Steel Industry Preservation Act

II 116TH CONGRESS 1ST SESSION S. 1627 To amend the Internal Revenue Code of 1986 to extend and modify the section 45 credit for refined coal from steel industry fuel, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 23 (legislative day, MAY 22), 2019 Mrs. CAPITO (for herself, Mr. BROWN, Mr. PORTMAN, and Mr. CASEY) intro- duced the following bill; which was read twice and referred to the Com- mittee on Finance A BILL To amend the Internal Revenue Code of 1986 to extend and modify the section 45 credit for refined coal from steel industry fuel, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Steel Industry Preser- 4 vation Act’’. 5 SEC. 2. EXTENSION AND MODIFICATION OF CREDIT FOR 6 STEEL INDUSTRY FUEL. 7 (a) CREDIT PERIOD.— 8 VerDate Sep 11 2014 23:52 Jun 03, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 2 •S 1627 IS (1) IN GENERAL.—Subclause (II) of section 1 45(e)(8)(D)(ii) of the Internal Revenue Code of 2 1986 is amended to read as follows: 3 ‘‘(II) CREDIT PERIOD.—In lieu 4 of the 10-year period referred to in 5 clauses (i) and (ii)(II) of subpara- 6 graph (A), the credit period shall be 7 the period beginning on the first date 8 that the facility first produces steel 9 industry fuel that is sold to an unre- 10 lated person after the date of the en- 11 actment of the Steel Industry Preser- 12 vation Act, and ending 10 years after 13 such first date.’’. 14 (2) CONFORMING AMENDMENT.—Section 15 45(e)(8)(D) of such Code is amended by striking 16 clause (iii) and by redesignating clause (iv) as clause 17 (iii). 18 (b) EXTENSION OF PLACED-IN-SERVICE DATE.— 19 Subparagraph (A) of section 45(d)(8) of the Internal Rev- 20 enue Code of 1986 is amended— 21 (1) by striking ‘‘(or any modification to a facil- 22 ity)’’; 23 (2) by striking ‘‘placed in service before’’ and 24 inserting ‘‘placed in service— 25 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 3 •S 1627 IS ‘‘(i) before’’; 1 (3) by striking ‘‘and’’ at the end and inserting 2 ‘‘or’’; and 3 (4) by adding at the end the following new 4 clause: 5 ‘‘(ii) after the date of the enactment 6 of this clause and before the date that is 7 18 months after such date, and’’. 8 (c) CLARIFICATIONS.— 9 (1) STEEL INDUSTRY FUEL.—Subclause (I) of 10 section 45(c)(7)(C)(i) of the Internal Revenue Code 11 of 1986 is amended by inserting ‘‘, or a blend of 12 coal and petroleum coke, or other coke feedstock’’ 13 after ‘‘on coal’’. 14 (2) OWNERSHIP INTEREST.—Section 45(d)(8) 15 of such Code is amended by adding at the end the 16 following new flush sentence: 17 ‘‘With respect to a facility producing steel industry 18 fuel, no person (including a ground lessor, customer, 19 supplier, or technology licensor) shall be treated as 20 having an ownership interest in the facility or as 21 otherwise entitled to the credit allowable under this 22 section with respect to such facility solely because 23 such person’s rent, license fee, or other entitlement 24 to net payments from the owner of such facility is 25 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 4 •S 1627 IS measured by a fixed dollar amount or a fixed 1 amount per ton, or otherwise determined without re- 2 gard to the profit or loss of such facility.’’. 3 (3) PRODUCTION AND SALE.—Subparagraph 4 (D) of section 45(e)(8) of such Code, as amended by 5 subsection (a)(2), is amended by redesignating 6 clause (iii) as clause (iv) and by inserting after 7 clause (ii) the following new clause: 8 ‘‘(iii) PRODUCTION AND SALE.—The 9 owner of a facility producing steel industry 10 fuel shall be treated as producing and sell- 11 ing steel industry fuel where that owner 12 manufactures such steel industry fuel from 13 coal, a blend of coal and petroleum coke, 14 or other coke feedstock to which it has 15 title. The sale of such steel industry fuel 16 by the owner of the facility to a person 17 who is not the owner of the facility shall 18 not fail to qualify as a sale to an unrelated 19 person solely because such purchaser may 20 also be a ground lessor, supplier, or cus- 21 tomer.’’. 22 (d) ELECTION TO INCREASE CREDIT IN LIEU OF 23 STEEL INDUSTRY FUEL DEDUCTIONS.—Paragraph (8) of 24 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 5 •S 1627 IS section 45(e) is amended by adding at the end the fol- 1 lowing new subparagraph: 2 ‘‘(E) ELECTION FOR INCREASED CREDIT 3 IN LIEU OF DEDUCTIONS FOR STEEL INDUSTRY 4 FUEL.—In the case of a taxpayer who produces 5 steel industry fuel— 6 ‘‘(i) IN GENERAL.—At the election of 7 the taxpayer— 8 ‘‘(I) no deduction shall be al- 9 lowed with respect to expenses made 10 in connection with the production and 11 sale of steel industry fuel for such 12 taxable year which are otherwise de- 13 ductible under this chapter (deter- 14 mined without regard to this subpara- 15 graph), 16 ‘‘(II) no expense made in connec- 17 tion with the production of and sale of 18 steel industry fuel which is otherwise 19 chargeable to capital account in such 20 taxable year shall be so charged, and 21 ‘‘(III) the credit determined 22 under this section (without regard to 23 this subparagraph) for such taxable 24 year shall be increased by an amount 25 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 6 •S 1627 IS equal to the product of the sum of the 1 amounts to which subclauses (I) and 2 (II) apply and the maximum rate of 3 tax applicable under section 1 or 4 11(b), as applicable to the taxpayer in 5 such taxable year. 6 ‘‘(ii) APPLICATION TO PARTNERSHIPS 7 AND S CORPORATIONS.—In the case of a 8 partnership or S corporation, the election 9 shall be made at the partnership or S cor- 10 poration level. 11 ‘‘(iii) ELECTION.—An election under 12 this subparagraph for any taxable year 13 shall be made not later than the time for 14 filing the return of tax for such year (in- 15 cluding extensions), in such manner as the 16 Secretary may prescribe. Such an election, 17 once made, shall be irrevocable.’’. 18 (e) SPECIFIED CREDIT FOR PURPOSES OF ALTER- 19 NATIVE MINIMUM TAX EXCLUSION.—Subclause (II) of 20 section 38(c)(4)(B)(iv) of the Internal Revenue Code of 21 1986 is amended by inserting ‘‘(in the case of a refined 22 coal production facility producing steel industry fuel, dur- 23 ing the credit period set forth in section 24 45(e)(8)(D)(ii)(II))’’ after ‘‘service’’. 25 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 7 •S 1627 IS (f) APPLICATION OF CERTAIN RULES TO STEEL IN- 1 DUSTRY FUEL.— 2 (1) ACTIVITY NOT ENGAGED IN FOR PROFIT.— 3 Section 183 of the Internal Revenue Code of 1986 4 is amended by adding at the end the following new 5 subsection: 6 ‘‘(f) EXCEPTION.—This section shall not apply to any 7 deduction with respect to the production of steel industry 8 fuel (as defined in section 45(c)(7)(C)).’’. 9 (2) APPLICATION OF ECONOMIC SUBSTANCE 10 DOCTRINE.— 11 (A) IN GENERAL.—Subsection (o) of sec- 12 tion 7701 of the Internal Revenue Code of 1986 13 is amended by adding at the end the following 14 new paragraph: 15 ‘‘(6) NON-APPLICATION TO STEEL INDUSTRY 16 FUEL.—The economic substance doctrine shall not 17 apply to any transaction to the extent such trans- 18 action relates to steel industry fuel (as defined in 19 section 45(c)(7)(C)).’’. 20 (B) CONFORMING AMENDMENT.—Para- 21 graph (5)(C) of section 7701(o) of such Code is 22 amended by striking ‘‘The determination’’ and 23 inserting ‘‘Except as provided in paragraph (6), 24 the determination’’. 25 VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS 8 •S 1627 IS (g) EFFECTIVE DATES.— 1 (1) IN GENERAL.—Except as provided in para- 2 graph (2), the amendments made by this section 3 shall apply to fuel produced and sold after the date 4 of the enactment of this Act, in taxable years ending 5 after such date. 6 (2) APPLICATION OF ECONOMIC SUBSTANCE 7 RULES.—The amendments made by subsection (f)(2) 8 shall apply to transactions entered into after the 9 date of the enactment of this Act. 10 Æ VerDate Sep 11 2014 01:38 Jun 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\S1627.IS S1627 SSpencer on DSKBBXCHB2PROD with BILLS