Energy Opportunity Zones Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8530 To amend the Internal Revenue Code of 1986 to provide for energy opportunity zones. IN THE HOUSE OF REPRESENTATIVES OCTOBER 6, 2020 Mr. CARBAJAL (for himself and Mr. LOWENTHAL) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide for energy opportunity zones. 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 ‘‘Energy Opportunity 4 Zones Act of 2020’’. 5 SEC. 2. OPPORTUNITY ZONES. 6 (a) IN GENERAL.—Chapter 1 of the Internal Rev- 7 enue Code of 1986 is amended by inserting before sub- 8 chapter Z the following new subchapter: 9 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 2 •HR 8530 IH ‘‘Subchapter Y—Energy Opportunity Zones 1 ‘‘Sec. 1400Y–1. Energy opportunity zones. ‘‘SEC. 1400Y–1. ENERGY OPPORTUNITY ZONES. 2 ‘‘(a) PRODUCTION TAX CREDIT.—In the case of a 3 qualified energy opportunity zone facility, section 45 shall 4 be administered as if— 5 ‘‘(1) subsection (b)(5) did not apply, 6 ‘‘(2) ‘2050’ were substituted for ‘2021’ in sub- 7 section (d)(1), and 8 ‘‘(3) ‘2050’ were substituted for ‘2021’ each 9 place such date appears in paragraphs (2)(A), 10 (3)(A)(i), (4)(B), (6), (7), (9), and (11)(B) of sub- 11 section (d). 12 ‘‘(b) INVESTMENT TAX CREDIT.—In the case of 13 qualified energy opportunity zone property, section 48 14 shall be administered as if— 15 ‘‘(1) ‘2050’ were substituted for ‘2022’ in para- 16 graphs (2)(A)(i)(II), (3)(A)(ii), and (3)(A)(vii) of 17 subsection (a), 18 ‘‘(2) ‘2050’ were substituted for ‘2021’ in sub- 19 section (a)(5)(C)(ii), 20 ‘‘(3) paragraphs (5)(E), (6), and (7) of sub- 21 section (a) did not apply, 22 ‘‘(4) paragraphs (1)(D) and (2)(D) of sub- 23 section (c) did not apply, 24 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 3 •HR 8530 IH ‘‘(5) ‘2050’ were substituted for ‘2022’ in sub- 1 section (c)(3)(A)(iv), and 2 ‘‘(6) subsection (c)(4)(C) did not apply. 3 ‘‘(c) DEFINITIONS.—For purposes of this section— 4 ‘‘(1) QUALIFIED ENERGY OPPORTUNITY ZONE 5 FACILITY.—The term ‘qualified energy opportunity 6 zone facility’ means any facility which is located 7 within an energy opportunity zone and the construc- 8 tion of which was subject to a project labor agree- 9 ment. 10 ‘‘(2) QUALIFIED ENERGY OPPORTUNITY ZONE 11 PROPERTY.—The term ‘qualified energy opportunity 12 zone property’ means any property if— 13 ‘‘(A) such property is located within an en- 14 ergy opportunity zone, 15 ‘‘(B) the construction of such property was 16 subject to a project labor agreement, and 17 ‘‘(C) all laborers and mechanics employed 18 by any contractor or subcontractor in the con- 19 struction of such property were paid wages at 20 rates not less than those prevailing on similar 21 construction in the locality as determined by 22 the Secretary of Labor under subchapter IV of 23 chapter 31 of title 40, United States Code 24 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 4 •HR 8530 IH (commonly referred to as the ‘‘Davis-Bacon 1 Act’’). 2 ‘‘(3) ENERGY OPPORTUNITY ZONE DEFINED.— 3 The term ‘energy opportunity zone’ means— 4 ‘‘(A) any area which is within 120 miles 5 of— 6 ‘‘(i) a nuclear power plant, or a facil- 7 ity which utilizes coal to generate elec- 8 tricity, which (after the date which is 10 9 years before the date of the enactment of 10 this section) ceases operation, or 11 ‘‘(ii) a nuclear power plant which is 12 scheduled to cease operation not later than 13 6 years after the date of the enactment of 14 this section, and 15 ‘‘(B) any other area that can reasonably 16 demonstrate how changes in the nuclear or coal 17 economy have resulted (or are anticipated to re- 18 sult) in job losses in such area. 19 ‘‘(4) PROJECT LABOR AGREEMENT.—The term 20 ‘project labor agreement’ means a pre-hire collective 21 bargaining agreement with one or more labor organi- 22 zations that establishes the terms and conditions of 23 employment for a specific construction project and 24 which is an agreement described in section 8(f) of 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 5 •HR 8530 IH the National Labor Relations Act (26 U.S.C. 1 158(f)).’’. 2 (b) CLERICAL AMENDMENT.—The table of sub- 3 chapters for chapter 1 of such Code is amended by insert- 4 ing before the item relating to subchapter Z the following 5 new item: 6 ‘‘SUBCHAPTER Y—ENERGY OPPORTUNITY ZONES’’. (c) EFFECTIVE DATE.— 7 (1) IN GENERAL.—Except as provided in para- 8 graph (2), the amendments made by this section 9 shall apply to property placed in service after the 10 date of the enactment of this Act. 11 (2) APPLICATION OF PROGRESS EXPENDITURE 12 RULES.—So much of the amendments made by this 13 section as relate to section 48 of the Internal Rev- 14 enue Code of 1986 shall apply to periods after the 15 date of the enactment of this Act under rules similar 16 to the rules of section 48(m) of the Internal Revenue 17 Code of 1986 (as in effect on the day before the 18 date of the enactment of the Revenue Reconciliation 19 Act of 1990). 20 SEC. 3. ENERGY CREDIT FOR QUALIFIED OFFSHORE WIND 21 FACILITIES AND ENERGY STORAGE. 22 (a) IN GENERAL.—Section 48 of the Internal Rev- 23 enue Code of 1986 is amended— 24 (1) in subsection (a)— 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 6 •HR 8530 IH (A) in paragraph (2)(A)(i)— 1 (i) in subclause (II), by striking 2 ‘‘paragraph (3)(A)(i)’’ and inserting 3 ‘‘clause (i) or (ix) of paragraph (3)(A)’’, 4 and 5 (ii) by striking ‘‘and’’ at the end of 6 subclause (III), and 7 (iii) by adding at the end the fol- 8 lowing new subclause: 9 ‘‘(V) qualified offshore wind 10 property, and’’, and 11 (B) in paragraph (3)(A)— 12 (i) in clause (vi), by striking ‘‘or’’ at 13 the end, and 14 (ii) by adding at the end the following 15 new clause: 16 ‘‘(viii) qualified offshore wind prop- 17 erty, but only with respect to property the 18 construction of which begins before Janu- 19 ary 1, 2050, or 20 ‘‘(ix) any equipment if— 21 ‘‘(I) such equipment receives, 22 stores, and delivers energy using bat- 23 teries, compressed air, pumped hydro- 24 power, hydrogen storage (including 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 7 •HR 8530 IH hydrolysis), thermal energy storage, 1 regenerative fuel cells, flywheels, ca- 2 pacitors, superconducting magnets, or 3 other technologies identified by the 4 Secretary in consultation with the 5 Secretary of Energy, 6 ‘‘(II) such equipment has a ca- 7 pacity of not less than 5 megawatt 8 hours, 9 ‘‘(III) such equipment is located 10 in an energy opportunity zone (as de- 11 fined in section 1400Y–1), 12 ‘‘(IV) the construction of such 13 equipment was subject to a project 14 labor agreement (as defined in section 15 1400Y–1), and 16 ‘‘(V) all laborers and mechanics 17 employed by any contractor or sub- 18 contractor in the construction of such 19 equipment were paid wages at rates 20 not less than those prevailing on simi- 21 lar construction in the locality as de- 22 termined by the Secretary of Labor 23 under subchapter IV of chapter 31 of 24 title 40, United States Code (com- 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 8 •HR 8530 IH monly referred to as the ‘‘Davis- 1 Bacon Act’’).’’, and 2 (2) in subsection (c), by adding at the end the 3 following new paragraph: 4 ‘‘(5) QUALIFIED OFFSHORE WIND PROPERTY.— 5 ‘‘(A) IN GENERAL.—The term ‘qualified 6 offshore wind property’ means an offshore facil- 7 ity, other than qualified small wind energy 8 property, if— 9 ‘‘(i) such facility uses wind to produce 10 electricity, 11 ‘‘(ii) such facility is located not far- 12 ther than 50 miles from the boundary of 13 an energy opportunity zone (as defined in 14 section 1400Y–1), 15 ‘‘(iii) the construction of such facility 16 was subject to a project labor agreement 17 (as defined in section 1400Y–1), and 18 ‘‘(iv) all laborers and mechanics em- 19 ployed by any contractor or subcontractor 20 in the construction of such facility were 21 paid wages at rates not less than those 22 prevailing on similar construction in the lo- 23 cality as determined by the Secretary of 24 Labor under subchapter IV of chapter 31 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 9 •HR 8530 IH of title 40, United States Code (commonly 1 referred to as the ‘‘Davis-Bacon Act’’). 2 ‘‘(B) OFFSHORE FACILITY.—The term 3 ‘offshore facility’ means any facility located in 4 the inland navigable waters of the United 5 States, including the Great Lakes, or in the 6 coastal waters of the United States, including 7 the territorial seas of the United States, the ex- 8 clusive economic zone of the United States, and 9 the outer Continental Shelf of the United 10 States.’’. 11 (b) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to periods after the date of the 13 enactment of this Act under rules similar to the rules of 14 section 48(m) of the Internal Revenue Code of 1986 (as 15 in effect on the day before the date of the enactment of 16 the Revenue Reconciliation Act of 1990). 17 SEC. 4. IMPROVEMENTS TO CREDIT FOR NONBUSINESS EN- 18 ERGY PROPERTY. 19 (a) EXTENSION OF CREDIT.— 20 (1) IN GENERAL.—Section 25C(g)(2) of the In- 21 ternal Revenue Code of 1986 is amended by striking 22 ‘‘December 31, 2020’’ and inserting ‘‘December 31, 23 2050’’. 24 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 10 •HR 8530 IH (2) EFFECTIVE DATE.—The amendments made 1 by this subsection shall apply to property placed in 2 service after December 31, 2020. 3 (b) OTHER IMPROVEMENTS.— 4 (1) IN GENERAL.—Section 25C of the Internal 5 Revenue Code of 1986 is amended— 6 (A) in subsection (a)(1), by striking ‘‘10 7 percent’’ and inserting ‘‘15 percent’’, 8 (B) in subsection (b)— 9 (i) in paragraph (1)— 10 (I) by striking ‘‘$500’’ and in- 11 serting ‘‘$1,200’’, and 12 (II) by striking ‘‘December 31, 13 2005’’ and inserting ‘‘December 31, 14 2019’’, and 15 (ii) by striking paragraphs (2) and (3) 16 and inserting the following: 17 ‘‘(2) LIMITATION ON INSULATION MATERIAL OR 18 SYSTEM.—In the case of amounts paid or incurred 19 for components described in subsection (c)(3)(A) by 20 any taxpayer for any taxable year, the credit allowed 21 under this section with respect to such amounts for 22 such year shall not exceed the excess (if any) of 23 $600 over the aggregate credits allowed under this 24 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 11 •HR 8530 IH section with respect to such amounts for all prior 1 taxable years ending after December 31, 2019. 2 ‘‘(3) LIMITATION ON WINDOWS.— 3 ‘‘(A) IN GENERAL.— 4 ‘‘(i) ENERGY STAR MOST EFFI- 5 CIENT.—In the case of amounts paid or in- 6 curred by any taxpayer for any taxable 7 year for components described in sub- 8 section (c)(3)(B) which meet the most effi- 9 cient certification under applicable Energy 10 Star program requirements, the credit al- 11 lowed under this section with respect to 12 such amounts for such year shall not ex- 13 ceed the excess (if any) of $600 over the 14 aggregate credits allowed under this sec- 15 tion with respect to such amounts for all 16 prior taxable years ending after December 17 31, 2019. 18 ‘‘(ii) ENERGY STAR.—In the case of 19 amounts paid or incurred by any taxpayer 20 for any taxable year for components de- 21 scribed in subsection (c)(3)(B) which do 22 not meet the most efficient certification 23 under applicable Energy Star program re- 24 quirements, the credit allowed under this 25 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 12 •HR 8530 IH section with respect to such amounts for 1 such year shall not exceed the excess (if 2 any) of $200 over the aggregate credits al- 3 lowed under this section with respect to 4 such amounts for all prior taxable years 5 ending after December 31, 2019. 6 ‘‘(B) ELECTION.— 7 ‘‘(i) IN GENERAL.—For purposes of 8 any amounts paid or incurred by any tax- 9 payer for components described in sub- 10 section (c)(3)(B), the credit allowed under 11 this section shall only be allowed for com- 12 ponents described in clause (i) of subpara- 13 graph (A) or clause (ii) of such subpara- 14 graph, but not both, as elected by the tax- 15 payer during the first taxable year in 16 which such credit is being claimed by the 17 taxpayer. 18 ‘‘(ii) IRREVOCABILITY.—The Sec- 19 retary shall, through such rules, regula- 20 tions, and procedures as are determined 21 appropriate, establish procedures for mak- 22 ing an election under this subparagraph, 23 which shall require that— 24 VerDate Sep 11 2014 20:22 Oct 31, 2020 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H8530.IH H8530 jbell on DSKJLSW7X2PROD with BILLS 13 •HR 8530 IH ‘‘(I) any election made by the 1 taxpayer shall be irrevocable, and 2 ‘‘(II) such election shall remain 3 in effect for all subsequent taxable 4 years. 5 ‘‘(4) LIMITATION ON DOORS.—In the case of 6 amounts paid or incurred for components described 7 in subsection (c)(3)(C) by any taxpayer for any tax- 8 able year, the credit allowed under this section with 9 respect to such amounts for such year shall not ex- 10 ceed— 11 ‘‘(A) the excess (if any) of $500 over the 12 aggregate credits allowed under this section 13 with respect to such amounts for all prior tax- 14 able years ending after December 31, 2019, or 15 ‘‘(B) $250 for each exterior door. 16 ‘‘(5) LIMITATION ON RESIDENTIAL ENERGY 17 PROPERTY EXPENDITURES.—The amount of the 18 credit allowed under this section by reason of sub- 19 section (a)(2) shall not exceed— 20 ‘‘(A) in the case of any energy-efficient 21 building property— 22 ‘‘(i) for any item of p [Text truncated for display. 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