2007-2008 Bill 3649: Energy Freedom and Rural Development Act

South Carolina General Assembly
117th Session, 2007-2008

Download This Bill in Microsoft Word format

A261, R274, H3649

STATUS INFORMATION

General Bill
Sponsors: Reps. Witherspoon, Merrill, Agnew, Anthony, Brady, R. Brown, Duncan, Funderburk, Hagood, Hardwick, Herbkersman, Hiott, Kelly, Loftis, Moss, Ott, E.H. Pitts, Scott, Talley, Toole, Umphlett, Cobb-Hunter, Leach, Cato, Clemmons, Barfield, Ceips, Dantzler, Hamilton, Howard, Jefferson, Lowe, Phillips, G.R. Smith, J.R. Smith, Stavrinakis, Bannister, J.H. Neal, Stewart, Sellers, Mitchell, Williams, G.M. Smith and Mahaffey
Document Path: l:\council\bills\dka\3201ssp07.doc
Companion/Similar bill(s): 243, 3146, 3749

Introduced in the House on March 6, 2007
Introduced in the Senate on May 22, 2007
Last Amended on May 17, 2007
Passed by the General Assembly on May 7, 2008
Governor's Action: May 21, 2008, Vetoed
Legislative veto action(s): Veto overridden

Summary: Energy Freedom and Rural Development Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
    3/6/2007  House   Introduced and read first time HJ-44
    3/6/2007  House   Referred to Committee on Ways and Means HJ-45
    3/7/2007  House   Member(s) request name added as sponsor: Stavrinakis, 
                        Bannister, J.H.Neal
   3/27/2007  House   Member(s) request name added as sponsor: Stewart, Sellers
   4/10/2007  House   Member(s) request name added as sponsor: Mitchell
   4/17/2007  House   Member(s) request name added as sponsor: Williams
   4/18/2007  House   Member(s) request name added as sponsor: G.M.Smith
   5/15/2007  House   Member(s) request name added as sponsor: Mahaffey
   5/15/2007  House   Recalled from Committee on Ways and Means HJ-36
   5/16/2007          Scrivener's error corrected
   5/17/2007  House   Amended HJ-36
   5/17/2007  House   Read second time HJ-47
   5/17/2007  House   Unanimous consent for third reading on next legislative 
                        day HJ-47
   5/18/2007  House   Read third time and sent to Senate HJ-2
   5/18/2007          Scrivener's error corrected
   5/22/2007  Senate  Introduced and read first time SJ-15
   5/22/2007  Senate  Referred to Committee on Finance SJ-15
   4/29/2008  Senate  Committee report: Favorable with amendment Finance SJ-19
   4/30/2008  Senate  Committee Amendment Adopted SJ-43
   4/30/2008  Senate  Read second time SJ-43
    5/1/2008  Senate  Read third time and returned to House with amendments 
                        SJ-27
    5/1/2008          Scrivener's error corrected
    5/7/2008  House   Concurred in Senate amendment and enrolled HJ-18
   5/15/2008          Ratified R 274
   5/21/2008          Vetoed by Governor
   5/27/2008  House   Veto overridden by originating body Yeas-95  Nays-0 HJ-26
   5/29/2008  Senate  Veto overridden Yeas-42  Nays-1
   6/11/2008          Copies available
   6/11/2008          Effective date 05/29/08
   6/13/2008          Act No. 261

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

3/6/2007
5/15/2007
5/16/2007
5/17/2007
5/18/2007
4/29/2008
4/30/2008
5/1/2008

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A261, R274, H3649)

AN ACT TO AMEND SECTION 12-63-20, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO SALES TAX REBATES ON ECOLOGICALLY FRIENDLY VEHICLES AND INCENTIVE PAYMENTS FOR ALTERNATIVE FUEL PURCHASE AND PRODUCTION OF ELECTRICITY OR METHANE GAS, SO AS TO DELETE THE SALES TAX REBATE ON FLEXIBLE FUEL VEHICLES, TO SHORTEN THE TIME PERIOD THE ALTERNATIVE FUEL PURCHASE INCENTIVE IS AVAILABLE, TO BROADEN THE INCENTIVE PAYMENT QUALIFICATIONS FOR THE PRODUCTION OF ELECTRICITY OR METHANE GAS FUEL, TO REPLACE "METHANE GAS FUEL" WITH "ENERGY", AND TO DELETE THE LIMITATIONS ON THE INCENTIVE AMOUNTS; TO AMEND SECTION 46-3-260, RELATING TO THE ESTABLISHMENT OF THE SOUTH CAROLINA RENEWABLE ENERGY INFRASTRUCTURE DEVELOPMENT FUND AND LOW INTEREST LOANS AND GRANTS, SO AS TO EXPAND THE PURVIEW OF THE MATCHING GRANTS FOR NEW AND FUTURE BIOMASS TECHNOLOGIES TO INCLUDE SOLAR, GEOTHERMAL, WIND ENERGY, AND SMALL HYDROPOWER TECHNOLOGIES AND TO PROVIDE THAT THE DEPARTMENT OF AGRICULTURE RATHER THAN THE DEPARTMENT OF REVENUE MAY ADMINISTER THE FUND AND COORDINATE ITS EFFORTS WITH THE STATE ENERGY OFFICE; TO AMEND SECTION 12-6-3600, AS AMENDED, RELATING TO TAX CREDITS FOR AN ETHANOL AND BIODIESEL FACILITY, SO AS TO EXTEND THE TAX CREDIT TO 2017, TO ALLOW THE TAXPAYER TO CLAIM THE CREDIT FOR THE FIRST SIX MONTHS IT MET THE REQUIREMENTS IN ADDITION TO QUALIFYING FOR THE CURRENT TAXABLE YEAR; TO ALLOW UNUSED CREDIT TO BE CARRIED FORWARD FOR TEN YEARS, TO REQUIRE APPROVAL BY THE STATE ENERGY OFFICE RATHER THAN THE DEPARTMENT OF REVENUE, AND TO REQUIRE EACH TAXPAYER TO SUBMIT A REQUEST TO THE STATE ENERGY OFFICE WITHIN A SPECIFIED TIME PERIOD AND SUBJECT TO CERTAIN PRESCRIBED CONDITIONS; TO AMEND SECTION 12-6-3610, AS AMENDED, RELATING TO TAX CREDITS FOR THE COST OF PURCHASING AND INSTALLING PROPERTY TO DISTRIBUTE AND DISPENSE RENEWABLE FUELS, SO AS TO REVISE THE DEFINITION OF "RENEWABLE FUEL" FOR CERTAIN TAXPAYERS WHO PURCHASE OR CONSTRUCT QUALIFYING FACILITIES OR COMMERCIAL FACILITIES, TO DELETE THE ONE HUNDRED FIFTY THOUSAND DOLLAR LIMIT, AND TO REQUIRE EACH TAXPAYER TO SUBMIT A REQUEST TO THE STATE ENERGY OFFICE WITHIN A SPECIFIED TIME PERIOD AND SUBJECT TO CERTAIN PRESCRIBED CONDITIONS; TO AMEND SECTION 12-6-3620, AS AMENDED, RELATING TO TAX CREDITS FOR THE COST OF METHANE GAS USE, SO AS TO DELETE THE PROVISIONS RELATED TO METHANE GAS, TO END THE TAX CREDIT ALLOWABLE FOR THE PURCHASE AND INSTALLATION OF CERTAIN ENERGY-CREATING FUELS WITH NO LESS THAN NINETY PERCENT BIOMASS RESOURCE, TO ALLOW THE STATE ENERGY OFFICE TO CONSULT WITH OTHER SPECIFIED AGENCIES TO CERTIFY THE COSTS OF THE TAXPAYER, TO PROVIDE PARAMETERS FOR THE TAX CREDIT, TO REDEFINE "BIOMASS RESOURCE", AND TO REQUIRE EACH TAXPAYER TO SUBMIT A REQUEST TO THE STATE ENERGY OFFICE WITHIN A SPECIFIED TIME PERIOD AND SUBJECT TO CERTAIN PRESCRIBED CONDITIONS; AND TO AMEND SECTION 12-6-3631, RELATING TO THE BIODIESEL EXPENDITURES TAX CREDIT, SO AS TO EXPAND THE DEFINITIONS OF "QUALIFIED EXPENDITURES FOR RESEARCH AND DEVELOPMENT" AND "CELLULOSIC ETHANOL" AND TO REQUIRE EACH TAXPAYER TO SUBMIT A REQUEST TO THE STATE ENERGY OFFICE WITHIN A SPECIFIED TIME PERIOD AND SUBJECT TO CERTAIN PRESCRIBED CONDITIONS.

Whereas, energy, like any basic need, is an absolute necessity for individuals, businesses, and government; and

Whereas, energy costs have a profound impact on South Carolina's economy, affecting households, businesses, health care, public institutions, and government; and

Whereas, South Carolinians spend more than eighteen billion dollars a year on energy with a majority of these expenditures leaving the state's economy because South Carolina produces no coal, oil, or natural gas; and

Whereas, biomass fuels can create over twelve thousand permanent jobs in South Carolina, with revenues to the local economy of over one billion dollars each year; and

Whereas, biomass energy resources can produce over 1.7 billion dollars in construction investments and seventeen thousand construction jobs over the next fifteen years; and

Whereas, the development of biomass energy resources will open new markets for South Carolina farmers and forest product producers and new opportunities for entrepreneurs; and

Whereas, a high proportion of the new jobs and additional income resulting from biomass energy will go to economically depressed rural areas of the State; and

Whereas, all petroleum fuels consumed in South Carolina come from out of state, primarily through two pipelines originating in the hurricane-prone coastal areas of Louisiana and Texas; and

Whereas, two-thirds of all oil consumed in America is imported from foreign countries and most oil reserves are in troublesome areas for the United States, such as the Middle East, Russia, West Africa, and Venezuela; and

Whereas, environmental effects of energy use have a major impact on the quality of our natural resources, the quality of human life, and the ability of the State to attract and retain both industrial and service-related jobs; and

Whereas, biomass fuels can reduce the production of air pollutants including: carbon dioxide which causes climate change; nitrogen oxide, which is known to create smog; sulfur oxides, which contribute to acid rain; particulate matter, which can cause health problems such as asthma, lung cancer, and cardiovascular disease; and mercury, a toxic substance that may cause fetal development problems; and

Whereas, it is critical to address economic, security, and environmental concerns created by current energy use patterns, and it is in the state's best interest to adopt a comprehensive set of recommendations to support and encourage biomass fuel development and utilization. Now, therefore,

Be it enacted by the General Assembly of the State of South Carolina:

Tax credits, alternative fuels and other energy sources

SECTION 1. Section 12-63-20 of the 1976 Code, as added by Act 83 of 2007, is amended to read:

"Section 12-63-20. (A)(1) An incentive payment for an alternative fuel purchase is provided beginning after June 30, 2009, and ending before July 1, 2012, and shall be provided from the general fund, excluding revenue derived from the sales and use tax as follows:

(a) five cents to the retailer for each gallon of E70 fuel or greater sold, provided that the ethanol-based fuel is subject to the South Carolina motor fuel user fee;

(b) twenty-five cents to the retailer for each gallon of pure biodiesel fuel sold so that the biodiesel in the blend is at least two percent B2 or greater, provided that the qualified biodiesel content fuel is subject to the South Carolina motor fuel user fee. Biodiesel fuel is a fuel for motor vehicle diesel engines comprised of vegetable oils or animal fats and meeting the specifications of the American Society of Testing and Materials (ASTM) D6751 or (ASTM) D975 blended stock; and

(c) twenty-five cents to the retailer or wholesaler for each gallon of pure biodiesel fuel sold as dyed diesel fuel for 'off-road' uses, so that the biodiesel in the blend is at least two percent B2 or greater.

(2) The payments allowed pursuant to this subsection must be made to the retailer upon compliance with verification procedures set forth by the Department of Agriculture.

(B)(1) An incentive payment for production of electricity or energy is provided pursuant to subitems (a) and (b), beginning after June 30, 2008, and ending before July 1, 2018, and shall be provided from the general fund, excluding revenue derived from the sales and use tax as follows:

(a) One cent per kilowatt-hour (kwh) for electricity produced from biomass resources in a facility not using biomass resources before June 30, 2008, or facilities which produce at least twenty-five percent more electricity from biomass resources than the greatest three-year average before June 30, 2008, up to a maximum of one hundred thousand dollars per year per taxpayer for five years. The incentive payment is also applicable to electricity from a qualifying facility placed in service and first producing electricity on or after July 1, 2008. The incentive payment extends for five years, and ends on July 1, 2013, or five years from the date the facility was placed in service and first produced electricity. In no case shall the incentive payment apply after June 30, 2018.

(b) Thirty cents per therm (100,000 Btu) for energy produced from biomass resources in a facility not using biomass resources before June 30, 2008, or facilities which utilize at least twenty-five percent more energy from biomass resources than the greatest three-year average before June 30, 2008, up to a maximum of one hundred thousand dollars per year per taxpayer for five years. The incentive payment is also applicable to energy from a qualifying facility placed in service and first producing energy on or after July 1, 2008. The incentive payment extends for five years, and ends on July 1, 2013, or five years from the date the facility was placed in service and first produced energy. In no case shall the incentive payment apply after June 30, 2018.

The incentive payment for the production of electricity or thermal energy may not be claimed for both electricity and energy produced from the same biomass resource.

(2) For purposes of this subsection, a biomass resource means wood, wood waste, agricultural waste, animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels.

(C) The Department of Revenue may prescribe forms and procedures, issue policy documents, and distribute funds as necessary to ensure the orderly and timely implementation of the provisions of this section. The Department of Revenue shall coordinate with the Department of Agriculture as necessary."

South Carolina Renewable Energy Infrastructure Development Fund, expansion of matching grants for biomass technologies

SECTION 2. A. Section 46-3-260(A)(2)(c) of the 1976 Code, as added by Act 116 of 2007, is amended to read:

"(c) matching grants up to two hundred thousand dollars are available for demonstration projects that validate the effectiveness of new and future biomass solar, geothermal, wind energy, and small hydropower technologies and products, provided that the grant does not exceed fifty percent of the total cost of the demonstration project."

B. Section 46-3-260(B) of the 1976 Code, as added by Act 116 of 2007, is amended to read:

"(B) The Department of Agriculture may prescribe forms, procedures, issue policy documents, and distribute funds as necessary to ensure the orderly and timely implementation of the provisions herein. The Department of Agriculture shall coordinate with the State Energy Office as necessary."

Tax credits, ethanol and biodiesel facilities, renewable fuel facilities, energy-creating fuels with no less than ninety percent biomass resource, and biodiesel expenditures

SECTION 3. A. Section 12-6-3600 of the 1976 Code, as last amended by Act 83 of 2007, is further amended to read:

"Section 12-6-3600. (A)(1) For taxable years beginning after 2006, and before 2017, there is allowed a credit against the tax imposed pursuant to this chapter for any corn-based ethanol or soy-based biodiesel facility which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of corn-based ethanol or soy-based biodiesel, before denaturing, on or before December 31, 2011. The credit equals twenty cents a gallon of corn-based ethanol or soy-based biodiesel produced and is allowed for sixty months beginning with the first month for which the facility is eligible to receive the credit and ending not later than December 31, 2016. The taxpayer is eligible to claim the credit after the facility has six consecutive months of operation at an average production rate of at least twenty-five percent of its name plate design capacity. In the first taxable year in which the taxpayer is eligible to claim the credit, the taxpayer may claim the credit for the first six months it met the requirements in addition to qualifying production during its current taxable year.

(2) For taxable years beginning after 2006, and before 2017, there is allowed a credit against the tax imposed pursuant to this chapter for an ethanol facility using a feedstock other than corn or a biodiesel facility using a feedstock other than soy oil which is in production at the rate of at least twenty-five percent of its name plate design capacity for the production of ethanol or biodiesel, before denaturing, on or before December 31, 2011. The credit equals thirty cents a gallon of noncorn ethanol or nonsoy oil biodiesel produced and is allowed for up to sixty months beginning with the first month for which the facility is eligible to receive the credit and ending no later than December 31, 2016. The taxpayer is eligible to claim the credit after the facility has six consecutive months of operation at an average production rate of at least twenty-five percent of its name plate design capacity. In the first taxable year in which the taxpayer is eligible to claim the credit, the taxpayer may claim the credit for the first six months it met the requirements in addition to qualifying production during its current taxable year.

(3) Any unused credit may be carried forward for ten years.

(B) As used in this section:

(1) 'Ethanol facility' means a plant or facility primarily engaged in the production of ethanol or ethyl alcohol derived from renewable and sustainable bioproducts used as a substitute for gasoline fuel.

(2) 'Biodiesel facility' means a plant or facility primarily engaged in the production of plant- or animal-based fuels used as a substitute for diesel fuel.

(3) 'Name plate design capacity' means the original designed capacity of an ethanol or biodiesel facility. Capacity may be specified as bushels of grain ground or gallons of ethanol or biodiesel produced a year.

(C)(1) Beginning January 1, 2017, an ethanol or biodiesel facility must receive a credit against the tax imposed by this chapter in the amount of seven and one-half cents a gallon of ethanol or biodiesel, before denaturing, for new production for a period not to exceed thirty-six consecutive months.

(2) For purposes of this subsection, 'new production' means production which results from a new facility, a facility which has not received credits before 2017, or the expansion of the capacity of an existing facility by at least two million gallons first placed into service after 2016, as certified by the design engineer of the facility to the State Energy Office.

(3) For expansion of the capacity of an existing facility, 'new production' means annual production in excess of twelve times the monthly average of the highest three months of ethanol or biodiesel production at an ethanol or biodiesel facility during the twenty-four-month period immediately preceding certification of the facility by the design engineer.

(4) Credits are not allowed pursuant to this subsection for expansion of the capacity of an existing facility until production is in excess of twelve times the three-month average amount determined pursuant to this subsection during any twelve-consecutive-month period beginning no sooner than January 1, 2017.

(5) The amount of a credit granted pursuant to this section based on new production must be approved by the State Energy Office based on the ethanol or biodiesel production records as may be necessary to reasonably determine the level of new production.

(D)(1) The credits described in this section are allowed only for ethanol or biodiesel produced at a plant in this State at which all fermentation, distillation, and dehydration takes place. Credit is not allowed for ethanol or biodiesel produced or sold for use in the production of distilled spirits.

(2) Not more than twenty-five million gallons of ethanol or biodiesel produced annually at an ethanol or biodiesel facility is eligible for the credits in subsections (A) and (B) of this section, and the credits only may be claimed by a producer for the periods specified in subsections (A) and (B) of this section.

(3) Not more than ten million gallons of ethanol or biodiesel produced during a twelve-consecutive-month period at an ethanol or biodiesel facility is eligible for the credit described in subsection (C) of this section, and the credit only may be claimed by a producer for the periods specified in subsection (C) of this section.

(4) Not more than one hundred twenty-five million gallons of ethanol or biodiesel produced at an ethanol or biodiesel facility by the end of the sixty-month period set forth in subsection (A) or (B) of this section is eligible for the credit under the subsection. An ethanol or biodiesel facility which receives a credit for ethanol or biodiesel produced under subsection (A) or (B) of this section may not receive a credit pursuant to subsection (C) of this section until its eligibility to receive a credit under subsection (A) or (B) of this section has been completed.

(E) The State Energy Office shall prescribe an application form and procedures for claiming credits under this section.

(F) For purposes of ascertaining the correctness of the credit allowed pursuant to this section, the State Energy Office or the department may examine or cause to have examined, by any agent or representative designated for that purpose, any books, papers, records, or memoranda bearing upon these matters.

(G) Notwithstanding the credit amount allowed by this section, for Fiscal Year 2008-2009, all claims made pursuant to this section must not exceed eight hundred thousand dollars and must apply proportionately to all eligible claimants.

(H)(1) To obtain the maximum amount of the credit available to a taxpayer, each taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all gallons of qualifying fuel produced in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the maximum credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.

(2) For the state's fiscal year beginning July 1, 2008, the maximum amount of credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.

(3) To the extent the maximum amount of the credit contained in this section is repealed, the elimination of the maximum amount shall be seen as the last expression of the legislature and to the extent any language in this act conflicts with that repeal, it shall be considered null and void."

B. Section 12-6-3610 of the 1976 Code, as last amended by Act 83 of 2007, is further amended to read:

"Section 12-6-3610. (A)(1) A taxpayer that purchases or constructs and installs and places in service in this State property that is used for distribution or dispensing renewable fuel specified in this subsection, at a new or existing commercial fuel distribution or dispensing facility, is allowed a credit equal to twenty-five percent of the cost to the taxpayer of purchasing, constructing, and installing the property against the taxpayer's liability for a tax imposed pursuant to this chapter.

(2) Eligible property includes pumps, storage tanks, and related equipment that is directly and exclusively used for distribution, dispensing, or storing renewable fuel. A taxpayer is qualified for a tax credit provided pursuant to this subsection if the equipment used to store, distribute, or dispense renewable fuel is labeled for this purpose and clearly identified as associated with renewable fuel.

(3) The entire credit may not be taken for the taxable year in which the property is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the property is placed in service. If, in one of the years in which the installment of a credit accrues, property directly and exclusively used for distributing, dispensing, or storing renewable fuel is disposed of or taken out of service and is not replaced, the credit expires and the taxpayer may not take any remaining installment of the credit.

(4) The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.

(5) For purposes of this subsection, 'renewable fuel' means E70 or greater ethanol fuel dispensed at the retail level for use in motor vehicles and pure ethanol or biodiesel fuel dispensed by a distributor or facility that blends these nonpetroleum liquids with gasoline fuel or diesel fuel for use in motor vehicles.

(B)(1) A taxpayer that constructs and places in service in this State a commercial facility for the production of renewable fuel is allowed a credit equal to twenty-five percent of the cost to the taxpayer of constructing or renovating a building and equipping the facility for the purpose of producing renewable fuel. Production of renewable fuel includes intermediate steps such as milling, crushing, and handling of feedstock and the distillation and manufacturing of the final product.

(2) The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit.

(3) The unused portion of an unexpired credit may be carried forward for not more than ten succeeding taxable years.

(4) As used in this subsection, 'renewable fuel' means liquid nonpetroleum-based fuels that may be placed in motor vehicle fuel tanks and used as a fuel in a highway vehicle. It includes all forms of fuel commonly or commercially known or sold as biodiesel and ethanol.

(5) A taxpayer that claims any other credit allowed under this article with respect to the costs of constructing and installing a facility may not take the credit allowed in this section with respect to the same costs.

(C)(1) To obtain the amount of credit available to a taxpayer, the taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all qualifying property or a qualifying facility, as applicable, placed in service in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.

(2) For the state's fiscal year beginning July 1, 2008, the credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.

(D) To claim the credits allowed in this section, the taxpayer must place the property or facility in service prior to January 1, 2020."

C. Section 12-6-3620 of the 1976 Code, as last amended by Acts 83 and 110 of 2007, is further amended to read:

"Section 12-6-3620. (A) For taxable years beginning after 2007, and ending before taxable year 2020, there is allowed a credit against the income tax imposed pursuant to Section 12-6-530 or license fees imposed pursuant to Section 12-20-50, or both, for twenty-five percent of the costs incurred by a taxpayer for the purchase and installation of equipment used to create heat, power, steam, electricity, or another form of energy for commercial use from a fuel consisting of no less than ninety percent biomass resource. Costs incurred by a taxpayer and qualifying for the credit allowed by this section must be certified by the State Energy Office. The State Energy Office may consult with the Department of Agriculture and the South Carolina Institute for Energy Studies on standards for certifying the costs incurred by the taxpayer. The credit may be claimed in the year in which the equipment is placed in service and may be claimed for all expenditures incurred for the purchase and installation of the equipment.

(B) A taxpayer may use up to six hundred fifty thousand dollars of credit for a single taxable year. The tax credit is nonrefundable but unused credits may be carried forward for fifteen years.

(1) 'Biomass resource' means noncommercial wood, by-products of wood processing, demolition debris containing wood, agricultural waste, animal waste, sewage, landfill gas, and other organic materials, not including fossil fuels.

(2) 'Commercial use' means a use intended for the purpose of generating a profit.

(3) If the equipment ceases to use biomass resources as its primary fuel source before the entire credit has been utilized, the taxpayer is ineligible to utilize any remaining credit until it resumes using biomass resources as its primary fuel source (at least ninety percent). The fifteen-year carry forward period must not be extended due to periods of noncompliance.

(D)(1) To obtain the maximum amount of credit available to a taxpayer, a taxpayer must submit a request for credit to the State Energy Office by January thirty-first for all qualifying equipment placed in service in the previous calendar year and the State Energy Office must notify the taxpayer that it qualifies for the credit and the amount of credit allocated to the taxpayer by March first of that year. A taxpayer may claim the maximum amount of the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.

(2) For the state's fiscal year beginning July 1, 2008, the maximum amount of the credit is to be determined based on an eighteen-month period beginning July 1, 2008, through December 31, 2009. Applications are to be made by January 31, 2010, for the previous eighteen-month period commencing July 1, 2008, and ending December 31, 2009. A taxpayer allocated a credit for this eighteen-month period may claim the credit for its tax year which contains December 31, 2009.

D. Section 12-6-3631 of the 1976 Code, as added by Act 83 of 2007, is amended to read:

"Section 12-6-3631. (A) For taxable years beginning after 2007, and before 2012, a taxpayer is allowed a credit against the income tax imposed pursuant to this chapter for qualified expenditures for research and development.

(B) For purposes of this section:

(1) 'Qualified expenditures for research and development' means expenditures to develop feedstocks and processes for cellulosic ethanol and for algae-derived biodiesel, including:

(a) enzymes and catalysts involving cellulosic ethanol and algae-derived biodiesel;

(b) best and most cost efficient feedstocks for South Carolina; or

(2) 'Cellulosic ethanol' means fuel from ligno-cellulosic materials, including wood chips derived from noncommercial sources, corn stover, and switchgrass.

(C) The credit is equal to twenty-five percent of qualified expenditures for research and development. A taxpayer's total credit in all years, for all expenditures allowed pursuant to this section, must not exceed one hundred thousand dollars. Unused credits may be carried forward for five years after the tax year in which a qualified expenditure was made. The credit is nonrefundable.

(D) Expenditures qualifying for a tax credit allowed by this section must be certified by the State Energy Office. The State Energy Office may consult with the Department of Agriculture and the South Carolina Institute for Energy Studies on standards for certification.

(E)(1) To obtain the maximum amount of the credit available to a taxpayer, each taxpayer must submit a request for the credit to the State Energy Office by January thirty-first for qualifying research expenses incurred in the previous calendar year and the State Energy Office must notify the taxpayer that the submitted expenditures qualify for the credit and the amount of credit allocated to such taxpayer by March first of that year. A taxpayer may claim the maximum amount of the credit for its taxable year which contains the December thirty-first of the previous calendar year. The Department of Revenue may require any documentation that it deems necessary to administer the credit.

Time effective

SECTION 4. This act takes effect upon approval by the Governor.

Ratified the 15th day of May, 2008.

Vetoed by the Governor -- 5/21/08.

Veto overridden by House -- 5/27/08.

Veto overridden by Senate -- 5/29/08.

__________

This web page was last updated on Monday, October 10, 2011 at 1:35 P.M.