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7 LONG TITLE
8 General Description:
9 This bill modifies provisions related to energy infrastructure.
10 Highlighted Provisions:
11 This bill:
12 ▸ modifies definitions and qualifications applicable to the high cost infrastructure
13 development tax credit (tax credit);
14 ▸ provides for the issuance of a tax credit for certain emissions reduction projects,
15 mineral processing projects, water purification projects, and water resource
16 forecasting projects;
17 ▸ modifies the membership of the Utah Energy Infrastructure Board; and
18 ▸ makes technical corrections.
19 Money Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 This bill provides retrospective operation.
23 Utah Code Sections Affected:
24 AMENDS:
25 79-6-602, as last amended by Laws of Utah 2023, Chapter 473
26 79-6-603, as last amended by Laws of Utah 2023, Chapter 473
27 79-6-902, as renumbered and amended by Laws of Utah 2022, Chapter 44
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29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 79-6-602 is amended to read:
31 79-6-602. Definitions.
32 As used in this part:
33 (1) "Applicant" means a person that conducts business in the state and that applies for a
34 tax credit under this part.
35 (2) (a) "Energy delivery project" means a project that is designed to:
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37 outside the state; [
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39 to deliver energy to a user of energy inside or outside the state[
40 (iii) increase the production and delivery of geothermal energy through horizontal
41 drilling to create injection and production wells.
42 (b) "Energy delivery project" includes:
43 (i) a hydroelectric energy storage system;
44 (ii) a utility-scale battery storage system; or
45 (iii) a nuclear power generation system.
46 (3) "Emissions reduction project" means a project that is designed to reduce the
47 emissions of an existing electrical generation facility, refinery, smelter, kiln, mineral processing
48 facility, manufacturing facility, oil or gas production facility, or other industrial facility, by
49 utilizing selective catalytic reduction technology, carbon capture utilization and sequestration
50 technology, or any other emissions reduction technology or equipment.
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52 refinery in order to make the refinery capable of producing fuel that complies with the United
53 States Environmental Protection Agency's Tier 3 gasoline sulfur standard described in 40
54 C.F.R. Sec. 79.54.
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56 (a) [
57 project, mineral processing project, or underground mine infrastructure project, a project:
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59 agriculture activity in the state, not including a retail business;
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61 industrial, mining, manufacturing, or agriculture entity[
62 county of the first or second class;
63 (C) that involves new investment of at least $25,000,000 made by an existing
64 industrial, mining, manufacturing, or agriculture entity located within a county of the third,
65 fourth, fifth, or sixth class, or a municipality with a population of 10,000 or less located within
66 a county of the second class; or
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68 of fuel used for transportation, electricity generation, or industrial use;
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71 project is greater than:
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74 (b) for an emissions reduction project, water purification project, or water resource
75 forecasting project, a project:
76 (i) that involves:
77 (A) new investment of at least $50,000,000 made by an existing industrial, mining,
78 manufacturing, or agriculture entity located within a county of the first or second class; or
79 (B) new investment of at least $25,000,000 made by an existing industrial, mining,
80 manufacturing, or agriculture entity located within a county of the third, fourth, fifth, or sixth
81 class, or a municipality with a population of 10,000 or less located within a county of the
82 second class; and
83 (ii) that requires or is directly facilitated by infrastructure construction.
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85 (a) an energy delivery project;
86 (b) a railroad as defined in Section 54-2-1;
87 (c) a fuel standard compliance project;
88 (d) a road improvement project;
89 (e) a water self-supply project;
90 (f) a water removal system project;
91 (g) a solution-mined subsurface salt cavern;
92 (h) a project that is designed to:
93 (i) increase the capacity for water delivery to a water user in the state; or
94 (ii) increase the capability of an existing water delivery system or related facility to
95 deliver water to a water user in the state; [
96 (i) an underground mine infrastructure project[
97 (j) an emissions reduction project;
98 (k) a mineral processing project;
99 (l) a water purification project; or
100 (m) a water resource forecasting project.
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102 agreement with the office that qualifies the applicant to receive a tax credit as provided in this
103 part.
104 (b) "Infrastructure cost-burdened entity" includes a pass-through entity taxpayer, as
105 defined in Section 59-10-1402, of a person described in Subsection [
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107 creating a high cost infrastructure project, in a taxable year, that is directly attributable to a high
108 cost infrastructure project, under:
109 (a) Title 59, Chapter 5, Part 1, Oil and Gas Severance Tax;
110 (b) Title 59, Chapter 5, Part 2, Mining Severance Tax;
111 (c) Title 59, Chapter 7, Corporate Franchise and Income Taxes;
112 (d) Title 59, Chapter 10, Individual Income Tax Act; and
113 (e) Title 59, Chapter 12, Sales and Use Tax Act.
114 (9) "Mineral processing project" means a project that is designed to:
115 (a) process, smelt, refine, convert, separate, or otherwise beneficiate metalliferous
116 minerals as defined in Section 59-5-201 or a metalliferous compound as defined in Section
117 59-5-202;
118 (b) calcine limestone or manufacture cement;
119 (c) process, refine, or otherwise beneficiate chloride compounds, salts, potash, gypsum,
120 sulfur or sulfuric acid, ammonium nitrate, phosphate, or uintaite; or
121 (d) convert or gasify coal to recover chemical compounds, gases, or minerals.
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123 79-6-401.
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126 infrastructure cost-burdened entity that:
127 (a) lists the name of the infrastructure cost-burdened entity;
128 (b) lists the infrastructure cost-burdened entity's taxpayer identification number;
129 (c) lists, for a taxable year, the amount of the tax credit authorized for the infrastructure
130 cost-burdened entity under this part; and
131 (d) includes other information as determined by the office.
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133 (i) is designed to create permanent underground infrastructure to facilitate underground
134 mining operations; and
135 (ii) services multiple levels or areas of an underground mine or multiple underground
136 mines.
137 (b) "Underground mine infrastructure project" includes:
138 (i) an underground access or a haulage road, entry, ramp, or decline;
139 (ii) a vertical or incline mine shaft;
140 (iii) a ventilation shaft or an air course; or
141 (iv) a conveyor or a truck haulageway.
142 (14) "Water purification project" means a project that, in order to meet applicable
143 quality standards established under Title 19, Chapter 5, Water Quality Act, is designed to
144 reduce the existing total dissolved solids or other naturally existing impurities contained in
145 water sources:
146 (a) located at a distance of not less than 2,000 feet below the surface;
147 (b) associated with existing mineral operations; or
148 (c) associated with deep water mining operations designed primarily for the
149 revitalization of the Great Salt Lake.
150 (15) "Water resource forecasting project" means a project that includes a network of
151 permanent, physical data collection systems designed to improve forecasting for the availability
152 of seasonal water flows within the state, including flash flooding and other event-driven water
153 flows resulting from localized severe weather events.
154 Section 2. Section 79-6-603 is amended to read:
155 79-6-603. Tax credit -- Amount -- Eligibility -- Reporting.
156 (1) (a) Before the office enters into an agreement described in Subsection (3) with an
157 applicant regarding a project, the office, in consultation with the Utah Energy Infrastructure
158 Board created in Section 79-6-902, and other state agencies as necessary, shall, in accordance
159 with the procedures described in Section 79-6-604, certify:
160 (i) that the project meets the definition of a high cost infrastructure project under this
161 part;
162 (ii) that the high cost infrastructure project will generate infrastructure-related revenue;
163 (iii) the economic life of the high cost infrastructure project; and
164 (iv) that the applicant has received a certificate of existence from the Division of
165 Corporations and Commercial Code.
166 (b) For purposes of determining whether a project meets the definition of a high cost
167 infrastructure project, the office shall consider a project to be a new project if the project began
168 no earlier than the taxable year before the year in which the applicant [
169 application or a preliminary application for a tax credit.
170 (2) (a) Before the office enters into an agreement described in Subsection (3) with an
171 applicant regarding a project, the Utah Energy Infrastructure Board shall evaluate the project's
172 net benefit to the state, including:
173 (i) whether the project is likely to increase the property tax revenue for the municipality
174 or county where the project will be located;
175 (ii) whether the project would contribute to the economy of the state and the
176 municipality, tribe, or county where the project will be located;
177 (iii) whether the project would provide new infrastructure for an area where the type of
178 infrastructure the project would create is underdeveloped;
179 (iv) whether the project is supported by a business case for providing the revenue
180 necessary to finance the construction and operation of the project;
181 (v) whether the project would have a positive environmental impact on the state;
182 (vi) whether the project promotes responsible energy development;
183 (vii) whether the project would upgrade or improve an existing entity in order to ensure
184 the entity's continued operation and economic viability;
185 (viii) whether the project is less likely to be completed without a tax credit issued to
186 the applicant under this part; and
187 (ix) other relevant factors that the board specifies in the board's evaluation.
188 (b) Before the office enters into an agreement described in Subsection (3) with an
189 applicant regarding an energy delivery project, in addition to the criteria described in
190 Subsection (2)(a) the Utah Energy Infrastructure Board shall determine that the project:
191 (i) is strategically situated to maximize connections to an energy source project located
192 in the state that is:
193 (A) existing;
194 (B) under construction;
195 (C) planned; or
196 (D) foreseeable;
197 (ii) is supported by a project plan related to:
198 (A) engineering;
199 (B) environmental issues;
200 (C) energy production;
201 (D) load or other capacity; and
202 (E) any other issue related to the building and operation of energy delivery
203 infrastructure; and
204 (iii) complies with the regulations of the following regarding the building of energy
205 delivery infrastructure:
206 (A) the Federal Energy Regulatory Commission;
207 (B) the North American Electric Reliability Council; and
208 (C) the Public Service Commission of Utah.
209 (c) The Utah Energy Infrastructure Board may recommend that the office deny an
210 applicant a tax credit if, as determined by the Utah Energy Infrastructure Board:
211 (i) the project does not sufficiently benefit the state based on the criteria described in
212 Subsection (2)(a); or
213 (ii) for an energy delivery project, the project does not satisfy the conditions described
214 in Subsection (2)(b).
215 (3) Subject to the procedures described in Section 79-6-604, if an applicant meets the
216 requirements of Subsection (1) to receive a tax credit, and the applicant's project receives a
217 favorable recommendation from the Utah Energy Infrastructure Board under Subsection (2),
218 the office shall enter into an agreement with the applicant to authorize the tax credit in
219 accordance with this part.
220 (4) The office shall grant a tax credit to an infrastructure cost-burdened entity, for a
221 high cost infrastructure project, under an agreement described in Subsection (3):
222 (a) for the lesser of:
223 (i) the economic life of the high cost infrastructure project;
224 (ii) 20 years; or
225 (iii) a time period, the first taxable year of which is the taxable year when the
226 construction of the high cost infrastructure project begins and the last taxable year of which is
227 the taxable year in which the infrastructure cost-burdened entity has recovered, through the tax
228 credit, an amount equal to:
229 (A) 50% of the cost of the infrastructure construction associated with the high cost
230 infrastructure project; or
231 (B) if the high cost infrastructure project is a fuel standard compliance project, 30% of
232 the cost of the infrastructure construction associated with the high cost infrastructure project;
233 (b) except as provided in Subsections (4)(a) and (d), in a total amount equal to 30% of
234 the high cost infrastructure project's total infrastructure-related revenue over the time period
235 described in Subsection (4)(a);
236 (c) for a taxable year, in an amount that does not exceed the high cost infrastructure
237 project's infrastructure-related revenue during that taxable year; and
238 (d) if the high cost infrastructure project is a fuel standard compliance project, in a total
239 amount that is:
240 (i) determined by the Utah Energy Infrastructure Board, based on:
241 (A) the applicant's likelihood of completing the high cost infrastructure project without
242 a tax credit; and
243 (B) how soon the applicant plans to complete the high cost infrastructure project; and
244 (ii) equal to or less than 30% of the high cost infrastructure project's total
245 infrastructure-related revenue over the time period described in Subsection (4)(a).
246 (5) An infrastructure cost-burdened entity shall, for each taxable year:
247 (a) file a report with the office showing the high cost infrastructure project's
248 infrastructure-related revenue during the taxable year;
249 (b) subject to Subsection (7), file a report with the office that is prepared by an
250 independent certified public accountant that verifies the infrastructure-related revenue
251 described in Subsection (5)(a); and
252 (c) provide the office with information required by the office to certify the economic
253 life of the high cost infrastructure project.
254 (6) An infrastructure cost-burdened entity shall retain records supporting a claim for a
255 tax credit for the same period of time during which a person is required to keep books and
256 records under Section 59-1-1406.
257 (7) An infrastructure cost-burdened entity for which a report is prepared under
258 Subsection (5)(b) shall pay the costs of preparing the report.
259 (8) The office shall certify, for each taxable year, the infrastructure-related revenue
260 generated by an infrastructure cost-burdened entity.
261 Section 3. Section 79-6-902 is amended to read:
262 79-6-902. Utah Energy Infrastructure Board.
263 (1) There is created within the office the Utah Energy Infrastructure Board that consists
264 of nine members as follows:
265 (a) subject to Subsection (2), members appointed by the governor:
266 (i) the energy advisor or the director of the Office of Energy Development, who shall
267 serve as chair of the board;
268 (ii) one member from the Governor's Office of Economic Opportunity;
269 (iii) one member from a public utility or electric interlocal entity that operates electric
270 transmission facilities within the state;
271 (iv) one member who resides within a county of the third, fourth, fifth, or sixth class,
272 as described in Section 17-50-501, with relevant experience in an energy or extraction industry;
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276 third, fourth, fifth, or sixth class, as described in Section 17-50-501; and
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279 experience; [
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282 (b) one member appointed jointly by the Utah Farm Bureau Federation, the Utah
283 Manufacturer's Association, the Utah Mining Association, and the Utah Petroleum
284 Association; and
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286 in Section 53C-1-201.
287 (2) The governor shall consult with the president of the Senate and the speaker of the
288 House of Representatives in appointing the members described in Subsections (1)(a)(iii)
289 through (vi).
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291 (b) Notwithstanding Subsection [
292 appointment or reappointment, adjust the length of terms to ensure that the terms of board
293 members are staggered so that approximately half of the board is appointed every two years.
294 (c) The governor may remove a member of the board for cause.
295 (d) The governor shall fill a vacancy in the board in the same manner under this section
296 as the appointment of the member whose vacancy is being filled.
297 (e) An individual appointed to fill a vacancy shall serve the remaining unexpired term
298 of the member whose vacancy the individual is filling.
299 (f) A board member shall serve until a successor is appointed and qualified.
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301 business.
302 (b) A majority vote of the quorum present is required for an action to be taken by the
303 board.
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306 but may receive per diem and travel expenses in accordance with:
307 (a) Section 63A-3-106;
308 (b) Section 63A-3-107; and
309 (c) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
310 63A-3-107.
311 Section 4. Effective date.
312 This bill takes effect on May 1, 2024.
313 Section 5. Retrospective operation.
314 (1) The following sections have retrospective operation for a taxable year beginning on
315 or after January 1, 2024:
316 (a) Section 79-6-602; and
317 (b) Section 79-6-603.