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Section 23662 Of Chapter 3.5. Tax Credits From California Revenue And Taxation Code >> Division 2. >> Part 11. >> Chapter 3.5.
23662
. (a) For each taxable year beginning on or after July 1,
2005, and before January 1, 2018, there shall be allowed as an
environmental tax credit against the "tax," as defined by Section
23036, an amount equal to five cents ($0.05) for each gallon of ultra
low sulfur diesel fuel produced during the taxable year by a small
refiner at any facility located in this state.
(b) The aggregate credit determined under subdivision (a) for any taxable year with respect to any facility shall not exceed 25 percent of the qualified capital costs incurred by the small refiner with respect to that facility, reduced by the aggregate credits determined under this section for all prior taxable years with respect to that facility.
(c) For purposes of this section:
(1) "Small refiner" means any refiner who owns or operates a refinery in California that:
(A) Has and at all times had since January 1, 1978, a crude oil capacity of not more than 55,000 barrels per stream day.
(B) Has not been at any time since September 1, 1988, owned or controlled by any refiner that at the same time owned or controlled refineries in California with a total combined crude oil capacity of more than 55,000 barrels per stream day.
(C) Has not been at any time since September 1, 1988, owned or controlled by any refiner that at the same time owned or controlled refineries in the United States with a total combined crude oil capacity of more than 137,500 barrels per stream day.
(2) (A) "Qualified capital costs" means, with respect to any facility, those costs paid or incurred during the applicable period for items certified by the California Air Resources Board (CARB) under subparagraph (B) for compliance with the applicable EPA or CARB regulations with respect to that facility, including, but not limited to, expenditures for the construction of new process operation units or the dismantling and reconstruction of existing process units to be used in the production of ultra low sulfur diesel fuel, associated adjacent or offsite equipment (including tankage, catalyst, and power supply), engineering, construction period interest, site work, and permitting.
(B) (i) Before claiming a credit under this section, a small refiner shall request from the California Air Resources Board a certification that both of the following are true:
(I) That the items for which qualified capital costs were paid or incurred are for compliance with the applicable EPA or CARB regulations described in subparagraph (A).
(II) That the items for which qualified capital costs were paid or incurred have been placed in service by the small refiner.
(ii) The request described in clause (i) shall be in a form and contain sufficient information to allow the California Air Resources Board to determine that the items that are requested to be certified were placed in service for compliance with applicable EPA and CARB regulations, which information shall include the date on which the items were placed in service.
(C) The California Air Resources Board shall make a determination regarding a request described in subparagraph (B) on or before 60 days after the request is submitted. If the board does not make a determination within this time period, the certification will be deemed to be granted.
(D) If certification from the Secretary of the Treasury of the United States, after consultation with the Administrator of the Environmental Protection Agency, that the taxpayer's qualified capital costs with respect to a facility are, or will result, in compliance with applicable EPA regulations, has been received, then the taxpayer shall be allowed the credit without obtaining certification from the CARB, unless CARB demonstrates that the fuel produced does not meet CARB regulations.
(3) "Facility" means a small refiner's petroleum refinery located in the State of California that has incurred qualified capital costs to produce ultra low sulfur diesel fuel.
(4) "Applicable EPA regulations" means the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency.
(5) "Applicable CARB regulations" means the Vehicular Diesel Fuel Sulfur Control Requirements of the California Air Resources Board (CARB) under Section 2281 of Article 2 of Chapter 5 of Division 3 of Title 13 of the California Code of Regulations.
(6) "Applicable period" means, with respect to any facility, the period beginning on January 1, 2004, and ending on May 31, 2007.
(7) "Ultra low sulfur diesel fuel" means both of the following:
(A) Diesel fuel with a sulfur content of 15 parts per million or less.
(B) (i) Subject to clause (ii), either of the following:
(I) Vehicular diesel fuel produced and sold by a small refiner on or after June 1, 2006.
(II) Vehicular diesel fuel produced and sold by the small refiner before June 1, 2006, that the small refiner specifically identifies and supports through internal test reports as meeting applicable CARB regulations.
(ii) For purposes of this section, it is rebuttably presumed that the fuel described in clause (i) is ultra low sulfur diesel fuel. The California Air Resources Board may rebut this presumption by demonstrating that the fuel does not comply with applicable CARB regulations.
(8) "Barrels per stream day" means the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal crude and product slate conditions with no allowance for downtime.
(d) For purposes of this section, if a credit is determined under this section for any expenditure with respect to any property, the increase in basis of that property that would (but for this subdivision) result from that expenditure shall be reduced by the amount of the credit so determined.
(e) No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under this section.
(f) In the case where the credit allowed by this section exceeds the "tax," the excess may be carried over to reduce the "tax" in the following year, and the 10 succeeding years if necessary, until the credit is exhausted.
(g) If a small refiner that claims a credit under this section sells, transfers, or otherwise disposes of, either directly or indirectly, a facility within five years of the taxable year during which it first claimed the credit, there shall be added to the "tax" of the small refiner during the taxable year of sale, transfer, or disposition an amount equal to the total credit claimed multiplied by a fraction, the numerator of which is the remaining term of five years and the denominator of which is 5.
(h) This section shall remain in effect only until January 1, 2018, and as of that date is repealed.
(b) The aggregate credit determined under subdivision (a) for any taxable year with respect to any facility shall not exceed 25 percent of the qualified capital costs incurred by the small refiner with respect to that facility, reduced by the aggregate credits determined under this section for all prior taxable years with respect to that facility.
(c) For purposes of this section:
(1) "Small refiner" means any refiner who owns or operates a refinery in California that:
(A) Has and at all times had since January 1, 1978, a crude oil capacity of not more than 55,000 barrels per stream day.
(B) Has not been at any time since September 1, 1988, owned or controlled by any refiner that at the same time owned or controlled refineries in California with a total combined crude oil capacity of more than 55,000 barrels per stream day.
(C) Has not been at any time since September 1, 1988, owned or controlled by any refiner that at the same time owned or controlled refineries in the United States with a total combined crude oil capacity of more than 137,500 barrels per stream day.
(2) (A) "Qualified capital costs" means, with respect to any facility, those costs paid or incurred during the applicable period for items certified by the California Air Resources Board (CARB) under subparagraph (B) for compliance with the applicable EPA or CARB regulations with respect to that facility, including, but not limited to, expenditures for the construction of new process operation units or the dismantling and reconstruction of existing process units to be used in the production of ultra low sulfur diesel fuel, associated adjacent or offsite equipment (including tankage, catalyst, and power supply), engineering, construction period interest, site work, and permitting.
(B) (i) Before claiming a credit under this section, a small refiner shall request from the California Air Resources Board a certification that both of the following are true:
(I) That the items for which qualified capital costs were paid or incurred are for compliance with the applicable EPA or CARB regulations described in subparagraph (A).
(II) That the items for which qualified capital costs were paid or incurred have been placed in service by the small refiner.
(ii) The request described in clause (i) shall be in a form and contain sufficient information to allow the California Air Resources Board to determine that the items that are requested to be certified were placed in service for compliance with applicable EPA and CARB regulations, which information shall include the date on which the items were placed in service.
(C) The California Air Resources Board shall make a determination regarding a request described in subparagraph (B) on or before 60 days after the request is submitted. If the board does not make a determination within this time period, the certification will be deemed to be granted.
(D) If certification from the Secretary of the Treasury of the United States, after consultation with the Administrator of the Environmental Protection Agency, that the taxpayer's qualified capital costs with respect to a facility are, or will result, in compliance with applicable EPA regulations, has been received, then the taxpayer shall be allowed the credit without obtaining certification from the CARB, unless CARB demonstrates that the fuel produced does not meet CARB regulations.
(3) "Facility" means a small refiner's petroleum refinery located in the State of California that has incurred qualified capital costs to produce ultra low sulfur diesel fuel.
(4) "Applicable EPA regulations" means the Highway Diesel Fuel Sulfur Control Requirements of the Environmental Protection Agency.
(5) "Applicable CARB regulations" means the Vehicular Diesel Fuel Sulfur Control Requirements of the California Air Resources Board (CARB) under Section 2281 of Article 2 of Chapter 5 of Division 3 of Title 13 of the California Code of Regulations.
(6) "Applicable period" means, with respect to any facility, the period beginning on January 1, 2004, and ending on May 31, 2007.
(7) "Ultra low sulfur diesel fuel" means both of the following:
(A) Diesel fuel with a sulfur content of 15 parts per million or less.
(B) (i) Subject to clause (ii), either of the following:
(I) Vehicular diesel fuel produced and sold by a small refiner on or after June 1, 2006.
(II) Vehicular diesel fuel produced and sold by the small refiner before June 1, 2006, that the small refiner specifically identifies and supports through internal test reports as meeting applicable CARB regulations.
(ii) For purposes of this section, it is rebuttably presumed that the fuel described in clause (i) is ultra low sulfur diesel fuel. The California Air Resources Board may rebut this presumption by demonstrating that the fuel does not comply with applicable CARB regulations.
(8) "Barrels per stream day" means the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal crude and product slate conditions with no allowance for downtime.
(d) For purposes of this section, if a credit is determined under this section for any expenditure with respect to any property, the increase in basis of that property that would (but for this subdivision) result from that expenditure shall be reduced by the amount of the credit so determined.
(e) No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under this section.
(f) In the case where the credit allowed by this section exceeds the "tax," the excess may be carried over to reduce the "tax" in the following year, and the 10 succeeding years if necessary, until the credit is exhausted.
(g) If a small refiner that claims a credit under this section sells, transfers, or otherwise disposes of, either directly or indirectly, a facility within five years of the taxable year during which it first claimed the credit, there shall be added to the "tax" of the small refiner during the taxable year of sale, transfer, or disposition an amount equal to the total credit claimed multiplied by a fraction, the numerator of which is the remaining term of five years and the denominator of which is 5.
(h) This section shall remain in effect only until January 1, 2018, and as of that date is repealed.
