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February 14, 2007
S. Printed 2/14/07--S.
Read the first time January 9, 2007.
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING CHAPTER 46 TO TITLE 11 SO AS TO ESTABLISH THE "SOUTH CAROLINA HYDROGEN INFRASTRUCTURE DEVELOPMENT FUND", TO AUTHORIZE THE SOUTH CAROLINA RESEARCH AUTHORITY TO ADMINISTER SUBGRANTS FOR THE PURPOSE OF PROMOTING THE DEVELOPMENT OF HYDROGEN PRODUCTION, TO ALLOW THE FUND TO RECEIVE DONATIONS, GRANTS, AND OTHER FUNDING AS PROVIDED BY LAW, TO ALLOW A TAXPAYER WHO MAKES A CONTRIBUTION TO THE FUND TO RECEIVE A TAX CREDIT SUBJECT TO CERTAIN LIMITATIONS, TO REQUIRE THE GENERAL ASSEMBLY TO APPROPRIATE A SPECIFIC AMOUNT FROM THE GENERAL FUND OF THE STATE TO THE FUND, AND TO REQUIRE STATE AGENCIES TO CONSIDER PURCHASING EQUIPMENT AND MACHINERY OPERATED BY HYDROGEN OR FUEL CELLS OR BOTH OF THEM; BY ADDING SECTION 12-6-3630 SO AS TO ALLOW A CREDIT AGAINST THE INCOME TAX, LICENSE FEES, OR INSURANCE PREMIUM TAXES FOR QUALIFIED CONTRIBUTIONS MADE TO THE FUND; BY AMENDING SECTION 12-36-2120, AS AMENDED, RELATING TO SALES TAX EXEMPTIONS, SO AS TO ALLOW A SALES TAX EXEMPTION FOR EQUIPMENT OR MACHINERY OPERATED BY HYDROGEN OR FUEL CELLS OR USED TO DISTRIBUTE HYDROGEN AND FOR EQUIPMENT AND MACHINERY USED PREDOMINATELY FOR RESEARCH AND DEVELOPMENT INVOLVING HYDROGEN OR FUEL CELL TECHNOLOGIES, AND TO ALLOW A SALES TAX EXEMPTION FOR BUILDING MATERIALS, MACHINERY, OR EQUIPMENT USED TO CONSTRUCT A NEW OR RENOVATED BUILDING LOCATED IN A RESEARCH DISTRICT.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The General Assembly finds that:
(1) South Carolina must encourage a vibrant knowledge-based economy and establish a foundation for research and commercialization activities to create higher paying jobs and benefit all South Carolinians;
(2) continuing to nurture a hydrogen and fuel cell cluster in South Carolina's economy, which has already begun with efforts by the state's research universities, is a public purpose that will help to further the state's goal to encourage a knowledge-based economy;
(3) South Carolina considers hydrogen and fuel cell technology, which is an alternative means of electrical power, to be a "fuel of the future" due to its potential to create high-paying jobs for the citizens of the State, its safe uses for stationary, portable and automotive devices, and its positive environmental impacts;
(4) hydrogen is a clean fuel that is of benefit to citizens because of its renewable sources, nonpolluting characteristics, nonpetroleum basis and its potential to limit the country's reliance on foreign sources of oil;
(5) the global demand for hydrogen technology is projected to be more than $2.6 trillion in 2021 and the United States market is expected to exceed one trillion dollars and one million jobs before 2020, while the economic potential for South Carolina and surrounding communities is estimated to be 40,000 jobs and a ten billion dollar capital investment in the State by 2020; and
(6) in order to capitalize on this economic opportunity, it is appropriate that the State create an ideal environment for all users and developers of hydrogen and fuel cell technology, including companies, businesses, and consumers, to further the state's goal to create a thriving hydrogen and fuel cell cluster in South Carolina's economy.
SECTION 2. Title 11 of the 1976 Code is amended by adding:
Section 11-46-10. This chapter may be cited as the 'South Carolina Hydrogen Infrastructure Development Act'.
Section 11-46-20. (A) There is established in the office of the State Treasurer a separate and distinct fund known as the 'South Carolina Hydrogen Infrastructure Development Fund'. The revenues of the fund must be distributed in the form of grants to the South Carolina Hydrogen and Fuel Cell Alliance and used for the purpose of promoting the development and deployment of hydrogen production, storage, distribution, and dispensing infrastructure and related products and services that enable the growth of hydrogen and fuel cell technologies in the State, either by the alliance or a subgrantee. Unexpended revenues in this fund carry forward into succeeding fiscal years through June 30, 2012, and earnings in this fund must be credited to it.
(B) The General Assembly must not appropriate more than a total of fifteen million dollars in grants as provided for in Section 11-46-30(B). Neither grants nor subgrants may be made after June 30, 2012. Revenues remaining in the fund after that date, regardless of source, lapse to the general fund of the State.
(C) The South Carolina Research Authority shall implement and manage the application for subgrants. The authority shall administer the fund and subgrants on behalf of the alliance for any purpose that furthers the creation of a sustainable foundation upon which a hydrogen economy may develop across the State including, but not limited to, a demonstration project, pilot project, and the purchase of machinery and equipment. The authority, upon consultation with the alliance, the University of South Carolina's Fuel Cell Center of Excellence, Clemson University, South Carolina State University's Clyburn Transportation Center, the Savannah River National Laboratory, the Center for Hydrogen Research, the Medical University of South Carolina, and the Columbia Innovation Center, shall establish guidelines for the application for and approval of subgrants, including specific objectives that an applicant must meet to receive a subgrant. The executive committee of the authority has the ultimate authority to determine any matter relating to the fund and to the application of fund proceeds including, but not limited to, the approval of subgrants.
(D) Subgrants distributed from the fund are subject to the procurement procedures followed by the authority.
(E) Appropriations made to the fund pursuant to Section 11-46-30(B) may be distributed as subgrants only to the extent that there is a dollar-for-dollar match, in cash or in kind, from a source other than the State. However, the executive committee of the authority, based on the merits of a subgrant proposal and its projected economic benefit, may reduce or eliminate the matching requirement on a case-by-case basis.
Section 11-46-30. (A) The South Carolina Hydrogen Infrastructure Development Fund may receive donations, grants, and any other funding as provided by law. A taxpayer making a contribution to the fund is allowed a tax credit provided pursuant to Section 12-6-3630.
(B) The South Carolina Hydrogen Infrastructure Development Fund may receive appropriations from the general fund of the State up to the following amounts in the fiscal years indicated:
(1) seven million dollars for the fiscal year 2007-08;
(2) five million dollars for fiscal year 2008-09;
(3) three million dollars for fiscal year 2009-10.
Section 11-46-40. The South Carolina Research Authority shall submit an annual report to the Governor and the General Assembly containing at a minimum the following:
(1) the total amount of monies placed in the fund in a fiscal year and the total amount of monies granted to the alliance from the fund in a fiscal year;
(2) a list of the applicants that received subgrants and the applicant's stated objectives;
(3) an audit of the activities conducted by the applicants;
(4) the monies used by the alliance and the authority for administration and management and the percentage of each subgrant used for administration and management;
(5) the progress achieved by the authority, the fund, and the alliance in creating a sustainable foundation upon which a hydrogen economy may develop across the State; and
(6) the certified gross profits earned by grant or subgrant recipients.
Section 11-46-50. Each state agency head shall require the agency's procurement officer, or other state employee authorized to purchase equipment or machinery for the agency, to consider purchasing equipment or machinery operated by hydrogen or fuel cells, or both of them, if available and cost-effective.
Section 11-46-60. Two percent of the gross profits derived from the sale of hydrogen and fuel cell products or services developed by a grant or subgrant recipient, organized and operating as a for-profit business entity must be annually remitted to the fund through June 30, 2012, until the full amount of the original grant or subgrant has been repaid to the fund. Thereafter, if the full amount of the original grant or subgrant has not been repaid, gross profits must be annually remitted to the State Treasurer and transferred to the general fund of the State until repaid. The Department of Revenue shall promulgate regulations to determine and certify gross profits."
SECTION 3. Article 25, Chapter 6, Title 12 of the 1976 Code is amended by adding:
"Section 12-6-3630. (A) For taxable years beginning after 2007, and before 2012, a taxpayer is allowed a credit against the income tax imposed pursuant to Chapter 6 or 11 of this title, license fees imposed pursuant to Chapter 20 of this title, or insurance premium tax imposed pursuant to Chapter 7, Title 38, or a combination of them, for a qualified contribution made by a taxpayer to the South Carolina Hydrogen Infrastructure Development Fund established pursuant to Chapter 46, Title 11. A contribution is not a qualified contribution if it is subject to a condition or limitation regarding the use of the contribution.
(B) The credit is equal to twenty-five percent of a qualified contribution made by a taxpayer to the fund. The credit must be used against the taxpayer's liability on income taxes, premium insurance taxes, or license fees after the application of all other credits applicable to the taxpayer's tax liability. Unused credits may be carried forward for ten years after the tax year in which a qualified contribution was made. The credit is nonrefundable.
(C) A taxpayer who claims a credit for a qualified contribution pursuant to this section may not claim a deduction for the same qualified contribution.
(D) A taxpayer who claims a credit pursuant to this section must attach to his tax return a copy of a form provided by the authority identifying the taxpayer's qualified contribution. The Department of Revenue may require from the taxpayer additional information identifying the taxpayer's qualified contribution as it considers appropriate."
SECTION 4. A. Section 12-36-2120 of the 1976 Code, as last amended by Act 386 of 2006, is further amended by adding appropriately numbered items to read:
"( ) any device, equipment, or machinery operated by hydrogen or fuel cells, any device, equipment, or machinery used to generate, produce, or distribute hydrogen and designated specifically for hydrogen applications or for fuel cell applications, and any device, equipment, or machinery used predominantly for the manufacturing of, or research and development involving hydrogen or fuel cell technologies. For purposes of this item:
(1) 'fuel cells' means a device that directly or indirectly creates electricity using hydrogen (or hydrocarbon-rich fuel) and oxygen through an electro-chemical process; and
(2) 'research and development' means laboratory, scientific, or experimental testing and development of hydrogen or fuel cell technologies. Research and development does not include efficiency surveys, management studies, consumer surveys, economic surveys, advertising, or promotion, or research in connection with literary, historical, or similar projects.
( ) any building materials used to construct a new or renovated building or any machinery or equipment located in a research district. However, the amount of the sales tax that would be assessed without the exemption provided by this section must be invested by the taxpayer in hydrogen or fuel cell machinery or equipment located in the same research district within twenty-four months of the purchase of an exempt item.
'Research district' means land owned by the State, a county, or other public entity that is designated as a research district by the University of South Carolina, Clemson University, the Medical University of South Carolina, South Carolina State University, or the Savannah River National Laboratory."
B. This section takes effect October 1, 2007.
SECTION 5. Except as otherwise provided elsewhere in this act, this act takes effect upon approval by the Governor.
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