Bill S.2810

SENATE DOCKET, NO. 2985 FILED ON: 1/31/2024

SENATE . . . . . . . . . . . . . . No. 2810

By Ms. Moran, a petition (accompanied by bill, Senate, No. 2810) (subject to Joint Rule 12) of Susan L. Moran for legislation relative to fusion investment and research for sustainable technology. Revenue.

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act relative to fusion investment and research for sustainable technology to be known as the FIRST Act.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. The General Laws are hereby amended by inserting, after chapter 28A, the following chapter:-

Chapter 28B. MASSACHUSETTS FUSION ENERGY COUNCIL

Section 1. Definitions

As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Fusion energy”, energy generated when nuclei from light atoms, such as hydrogen, combine to form a single heavier one, such as helium.

“Fund”, the Fusion Energy Development Fund.

“Council” the Fusion Energy Council.

“Department”, the Department of Revenue.

Section 2. Massachusetts Fusion Energy Council; powers and duties

(a) There is hereby established a Massachusetts Fusion Energy Council. The Council is hereby placed in the executive office of economic development but shall not be subject to the supervision, or control of said office, or of any board, bureau, department, or other center of the commonwealth, except as specifically provided in this chapter.

(b) The duties of the fund shall include, but shall not be limited to:

(i) administering the fusion energy tax incentive program;

(ii) administering the fusion energy development fund;

(iii) administering the fusion energy scholarship fund in partnership with the Department of Higher Education;

(iv) applying for relevant federal and state funding opportunities.

(c) The Council shall be governed and its powers exercised by 10 members: 1 of whom shall be the secretary of economic development or a designee; 1 of whom shall be the secretary of energy and environmental affairs or a designee; 1 of whom shall be the commissioner of revenue or a designee; 1 of whom shall be the chief executive officer of the Massachusetts clean energy center or a designee; 1 of whom shall be the chair of the commonwealth utilities commission or a designee; 1 of whom shall be a representative of the fusion energy industry; 1 of whom shall be appointed by the senate president; 1 of whom shall be appointed by the speaker of the house of representatives; 2 of whom shall be appointed by the governor and shall be representatives of nonprofit organizations in the commonwealth focused on clean energy proliferation. Each appointed member shall serve a term of 3 years. The secretary of economic development and the secretary of energy and environmental affairs, or their designees, shall serve as co-presidents of the council.

(d) 8 members shall constitute a quorum and the affirmative vote of a majority of members present at a duly called meeting if a quorum is present shall be necessary for any action to be taken by the council. Any action required or permitted to be taken at a meeting of the council may be taken without a meeting if all of the members’ consent in writing to such action and such written consent is filed with the records of the minutes of the meetings of the council. Such consent shall be treated for all purposes as a vote at a meeting.

(e) The members of the board shall serve without compensation, but each member shall be entitled to reimbursement for his actual and necessary expenses incurred in the performance of his official duties.

Section 3. Certified fusion energy companies

(a) A certified fusion energy company shall:

(i) in its mission statement, include the goal of generating fusion energy for the purpose of providing energy to external consumers; or

(ii) produce materials critical to the production of fusion energy as more than 50% of its annual production.

(b) The council may, upon a majority vote, certify a company that meets the criteria specified in subsection (a) as a certified fusion energy company upon: (i) the timely receipt, as determined by the council, of a certification proposal supported by independently verifiable information, signed under the pains and penalties of perjury by a person expressly authorized to contract on behalf of the fusion energy company and which shall include, but not be limited to: (A) an estimate of the projected new state revenue the fusion energy company expects to generate during the period for which the company seeks certification, together with a plan, including precise goals and objectives, by which the fusion energy company proposes to achieve the projected new state revenue, including for each tax year, an estimate of new commercial revenue that the commonwealth would not otherwise have received, an estimate of the number of permanent full-time employees to be hired or retained, an estimate of the year in which the company expects to hire or retain the employees, an estimate of the projected average salaries of said employees, an estimate of the projected taxable income pursuant to chapter 62 or 63 generated by said employees and an estimate of the methods by which the company shall obtain new employees and pursue a diverse workforce; (B) documentation of an agreement, if any, between the fusion energy company and banking institutions with which the fusion energy company shall have agreed to establish accounts and by which the banking institutions shall have agreed to commit a specified percentage of the funds deposited in the accounts for loans made thereby to companies under the small business capital access program established pursuant to section 57 of chapter 23A; and (C) if appropriate, documentation that the fusion energy company has received approval for a certified project, pursuant to section 3F of chapter 23A; and (ii) findings made by the council, based on the certification proposal, documents submitted therewith and any additional investigation by the council, and incorporated in its approval, that: (A) the fusion energy company shall meet all statutory requirements and any other criteria that the council may prescribe including, but not limited to criteria in the following areas: whether the fusion energy company has sufficient business contacts with the commonwealth as evidenced by its business activity within the commonwealth including, but not limited to, the number of full-time employees employed in the commonwealth; the fusion energy company's potential to further technological advancements in renewable energy; the fusion energy company's potential for leveraging additional funding or attracting additional resources to the commonwealth; the fusion energy company's potential to promote related manufacturing in the commonwealth; and evidence of potential royalty income and contractual means to recapture such income for the purposes of this chapter, as the council considers appropriate; and (B) a certified fusion energy company shall meet the new state revenue and employment growth projections, as specified in the certification proposal, over the period for which it receives benefits.

(c) A certified fusion energy company may, upon a majority vote of the council, be eligible for the benefits from the fusion energy tax incentive program established by subsection (c).

(d) There shall be established a fusion energy tax incentive program. The council may, in consultation with the department, annually authorize incentives, including incentives carried forward or refunded pursuant to subsections (dd) and (ee) of section 6 of chapter 62 and sections 38NN, 38OO and 38PP of chapter 63 in a cumulative amount, including the current year cost of incentives allowed in previous years, that shall not exceed $10,000,000 annually. The council may, in consultation with the department, limit any incentive to a specific dollar amount or time duration or in any other manner deemed appropriate by the department; provided, however, that the department shall only allocate any such incentives among commonwealth certified fusion energy companies pursuant to subsection (b) and shall award such tax incentives pursuant to subsection (c).

(e) The council shall provide an estimate to the secretary of administration and finance of the tax cost of extending benefits to a proposed project before certification, as approved by the commissioner of revenue, based on reasonable projections of project activities and costs. Tax incentives shall not be available to a certified fusion energy company unless expressly granted by the secretary of administration and finance in writing.

(f)(1) Certification granted pursuant to subsection (b) shall be valid for 5 years starting with the tax year in which certification is granted. Each certified fusion energy company shall file an annual report with the council detailing whether it has met the specific targets established in the proposal.

(2) The certification of a fusion energy company may be revoked by the council after an independent investigation and determination that representations made by the certified fusion energy company in its certification proposal are materially at variance with the conduct of the fusion energy company after receiving certification; provided, however, that the council shall review the certified fusion energy company at least annually; provided, further, that a project with an actual return on investment that is less than 70 per cent of the return on investment projected in the certification proposal shall be deemed to contain a material variance for a revocation determination. If the council determines not to revoke certification upon a finding that the actual return on investment for the project is less than 70 per cent, the council shall provide its reasons for the decision in writing to the secretary of administration and finance, the commissioner of revenue and the clerks of the house of representatives and the senate, who shall forward the same to the house and senate committees on ways and means, the joint committee on revenue and the joint committee on economic development and emerging technologies. The council shall post these reasons on the internet for public access.

(3) Under this subsection, revocation shall take effect on the first day of the tax year in which the council determines that a material variance commenced. The commissioner of revenue shall, as of the effective date of the revocation, disallow any credits, exemptions or other tax benefits allowed by the original certification of tax benefits under this section. The department shall issue regulations to recapture the value of any credits, exemptions or other tax benefits allowed by the certification under this section. If the original certification allowed sales and use tax exemptions pursuant to subsection (xx) of section 6 of chapter 64H, the purchaser shall accrue use tax as of the date of revocation on a portion of the sales price on which exemption was claimed that is proportionate to the remaining useful life of the property.

(4) Nothing in this subsection shall limit any legal remedies available to the commonwealth against any certified fusion energy company.

(g) The center shall revoke the certification of a fusion energy company when independent investigations conducted in 2 consecutive years determine that representations made by the fusion energy company in its project proposal are deemed materially at variance, pursuant to paragraph (2) of subsection (e) or subsection (f).

(h) The council, in consultation with the executive office of administration and finance and the executive office of housing and economic development, shall promulgate rules, regulations or guidelines necessary to carry out the provisions of this section.

Section 4. Fusion Energy Development Fund

There shall be a Fusion Energy Development fund which shall be administered by the council. The objective of the fund shall be to attract qualified fusion energy companies to the commonwealth. Notwithstanding any general or special laws to the contrary, the following amounts shall be credited to the fund: any appropriations, grants, gifts or other monies authorized by the general court or other parties and specifically designated to be credited to the fund, and any income derived from the investment of amounts credited to the fund. All amounts credited to the fund shall be used without further appropriation to accomplish the objective of the fund. No expenditure from the fund shall cause the fund to be in deficiency at the close of a fiscal year. Monies deposited in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent year.

Section 5. Fusion Energy Scholarship Fund

There shall be a Fusion Energy Development fund which shall be administered by the council and the department of higher education. The objective of the fund shall be provide funding for the fusion energy scholarship program. Notwithstanding any general or special laws to the contrary, the following amounts shall be credited to the fund: any appropriations, grants, gifts or other monies authorized by the general court or other parties and specifically designated to be credited to the fund, and any income derived from the investment of amounts credited to the fund. All amounts credited to the fund shall be used without further appropriation to accomplish the objective of the fund. No expenditure from the fund shall cause the fund to be in deficiency at the close of a fiscal year. Monies deposited in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent year.

SECTION 2. Section 6 of chapter 62 of the General Laws, as so appearing, is hereby amended by inserting after subsection (cc), the following subsections:-

(dd)(1) As used in this subsection and subsection (ee), the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Fusion energy”, energy generated when nuclei from light atoms, such as hydrogen, combine to form a single heavier one, such as helium.

“Fund”, the Fusion Energy Development Fund.

"Council” the Fusion Energy Council.

“Department”, the Department of Revenue.

(2) A taxpayer may, to the extent authorized pursuant to the fusion energy tax incentive program established by section 2 of chapter 28B, take a credit against the taxes imposed by this chapter in an amount equal to 10 per cent of the cost of qualifying property acquired, constructed, reconstructed or erected during the taxable year and used exclusively in the commonwealth.

Qualifying property shall be tangible personal property and other tangible property including buildings and structural components of buildings acquired by purchase, as defined by section 179(d) of the Internal Revenue Code, as amended and in effect for the taxable year, but not including property that is taxable under chapter 60A; provided, however, that such property shall be depreciable under section 167 of the Internal Revenue Code and have a useful life of 4 years or more. With respect to property which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this paragraph which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back as additional taxes due in the year of disposition; provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit, as provided in this paragraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For the purposes of this paragraph, useful life of property shall be the same as that used by the corporation for depreciation purposes when computing federal income tax liability.

A taxpayer taking a credit allowed under this subsection may not take the credit allowed by subsection (g) except to such extent, not to exceed 2 per cent of the cost of any qualifying property, as may be provided in a certification pursuant to said section 5 of chapter 23I.

Nothing in this section shall limit the authority of the commissioner to make adjustments to a taxpayer's liability upon audit or limit any other legal remedies available to the commissioner or the commonwealth against said taxpayer.

(3) Any taxpayer entitled to a credit under this section for any taxable year may carry over and apply to its tax for any 1 or more of the next succeeding 10 taxable years, the portion, as reduced from year to year, of those credits which exceed the tax for the taxable year.

(4) The commissioner shall promulgate regulations necessary for the administration of this subsection; provided, further, that said regulations may provide the adjustment of intercompany prices and elimination of intercompany transactions to ensure that all amounts upon which the credit is based reasonably reflect fair market value; and provided, further, that said regulations shall include provisions to prevent the generation of multiple credits with respect to the same property.

(5) If a credit allowed under this subsection, or such credit as may be allowed under subsection (g) as limited in this subsection, exceeds the tax otherwise due under chapter 62, 90 per cent of the balance of such credit may, at the option of the taxpayer, be refundable to the taxpayer for the taxable year in which qualified property giving rise to that credit is placed in service. If such credit balance is refunded to the taxpayer, then the credit carryover provisions of paragraph (3), and paragraph (2) of subsection (g), shall not apply.

(ee)(1) A taxpayer may, to the extent authorized pursuant to the fusion energy tax incentive program established by section 2 of chapter 28B, be allowed a refundable jobs credit against the tax liability imposed under this chapter in an amount determined by the Massachusetts Fusion Energy Council in consultation with the department.

(2) A taxpayer taking a credit under this subsection shall commit to the creation of a minimum of 50 net new permanent full-time positions in the commonwealth.

(3) A credit allowed under this subsection shall reduce the liability of the taxpayer under this chapter for the taxable year. If a credit claimed under this subsection by a taxpayer exceeds the taxpayer's liability as otherwise determined under this chapter for the taxable year, 90 per cent of such excess credit shall be refundable to the taxpayer. Excess credit amounts shall not be carried forward to other taxable years.

SECTION 3. Chapter 63 of the General Laws, as so appearing, is hereby amended by inserting after section 38MM, the following sections:-

Section 38NN. Credit for cost of qualifying property; fusion energy

(a) As used in this section and in section 38OO and 38PP the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Fusion energy”, energy generated when nuclei from light atoms, such as hydrogen, combine to form a single heavier one, such as helium.

“Fund”, the Fusion Energy Development Fund.

“Council” the Fusion Energy Council.

“Department”, the Department of Revenue.

(b) A taxpayer may, to the extent authorized pursuant to the fusion energy tax incentive program established by section 2 of chapter 28B, take a credit against the taxes imposed by this chapter in an amount equal to 10 per cent of the cost of qualifying property acquired, constructed, reconstructed or erected during the taxable year and used exclusively in the commonwealth.

With respect to property which is disposed of or ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this paragraph which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken is disposed of or ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back as additional taxes due in the year of disposition; provided, however, if such property is disposed of or ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit, as provided in this paragraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For the purposes of this paragraph, useful life of property shall be the same as that used by the corporation for depreciation purposes when computing federal income tax liability.

The credit allowed under this section may be taken by an eligible corporation; provided, however, that neither credit allowed by section 31A nor section 31H is taken by such corporation; and provided, further, that the credit allowed by section 38N shall not be taken except to such extent, not to exceed 2 per cent of the cost of any qualifying property.

(d) If a taxpayer that is subject to a minimum excise under this chapter, the amount of the credit allowed by this section shall not reduce the excise to an amount less than such minimum excise.

(e) A taxpayer entitled to a credit under this section for any taxable year may carry over and apply to its excise for any 1 or more of the next succeeding 10 taxable years, the portion, as reduced from year to year, of those credits which were not allowed by subsection (c) or which exceed the excise for the taxable year.

(f) For corporations filing a combined return of income under section 32B, a credit generated by an individual member corporation under this section shall first be applied against the separately determined excise attributable to that member, subject to the limitations of subsection (d). A member corporation with an excess credit may apply its excess credit against the excise of another group member, to the extent that such other member corporation may use additional credits under the limitation of paragraph (d). Unused, unexpired credits generated by member corporations shall be carried over from year to year by the individual corporation that generated the credit.

(g) The commissioner shall promulgate regulations necessary to implement this section. Said regulations may provide for the adjustment of intercompany prices and elimination of intercompany transactions to ensure that all amounts upon which the credit is based reasonably reflect fair market value and shall include provisions to prevent the generation of multiple credits with respect to the same property.

(h) If a credit allowed to a taxpayer under this section, or such credit as may be allowed under section 38N of this chapter as limited in this subsection, exceeds the excise otherwise due under this chapter, 90 per cent of the balance of such credit may, at the option of the taxpayer, be refundable to the taxpayer for the taxable year in which qualified property giving rise to that credit is placed in service. If such credit balance is refunded to the taxpayer, the credit carryover provisions of subsection (e) and said section 38N shall not apply.

Section 38OO. Credit for qualified research expenses; fusion energy

(a) A taxpayer may, to the extent authorized pursuant to the fusion energy tax incentive program established by section 2 of chapter 28B, be allowed a credit against its excise due under this chapter equal to the sum of 10 per cent of the excess, if any, of the qualified research expenses for the taxable year, over the base amount, and 15 per cent of the basic research payments determined pursuant to section 41(e)(1)(A) of the Internal Revenue Code. The terms ''qualified research expenses'', ''base amount'', ''qualified organization base period amount'', ''basic research'' and any other terms affecting the calculation of the credit shall, unless the context otherwise requires or unless otherwise stated in this section, have the same meanings as under said section 41 of said Code.

In determining the amount of the credit allowable under this section, the commissioner of revenue may aggregate the activities of all corporations that are members of a controlled group of corporations, as defined by 41(f)(1)(A) of said Code, and may aggregate the activities of all entities, whether or not incorporated, that are under common control, as defined in section 41(f)(1)(B) of said Code.

(b) For purposes of section 30, the deduction from gross income that may be taken with respect to any expenditures qualifying for a credit under said section 41 of said Code shall be based upon its cost less the credit allowable under this section; provided, however, that section 280C(c) of said Code shall not apply.

(c) The credit allowed hereunder for any taxable year shall not reduce the excise to less than the amount due under subsection (b) of section 32, subsection (b) of section 39, section 67 or under any other general or special law.

(d) The credit allowed under this section shall be limited to 100 per cent of a corporation's first $25,000 of excise, as determined before the allowance of any credits, plus 75 per cent of the corporation's excise, as so determined in excess of $25,000. The commissioner of revenue shall promulgate regulations similar to those authorized under section 38(c)(2)(B) of the Internal Revenue Code for purposes of apportioning the $25,000 amount among members of a controlled group. Nothing in this section shall alter section 32C, as it affects other credits under this chapter.

(e) If a corporation files a combined return of income under section 32B, a credit generated by an individual member corporation under this section shall first be applied against the excise attributable to that company under sections 32 or 39, subject to the limitations of subsections (d) and (e). A member corporation with an excess research and development credit may apply its excess credit against the excise of another group member if such other member corporation may use additional credits under the limitations of said subsections (d) and (e). Unused, unexpired credits generated by a member corporation shall be carried over from year to year by the individual corporation that generated the credit and shall not be refundable. Nothing in this section shall alter subsection (h) of section 31A.

(g) A corporation entitled to a credit under this section for any taxable year may carry over and apply to its excise for any of the next succeeding 15 taxable years that portion, as reduced from year to year, of its credit which exceeds its excise for the taxable year. A corporation may carry over and apply to its excise for any subsequent taxable year that portion, as reduced from year to year, of those credits which were not allowed by subsection (f).

(h) The commissioner of revenue shall promulgate regulations necessary to carry out this section.

Section 38PP. (a) A taxpayer may, to the extent authorized pursuant to the fusion energy tax incentive program established by section 2 of chapter 28B, be allowed a refundable jobs credit against the tax liability imposed under this chapter in an amount determined by the Massachusetts Fusion Energy Council in consultation with the department.

(b) A taxpayer taking a credit under this section shall commit to the creation of a minimum of 50 net new permanent full-time positions in the commonwealth.

(c) A credit allowed under this section shall reduce the liability of the taxpayer under this chapter for the taxable year. If a credit claimed under this section by a taxpayer exceeds the taxpayer's liability as otherwise determined under this chapter for the taxable year, 90 per cent of such excess credit shall be refundable to the taxpayer. Excess credit amounts shall not be carried forward to other taxable years.

SECTION 4. Chapter 15A of the General Laws, as appearing in the 2022 Official Edition, is hereby amended by inserting, after section 16, the following new section:-

Section 17. Fusion Energy Scholarship Program

There shall be a Fusion Energy Scholarship Program to provide scholarships for graduate students and postdoctoral researchers studying or conducting research in the commonwealth in the fields of plasma physics and fusion energy science to cover the entire cost of tuition and fees for one year other than the first each to qualified recipients enrolled in or employed by an institution of higher education in the commonwealth. The scholarships will be available to residents of the Commonwealth in need of financial assistance whose family income is less than the median family income in Massachusetts.

The Department of Higher Education, in partnership with the Fusion Energy Council, shall establish guidelines governing said program, which shall include but not be limited to eligibility requirements, selection criteria (such as acceptable grades and an academic plan for timely degree completion), and other guidelines designed to help meet the department’s goals, such as increasing overall student success and graduation rates, and lowering achievement gaps for high-risk students; provided, further, that no student shall be eligible to receive a scholarship from this program more than one time.

Funds for this program shall be drawn from the fusion energy scholarship fund and any amounts appropriated for the program. If funds for this program are insufficient to cover costs of qualified applicants, the department shall hold a lottery for available scholarships. The funds for the program are meant to supplement and not supplant existing scholarship funds; funds for this program shall not be derived from existing financial aid programs the Commonwealth administers.

The Department of Higher Education, along with the fusion energy council, shall provide the Joint Committee of Higher Education and the Joint Committee on Economic Development and Emerging Technologies a report analyzing the usage, achievements and costs of this program, together with recommendations for its future, no later than 120 days following the program’s first year of operation.

SECTION 5. The Massachusetts Clean Energy Technology Center and the Massachusetts Fusion Energy Council shall collaborate to identify a public institution of higher education in which to establish a research center focused on plasma science and fusion energy. The Center and the Council shall collaborate with the selected institution to identify funding opportunities.

Name:	District/Address:
Susan L. Moran	Plymouth and Barnstable