Senate Bill S7438

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7438
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             October 14, 2021
                                ___________
 
 Introduced  by  Sen. KRUEGER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the economic development law and the public service law,
   in relation to limiting the use of fossil fuels  in  the  research  or
   production  of  energy  for purposes of the excelsior jobs program; to
   amend the economic development law, in relation to  prohibiting  busi-
   nesses  engaged  in the production, transmission, distribution, trans-
   portation or storage of fossil fuels from participation in the  START-
   UP  NY  program;  to  amend  the  tax  law, in relation to eliminating
   property that directly produces, transmits, distributes, transports or
   stores fossil fuels from qualifying tangible property for purposes  of
   the investment tax credit and the Brownfield redevelopment tax credit;
   to  amend the tax law, in relation to tax on sales of  motor  fuel and
   petroleum  products and to make conforming changes; to amend  the  tax
   law, in relation to the definition of qualified rehabilitation expend-
   itures  for  purposes of the tax credit for rehabilitation of historic
   properties; to amend the public authorities law, in  relation  to  the
   definition  of  a  qualified emerging technology company; to amend the
   tax law, in relation to the definition of manufacturer for purposes of
   the calculation  of  special  tax  benefits  for  qualified  New  York
   manufacturers;  to repeal paragraph 3 of subdivision (f) and paragraph
   4 of subdivision (g) of section 301-a of the tax law relating to manu-
   facturing gallonage for  purposes  of   the   imposition   of  certain
   taxes;   to  repeal subdivisions (i), (j), and (l) of section 301-c of
   the tax law relating to  reimbursement;  to  repeal  section 301-d  of
   the  tax  law relating to a utility credit or reimbursement; to repeal
   subdivision (f) of section  301-e  of  the  tax  law  relating  to  an
   aviation  fuel business which services four or more cities; to  repeal
   subparagraph (xi) of paragraph 3 of subdivision (c) of section 1105 of
   the tax law relating to services  rendered  with  respect  to  certain
   property; and to repeal paragraph 9 of subdivision (a) of section 1115
   of  the   tax  law relating  to fuel sold to an airline for use in its
   airplanes
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD13295-03-1
              

 S. 7438                             2
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "Fossil Fuel Subsidy Elimination Act".
   § 2. Subdivisions 17, 18, 21, and 22 of section 352  of  the  economic
 development  law, as amended by section 1 of part K of chapter 59 of the
 laws of 2017, subdivision 18 as separately amended by section 1 of  part
 ZZ of chapter 59 of the laws of 2017, are amended to read as follows:
   17.  "Qualified  investment"  means an investment in tangible property
 (including a building or a structural component of a building) owned  by
 a business enterprise which:
   (a)  is depreciable pursuant to section one hundred sixty-seven of the
 internal revenue code;
   (b) has a useful life of four years or more;
   (c) is acquired by purchase as defined in section one  hundred  seven-
 ty-nine (d) of the internal revenue code;
   (d)  DOES  NOT  DIRECTLY  PRODUCE, TRANSMIT, DISTRIBUTE, TRANSPORT, OR
 STORE FOSSIL FUELS OR DIRECTLY UTILIZE FOSSIL FUELS FOR  THE  PRODUCTION
 OF  ON-SITE  ENERGY,  INCLUDING THERMAL ENERGY, FOR ANY PURPOSE. FOR THE
 PURPOSES OF THIS ARTICLE, FOSSIL FUEL SHALL HAVE THE SAME DEFINITION  AS
 IN SECTION 1-103 OF THE ENERGY LAW;
   (E) has a situs in this state; and
   [(e)]  (F)  is placed in service in the state on or after the date the
 certificate of eligibility is issued to the business enterprise.
   18. "Regionally significant project" means (a) a manufacturer creating
 at least ten net new jobs in the state and  making  significant  capital
 investment  in  the  state; (b) a business creating at least ten net new
 jobs in agriculture in the state and making significant capital  invest-
 ment  in  the state, (c) a financial services firm, distribution center,
 or back office operation creating at least one hundred net new  jobs  in
 the  state and making significant capital investment in the state, (d) a
 scientific research and development firm creating at least ten  net  new
 jobs  in  the  state,  and  making significant capital investment in the
 state, (e) a life sciences company creating at least twenty net new jobs
 in the state and making significant capital investment in the  state  or
 (f)  an entertainment company creating or obtaining at least two hundred
 net new jobs in the state and making significant capital  investment  in
 the  state.  Other businesses creating one hundred fifty or more net new
 jobs in the state and making significant capital investment in the state
 may be considered eligible as a regionally significant  project  by  the
 commissioner  as  well.  A  REGIONALLY  SIGNIFICANT PROJECT SHALL NOT BE
 ENGAGED IN THE PRODUCTION, TRANSMISSION,  DISTRIBUTION,  TRANSPORTATION,
 STORAGE,  SALE,  PURCHASE, OR DELIVERY OF FOSSIL FUELS. The commissioner
 shall promulgate regulations pursuant to section three hundred fifty-six
 of this article to determine what additional criteria  a  business  must
 meet  to be eligible as a regionally significant project, including, but
 not limited to, whether a business exports a substantial portion of  its
 products  or  services outside of the state or outside of a metropolitan
 statistical area or county within the state.
   21. "Research and development expenditures" mean the expenses  of  the
 business  enterprise  that  are  qualified  research  expenses under the
 federal research and development credit under section forty-one  of  the
 internal  revenue  code  and are attributable to activities conducted in
 the state. If the federal research and development credit  has  expired,
 then the research and development expenditures shall be calculated as if
 S. 7438                             3
 
 the  federal research and development credit structure and definition in
 effect in federal tax year two  thousand  nine  were  still  in  effect.
 RESEARCH  AND DEVELOPMENT EXPENDITURES DOES NOT INCLUDE ANY EXPENSES FOR
 TANGIBLE  PERSONAL  PROPERTY THAT DIRECTLY PRODUCES, TRANSMITS, DISTRIB-
 UTES, TRANSPORTS, OR STORES FOSSIL FUELS  OR  DIRECTLY  UTILIZES  FOSSIL
 FUELS  FOR  THE  PRODUCTION OF ON-SITE ENERGY, INCLUDING THERMAL ENERGY,
 FOR ANY PURPOSE.
   22. "Scientific research and development"  means  conducting  research
 and  experimental  development  in  the  physical, engineering, and life
 sciences, including but not limited to agriculture,  electronics,  envi-
 ronmental,  biology,  botany, biotechnology, computers, chemistry, food,
 fisheries, forests, geology, health, mathematics,  medicine,  oceanogra-
 phy,  pharmacy, physics, veterinary, and other allied subjects.  For the
 purposes of this article, scientific research and development  does  not
 include  medical  or  veterinary  laboratory  testing facilities, OR ANY
 RESEARCH THAT CONTRIBUTES TO THE PRODUCTION, TRANSMISSION, DISTRIBUTION,
 TRANSPORTATION, STORAGE, SALE, PURCHASE, OR DELIVERY OF FOSSIL FUELS.
   § 3. Subdivision 7 of section 355 of the economic development law,  as
 added  by  section  4  of  part  G of chapter 61 of the laws of 2011, is
 amended to read as follows:
   7. For availability of special excelsior jobs program rates  governing
 the  provision of [gas or] electric service, see subdivision twelve-d of
 section sixty-six of the public service law. Such special excelsior jobs
 program rates may remain available to participants as  defined  in  this
 article  for a period of up to ten years commencing in the first taxable
 year that the participant receives a certificate of tax credit,  or  the
 first  taxable  year  listed  on  its  preliminary schedule of benefits,
 whichever is later. Provided however, if a participant is  removed  from
 the  excelsior jobs program pursuant to this article, the excelsior jobs
 program rates may be denied.
   § 4. Subdivision 12-d of section 66 of  the  public  service  law,  as
 added  by  section  8  of  part  G of chapter 61 of the laws of 2011, is
 amended to read as follows:
   12-d. Notwithstanding any other provision of law, upon application  of
 [a  gas or] AN electric corporation, the commission shall authorize such
 corporation to charge a special excelsior jobs program rate equal to the
 incremental cost of providing ELECTRIC service to  participants  in  the
 excelsior  jobs  program as defined in article seventeen of the economic
 development law.
   § 5. Subdivision 2 of section 433 of the economic development law,  as
 added  by  section  1  of  part  A of chapter 68 of the laws of 2013, is
 amended to read as follows:
   2. The following types of businesses are prohibited from participating
 in the START-UP NY program.
   (a) retail and wholesale businesses;
   (b) restaurants;
   (c) real estate brokers;
   (d) law firms;
   (e) medical or dental practices;
   (f) real estate management companies;
   (g) hospitality;
   (h) finance and financial services;
   (i) businesses providing personal services;
   (j) businesses providing business administrative or support  services,
 unless  such  business  has received permission from the commissioner to
 apply to participate in the START-UP NY program upon demonstration  that
 S. 7438                             4
 
 the  business would create no fewer than one hundred net new jobs in the
 tax-free NY area;
   (k) accounting firms;
   (l) businesses providing utilities; [and]
   (m)  businesses engaged in the generation or distribution of electric-
 ity, the distribution of natural gas, or the production of steam associ-
 ated with the generation of electricity; AND
   (N) BUSINESSES ENGAGED IN THE PRODUCTION, TRANSMISSION,  DISTRIBUTION,
 TRANSPORTATION,  OR  STORAGE OF FOSSIL FUELS AS DEFINED IN SECTION 1-103
 OF THE ENERGY LAW.
   § 6. Subparagraph (i) of paragraph (b) of  subdivision  1  of  section
 210-B of the tax law, as amended by section 2 of part P of chapter 59 of
 the laws of 2017, is amended to read as follows:
   (i)  A  credit shall be allowed under this subdivision with respect to
 tangible personal property and other tangible property, including build-
 ings and structural components  of  buildings,  which  are:  depreciable
 pursuant  to  section  one  hundred  sixty-seven of the internal revenue
 code, have a useful life of four years or more, are acquired by purchase
 as defined in section one  hundred  seventy-nine  (d)  of  the  internal
 revenue code, have a situs in this state and are (A) principally used by
 the  taxpayer  in  the production of goods by manufacturing, processing,
 assembling, refining, mining, extracting, farming,  agriculture,  horti-
 culture, floriculture, viticulture or commercial fishing, (B) industrial
 waste  treatment facilities or air pollution control facilities, used in
 the taxpayer's trade or business, (C) research and development property,
 or (D) principally used in the ordinary course of the  taxpayer's  trade
 or  business  as  a  broker or dealer in connection with the purchase or
 sale (which shall include but not be limited to the  issuance,  entering
 into,  assumption,  offset,  assignment,  termination,  or  transfer) of
 stocks, bonds or other securities as defined  in  section  four  hundred
 seventy-five  (c)(2)  of the Internal Revenue Code, or of commodities as
 defined in section four hundred seventy-five (e) of the Internal Revenue
 Code, (E) principally used in the  ordinary  course  of  the  taxpayer's
 trade  or business of providing investment advisory services for a regu-
 lated investment company as defined in section eight  hundred  fifty-one
 of the Internal Revenue Code, or lending, loan arrangement or loan orig-
 ination  services  to  customers in connection with the purchase or sale
 (which shall include but not be limited to the issuance, entering  into,
 assumption,  offset, assignment, termination, or transfer) of securities
 as defined in section four hundred seventy-five (c)(2) of  the  Internal
 Revenue Code, (F) principally used in the ordinary course of the taxpay-
 er's  business  as  an  exchange  registered  as  a  national securities
 exchange within the meaning of sections 3(a)(1) and 6(a) of the  Securi-
 ties Exchange Act of 1934 or a board of trade as defined in subparagraph
 one of paragraph (a) of section fourteen hundred ten of the not-for-pro-
 fit  corporation law or as an entity that is wholly owned by one or more
 such national securities exchanges or boards of trade and that  provides
 automation  or  technical services thereto, or (G) principally used as a
 qualified film production facility including qualified  film  production
 facilities  having a situs in an empire zone designated as such pursuant
 to article eighteen-B of the general municipal law, where  the  taxpayer
 is  providing  three  or  more services to any qualified film production
 company using the facility, including such services as a studio lighting
 grid, lighting and grip equipment, multi-line phone  service,  broadband
 information  technology  access,  industrial  scale electrical capacity,
 food services, security  services,  and  heating,  ventilation  and  air
 S. 7438                             5
 
 conditioning.  For purposes of clauses (D), (E) and (F) of this subpara-
 graph, property purchased by a  taxpayer  affiliated  with  a  regulated
 broker,  dealer,  registered  investment  advisor,  national  securities
 exchange  or  board of trade, is allowed a credit under this subdivision
 if the property is used by  its  affiliated  regulated  broker,  dealer,
 registered  investment advisor, national securities exchange or board of
 trade in accordance with this subdivision. For purposes  of  determining
 if  the property is principally used in qualifying uses, the uses by the
 taxpayer described in clauses (D) and (E) of this  subparagraph  may  be
 aggregated.  In addition, the uses by the taxpayer, its affiliated regu-
 lated broker, dealer and registered investment advisor under  either  or
 both  of  those clauses may be aggregated. Provided, however, a taxpayer
 shall not be allowed the credit provided by clauses (D), (E) and (F)  of
 this  subparagraph unless the property is first placed in service before
 October first, two thousand fifteen and (i) eighty percent  or  more  of
 the  employees  performing  the  administrative  and  support  functions
 resulting from or related to the qualifying uses of such  equipment  are
 located  in  this  state  or  (ii)  the average number of employees that
 perform the administrative  and  support  functions  resulting  from  or
 related to the qualifying uses of such equipment and are located in this
 state  during  the taxable year for which the credit is claimed is equal
 to or greater than ninety-five percent of the average number of  employ-
 ees  that  perform  these functions and are located in this state during
 the thirty-six months immediately preceding the year for which the cred-
 it is claimed, or (iii) the number of employees located  in  this  state
 during  the  taxable year for which the credit is claimed is equal to or
 greater than ninety percent of the number of employees located  in  this
 state on December thirty-first, nineteen hundred ninety-eight or, if the
 taxpayer  was  not  a calendar year taxpayer in nineteen hundred ninety-
 eight, the last day of its first  taxable  year  ending  after  December
 thirty-first,  nineteen  hundred  ninety-eight.  If the taxpayer becomes
 subject to tax in this state after the taxable year beginning  in  nine-
 teen  hundred ninety-eight, then the taxpayer is not required to satisfy
 the employment test provided in the preceding sentence of this  subpara-
 graph  for  its first taxable year. For purposes of clause (iii) of this
 subparagraph the employment test will be based on the number of  employ-
 ees  located in this state on the last day of the first taxable year the
 taxpayer is subject to tax in this state. If the uses  of  the  property
 must be aggregated to determine whether the property is principally used
 in  qualifying  uses, then either each affiliate using the property must
 satisfy this employment test or this employment test must  be  satisfied
 through the aggregation of the employees of the taxpayer, its affiliated
 regulated  broker,  dealer,  and registered investment adviser using the
 property. For purposes of clause  (A)  of  this  subparagraph,  tangible
 personal property and other tangible property shall not include property
 principally  used  by  the taxpayer in the production or distribution of
 electricity, natural gas after extraction from wells,  steam,  or  water
 delivered  through  pipes  and  mains. FOR PURPOSES OF THIS SUBDIVISION,
 TANGIBLE PERSONAL PROPERTY AND OTHER TANGIBLE PROPERTY DOES NOT  INCLUDE
 PROPERTY  THAT DIRECTLY PRODUCES, TRANSMITS, DISTRIBUTES, TRANSPORTS, OR
 STORES FOSSIL FUELS AS DEFINED IN SECTION 1-103 OF THE  ENERGY  LAW,  OR
 DIRECTLY  UTILIZES  FOSSIL  FUELS  FOR THE PRODUCTION OF ON-SITE ENERGY,
 INCLUDING THERMAL ENERGY, FOR ANY PURPOSE.
   § 7. Subdivision (m) of section 301-a of the  tax  law,  as  added  by
 section  20  of  part K of chapter 61 of the laws of 2011, is amended to
 read as follows:
 S. 7438                             6
 
   (m) Special rate adjustment for certain vessels.  Notwithstanding  any
 provision of this section to the contrary, the use of non-highway diesel
 motor  fuel  in  the  engine  of a vessel to propel such vessel shall be
 subject to tax at the motor fuel and  highway  diesel  motor  fuel  rate
 provided  for in this section, and shall be subject to the provisions of
 section three hundred one-j of this article,  including  the  adjustment
 set  forth  in paragraph [four] THREE of subdivision (a) of such section
 three hundred one-j. A credit or refund shall be available to the extent
 tax paid on gallonage used to propel any such vessel exceeds the  amount
 of  tax  due  based on the tax rate set forth herein. Provided, however,
 that the commissioner shall require such documentary  proof  to  qualify
 for  any  credit or reimbursement provided hereunder as the commissioner
 deems appropriate.
   § 8. Paragraph 3 of subdivision (f) and paragraph 4 of subdivision (g)
 of section 301-a of the tax law are REPEALED.
   § 9. Subdivisions (a) and (d) of section 301-b of the tax law,  subdi-
 vision  (a)  as added by chapter 190 of the laws of 1990, paragraph 5 of
 subdivision (a) as amended by section 3 of part E of chapter 59  of  the
 laws  of  2012,  paragraphs  6,  7  and 8 of subdivision (a) as added by
 section 4 of part W-1 of chapter 109 of the laws of 2006,  and  subdivi-
 sion (d) as amended by section 21 of part K of chapter 61 of the laws of
 2011, are amended to read as follows:
   (a) Products. (1) [Kerosene sold or used by a petroleum business which
 is registered under article twelve-A of this chapter as a distributor of
 diesel  motor  fuel  so long as (i) such product has not been blended or
 mixed with any other product constituting diesel  motor  fuel  or  motor
 fuel  or  a residual petroleum product and (ii) such product is not used
 by the petroleum business as fuel to operate a motor vehicle or sold  by
 such petroleum business to a consumer for use as fuel to operate a motor
 vehicle.
   (2) Kero-jet fuel (i) sold by a petroleum business which is registered
 under  article twelve-A of this chapter as a distributor of diesel motor
 fuel to a consumer for use exclusively as jet  aircraft  fuel  or  to  a
 petroleum business registered under such article twelve-A as a "distrib-
 utor  of  kero-jet  fuel only" where such fixed base operator is engaged
 solely in making or offering to make retail sales not in bulk  of  kero-
 jet  fuel  directly into the fuel tank of an airplane for the purpose of
 operating such airplane, (ii) used by a petroleum  business,  registered
 under  article twelve-A of this chapter as a distributor of diesel motor
 fuel, exclusively as jet aircraft fuel, or (iii) sold at retail  not  in
 bulk  by  a petroleum business registered under article twelve-A of this
 chapter as a "distributor of kero-jet fuel  only"  where  such  fuel  is
 delivered  directly  into the fuel tank of a jet airplane for use in the
 operation of such airplane.
   (3)] Aviation gasoline, meeting the specifications set forth in Ameri-
 can Standard Testing Material Specification D910 or Military  Specifica-
 tion  MIL-G-5572,  which  is imported or caused to be imported into this
 state by a petroleum business which is registered under article twelve-A
 of this chapter as a distributor of motor  fuel  or  produced,  refined,
 manufactured or compounded in this state by such a petroleum business.
   [(4)  Residual  petroleum  product sold by a petroleum business regis-
 tered under this article as a residual  petroleum  product  business  if
 such  product  is  sold by such petroleum business to a consumer for use
 exclusively as bunker fuel for vessels or if such  product  is  used  by
 such petroleum business exclusively as bunker fuel in its own vessels.
   (5) Liquefied petroleum gases, such as butane, ethane or propane.
 S. 7438                             7

   (6)]  (2)  E85  imported  or  caused to be imported into this state or
 produced, refined, manufactured or compounded in this state by a  petro-
 leum  business  registered  under article twelve-A of this chapter, as a
 distributor of motor fuel, and then sold by such petroleum business  and
 delivered  to  a  filling  station  and placed in a storage tank of such
 filling station for such E85 to be dispensed directly into a motor vehi-
 cle for use in the operation of such vehicle.
   [(7)] (i) Partial B20 exemption. B20 imported or caused to be imported
 into this state or produced, refined, manufactured or compounded in this
 state by a petroleum business registered under article twelve-A of  this
 chapter,  as  a  distributor of diesel motor fuel, and then sold by such
 petroleum business.
   (ii) Calculation of partial  exemption.  The  amount  of  the  partial
 exemption  under  this  paragraph shall be determined by multiplying the
 quantity of B20 times twenty percent of the applicable  taxes  otherwise
 imposed by this article on such fuel.
   [(8)] (3) CNG or hydrogen.
   (d)  Sales  to consumers for heating purposes. [(1)] Total residential
 heating exemption. Non-highway diesel motor fuel  sold  by  a  petroleum
 business registered under article twelve-A of this chapter as a distrib-
 utor of diesel motor fuel or residual petroleum product sold by a petro-
 leum  business  registered  under  this  article as a residual petroleum
 product business to the consumer  exclusively  for  residential  heating
 purposes  only if such non-highway diesel motor fuel is delivered into a
 storage tank which is not equipped with a hose  or  other  apparatus  by
 which  such  fuel can be dispensed into the fuel tank of a motor vehicle
 and such storage tank is attached to the heating unit burning such fuel.
   [(2) Partial non-residential heating exemption. (A) Non-highway diesel
 motor fuel  sold  by  a  petroleum  business  registered  under  article
 twelve-A  of this chapter as a distributor of diesel motor fuel or resi-
 dual petroleum product sold by a  petroleum  business  registered  under
 this  article  as  a residual petroleum product business to the consumer
 exclusively for heating, other than residential heating purposes only if
 such non-highway diesel motor fuel is  delivered  into  a  storage  tank
 which  is not equipped with a hose or other apparatus by which such fuel
 can be dispensed into the fuel tank of a motor vehicle and such  storage
 tank  is  attached to the heating unit burning such fuel (B) Calculation
 of partial exemption. The partial exemption under this  paragraph  shall
 be  determined  by  multiplying the quantity of non-highway diesel motor
 fuel and residual petroleum product eligible for the exemption times the
 sum of the then current rate of the supplemental tax imposed by  section
 three  hundred  one-j  of this article and forty-six percent of the then
 current rate of the tax imposed by section three hundred one-a  of  this
 article,  with  respect to the specific non-highway diesel motor fuel or
 residual petroleum product rate, as the case may be.]
   § 10. The opening paragraph and paragraph  1  of  subdivision  (c)  of
 section  301-b  of  the  tax law, as added by chapter 190 of the laws of
 1990, are amended to read as follows:
   Sales to [New York state and] the federal government. (1)  Motor  fuel
 imported  or caused to be imported into this state or produced, refined,
 manufactured or compounded in this state by a petroleum business  regis-
 tered  under article twelve-A of this chapter, as a distributor of motor
 fuel, and then sold  by  such  petroleum  business  to  an  organization
 described in paragraph [one or] two of subdivision (a) of section eleven
 hundred  sixteen  of  this chapter where such motor fuel is used by such
 organization for its own use or consumption.
 S. 7438                             8
 
   § 11. The opening paragraph and subdivisions (a) and  (b)  of  section
 301-c  of  the tax law, the opening paragraph as amended by section 5 of
 part W-1 of chapter 109 of the laws of 2006, subdivision (a) as  amended
 by  section 23 of part K of chapter 61 of the laws of 2011, and subdivi-
 sion  (b)  as amended by chapter 330 of the laws of 1991, are amended to
 read as follows:
   A subsequent purchaser shall be eligible for reimbursement of tax with
 respect to the following gallonage, subsequently sold by such  purchaser
 in  accordance  with  subdivision  (a), (b), (e), (h), [(j), (k), (n) or
 (o)] (I), (K) OR (L) of this  section  or  used  by  such  purchaser  in
 accordance  with subdivision (c), (d), (f), (g)[, (i), (l)] or [(m)] (J)
 of this section, which gallonage has been included in the measure of the
 tax imposed by this article on a petroleum business:
   (a) [Non-highway Diesel motor fuel used  for  heating  purposes.  (1)]
 Total  residential  heating reimbursement. Non-highway Diesel motor fuel
 purchased in this state and sold by such purchaser to a consumer for use
 exclusively for residential heating purposes but  only  where  (i)  such
 non-highway  diesel motor fuel is delivered into a storage tank which is
 not equipped with a hose or other apparatus by  which  such  non-highway
 Diesel motor fuel can be dispensed into the fuel tank of a motor vehicle
 and  such storage tank is attached to the heating unit burning such non-
 highway Diesel motor fuel, (ii) the tax imposed pursuant to this article
 has been paid with respect to such non-highway diesel motor fuel and the
 entire amount of such tax has been absorbed by such purchaser, and (iii)
 such purchaser possesses documentary proof satisfactory to  the  commis-
 sioner  evidencing  the absorption by it of the entire amount of the tax
 imposed pursuant to this article. Provided, however,  that  the  commis-
 sioner is authorized, in the event that the commissioner determines that
 it  would  not threaten the integrity of the administration and enforce-
 ment of the tax imposed by this article, to provide a reimbursement with
 respect to a retail sale to a consumer for residential heating  purposes
 of  less than ten gallons of non-highway diesel motor fuel provided such
 fuel is not dispensed into the tank of a motor vehicle.
   [(2) Partial non-residential heating  reimbursement.  (A)  Non-highway
 Diesel  motor fuel purchased in this state and sold by such purchaser to
 a consumer for use exclusively for heating, other than  for  residential
 heating  purposes, but only where (i) such non-highway diesel motor fuel
 is delivered into a storage tank which is not equipped with  a  hose  or
 other  apparatus  by  which  such  non-highway  Diesel motor fuel can be
 dispensed into the fuel tank of a motor vehicle and such storage tank is
 attached to the heating unit burning such non-highway Diesel motor fuel,
 (ii) the tax imposed pursuant to this article has been paid with respect
 to such non-highway diesel motor fuel and the entire amount of such  tax
 has  been absorbed by such purchaser, and (iii) such purchaser possesses
 documentary  proof  satisfactory  to  the  commissioner  evidencing  the
 absorption  by  it  of  the entire amount of the tax imposed pursuant to
 this article.
   (B) Calculation of partial reimbursement.  Notwithstanding  any  other
 provision  of  this  article, the amount of the reimbursement under this
 paragraph shall be determined by multiplying the quantity of non-highway
 diesel motor fuel eligible for the reimbursement times the  sum  of  the
 then  current  rate  of  the  supplemental  tax imposed by section three
 hundred one-j of this article and forty-six percent of the then  current
 rate  of the tax imposed by section three hundred one-a of this article,
 with respect to the non-highway diesel motor fuel rate, as the case  may
 be.]
 S. 7438                             9
 
   (b)  Sales  to [New York state and] the federal government. Motor fuel
 and diesel motor fuel purchased in this state and sold by such purchaser
 in this state to an organization described in paragraph [one or] two  of
 subdivision  (a) of section eleven hundred sixteen of this chapter where
 (i)  such motor fuel or diesel motor fuel is for such organization's own
 use or consumption, (ii) the tax imposed pursuant to  this  article  has
 been  paid  with respect to such motor fuel or diesel motor fuel and the
 entire amount of such tax has been absorbed by such purchaser and, (iii)
 such purchaser possesses documentary proof satisfactory to  the  commis-
 sioner  of  taxation  and finance evidencing the absorption by it of the
 entire amount of the tax imposed pursuant  to  this  article.  Provided,
 however,  that  the commissioner [of taxation and finance] shall require
 such documentary proof to qualify for any reimbursement of tax  provided
 by  this  section  as  the commissioner deems appropriate, including the
 expansion of any certification required pursuant to section two  hundred
 eighty-five-a  or two hundred eighty-five-b of this chapter to cover the
 taxes imposed pursuant to this article.
   § 11-a. The opening paragraph of section 301-c  of  the  tax  law,  as
 amended  by  chapter  468  of  the  laws  of 2000, is amended to read as
 follows:
   A subsequent purchaser shall be eligible for reimbursement of tax with
 respect to the following gallonage, subsequently sold by such  purchaser
 in accordance with subdivision (a), (b), (e), (h)[, (j)] or [(k)] (I) of
 this  section  or  used by such purchaser in accordance with subdivision
 (c), (d), (f), (g)[, (i), (l)] or  [(m)]  (J)  of  this  section,  which
 gallonage  has  been  included in the measure of the tax imposed by this
 article on a petroleum business:
   § 12. Subdivisions (i), (j) and (l) of section 301-c of  the  tax  law
 are REPEALED.
   §  13. Subdivisions (k), (m), (n), (o) and (p) of section 301-c of the
 tax law are relettered subdivisions (i), (j), (k), (l) and (m).
   § 14. Section 301-d of the tax law is REPEALED.
   § 15. Subdivision (f) of section 301-e is REPEALED.
   § 16. Subdivision (a) of section 301-j of the tax law, as  amended  by
 chapter  309 of the laws of 1996, paragraphs 1, 2, 3 and 4 as amended by
 section 29 of part K of chapter 61 of the laws of 2011,  is  amended  to
 read as follows:
   (a)  Imposition  of  tax.  (1)  In  addition  to  the taxes imposed by
 sections three hundred one-a and three hundred one-e  of  this  article,
 there  is  hereby  imposed  upon every petroleum business subject to tax
 imposed under section three hundred one-a  of  this  article  and  every
 aviation fuel business subject to the aviation gasoline component of the
 tax imposed under section three hundred one-e of this article, a supple-
 mental  monthly tax for each or any part of a taxable month at a rate of
 six and eight-tenths cents per  gallon  with  respect  to  the  products
 included  in  each  component of the taxes imposed by such section three
 hundred one-a and the aviation gasoline component of the tax imposed  by
 such section three hundred one-e of this article.
   (2)  [Provided,  however,  "commercial  gallonage,"  as  such  term is
 defined in subdivision (k) of section three  hundred  of  this  article,
 shall be exempt from the measure of the tax imposed under this section.
   (3)]  Provided, further, "railroad diesel," as such term is defined in
 subdivision (l) of section three  hundred  of  this  article,  shall  be
 exempt from the measure of the tax imposed under this section.
   [(4)]  (3)  Provided,  further, a separate per gallon rate shall apply
 with respect to highway diesel motor fuel. Such rate shall be determined
 S. 7438                            10
 
 by taking the adjusted rate per gallon of tax  imposed  under  paragraph
 one  of this subdivision as adjusted in accordance with paragraph [five]
 FOUR of this subdivision and subtracting therefrom one  and  three-quar-
 ters  cents.    Commencing  January first, two thousand twelve, and each
 January thereafter, the per gallon rate  applicable  to  highway  diesel
 motor fuel shall be the adjusted rate under paragraph one of this subdi-
 vision  as  adjusted  in  accordance  with paragraph [five] FOUR of this
 subdivision which commences on such date minus  one  and  three-quarters
 cents.  The  resulting  rate  under this paragraph shall be expressed in
 hundredths of a cent.
   [(5)] (4) Except as  herein  provided,  the  tax  imposed  under  this
 section  shall  be calculated in the same respective manner as the taxes
 imposed by section three hundred one-a and section three  hundred  one-e
 of  this article. Except [for section three hundred one-d and except] as
 otherwise provided in this section, all the provisions of  this  article
 applicable  to  the  taxes  imposed  by sections three hundred one-a and
 three hundred one-e of this article, shall apply  with  respect  to  the
 supplemental  tax  imposed  by  this section to the same extent as if it
 were respectively imposed by such sections.
   § 17. Subparagraph (A) of paragraph 2 of subsection (a) of section 606
 of the tax law, as amended by section 3 of part P of chapter 59  of  the
 laws of 2017, is amended to read as follows:
   (A)  A  credit  shall be allowed under this subsection with respect to
 tangible personal property and other tangible property, including build-
 ings and structural components  of  buildings,  which  are:  depreciable
 pursuant  to  section  one  hundred  sixty-seven of the internal revenue
 code, have a useful life of four years or more, are acquired by purchase
 as defined in section one  hundred  seventy-nine  (d)  of  the  internal
 revenue code, have a situs in this state and are (i) principally used by
 the  taxpayer  in  the production of goods by manufacturing, processing,
 assembling, refining, mining, extracting, farming,  agriculture,  horti-
 culture,  floriculture,  viticulture  or commercial fishing, (ii) indus-
 trial waste treatment facilities or air  pollution  control  facilities,
 used in the taxpayer's trade or business, (iii) research and development
 property, (iv) principally used in the ordinary course of the taxpayer's
 trade  or business as a broker or dealer in connection with the purchase
 or sale (which shall include but not be limited to the issuance,  enter-
 ing  into,  assumption, offset, assignment, termination, or transfer) of
 stocks, bonds or other securities as defined  in  section  four  hundred
 seventy-five  (c)(2)  of the Internal Revenue Code, or of commodities as
 defined in section 475(e) of the Internal Revenue Code, (v)  principally
 used  in  the  ordinary  course  of  the taxpayer's trade or business of
 providing investment advisory services for a regulated investment compa-
 ny as defined in section eight hundred fifty-one of the Internal Revenue
 Code, or lending, loan  arrangement  or  loan  origination  services  to
 customers  in  connection with the purchase or sale (which shall include
 but not be limited to the issuance, entering into,  assumption,  offset,
 assignment,  termination,  or  transfer)  of  securities  as  defined in
 section four hundred seventy-five (c)(2) of the Internal  Revenue  Code,
 or (vi) principally used as a qualified film production facility includ-
 ing  qualified  film  production  facilities having a situs in an empire
 zone designated as such pursuant to article eighteen-B  of  the  general
 municipal law, where the taxpayer is providing three or more services to
 any qualified film production company using the facility, including such
 services  as a studio lighting grid, lighting and grip equipment, multi-
 line phone service, broadband information technology access,  industrial
 S. 7438                            11
 
 scale  electrical  capacity, food services, security services, and heat-
 ing, ventilation and air conditioning. For purposes of clauses (iv)  and
 (v)  of  this  subparagraph, property purchased by a taxpayer affiliated
 with  a  regulated  broker,  dealer, or registered investment adviser is
 allowed a credit under this subsection if the property is  used  by  its
 affiliated  regulated broker, dealer or registered investment adviser in
 accordance with this subsection. For  purposes  of  determining  if  the
 property is principally used in qualifying uses, the uses by the taxpay-
 er  described in clauses (iv) and (v) of this subparagraph may be aggre-
 gated. In addition, the uses by the taxpayer, its  affiliated  regulated
 broker, dealer and registered investment adviser under either or both of
 those clauses may be aggregated. Provided, however, a taxpayer shall not
 be  allowed the credit provided by clauses (iv) and (v) of this subpara-
 graph unless (I) eighty percent or more of the employees performing  the
 administrative  and  support  functions resulting from or related to the
 qualifying uses of such equipment are located in this state, or (II) the
 average number of employees that perform the administrative and  support
 functions  resulting  from  or  related  to  the qualifying uses of such
 equipment and are located in this state  during  the  taxable  year  for
 which  the  credit  is  claimed  is equal to or greater than ninety-five
 percent of the average number of employees that perform these  functions
 and  are  located in this state during the thirty-six months immediately
 preceding the year for which the credit is claimed, or (III) the  number
 of employees located in this state during the taxable year for which the
 credit  is  claimed  is  equal  to or greater than ninety percent of the
 number of employees located in  this  state  on  December  thirty-first,
 nineteen  hundred  ninety-eight  or,  if the taxpayer was not a calendar
 year taxpayer in nineteen hundred ninety-eight,  the  last  day  of  its
 first  taxable year ending after December thirty-first, nineteen hundred
 ninety-eight. If the taxpayer becomes subject to tax in this state after
 the taxable year beginning in nineteen hundred  ninety-eight,  then  the
 taxpayer  is not required to satisfy the employment test provided in the
 preceding sentence of this subparagraph for its first taxable year.  For
 the  purposes  of  clause (III) of this subparagraph the employment test
 will be based on the number of employees located in this  state  on  the
 last  day  of  the  first taxable year the taxpayer is subject to tax in
 this state. If the uses of the property must be aggregated to  determine
 whether the property is principally used in qualifying uses, then either
 each  affiliate  using the property must satisfy this employment test or
 this employment test must be satisfied through the  aggregation  of  the
 employees  of the taxpayer, its affiliated regulated broker, dealer, and
 registered investment adviser using the property. For purposes of clause
 (i) of this subparagraph, tangible personal property and other  tangible
 property  shall not include property principally used by the taxpayer in
 the  production  or  distribution  of  electricity,  natural  gas  after
 extraction  from  wells,  steam,  or  water  delivered through pipes and
 mains. FOR PURPOSES OF THIS SUBSECTION, TANGIBLE PERSONAL  PROPERTY  AND
 OTHER  TANGIBLE PROPERTY DOES NOT INCLUDE PROPERTY THAT DIRECTLY PRODUC-
 ES, TRANSMITS,  DISTRIBUTES,  TRANSPORTS,  OR  STORES  FOSSIL  FUELS  AS
 DEFINED  IN SECTION 1-103 OF THE ENERGY LAW, OR DIRECTLY UTILIZES FOSSIL
 FUELS FOR THE PRODUCTION OF ON-SITE ENERGY,  INCLUDING  THERMAL  ENERGY,
 FOR ANY PURPOSE.
   §  18. Paragraph 3 of subdivision (b) of section 21 of the tax law, as
 amended by chapter 420 of the laws of 2006, clause (i)  of  subparagraph
 (B)  as  amended  by  section 22 of part BB of chapter 56 of the laws of
 2015, is amended to read as follows:
 S. 7438                            12
 
   (3) Qualified tangible  property.  "Qualified  tangible  property"  is
 property  described  in  either subparagraph (A) or (B) AND SUBPARAGRAPH
 (C) of this paragraph which:
   (A)  (i) is depreciable pursuant to section one hundred sixty-seven of
 the internal revenue code,
   (ii) has a useful life of four years or more,
   (iii) has been acquired by purchase as defined in section one  hundred
 seventy-nine (d) of the internal revenue code,
   (iv) has a situs on a qualified site in this state, and
   (v)  is  principally  used by the taxpayer for industrial, commercial,
 recreational  or  environmental  conservation  purposes  (including  the
 commercial development of residential housing); or
   (B) (i) is, or when occupied becomes, part of a dwelling whose primary
 ownership  structure  is covered under either article nine-B of the real
 property law or meets the requirements of  section  216  (b)(1)  of  the
 Internal  Revenue  Code  or  is part of an affordable housing project as
 defined in subdivision twenty-nine of section 27-1405  of  the  environ-
 mental  conservation law, where units are sold as single family homes or
 multiple family dwellings;
   (ii) has been acquired by purchase (as defined in section one  hundred
 seventy-nine (d) of the Internal Revenue Code);
   (iii) has a situs on a qualified site in this state; and
   (iv)  for  purposes of this subparagraph only, and notwithstanding any
 other section of law to the contrary,  property  qualifying  under  this
 subparagraph  shall  be deemed to be qualified tangible property for the
 purposes of paragraph one of subdivision (d) of  this  section;  and  in
 addition, for the purposes of this subdivision only, property qualifying
 under  this  subparagraph shall be deemed to have been placed in service
 for the purposes of paragraph three of subdivision (a) of  this  section
 when a certificate of occupancy is issued for such property; AND
   (C)  DOES  NOT  DIRECTLY  PRODUCE, TRANSMIT, DISTRIBUTE, TRANSPORT, OR
 STORE FOSSIL FUELS AS DEFINED IN SECTION 1-103 OF  THE  ENERGY  LAW,  OR
 DIRECTLY  UTILIZE  FOSSIL  FUELS  FOR  THE PRODUCTION OF ON-SITE ENERGY,
 INCLUDING THERMAL ENERGY, FOR ANY PURPOSE.
   § 19. Subdivision 26 of section 210-B of the tax  law  is  amended  by
 adding a new paragraph (g) to read as follows:
   (G)  FOR  PURPOSES  OF  THIS  SUBDIVISION,  "QUALIFIED  REHABILITATION
 EXPENDITURES" DOES NOT INCLUDE EXPENDITURES FOR PROPERTY  THAT  DIRECTLY
 PRODUCES,  TRANSMITS, DISTRIBUTES, TRANSPORTS, OR STORES FOSSIL FUELS AS
 DEFINED IN SECTION 1-103 OF THE ENERGY LAW, OR DIRECTLY UTILIZES  FOSSIL
 FUELS  FOR  THE  PRODUCTION OF ON-SITE ENERGY, INCLUDING THERMAL ENERGY,
 FOR ANY PURPOSE.
   § 20. Subparagraphs (ix) and (x) of paragraph 3  and  paragraph  5  of
 subdivision  (c)  of  section  1105 of the tax law, subparagraph (ix) of
 paragraph 3 as added by chapter 395 of the laws  of  1998,  subparagraph
 (x)  of  paragraph  3 as added by section 1 of part FF of chapter 407 of
 the laws of 1999, and paragraph 5 as amended by chapter 321 of the  laws
 of 2005, are amended to read as follows:
   (ix) [such services rendered with respect to tangible property used or
 consumed directly and predominantly in the production for sale of gas or
 oil  by  manufacturing,  processing,  generating,  assembling, refining,
 mining, or extracting.
   (x)] such services rendered with  respect  to  property  described  in
 paragraph  twelve-a of subdivision (a) of section eleven hundred fifteen
 of this article.
 S. 7438                            13
 
   (5) Maintaining, servicing or repairing  real  property,  property  or
 land,  as  such  terms are defined in the real property tax law, whether
 the services are performed in or outside of a building, as distinguished
 from adding to or improving such real property, property or land,  by  a
 capital improvement as such term capital improvement is defined in para-
 graph  nine  of  subdivision  (b)  of section eleven hundred one of this
 article, but excluding (i) services rendered by an individual who is not
 in a regular trade or business offering his services to the public, (ii)
 [services rendered directly with respect to real property,  property  or
 land  used  or consumed directly and predominantly in the production for
 sale of gas or oil by manufacturing, processing, generating, assembling,
 refining, mining, or extracting, (iii)] services rendered  with  respect
 to real property, property or land used or consumed predominantly either
 in the production of tangible personal property, for sale, by farming or
 in  a  commercial  horse boarding operation, or in both and [(iv)] (III)
 services of removal of waste material from a  facility  regulated  as  a
 transfer station or construction and demolition debris processing facil-
 ity  by  the department of environmental conservation, provided that the
 waste material to be removed was not generated by the facility.
   § 21. Subparagraph (xi) of paragraph 3 of subdivision (c)  of  section
 1105 of the tax law is REPEALED.
   § 22. Paragraph 9 of subdivision (a) of section 1115 of the tax law is
 REPEALED.
   §  23.  Paragraph  (ii)  of subdivision (b) of section 1115 of the tax
 law, as amended by section 30 of part Y of chapter 63  of  the  laws  of
 2000, is amended to read as follows:
   (ii)  [Gas,  electricity]  ELECTRICITY,  refrigeration  and steam, and
 [gas,] electric, refrigeration and steam service of whatever nature  for
 use  or consumption directly and exclusively in research and development
 in the experimental or laboratory sense shall be  exempt  from  the  tax
 imposed  under  subdivision  (b)  of section eleven hundred five and the
 compensating use tax imposed under section eleven hundred  ten  of  this
 article.  Such  research  and development shall not be deemed to include
 the ordinary testing or inspection of materials or products for  quality
 control,  efficiency  surveys,  management  studies,  consumer  surveys,
 advertising, promotions or research in connection with literary, histor-
 ical or similar projects.
   § 24. Paragraph 1 of subdivision (c) of section 1115 of the  tax  law,
 as  amended by section 7 of part B of chapter 63 of the laws of 2000, is
 amended to read as follows:
   (1) [Fuel, gas, electricity] ELECTRICITY, refrigeration and steam, and
 [gas,] electric, refrigeration and steam service of whatever nature  for
 use  or consumption directly and exclusively in the production of tangi-
 ble personal property, [gas,] electricity, refrigeration or  steam,  for
 sale,  by  manufacturing,  processing, assembling, generating, refining,
 mining or extracting shall be exempt from the taxes imposed under subdi-
 visions (a) and (b) of section eleven hundred five and the  compensating
 use tax imposed under section eleven hundred ten of this article.
   §  25.  Subdivision  (j) of section 1115 of the tax law, as amended by
 section 41 of part K of chapter 61 of the laws of 2011,  is  amended  to
 read as follows:
   (j) The exemptions provided in this section shall not apply to the tax
 required  to  be  prepaid  pursuant  to the provisions of section eleven
 hundred two of this article nor to the taxes imposed by sections  eleven
 hundred  five  and  eleven  hundred  ten of this article with respect to
 receipts from sales and uses of motor fuel or diesel motor fuel,[ except
 S. 7438                            14

 that the exemptions provided in paragraphs nine and forty-two of  subdi-
 vision (a) of this section shall apply to the tax required to be prepaid
 pursuant to the provisions of section eleven hundred two of this article
 and  to  the  taxes  imposed  by sections eleven hundred five and eleven
 hundred ten of this article with respect to sales and uses  of  kero-jet
 fuel,]  CNG,  hydrogen and E85, provided, however, the exemption allowed
 for E85 shall be subject to  the  additional  requirements  provided  in
 section  eleven  hundred  two  of  this article with respect to E85. The
 exemption provided in subdivision (c) of this  section  shall  apply  to
 sales  and uses of non-highway diesel motor fuel but only if all of such
 fuel is consumed other than on the public highways of  this  state.  The
 exemption  provided  in  subdivision  (c) of this section shall apply to
 sales and uses of non-highway diesel motor fuel for use  or  consumption
 either in the production for sale of tangible personal property by farm-
 ing  or in a commercial horse boarding operation, or in both but only if
 all of such fuel is consumed other than on the public highways  of  this
 state (except for the use of the public highways to reach adjacent farm-
 lands  or  adjacent lands used in a commercial horse boarding operation,
 or both).
   § 25-a. Subdivision (j) of section 1115 of the tax law, as amended  by
 section  41-a of part K of chapter 61 of the laws of 2011, is amended to
 read as follows:
   (j) The exemptions provided in this section shall not apply to the tax
 required to be prepaid pursuant to  the  provisions  of  section  eleven
 hundred  two of this article nor to the taxes imposed by sections eleven
 hundred five and eleven hundred ten of  this  article  with  respect  to
 receipts from sales and uses of motor fuel or diesel motor fuel[, except
 that the exemption provided in paragraph nine of subdivision (a) of this
 section  shall  apply  to the tax required to be prepaid pursuant to the
 provisions of section eleven hundred two of  this  article  and  to  the
 taxes  imposed by sections eleven hundred five and eleven hundred ten of
 this article with respect to sales  and  uses  of  kero-jet  fuel].  The
 exemption  provided  in  subdivision  (c) of this section shall apply to
 sales and uses of non-highway diesel motor fuel but only if all of  such
 fuel  is  consumed  other than on the public highways of this state. The
 exemption provided in subdivision (c) of this  section  shall  apply  to
 sales  and  uses of non-highway diesel motor fuel for use or consumption
 either in the production for sale of tangible personal property by farm-
 ing or in a commercial horse boarding operation, or in both but only  if
 all  of  such fuel is consumed other than on the public highways of this
 state (except for the use of the public highways to reach adjacent farm-
 lands or adjacent lands used in a commercial horse  boarding  operation,
 or both).
   §  26.  Subdivision  (s)  of  section 1115 of the tax law, as added by
 chapter 201 of the laws of 1995, is relettered subdivision (p).
   § 27. Subdivision (w) of section 1115 of the  tax  law,  as  added  by
 section  32  of  part Y of chapter 63 of the laws of 2000, is amended to
 read as follows:
   (w) Receipts from the sale of [gas or] electricity or [gas  or]  elec-
 tric service of whatever nature and consideration given or contracted to
 be  given for, or for the use of, [gas or] electricity or [gas or] elec-
 tric service of whatever nature purchased for use or consumption direct-
 ly and exclusively to provide [gas  or]  electric  service  of  whatever
 nature  consisting of operating [a gas pipeline or gas distribution line
 or] an electric transmission or  distribution  line  [and  ensuring  the
 necessary working pressure in an underground gas storage facility] shall
 S. 7438                            15
 
 be exempt from sales and compensating use taxes imposed by this article.
 Such exempt [gas or] electricity or [gas or] electric service of whatev-
 er  nature  shall  include,  but  shall not be limited to, such [gas or]
 electricity  or  [gas  or]  electric  service of whatever nature used or
 consumed directly and exclusively to (1) [ensure necessary working pres-
 sure in a gas pipeline used to transport, transmit  or  distribute  gas,
 (2)  operate  compressors  used to transport, transmit or distribute gas
 through such a gas pipeline or  distribution  line  or  used  to  ensure
 necessary working pressure in such a storage facility, (3) operate heat-
 ers  to  prevent gas in such a pipeline or distribution line from freez-
 ing, (4) operate equipment which removes impurities  and  moisture  from
 gas  in  such  a pipeline or distribution line, (5)] operate substations
 and equipment related to electric transmission  and  distribution  lines
 such   as  transformers,  capacitors,  meters,  switches,  communication
 devices and heating and cooling equipment,  and  [(6)]  (2)  ensure  the
 reliability  of  electricity or electric service transmitted or distrib-
 uted through such lines, for  example,  by  operating  reserve  capacity
 machinery and equipment.
   §  28.  Subdivision  (k)  of section 300 of the tax law, as amended by
 section 17 of part K of chapter 61 of the laws of 2011,  is  amended  to
 read as follows:
   (k)  "Commercial  gallonage"  means gallonage (1) which is non-highway
 diesel motor fuel or residual petroleum product, (2) [which is  included
 in  the  full  measure of the non-highway diesel motor fuel component or
 the residual petroleum  product  component  of  the  tax  imposed  under
 section  three  hundred  one-a of this article, (3)] which does not (and
 will not) qualify (A) [for the utility credit or reimbursement  provided
 for in section three hundred one-d of this article, (B)] as "manufactur-
 ing  gallonage",  as  such  term  is  defined in subdivision (m) of this
 section, [(C)] OR (B)  for  the  not-for-profit  organization  exemption
 provided  for  in subdivision (h) of section three hundred one-b of this
 article, [or (D) for the heating exemption provided for in paragraph two
 of subdivision (d) of section three hundred one-b of this article or the
 heating reimbursement provided for in paragraph two of  subdivision  (a)
 of  section  three  hundred  one-c of this article,] and [(4)] (3) which
 will not be used nor has been used in the fuel tank connecting with  the
 engine of a vessel. No gallonage shall qualify as "commercial gallonage"
 where  such  gallonage  is  eligible  for  the  [(i)  utility  credit or
 reimbursement under such section three hundred one-d  of  this  article,
 (ii)  "manufacturing exemption" under paragraph three of subdivision (f)
 of section three hundred one-a of this  article,  (iii)]  not-for-profit
 organization  exemption  under  subdivision (h) of section three hundred
 one-b of this article[, or (iv) heating exemption provided for in  para-
 graph  two  of  subdivision  (d)  of section three hundred one-b of this
 article or the heating reimbursement provided for in  paragraph  two  of
 subdivision  (a)  of  section  three hundred one-c of this article]. The
 commissioner shall require such documentary proof  to  substantiate  the
 classification  of product as "commercial gallonage" as the commissioner
 deems appropriate.
   § 29. Paragraph 1 of subdivision (f) of section 301-b of the tax  law,
 as amended by section 21 of part K of chapter 61 of the laws of 2011, is
 amended to read as follows:
   (1)  Residual petroleum product and non-highway diesel motor fuel sold
 to an electric corporation, [as described in subdivision (a) of  section
 three hundred one-d of this article,] AS DEFINED IN SUBDIVISION THIRTEEN
 OF  SECTION TWO OF THE PUBLIC SERVICE LAW, SUBJECT TO THE SUPERVISION OF
 S. 7438                            16
 
 THE DEPARTMENT OF PUBLIC SERVICE, which is registered with  the  depart-
 ment  as a petroleum business tax direct pay permittee, and used by such
 electric corporation to fuel generators for the purpose of manufacturing
 or producing electricity where such electric corporation provides a copy
 of a direct pay permit authorized and issued by the commissioner, to the
 petroleum  business making such sale. If so registered, such corporation
 shall be a taxpayer under this article and (i) such electric corporation
 shall file a return monthly and pay the applicable tax under this  arti-
 cle,  after  the application of allowable credits, on all such purchases
 directly to the commissioner, (ii) such electric  corporation  shall  be
 subject to all of the provisions of this article relating to the respon-
 sibilities  and liabilities of taxpayers under this article with respect
 to such residual petroleum product and non-highway diesel motor fuel.
   § 30. Subdivision (y) of section 1511 of the  tax  law,  as  added  by
 chapter  472 of the laws of 2010, is amended by adding a new paragraph 7
 to read as follows:
   (7) FOR PURPOSES OF THIS SUBSECTION, "QUALIFIED REHABILITATION EXPEND-
 ITURES" DOES NOT INCLUDE EXPENDITURES FOR PROPERTY THAT DIRECTLY PRODUC-
 ES, TRANSMITS,  DISTRIBUTES,  TRANSPORTS,  OR  STORES  FOSSIL  FUELS  AS
 DEFINED  IN SECTION 1-103 OF THE ENERGY LAW, OR DIRECTLY UTILIZES FOSSIL
 FUELS FOR THE PRODUCTION OF ON-SITE ENERGY,  INCLUDING  THERMAL  ENERGY,
 FOR ANY PURPOSE.
   §  31.  Paragraph (c) of subdivision 1 of section 3102-e of the public
 authorities law, as added by section 31 of part A of chapter 56  of  the
 laws of 1998, is amended to read as follows:
   (c)  "Qualified  emerging  technology  company"  shall  mean a company
 located in New York state: (1) whose primary products  or  services  are
 classified as emerging technologies and whose total annual product sales
 are ten million dollars or less; or (2) a company which has research and
 development activities in New York state and whose ratio of research and
 development  funds  to net sales equals or exceeds the average ratio for
 all surveyed companies classified as determined by the National  Science
 Foundation  in  the  most  recent  published  results from its Survey of
 Industry Research and Development, or any comparable successor survey as
 determined by the department, and whose total annual product  sales  are
 ten million dollars or less. QUALIFIED EMERGING TECHNOLOGY COMPANY SHALL
 NOT  INCLUDE A COMPANY ENGAGED IN THE PRODUCTION, TRANSMISSION, DISTRIB-
 UTION, TRANSPORTATION, OR STORAGE OF FOSSIL FUELS AS DEFINED IN  SECTION
 1-103 OF THE ENERGY LAW.
   The  definition  of "research and development funds" shall be the same
 as that used by the National Science Foundation  in  the  aforementioned
 survey.
   §  32.  Subparagraph (vi) of paragraph (a) of subdivision 1 of section
 210 of the tax law, as amended by section 1 of part D of chapter  59  of
 the laws of 2019, is amended to read as follows:
   (vi)  for taxable years beginning on or after January first, two thou-
 sand fourteen, the amount prescribed by this paragraph  for  a  taxpayer
 that is a qualified New York manufacturer, shall be computed at the rate
 of  zero  percent  of  the  taxpayer's  business  income  base. The term
 "manufacturer" shall mean a taxpayer that during  the  taxable  year  is
 principally  engaged  in the production of goods by manufacturing, proc-
 essing, assembling, refining, mining, extracting, farming,  agriculture,
 horticulture,  floriculture, viticulture or commercial fishing. However,
 the generation and distribution  of  electricity,  the  distribution  of
 natural  gas,  [and]  the production of steam associated with the gener-
 ation of electricity, AND THE  PRODUCTION,  TRANSMISSION,  DISTRIBUTION,
 S. 7438                            17
 
 TRANSPORTATION,  OR  STORAGE OF FOSSIL FUELS AS DEFINED IN SECTION 1-103
 OF THE ENERGY LAW shall not be qualifying activities for a  manufacturer
 under this subparagraph. Moreover, in the case of a combined report, the
 combined group shall be considered a "manufacturer" for purposes of this
 subparagraph only if the combined group during the taxable year is prin-
 cipally  engaged  in  the activities set forth in this paragraph, or any
 combination thereof. A taxpayer or, in the case of a combined report,  a
 combined  group  shall  be "principally engaged" in activities described
 above if, during the taxable year, more than fifty percent of the  gross
 receipts  of  the  taxpayer or combined group, respectively, are derived
 from receipts from the sale of goods produced  by  such  activities.  In
 computing  a  combined  group's  gross receipts, intercorporate receipts
 shall be eliminated. A "qualified New York manufacturer" is  a  manufac-
 turer  that  has property in New York that is described in clause (A) of
 subparagraph (i) of paragraph (b) of  subdivision  one  of  section  two
 hundred  ten-B of this article and either (I) the adjusted basis of such
 property for New York state tax purposes at the  close  of  the  taxable
 year  is  at  least  one  million  dollars  or  (II) all of its real and
 personal property is located in New York. A taxpayer or, in the case  of
 a  combined  report, a combined group, that does not satisfy the princi-
 pally engaged test may be a  qualified  New  York  manufacturer  if  the
 taxpayer  or the combined group employs during the taxable year at least
 two thousand five hundred employees in manufacturing in New York and the
 taxpayer or the combined group has property in the state used  in  manu-
 facturing,  the  adjusted basis of which for New York state tax purposes
 at the close of the  taxable  year  is  at  least  one  hundred  million
 dollars.
   §  33. Subparagraph 2 of paragraph (b) of subdivision 1 of section 210
 of the tax law, as amended by section 2 of part D of chapter 59  of  the
 laws of 2019, is amended to read as follows:
   (2)  For  purposes  of  subparagraph  one  of this paragraph, the term
 "manufacturer" shall mean a taxpayer that during  the  taxable  year  is
 principally  engaged  in the production of goods by manufacturing, proc-
 essing, assembling, refining, mining, extracting, farming,  agriculture,
 horticulture, floriculture, viticulture or commercial fishing; PROVIDED,
 HOWEVER,  THE PRODUCTION, TRANSMISSION, DISTRIBUTION, TRANSPORTATION, OR
 STORAGE OF FOSSIL FUELS AS DEFINED IN SECTION 1-103 OF  THE  ENERGY  LAW
 SHALL NOT BE QUALIFYING ACTIVITIES FOR A MANUFACTURER UNDER THIS SUBPAR-
 AGRAPH.  Moreover,  for  purposes  of  computing  the  capital base in a
 combined report, the combined group shall be considered a "manufacturer"
 for purposes of this subparagraph only if the combined group during  the
 taxable  year is principally engaged in the activities set forth in this
 subparagraph, or any combination thereof. A taxpayer or, in the case  of
 a  combined  report,  a combined group shall be "principally engaged" in
 activities described above if, during the taxable year, more than  fifty
 percent of the gross receipts of the taxpayer or combined group, respec-
 tively,  are  derived  from  receipts from the sale of goods produced by
 such activities. In computing a combined group's gross receipts,  inter-
 corporate  receipts  shall be eliminated. A "qualified New York manufac-
 turer" is a manufacturer that has property in New York that is described
 in clause (A) of subparagraph (i) of paragraph (b) of subdivision one of
 section two hundred ten-B of this article and either  (i)  the  adjusted
 basis  of  that property for New York state tax purposes at the close of
 the taxable year is at least one million dollars or (ii) all of its real
 and personal property is located in New York. In addition, a  "qualified
 New  York  manufacturer" means a taxpayer that is defined as a qualified
 S. 7438                            18
 
 emerging technology company under paragraph (c) of  subdivision  one  of
 section  thirty-one  hundred two-e of the public authorities law regard-
 less of the ten million dollar limitation expressed in subparagraph  one
 of  such  paragraph.  A taxpayer or, in the case of a combined report, a
 combined group, that does not satisfy the principally engaged  test  may
 be  a  qualified  New  York manufacturer if the taxpayer or the combined
 group employs during the taxable year at least two thousand five hundred
 employees in manufacturing in New York and the taxpayer or the  combined
 group  has  property  in  the  state used in manufacturing, the adjusted
 basis of which for New York state tax purposes at the close of the taxa-
 ble year is at least one hundred million dollars.
   § 34. This act shall take effect immediately and shall apply to  taxa-
 ble  years  commencing  on or after the first of January next succeeding
 the date on which it shall have become a law; provided, however, that:
   (a) the amendments to paragraphs 6, 7 and  8  of  subdivision  (a)  of
 section  301-b  made  by  section  nine of this act shall not affect the
 repeal of such paragraphs and shall be deemed repealed therewith;
   (b) the amendments to the opening paragraph of section  301-c  of  the
 tax law made by section eleven of this act shall be subject to the expi-
 ration  and  reversion  of such paragraph pursuant to section 19 of part
 W-1 of chapter 109 of the laws of 2006, as amended, when upon such  date
 the provisions of section eleven-a of this act shall take effect;
   (c)  the  amendments to subdivisions (k) and (l) of section 301-c made
 by section thirteen of this act shall not  affect  the  repeal  of  such
 subdivisions and shall be deemed repealed therewith; and
   (d)  the  amendments to subdivision (j) of section 1115 of the tax law
 made by section twenty-five of this act shall be subject to the  expira-
 tion  and  reversion  of such subdivision pursuant to section 19 of part
 W-1 of chapter 109 of the laws of 2006, as amended, when upon such  date
 the provisions of section twenty-five-a of this act shall take effect.