In June 2021, Senators Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) introduced The Maintaining and Enhancing Hydroelectric and River Restoration Act of 2021, which would establish a tax credit for certain investments in dam safety and environmental improvements at qualified dams and separate tax credit to incentivize the removal of obsolete river obstructions, including nonpowered dams.

The bill first establishes a 30% tax credit for three categories of investments, including dam safety, environmental improvements, and grid resilience.  The bill defines the types of improvements for which the credit would be available for each category of investments.  For dam safety, the tax credit would be available for investments “with the purpose of maintaining or improving dam safety,” including dam stability projects, upgrading or replacing floodgates, or upgrading spillways.  In the environmental improvement category, the tax credit would be available for investments that add or improve fish passage facilities, improve the quality of water retained or released by a project, promote sediment transport and habitat maintenance, and establish or improve recreational access.  Finally, the credit would be available for certain grid resilience improvements, including upgrades that would provide ancillary services such as black start capabilities and spinning reserves and integrate variable sources of electricity generation.  The grid resilience category would also include new small scale hydroelectric projects that were licensed by FERC prior to December 31, 2020, have an active license at the time the bill is enacted, were not placed into service prior to enactment, and do not contribute to atmospheric pollution.

The bill would also include a separate 30% tax credit for expenses incurred in removing obsolete river obstructions, including nonpowered dams and hydroelectric dams not owned by the federal government.  Eligible expenses include the full or partial removal of the river obstructions, along with remediation and ecosystem restoration costs.  Under the bill, the tax credit would be available to both private entities as well as state and local governments.  The bill is available here.