[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2606 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2606

 To provide project assistance, loan guarantees, and tax credits for a 
    coal gasification demonstration project, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 24, 2001

 Mrs. Capito introduced the following bill; which was referred to the 
 Committee on Science, and in addition to the Committees on Energy and 
     Commerce, and Ways and Means, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To provide project assistance, loan guarantees, and tax credits for a 
    coal gasification demonstration project, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Coal Gasification Commercial 
Demonstration Project Act of 2001''.

SEC. 2. DEMONSTRATION.

    (a) Project Grant.--
            (1) Authority.--The Secretary of Energy shall make a grant 
        for a project to demonstrate the commercial viability of a new 
        coal gasification combined cycle technology plant.
            (2) Amount.--A grant made under this subsection may be in 
        an amount of--
                    (A) $5,000,000 for design, engineering, and other 
                necessary preconstruction project development 
                activities; and
                    (B) $10,000,000 for construction costs (including 
                engineering, procurement, and associated project 
                development activities).
            (3) Location.--The demonstration project for which a grant 
        is made under this subsection shall be located in Kanawha 
        County, West Virginia, or any adjacent county.
            (4) Timing.--Not later than 30 days after the date of the 
        enactment of this Act, any interested party may submit to the 
        Secretary of Energy a proposal to construct and operate a coal 
        gasification plant in West Virginia consistent with this 
        subsection, and not later than 60 days after the date of the 
        enactment of this Act, the Secretary of Energy shall select the 
        entity to be awarded the grant.
    (b) Additional Demonstration Assistance.--There are authorized to 
be appropriated to the Secretary of Energy for each of fiscal years 
2003 and 2004 $20,000,000 for providing assistance to additional 
projects that demonstrate the commercial viability of coal gasification 
technology.

SEC. 3. LOAN GUARANTEES.

    (a) Authority.--The Secretary of Energy shall provide loan 
guarantees for the project receiving a grant under section 2(a).
    (b) Amount.--The total amount of loans guaranteed under this 
section shall be 80 percent of the total project costs of the project 
receiving a grant under section 2(a). For purposes of this subsection, 
total project costs include the cost of a generally available 
commercial loan to finance the project.
    (c) Terms and Conditions.--The terms and conditions of a loan 
guarantee under this section shall be established by negotiation 
between the Secretary of Energy and representatives of the recipient of 
the grant under section 2(a). The Secretary--
            (1) shall commence such negotiations not later than 30 days 
        after the selection under section 2(a)(5) of an entity to be 
        awarded the grant;
            (2) shall review the terms and conditions for loan 
        guarantees in section 201(d) of the Geothermal Energy Research, 
        Development, and Demonstration Act of 1974 (30 U.S.C. 1141(d)) 
        in order to facilitate the funding and long-term success of the 
        project;
            (3) shall negotiate in good faith and make best efforts to 
        conclude those negotiations within 120 days; and
            (4) if the negotiations are not concluded within 120 days, 
        shall agree to referral of the dispute regarding terms and 
        conditions to binding arbitration (as allowed by Executive 
        Order 12988, February 5, 1996) for a period not to exceed 90 
        days, so that the objectives of this section are fulfilled.
    (d) Definition.--In this section, the term ``loan guarantee'' has 
the meaning given that term in section 502(3) of the Federal Credit 
Reform Act of 1990 (2 U.S.C. 661a(3)).

SEC. 4. PROJECT APPROVAL UNDER CLEAN AIR ACT.

    All new source review approvals and related permits required under 
the Clean Air Act and under applicable implementation plans under that 
Act shall be issued for the project receiving a grant under section 
2(a) by the permitting State agency upon--
            (1) certification by the permit applicant that emissions of 
        each pollutant regulated under the Clean Air Act will be no 
        greater than the average emission rate identified by the 
        Administrator of the Environmental Protection Agency in the 3 
        most recently permitted new source review permits for coal 
        gasification plants as of June 1, 2001; and
            (2) certification by the permit applicant, based on 
        modeling using a model approved for such purposes by the 
        Administrator and incorporating the most relevant 
        meteorological and air quality data available to the applicant 
        as of June 1, 2001, that the plant will not violate any 
        National Ambient Air Quality Standard nor any Prevention of 
        Deterioration air quality increment.

SEC. 5. INVESTMENT TAX CREDIT.

    (a) Allowance of Qualifying Coal Gasification Technology Facility 
Credit.--Section 46 of the Internal Revenue Code of 1986 (relating to 
amount of credit) is amended by striking ``and'' at the end of 
paragraph (2), by striking the period at the end of paragraph (3) and 
inserting ``, and'', and by adding at the end the following:
            ``(4) the qualifying coal gasification technology facility 
        credit.''
    (b) Amount of Qualifying Coal Gasification Technology Facility 
Credit.--Subpart E of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to rules for computing 
investment credit) is amended by inserting after section 48 the 
following:

``SEC. 48A. QUALIFYING COAL GASIFICATION TECHNOLOGY FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying coal 
gasification technology facility credit for any taxable year is an 
amount equal to 10 percent of the qualified investment in a qualifying 
coal gasification technology facility for such taxable year.
    ``(b) Qualifying Coal Gasification Technology Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying coal gasification technology facility' means the 
        coal gasification project described in section 2 of the Coal 
        Gasification Commercial Demonstration Project Act of 2001.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        paragraph (1), in the case of a facility which--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years, such facility shall 
                be treated as originally placed in service not earlier 
                than the date on which such property is used under the 
                leaseback (or lease).
        The preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
    ``(c) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying coal gasification technology facility placed 
in service by the taxpayer during such taxable year.
    ``(d) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        coal gasification technology facility which is being 
        constructed by or for the taxpayer when it is placed in 
        service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Nonself-constructed property.--In the case of 
                nonself-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Nonself-constructed property.--The term 
                `nonself-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying coal 
                gasification technology facility to be taken into 
                account.--Construction shall be taken into account only 
                if, for purposes of this subpart, expenditures therefor 
                are properly chargeable to capital account with respect 
                to the property.
            ``(5) Election.--Except as otherwise provided by 
        regulations, an election under this subsection may be made only 
        on or before the due date prescribed by law (including 
        extensions) for filing the taxpayer's return of the tax imposed 
        by this chapter for the first taxable year in which the 
        taxpayer makes a qualified investment. Such an election shall 
        apply to the taxable year for which made and to all subsequent 
        taxable years. Such an election, once made, may not be revoked 
        except with the consent of the Secretary.
    ``(e) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(f) Termination.--This section shall not apply with respect to 
any qualified investment made more than 10 years after the effective 
date of this section.''
    (c) Recapture.--Section 50(a) of the Internal Revenue Code of 1986 
(relating to other special rules) is amended by adding at the end the 
following:
            ``(6) Special rules relating to qualifying coal 
        gasification technology facility.--For purposes of applying 
        this subsection in the case of any credit allowable by reason 
        of section 48A, the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying coal gasification 
                technology facility (as defined by section 48A(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying coal gasification technology facility 
                disposed of, and whose denominator is the total number 
                of years over which such facility would otherwise have 
                been subject to depreciation. For purposes of the 
                preceding sentence, the year of disposition of the 
                qualifying coal gasification technology facility 
                property shall be treated as a year of remaining 
                depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying coal gasification 
                technology facility under section 48A, except that the 
                amount of the increase in tax under subparagraph (A) of 
                this paragraph shall be substituted in lieu of the 
                amount described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying coal 
                gasification technology facility.''
    (d) Special Rule Relating to Basis Adjustment.--Section 50(c) of 
the Internal Revenue Code of 1986 (relating to basis adjustment for 
investment credit property) is amended by adding at the end the 
following:
            ``(6) Nonapplication.--Paragraphs (1) and (2) shall not 
        apply to any qualifying coal gasification technology facility 
        credit under section 48A.''
    (e) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules) is amended by adding at the 
end the following:
            ``(10) No carryback of section 48a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying coal gasification 
        technology facility credit determined under section 48A may be 
        carried back to a taxable year ending before the date of 
        enactment of section 48A.''
    (f) Technical Amendments.--
            (1) Section 49(a)(1)(C) of the Internal Revenue Code of 
        1986 is amended by striking ``and'' at the end of clause (ii), 
        by striking the period at the end of clause (iii) and inserting 
        ``, and'', and by adding at the end the following:
                            ``(iv) the portion of the basis of any 
                        qualifying coal gasification technology 
                        facility attributable to any qualified 
                        investment (as defined by section 48A(c)).''
            (2) Section 50(a)(4) of such Code is amended by striking 
        ``and (2)'' and inserting ``(2), and (6)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding 
        after the item relating to section 48 the following:

                              ``Sec. 48A. Qualifying coal gasification 
                                        technology facility credit.''
    (g) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2001, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 6. PRODUCTION TAX CREDIT.

    (a) Credit for Production From Qualifying Coal Gasification 
Technology Facility.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits), is amended by adding at the end the following:

``SEC. 45E. CREDIT FOR PRODUCTION FROM QUALIFYING COAL GASIFICATION 
              TECHNOLOGY FACILITY.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
coal gasification technology facility production credit of any taxpayer 
for any taxable year is equal to--
            ``(1) the applicable amount of coal gasification technology 
        production credit, multiplied by
            ``(2) the kilowatt hours of electricity produced by the 
        taxpayer during such taxable year at a qualifying coal 
        gasification facility.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount of coal gasification technology facility production 
credit with respect to production from a qualifying coal gasification 
technology facility shall be $0.0125.
    ``(c) Inflation Adjustment Factor.--For calendar years after 2002, 
the amount in subsection (b) shall be adjusted by multiplying such 
amount by the inflation adjustment factor for the calendar year in 
which the amount is applied. If any amount as increased under the 
preceding sentence is not a multiple of 0.0001 cent, such amount shall 
be rounded to the nearest multiple of 0.0001 cent.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--Any term used in this section which is 
        also used in section 48A shall have the meaning given such term 
        in section 48A.
            ``(2) Inflation adjustment factor.--The term `inflation 
        adjustment factor' means, with respect to a calendar year, a 
        fraction the numerator of which is the GDP implicit price 
        deflator for the preceding calendar year and the denominator of 
        which is the GDP implicit price deflator for the calendar year 
        2001.
            ``(3) GDP implicit price deflator.--The term `GDP implicit 
        price deflator' means the most recent revision of the implicit 
        price deflator for the gross domestic product as computed by 
        the Department of Commerce before March 15 of the calendar 
        year.''
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 is amended by striking ``plus'' at the 
end of paragraph (12), by striking the period at the end of paragraph 
(13) and inserting ``, plus'', and by adding at the end the following:
            ``(14) the qualifying coal gasification technology facility 
        production credit determined under section 45E(a).''
    (c) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 5, is 
amended by adding at the end the following:
            ``(11) No carryback of section 45c credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying coal gasification 
        technology facility production credit determined under section 
        45E may be carried back to a taxable year ending before the 
        date of enactment of section 45E.''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following:

                              ``Sec. 45E. Credit for production from 
                                        qualifying coal gasification 
                                        technology facility.''
    (e) Effective Date.--The amendments made by this section shall 
apply to production on or after the date of enactment of this Act.
                                 <all>