Findings and purpose

(a)

Findings

Congress finds the following: (1)Coal mining has been an important part of the industrial heritage of the United States for over 150 years. As coal is removed from underground mines, a large amount of other materials accompanies the coal to the surface. This substance, known as gob, contains a mixture of clay, rocks, soil, minerals, and other raw materials. The gob piles contain millions of cubic feet of material known to contribute to acid mine drainage. (2)The mountains of gob contain large amounts of potential energy that can be recycled to create new sources of power. The technology to use the gob pile materials as an efficient alternative energy source has been developed over the past 15 years. However, the incentive to invest in the technology has not been pursued due to the high capitalization and operating costs. (3)Circulating Fluidized Bed (CFB) combustion is a clean coal technology that produces low emissions of sulfur dioxides, nitrogen oxides, particulate matter, and mercury. CFB represents the best available control technology to burn waste coal and recover the energy stored therein. By using waste coal as the fuel source, the existing waste coal sites can be reclaimed, the mine drainage associated with these sites ameliorated, and the alkaline coal combustion byproducts beneficially used in reclaiming the mine lands. (4)Developing alternate energy sources reduces energy costs, reduces dependencies on foreign oil, and improves the competitiveness of American industry. Increasing energy demands, and over reliance on limited sources of energy, will result in higher prices for homeowners and industry. Higher production costs hurt American jobs, overburdens industry, and stifles economic growth. The development of alternate energy sources will result in lower prices, a cleaner environment, new manufacturing, and more jobs. (b)

Purpose

The purpose of this Act is to encourage and create incentives for alternate fuel sources to meet the increasing demands of homeowners and industries while helping to keep the environment clean by utilizing waste coal efficiently.

Energy produced from waste coal

(a)

In general

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 inserting after section 45I the following new section:

45J.

Energy produced from waste coal

(a)

General rule

For purposes of section 38, the waste coal energy production credit for any taxable year is an amount equal to $0.75 per million Btu of heat input utilized by the taxpayer to produce energy in an eligible facility from qualified waste coal during the taxable year. (b)

Credit reduced for grants

The amount of the credit determined under subsection (a) with respect to any project for any taxable year shall be reduced by the amount which is the product of the amount so determined for such year and a fraction— (1)the numerator of which is the sum, for the taxable year and all prior taxable years, of— (A)grants provided by the United States, a State, or a political subdivision of a State for use in connection with the project, and (B)the amount of any other credit allowable with respect to any property which is part of the project, and (2)the denominator of which is the aggregate amount of additions to the capital account for the project for the taxable year and all prior taxable years.

The amounts under the preceding sentence for any taxable year shall be determined as of the close of the taxable year.

(c)

Qualified waste coal

(1)

In general

For purposes of this section, the term qualified waste coal means coal certified by the Secretary to be waste (as defined in paragraphs (1) through (6) of section 292.202(b) of title 18, Code of Federal Regulations (as in effect on the date of the enactment of this section)). (2)

Certification process

For purposes of paragraph (1), coal may not be certified as qualified waste coal unless application therefor is submitted— (A)with respect to a facility placed in service prior to, or within 12 months after, the date of enactment of this section, not later than 6 months after the date of such enactment, and (B)with respect to a facility placed in service at least 12 months after the date of the enactment of this section, at least 6 months prior to the anticipated commercial operation date of such facility. (d)

Eligible facility

For purposes of this section— (1)

In general

The term eligible facility means a facility— (A)whose heat input is not less than 75 percent from qualified waste coal, (B)which, as of the date on which the Secretary determines by private letter ruling that the taxpayer is eligible for the allowance of the credit under this section, has under its control, by ownership, lease, or contract— (i)with respect to a facility placed in service after the date of the enactment of this section, not less than a 15-year supply of qualified waste coal, or (ii)with respect to a facility placed in service prior to the date of the enactment of this section, not less than a 10-year supply of qualified waste coal, and (C)which— (i)is placed in service prior to, or within 12 months after, the date of the enactment of this section, or (ii)is placed in service not more than 48 months after the month in which the taxpayer receives the private letter ruling referred to in subparagraph (B). (2)

Private letter ruling

For purposes of paragraph (1)(B), a private letter ruling shall not be taken into account unless the request for such ruling is submitted to the Secretary within 30 days after the date on which the supply of coal that the taxpayer has under its control is certified as qualified waste coal under subsection (c). (e)

Other definition and applicable rules

For purposes of this section— (1)

Heat content

Heat content shall be determined on an as received basis. (2)

Applicable rules

Rules similar to the rules of section 45(e) (other than paragraph (2)) shall apply. (3)

Force majeure

Performance time requirements specified in this section may be suspended by the Secretary for reasons beyond the control of the taxpayer when the Secretary is so requested to extend deadlines by the taxpayer as long as the taxpayer makes such request within 72 hours of determining such event has occurred. Such events include acts of God and third party actions causing delay. (f)

Termination of credit

(1)

In general

No amount shall be allowed as a credit under subsection (a) with respect to an eligible facility for taxable years beginning after the expiration of the period determined under paragraph (1). (2)

Period of applicability

The period determined under this paragraph is— (A)with respect to a facility placed in service not later than 5 years after the date of the enactment of this section, the 10-year period beginning on the date on which such facility receives certification that it is an eligible facility (as defined in subsection (d)), and (B)with respect to a facility placed in service more than 5 years after the date of enactment of this section, the period beginning on the date on which such facility receives certification that it is an eligible facility (as defined in subsection (d)) and ending on the date that is 15 years after the date of the enactment of this section. (g)

Special annual application

Notwithstanding any other provision of this title, no amount shall be allowed as a credit for a taxable year under subsection (a) until after the taxpayer submits an application for such credit to the Secretary. (h)

Credit may be transferred

Nothing in any law or rule of law shall be construed to limit the transferability of the credit allowed by this section through sale or repurchase agreements.

(b)

Credit made part of general business credit

Subsection (b) of section 38 of such Code (relating to current year business credit) is amended by striking plus at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting , plus, and by adding at the end the following new paragraph:

(20)the waste coal energy production credit determined under section 45J.

(c)

Denial of double benefit

Section 280C of such Code (relating to certain expenses for which credits are allowable) is amended by adding at the end the following new subsection:

(e)

Waste coal energy production credit

No deduction shall be allowed for that portion of expenses incurred by the taxpayer to purchase qualified waste coal (excluding costs of transportation, handling, and preparation that may be included in the purchase price) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45J.

(d)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 45I the following new item:

Sec. 45J. Energy produced from waste coal

(e)

Effective date

The amendments made by this section shall apply to taxable years ending after December 31, 2005.