Modification of refined coal credit to include qualified coal waste sludge recycling

(a)

In general

Section 45 of the Internal Revenue Code of 1986 (relating to electricity produced from certain renewable resources, etc.) is amended— (1)in subsection (b)(2) by inserting the $3.00 amount in subsection (e)(8)(B), after the $4.375 amount in subsection (e)(8)(A),, (2)in subsection (b)(2) by striking subsection (e)(8)(B)(i) and inserting subsection (e)(8)(C)(i), (3)in subsection (c)(7) by adding at the end the following:

(C)

Refined coal from a qualified coal waste sludge recycling process

Refined coal shall also include, without regard to subparagraphs (A) and (B) hereof, a solid fuel produced from a qualified coal waste sludge recycling process.

(4)in subsection (d)(8) by striking 2009. and inserting 2009, or in the case of a facility that uses a qualified coal waste sludge recycling process, a facility that was placed in service not later than one year after the date of enactment of the credit under this section for refined coal from a qualified coal waste sludge recycling process. For purposes of this subsection, a qualified coal waste sludge recycling facility shall be treated as placed in service when such facility is in place and functioning to process coal with coal waste sludge. A qualified coal waste sludge recycling facility includes a plant, comprised of one or more batch tanks and/or one or more storage tanks, steam and spray pipes, processing pumps, variable speed drives, a flowmeter and related electrical equipment, that processes coal and liquefied coal waste sludge., (5)in subsection (e)(8)(A) by inserting (other than refined coal from a qualified coal waste sludge recycling process) after refined coal the first place it appears, (6)in subsection (e)(8) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, and by inserting after subparagraph (A) the following new subparagraph:

(B)

Availability and determination of credit amount for refined coal from a qualified coal waste sludge recycling process

In the case of a producer of refined coal from a qualified coal waste sludge recycling process, there shall be allowed a credit for the taxable year under this section of $3.00 per barrel-of-oil equivalent of refined coal from a qualified coal waste sludge recycling process— (i)produced by the taxpayer at a facility using a refined coal from qualified coal waste sludge recycling process during the period beginning on the date of enactment of this subparagraph and ending on the date that is four years from the later of the first day of the fifth full month after the date of enactment of this subparagraph or its placed-in-service date, and (ii)sold by the taxpayer— (I)to an unrelated person, and (II)during such period and taxable year.

For purposes of the preceding sentence, barrel-of-oil equivalent is the amount of refined coal from a qualified coal waste sludge recycling process that has a Btu content of 5.8 million.

(7)in subsection (e)(8)(C), as redesignated by paragraph (6), by striking The amount and inserting Except for a facility producing refined coal from a qualified coal waste sludge recycling process, the amount, (8)in subsection (e)(8), as amended by paragraph (6), by adding at the end the following new subparagraph:

(E)

Qualified coal waste sludge recycling process

(i)

Definition

For purposes of this section, a qualified coal waste sludge recycling process means a process using a facility to liquefy coal waste sludge and distribute the liquefied coal waste sludge on the coal to create a feedstock for the manufacture of coke. The term coal waste sludge means the tar decanter sludge and related byproducts of the coking process, including such materials that have been stored in ground, in tanks and in lagoons, that have been treated as hazardous wastes under applicable Federal environmental rules absent liquefaction and processing with coal into a feedstock for the manufacture of coke. The process liquefies coal waste sludge and distributes approximately one-quarter to one-half gallon of liquefied coal waste sludge per each ton of metallurgical coal. Liquefied coal waste sludge in excess of such amounts would have adverse effects on the operations and equipment of the coke batteries that use refined coal from a qualified coal waste sludge recycling process as a feedstock for coke. Coal waste sludge has an energy content ranging from 7,000 to 16,000 Btus per pound. (ii)

Interaction between section 45 and section 45K; cross reference

A taxpayer selling refined coal from a qualified coal waste sludge recycling process shall be entitled to a credit under this section for all such refined coal that meets the requirements of this section. The credit under this section shall be available notwithstanding the fact that such refined coal is purchased for use as a feedstock for coke by a taxpayer that has previously claimed credits under section 45K for the production of coke or coke gas. For rules applicable to taxpayers producing coke or coke gas from refined coal from a qualified coal waste sludge recycling process, see section 45K(h).

, and

(9)in subsection (e)(9)(B) by striking The term and inserting Except for a facility producing refined coal from a qualified coal waste sludge recycling process, the term. (b)

No double benefit; cross reference

Section 45K of such Code is amended by adding at the end the following new subsection:

(h)

No double benefit; cross reference

No credit shall be allowed under this section for coke or coke gas manufactured from refined coal from a qualified coal waste sludge recycling process (as defined by section 45(e)(8)(E)(i)) for which credits have been claimed under section 45; provided that taxpayers may claim the credit under this section for coke or coke gas produced from feedstocks for which a refined coal credit under section 45 has not been claimed. For rules governing the interaction of section 45 and this section that are applicable to taxpayers producing refined coal from a qualified coal waste sludge recycling process, see section 45(e)(8)(E)(ii).

(c)

Effective date

The amendments made by this Act shall apply to refined coal produced after the date of enactment of this Act.