To amend the Internal Revenue Code of 1986 to provide for a transferable credit against the income tax for producing energy from waste coal.

Summary: Environmental Restoration Act of 2005 - Amends the Internal Revenue Code to allow: (1) a transferable business tax credit for waste coal energy production; and (2) the issuance of tax-exempt facility bonds for waste coal processing facilities.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Environmental Restoration Act of 
2005''.

SEC. 2. 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.

SEC. 3. 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:

``SEC. 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:

``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.

SEC. 4. TREATMENT OF WASTE COAL PROCESSING FACILITY AS EXEMPT FACILITY 
              BOND.

    (a) In General.--Paragraph (6) of section 142(a) (relating to 
definition of exempt facility bond) is amended by striking 
``facilities,'' and inserting ``facilities, including waste coal 
processing facilities,''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 2005.