II 

109TH CONGRESS 

1ST SESSION S. 1153 

To provide Federal financial incentives for deployment of advanced coalbased generation technologies. 

IN THE SENATE OF THE UNITED STATES 

MAY 26, 2005 

Mr. BUNNING (for himself and Mr. Thomas) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To provide Federal financial incentives for deployment of 

advanced coal-based generation technologies. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Coal-based Generation 

5 Improvement Act’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to provide Federal finan8 cial assistance for projects that will use integrated gasifi9 cation combined cycle or other advanced coal-based gen10 eration technologies— 
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1 (1) in new electric generating units; 

2 (2) to repower existing electric generation units; 

3 or 

4 (3) to retrofit existing natural gas combined 

5 cycle units to operate on coal instead of natural gas. 

6 SEC. 3. DEFINITIONS. 

7 In this Act: 

8 (1) ADVANCED COAL-BASED GENERATION

9 TECHNOLOGY.—The term ‘‘advanced coal-based gen10 eration technology’’ means a technology that meets 

11 the requirements of section 8. 

12 (2) CERTIFIED PROJECT.—The term ‘‘certified 

13 project’’ means a qualifying advanced coal project 

14 that the Secretary has certified under section 4 as 

15 eligible to receive Federal financial assistance under 

16 this Act. 

17 (3) ELECTRIC GENERATION UNIT.—The term 

18 ‘‘electric generation unit’’ means any facility at least 

19 50 percent of the total annual net output of which 

20 is electrical power, including an otherwise eligible fa21 cility that is used in an industrial application. 

22 (4) INTEGRATED GASIFICATION COMBINED

23 CYCLE.—The term ‘‘integrated gasification combined 

24 cycle’’ means an electric generation unit that pro25 duces electricity by converting coal to synthesis gas 
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1 that is then used to fuel a combined-cycle plant that 

2 produces electricity from both a combustion turbine 

3 and a steam turbine. 

4 (5) QUALIFYING ADVANCED COAL PROJECT.—

5 The term ‘‘qualifying advanced coal project’’ means 

6 a project that meets the requirements of section 6. 

7 (6) SECRETARY.—The ‘‘Secretary’’ means the 

8 Secretary of Energy. 

9 SEC. 4. DEPLOYMENT INCENTIVE PROGRAM. 

10 (a) ESTABLISHMENT.—Not later than 180 days after 

11 the date of enactment of this Act, the Secretary shall 

12 begin carrying out a program to provide Federal financial 

13 incentives for deployment of advanced coal-based genera14 tion technologies. 

15 (b) CERTIFICATION.—

16 (1) IN GENERAL.—The Secretary may certify a 

17 qualifying advanced coal project as eligible to receive 

18 1 of the Federal financial incentives provided under 

19 section 5. 

20 (2) PERIOD OF ISSUANCE.—A certificate of eli21 gibility under this subsection may be issued only 

22 during the 10 fiscal year periods beginning on Octo23 ber 1, 2005. 
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1 (3) CERTIFICATION COMMITMENTS.—The Sec2 retary may issue certification commitments in ac3 cordance with section 6(a)(4)(B). 

4 (4) AGGREGATE GENERATING CAPACITY.— 

5 (A) IN GENERAL.—The aggregate gener6 ating capacity of projects certified by the Sec7 retary under paragraph (1) may not exceed 

8 10,000 megawatts. 

9 (B) PARTICULAR PROJECTS.—Of the total 

10 megawatts of capacity that the Secretary is au11 thorized to certify— 

12 (i) 5,000 megawatts shall be available 

13 only for use for integrated gasification 

14 combined cycle projects; and 

15 (ii) 5,000 megawatts shall be available 

16 only for use for projects that use other ad17 vanced coal-based generation technologies. 

18 (C) DETERMINATION OF CAPACITY.—In 

19 determining capacity under this paragraph in 

20 the case of a retrofitted or repowered plant, ca21 pacity shall be determined based on total design 

22 capacity after the retrofit or repowering of the 

23 existing facility is accomplished. 

24 (D) REVIEW AND REDISTRIBUTION.— 
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1 (i) REVIEW.—Not later than 6 years 

2 after the date of enactment of this Act, the 

3 Secretary shall review the projects certified 

4 and the megawatts allocated under this 

5 section as of that date. 

6 (ii) REDISTRIBUTION.—The Secretary 

7 may reallocate the remaining megawatts 

8 available under paragraph (4) if the Sec9 retary determines that— 

10 (I) capacity cannot be used be11 cause there are no qualifying applica12 tions for certification pending for any 

13 available capacity at the time of the 

14 review; or 

15 (II) a certification commitment 

16 made in accordance with paragraph 

17 (3) has not been revoked because the 

18 project subject to the certification 

19 commitment has been delayed as a re20 sult of third party opposition or litiga21 tion with respect to the proposed 

22 project. 

23 SEC. 5. ELECTION OF FEDERAL FINANCIAL INCENTIVES. 

24 (a) ELECTION.— 
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1 (1) IN GENERAL.—The project sponsor of a 

2 certified project may elect to receive the Federal fi3 nancial incentives described in either subsection (b) 

4 or (c). 

5 (2) LIMITATION.—A project sponsor may not 

6 elect incentives from more than 1 subsection de7 scribed in paragraph (1). 

8 (b) INVESTMENT TAX CREDIT AND SHORTENED RE9 COVERY PERIOD.— 

10 (1) ELIGIBILITY.—The project sponsor of a cer11 tified project may elect to receive the 20 percent in12 vestment tax credit provided under section 48 of the 

13 Internal Revenue Code of 1986 (as amended by 

14 paragraph (2) of this subsection) and the 5-year re15 covery period provided under section 168 

16 (e)(3)(B)(vi) of such Code. 

17 (2) AMENDMENTS TO INTERNAL REVENUE

18 CODE OF 1986.—Section 48 of the Internal Revenue 

19 Code of 1986 (relating to energy credit) is amend20 ed— 

21 (A) by striking ‘‘10 percent’’ in subsection 

22 (a)(2)(A) and inserting ‘‘10 percent for energy 

23 property other than certified coal property, and 

24 20 percent for certified coal property’’; 
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1 (B) by striking ‘‘or’’ at the end of clause 

2 (i) of subsection (a)(3)(A), by inserting ‘‘or’’ at 

3 the end of clause (ii) of such subsection, and by 

4 inserting after such clause the following: 

5 ‘‘(iii) certified coal property.’’; and 

6 (C) by inserting at the end the following 

7 new subsection: 

8 ‘‘(c) CERTIFIED COAL PROPERTY.—For purposes of 

9 this section: 

10 ‘‘(1) DEFINITION.—The term ‘certified coal 

11 property’ means any property that is part of a quali12 fying advanced coal project that the Secretary of 

13 Energy has certified under section 4 of the Coal14 based Generation Improvement Act, if the project 

15 sponsor has elected the application of this section for 

16 the project under section 5(b)(1) of such Act. 

17 ‘‘(2) INAPPLICABILITY OF CERTAIN PROVI18 SIONS.—The following provisions of this section are 

19 inapplicable to certified coal property: 

20 ‘‘(A) Subsection (a)(3)(D) (relating to per21 formance and quality standards). 

22 ‘‘(B) The penultimate sentence of sub23 section (a)(3) (relating to public utility prop24 erty).’’. 

25 (c) TAX CREDIT BONDS.— 
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1 (1) ELECTION.—A project sponsor that is a 

2 qualified issuer (as defined in section 54(i)(4) of the 

3 Internal Revenue Code of 1986 (as added by para4 graph (2)) may elect to issue clean energy bonds 

5 under such section 54 for the purpose of financing 

6 a certified project. 

7 (2) CREDIT TO HOLDERS OF CLEAN ENERGY

8 BONDS.— 

9 (A) IN GENERAL.—Part IV of subchapter 

10 A of chapter 1 of the Internal Revenue Code of 

11 1986 (relating to credits against tax) is amend12 ed by adding at the end the following new sub13 part: 

14 ‘‘Subpart H—Nonrefundable Credit to Holders of 

15 Clean Energy Bonds 

‘‘Sec. 54. Credit to holders of clean energy bonds. 

16 ‘‘SEC. 54. CREDIT TO HOLDERS OF CLEAN ENERGY BONDS. 

17 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax18 payer who holds a clean energy bond on a credit allowance 

19 date of such bond, which occurs during the taxable year, 

20 there shall be allowed as a credit against the tax imposed 

21 by this chapter for such taxable year an amount equal to 

22 the sum of the credits determined under subsection (b) 

23 with respect to credit allowance dates during such year 

24 on which the taxpayer holds such bond. 
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1 ‘‘(b) AMOUNT OF CREDIT.— 

2 ‘‘(1) IN GENERAL.—The amount of the credit 

3 determined under this subsection with respect to any 

4 credit allowance date for a clean energy bond is 25 

5 percent of the annual credit determined with respect 

6 to such bond. 

7 ‘‘(2) ANNUAL CREDIT.—The annual credit de8 termined with respect to any clean energy bond is 

9 the product of— 

10 ‘‘(A) the credit rate determined by the Sec11 retary under paragraph (3) for the day on 

12 which such bond was sold, multiplied by 

13 ‘‘(B) the outstanding face amount of the 

14 bond. 

15 ‘‘(3) DETERMINATION.—For purposes of para16 graph (2), with respect to any clean energy bond, 

17 the Secretary shall determine daily or caused to be 

18 determined daily a credit rate which shall apply to 

19 the first day on which there is a binding, written 

20 contract for the sale or exchange of the bond. The 

21 credit rate for any day is the credit rate which the 

22 Secretary or the Secretary’s designee estimates will 

23 permit the issuance of clean energy bonds with a 

24 specified maturity or redemption date without dis-
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1 count and without interest cost to the qualified 

2 issuer. 

3 ‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 

4 of this section, the term ‘credit allowance date’ 

5 means— 

6 ‘‘(A) March 15, 

7 ‘‘(B) June 15, 

8 ‘‘(C) September 15, and 

9 ‘‘(D) December 15. 

10 Such term also includes the last day on which the 

11 bond is outstanding. 

12 ‘‘(5) SPECIAL RULE FOR ISSUANCE AND RE13 DEMPTION.—In the case of a bond which is issued 

14 during the 3-month period ending on a credit allow15 ance date, the amount of the credit determined 

16 under this subsection with respect to such credit al17 lowance date shall be a ratable portion of the credit 

18 otherwise determined based on the portion of the 3- 

19 month period during which the bond is outstanding. 

20 A similar rule shall apply when the bond is redeemed 

21 or matures. 

22 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 

23 ‘‘(1) IN GENERAL.—The credit allowed under 

24 subsection (a) for any taxable year shall not exceed 

25 the excess of— 
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1 ‘‘(A) the sum of the regular tax liability 

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over 

4 ‘‘(B) the sum of the credits allowable 

5 under this part (other than subpart C thereof, 

6 relating to refundable credits). 

7 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

8 credit allowable under subsection (a) exceeds the 

9 limitation imposed by paragraph (1) for such taxable 

10 year, such excess shall be carried to the succeeding 

11 taxable year and added to the credit allowable under 

12 subsection (a) for such taxable year. 

13 ‘‘(d) CLEAN ENERGY BOND.—For purposes of this 

14 section— 

15 ‘‘(1) IN GENERAL.—The term ‘clean energy 

16 bond’ means any bond issued as part of an issue 

17 if— 

18 ‘‘(A) the bond is issued by a qualified 

19 issuer, 

20 ‘‘(B) 95 percent or more of the proceeds 

21 from the sale of such issue are to be used for 

22 capital expenditures incurred by qualified bor23 rowers for 1 or more qualified projects, 
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1 ‘‘(C) the qualified issuer designates such 

2 bond for purposes of this section and the bond 

3 is in registered form, and 

4 ‘‘(D) the issue meets the requirements of 

5 subsections (e) and (g). 

6 ‘‘(2) QUALIFIED PROJECT; SPECIAL USE

7 RULES.— 

8 ‘‘(A) IN GENERAL.—The term ‘qualified 

9 project’ means any certified coal property as de10 termined under section 48(c)(1) owned by a 

11 qualified borrower. 

12 ‘‘(B) REFINANCING RULES.—For purposes 

13 of paragraph (1)(B), a qualified project may be 

14 refinanced with proceeds of a clean energy bond 

15 only if the indebtedness being refinanced (in16 cluding any obligation directly or indirectly refi17 nanced by such indebtedness) was originally in18 curred by a qualified borrower after the date of 

19 the enactment of this section. 

20 ‘‘(C) REIMBURSEMENT.—For purposes of 

21 paragraph (1)(B), a clean energy bond may be 

22 issued to reimburse a qualified borrower for 

23 amounts paid after the date of the enactment 

24 of this section with respect to a qualified 

25 project, but only if prior to the payment of such 
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1 expenditure, the qualified borrower declared its 

2 intent to reimburse such expenditure with the 

3 proceeds of a clean energy bond. 

4 ‘‘(D) TREATMENT OF CHANGES IN USE.— 

5 For purposes of paragraph (1)(B), the proceeds 

6 of an issue shall not be treated as used for a 

7 qualified project to the extent that a qualified 

8 borrower takes any action within its control 

9 which causes such proceeds not to be used for 

10 a qualified project. The Secretary shall pre11 scribe regulations specifying remedial actions 

12 that may be taken (including conditions to tak13 ing such remedial actions) to prevent an action 

14 described in the preceding sentence from caus15 ing a bond to fail to be a clean energy bond. 

16 ‘‘(e) MATURITY LIMITATIONS.— 

17 ‘‘(1) DURATION OF TERM.—A bond shall not be 

18 treated as a clean energy bond if such bond is issued 

19 as part of an issue and— 

20 ‘‘(A) the average maturity of bonds issued 

21 as a part of such issue, exceeds 

22 ‘‘(B) 120 percent of the average reasonable 

23 expected economic life of the facilities being fi24 nanced with the proceeds from the sale of such 

25 issue. 
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1 ‘‘(2) DETERMINATION OF AVERAGES.—For pur2 poses of paragraph (1), the determination of aver3 ages of an issue and economic life of any facility 

4 shall be determined in accordance with section 

5 147(b). 

6 ‘‘(3) RATABLE PRINCIPAL AMORTIZATION RE7 QUIRED.—A bond shall not be treated as a clean en8 ergy bond unless it is part of an issue which pro9 vides for an equal amount of principal to be paid by 

10 the qualified issuer during each calendar year that 

11 the issue is outstanding. 

12 ‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross 

13 income includes the amount of the credit allowed to the 

14 taxpayer under this section (determined without regard to 

15 subsection (c)) and the amount so included shall be treat16 ed as interest income. 

17 ‘‘(g) SPECIAL RULES RELATING TO EXPENDI18 TURES.— 

19 ‘‘(1) IN GENERAL.—An issue shall be treated as 

20 meeting the requirements of this subsection if— 

21 ‘‘(A) at least 95 percent of the proceeds 

22 from the sale of the issue are to be spent for 

23 1 or more qualified projects within the 5-year 

24 period beginning on the date of issuance of the 

25 clean energy bond, 
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1 ‘‘(B) a binding commitment with a third 

2 party to spend at least 10 percent of the pro3 ceeds from the sale of the issue will be incurred 

4 within the 6-month period beginning on the 

5 date of issuance of the clean energy bond or, in 

6 the case of a clean energy bond, the proceeds 

7 of which are to be loaned to 2 or more qualified 

8 borrowers, such binding commitment will be in9 curred within the 6-month period beginning on 

10 the date of the loan of such proceeds to a quali11 fied borrower, and 

12 ‘‘(C) such projects will be completed with 

13 due diligence and the proceeds from the sale of 

14 the issue will be spent with due diligence. 

15 ‘‘(2) EXTENSION OF PERIOD.—Upon submis16 sion of a request prior to the expiration of the period 

17 described in paragraph (1)(A), the Secretary may 

18 extend such period if the qualified issuer establishes 

19 that the failure to satisfy the 5-year requirement is 

20 due to reasonable cause and the related projects will 

21 continue to proceed with due diligence. 

22 ‘‘(3) FAILURE TO SPEND REQUIRED AMOUNT

23 OF BOND PROCEEDS WITHIN 5 YEARS.—To the ex24 tent that less than 95 percent of the proceeds of 

25 such issue are expended within such 5-year period 
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1 (and no extension has been obtained under para2 graph (2)), the qualified issuer shall redeem all of 

3 the nonqualified bonds on the earliest call date sub4 sequent to the expiration of the 5-year period. If 

5 such earliest call date is more than 90 days subse6 quent to the expiration of the 5-year period, the 

7 qualified issuer shall establish a yield-restricted de8 feasance escrow within such 90 days to retire such 

9 nonqualified bonds on the earlier of the date which 

10 is 10 years after the issue date or the first call date. 

11 For purposes of this paragraph, the term ‘non12 qualified bonds’ means the portion of the out13 standing bonds in an amount that, if the remaining 

14 bonds were issued on the fifth anniversary of the 

15 date of the issuance of the issue, at least 95 percent 

16 of the proceeds of the remaining bonds would be 

17 used to provide qualified projects. 

18 ‘‘(h) SPECIAL RULES RELATING TO ARBITRAGE.— 

19 ‘‘(1) IN GENERAL.—A bond which is part of an 

20 issue shall not be treated as a clean energy bond un21 less, with respect to the issue of which the bond is 

22 a part, the qualified issuer satisfies the arbitrage re23 bate requirements of section 148 with respect to 

24 gross proceeds of the issue (other than any amounts 

25 applied in accordance with subsection (g)). For pur-
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1 poses of such requirements, yield over the term of an 

2 issue shall be determined under the principles of sec3 tion 148 based on the qualified issuer’s payments of 

4 principal, interest (if any), and fees for qualified 

5 guarantees on such issue. 

6 ‘‘(2) EXCEPTION.—Amounts on deposit in a 

7 bona fide debt service fund with regard to any clean 

8 energy bond are not subject to the arbitrage rebate 

9 requirements of section 148. 

10 ‘‘(i) COOPERATIVE ELECTRIC COMPANY; QUALIFIED

11 ENERGY TAX CREDIT BOND LENDER; GOVERNMENTAL

12 BODY; QUALIFIED BORROWER.—For purposes of this sec13 tion— 

14 ‘‘(1) COOPERATIVE ELECTRIC COMPANY.—The 

15 term ‘cooperative electric company’ means a mutual 

16 or cooperative electric company described in section 

17 501(c)(12) or section 1381(a)(2)(C), or a not-for18 profit electric utility which has received a loan or 

19 loan guarantee under the Rural Electrification Act. 

20 ‘‘(2) CLEAN ENERGY BOND LENDER.—The 

21 term ‘clean energy bond lender’ means a lender 

22 which is a cooperative which is owned by, or has out23 standing loans to, 100 or more cooperative electric 

24 companies and is in existence on February 1, 2002, 
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1 and shall include any affiliated entity which is con2 trolled by such lender. 

3 ‘‘(3) GOVERNMENTAL BODY.—The term ‘gov4 ernmental body’ means any State, territory, posses5 sion of the United States, the District of Columbia, 

6 Indian tribal government, and any political subdivi7 sion thereof. 

8 ‘‘(4) QUALIFIED ISSUER.—The term ‘qualified 

9 issuer’ means— 

10 ‘‘(A) a clean energy bond lender, 

11 ‘‘(B) a cooperative electric company, 

12 ‘‘(C) a governmental body, or 

13 ‘‘(D) the Tennessee Valley Authority. 

14 ‘‘(5) QUALIFIED BORROWER.—The term ‘quali15 fied borrower’ means— 

16 ‘‘(A) a cooperative electric company, 

17 ‘‘(B) a governmental body, or 

18 ‘‘(C) the Tennessee Valley Authority. 

19 ‘‘(j) SPECIAL RULES RELATING TO POOL BONDS.— 

20 No portion of a pooled financing bond may be allocable 

21 to loan unless the borrower has entered into a written loan 

22 commitment for such portion prior to the issue date of 

23 such issue. 

24 ‘‘(k) OTHER DEFINITIONS AND SPECIAL RULES.— 

25 For purposes of this section— 
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1 ‘‘(1) BOND.—The term ‘bond’ includes any ob2 ligation. 

3 ‘‘(2) POOLED FINANCING BOND.—The term 

4 ‘pooled financing bond’ shall have the meaning given 

5 such term by section 149(f)(4)(A). 

6 ‘‘(3) PARTNERSHIP; S CORPORATION; AND

7 OTHER PASS-THRU ENTITIES.—Under regulations 

8 prescribed by the Secretary, in the case of a partner9 ship, trust, S corporation, or other pass-thru entity, 

10 rules similar to the rules of section 41(g) shall apply 

11 with respect to the credit allowable under subsection 

12 (a). 

13 ‘‘(4) BONDS HELD BY REGULATED INVEST14 MENT COMPANIES.—If any clean energy bond is held 

15 by a regulated investment company, the credit deter16 mined under subsection (a) shall be allowed to 

17 shareholders of such company under procedures pre18 scribed by the Secretary. 

19 ‘‘(5) TREATMENT FOR ESTIMATED TAX PUR20 POSES.—Solely for purposes of sections 6654 and 

21 6655, the credit allowed by this section to a tax22 payer by reason of holding a clean energy bond on 

23 a credit allowance date shall be treated as if it were 

24 a payment of estimated tax made by the taxpayer on 

25 such date. 
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1 ‘‘(6) REPORTING.—Issuers of clean energy 

2 bonds shall submit reports similar to the reports re3 quired under section 149(e). 

4 ‘‘(l) TERMINATION.—This section shall not apply 

5 with respect to any bond issued after December 31, 

6 2008.’’. 

7 (B) REPORTING.—Subsection (d) of sec8 tion 6049 of such Code (relating to returns re9 garding payments of interest) is amended by 

10 adding at the end the following new paragraph: 

11 ‘‘(8) REPORTING OF CREDIT ON CLEAN ENERGY

12 BONDS.— 

13 ‘‘(A) IN GENERAL.—For purposes of sub14 section (a), the term ‘interest’ includes amounts 

15 includible in gross income under section 54(f) 

16 and such amounts shall be treated as paid on 

17 the credit allowance date (as defined in section 

18 54(b)(4)). 

19 ‘‘(B) REPORTING TO CORPORATIONS, 

20 ETC.—Except as otherwise provided in regula21 tions, in the case of any interest described in 

22 subparagraph (A), subsection (b)(4) shall be 

23 applied without regard to subparagraphs (A), 

24 (H), (I), (J), (K), and (L)(i) of such subsection. 
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1 ‘‘(C) REGULATORY AUTHORITY.—The Sec2 retary may prescribe such regulations as are 

3 necessary or appropriate to carry out the pur4 poses of this paragraph, including regulations 

5 which require more frequent or more detailed 

6 reporting.’’. 

7 (C) CLERICAL AMENDMENTS.— 

8 (i) The table of subparts for part IV 

9 of subchapter A of chapter 1 of such Code 

10 is amended by adding at the end the fol11 lowing new item: 

‘‘SUBPART H. NONREFUNDABLE CREDIT TO HOLDERS OF CLEAN ENERGY

BONDS.’’. 

12 (ii) Section 6401(b)(1) of such Code 

13 is amended by striking ‘‘and G’’ and in14 serting ‘‘G, and H’’. 

15 (D) ISSUANCE OF REGULATIONS.—The 

16 Secretary of Treasury shall issue regulations re17 quired under section 54 of the Internal Revenue 

18 Code of 1986 (as added by this paragraph) not 

19 later than 120 days after the date of the enact20 ment of this Act. 

21 (E) EFFECTIVE DATE.—The amendments 

22 made by this paragraph shall apply to bonds 

23 issued after the date of the enactment of this 

24 Act. 
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1 SEC. 6. QUALIFYING ADVANCED COAL PROJECTS. 

2 (a) REQUIREMENTS.—For the purpose of section 

3 4(b), a project shall be considered a qualifying advanced 

4 coal project that the Secretary may certify under section 

5 4(b) if the Secretary determines that, at a minimum— 

6 (1) the project uses an advanced coal-based 

7 generation technology— 

8 (A) in a new electric generation unit; or 

9 (B) to retrofit or repower an existing elec10 tric generation unit (including an existing nat11 ural gas-fired combined cycle unit); 

12 (2) the fuel input for the project, when com13 pleted, is at least 75 percent coal; 

14 (3) the applicant provides assurance satisfac15 tory to the Secretary that— 

16 (A) the project is technologically feasible; 

17 and 

18 (B) with the Federal financial incentives, 

19 the project is economically feasible, taking into 

20 consideration— 

21 (i) the regulatory approvals or power 

22 purchase contracts referred to in para23 graph (4)(A); 

24 (ii) arrangements for supply of fuel to 

25 the project; 
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1 (iii) contracts or other arrangements 

2 for construction of the project facilities; 

3 (iv) any performance guarantees to be 

4 provided by contractors and equipment 

5 vendors; and 

6 (v) evidence of the availability of 

7 funds to develop and construct the project; 

8 (4) the applicant demonstrates that the appli9 cant has obtained— 

10 (A) approval by the appropriate regulatory 

11 commission of the recovery of the cost of the 

12 project; or 

13 (B) a power purchase agreement (or letter 

14 of intent subject to subsection (b)) that has 

15 been approved by the board of directors of, and 

16 executed by, a creditworthy purchasing party; 

17 and 

18 (5) except as provided in subsection (c), the ap19 plicant demonstrates that the applicant has, or will, 

20 obtain all project agreements and approvals. 

21 (b) LETTER OF INTENT.—A letter of intent described 

22 in subsection (a)(4)(B) shall be replaced by a binding con23 tract before a certificate may be issued. 

24 (c) PROJECT AGREEMENTS AND APPROVALS.— 
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1 (1) DEFINITION OF PROJECT AGREEMENTS AND

2 APPROVALS.— 

3 (A) IN GENERAL.—In this section, the 

4 term ‘‘project agreements and approvals’’ 

5 means— 

6 (i) all necessary power purchase 

7 agreements and all other contracts that the 

8 Secretary determines are necessary to con9 struct, finance, and operate a project; and 

10 (ii) all authorizations by Federal, 

11 State, and local agencies that are required 

12 in order to construct, operate, and recover 

13 the cost of the project. 

14 (B) INCLUSION.—The term ‘‘project agree15 ments and approvals’’ includes any approvals or 

16 contracts required under subparagraph (A) or 

17 (B) of subsection (a)(4). 

18 (2) CERTIFICATION COMMITMENT.— 

19 (A) IN GENERAL.—If the applicant has not 

20 obtained all agreements and approvals prior to 

21 application, the Secretary may issue a certifi22 cation commitment. 

23 (B) REQUIREMENTS.— 

24 (i) IN GENERAL.—An applicant that 

25 receives a certification commitment shall 
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1 obtain any remaining project agreements 

2 and approvals not later than 4 years after 

3 the issuance of the certification commit4 ment. 

5 (ii) REVOCATION.—If all project 

6 agreements and approvals are not obtained 

7 during the 4-year period described in 

8 clause i), the certification commitment is 

9 terminated without any other action by the 

10 Secretary. 

11 (iii) FINAL CERTIFICATE.—No certifi12 cate may be issued until such project 

13 agreements and approvals are obtained. 

14 (b) INCENTIVES.—An application for certification 

15 shall specify which of the incentives under section 5 the 

16 project sponsor will elect. 

17 SEC. 7. PROCESS FOR ACTING ON APPLICATIONS. 

18 (a) IN GENERAL.—The Secretary shall act on appli19 cations for certification under section 3 as the applications 

20 are received. 

21 (b) DETERMINATION.—In determining whether to 

22 certify a qualifying advanced coal project, the Secretary 

23 shall take into account any written statement from the 

24 Governor of the State in which the project is to be sited 
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1 that the construction and operation of the project is con2 sistent with State environmental and energy policy. 

3 SEC. 8. ADVANCED COAL-BASED GENERATION TECH4 NOLOGY. 

5 (a) IN GENERAL.—For the purposes of this Act, an 

6 electric generation unit uses advanced coal-based genera7 tion technology if— 

8 (1) the unit— 

9 (A) uses integrated gasification combined 

10 cycle technology; or 

11 (B) has a design net heat rate of 8530 

12 Btu/kWh (40 percent efficiency); and 

13 (2) the vendor warrants that the unit is de14 signed to meet the performance requirements in the 

15 following table: 

Performance characteristic Design level for 

project: 

SO2 (% removal) .............................................. 99% of such amount 

NOx (emissions) ............................................... 0.07 lbs/MMBTU 

PM* (emissions) ............................................... 0.015 lbs/MMBTU 

Hg (% removal) ............................................... 90%. 

16 (b) DESIGN NET HEAT RATE.—For purposes of this 

17 section, design net heat rate with respect to an electric 

18 generation unit shall— 

19 (1) be measured in Btu per kilowatt hour (high20 er heating value); 

21 (2) be based on the design annual heat input to 

22 the design and the design annual net electrical 
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•S 1153 IS 

1 power, fuels, and chemicals output from the unit 

2 (determined without regard to the cogeneration of 

3 steam by the unit); 

4 (3) be adjusted for the heat content of the de5 sign coal to be used by the unit— 

6 (A) if the heat content is less than 13,500 

7 Btu per pound but greater than 7,000 Btu per 

8 pound, according to the following formula: unit 

9 net heat rate x [1-{((13,500-design coal heat 

10 content, Btu per pound)/1,000)* 0.013}]; and 

11 (B) if the heat content is less than or 

12 equal to 7,000 Btu per pound, according to the 

13 following formula: unit net heat rate x [1- 

14 {((13,500-design coal heat content, Btu per 

15 pound)/1,000)* 0.018}]; and 

16 (4) be corrected for the site reference conditions 

17 of— 

18 (A) elevation above sea level of 500 feet; 

19 (B) air pressure of 14.4 pounds per square 

20 inch absolute; 

21 (C) temperature, dry bulb of 63°F; 

22 (D) temperature, wet bulb of 54°F; and 

23 (E) relative humidity of 55 percent. 
28

•S 1153 IS 

1 SEC. 9. FEDERAL PROJECT COORDINATOR. 

2 The Secretary shall designate a Federal project coor3 dinator to facilitate any Federal agency approvals of eligi4 ble advanced coal generation projects. 

5 SEC. 10. APPLICABILITY. 

6 No technology, or level of emission reduction, solely 

7 by reason of the use of the technology, or the achievement 

8 of the emission reduction, by 1 or more facilities receiving 

9 assistance under this Act, shall be considered to indicate 

10 that the technology or performance level is—

11 (1) adequately demonstrated for purposes of 

12 section 111 of the Clean Air Act (42 U.S.C. 7411); 

13 (2) achievable for purposes of section 169 of 

14 that Act (42 U.S.C. 7479); or 

15 (3) achievable in practice for purposes of sec16 tion 171 of that Act (42 U.S.C. 7501).

Æ