Production Tax Credit for Refined Coal 

Part III - Administrative, Procedural, and Miscellaneous 

Notice 2009-90 

SECTION 1. PURPOSE 

This notice sets forth interim guidance pending the issuance of regulations 

relating to the tax credit under § 45 of the Internal Revenue Code (Code) for refined 

coal. 

SECTION 2. BACKGROUND 

Sections 45(c)(7), (d)(8), and (e)(8) of the Code provide definitions and rules 

relating to the tax credit for refined coal (the refined coal credit). Section 45(e)(8) 

provides that the refined coal credit increases a taxpayer’s credit determined under 

the other provisions of § 45. The credit is allowed for qualified refined coal (1) 

produced by the taxpayer at a refined coal production facility during the ten-year 

period beginning on the date the facility is originally placed in service, and (2) sold 

by the taxpayer to an unrelated person during that ten-year period. 

Sections 45(c)(7), (d)(8), and (e)(8) were added to the Code by sections 

710(a), (b)(1), and (b)(2), respectively, of the American Jobs Creation Act of 2004, 
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Pub. L. No. 108-357. These provisions were amended by sections 403(t) and 

412(j)(1) and (2) of the Gulf Opportunity Zone Act of 2005, Pub. L. No. 109-135, and 

by sections 101 and 108 of the Energy Improvement and Extension Act of 2008, 

Division B of Pub. L. No. 110-343. 

SECTION 3. DEFINITIONS, ETC. 

The following definitions apply for purposes of this notice: 

.01 Refined Coal. 

(1) In General. Except as otherwise provided in this section 3.01, the term 

“refined coal” means fuel that-- 

(a) is a liquid, gaseous, or solid fuel produced from coal (including lignite) or 

high carbon fly ash, including (except to the extent inconsistent with section 

3.01(1)(b) of this notice) such fuel used as a feedstock; 

(b) is sold by the taxpayer (producer), to an unrelated person, with the 

reasonable expectation that it will be used for the purpose of producing steam; and 

(c) is certified by the taxpayer as resulting (when used in the production of 

steam) in a qualified emission reduction. 

(2) Steel Industry Fuel. Refined coal includes steel industry fuel (as defined 

in § 45(c)(7)(C)) that is produced and sold after September 30, 2008. 

(3) Pre-2009 Facilities. Refined coal does not include fuel (other than steel 

industry fuel) that is produced and sold from a facility placed in service before 

January 1, 2009, unless such fuel is produced in such a manner as to result in an 

increase of at least 50 percent in the market value of the fuel (excluding any 
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increase caused by materials combined or added during the production process) as 

compared to the feedstock coal. 

.02 Coal. The term ”coal” means anthracite, bituminous coal, subbituminous 

coal, and lignite. Coal includes waste coal (that is, usable material that is a 

byproduct of the previous processing of anthracite, bituminous coal, subbituminous 

coal, or lignite). Examples of waste coal include fine coal of any of the listed ranks, 

coal of any of the listed ranks obtained from a refuse bank or slurry dam, anthracite 

culm, bituminous gob, and lignite waste. 

.03 Comparable Coal. The term “comparable coal” means, with respect to 

any feedstock coal, coal that is of the same rank as the feedstock coal and that has 

an emissions profile comparable to the emissions profile of the feedstock coal. 

.04 Qualified Emissions Reduction. The term ”qualified emissions reduction” 

means-- 

(1) in the case of refined coal produced at a facility placed in service after 

December 31, 2008, a reduction of at least 20 percent of the emissions of nitrogen 

oxide (NOx) and at least 40 percent of the emissions of either sulfur dioxide (SO2) or 

mercury (Hg) released when burning the refined coal (excluding any dilution caused 

by materials combined or added during the production process), as compared to the 

emissions released when burning the feedstock coal or comparable coal 

predominantly available in the marketplace as of January 1, 2003; and 

(2) in the case of production at a facility placed in service before January 1, 

2009, a reduction of at least 20 percent of the emissions of NOx and at least 20 

percent of the emissions of either SO2 or Hg released when burning the refined coal 
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(excluding any dilution caused by materials combined or added during the 

production process), as compared to the emissions released when burning the 

feedstock coal or comparable coal predominantly available in the marketplace as of 

January 1, 2003. 

.05 Refined Coal Production Facility. The term ”refined coal production 

facility” means-- 

(a) for purposes of the refined coal credit allowable with respect to steel 

industry fuel, any facility (or any modification to a facility) which is placed in service 

before January 1, 2010, and 

(b) for purposes of the refined coal credit allowable with respect to refined 

coal other than steel industry fuel, any facility placed in service after the date of the 

enactment of the American Jobs Creation Act of 2004 and before January 1, 2010, 

other than a facility producing fuel for which a credit under § 45K (or under § 29, as 

in effect on the day before the date of enactment of the Energy Tax Incentives Act of 

2005) was allowed for the taxable year or any prior taxable year. 

.06 Related Persons. Persons are treated as related to each other if they 

would be treated as a single employer under the regulations prescribed under 

§ 52(b). A corporation that is a member of an affiliated group filing a consolidated 

return is treated as selling coal to an unrelated person if the coal is sold to an 

unrelated person by another member of the affiliated group. 

.07 Placed in service. The year in which property is placed in service is 

determined under the principles of § 1.46-3(d). 

SECTION 4. COMPUTATION OF CREDIT 
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.01 In General. The refined coal credit for a taxable year is the tentative 

credit for the year determined under this section 4.01, reduced to the extent 

provided in sections 4.02 and 4.04 of this notice. If the taxable year is a calendar 

year, the tentative credit for the taxable year is the tentative credit for the calendar 

year. If the taxable year includes parts of two calendar years, the tentative credit for 

the taxable year is the sum of the tentative credits for each partial calendar year 

included in the taxable year. The tentative credit for any calendar year (or partial 

calendar year) is the applicable amount per ton of qualified refined coal (1) produced 

by the taxpayer at a refined coal production facility during the ten-year period 

beginning on the date the facility is originally placed in service, and (2) sold by the 

taxpayer to an unrelated person during that ten-year period and during the calendar 

year (or partial calendar year). The applicable amount for sales of refined coal 

during a calendar year is $4.375 multiplied by the inflation adjustment factor for the 

calendar year to adjust for inflation since 1992. 

.02 Limitation of the Credit. 

 (1) In General. The tentative credit with respect to sales of refined coal 

during a calendar year is reduced by an amount that bears the same ratio to the 

tentative credit as the excess reference price for the calendar year bears to $8.75. 

 (2) Excess Reference Price. The excess reference price for a calendar year 

is the amount by which (a) the reference price for the calendar year of fuel used as a 

feedstock exceeds (b) an amount equal to 1.7 multiplied by $31.90 and further 

multiplied by the inflation adjustment factor for the calendar year. 
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.03 Reference Price and Inflation Adjustment Factor. The reference price 

and inflation adjustment factor for a calendar year are provided by notice published 

in the Internal Revenue Bulletin. See, for example, Notice 2008-48, 2008-21 I.R.B. 

1008. 

.04 Reduction for Grants, Tax-Exempt Bonds, Subsidized Energy Financing 

and Other Credits. The tentative credit, after the reduction, if any, under section 

4.02 of this notice, is reduced by a prescribed percentage if the project received 

government grants, subsidies, or other credits. The reduction percentage for a tax 

year is the lesser of 50 percent or the percentage that is determined by dividing the 

sum for the taxable year and all earlier taxable years of the four items listed below 

by the aggregate additions to the capital account attributable to the project for the 

taxable year and all earlier taxable years. Those four items are (1) governmental 

grants received for the project; (2) proceeds from tax-exempt state or local 

government bonds used to finance the project; (3) directly and indirectly provided 

subsidized energy financing under a federal, state or local program in connection 

with the project and (4) any other credit allowable with respect to any property that is 

part of the project. 

SECTION 5. RULES RELATING TO THE AVAILABILITY OF THE REFINED COAL 

CREDIT 

.01 Leased Refined Coal Production Facility. The refined coal credit is 

allowed for qualified refined coal produced and sold to an unrelated person by the 

taxpayer, without regard to whether the taxpayer owns the refined coal production 

facility in which the refined coal is produced. Accordingly, a taxpayer that leases or 
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operates a facility owned by another person may claim the credit for refined coal that 

the taxpayer produces in the facility. 

 .02 Addition or improvement to an existing facility. A refined coal production 

facility will not be treated as placed in service after October 22, 2004, if more than 

20 percent of the facility’s total value (the cost of the new property plus the value of 

the used property) is attributable to property placed in service on or before October 

22, 2004. The Service will not issue private letter rulings relating to when a refined 

coal production facility has been placed in service. 

SECTION 6. RULES RELATING TO EMISSION REDUCTION 

.01 Emission Reductions Attributable to Mining Processes Disregarded. 

(1) In General. A qualified emission reduction does not include any reduction 

attributable to mining processes or processes that would be treated as mining if 

performed by the mine owner or operator. Accordingly, in determining whether a 

qualified emission reduction has been achieved, the emissions released when 

burning the refined coal must be compared to the emissions that would be released 

when burning the feedstock coal. Feedstock coal is the product resulting from 

processes that are treated as mining under section 6.01(2) of this notice and are 

actually applied by a taxpayer in any part of the taxpayer’s process of producing 

refined coal from coal. 

(2) Processes Treated as Mining. Any process described in § 613(c)(2), (3), 

(4)(A), (4)(C), or (4)(I), or that would be described in those provisions if performed 

by the mine owner or operator, shall be treated as a mining process for purposes of 

this notice. Section 613(c)(2) provides that the term ’mining’ includes not merely the 
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extraction of the ores or minerals from the ground but also the treatment processes 

considered as mining described in § 613(c)(4) (and the treatment processes 

necessary or incidental thereto). Section 613(c)(3) provides that extraction of ores 

or minerals from the ground includes the extraction by mine owners or operators of 

ores or minerals from the waste or residue of prior mining. Section 613(c)(4)(A) 

provides, in the case of coal, that cleaning, breaking, sizing, dust allaying, treating to 

prevent freezing and loading for shipment by a mine owner or operator shall be 

considered as mining. Section 613(c)(4)(C) provides in the case of minerals that are 

customarily sold in the form of a crude mineral product--sorting, concentrating, 

sintering, and substantially equivalent processes to bring to shipping grade and form 

(see § 1.613-4(f)(3)(i)) shall be considered as mining. Section 613(c)(4)(I) provides 

that the Secretary may prescribe certain treatment processes that will be treated as 

mining; for example, § 1.613-4(f)(5) provides that drying to remove free water, 

provided that such drying does not change the physical or chemical identity or 

composition of the mineral, is treated as mining. Section 613(c)(5) describes 

treatment processes that are not considered as mining unless they are provided for 

in § 613(c)(4) or are necessary or incidental to a process provided for in § 613(c)(4). 

Any cleaning process, such as a process that uses ash separation, dewatering, 

scrubbing through a centrifugal pump, spiral concentration, gravity concentration, 

flotation, application of liquid hydrocarbons or alcohol to the surface of the fuel 

particles or to the feed slurry, provided such cleaning does not change the physical 

or chemical structure of the coal, and drying to remove free water, provided such 
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drying does not change the physical or chemical identity of the coal, will be 

considered as mining. 

(3) Exception. 

(a) In General. A cleaning process shall not be treated as a mining process 

for purposes of applying this section 6.01 to refined coal produced from waste coal 

at a facility placed in service before January 1, 2010, for the primary purpose of 

producing refined coal from waste coal. For purposes of this section 6.01(3), waste 

coal means the waste materials that are separated through ordinary mining 

processes during the process of producing a merchantable product from the coal 

extracted from a natural deposit. This section 6.01(3) does not apply with respect to 

the refined coal produced at a facility during a taxable year unless a verification of 

waste coal supply, as described in section 6.01(3)(b), is available for such facility. 

(b) Verification of Waste Coal Supply. The verification of the waste coal 

supply for a facility required under this section 6.01(3) must contain the following: 

 (i) The name, address, and telephone number of the qualified individual. 

(ii) A statement that the person providing the verification of the waste coal 

supply is a qualified individual. 

(iii) A statement that the coal to be processed by the facility is “waste coal” 

within the meaning of section 6.01(3)(a).

(iv) A declaration, signed by the qualified individual, in the following form: 

“Under penalties of perjury, I declare that I have examined this verification statement 

and, to the best of my knowledge and belief, it is true, correct, and complete.” 
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(c) Qualified Individual. A qualified individual for purposes of this section 

6.01(3) is an individual that-- 

(i) is not related (within the meaning of § 45(e)(4)) to the taxpayer claiming 

the refined coal credit; 

(ii) is properly licensed as a professional engineer; and 

(iii) has the requisite qualifications to provide the verification required under 

this section 6.01(3). 

.02 Basis for Determining Emission Reduction. 

(1) In General. Emission reductions are determined by comparing the 

emissions that result when feedstock coal and refined coal are used to produce the 

same amounts of useful thermal energy. 

(2) Emissions Resulting from Production Process. Emissions that result from 

the process of producing refined coal from feedstock coal are treated for purposes 

of this section 6.02 as emissions that result when the refined coal is used to produce 

useful thermal energy. In any case in which waste heat from an activity other than 

the production of refined coal is used in the process of producing refined coal from 

feedstock coal, the emissions associated with the waste heat are not treated as 

emissions that result from such process. The emissions that result when refined 

coal is produced from feedstock coal must be determined using a method that 

accurately measures such emissions. 

(3) Adjustment for Additives. In any case in which additives are used to 

produce the refined coal, appropriate adjustment must be made in determining the 

useful thermal energy produced by the refined coal. 
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.03 Emission Reduction Testing Methods. 

(1) CEMS Field Testing. 

(a) In General. The emissions reduction may be determined using 

continuous emission monitoring system (CEMS) field testing. CEMS field testing is 

testing that meets all the following requirements: 

(i) The boiler used to conduct the test is coal-fired and steam-producing and 

is of a size and type commonly used in commercial operations. 

(ii) Emissions are measured using a CEMS. 

(iii) If EPA has promulgated a performance standard that applies at the time 

of the test to the pollutant emission being measured, the CEMS must conform to 

that standard. 

(iv) Emissions for both the feedstock coal and the refined coal are measured 

at the same operating conditions and over a period of at least 3 hours during which 

the boiler is operating at a steady state and at least 90 percent of full load. 

(v) Emissions of SO2 are measured upstream of any SO2 scrubber. 

(vi) Emissions of Hg are measured upstream of any SO2 scrubber or Hg 

control device (such as activated carbon injection). 

(vii) Emissions of NOx are measured upstream of any NOx controls. 

(viii) A qualified individual verifies the test results in a manner that satisfies 

the requirements of section 6.03(1)(b) of this notice. 

(b) Verification of Test Results. A verification of test results for purposes of 

this section 6.03(1) must contain the following: 

(i) The name, address, and telephone number of the qualified individual. 
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(ii) A statement that the person providing the verification of test results is a 

qualified individual. 

(iii) A statement that the testing satisfied all the requirements specified in 

section 6.03(1)(a)(i) through (vii) of this notice. 

(iv) A statement that the amount of the emissions reduction was determined 

in accordance with the provisions of section 6.01 and section 6.02 of this notice. 

(v) A declaration, signed by the qualified individual, in the following form: 

“Under penalties of perjury, I declare that I have examined this verification statement 

and, to the best of my knowledge and belief, it is true, correct, and complete.” 

(c) Qualified Individual. A qualified individual for purposes of this section 

6.03(1) is an individual that-- 

(i) is not related (within the meaning of § 45(e)(4)) to the taxpayer claiming 

the refined coal credit; 

(ii) is properly licensed as a professional engineer; and 

(iii) has the requisite qualifications to provide the verification required under 

this section 6.03(1). 

(d) Reliance Permitted. If CEMS field testing is used to determine the 

emissions reduction, the IRS will not, on examination, require any additional proof of 

the emission reduction achieved. The IRS may, however, require the taxpayer to 

establish that the testing used qualifies as CEMS field testing. 

(2) Other Testing Methods. Methods other than CEMS field testing may be 

used to determine the emissions reduction. If a method other than CEMS field 
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testing is used, the IRS may require the taxpayer to provide additional proof that the 

emission reduction has been achieved. Permissible methods include the following: 

(i) A testing method using a demonstration pilot-scale combustion furnace if it 

is established that the method accurately measures the emissions reduction that 

would be achieved in a boiler described in section 6.03(1)(a)(i) of this notice and a 

qualified individual verifies the test results in a manner that satisfies the 

requirements of section 6.03(1)(b)(i), (ii), (iv), and (v) of this notice. 

(ii) Laboratory analysis of the feedstock coal and the refined coal. The 

laboratory analysis must comply with a currently applicable EPA or ASTM standard 

and may be used only for purposes of determining the emissions reduction for SO2

and Hg. 

.04 Frequency of Testing. 

(1) In general. A taxpayer may establish that a qualified emissions reduction 

determined under section 6.03 of this notice applies to production from a facility by a 

determination or redetermination that is valid at the time the production occurs. A 

determination or redetermination is valid for the period beginning on the date of the 

determination or redetermination and ending with the occurrence of the earliest of 

the following events: 

(i) The lapse of six months from the date of such determination or 

redetermination. 

(ii) A change in the type, source, or rank of feedstock coal that occurs after 

the date of such determination or redetermination. 
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(iii) A change in the process of producing refined coal from the feedstock coal 

that occurs after the date of such determination or redetermination. 

(2) Redetermination methods. In the case of a redetermination required 

because of a change in the process of producing refined coal from the feedstock 

coal, the redetermination required under this section 6.04 must use a method that 

meets the requirements of section 6.03 of this notice. In any other case, the 

redetermination requirement may be satisfied by laboratory analysis establishing 

that the SO2 and Hg content of both the feedstock coal and the refined coal do not 

vary by more than ten percent from the SO2 and Hg content of the feedstock coal 

and refined coal used in the most recent determination that meets the requirements 

of section 6.03 of this notice. 

.05 Certification of emissions reduction. The certification requirement of 

section 3.01(1)(c) of this notice is satisfied with respect to fuel for which the refined 

coal credit is claimed only if the taxpayer attaches to its tax return on which the 

credit is claimed a certification that contains the following: 

(1) A statement that the fuel will result in a qualified emissions reduction 

when used in the production of steam. 

(2) A statement indicating whether CEMS field testing was used to determine 

the emissions reduction. 

(3) If CEMS field testing was not used to determine the emissions reduction, 

a description of the method used. 

(4) A statement that the emissions reduction was determined or redetermined 

within the six months preceding the production of the fuel and that there have been 
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no changes in the type, source, or rank of feedstock coal used or in the process of 

producing refined coal from the feedstock coal since the emissions reduction was 

determined or was most recently redetermined. 

(5) A declaration signed by the taxpayer in the following form: “Under 

penalties of perjury, I declare that I have examined this certification and to the best 

of my knowledge and belief, it is true, correct, and complete.” 

SECTION 7. RECORDKEEPING 

Section 6001 provides that every person liable for any tax imposed by the 

Code, or for the collection thereof, must keep such records, render such statements, 

make such returns, and comply with such rules and regulations as the Secretary 

may from time to time prescribe. The books and records required by § 6001 must 

be kept at all times available for inspection by authorized internal revenue officers or 

employees, and must be retained so long as the contents thereof may become 

material in the administration of any internal revenue law. In order to satisfy the 

recordkeeping requirements of § 6001 and the regulations thereunder, a taxpayer 

that claims the refined coal credit must retain adequate books and records so that, 

for any taxable year, it can be verified from those books and records that the 

property with respect to which the credit is claimed satisfies the applicable 

requirements of § 45 and this notice. 

SECTION 8. REQUEST FOR COMMENTS 

The IRS and the Treasury Department invite comments concerning section 

6.03 of this notice relating to emission reduction testing methods. Comments should 

refer to Notice 2009-90 and be submitted to: 
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Internal Revenue Service 

CC:PA:LPD:PR (Notice 2009-90 ) 

Room 5203 

P. O. Box 7604 

Ben Franklin Station 

Washington, DC 20044 

Submissions may be hand delivered Monday through Friday between the hours of 8 

a.m. and 4 p.m. to: 

Courier’s Desk 

Internal Revenue Service 

1111 Constitution Ave., N.W. 

Washington, DC 20224 

Attn: CC:PA:LPD:PR (Notice 2009-) 

Alternatively, taxpayers may submit comments electronically to 

 notice.comments@irscounsel.treas.gov. Please include “Notice 2009-90” in the 

subject line of any electronic communications. 

All comments will be available for public inspection and copying. 

SECTION 9. EFFECTIVE DATE 

This notice is effective for refined coal produced after December 7, 2009. 

Taxpayers may apply the provisions of this notice with respect to refined coal 

produced on or before December 7, 2009. 

SECTION 10. PAPERWORK REDUCTION ACT 

The collection of information contained in this notice has been reviewed and 

approved by the Office of Management and Budget (OMB) in accordance with the 

Paperwork Reduction Act (44 U.S.C. § 3507) under control number 1545-2158. 

An agency may not conduct or sponsor, and a person is not required to 

respond to, a collection of information unless the collection of information displays a 

valid OMB control number. 
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 The collection of information in this notice is in section 6 of this notice. This 

information will be used by the Service to verify that the taxpayer is eligible for the 

production tax credit for refined coal. The collection of information is required to 

obtain a benefit. The likely respondents are businesses or other for-profit 

institutions. 

 The estimated total annual reporting burden is 15 hours. 

 The estimated annual burden per respondent varies from 10 to 20 hours, 

depending on individual circumstances, with an estimated average of 15 hours. The 

estimated number of respondents is 100. 

 The estimated annual frequency of responses is on occasion. 

 Books or records relating to a collection of information must be retained as 

long as their contents may become material in the administration of any internal 

revenue law. Generally, tax returns and return information are confidential, as 

required by 26 U.S.C. § 6103. 

SECTION 11. DRAFTING AND CONTACT INFORMATION 

The principal author of this notice is Philip Tiegerman of the Office of 

Associate Chief Counsel (Passthroughs and Special Industries). However, other 

personnel from the IRS and Treasury participated in its development. For further 

information regarding this notice, contact Mr. Tiegerman at (202) 622-3110.