II

106TH CONGRESS

2D SESSION S. 3253

To authorize Department of Energy programs to develop and implement

an accelerated research and development program for advanced clean

coal technologies for use in coal-based electricity generating facilities

and to amend the Internal Revenue Code of 1986 to provide financial

incentives to encourage the retrofitting, repowering, or replacement of

coal-based electricity generating facilities to protect the environment and

improve efficiency and encourage the early commercial application of

advanced clean coal technologies, so as to allow coal to help meet the

growing need of the United States for the generation of reliable and

affordable electricity.

IN THE SENATE OF THE UNITED STATES

OCTOBER 27 (legislative day, SEPTEMBER 22), 2000

Mr. MCCONNELL (for himself and Mr. BYRD) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To authorize Department of Energy programs to develop

and implement an accelerated research and development

program for advanced clean coal technologies for use

in coal-based electricity generating facilities and to

amend the Internal Revenue Code of 1986 to provide

financial incentives to encourage the retrofitting,

repowering, or replacement of coal-based electricity generating facilities to protect the environment and improve

efficiency and encourage the early commercial application

of advanced clean coal technologies, so as to allow coal
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to help meet the growing need of the United States

for the generation of reliable and affordable electricity.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘National Electricity and Environmental Technology

6 Act’’.

7 (b) TABLE OF CONTENTS.—The table of contents of

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings and purposes.

TITLE I—ACCELERATED TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM FOR ADVANCED CLEAN COAL TECHNOLOGY

FOR COAL-BASED ELECTRICITY GENERATING FACILITIES

Sec. 101. Purpose.

Sec. 102. Definitions.

Subtitle A—National Coal-Based Technology Development and Applications

Program

Sec. 111. Cost and performance goals.

Sec. 112. Study.

Sec. 113. Technology research and development program.

Sec. 114. Authorization of appropriations.

Subtitle B—Plant Technology Applications

Sec. 121. Plant technology applications.

Sec. 122. Financial assistance.

Sec. 123. Funding.

TITLE II—CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY

IMPROVEMENTS IN EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES

Sec. 201. Credit for investment in qualifying clean coal technology.

Sec. 202. Credit for production from a qualifying clean coal technology unit.

TITLE III—INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS

OF ADVANCED CLEAN COAL TECHNOLOGIES

Sec. 301. Credit for investment in qualifying advanced clean coal technology.

Sec. 302. Credit for production from qualifying advanced clean coal technology.
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Sec. 303. Risk pool for qualifying advanced clean coal technology.

TITLE IV—TREATMENT OF CERTAIN TAX-EXEMPT ENTITIES

Sec. 401. Refundable credits for electric cooperatives or publicly owned electric

utilities.

Sec. 402. Offset of certain annual payment obligations in lieu of qualifying

clean coal technology credits.

1 SEC. 2. FINDINGS AND PURPOSES.

2 (a) FINDINGS.—Congress finds that—

3 (1) reliable, affordable, increasingly clean elec4 tricity will continue to power the growing United

5 States economy;

6 (2) an increasing use of electrotechnologies, the

7 desire for continuous environmental improvement, a

8 more competitive electricity market, and concerns

9 about rising energy prices add importance to the

10 need for reliable, affordable, increasingly clean elec11 tricity;

12 (3) coal, which, as of the date of enactment of

this Act, accounts for more than 1 13 ⁄2 of all electricity

14 generated in the United States, is the most abun15 dant fossil energy resource of the United States;

16 (4) coal comprises more than 85 percent of all

17 fossil resources in the United States and exists in

18 quantities sufficient to supply the United States for

19 250 years at current usage rates;

20 (5) investments in electricity generating facility

21 emissions control technology over the past 30 years

22 have reduced the aggregate emissions of pollutants
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1 from coal-based generating facilities by 21 percent,

2 even as coal use for electricity generation has nearly

3 tripled;

4 (6) continuous improvement in efficiency and

5 environmental performance from electricity gener6 ating facilities would allow continued use of coal and

7 preserve less-abundant energy resources for other

8 energy uses;

9 (7) new technologies for converting coal into

10 electricity can effectively eliminate health-threat11 ening emissions and improve efficiency by as much

12 as 50 percent, but initial commercial deployment of

13 new coal generation technologies entails significant

14 risk that generators may be unable to accept in a

15 newly competitive electricity market; and

16 (8) continued environmental improvement in

17 coal-based generation through continued research,

18 development, and demonstration toward an ultimate

19 goal of near-zero emissions is important and desir20 able.

21 (b) PURPOSES.—The purposes of this Act are—

22 (1) to authorize Department of Energy pro23 grams to develop and implement an accelerated re24 search and development program for advanced clean
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1 coal technologies for use in coal-based electricity

2 generating facilities; and

3 (2) to amend the Internal Revenue Code of

4 1986—

5 (A) to provide financial incentives to en6 courage the retrofitting, repowering, or replace7 ment of coal-based electricity generating facili8 ties to protect the environment and improve ef9 ficiency;

10 (B) to encourage the early commercial ap11 plication of advanced clean coal technologies;

12 and

13 (C) to develop technologies that provide

14 flexibility in obtaining environmental objectives

15 at the lowest possible cost in order to provide

16 electricity to the consumer at the lowest pos17 sible cost;

18 so as to allow coal to help meet the growing need of the

19 United States for the generation of reliable and affordable

20 electricity.
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1 TITLE I—ACCELERATED TECH2 NOLOGY RESEARCH AND DE3 VELOPMENT PROGRAM FOR

4 ADVANCED CLEAN COAL

5 TECHNOLOGY FOR COAL6 BASED ELECTRICITY GENER7 ATING FACILITIES

8 SEC. 101. PURPOSE.

9 The purpose of this title is to direct the Secretary—

10 (1) to establish a coal-based technology develop11 ment program designed to achieve cost and perform12 ance goals;

13 (2) to carry out a study to identify technologies

14 that may be capable of achieving the cost and per15 formance goals and for other purposes; and

16 (3) to implement a research, development, and

17 demonstration program to develop and demonstrate

18 in commercial-scale applications advanced clean coal

19 technologies for coal-fired generating units con20 structed before the date of enactment of this Act.

21 SEC. 102. DEFINITIONS.

22 In this title:

23 (1) COST AND PERFORMANCE GOALS.—The

24 term ‘‘cost and performance goals’’ means the cost
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1 and performance goals established under section

2 111.

3 (2) SECRETARY.—The term ‘‘Secretary’’ means

4 the Secretary of Energy.

5 Subtitle A—National Coal-Based

6 Technology Development and

7 Applications Program

8 SEC. 111. COST AND PERFORMANCE GOALS.

9 (a) IN GENERAL.—The Secretary shall perform an

10 assessment that identifies costs and associated perform11 ance of technologies that would permit the continued cost12 competitive use of coal for electricity generation, as chem13 ical feedstocks, and as transportation fuel in 2007, 2015,

14 and the years after 2020.

15 (b) CONSULTATION.—In establishing the cost and

16 performance goals, the Secretary shall consult with rep17 resentatives of—

18 (1) the United States coal industry;

19 (2) State coal development agencies;

20 (3) the electric utility industry;

21 (4) railroads and other transportation indus22 tries;

23 (5) manufacturers of equipment using advanced

24 coal technologies;

25 (6) organizations representing workers; and
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1 (7) organizations formed to—

2 (A) further the goals of environmental pro3 tection;

4 (B) promote the use of coal; or

5 (C) promote the development and use of

6 advanced coal technologies.

7 (c) TIMING.—The Secretary shall—

8 (1) not later than 120 days after the date of

9 enactment of this Act, issue a set of draft cost and

10 performance goals for public comment; and

11 (2) not later than 180 days after the date of

12 enactment of this Act, after taking into consider13 ation any public comments received, submit to Con14 gress the final cost and performance goals.

15 SEC. 112. STUDY.

16 (a) IN GENERAL.—Not later than 1 year after the

17 date of enactment of this Act, the Secretary, in coopera18 tion with the Secretary of the Interior and the Adminis19 trator of the Environmental Protection Agency, shall con20 duct a study to—

21 (1) identify technologies capable of achieving

22 the cost and performance goals;

23 (2) assess the costs that would be incurred by,

24 and the period of time that would be required for,
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1 the development and demonstration of the cost and

2 performance goals; and

3 (3) develop recommendations for technology de4 velopment programs, which the Department of En5 ergy could carry out in cooperation with industry, to

6 develop and demonstrate the cost and performance

7 goals.

8 (b) COOPERATION.—In carrying out this section, the

9 Secretary shall give due weight to the expert advice of rep10 resentatives of the entities described in section 111(b).

11 SEC. 113. TECHNOLOGY RESEARCH AND DEVELOPMENT

12 PROGRAM.

13 (a) IN GENERAL.—The Secretary shall carry out a

14 program of research on and development, demonstration,

15 and commercial application of coal-based technologies

16 under—

17 (1) this Act;

18 (2) the Federal Nonnuclear Energy Research

19 and Development Act of 1974 (42 U.S.C. 5901 et

20 seq.);

21 (3) the Energy Reorganization Act of 1974 (42

22 U.S.C. 5801 et seq.); and

23 (4) title XVI of the Energy Policy Act of 1992

24 (42 U.S.C. 13381 et seq.).
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1 (b) CONDITIONS.—The research, development, dem2 onstration, and commercial application programs identi3 fied in section 112(a) shall be designed to achieve the cost

4 and performance goals.

5 (c) REPORT.—Not later than 18 months after the

6 date of enactment of this Act, the Secretary shall submit

7 to the President and Congress a report containing—

8 (1) a description of the programs that, as of the

9 date of the report, are in effect or are to be carried

10 out by the Department of Energy to support tech11 nologies that are designed to achieve the cost and

12 performance goals; and

13 (2) recommendations for additional authorities

14 required to achieve the cost and performance goals.

15 SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

16 (a) IN GENERAL.—There is authorized to be appro17 priated to carry out this subtitle $100,000,000 for each

18 of fiscal years 2002 through 2012, to remain available

19 until expended.

20 (b) CONDITIONS OF AUTHORIZATION.—The author21 ization of appropriations under subsection (a)—

22 (1) shall be in addition to authorizations of ap23 propriations in effect on the date of enactment of

24 this Act; and
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1 (2) shall not be a cap on Department of Energy

2 fossil energy research and development and clean

3 coal technology appropriations.

4 Subtitle B—Plant Technology

5 Applications

6 SEC. 121. PLANT TECHNOLOGY APPLICATIONS.

7 (a) IN GENERAL.—The Secretary shall carry out a

8 program of research, development, demonstration, and

9 commercial application for the purpose of developing eco10 nomically and environmentally acceptable advanced tech11 nologies for use of coal at or within electricity generating

12 facilities that use coal as the primary feedstock on the date

13 of enactment of this Act.

14 (b) PLAN.—Not later than 120 days after the date

15 of enactment of this Act, the Secretary shall submit to

16 Congress a plan to carry out subsection (a) that includes

17 a description of—

18 (1) the program elements and management

19 structure to be used;

20 (2) the technical milestones to be achieved with

21 respect to each of the advanced coal-based tech22 nologies included in the plan; and

23 (3) the research, development, and demonstra24 tion activities proposed to be conducted at new or

25 existing coal-based electricity generating units hav-
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1 ing at least 50 megawatts nameplate rating, includ2 ing improvements designed to allow the units to

3 provide—

4 (A) an overall efficiency improvement of

5 not less than 3 percent as compared with the

6 efficiency of the unit as operated on the date of

7 enactment of this Act and before any retro8 fitting, repowering, or replacement;

9 (B)(i) an annual daily average of not less

10 than 98 percent removal of sulfur dioxide at a

11 capital cost and operating cost that is at least

12 25 percent below the costs of technology that is

13 commercially available on the date of enactment

14 of this Act for coals with a potential to emit

15 sulfur dioxide of more than 520 nanograms/

16 joule or 1.2 lb./mmbtu;

17 (ii) an annual daily average of not less

18 than 85 percent removal of sulfur dioxide at a

19 capital cost and operating cost at least 25 per20 cent below the costs of that is commercially

21 available on the date of enactment of this Act

22 for coals with a potential to emit sulfur dioxide

23 of not more than 520 nanograms/joule or 1.2

24 lb./mmbtu;
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1 (iii) an annual daily average of not less

2 than 85 percent removal of nitrogen oxide with

3 a nitrogen oxide emission level of not more than

4 65 nanograms/joule or 0.15 lb./mmbtu without

5 the use of ammonia, urea, or technologies not

6 fully developed and commercially demonstrated

7 on low-rank coals or coals with a high sodium

8 content; or

9 (iv) an annual daily average of 75 percent

10 removal of total (organic and inorganic) mer11 cury (not including any removal achieved by the

12 use of activated carbon or a system for selective

13 catalytic reduction);

14 (C) means of recycling or reusing 100 per15 cent of coal combustion wastes (not including—

16 (i) use of gypsum produce wallboard;

17 (ii) use of coal flyash and bottom ash

18 in Portland cement and concrete applica19 tions); or

20 (iii) other practices that are commer21 cially available at the date of enactment of

22 this Act; or

23 (D) means of reusing 100 percent of deep24 ly beneficated and dewatered coals and coal

25 wastes, thereby increasing generating unit effi-
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1 ciency and eliminating the need for any flue gas

2 desulfurization.

3 SEC. 122. FINANCIAL ASSISTANCE.

4 (a) IN GENERAL.—Not later than 180 days after the

5 date on which the Secretary submits to Congress the plan

6 under section 121(b), the Secretary shall solicit proposals

7 for projects at new or existing facilities designed to achieve

8 the technical milestones specified in the plan under section

9 121(b)(2).

10 (b) PROJECT CRITERIA.—A solicitation under sub11 section (a) may include solicitation of a proposal for a

12 project to demonstrate—

13 (1) the control of emissions of 1 or more pollut14 ants; or

15 (2) the production of coal combustion byprod16 ucts that are capable of obtaining economic values

17 significantly greater than byproducts produced on

18 the date of enactment of this Act.

19 (c) FINANCIAL ASSISTANCE.—The Secretary shall

20 provide financial assistance to projects that—

21 (1) demonstrate overall cost reductions in the

22 use of coal to generate useful forms of energy;

23 (2) improve the competitiveness of coal among

24 various forms of energy so as to maintain a variety
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1 of fuel choices in the United States to meet elec2 tricity generation requirements;

3 (3) achieve, in a cost-effective manner, 1 or

4 more of the criteria described in the solicitation; and

5 (4) demonstrate technologies that are applicable

6 to 25 percent of the electricity generating facilities

7 that use coal as the primary feedstock on the date

8 of enactment of this Act.

9 (d) FEDERAL SHARE.—The Federal share cost of the

10 project funded under this subtitle shall not exceed 50 per11 cent.

12 (e) EXEMPTION FROM NEW SOURCE REVIEW PROVI13 SIONS.—A project funded under this subtitle shall be ex14 empt from the new source review provisions of the Clean

15 Air Act (42 U.S.C. 7401 et seq.).

16 SEC. 123. FUNDING.

17 To carry out this subtitle, the Secretary may use any

18 unobligated funds available to the Secretary and any funds

19 obligated to any project selected under the clean coal tech20 nology program that become unobligated.
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1 TITLE II—CREDIT FOR EMISSION

2 REDUCTIONS AND EFFI3 CIENCY IMPROVEMENTS IN

4 EXISTING COAL-BASED ELEC5 TRICITY GENERATION FACILI6 TIES

7 SEC. 201. CREDIT FOR INVESTMENT IN QUALIFYING CLEAN

8 COAL TECHNOLOGY.

9 (a) ALLOWANCE OF QUALIFYING CLEAN COAL

10 TECHNOLOGY UNIT CREDIT.—Section 46 of the Internal

11 Revenue Code of 1986 (relating to amount of credit) is

12 amended by striking ‘‘and’’ at the end of paragraph (2),

13 by striking the period at the end of paragraph (3) and

14 inserting ‘‘, and’’, and by adding at the end the following:

15 ‘‘(4) the qualifying clean coal technology unit

16 credit.’’.

17 (b) AMOUNT OF QUALIFYING CLEAN COAL TECH18 NOLOGY UNIT CREDIT.—Subpart E of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of

20 1986 (relating to rules for computing investment credit)

21 is amended by inserting after section 48 the following:

22 ‘‘SEC. 48A. QUALIFYING CLEAN COAL TECHNOLOGY UNIT

23 CREDIT.

24 ‘‘(a) IN GENERAL.—For purposes of section 46, the

25 qualifying clean coal technology unit credit for any taxable
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1 year is an amount equal to 20 percent of the qualified

2 investment in a qualifying system of continuous emission

3 control for such taxable year.

4 ‘‘(b) QUALIFYING SYSTEM OF CONTINUOUS EMIS5 SION CONTROL.—

6 ‘‘(1) IN GENERAL.—For purposes of subsection

7 (a), the term ‘qualifying system of continuous emis8 sion control’ means a system of the taxpayer—

9 ‘‘(A) which serves, is added to, or retrofits

10 an existing coal-based electricity generation

11 unit, the construction, installation, or retro12 fitting of which is completed by the taxpayer

13 (but only with respect to that portion of the

14 basis which is properly attributable to such con15 struction, installation, or retrofitting),

16 ‘‘(B) which removes or reduces 1 or more

17 of the pollutants regulated under title I of the

18 Clean Air Act (42 U.S.C. 7401 et seq.),

19 ‘‘(C) that is depreciable under section 167,

20 ‘‘(D) that has a useful life of not less than

21 4 years, and

22 ‘‘(E) that is located in the United States.

23 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

24 For purposes of subparagraph (A) of paragraph (1),

25 in the case of a unit that—
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1 ‘‘(A) is originally placed in service by a

2 person, and

3 ‘‘(B) is sold and leased back by such per4 son, or is leased to such person, within 3

5 months after the date such unit was originally

6 placed in service, for a period of not less than

7 12 years,

8 such unit shall be treated as originally placed in

9 service not earlier than the date on which such prop10 erty is used under the leaseback (or lease) referred

11 to in subparagraph (B). The preceding sentence

12 shall not apply to any property if the lessee and les13 sor of such property make an election under this

14 sentence. Such an election, once made, may be re15 voked only with the consent of the Secretary.

16 ‘‘(c) EXISTING COAL-BASED ELECTRICITY GENERA17 TION UNIT.—For purposes of subsection (a), the term ‘ex18 isting coal-based electricity generating unit’ means, with

19 respect to any taxable year, a steam generator-turbine

20 unit that uses coal to produce 75 percent or more of its

21 output as electricity and was in operation before the effec22 tive date of this section.

23 ‘‘(d) LIMIT ON QUALIFYING CLEAN COAL TECH24 NOLOGY UNIT CREDIT.—For purposes of subsection (a),

25 the credit shall be applicable to not more than the first
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1 $100,000,000 of qualifying investment in a qualifying sys2 tem of continuous emission control at any 1 existing coal3 based electricity generating unit.

4 ‘‘(e) QUALIFIED INVESTMENT.—For purposes of sub5 section (a), the term ‘qualified investment’ means, with

6 respect to any taxable year, the basis of a qualifying sys7 tem of continuous emission control placed in service by

8 the taxpayer during such taxable year.

9 ‘‘(f) QUALIFIED PROGRESS EXPENDITURES.—

10 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

11 In the case of a taxpayer who has made an election

12 under paragraph (5), the amount of the qualified in13 vestment of such taxpayer for the taxable year (de14 termined under subsection (e) without regard to this

15 subsection) shall be increased by an amount equal to

16 the aggregate of each qualified progress expenditure

17 for the taxable year with respect to progress expend18 iture property.

19 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE20 FINED.—For purposes of this subsection, the term

21 ‘progress expenditure property’ means any property

22 being constructed by or for the taxpayer and which

23 it is reasonable to believe will qualify as a qualifying

24 system of continuous emission control which is being
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1 constructed by or for the taxpayer when it is placed

2 in service.

3 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE4 FINED.—For purposes of this subsection—

5 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

6 the case of any self-constructed property, the

7 term ‘qualified progress expenditures’ means

8 the amount which, for purposes of this subpart,

9 is properly chargeable (during such taxable

10 year) to capital account with respect to such

11 property.

12 ‘‘(B) NONSELF-CONSTRUCTED PROP13 ERTY.—In the case of nonself-constructed prop14 erty, the term ‘qualified progress expenditures’

15 means the amount paid during the taxable year

16 to another person for the construction of such

17 property.

18 ‘‘(4) OTHER DEFINITIONS.—For purposes of

19 this subsection—

20 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

21 The term ‘self-constructed property’ means

22 property for which it is reasonable to believe

23 that more than half of the construction expendi24 tures will be made directly by the taxpayer.
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1 ‘‘(B) NONSELF-CONSTRUCTED PROP2 ERTY.—The term ‘nonself-constructed property’

3 means property which is not self-constructed

4 property.

5 ‘‘(C) CONSTRUCTION, ETC.—The term

6 ‘construction’ includes reconstruction and erec7 tion, and the term ‘constructed’ includes recon8 structed and erected.

9 ‘‘(D) ONLY CONSTRUCTION OF QUALI10 FYING SYSTEM OF CONTINUOUS EMISSION CON11 TROL TO BE TAKEN INTO ACCOUNT.—Construc12 tion shall be taken into account only if, for pur13 poses of this subpart, expenditures therefore

14 are properly chargeable to capital account with

15 respect to the property.

16 ‘‘(5) ELECTION.—An election under this sub17 section may be made at such time and in such man18 ner as the Secretary may by regulations prescribe.

19 Such an election shall apply to the taxable year for

20 which made and to all subsequent taxable years.

21 Such an election, once made, may not be revoked ex22 cept with the consent of the Secretary.

23 ‘‘(g) COORDINATION WITH OTHER CREDITS.—This

24 section shall not apply to any property with respect to

25 which the rehabilitation credit under section 47 or the en-
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1 ergy credit under section 48 is allowed unless the taxpayer

2 elects to waive the application of such credit to such prop3 erty.

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

5 with respect to any qualified investment made more than

6 10 years after the effective date of this section.’’.

7 (c) RECAPTURE.—Section 50(a) of the Internal Rev8 enue Code of 1986 (relating to other special rules) is

9 amended by adding at the end the following:

10 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

11 SYSTEM OF CONTINUOUS EMISSION CONTROL.—For

12 purposes of applying this subsection in the case of

13 any credit allowable by reason of section 48A, the

14 following shall apply:

15 ‘‘(A) GENERAL RULE.—In lieu of the

16 amount of the increase in tax under paragraph

17 (1), the increase in tax shall be an amount

18 equal to the investment tax credit allowed under

19 section 38 for all prior taxable years with re20 spect to a qualifying system of continuous emis21 sion control (as defined by section 48A(b)(1))

22 multiplied by a fraction whose numerator is the

23 number of years remaining to fully depreciate

24 under this title the qualifying system of contin25 uous emission control disposed of, and whose
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1 denominator is the total number of years over

2 which such unit would otherwise have been sub3 ject to depreciation. For purposes of the pre4 ceding sentence, the year of disposition of the

5 qualifying system of continuous emission con6 trol property shall be treated as a year of re7 maining depreciation.

8 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

9 PROGRESS EXPENDITURES.—Rules similar to

10 the rules of paragraph (2) shall apply in the

11 case of qualified progress expenditures for a

12 qualifying system of continuous emission con13 trol under section 48A, except that the amount

14 of the increase in tax under subparagraph (A)

15 of this paragraph shall be substituted in lieu of

16 the amount described in such paragraph (2).

17 ‘‘(C) APPLICATION OF PARAGRAPH.—This

18 paragraph shall be applied separately with re19 spect to the credit allowed under section 38 re20 garding a qualifying system of continuous emis21 sion control.’’.

22 (d) TRANSITIONAL RULE.—Section 39(d) of the In23 ternal Revenue Code of 1986 (relating to transitional

24 rules) is amended by adding at the end the following:
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1 ‘‘(9) NO CARRYBACK OF SECTION 48A CREDIT

2 BEFORE EFFECTIVE DATE.—No portion of the un3 used business credit for any taxable year which is

4 attributable to the qualifying clean coal technology

5 unit credit determined under section 48A may be

6 carried back to a taxable year ending before the date

7 of enactment of section 48A.’’.

8 (e) TECHNICAL AMENDMENTS.—

9 (1) Section 49(a)(1)(C) of the Internal Revenue

10 Code of 1986 is amended by striking ‘‘and’’ at the

11 end of clause (ii), by striking the period at the end

12 of clause (iii) and inserting ‘‘, and’’, and by adding

13 at the end the following:

14 ‘‘(iv) the portion of the basis of any

15 qualifying system of continuous emission

16 control attributable to any qualified invest17 ment (as defined by section 48A(e)).’’.

18 (2) Section 50(a)(4) of such Code is amended

19 by striking ‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’.

20 (3) Section 50(c) of such Code is amended by

21 adding at the end the following:

22 ‘‘(6) NONAPPLICATION.—Paragraphs (1) and

23 (2) shall not apply to any qualifying clean coal tech24 nology unit credit under section 48A.’’.
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1 (4) The table of sections for subpart E of part

2 IV of subchapter A of chapter 1 of such Code is

3 amended by inserting after the item relating to sec4 tion 48 the following:

‘‘48A. Qualifying clean coal technology unit credit.’’.

5 (f) INSTALLATIONS NOT SUBJECT TO NEW SOURCE

6 REVIEW, ETC.—

7 (1) EXEMPTION FROM NEW SOURCE REVIEW.—

8 The installation of a qualifying system of continuous

9 emission control (as defined in section 48A(b)(1) of

10 the Internal Revenue Code of 1986, as added by

11 subsection (b), shall be exempt from the new source

12 review provisions of the Clean Air Act (42 U.S.C.

13 7401 et seq.).

14 (2) EXEMPTION FROM EMISSION CONTROL RE15 QUIREMENTS.—The installation of a qualifying sys16 tem of continuous emission control (as so defined)

17 on an existing coal-based electricity generating unit,

18 that meets or exceeds, for the applicable source cat19 egory and pollutant being controlled by such quali20 fied system, the standard of performance for new

21 stationary sources, shall exempt the existing unit

22 from any new or increased emission control require23 ments for the pollutant being controlled by such

24 qualified system under title I of the Clean Air Act

25 (42 U.S.C. 7401 et seq.) for a period of 10 years
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1 after the date such qualified system is originally

2 placed in service.

3 (g) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to periods after December 31,

5 2000, under rules similar to the rules of section 48(m)

6 of the Internal Revenue Code of 1986 (as in effect on the

7 day before the date of enactment of the Revenue Reconcili8 ation Act of 1990).

9 SEC. 202. CREDIT FOR PRODUCTION FROM A QUALIFYING

10 CLEAN COAL TECHNOLOGY UNIT.

11 (a) CREDIT FOR PRODUCTION FROM A QUALIFYING

12 CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV

13 of subchapter A of chapter 1 of the Internal Revenue Code

14 of 1986 (relating to business related credits) is amended

15 by adding at the end the following:

16 ‘‘SEC. 45D. CREDIT FOR PRODUCTION FROM A QUALIFYING

17 CLEAN COAL TECHNOLOGY UNIT.

18 ‘‘(a) GENERAL RULE.—For purposes of section 38,

19 the qualifying clean coal technology production credit of

20 any taxpayer for any taxable year is equal to the product

21 of—

22 ‘‘(1) the applicable amount of clean coal tech23 nology production credit, multiplied by

24 ‘‘(2) the kilowatt hours of electricity produced

25 by the taxpayer during such taxable year at a quali-
27

•S 3253 IS

1 fying clean coal technology unit during the 10-year

2 period beginning on the date the unit was returned

3 to service after retrofit, repowering, or replacement.

4 ‘‘(b) APPLICABLE AMOUNT.—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the applicable amount of clean coal technology

7 production credit is equal to $0.006.

8 ‘‘(2) INFLATION ADJUSTMENT FACTOR.—For

9 calendar years after 2001, the applicable amount of

10 clean coal technology production credit shall be ad11 justed by multiplying such amount by the inflation

12 adjustment factor for the calendar year in which the

13 amount is applied. If any amount as increased under

14 the preceding sentence is not a multiple of 0.01 cent,

15 such amount shall be rounded to the nearest mul16 tiple of 0.01 cent.

17 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur18 poses of this section—

19 ‘‘(1) QUALIFYING CLEAN COAL TECHNOLOGY

20 UNIT.—The term ‘qualifying clean coal technology

21 unit’ means a unit of the taxpayer that—

22 ‘‘(A) is an existing coal-based electricity

23 generating steam generator-turbine unit,

24 ‘‘(B) has a nameplate capacity rating of

25 not more than 300,000 kilowatts, and
28

•S 3253 IS

1 ‘‘(C) has been retrofitted, repowered, or re2 placed with a clean coal technology within 10

3 years of the effective date of this section.

4 ‘‘(2) CLEAN COAL TECHNOLOGY.—The term

5 ‘clean coal technology’ means technology that—

6 ‘‘(A) uses coal to produce 50 percent or

7 more of its thermal output as electricity, includ8 ing advanced pulverized coal or atmospheric flu9 idized bed combustion, pressurized fluidized bed

10 combustion, integrated gasification combined

11 cycle, or any other technology for the produc12 tion of electricity,

13 ‘‘(B) has a design heat rate not less than

14 500 Btu/kWh below that of the existing unit be15 fore it is retrofit, repowered, or replaced with

16 the qualifying clean coal technology,

17 ‘‘(C) has a maximum design heat rate of

18 not more than 9,000 Btu/kWh when the design

19 coal has a heat content of more than 8,000 Btu

20 per pound, and

21 ‘‘(D) has a maximum design heat rate of

22 not more than 10,500 Btu/kWh when the de23 sign coal has a heat content of 8,000 Btu per

24 pound or less.
29

•S 3253 IS

1 ‘‘(3) APPLICATION OF CERTAIN RULES.—The

2 rules of paragraphs (3), (4), and (5) of section 45

3 shall apply.

4 ‘‘(4) INFLATION ADJUSTMENT FACTOR.—The

5 term ‘inflation adjustment factor’ means, with re6 spect to a calendar year, a fraction the numerator

7 of which is the GDP implicit price deflator for the

8 preceding calendar year and the denominator of

9 which is the GDP implicit price deflator for the cal10 endar year 2000.

11 ‘‘(5) GDP IMPLICIT PRICE DEFLATOR.—The

12 term ‘GDP implicit price deflator’ means the most

13 recent revision of the implicit price deflator for the

14 gross domestic product as computed by the Depart15 ment of Commerce before March 15 of the calendar

16 year.’’.

17 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec18 tion 38(b) of the Internal Revenue Code of 1986 is amend19 ed by striking ‘‘plus’’ at the end of paragraph (11), by

20 striking the period at the end of paragraph (12) and in21 serting ‘‘, plus’’, and by adding at the end the following:

22 ‘‘(13) the qualifying clean coal technology pro23 duction credit determined under section 45D(a).

24 (c) TRANSITIONAL RULE.—Section 39(d) of the In25 ternal Revenue Code of 1986 (relating to transitional
30

•S 3253 IS

1 rules), as amended by section 201(d), is amended by add2 ing at the end the following:

3 ‘‘(10) NO CARRYBACK OF SECTION 45D CREDIT

4 BEFORE EFFECTIVE DATE.—No portion of the un5 used business credit for any taxable year which is

6 attributable to the qualifying clean coal technology

7 production credit determined under section 45D may

8 be carried back to a taxable year ending before the

9 date of enactment of section 45D.’’.

10 (d) CLERICAL AMENDMENT.—The table of sections

11 for subpart D of part IV of subchapter A of chapter 1

12 of the Internal Revenue Code of 1986 is amended by add13 ing at the end the following:

‘‘Sec. 45D. Credit for production from a qualifying clean coal technology unit.’’.

14 (e) MODIFICATIONS AND INSTALLATIONS NOT SUB15 JECT TO NEW SOURCE REVIEW, ETC.—

16 (1) EXEMPTION FROM NEW SOURCE REVIEW.—

17 Modifications made to an existing coal-based genera18 tion unit because of, or as part of a qualifying clean

19 coal technology unit (as defined in section 45D(c)(1)

20 of the Internal Revenue Code of 1986, as added by

21 subsection (a), shall be exempt from the new source

22 review provisions of the Clean Air Act (42 U.S.C.

23 7401 et seq.).

24 (2) EXEMPTION FROM EMISSION CONTROL RE25 QUIREMENTS.—The installation of a qualifying clean
31

•S 3253 IS

1 coal technology (as so defined) on an existing coal2 based electricity generating unit, that meets or ex3 ceeds, for the applicable source category, the stand4 ard of performance for new stationary sources under

5 section 111 of the Clean Air Act (42 U.S.C. 7411),

6 shall exempt the existing unit from any new or in7 creased emission control requirements under title I

8 of such Act (42 U.S.C. 7401 et seq.) for a period

9 of 10 years after the date the qualifying clean coal

10 technology is originally placed in service.

11 (f) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to production after the date of en13 actment of this Act.

14 TITLE III—INCENTIVES FOR

15 EARLY COMMERCIAL APPLI16 CATIONS OF ADVANCED

17 CLEAN COAL TECHNOLOGIES

18 SEC. 301. CREDIT FOR INVESTMENT IN QUALIFYING AD19 VANCED CLEAN COAL TECHNOLOGY.

20 (a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN

21 COAL TECHNOLOGY FACILITY CREDIT.—Section 46 of

22 the Internal Revenue Code of 1986 (relating to amount

23 of credit), as amended by section 201(a), is amended by

24 striking ‘‘and’’ at the end of paragraph (3), by striking
32

•S 3253 IS

1 the period at the end of paragraph (4) and inserting ‘‘,

2 and’’, and by adding at the end the following:

3 ‘‘(5) the qualifying advanced clean coal tech4 nology facility credit.’’.

5 (b) AMOUNT OF QUALIFYING ADVANCED CLEAN

6 COAL TECHNOLOGY FACILITY CREDIT.—Subpart E of

7 part IV of subchapter A of chapter 1 of the Internal Rev8 enue Code of 1986 (relating to rules for computing invest9 ment credit), as amended by section 201(b), is amended

10 by inserting after section 48A the following:

11 ‘‘SEC. 48B. QUALIFYING ADVANCED CLEAN COAL TECH12 NOLOGY FACILITY CREDIT.

13 ‘‘(a) IN GENERAL.—For purposes of section 46, the

14 qualifying advanced clean coal technology facility credit

15 for any taxable year is an amount equal to 10 percent

16 of the qualified investment in a qualifying advanced clean

17 coal technology facility for such taxable year.

18 ‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH19 NOLOGY FACILITY.—

20 ‘‘(1) IN GENERAL.—For purposes of subsection

21 (a), the term ‘qualifying advanced clean coal tech22 nology facility’ means a facility of the taxpayer—

23 ‘‘(A)(i)(I) which replaces a conventional

24 technology facility of the taxpayer and the origi-
33

•S 3253 IS

1 nal use of which commences with the taxpayer,

2 or

3 ‘‘(II) which is a retrofitted or repowered

4 conventional technology facility, the retrofitting

5 or repowering of which is completed by the tax6 payer (but only with respect to that portion of

7 the basis which is properly attributable to such

8 retrofitting or repowering), or

9 ‘‘(ii) which is acquired through purchase

10 (as defined by section 179(d)(2)),

11 ‘‘(B) that is depreciable under section 167,

12 ‘‘(C) that has a useful life of not less than

13 4 years,

14 ‘‘(D) that is located in the United States,

15 and

16 ‘‘(E) that uses qualifying advanced clean

17 coal technology.

18 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

19 For purposes of subparagraph (A) of paragraph (1),

20 in the case of a facility that—

21 ‘‘(A) is originally placed in service by a

22 person, and

23 ‘‘(B) is sold and leased back by such per24 son, or is leased to such person, within 3

25 months after the date such facility was origi-
34

•S 3253 IS

1 nally placed in service, for a period of not less

2 than 12 years,

3 such facility shall be treated as originally placed in

4 service not earlier than the date on which such prop5 erty is used under the leaseback (or lease) referred

6 to in subparagraph (B). The preceding sentence

7 shall not apply to any property if the lessee and les8 sor of such property make an election under this

9 sentence. Such an election, once made, may be re10 voked only with the consent of the Secretary.

11 ‘‘(3) QUALIFYING ADVANCED CLEAN COAL

12 TECHNOLOGY.—For purposes of paragraph (1)—

13 ‘‘(A) IN GENERAL.—The term ‘qualifying

14 advanced clean coal technology’ means, with re15 spect to clean coal technology—

16 ‘‘(i) multiple applications, with a com17 bined capacity of not more than 1,000

18 megawatts, of advanced pulverized coal or

19 atmospheric fluidized bed combustion

20 technology—

21 ‘‘(I) installed as a new, retrofit,

22 or repowering application,

23 ‘‘(II) operated between 2000 and

24 2015, and
35

•S 3253 IS

1 ‘‘(III) with a design net heat rate

2 of not more than 8,750 Btu per kilo3 watt hour when the design coal has a

4 heat content of more than 8,000 Btu

5 per pound, or a design net heat rate

6 of not more than 9,900 Btu per kilo7 watt hour when the design coal has a

8 heat content of 8,000 Btu per pound

9 or less,

10 ‘‘(ii) multiple applications, with a

11 combined capacity of not more than 1,000

12 megawatts, of pressurized fluidized bed

13 combustion technology—

14 ‘‘(I) installed as a new, retrofit,

15 or repowering application,

16 ‘‘(II) operated between 2000 and

17 2015, and

18 ‘‘(III) with a design net heat rate

19 of not more than 8,400 Btu per kilo20 watt hour when the design coal has a

21 heat content of more than 8,000 Btu

22 per pound, or a design net heat rate

23 of not more than 9,900 Btu’s per kilo24 watt hour when the design coal has a
36

•S 3253 IS

1 heat content of 8,000 Btu per pound

2 or less,

3 ‘‘(iii) multiple applications, with a

4 combined capacity of not more than 2,000

5 megawatts, of integrated gasification com6 bined cycle technology, with or without fuel

7 or chemical co-production—

8 ‘‘(I) installed as a new, retrofit,

9 or repowering application,

10 ‘‘(II) operated between 2000 and

11 2015,

12 ‘‘(III) with a design net heat rate

13 of not more than 8,550 Btu per kilo14 watt hour when the design coal has a

15 heat content of more than 8,000 Btu

16 per pound, or a design net heat rate

17 of not more than 9,900 Btu per kilo18 watt hour when the design coal has a

19 heat content of 8,000 Btu per pound

20 or less, and

21 ‘‘(IV) with a net thermal effi22 ciency on any fuel or chemical co-pro23 duction of not less than 40 percent

24 (higher heating value), and
37

•S 3253 IS

1 ‘‘(iv) multiple applications, with a

2 combined capacity of not more than 2,000

3 megawatts of technology for the production

4 of electricity—

5 ‘‘(I) installed as a new, retrofit,

6 or repowering application,

7 ‘‘(II) operated between 2000 and

8 2015, and

9 ‘‘(III) with a carbon emission

10 rate that is not more than 85 percent

11 of conventional technology.

12 ‘‘(B) EXCEPTIONS.—Such term shall not

13 include clean coal technology projects receiving

14 or scheduled to receive funding under the Clean

15 Coal Technology Program of the Department of

16 Energy.

17 ‘‘(C) CLEAN COAL TECHNOLOGY.—The

18 term ‘clean coal technology’ means advanced

19 technology that uses coal to produce 75 percent

20 or more of its thermal output as electricity in21 cluding advanced pulverized coal or atmospheric

22 fluidized bed combustion, pressurized fluidized

23 bed combustion, integrated gasification com24 bined cycle with or without fuel or chemical co25 production, and any other technology for the
38

•S 3253 IS

1 production of electricity that exceeds the per2 formance of conventional technology.

3 ‘‘(D) CONVENTIONAL TECHNOLOGY.—The

4 term ‘conventional technology’ means—

5 ‘‘(i) coal-fired combustion technology

6 with a design net heat rate of not less than

7 9,300 Btu per kilowatt hour (HHV) and a

8 carbon equivalents emission rate of not

9 more than 0.53 pounds of carbon per kilo10 watt hour when the design coal has a heat

11 content of more than 8,000 Btu per

12 pound,

13 ‘‘(ii) coal-fired combustion technology

14 with a design net heat rate of not less than

15 10,500 Btu per kilowatt hour (HHV) and

16 a carbon equivalents emission rate of not

17 more than 0.60 pound of carbon per kilo18 watt hour when the design coal has a heat

19 content of 8,000 Btu per pound or less, or

20 ‘‘(iii) natural gas-fired combustion

21 technology with a design net heat rate of

22 not less than 7,500 Btu per kilowatt hour

23 (HHV) and a carbon equivalents emission

24 rate of not more than 0.24 pound of car25 bon per kilowatt hour.
39

•S 3253 IS

1 ‘‘(E) DESIGN NET HEAT RATE.—The de2 sign net heat rate shall be based on the design

3 annual heat input to and the design annual net

4 electrical output from the qualifying advanced

5 clean coal technology (determined without re6 gard to such technology’s co-generation of

7 steam).

8 ‘‘(F) SELECTION CRITERIA.—Selection cri9 teria for clean coal technology facilities—

10 ‘‘(i) shall be established by the Sec11 retary of Energy as part of a competitive

12 solicitation,

13 ‘‘(ii) shall include primary criteria of

14 minimum design net heat rate, maximum

15 design thermal efficiency, and lowest cost

16 to the government, and

17 ‘‘(iii) shall include supplemental cri18 teria as determined appropriate by the

19 Secretary of Energy.

20 ‘‘(c) QUALIFIED INVESTMENT.—For purposes of sub21 section (a), the term ‘qualified investment’ means, with

22 respect to any taxable year, the basis of a qualifying ad23 vanced clean coal technology facility placed in service by

24 the taxpayer during such taxable year.

25 ‘‘(d) QUALIFIED PROGRESS EXPENDITURES.—
40

•S 3253 IS

1 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

2 In the case of a taxpayer who has made an election

3 under paragraph (5), the amount of the qualified in4 vestment of such taxpayer for the taxable year (de5 termined under subsection (c) without regard to this

6 section) shall be increased by an amount equal to

7 the aggregate of each qualified progress expenditure

8 for the taxable year with respect to progress expend9 iture property.

10 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE11 FINED.—For purposes of this subsection, the term

12 ‘progress expenditure property’ means any property

13 being constructed by or for the taxpayer and which

14 it is reasonable to believe will qualify as a qualifying

15 advanced clean coal technology facility which is

16 being constructed by or for the taxpayer when it is

17 placed in service.

18 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE19 FINED.—For purposes of this subsection—

20 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In

21 the case of any self-constructed property, the

22 term ‘qualified progress expenditures’ means

23 the amount which, for purposes of this subpart,

24 is properly chargeable (during such taxable
41

•S 3253 IS

1 year) to capital account with respect to such

2 property.

3 ‘‘(B) NONSELF-CONSTRUCTED PROP4 ERTY.—In the case of nonself-constructed prop5 erty, the term ‘qualified progress expenditures’

6 means the amount paid during the taxable year

7 to another person for the construction of such

8 property.

9 ‘‘(4) OTHER DEFINITIONS.—For purposes of

10 this subsection—

11 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

12 The term ‘self-constructed property’ means

13 property for which it is reasonable to believe

14 that more than half of the construction expendi15 tures will be made directly by the taxpayer.

16 ‘‘(B) NONSELF-CONSTRUCTED PROP17 ERTY.—The term ‘nonself-constructed property’

18 means property which is not self-constructed

19 property.

20 ‘‘(C) CONSTRUCTION, ETC.—The term

21 ‘construction’ includes reconstruction and erec22 tion, and the term ‘constructed’ includes recon23 structed and erected.

24 ‘‘(D) ONLY CONSTRUCTION OF QUALI25 FYING ADVANCED CLEAN COAL TECHNOLOGY
42

•S 3253 IS

1 FACILITY TO BE TAKEN INTO ACCOUNT.—Con2 struction shall be taken into account only if, for

3 purposes of this subpart, expenditures therefor

4 are properly chargeable to capital account with

5 respect to the property.

6 ‘‘(5) ELECTION.—An election under this sub7 section may be made at such time and in such man8 ner as the Secretary may by regulations prescribe.

9 Such an election shall apply to the taxable year for

10 which made and to all subsequent taxable years.

11 Such an election, once made, may not be revoked ex12 cept with the consent of the Secretary.

13 ‘‘(e) COORDINATION WITH OTHER CREDITS.—This

14 section shall not apply to any property with respect to

15 which the rehabilitation credit under section 47 or the en16 ergy credit under section 48 is allowed unless the taxpayer

17 elects to waive the application of such credit to such prop18 erty.

19 ‘‘(f) TERMINATION.—This section shall not apply

20 with respect to any qualified investment made more than

21 10 years after the effective date of this section.’’.

22 (c) RECAPTURE.—Section 50(a) of the Internal Rev23 enue Code of 1986 (relating to other special rules), as

24 amended by section 201(c), is amended by adding at the

25 end the following:
43

•S 3253 IS

1 ‘‘(7) SPECIAL RULES RELATING TO QUALIFYING

2 ADVANCED CLEAN COAL TECHNOLOGY FACILITY.—

3 For purposes of applying this subsection in the case

4 of any credit allowable by reason of section 48B, the

5 following shall apply:

6 ‘‘(A) GENERAL RULE.—In lieu of the

7 amount of the increase in tax under paragraph

8 (1), the increase in tax shall be an amount

9 equal to the investment tax credit allowed under

10 section 38 for all prior taxable years with re11 spect to a qualifying advanced clean coal tech12 nology facility (as defined by section 48B(b)(1))

13 multiplied by a fraction whose numerator is the

14 number of years remaining to fully depreciate

15 under this title the qualifying advanced clean

16 coal technology facility disposed of, and whose

17 denominator is the total number of years over

18 which such facility would otherwise have been

19 subject to depreciation. For purposes of the

20 preceding sentence, the year of disposition of

21 the qualifying advanced clean coal technology

22 facility property shall be treated as a year of re23 maining depreciation.

24 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

25 PROGRESS EXPENDITURES.—Rules similar to
44

•S 3253 IS

1 the rules of paragraph (2) shall apply in the

2 case of qualified progress expenditures for a

3 qualifying advanced clean coal technology facil4 ity under section 48B, except that the amount

5 of the increase in tax under subparagraph (A)

6 of this paragraph shall be substituted in lieu of

7 the amount described in such paragraph (2).

8 ‘‘(C) APPLICATION OF PARAGRAPH.—This

9 paragraph shall be applied separately with re10 spect to the credit allowed under section 38 re11 garding a qualifying advanced clean coal tech12 nology facility.’’.

13 (d) TRANSITIONAL RULE.—Section 39(d) of the In14 ternal Revenue Code of 1986 (relating to transitional

15 rules), as amended by section 202(c), is amended by add16 ing at the end the following:

17 ‘‘(11) NO CARRYBACK OF SECTION 48B CREDIT

18 BEFORE EFFECTIVE DATE.—No portion of the un19 used business credit for any taxable year which is

20 attributable to the qualifying advanced clean coal

21 technology facility credit determined under section

22 48B may be carried back to a taxable year ending

23 before the date of the enactment of section 48B.’’.

24 (e) TECHNICAL AMENDMENTS.—
45

•S 3253 IS

1 (1) Section 49(a)(1)(C) of the Internal Revenue

2 Code of 1986, as amended by section 201(e)(1), is

3 amended by striking ‘‘and’’ at the end of clause (iii),

4 by striking the period at the end of clause (iv) and

5 inserting ‘‘, and’’, and by adding at the end the fol6 lowing:

7 ‘‘(v) the portion of the basis of any

8 qualifying advanced clean coal technology

9 facility attributable to any qualified invest10 ment (as defined by section 48B(c)).’’.

11 (2) Section 50(a)(4) of such Code, as amended

12 by section 201(e)(2), is amended by striking ‘‘and

13 (6)’’ and inserting ‘‘(6), and (7)’’.

14 (3) Section 50(c)(6) of such Code, as added by

15 section 201(e)(3), is amended by inserting ‘‘or any

16 advanced clean coal technology facility credit under

17 section 48B’’ after ‘‘section 48A’’.

18 (4) The table of sections for subpart E of part

19 IV of subchapter A of chapter 1, as amended by sec20 tion 201(e)(4), is amended by inserting after the

21 item relating to section 48A the following:

‘‘Sec. 48B. Qualifying advanced clean coal technology facility credit.’’.

22 (f) INSTALLATIONS NOT SUBJECT TO NEW SOURCE

23 REVIEW, ETC.—

24 (1) EXEMPTION FROM NEW SOURCE REVIEW.—

25 The installation of a qualifying advanced clean coal
46

•S 3253 IS

1 technology facility (as defined in section 48B(b)(1)

2 of the Internal Revenue Code of 1986, as added by

3 subsection (b), shall be exempt from the new source

4 review provisions of the Clean Air Act (42 U.S.C.

5 7401 et seq.).

6 (2) EXEMPTION FROM EMISSION CONTROL RE7 QUIREMENTS.—The installation of a qualifying ad8 vanced clean coal technology facility (as so defined)

9 that meets or exceeds, for the applicable source cat10 egory, the standard of performance for new sta11 tionary sources established under section 111 of the

12 Clean Air Act (42 U.S.C. 7411), shall exempt that

13 facility from any new or increased emission control

14 requirements under title I of such Act (42 U.S.C.

15 7401 et seq.) for a period of 10 years after the date

16 the qualifying clean coal technology facility is origi17 nally placed in service.

18 (g) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to periods after December 31,

20 2000, under rules similar to the rules of section 48(m)

21 of the Internal Revenue Code of 1986 (as in effect on the

22 day before the date of the enactment of the Revenue Rec23 onciliation Act of 1990).
47

•S 3253 IS

1 SEC. 302. CREDIT FOR PRODUCTION FROM QUALIFYING

2 ADVANCED CLEAN COAL TECHNOLOGY.

3 (a) CREDIT FOR PRODUCTION FROM QUALIFYING

4 ADVANCED CLEAN COAL TECHNOLOGY.—Subpart D of

5 part IV of subchapter A of chapter 1 of the Internal Rev6 enue Code of 1986 (relating to business related credits),

7 as amended by section 202(a), is amended by adding at

8 the end the following:

9 ‘‘SEC. 45E. CREDIT FOR PRODUCTION FROM QUALIFYING

10 ADVANCED CLEAN COAL TECHNOLOGY.

11 ‘‘(a) GENERAL RULE.—For purposes of section 38,

12 the qualifying advanced clean coal technology production

13 credit of any taxpayer for any taxable year is equal to—

14 ‘‘(1) the applicable amount of advanced clean

15 coal technology production credit, multiplied by

16 ‘‘(2) the sum of—

17 ‘‘(A) the kilowatt hours of electricity, plus

18 ‘‘(B) each 3413 Btu of fuels or chemicals,

19 produced by the taxpayer during such taxable year

20 at a qualifying advanced clean coal technology facil21 ity during the 10-year period beginning on the date

22 the facility was originally placed in service.

23 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this

24 section, the applicable amount of advanced clean coal tech25 nology production credit with respect to production from
48

•S 3253 IS

1 a qualifying advanced clean coal technology facility shall

2 be determined as follows:

3 ‘‘(1) Where the design coal has a heat content

4 of more than 8,000 Btu per pound:

5 ‘‘(A) In the case of a facility originally

6 placed in service before 2008, if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 8,400 ................................................. $.0130 $.0115

More than 8,400 but not more than 8,550 ............... $.0100 $.0080

More than 8,550 but not more than 8,750 ............... $.0075 $.0060.

7 ‘‘(B) In the case of a facility originally

8 placed in service after 2007 and before 2012,

9 if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 7,770 ................................................. $.0135 $.0110

More than 7,770 but not more than 8,125 ............... $.0115 $.0090

More than 8,125 but not more than 8,350 ............... $.0090 $.0080.

10 ‘‘(C) In the case of a facility originally

11 placed in service after 2011 and before 2016,

12 if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 7,380 ................................................. $.0155 $.0135

More than 7,380 but not more than 7,720 ............... $.0135 $.0115.

13 ‘‘(2) Where the design coal has a heat content

14 of not more than 8,000 Btu per pound:
49

•S 3253 IS

1 ‘‘(A) In the case of a facility originally

2 placed in service before 2008, if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 8,500 ................................................. $.0130 $.0115

More than 8,500 but not more than 8,650 ............... $.0100 $.0080

More than 8,650 but not more than 8,750 ............... $.0075 $.0060.

3 ‘‘(B) In the case of a facility originally

4 placed in service after 2007 and before 2012,

5 if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 8,000 ................................................. $.0135 $.0110

More than 8,000 but not more than 8,250 ............... $.0115 $.0090

More than 8,250 but not more than 8,400 ............... $.0090 $.0080.

6 ‘‘(C) In the case of a facility originally

7 placed in service after 2011 and before 2016,

8 if—

‘‘The facility design net heat rate, Btu/kWh (HHV)

is equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not more than 7,800 ................................................. $.0155 $.0135

More than 7,800 but not more than 7,950 ............... $.0135 $.0115.

9 ‘‘(3) Where the clean coal technology facility is

10 producing fuel or chemicals:

11 ‘‘(A) In the case of a facility originally

12 placed in service before 2008, if—

‘‘The facility design net thermal efficiency (HHV) is

equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not less than 40.6 percent ........................................ $.0130 $.0115

Less than 40.6 but not less than 40 percent ............ $.0100 $.0080

Less than 40 but not less than 39 percent ............... $.0075 $.0060.
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1 ‘‘(B) In the case of a facility originally

2 placed in service after 2007 and before 2012,

3 if—

‘‘The facility design net thermal efficiency (HHV) is

equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not less than 43.9 percent ........................................ $.0135 $.0110

Less than 43.9 but not less than 42 percent ............ $.0115 $.0090

Less than 42 but not less than 40.9 percent ............ $.0090 $.0080.

4 ‘‘(C) In the case of a facility originally

5 placed in service after 2011 and before 2016,

6 if—

‘‘The facility design net thermal efficiency (HHV) is

equal to:

The applicable amount is:

For 1st 5 years

of such service

For 2d 5 years of

such service

Not less than 44.2 percent ........................................ $.0155 $.0135

Less than 44.2 but not less than 43.6 percent ......... $.0135 $.0115.

7 ‘‘(c) INFLATION ADJUSTMENT FACTOR.—For cal8 endar years after 2001, each amount in paragraphs (1),

9 (2), and (3) shall be adjusted by multiplying such amount

10 by the inflation adjustment factor for the calendar year

11 in which the amount is applied. If any amount has in12 creased under the preceding sentence is not a multiple of

13 0.01 cent, such amount shall be rounded to the nearest

14 multiple of 0.01 cent.

15 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section—

17 ‘‘(1) IN GENERAL.—Any term used in this sec18 tion which is also used in section 48B shall have the

19 meaning given such term in section 48B.
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1 ‘‘(2) APPLICABLE RULES.—The rules of para2 graphs (3), (4), and (5) of section 45 shall apply.

3 ‘‘(3) INFLATION ADJUSTMENT FACTOR.—The

4 term ‘inflation adjustment factor’ means, with re5 spect to a calendar year, a fraction the numerator

6 of which is the GDP implicit price deflator for the

7 preceding calendar year and the denominator of

8 which is the GDP implicit price deflator for the cal9 endar year 2000.

10 ‘‘(4) GDP IMPLICIT PRICE DEFLATOR.—The

11 term ‘GDP implicit price deflator’ means the most

12 recent revision of the implicit price deflator for the

13 gross domestic product as computed by the Depart14 ment of Commerce before March 15 of the calendar

15 year.’’.

16 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec17 tion 38(b) of the Internal Revenue Code of 1986, as

18 amended by section 202(b), is amended by striking ‘‘plus’’

19 at the end of paragraph (12), by striking the period at

20 the end of paragraph (13) and inserting ‘‘, plus’’, and by

21 adding at the end the following:

22 ‘‘(14) the qualifying advanced clean coal tech23 nology production credit determined under section

24 45E(a).’’
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1 (c) TRANSITIONAL RULE.—Section 39(d) of the In2 ternal Revenue Code of 1986 (relating to transitional

3 rules), as amended by section 301(d), is amended by add4 ing at the end the following:

5 ‘‘(12) NO CARRYBACK OF SECTION 45E CREDIT

6 BEFORE EFFECTIVE DATE.—No portion of the un7 used business credit for any taxable year which is

8 attributable to the qualifying advanced clean coal

9 technology production credit determined under sec10 tion 45E may be carried back to a taxable year end11 ing before the date of enactment of section 45E.’’.

12 (d) CLERICAL AMENDMENT.—The table of sections

13 for subpart D of part IV of subchapter A of chapter 1

14 of the Internal Revenue Code of 1986, as amended by sec15 tion 202(d), is amended by adding at the end the fol16 lowing:

‘‘Sec. 45E. Credit for production from qualifying advanced clean coal technology.’’.

17 (e) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to production after the date of the

19 enactment of this Act.

20 SEC. 303. RISK POOL FOR QUALIFYING ADVANCED CLEAN

21 COAL TECHNOLOGY.

22 (a) ESTABLISHMENT.—The Secretary of the Treas23 ury shall establish a financial risk pool which shall be

24 available to any United States owner of a qualifying ad-
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1 vanced clean coal technology (as defined in section

2 48B(b)(3) of the Internal Revenue Code of 1986, as added

3 by section 301(b)) to offset for the first 3 years of the

4 operation of such technology the costs (not to exceed 5

5 percent of the total cost of installation) for modifications

6 resulting from the technology’s failure to achieve its de7 sign performance.

8 (b) AUTHORIZATION OF APPROPRIATIONS.—There is

9 authorized to be appropriated such sums as are necessary

10 to carry out the purposes of this section.

11 TITLE IV—TREATMENT OF

12 CERTAIN TAX-EXEMPT ENTITIES

13 SEC. 401. REFUNDABLE CREDITS FOR ELECTRIC COOPERA14 TIVES OR PUBLICLY OWNED ELECTRIC UTILI15 TIES.

16 (a) REFUNDABLE CREDITS.—Section 6401(b) of the

17 Internal Revenue Code of 1986 (relating to excessive cred18 its) is amended by adding at the end the following:

19 ‘‘(3) SPECIAL RULE FOR CREDITS UNDER SEC20 TIONS 45D, 45E, 48A, AND 48B.—

21 ‘‘(A) IN GENERAL.—For purposes of para22 graph (1), the credits allowed under sections

23 45D, 45E, 48A, and 48B (relating to credits

24 for emission reductions and efficiency improve25 ments in existing coal-based generating facili-
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1 ties) shall be treated for the taxable year as

2 credits allowable under subpart C of part IV of

3 subchapter A of chapter 1 (relating to refund4 able credits) only if with respect to such taxable

5 year—

6 ‘‘(i) the taxpayer is an electric cooper7 ative which is—

8 ‘‘(I) an organization engaged in

9 marketing, generating, purchasing,

10 transmitting, or distributing electric

11 energy,

12 ‘‘(II) recognized for purposes of

13 this title as operating on a cooperative

14 basis, and

15 ‘‘(III) the owner of a qualifying

16 system of continuous emission control

17 or a qualifying clean coal technology

18 unit or both or a qualifying advanced

19 clean coal technology facility from

20 which such credits are derived, or

21 ‘‘(ii) the taxpayer is a public utility

22 which is—

23 ‘‘(I) organized by an Act of Con24 gress or whose income would qualify

25 under section 115 as income derived
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•S 3253 IS

1 from a State or any subdivision there2 of, and

3 ‘‘(II) the owner of the existing

4 coal-based generating facility which is

5 retrofitted, repowered, or replaced

6 with a qualifying clean coal technology

7 for purposes of the credit under sec8 tion 45D or served by, added to by, or

9 retrofitted with a qualifying system of

10 continuous emission control for pur11 poses of the credit under section 48A,

12 or the owner of qualifying advanced

13 clean coal technology for purposes of

14 the credits under sections 45E and

15 48B.

16 ‘‘(B) TREATMENT OF COOPERATIVE TAX17 PAYER.—For purposes of this paragraph, an

18 electric cooperative shall be deemed a taxpayer

19 thereby qualifying for the credits described in

20 sections 45D, 45E, 48A, and 48B notwith21 standing any other provision to the contrary.

22 ‘‘(C) PUBLIC UTILITY DEFINED.—For pur23 poses of this paragraph only, the term ‘public

24 utility’ means a utility providing electricity that

25 is owned by the Federal Government, a State or
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•S 3253 IS

1 local government, or any political subdivision

2 thereof.

3 ‘‘(D) TREATMENT OF CREDIT.—Neither

4 the amount of credit produced nor the amount

5 of credit refunded pursuant to this paragraph

6 shall result in income for purposes of section

7 501(c)(12).

8 ‘‘(E) TREATMENT OF UNRELATED PER9 SONS.—For purpose of this paragraph, the

10 rules of section 45(d)(4) shall apply.

11 ‘‘(F) TREATMENT OF TVA.—This para12 graph shall not with respect to the Tennessee

13 Valley Authority.’’.

14 SEC. 402. OFFSET OF CERTAIN ANNUAL PAYMENT OBLIGA15 TIONS IN LIEU OF QUALIFYING CLEAN COAL

16 TECHNOLOGY CREDITS.

17 (a) IN GENERAL.—Notwithstanding any other provi18 sion of law, the Tennessee Valley Authority shall be enti19 tled, with respect to its being an owner of a qualifying

20 system of continuous emission control for purposes of the

21 credit under section 45D of the Internal Revenue Code

22 of 1986, a qualifying clean coal technology unit for pur23 poses of the credit under section 48A of such Code, or

24 a qualifying advanced clean coal technology facility for

25 purposes of the credit under section 45E or 48B of such
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1 Code, to have an amount, equal to the aggregate amount

2 of such credits for any fiscal year, applied as a credit

3 against the payments required to be made in such fiscal

4 year under section 15d(e) of the Tennessee Valley Author5 ity Act of 1933 (16 U.S.C. 831n–4(e)) as an annual re6 turn on the appropriations investment and an annual re7 payment sum.

8 (b) TREATMENT OF CREDITS.—The aggregate

9 amount of credits described in subsection (a) shall be

10 treated in the same manner and to the same extent as

11 if such credits were a payment in cash and shall be applied

12 first against the annual return on the appropriations in13 vestment.

14 (c) CREDIT CARRYOVER.—With respect to any fiscal

15 year, if the aggregate amount of credits described in sub16 section (a) exceeds the aggregate amount of payment obli17 gations described in subsection (a), the excess amount

18 shall remain available to the Tennessee Valley Authority

19 for application as credits against the amounts of such pay20 ment obligations in succeeding fiscal years in the same

21 manner as described in this section.

Æ