I 

111TH CONGRESS 

2D SESSION H. R. 6035 

To amend the Internal Revenue Code of 1986 to provide an investment 

credit to promote the conversion of United States coal and domestic 

carbonaceous feedstocks into synthetic fuels and synthetic gas. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 30, 2010 

Mr. HOLDEN introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

an investment credit to promote the conversion of United 

States coal and domestic carbonaceous feedstocks into 

synthetic fuels and synthetic gas. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Foreign Oil Displace5 ment Act of 2010’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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1 (1) the strategic interests of the United States 

2 would be served by a reduction in the Nation’s de3 pendence upon imported oil to produce transpor4 tation fuels and other products vital to both the do5 mestic economy and national security; 

6 (2) this goal would be served by the develop7 ment of a viable, commercially competitive synthetic 

8 fuels industry reliant upon domestic coals and other 

9 plentiful, nontraditional carbonaceous feedstocks; 

10 and 

11 (3) temporary financial incentives are required 

12 to foster private investment in the technology, de13 sign, construction, and operation of strategic facili14 ties capable of producing synthetic fuels or synthetic 

15 gas on a commercial scale. 

16 SEC. 3. CARBONACEOUS FUELS FACILITY CREDIT. 

17 (a) ALLOWANCE OF CARBONACEOUS FUELS FACIL18 ITY CREDIT.—Section 46 of the Internal Revenue Code 

19 of 1986 is amended by striking ‘‘and’’ at the end of para20 graph (5), by striking the period at the end of paragraph 

21 (6) and inserting ‘‘, and’’ and by inserting after paragraph 

22 (6) the following new paragraph: 

23 ‘‘(7) the carbonaceous fuels facility credit.’’. 

24 (b) AMOUNT OF CARBONACEOUS FUELS FACILITY

25 CREDIT.—Subpart E of part IV of subchapter A of chapVerDate Mar 15 2010 00:13 Aug 04, 2010 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6035.IH H6035

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1 ter 1 of such Code is amended by inserting after section 

2 48D the following new section: 

3 ‘‘SEC. 48E. CARBONACEOUS FUELS FACILITY CREDIT. 

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

5 carbonaceous fuels facility credit for any taxable year is 

6 an amount equal to 30 percent of the qualified investment 

7 in a carbonaceous fuels conversion facility for such taxable 

8 year. 

9 ‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 

10 section— 

11 ‘‘(1) IN GENERAL.—The term ‘qualified invest12 ment’ means, with respect to any taxable year, the 

13 basis of property placed in service by the taxpayer 

14 during the taxable year as part of a carbonaceous 

15 fuels conversion facility— 

16 ‘‘(A)(i) the construction, reconstruction, or 

17 erection of which is completed by the taxpayer, 

18 or 

19 ‘‘(ii) which is acquired by the taxpayer if 

20 the original use of such property commences 

21 with the taxpayer, 

22 ‘‘(B) with respect to which depreciation (or 

23 amortization in lieu of depreciation) is allow24 able, and 


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1 ‘‘(C) which has a useful life of not less 

2 than 3 years. 

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

4 For purposes of paragraph (1)(A), in the case of a 

5 facility that— 

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

7 person, and 

8 ‘‘(B) is sold and leased back by such per9 son, or is leased to such person, within 3 

10 months after the date such facility was origi11 nally placed in service, for a period of not less 

12 than 12 years, 

13 such facility shall be treated as originally placed in 

14 service not earlier than the date on which such prop15 erty is used under the leaseback (or lease) referred 

16 to in subparagraph (B). The preceding sentence 

17 shall not apply to any property if the lessee and les18 sor of such property make an election under this 

19 sentence. Such an election, once made, may be re20 voked only with the consent of the Secretary. 

21 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI22 TURES RULES MADE APPLICABLE.—Rules similar to 

23 the rules of subsections (c)(4) and (d) of section 46 

24 (as in effect on the day before the enactment of the 


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1 Revenue Reconciliation Act of 1990) shall apply for 

2 purposes of this section. 

3 ‘‘(c) CARBONACEOUS FUELS CONVERSION FACIL4 ITY.— 

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the term ‘carbonaceous fuels conversion facility’ 

7 means a facility of the taxpayer used to produce a 

8 qualified fuel. 

9 ‘‘(2) QUALIFIED FUEL.—For purposes of para10 graph (1), the term ‘qualified fuel’— 

11 ‘‘(A) has the meaning given such term by 

12 section 45K(c), except that 

13 ‘‘(B) in applying section 45K(c)(1)(C), the 

14 term ‘coal’ includes— 

15 ‘‘(i) peat, and 

16 ‘‘(ii) any byproduct (including syn17 thetic gas) or chemical— 

18 ‘‘(I) that is from a coal, culm, or 

19 silt preparation facility, and 

20 ‘‘(II) that contains fixed carbon 

21 derived from coal. 

22 ‘‘(d) COORDINATION WITH OTHER CREDITS.—This 

23 section shall not apply to any property with respect to 

24 which any other credit is allowed unless the taxpayer elects 


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1 to waive the application of such other credits to such prop2 erty. 

3 ‘‘(e) CREDIT MAY BE ASSIGNED.— 

4 ‘‘(1) IN GENERAL.—If any taxpayer elects the 

5 application of this subsection for any taxable year, 

6 the amount of credit determined under this section 

7 for such year which would (but for this subsection) 

8 be allowable to the taxpayer shall be allowable to the 

9 person designated by the taxpayer. Such amount 

10 shall be determined by applying this section sepa11 rately from section 38 for such year. The person so 

12 designated shall be treated as the taxpayer with re13 spect to this section (other than this subsection) for 

14 purposes of this title (other than this paragraph). 

15 ‘‘(2) TREATMENT OF AMOUNTS PAID FOR AS16 SIGNMENT.—If any amount is paid to the person 

17 who assigns the credit determined under this sec18 tion, no portion of such amount shall be includible 

19 in such person’s gross income. 

20 ‘‘(f) APPLICATION OF SECTION.—This section shall 

21 apply to periods after the date of the enactment of this 

22 section and before January 1, 2024, under rules similar 

23 to the rules of section 48(m) (as in effect on the day before 

24 the date of the enactment of the Revenue Reconciliation 

25 Act of 1990).’’. 


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1 (c) RECAPTURE.— 

2 (1) IN GENERAL.—Subsection (a) of section 50 

3 of such Code is amended by adding at the end the 

4 following new paragraph: 

5 ‘‘(6) SPECIAL RULES RELATING TO CARBO6 NACEOUS FUELS CONVERSION FACILITY.—For pur7 poses of applying this subsection in the case of any 

8 credit allowable by reason of section 48E, the fol9 lowing shall apply: 

10 ‘‘(A) IN GENERAL.—In lieu of the amount 

11 of the increase in tax under paragraph (1), the 

12 increase in tax shall be an amount equal to the 

13 investment tax credit allowed under section 38 

14 for all prior taxable years with respect to a car15 bonaceous fuels conversion facility (as defined 

16 by section 48E(c)) multiplied by a fraction 

17 whose numerator is the number of years re18 maining to fully depreciate under this chapter 

19 the carbonaceous fuels conversion facility dis20 posed of, and whose denominator is the total 

21 number of years over which such facility would 

22 otherwise have been subject to depreciation. For 

23 purposes of the preceding sentence, the year of 

24 disposition of the carbonaceous fuels conversion 


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1 facility property shall be treated as a year of re2 maining depreciation. 

3 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

4 PROGRESS EXPENDITURES.—Rules similar to 

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

6 case of qualified progress expenditures for a 

7 carbonaceous fuels conversion facility under sec8 tion 48E, except that the amount of the in9 crease in tax under subparagraph (A) of this 

10 paragraph shall be substituted in lieu of the 

11 amount described in such paragraph (2).’’. 

12 (2) Paragraph (4) of section 50(a) of such Code 

13 is amended by striking ‘‘and (2)’’ and inserting ‘‘, 

14 (2), and (6)’’. 

15 (d) APPLICATION OF AT-RISK RULES.—Subpara16 graph (C) of section 49(a)(1) of such Code is amended 

17 by striking ‘‘and’’ at the end of clause (v), by striking the 

18 period at the end of clause (vi) and inserting ‘‘, and’’, and 

19 by adding at the end thereof the following new clause: 

20 ‘‘(vii) the portion of the basis of any 

21 carbonaceous fuels conversion facility at22 tributable to any qualified investment (as 

23 defined by section 48E(b)).’’. 

24 (e) CLERICAL AMENDMENT.—The table of sections 

25 for subpart E of part IV of subchapter A of chapter 1 


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1 of such Code is amended by inserting after the item relat2 ing to section 48D the following new item: 

‘‘Sec. 48E. Carbonaceous fuels facility credit.’’ 

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

4 this section shall apply taxable years ending after the date 

5 of the enactment of this Act. 

6 SEC. 4. EXEMPTION FROM MANUFACTURERS EXCISE TAX 

7 ON FUELS. 

8 (a) IN GENERAL.—Subsection (a) of section 4083 of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(4) QUALIFIED CARBONACEOUS FUEL.— 

12 ‘‘(A) EXEMPTION.—The terms ‘taxable 

13 fuel’, ‘gasoline’, ‘diesel fuel’ and ‘kerosene’ do 

14 not include qualified carbonaceous fuel or that 

15 portion of a blend that is qualified carbo16 naceous fuel. 

17 ‘‘(B) QUALIFIED CARBONACEOUS FUEL

18 DEFINED.—For purposes of subparagraph (A), 

19 the term ‘qualified carbonaceous fuel’ means 

20 qualified fuel produced by a carbonaceous fuels 

21 conversion facility. 

22 ‘‘(C) OTHER DEFINITIONS.—For purposes 

23 of subparagraph (B), the terms ‘qualified fuel’ 

24 and ‘carbonaceous fuels conversion facility’ have 

25 the meaning given such terms by section 48E. 


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1 ‘‘(D) APPLICATION OF PARAGRAPH.—This 

2 paragraph shall apply during the period begin3 ning on the 91st day after the date of the en4 actment of this paragraph and ending on De5 cember 31, 2023.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall take effect on the date of the enactment 

8 of this Act. 

Æ 


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