II 

110TH CONGRESS 

1ST SESSION S. 155 

To promote coal-to-liquid fuel activities. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 4, 2007 

Mr. BUNNING (for himself, Mr. OBAMA, Mr. LUGAR, Mr. PRYOR, Ms. MURKOWSKI, Mr. BOND, Mr. THOMAS, Mr. MARTINEZ, Mr. ENZI, Ms. 

LANDRIEU, and Mr. CRAIG) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To promote coal-to-liquid fuel activities. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Coal-to-Liquid Fuel 

5 Promotion Act of 2007’’. 

6 TITLE I—COAL-TO-LIQUID FUEL 

7 ACTIVITIES 

8 SEC. 101. DEFINITIONS. 

9 In this title: 

10 (1) COAL-TO-LIQUID.—The term ‘‘coal-to-liq11 uid’’ means— 


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1 (A) with respect to a process or tech2 nology, the use of a feedstock, the majority of 

3 which is the coal resources of the United 

4 States, using the class of reactions known as 

5 Fischer-Tropsch, to produce synthetic fuel suit6 able for transportation; and 

7 (B) with respect to a facility, the portion 

8 of a facility related to producing the inputs to 

9 the Fischer-Tropsch process, the Fischer10 Tropsch process, finished fuel production, or 

11 the capture, transportation, or sequestration of 

12 byproducts of the use of a feedstock that is pri13 marily domestic coal at the Fischer-Tropsch fa14 cility, including carbon emissions. 

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

16 the Secretary of Energy. 

17 SEC. 102. COAL-TO-LIQUID FUEL LOAN GUARANTEE PRO18 GRAM. 

19 (a) ELIGIBLE PROJECTS.—Section 1703(b) of the 

20 Energy Policy Act of 2005 (42 U.S.C. 16513(b)) is 

21 amended by adding at the end the following: 

22 ‘‘(11) Large-scale coal-to-liquid facilities (as de23 fined in section 101 of the Coal-to-Liquid Fuel Pro24 motion Act of 2007) that use a feedstock, the major25 ity of which is the coal resources of the United 


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1 States, to produce not less than 10,000 barrels a 

2 day of liquid transportation fuel.’’. 

3 (b) AUTHORIZATION OF APPROPRIATIONS.—Section 

4 1704 of the Energy Policy Act of 2005 (42 U.S.C. 16514) 

5 is amended by adding at the end the following: 

6 ‘‘(c) COAL-TO-LIQUID PROJECTS.— 

7 ‘‘(1) IN GENERAL.—There are authorized to be 

8 appropriated such sums as are necessary to provide 

9 the cost of guarantees for projects involving large10 scale coal-to-liquid facilities under section 

11 1703(b)(11). 

12 ‘‘(2) ALTERNATIVE FUNDING.—If no appropria13 tions are made available under paragraph (1), an eli14 gible applicant may elect to provide payment to the 

15 Secretary, to be delivered if and at the time the ap16 plication is approved, in the amount of the estimated 

17 cost of the loan guarantee to the Federal Govern18 ment, as determined by the Secretary. 

19 ‘‘(3) LIMITATIONS.— 

20 ‘‘(A) IN GENERAL.—No loan guarantees 

21 shall be provided under this title for projects 

22 described in paragraph (1) after (as determined 

23 by the Secretary)— 

24 ‘‘(i) the tenth such loan guarantee is 

25 issued under this title; or 


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1 ‘‘(ii) production capacity covered by 

2 such loan guarantees reaches 100,000 bar3 rels per day of coal-to-liquid fuel. 

4 ‘‘(B) INDIVIDUAL PROJECTS.— 

5 ‘‘(i) IN GENERAL.—A loan guarantee 

6 may be provided under this title for any 

7 large-scale coal-to-liquid facility described 

8 in paragraph (1) that produces no more 

9 than 20,000 barrels of coal-to-liquid fuel 

10 per day. 

11 ‘‘(ii) NON-FEDERAL FUNDING RE12 QUIREMENT.—To be eligible for a loan 

13 guarantee under this title, a large-scale 

14 coal-to-liquid facility described in para15 graph (1) that produces more than 20,000 

16 barrels per day of coal-to-liquid fuel shall 

17 be eligible to receive a loan guarantee for 

18 the proportion of the cost of the facility 

19 that represents 20,000 barrels of coal-to20 liquid fuel per day of production. 

21 ‘‘(4) REQUIREMENTS.— 

22 ‘‘(A) GUIDELINES.—Not later than 180 

23 days after the date of enactment of this sub24 section, the Secretary shall publish guidelines 


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1 for the coal-to-liquids loan guarantee applica2 tion process. 

3 ‘‘(B) APPLICATIONS.—Not later than 1 

4 year after the date of enactment of this sub5 section, the Secretary shall begin to accept ap6 plications for coal-to-liquid loan guarantees 

7 under this subsection. 

8 ‘‘(C) DEADLINE.—Not later than 1 year 

9 from the date of acceptance of an application 

10 under subparagraph (B), the Secretary shall 

11 evaluate the application and make final deter12 minations under this subsection. 

13 ‘‘(5) REPORTS TO CONGRESS.—The Secretary 

14 shall submit to the Committee on Energy and Nat15 ural Resources of the Senate and the Committee on 

16 Energy and Commerce of the House of Representa17 tives a report describing the status of the program 

18 under this subsection not later than each of— 

19 ‘‘(A) 180 days after the date of enactment 

20 of this subsection; 

21 ‘‘(B) 1 year after the date of enactment of 

22 this subsection; and 

23 ‘‘(C) the dates on which the Secretary ap24 proves the first and fifth applications for coalVerDate Aug 31 2005 07:34 Jan 10, 2007 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S155.IS S155

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1 to-liquid loan guarantees under this sub2 section.’’. 

3 SEC. 103. COAL-TO-LIQUID FACILITIES LOAN PROGRAM. 

4 (a) DEFINITION OF ELIGIBLE RECIPIENT.—In this 

5 section, the term ‘‘eligible recipient’’ means an individual, 

6 organization, or other entity that owns, operates, or plans 

7 to construct a coal-to-liquid facility that will produce at 

8 least 10,000 barrels per day of coal-to-liquid fuel. 

9 (b) ESTABLISHMENT.—The Secretary shall establish 

10 a program under which the Secretary shall provide loans, 

11 in a total amount not to exceed $20,000,000, for use by 

12 eligible recipients to pay the Federal share of the cost of 

13 obtaining any services necessary for the planning, permit14 ting, and construction of a coal-to-liquid facility. 

15 (c) APPLICATION.—To be eligible to receive a loan 

16 under subsection (b), the eligible recipient shall submit to 

17 the Secretary an application at such time, in such manner, 

18 and containing such information as the Secretary may re19 quire. 

20 (d) NON-FEDERAL MATCH.—To be eligible to receive 

21 a loan under this section, an eligible recipient shall use 

22 non-Federal funds to provide a dollar-for-dollar match of 

23 the amount of the loan. 

24 (e) REPAYMENT OF LOAN.— 


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1 (1) IN GENERAL.—To be eligible to receive a 

2 loan under this section, an eligible recipient shall 

3 agree to repay the original amount of the loan to the 

4 Secretary not later than 5 years after the date of the 

5 receipt of the loan. 

6 (2) SOURCE OF FUNDS.—Repayment of a loan 

7 under paragraph (1) may be made from any financ8 ing or assistance received for the construction of a 

9 coal-to-liquid facility described in subsection (a), in10 cluding a loan guarantee provided under section 

11 1703(b)(11) of the Energy Policy Act of 2005 (42 

12 U.S.C. 16513(b)(11)). 

13 (f) REQUIREMENTS.— 

14 (1) GUIDELINES.—Not later than 180 days 

15 after the date of enactment of this Act, the Sec16 retary shall publish guidelines for the coal-to-liquids 

17 loan application process. 

18 (2) APPLICATIONS.—Not later than 1 year 

19 after the date of enactment of this Act, the Sec20 retary shall begin to accept applications for coal-to21 liquid loans under this section. 

22 (g) REPORTS TO CONGRESS.—Not later than each of 

23 180 days and 1 year after the date of enactment of this 

24 Act, the Secretary shall submit to the Committee on En25 ergy and Natural Resources of the Senate and the ComVerDate Aug 31 2005 07:34 Jan 10, 2007 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S155.IS S155

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1 mittee on Energy and Commerce of the House of Rep2 resentatives a report describing the status of the program 

3 under this section. 

4 (h) AUTHORIZATION OF APPROPRIATIONS.—There is 

5 authorized to be appropriated to carry out this section 

6 $200,000,000, to remain available until expended. 

7 SEC. 104. LOCATION OF COAL-TO-LIQUID MANUFACTURING 

8 FACILITIES. 

9 The Secretary, in coordination with the head of any 

10 affected agency, shall promulgate such regulations as the 

11 Secretary determines to be necessary to support the devel12 opment on Federal land (including land of the Department 

13 of Energy, military bases, and military installations closed 

14 or realigned under the defense base closure and realign15 ment) of coal-to-liquid manufacturing facilities and associ16 ated infrastructure, including the capture, transportation, 

17 or sequestration of carbon dioxide. 

18 SEC. 105. STRATEGIC PETROLEUM RESERVE. 

19 (a) DEVELOPMENT, OPERATION, AND MAINTENANCE

20 OF RESERVE.—Section 159 of the Energy Policy and Con21 servation Act (42 U.S.C. 6239) is amended— 

22 (1) by redesignating subsections (f), (g), (j), 

23 (k), and (l) as subsections (a), (b), (e), (f), and (g), 

24 respectively; and 


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1 (2) by inserting after subsection (b) (as redesig2 nated by paragraph (1)) the following: 

3 ‘‘(c) STUDY OF MAINTAINING COAL-TO-LIQUID

4 PRODUCTS IN RESERVE.—Not later than 1 year after the 

5 date of enactment of the Coal-to-Liquid Fuel Promotion 

6 Act of 2007, the Secretary and the Secretary of Defense 

7 shall— 

8 ‘‘(1) conduct a study of the feasibility and suit9 ability of maintaining coal-to-liquid products in the 

10 Reserve; and 

11 ‘‘(2) submit to the Committee on Energy and 

12 Natural Resources and the Committee on Armed 

13 Services of the Senate and the Committee on Energy 

14 and Commerce and the Committee on Armed Serv15 ices of the House of Representatives a report de16 scribing the results of the study. 

17 ‘‘(d) CONSTRUCTION OF STORAGE FACILITIES.—As 

18 soon as practicable after the date of enactment of the 

19 Coal-to-Liquid Fuel Promotion Act of 2007, the Secretary 

20 may construct 1 or more storage facilities in the vicinity 

21 of pipeline infrastructure and at least 1 military base.’’. 

22 (b) PETROLEUM PRODUCTS FOR STORAGE IN RE23 SERVE.—Section 160 of the Energy Policy and Conserva24 tion Act (42 U.S.C. 6240) is amended— 

25 (1) in subsection (a)— 


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1 (A) in paragraph (1), by inserting a semi2 colon at the end; 

3 (B) in paragraph (2), by striking ‘‘and’’ at 

4 the end; 

5 (C) in paragraph (3), by striking the pe6 riod at the end and inserting ‘‘; and’’; and 

7 (D) by adding at the end the following: 

8 ‘‘(4) coal-to-liquid products (as defined in sec9 tion 101 of the Coal-to-Liquid Fuel Promotion Act 

10 of 2007), as the Secretary determines to be appro11 priate, in a quantity not to exceed 20 percent of the 

12 total quantity of petroleum and petroleum products 

13 in the Reserve.’’; 

14 (2) in subsection (b), by redesignating para15 graphs (3) through (5) as paragraphs (2) through 

16 (4), respectively; and 

17 (3) by redesignating subsections (f) and (h) as 

18 subsections (d) and (e), respectively. 

19 (c) CONFORMING AMENDMENTS.—Section 167 of the 

20 Energy Policy and Conservation Act (42 U.S.C. 6247) is 

21 amended— 

22 (1) in subsection (b)— 

23 (A) by redesignating paragraphs (2) and 

24 (3) as paragraphs (1) and (2), respectively; and 


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1 (B) in paragraph (2) (as redesignated by 

2 subparagraph (A)), by striking ‘‘section 160(f)’’ 

3 and inserting ‘‘section 160(e)’’; and 

4 (2) in subsection (d), in the matter preceding 

5 paragraph (1), by striking ‘‘section 160(f)’’ and in6 serting ‘‘section 160(e)’’. 

7 SEC. 106. AUTHORIZATION TO CONDUCT RESEARCH, DE8 VELOPMENT, TESTING, AND EVALUATION OF 

9 ASSURED DOMESTIC FUELS. 

10 Of the amount authorized to be appropriated for the 

11 Air Force for research, development, testing, and evalua12 tion, $10,000,000 may be made available for the Air Force 

13 Research Laboratory to continue support efforts to test, 

14 qualify, and procure synthetic fuels developed from coal 

15 for aviation jet use. 

16 SEC. 107. COAL-TO-LIQUID LONG-TERM FUEL PROCURE17 MENT AND DEPARTMENT OF DEFENSE DE18 VELOPMENT. 

19 Section 2398a of title 10, United States Code is 

20 amended— 

21 (1) in subsection (b)— 

22 (A) by striking ‘‘The Secretary’’ and in23 serting the following: 

24 ‘‘(1) IN GENERAL.—The Secretary’’; and 

25 (B) by adding at the end the following: 


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1 ‘‘(2) COAL-TO-LIQUID PRODUCTION FACILI2 TIES.— 

3 ‘‘(A) IN GENERAL.—The Secretary of De4 fense may enter into contracts or other agree5 ments with private companies or other entities 

6 to develop and operate coal-to-liquid facilities 

7 (as defined in section 101 of the Coal-to-Liquid 

8 Fuel Promotion Act of 2007) on or near mili9 tary installations. 

10 ‘‘(B) CONSIDERATIONS.—In entering into 

11 contracts and other agreements under subpara12 graph (A), the Secretary shall consider land 

13 availability, testing opportunities, and proximity 

14 to raw materials.’’; 

15 (2) in subsection (d)— 

16 (A) by striking ‘‘Subject to applicable pro17 visions of law, any’’ and inserting ‘‘Any’’; and 

18 (B) by striking ‘‘1 or more years’’ and in19 serting ‘‘up to 25 years’’; and 

20 (3) by adding at the end the following: 

21 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 

22 are authorized to be appropriated such sums as are nec23 essary to carry out this section.’’. 


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1 SEC. 108. REPORT ON EMISSIONS OF FISCHER-TROPSCH 

2 PRODUCTS USED AS TRANSPORTATION 

3 FUELS. 

4 (a) IN GENERAL.—In cooperation with the Adminis5 trator of the Environmental Protection Agency, the Sec6 retary of Defense, the Administrator of the Federal Avia7 tion Administration, and the Secretary of Health and 

8 Human Services, the Secretary shall— 

9 (1) carry out a research and demonstration pro10 gram to evaluate the emissions of the use of Fischer11 Tropsch fuel for transportation, including diesel and 

12 jet fuel; 

13 (2) evaluate the effect of using Fischer-Tropsch 

14 transportation fuel on land and air engine exhaust 

15 emissions; and 

16 (3) in accordance with subsection (e), submit to 

17 Congress a report on the effect on air quality and 

18 public health of using Fischer-Tropsch fuel in the 

19 transportation sector. 

20 (b) GUIDANCE AND TECHNICAL SUPPORT.—The Sec21 retary shall issue any guidance or technical support docu22 ments necessary to facilitate the effective use of Fischer23 Tropsch fuel and blends under this section. 

24 (c) FACILITIES.—For the purpose of evaluating the 

25 emissions of Fischer-Tropsch transportation fuels, the 

26 Secretary shall— 


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1 (1) support the use and capital modification of 

2 existing facilities and the construction of new facili3 ties at the research centers designated in section 

4 417 of the Energy Policy Act of 2005 (42 U.S.C. 

5 15977); and 

6 (2) engage those research centers in the evalua7 tion and preparation of the report required under 

8 subsection (a)(3). 

9 (d) REQUIREMENTS.—The program described in sub10 section (a)(1) shall consider— 

11 (1) the use of neat (100 percent) Fischer12 Tropsch fuel and blends of Fischer-Tropsch fuels 

13 with conventional crude oil-derived fuel for heavy14 duty and light-duty diesel engines and the aviation 

15 sector; and 

16 (2) the production costs associated with domes17 tic production of those fuels and prices for con18 sumers. 

19 (e) REPORTS.—The Secretary shall submit to the 

20 Committee on Energy and Natural Resources of the Sen21 ate and the Committee on Energy and Commerce of the 

22 House of Representatives— 

23 (1) not later than 180 days after the date of 

24 enactment of this Act, an interim report on actions 

25 taken to carry out this section; and 


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1 (2) not later than 1 year after the date of en2 actment of this Act, a final report on actions taken 

3 to carry out this section. 

4 (f) AUTHORIZATION OF APPROPRIATIONS.—There 

5 are authorized to be appropriated such sums as are nec6 essary to carry out this section. 

7 TITLE II—AMENDMENTS TO THE 

8 INTERNAL REVENUE CODE 

9 OF 1986 

10 SEC. 201. CREDIT FOR INVESTMENT IN COAL-TO-LIQUID 

11 FUELS PROJECTS. 

12 (a) IN GENERAL.—Section 46 of the Internal Rev13 enue Code of 1986 (relating to amount of credit) is 

14 amended by striking ‘‘and’’ at the end of paragraph (3), 

15 by striking the period at the end of paragraph (4) and 

16 inserting ‘‘, and’’, and by adding at the end the following 

17 new paragraph: 

18 ‘‘(5) the qualifying coal-to-liquid fuels project 

19 credit.’’. 

20 (b) AMOUNT OF CREDIT.—Subpart E of part IV of 

21 subchapter A of chapter 1 of the Internal Revenue Code 

22 of 1986 (relating to rules for computing investment credit) 

23 is amended by inserting after section 48B the following 

24 new section: 


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1 ‘‘SEC. 48C. QUALIFYING COAL-TO-LIQUID FUELS PROJECT 

2 CREDIT. 

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

4 qualifying coal-to-liquid fuels project credit for any taxable 

5 year is an amount equal to 20 percent of the qualified 

6 investment for such taxable year. 

7 ‘‘(b) QUALIFIED INVESTMENT.— 

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

9 (a), the qualified investment for any taxable year is 

10 the basis of property placed in service by the tax11 payer during such taxable year which is part of a 

12 qualifying coal-to-liquid fuels project— 

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

14 erection of which is completed by the taxpayer, 

15 or 

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

17 the original use of such property commences 

18 with the taxpayer, and 

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

20 amortization in lieu of depreciation) is allow21 able. 

22 ‘‘(2) APPLICABLE RULES.—For purposes of this 

23 section, rules similar to the rules of subsection 

24 (a)(4) and (b) of section 48 shall apply. 

25 ‘‘(c) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) QUALIFYING COAL-TO-LIQUID FUELS

2 PROJECT.—The term ‘qualifying coal-to-liquid fuels 

3 project’ means any domestic project which— 

4 ‘‘(A) employs the class of reactions known 

5 as Fischer-Tropsch to produce at least 10,000 

6 barrels per day of transportation grade liquid 

7 fuels from a feedstock that is primarily domes8 tic coal (including any property which allows for 

9 the capture, transportation, or sequestration of 

10 by-products resulting from such process, includ11 ing carbon emissions), and 

12 ‘‘(B) any portion of the qualified invest13 ment in which is certified under the qualifying 

14 coal-to-liquid program as eligible for credit 

15 under this section in an amount (not to exceed 

16 $200,000,000) determined by the Secretary. 

17 ‘‘(2) COAL.—The term ‘coal’ means any carbon18 ized or semicarbonized matter, including peat. 

19 ‘‘(d) QUALIFYING COAL-TO-LIQUID FUELS PROJECT

20 PROGRAM.— 

21 ‘‘(1) IN GENERAL.—The Secretary, in consulta22 tion with the Secretary of Energy, shall establish a 

23 qualifying coal-to-liquid fuels project program to 

24 consider and award certifications for qualified in25 vestment eligible for credits under this section to 10 


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1 qualifying coal-to-liquid fuels project sponsors under 

2 this section. The total qualified investment which 

3 may be awarded eligibility for credit under the pro4 gram shall not exceed $2,000,000,000. 

5 ‘‘(2) PERIOD OF ISSUANCE.—A certificate of 

6 eligibility under paragraph (1) may be issued only 

7 during the 10-fiscal year period beginning on Octo8 ber 1, 2007. 

9 ‘‘(3) SELECTION CRITERIA.—The Secretary 

10 shall not make a competitive certification award for 

11 qualified investment for credit eligibility under this 

12 section unless the recipient has documented to the 

13 satisfaction of the Secretary that— 

14 ‘‘(A) the proposal of the award recipient is 

15 financially viable, 

16 ‘‘(B) the recipient will provide sufficient 

17 information to the Secretary for the Secretary 

18 to ensure that the qualified investment is spent 

19 efficiently and effectively, 

20 ‘‘(C) the fuels identified with respect to the 

21 gasification technology for such project will 

22 comprise at least 90 percent of the fuels re23 quired by the project for the production of 

24 transportation grade liquid fuels, 


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1 ‘‘(D) the award recipient’s project team is 

2 competent in the planning and construction of 

3 coal gasification facilities and familiar with op4 eration of the Fischer-Tropsch process, with 

5 preference given to those recipients with experi6 ence which demonstrates successful and reliable 

7 operations of such process, and 

8 ‘‘(E) the award recipient has met other cri9 teria established and published by the Sec10 retary. 

11 ‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction 

12 or other credit shall be allowed with respect to the basis 

13 of any property taken into account in determining the 

14 credit allowed under this section.’’. 

15 (c) CONFORMING AMENDMENTS.— 

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

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

18 end of clause (iii), by striking the period at the end 

19 of clause (iv) and inserting ‘‘, and’’, and by adding 

20 after clause (iv) the following new clause: 

21 ‘‘(v) the basis of any property which 

22 is part of a qualifying coal-to-liquid fuels 

23 project under section 48C.’’. 

24 (2) The table of sections for subpart E of part 

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


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1 amended by inserting after the item relating to sec2 tion 48B the following new item: 

‘‘48C. Qualifying coal-to-liquid fuels project credit.’’. 

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

4 this section shall apply to periods after the date of the 

5 enactment of this Act, under rules similar to the rules of 

6 section 48(m) of the Internal Revenue Code of 1986 (as 

7 in effect on the day before the date of the enactment of 

8 the Revenue Reconciliation Act of 1990). 

9 SEC. 202. TEMPORARY EXPENSING FOR EQUIPMENT USED 

10 IN COAL-TO-LIQUID FUELS PROCESS. 

11 (a) IN GENERAL.—Part VI of subchapter B of chap12 ter 1 of the Internal Revenue Code of 1986 is amended 

13 by inserting after section 179D the following new section: 

14 ‘‘SEC. 179E. ELECTION TO EXPENSE CERTAIN COAL-TO-LIQ15 UID FUELS FACILITIES. 

16 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

17 elect to treat the cost of any qualified coal-to-liquid fuels 

18 process property as an expense which is not chargeable 

19 to capital account. Any cost so treated shall be allowed 

20 as a deduction for the taxable year in which the expense 

21 is incurred. 

22 ‘‘(b) ELECTION.— 

23 ‘‘(1) IN GENERAL.—An election under this sec24 tion for any taxable year shall be made on the tax25 payer’s return of the tax imposed by this chapter for 


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1 the taxable year. Such election shall be made in such 

2 manner as the Secretary may by regulations pre3 scribe. 

4 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

5 made under this section may not be revoked except 

6 with the consent of the Secretary. 

7 ‘‘(c) QUALIFIED COAL-TO-LIQUID FUELS PROCESS

8 PROPERTY.—The term ‘qualified coal-to-liquid fuels proc9 ess property’ means any property located in the United 

10 States— 

11 ‘‘(1) which employs the Fischer-Tropsch process 

12 to produce transportation grade liquid fuels from a 

13 feedstock that is primarily domestic coal (including 

14 any property which allows for the capture, transpor15 tation, or sequestration of by-products resulting 

16 from such process, including carbon emissions), 

17 ‘‘(2) the original use of which commences with 

18 the taxpayer, 

19 ‘‘(3) the construction of which— 

20 ‘‘(A) except as provided in subparagraph 

21 (B), is subject to a binding construction con22 tract entered into after the date of the enact23 ment of this section and before January 1, 

24 2011, but only if there was no written binding 


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1 construction contract entered into on or before 

2 such date of enactment, or 

3 ‘‘(B) in the case of self-constructed prop4 erty, began after the date of the enactment of 

5 this section and before January 1, 2011, and 

6 ‘‘(4) which is placed in service by the taxpayer 

7 after the date of the enactment of this section and 

8 before January 1, 2016. 

9 ‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP10 ERATIVE OWNER.—If— 

11 ‘‘(1) a taxpayer to which subsection (a) applies 

12 is an organization to which part I of subchapter T 

13 applies, and 

14 ‘‘(2) one or more persons directly holding an 

15 ownership interest in the taxpayer are organizations 

16 to which part I of subchapter T apply, 

17 the taxpayer may elect to allocate all or a portion of the 

18 deduction allowable under subsection (a) to such persons. 

19 Such allocation shall be equal to the person’s ratable share 

20 of the total amount allocated, determined on the basis of 

21 the person’s ownership interest in the taxpayer. The tax22 able income of the taxpayer shall not be reduced under 

23 section 1382 by reason of any amount to which the pre24 ceding sentence applies. 

25 ‘‘(e) BASIS REDUCTION.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this title, 

2 if a deduction is allowed under this section with re3 spect to any qualified coal-to-liquid fuels process 

4 property, the basis of such property shall be reduced 

5 by the amount of the deduction so allowed. 

6 ‘‘(2) ORDINARY INCOME RECAPTURE.—For 

7 purposes of section 1245, the amount of the deduc8 tion allowable under subsection (a) with respect to 

9 any property which is of a character subject to the 

10 allowance for depreciation shall be treated as a de11 duction allowed for depreciation under section 167. 

12 ‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND

13 CREDITS.— 

14 ‘‘(1) OTHER DEDUCTIONS.—No deduction shall 

15 be allowed under any other provision of this chapter 

16 with respect to any expenditure with respect to 

17 which a deduction is allowed under subsection (a) to 

18 the taxpayer. 

19 ‘‘(2) CREDITS.—No credit shall be allowed 

20 under section 38 with respect to any amount for 

21 which a deduction is allowed under subsection (a). 

22 ‘‘(g) REPORTING.—No deduction shall be allowed 

23 under subsection (a) to any taxpayer for any taxable year 

24 unless such taxpayer files with the Secretary a report con25 taining such information with respect to the operation of 


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1 the property of the taxpayer as the Secretary shall re2 quire.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) Section 1016(a) of the Internal Revenue 

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

6 end of paragraph (36), by striking the period at the 

7 end of paragraph (37) and inserting ‘‘, and’’, and by 

8 adding at the end the following new paragraph: 

9 ‘‘(38) to the extent provided in section 

10 179E(e)(1).’’. 

11 (2) Section 1245(a) of such Code is amended 

12 by inserting ‘‘179E,’’ after ‘‘179D,’’ both places it 

13 appears in paragraphs (2)(C) and (3)(C). 

14 (3) Section 263(a)(1) of such Code is amended 

15 by striking ‘‘or’’ at the end of subparagraph (J), by 

16 striking the period at the end of subparagraph (K) 

17 and inserting ‘‘, or’’, and by inserting after subpara18 graph (K) the following new subparagraph: 

19 ‘‘(L) expenditures for which a deduction is 

20 allowed under section 179E.’’. 

21 (4) Section 312(k)(3)(B) of such Code is 

22 amended by striking ‘‘or 179D’’ each place it ap23 pears in the heading and text and inserting ‘‘179D, 

24 or 179E’’. 


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1 (5) The table of sections for part VI of sub2 chapter B of chapter 1 of such Code is amended by 

3 inserting after the item relating to section 179D the 

4 following new item: 

‘‘Sec. 179E. Election to expense certain coal-to-liquid fuels facilities.’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to properties placed in service after 

7 the date of the enactment of this Act. 

8 SEC. 203. EXTENSION OF ALTERNATIVE FUEL CREDIT FOR 

9 FUEL DERIVED FROM COAL THROUGH THE 

10 FISCHER-TROPSCH PROCESS. 

11 (a) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of 

12 section 6426(d) of the Internal Revenue Code of 1986 is 

13 amended to read as follows: 

14 ‘‘(4) TERMINATION.—This subsection shall not 

15 apply to— 

16 ‘‘(A) any sale or use involving liquid fuel 

17 derived from a feedstock that is primarily do18 mestic coal (including peat) through the Fisch19 er-Tropsch process for any period after Sep20 tember 30, 2020, 

21 ‘‘(B) any sale or use involving liquified hy22 drogen for any period after September 30, 

23 2014, and 

24 ‘‘(C) any other sale or use for any period 

25 after September 30, 2009.’’. 


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1 (b) PAYMENTS.— 

2 (1) IN GENERAL.—Paragraph (5) of section 

3 6427(e) of the Internal Revenue Code of 1986 is 

4 amended by striking ‘‘and’’ and the end of subpara5 graph (C), by striking the period at the end of sub6 paragraph (D) and inserting ‘‘, and’’, and by adding 

7 at the end the following new subparagraph: 

8 ‘‘(E) any alternative fuel or alternative fuel 

9 mixture (as so defined) involving liquid fuel de10 rived from coal (including peat) through the 

11 Fischer-Tropsch process sold or used after Sep12 tember 30, 2020.’’. 

13 (2) CONFORMING AMENDMENT.—Section 

14 6427(e)(5)(C) of such Code is amended by striking 

15 ‘‘subparagraph (D)’’ and inserting ‘‘subparagraphs 

16 (D) and (E)’’. 

17 SEC. 204. MODIFICATIONS TO ENHANCED OIL RECOVERY 

18 CREDIT. 

19 (a) ENHANCED CREDIT FOR CARBON DIOXIDE IN20 JECTIONS.—Section 43 of the Internal Revenue Code of 

21 1986 is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(f) ENHANCED CREDIT FOR PROJECTS USING

24 QUALIFIED CARBON DIOXIDE.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion— 

3 ‘‘(A) the term ‘qualified project’ includes a 

4 project described in paragraph (2), and 

5 ‘‘(B) in the case of a project described in 

6 paragraph (2), subsection (a) shall be applied 

7 by substituting ‘50 percent’ for ‘15 percent’. 

8 ‘‘(2) PROJECTS DESCRIBED.—A project is de9 scribed in this paragraph if it begins or is substan10 tially expanded after December 31, 2007, and 

11 ‘‘(A) uses qualified carbon dioxide in an 

12 enhanced oil, natural gas, or coalbed methane 

13 recovery method, which involves flooding or in14 jection, or 

15 ‘‘(B) enables the capture or sequestration 

16 of qualified carbon dioxide. 

17 ‘‘(3) DEFINITIONS.—For purposes of this sub18 section— 

19 ‘‘(A) ENHANCED OIL RECOVERY.—The 

20 term ‘enhanced oil recovery’ means recovery of 

21 oil by injecting or flooding with qualified carbon 

22 dioxide. 

23 ‘‘(B) ENHANCED NATURAL GAS RECOV24 ERY.—The term ‘enhanced natural gas recovVerDate Aug 31 2005 03:55 Jan 14, 2007 Jkt 059200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S155.IS S155

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1 ery’ means recovery of natural gas by injecting 

2 or flooding with qualified carbon dioxide. 

3 ‘‘(C) ENHANCED COALBED METHANE RE4 COVERY.—The term ‘enhanced coalbed methane 

5 recovery’ means recovery of coalbed methane by 

6 injecting or flooding with qualified carbon diox7 ide. 

8 ‘‘(D) QUALIFIED CARBON DIOXIDE.—The 

9 term ‘qualified carbon dioxide’ means carbon di10 oxide which is produced from the gasification 

11 and subsequent refinement of a feedstock which 

12 is primarily domestic coal, at a facility which 

13 produces coal-to-liquid fuel. 

14 ‘‘(E) CAPTURE OR SEQUESTRATION.—The 

15 term ‘capture or sequestration’ means any 

16 equipment or facility necessary to— 

17 ‘‘(i) capture or separate qualified car18 bon dioxide from other emissions, 

19 ‘‘(ii) transport qualified carbon diox20 ide, or 

21 ‘‘(iii) process and use qualified carbon 

22 dioxide in a qualified project. 

23 ‘‘(4) TERMINATION.—This subsection shall not 

24 apply to costs paid or incurred for any qualified 

25 project after December 31, 2020.’’. 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 43 of the Internal Revenue Code of 

3 1986 is amended— 

4 (A) by striking ‘‘enhanced oil recovery 

5 credit’’ in subsection (a) and inserting ‘‘en6 hanced oil, natural gas, and coalbed methane 

7 recovery, and capture and sequestration credit’’, 

8 (B) by striking ‘‘qualified enhanced oil re9 covery costs’’ each place it appears and insert10 ing ‘‘qualified costs’’, 

11 (C) by striking ‘‘qualified enhanced oil re12 covery project’’ each place it appears and in13 serting ‘‘qualified project’’, and 

14 (D) by striking the heading and inserting: 

15 ‘‘SEC. 43. ENHANCED OIL, NATURAL GAS, AND COALBED 

16 METHANE RECOVERY, AND CAPTURE AND SE17 QUESTRATION CREDIT.’’. 

18 (2) The item in the table of sections for subpart 

19 D of part IV of subchapter A of chapter 1 of such 

20 Code relating to section 43 is amended to read as 

21 follows: 

‘‘Sec. 43. Enhanced oil. natural gas, and coalbed methane recovery, and capture and sequestration credit.’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to costs paid or incurred in taxable 

24 years ending after December 31, 2007. 


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1 SEC. 205. ALLOWANCE OF ENHANCED OIL, NATURAL GAS, 

2 AND COALBED METHANE RECOVERY, AND 

3 CAPTURE AND SEQUESTRATION CREDIT 

4 AGAINST THE ALTERNATIVE MINIMUM TAX. 

5 (a) IN GENERAL.—Subsection (c) of section 38 of the 

6 Internal Revenue Code of 1986 (relating to limitation 

7 based on amount of tax) is amended by redesignating 

8 paragraphs (4) and (5) as paragraphs (5) and (6), respec9 tively, and by inserting after paragraph (3) the following 

10 new paragraph: 

11 ‘‘(4) SPECIAL RULES FOR ENHANCED OIL, NAT12 URAL GAS, AND COALBED METHANE RECOVERY, AND

13 CAPTURE AND SEQUESTRATION CREDIT.—In the 

14 case of the enhanced oil, natural gas, and coalbed 

15 methane recovery, and capture and sequestration 

16 credit determined under section 43— 

17 ‘‘(A) this section and section 39 shall be 

18 applied separately with respect to such credit, 

19 and 

20 ‘‘(B) in applying paragraph (1) to such 

21 credit— 

22 ‘‘(i) the tentative minimum tax shall 

23 be treated as being zero, and 

24 ‘‘(ii) the limitation under paragraph 

25 (1) (as modified by clause (i)) shall be re26 duced by the credit allowed under subVerDate Aug 31 2005 07:34 Jan 10, 2007 Jkt 059200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S155.IS S155

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1 section (a) for the taxable year (other than 

2 the enhanced oil, natural gas, and coalbed 

3 methane recovery, and capture and seques4 tration credit and the specified credits).’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) Section 38(c)(2)(A)(ii)(II) of such Code is 

7 amended by inserting ‘‘the enhanced oil, natural gas, 

8 and coalbed methane recovery, and capture and se9 questration credit,’’ after ‘‘employee credit,’’. 

10 (2) Section 38(c)(3)(A)(ii)(II) of such Code is 

11 amended by inserting ‘‘, the enhanced oil, natural 

12 gas, coalbed methane recovery, capture and seques13 tration credit,’’ after ‘‘employee credit’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years ending after De16 cember 31, 2007. 

Æ 


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