I 
110TH CONGRESS 
1ST SESSION 
H. R. 370 
To promote coal-to-liquid fuel activities. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 10, 2007 
Mr. DAVIS of Kentucky (for himself, Mr. RAHALL, Mr. WHITFIELD, Mr. PICK-
ERING, Mr. ROGERS of Kentucky, Mr. DUNCAN, Mr. LAHOOD, Mr. 
BOUSTANY, Mrs. CUBIN, Mr. BACHUS, Mr. EVERETT, Mr. ROGERS of 
Alabama, Mr. BOUCHER, Mr. LINCOLN
DAVIS
of Tennessee, Mr. 
SHIMKUS, Mr. CANNON, Mrs. DRAKE, Mr. LEWIS of Kentucky, Mr. 
REHBERG, Mr. HASTERT, and Mr. YARMUTH) introduced the following 
bill; which was referred to the Committee on Energy and Commerce, and 
in addition to the Committees on Ways and Means, Science and Tech-
nology, and Armed Services, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To promote coal-to-liquid fuel activities. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Coal-to-Liquid Fuel 
Promotion Act of 2007’’. 
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TITLE I—COAL-TO-LIQUID FUEL 
ACTIVITIES 
SEC. 101. DEFINITIONS. 
In this title: 
(1) COAL-TO-LIQUID.—The term ‘‘coal-to-liq-
uid’’ means— 
(A) with respect to a process or tech-
nology, the use of a feedstock, the majority of 
which is the coal resources of the United 
States, using the class of reactions known as 
Fischer-Tropsch, to produce synthetic fuel suit-
able for transportation; and 
(B) with respect to a facility, the portion 
of a facility related to producing the inputs to 
the Fischer-Tropsch process, the Fischer- 
Tropsch process, finished fuel production, or 
the capture, transportation, or sequestration of 
byproducts of the use of a feedstock that is pri-
marily domestic coal at the Fischer-Tropsch fa-
cility, including carbon emissions. 
(2) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Energy. 
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SEC. 102. COAL-TO-LIQUID FUEL LOAN GUARANTEE PRO-
GRAM. 
(a) ELIGIBLE PROJECTS.—Section 1703(b) of the 
Energy Policy Act of 2005 (42 U.S.C. 16513(b)) is 
amended by adding at the end the following: 
‘‘(11) Large-scale coal-to-liquid facilities (as de-
fined in section 101 of the Coal-to-Liquid Fuel Pro-
motion Act of 2007) that use a feedstock, the major-
ity of which is the coal resources of the United 
States, to produce not less than 10,000 barrels a 
day of liquid transportation fuel.’’. 
(b) AUTHORIZATION OF APPROPRIATIONS.—Section 
1704 of the Energy Policy Act of 2005 (42 U.S.C. 16514) 
is amended by adding at the end the following: 
‘‘(c) COAL-TO-LIQUID PROJECTS.— 
‘‘(1) IN GENERAL.—There are authorized to be 
appropriated such sums as are necessary to provide 
the cost of guarantees for projects involving large- 
scale 
coal-to-liquid 
facilities 
under 
section 
1703(b)(11). 
‘‘(2) ALTERNATIVE FUNDING.—If no appropria-
tions are made available under paragraph (1), an eli-
gible applicant may elect to provide payment to the 
Secretary, to be delivered if and at the time the ap-
plication is approved, in the amount of the estimated 
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tives a report describing the status of the program 
under this subsection not later than each of— 
‘‘(A) 180 days after the date of enactment 
of this subsection; 
‘‘(B) 1 year after the date of enactment of 
this subsection; and 
‘‘(C) the dates on which the Secretary ap-
proves the first and fifth applications for coal- 
to-liquid loan guarantees under this sub-
section.’’. 
SEC. 103. COAL-TO-LIQUID FACILITIES LOAN PROGRAM. 
(a) DEFINITION OF ELIGIBLE RECIPIENT.—In this 
section, the term ‘‘eligible recipient’’ means an individual, 
organization, or other entity that owns, operates, or plans 
to construct a coal-to-liquid facility that will produce at 
least 10,000 barrels per day of coal-to-liquid fuel. 
(b) ESTABLISHMENT.—The Secretary shall establish 
a program under which the Secretary shall provide loans, 
in a total amount not to exceed $20,000,000, for use by 
eligible recipients to pay the Federal share of the cost of 
obtaining any services necessary for the planning, permit-
ting, and construction of a coal-to-liquid facility. 
(c) APPLICATION.—To be eligible to receive a loan 
under subsection (b), the eligible recipient shall submit to 
the Secretary an application at such time, in such manner, 
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and containing such information as the Secretary may re-
quire. 
(d) NON-FEDERAL MATCH.—To be eligible to receive 
a loan under this section, an eligible recipient shall use 
non-Federal funds to provide a dollar-for-dollar match of 
the amount of the loan. 
(e) REPAYMENT OF LOAN.— 
(1) IN GENERAL.—To be eligible to receive a 
loan under this section, an eligible recipient shall 
agree to repay the original amount of the loan to the 
Secretary not later than 5 years after the date of the 
receipt of the loan. 
(2) SOURCE OF FUNDS.—Repayment of a loan 
under paragraph (1) may be made from any financ-
ing or assistance received for the construction of a 
coal-to-liquid facility described in subsection (a), in-
cluding a loan guarantee provided under section 
1703(b)(11) of the Energy Policy Act of 2005 (42 
U.S.C. 16513(b)(11)). 
(f) REQUIREMENTS.— 
(1) GUIDELINES.—Not later than 180 days 
after the date of enactment of this Act, the Sec-
retary shall publish guidelines for the coal-to-liquids 
loan application process. 
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(2) APPLICATIONS.—Not later than 1 year 
after the date of enactment of this Act, the Sec-
retary shall begin to accept applications for coal-to- 
liquid loans under this section. 
(g) REPORTS TO CONGRESS.—Not later than each of 
180 days and 1 year after the date of enactment of this 
Act, the Secretary shall submit to the Committee on En-
ergy and Natural Resources of the Senate and the Com-
mittee on Energy and Commerce of the House of Rep-
resentatives a report describing the status of the program 
under this section. 
(h) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$200,000,000, to remain available until expended. 
SEC. 104. LOCATION OF COAL-TO-LIQUID MANUFACTURING 
FACILITIES. 
The Secretary, in coordination with the head of any 
affected agency, shall promulgate such regulations as the 
Secretary determines to be necessary to support the devel-
opment on Federal land (including land of the Department 
of Energy, military bases, and military installations closed 
or realigned under the defense base closure and realign-
ment) of coal-to-liquid manufacturing facilities and associ-
ated infrastructure, including the capture, transportation, 
or sequestration of carbon dioxide. 
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SEC. 105. STRATEGIC PETROLEUM RESERVE. 
(a) DEVELOPMENT, OPERATION, AND MAINTENANCE 
OF RESERVE.—Section 159 of the Energy Policy and Con-
servation Act (42 U.S.C. 6239) is amended— 
(1) by redesignating subsections (f), (g), (j), 
(k), and (l) as subsections (a), (b), (e), (f), and (g), 
respectively; and 
(2) by inserting after subsection (b) (as redesig-
nated by paragraph (1)) the following: 
‘‘(c) STUDY
OF
MAINTAINING
COAL-TO-LIQUID 
PRODUCTS IN RESERVE.—Not later than 1 year after the 
date of enactment of the Coal-to-Liquid Fuel Promotion 
Act of 2007, the Secretary and the Secretary of Defense 
shall— 
‘‘(1) conduct a study of the feasibility and suit-
ability of maintaining coal-to-liquid products in the 
Reserve; and 
‘‘(2) submit to the Committee on Energy and 
Natural Resources and the Committee on Armed 
Services of the Senate and the Committee on Energy 
and Commerce and the Committee on Armed Serv-
ices of the House of Representatives a report de-
scribing the results of the study. 
‘‘(d) CONSTRUCTION OF STORAGE FACILITIES.—As 
soon as practicable after the date of enactment of the 
Coal-to-Liquid Fuel Promotion Act of 2007, the Secretary 
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may construct 1 or more storage facilities in the vicinity 
of pipeline infrastructure and at least 1 military base.’’. 
(b) PETROLEUM PRODUCTS FOR STORAGE IN RE-
SERVE.—Section 160 of the Energy Policy and Conserva-
tion Act (42 U.S.C. 6240) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), by inserting a semi-
colon at the end; 
(B) in paragraph (2), by striking ‘‘and’’ at 
the end; 
(C) in paragraph (3), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(D) by adding at the end the following: 
‘‘(4) coal-to-liquid products (as defined in sec-
tion 101 of the Coal-to-Liquid Fuel Promotion Act 
of 2007), as the Secretary determines to be appro-
priate, in a quantity not to exceed 20 percent of the 
total quantity of petroleum and petroleum products 
in the Reserve.’’; 
(2) in subsection (b), by redesignating para-
graphs (3) through (5) as paragraphs (2) through 
(4), respectively; and 
(3) by redesignating subsections (f) and (h) as 
subsections (d) and (e), respectively. 
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(A) by striking ‘‘Subject to applicable pro-
visions of law, any’’ and inserting ‘‘Any’’; and 
(B) by striking ‘‘1 or more years’’ and in-
serting ‘‘up to 25 years’’; and 
(3) by adding at the end the following: 
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary to carry out this section.’’. 
SEC. 108. REPORT ON EMISSIONS OF FISCHER-TROPSCH 
PRODUCTS 
USED 
AS 
TRANSPORTATION 
FUELS. 
(a) IN GENERAL.—In cooperation with the Adminis-
trator of the Environmental Protection Agency, the Sec-
retary of Defense, the Administrator of the Federal Avia-
tion Administration, and the Secretary of Health and 
Human Services, the Secretary shall— 
(1) carry out a research and demonstration pro-
gram to evaluate the emissions of the use of Fischer- 
Tropsch fuel for transportation, including diesel and 
jet fuel; 
(2) evaluate the effect of using Fischer-Tropsch 
transportation fuel on land and air engine exhaust 
emissions; and 
(3) in accordance with subsection (e), submit to 
Congress a report on the effect on air quality and 
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public health of using Fischer-Tropsch fuel in the 
transportation sector. 
(b) GUIDANCE AND TECHNICAL SUPPORT.—The Sec-
retary shall issue any guidance or technical support docu-
ments necessary to facilitate the effective use of Fischer- 
Tropsch fuel and blends under this section. 
(c) FACILITIES.—For the purpose of evaluating the 
emissions of Fischer-Tropsch transportation fuels, the 
Secretary shall— 
(1) support the use and capital modification of 
existing facilities and the construction of new facili-
ties at the research centers designated in section 
417 of the Energy Policy Act of 2005 (42 U.S.C. 
15977); and 
(2) engage those research centers in the evalua-
tion and preparation of the report required under 
subsection (a)(3). 
(d) REQUIREMENTS.—The program described in sub-
section (a)(1) shall consider— 
(1) the use of neat (100 percent) Fischer- 
Tropsch fuel and blends of Fischer-Tropsch fuels 
with conventional crude oil-derived fuel for heavy- 
duty and light-duty diesel engines and the aviation 
sector; and 
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(2) the production costs associated with domes-
tic production of those fuels and prices for con-
sumers. 
(e) REPORTS.—The Secretary shall submit to the 
Committee on Energy and Natural Resources of the Sen-
ate and the Committee on Energy and Commerce of the 
House of Representatives— 
(1) not later than 180 days after the date of 
enactment of this Act, an interim report on actions 
taken to carry out this section; and 
(2) not later than 1 year after the date of en-
actment of this Act, a final report on actions taken 
to carry out this section. 
(f) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as are nec-
essary to carry out this section. 
TITLE II—AMENDMENTS TO THE 
INTERNAL 
REVENUE 
CODE 
OF 1986 
SEC. 201. CREDIT FOR INVESTMENT IN COAL-TO-LIQUID 
FUELS PROJECTS. 
(a) IN GENERAL.—Section 46 of the Internal Rev-
enue Code of 1986 (relating to amount of credit) is 
amended by striking ‘‘and’’ at the end of paragraph (3), 
by striking the period at the end of paragraph (4) and 
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inserting ‘‘, and’’, and by adding at the end the following 
new paragraph: 
‘‘(5) the qualifying coal-to-liquid fuels project 
credit.’’. 
(b) AMOUNT OF CREDIT.—Subpart E of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code 
of 1986 (relating to rules for computing investment credit) 
is amended by inserting after section 48B the following 
new section: 
‘‘SEC. 48C. QUALIFYING COAL-TO-LIQUID FUELS PROJECT 
CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
qualifying coal-to-liquid fuels project credit for any taxable 
year is an amount equal to 20 percent of the qualified 
investment for such taxable year. 
‘‘(b) QUALIFIED INVESTMENT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the qualified investment for any taxable year is 
the basis of property placed in service by the tax-
payer during such taxable year which is part of a 
qualifying coal-to-liquid fuels project— 
‘‘(A)(i) the construction, reconstruction, or 
erection of which is completed by the taxpayer, 
or 
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‘‘(ii) which is acquired by the taxpayer if 
the original use of such property commences 
with the taxpayer, and 
‘‘(B) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able. 
‘‘(2) APPLICABLE RULES.—For purposes of this 
section, rules similar to the rules of subsection 
(a)(4) and (b) of section 48 shall apply. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) 
QUALIFYING
COAL-TO-LIQUID
FUELS 
PROJECT.—The term ‘qualifying coal-to-liquid fuels 
project’ means any domestic project which— 
‘‘(A) employs the class of reactions known 
as Fischer-Tropsch to produce at least 10,000 
barrels per day of transportation grade liquid 
fuels from a feedstock that is primarily domes-
tic coal (including any property which allows for 
the capture, transportation, or sequestration of 
by-products resulting from such process, includ-
ing carbon emissions), and 
‘‘(B) any portion of the qualified invest-
ment in which is certified under the qualifying 
coal-to-liquid program as eligible for credit 
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under this section in an amount (not to exceed 
$200,000,000) determined by the Secretary. 
‘‘(2) COAL.—The term ‘coal’ means any carbon-
ized or semicarbonized matter, including peat. 
‘‘(d) QUALIFYING COAL-TO-LIQUID FUELS PROJECT 
PROGRAM.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Energy, shall establish a 
qualifying coal-to-liquid fuels project program to 
consider and award certifications for qualified in-
vestment eligible for credits under this section to 10 
qualifying coal-to-liquid fuels project sponsors under 
this section. The total qualified investment which 
may be awarded eligibility for credit under the pro-
gram shall not exceed $2,000,000,000. 
‘‘(2) PERIOD
OF
ISSUANCE.—A certificate of 
eligibility under paragraph (1) may be issued only 
during the 10-fiscal year period beginning on Octo-
ber 1, 2007. 
‘‘(3) SELECTION
CRITERIA.—The Secretary 
shall not make a competitive certification award for 
qualified investment for credit eligibility under this 
section unless the recipient has documented to the 
satisfaction of the Secretary that— 
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‘‘(A) the proposal of the award recipient is 
financially viable, 
‘‘(B) the recipient will provide sufficient 
information to the Secretary for the Secretary 
to ensure that the qualified investment is spent 
efficiently and effectively, 
‘‘(C) the fuels identified with respect to the 
gasification technology for such project will 
comprise at least 90 percent of the fuels re-
quired by the project for the production of 
transportation grade liquid fuels, 
‘‘(D) the award recipient’s project team is 
competent in the planning and construction of 
coal gasification facilities and familiar with op-
eration of the Fischer-Tropsch process, with 
preference given to those recipients with experi-
ence which demonstrates successful and reliable 
operations of such process, and 
‘‘(E) the award recipient has met other cri-
teria established and published by the Sec-
retary. 
‘‘(e) DENIAL OF DOUBLE BENEFIT.—No deduction 
or other credit shall be allowed with respect to the basis 
of any property taken into account in determining the 
credit allowed under this section.’’. 
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(c) CONFORMING AMENDMENTS.— 
(1) Section 49(a)(1)(C) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘and’’ at the 
end of clause (iii), by striking the period at the end 
of clause (iv) and inserting ‘‘, and’’, and by adding 
after clause (iv) the following new clause: 
‘‘(v) the basis of any property which 
is part of a qualifying coal-to-liquid fuels 
project under section 48C.’’. 
(2) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 48B the following new item: 
‘‘Sec. 48C. Qualifying coal-to-liquid fuels project credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods after the date of the 
enactment of this Act, under rules similar to the rules of 
section 48(m) of the Internal Revenue Code of 1986 (as 
in effect on the day before the date of the enactment of 
the Revenue Reconciliation Act of 1990). 
SEC. 202. TEMPORARY EXPENSING FOR EQUIPMENT USED 
IN COAL-TO-LIQUID FUELS PROCESS. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 179E the following new section: 
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‘‘SEC. 179F. ELECTION TO EXPENSE CERTAIN COAL-TO-LIQ-
UID FUELS FACILITIES. 
‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 
elect to treat the cost of any qualified coal-to-liquid fuels 
process property as an expense which is not chargeable 
to capital account. Any cost so treated shall be allowed 
as a deduction for the taxable year in which the expense 
is incurred. 
‘‘(b) ELECTION.— 
‘‘(1) IN GENERAL.—An election under this sec-
tion for any taxable year shall be made on the tax-
payer’s return of the tax imposed by this chapter for 
the taxable year. Such election shall be made in such 
manner as the Secretary may by regulations pre-
scribe. 
‘‘(2) ELECTION
IRREVOCABLE.—Any election 
made under this section may not be revoked except 
with the consent of the Secretary. 
‘‘(c) QUALIFIED COAL-TO-LIQUID FUELS PROCESS 
PROPERTY.—The term ‘qualified coal-to-liquid fuels proc-
ess property’ means any property located in the United 
States— 
‘‘(1) which employs the Fischer-Tropsch process 
to produce transportation grade liquid fuels from a 
feedstock that is primarily domestic coal (including 
any property which allows for the capture, transpor-
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tation, or sequestration of by-products resulting 
from such process, including carbon emissions), 
‘‘(2) the original use of which commences with 
the taxpayer, 
‘‘(3) the construction of which— 
‘‘(A) except as provided in subparagraph 
(B), is subject to a binding construction con-
tract entered into after the date of the enact-
ment of this section and before January 1, 
2011, but only if there was no written binding 
construction contract entered into on or before 
such date of enactment, or 
‘‘(B) in the case of self-constructed prop-
erty, began after the date of the enactment of 
this section and before January 1, 2011, and 
‘‘(4) which is placed in service by the taxpayer 
after the date of the enactment of this section and 
before January 1, 2016. 
‘‘(d) ELECTION TO ALLOCATE DEDUCTION TO COOP-
ERATIVE OWNER.—If— 
‘‘(1) a taxpayer to which subsection (a) applies 
is an organization to which part I of subchapter T 
applies, and 
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‘‘(2) one or more persons directly holding an 
ownership interest in the taxpayer are organizations 
to which part I of subchapter T apply, 
the taxpayer may elect to allocate all or a portion of the 
deduction allowable under subsection (a) to such persons. 
Such allocation shall be equal to the person’s ratable share 
of the total amount allocated, determined on the basis of 
the person’s ownership interest in the taxpayer. The tax-
able income of the taxpayer shall not be reduced under 
section 1382 by reason of any amount to which the pre-
ceding sentence applies. 
‘‘(e) BASIS REDUCTION.— 
‘‘(1) IN GENERAL.—For purposes of this title, 
if a deduction is allowed under this section with re-
spect to any qualified coal-to-liquid fuels process 
property, the basis of such property shall be reduced 
by the amount of the deduction so allowed. 
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For 
purposes of section 1245, the amount of the deduc-
tion allowable under subsection (a) with respect to 
any property which is of a character subject to the 
allowance for depreciation shall be treated as a de-
duction allowed for depreciation under section 167. 
‘‘(f) APPLICATION WITH OTHER DEDUCTIONS AND 
CREDITS.— 
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‘‘(1) OTHER DEDUCTIONS.—No deduction shall 
be allowed under any other provision of this chapter 
with respect to any expenditure with respect to 
which a deduction is allowed under subsection (a) to 
the taxpayer. 
‘‘(2) CREDITS.—No credit shall be allowed 
under section 38 with respect to any amount for 
which a deduction is allowed under subsection (a). 
‘‘(g) REPORTING.—No deduction shall be allowed 
under subsection (a) to any taxpayer for any taxable year 
unless such taxpayer files with the Secretary a report con-
taining such information with respect to the operation of 
the property of the taxpayer as the Secretary shall re-
quire.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘and’’ at the 
end of paragraph (36), by striking the period at the 
end of paragraph (37) and inserting ‘‘, and’’, and by 
adding at the end the following new paragraph: 
‘‘(38) to the extent provided in section 
179F(e)(1).’’. 
(2) Section 1245(a) of such Code is amended 
by inserting ‘‘179F,’’ after ‘‘179D,’’ both places it 
appears in paragraphs (2)(C) and (3)(C). 
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(3) Section 263(a)(1) of such Code is amended 
by striking ‘‘or’’ at the end of subparagraph (J), by 
striking the period at the end of subparagraph (K) 
and inserting ‘‘, or’’, and by inserting after subpara-
graph (K) the following new subparagraph: 
‘‘(L) expenditures for which a deduction is 
allowed under section 179F.’’. 
(4) Section 312(k)(3)(B) of such Code is 
amended by striking ‘‘or 179E’’ each place it ap-
pears in the heading and text and inserting ‘‘179E, 
or 179F’’. 
(5) The table of sections for part VI of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 179E the 
following new item: 
‘‘Sec. 179F. Election to expense certain coal-to-liquid fuels facilities.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to properties placed in service after 
the date of the enactment of this Act. 
SEC. 203. EXTENSION OF ALTERNATIVE FUEL CREDIT FOR 
FUEL DERIVED FROM COAL THROUGH THE 
FISCHER-TROPSCH PROCESS. 
(a) ALTERNATIVE FUEL CREDIT.—Paragraph (4) of 
section 6426(d) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
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‘‘(4) TERMINATION.—This subsection shall not 
apply to— 
‘‘(A) any sale or use involving liquid fuel 
derived from a feedstock that is primarily do-
mestic coal (including peat) through the Fisch-
er-Tropsch process for any period after Sep-
tember 30, 2020, 
‘‘(B) any sale or use involving liquified hy-
drogen for any period after September 30, 
2014, and 
‘‘(C) any other sale or use for any period 
after September 30, 2009.’’. 
(b) PAYMENTS.— 
(1) IN
GENERAL.—Paragraph (5) of section 
6427(e) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and’’ and the end of subpara-
graph (C), by striking the period at the end of sub-
paragraph (D) and inserting ‘‘, and’’, and by adding 
at the end the following new subparagraph: 
‘‘(E) any alternative fuel or alternative fuel 
mixture (as so defined) involving liquid fuel de-
rived from coal (including peat) through the 
Fischer-Tropsch process sold or used after Sep-
tember 30, 2020.’’. 
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(2) 
CONFORMING
AMENDMENT.—Section 
6427(e)(5)(C) of such Code is amended by striking 
‘‘subparagraph (D)’’ and inserting ‘‘subparagraphs 
(D) and (E)’’. 
SEC. 204. MODIFICATIONS TO ENHANCED OIL RECOVERY 
CREDIT. 
(a) ENHANCED CREDIT FOR CARBON DIOXIDE IN-
JECTIONS.—Section 43 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
subsection: 
‘‘(f) ENHANCED CREDIT
FOR PROJECTS USING 
QUALIFIED CARBON DIOXIDE.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion— 
‘‘(A) the term ‘qualified project’ includes a 
project described in paragraph (2), and 
‘‘(B) in the case of a project described in 
paragraph (2), subsection (a) shall be applied 
by substituting ‘50 percent’ for ‘15 percent’. 
‘‘(2) PROJECTS DESCRIBED.—A project is de-
scribed in this paragraph if it begins or is substan-
tially expanded after December 31, 2007, and 
‘‘(A) uses qualified carbon dioxide in an 
enhanced oil, natural gas, or coalbed methane 
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recovery method, which involves flooding or in-
jection, or 
‘‘(B) enables the capture or sequestration 
of qualified carbon dioxide. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) ENHANCED
OIL
RECOVERY.—The 
term ‘enhanced oil recovery’ means recovery of 
oil by injecting or flooding with qualified carbon 
dioxide. 
‘‘(B) ENHANCED
NATURAL
GAS
RECOV-
ERY.—The term ‘enhanced natural gas recov-
ery’ means recovery of natural gas by injecting 
or flooding with qualified carbon dioxide. 
‘‘(C) ENHANCED COALBED METHANE RE-
COVERY.—The term ‘enhanced coalbed methane 
recovery’ means recovery of coalbed methane by 
injecting or flooding with qualified carbon diox-
ide. 
‘‘(D) QUALIFIED CARBON DIOXIDE.—The 
term ‘qualified carbon dioxide’ means carbon di-
oxide which is produced from the gasification 
and subsequent refinement of a feedstock which 
is primarily domestic coal, at a facility which 
produces coal-to-liquid fuel. 
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‘‘(E) CAPTURE OR SEQUESTRATION.—The 
term ‘capture or sequestration’ means any 
equipment or facility necessary to— 
‘‘(i) capture or separate qualified car-
bon dioxide from other emissions, 
‘‘(ii) transport qualified carbon diox-
ide, or 
‘‘(iii) process and use qualified carbon 
dioxide in a qualified project. 
‘‘(4) TERMINATION.—This subsection shall not 
apply to costs paid or incurred for any qualified 
project after December 31, 2020.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 43 of the Internal Revenue Code of 
1986 is amended— 
(A) by striking ‘‘enhanced oil recovery 
credit’’ in subsection (a) and inserting ‘‘en-
hanced oil, natural gas, and coalbed methane 
recovery, and capture and sequestration credit’’, 
(B) by striking ‘‘qualified enhanced oil re-
covery costs’’ each place it appears and insert-
ing ‘‘qualified costs’’, 
(C) by striking ‘‘qualified enhanced oil re-
covery project’’ each place it appears and in-
serting ‘‘qualified project’’, and 
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(D) by striking the heading and inserting: 
‘‘SEC. 43. ENHANCED OIL, NATURAL GAS, AND COALBED 
METHANE RECOVERY, AND CAPTURE AND SE-
QUESTRATION CREDIT.’’. 
(2) The item in the table of sections for subpart 
D of part IV of subchapter A of chapter 1 of such 
Code relating to section 43 is amended to read as 
follows: 
‘‘Sec. 43. Enhanced oil. natural gas, and coalbed methane recovery, and cap-
ture and sequestration credit.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to costs paid or incurred in taxable 
years ending after December 31, 2007. 
SEC. 205. ALLOWANCE OF ENHANCED OIL, NATURAL GAS, 
AND COALBED METHANE RECOVERY, AND 
CAPTURE 
AND 
SEQUESTRATION 
CREDIT 
AGAINST THE ALTERNATIVE MINIMUM TAX. 
(a) IN GENERAL.—Subsection (c) of section 38 of the 
Internal Revenue Code of 1986 (relating to limitation 
based on amount of tax) is amended by redesignating 
paragraphs (4) and (5) as paragraphs (5) and (6), respec-
tively, and by inserting after paragraph (3) the following 
new paragraph: 
‘‘(4) SPECIAL RULES FOR ENHANCED OIL, NAT-
URAL GAS, AND COALBED METHANE RECOVERY, AND 
CAPTURE
AND
SEQUESTRATION
CREDIT.—In the 
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