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. 
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 ‘‘Foreign Oil Displace-
ment Act of 2010’’. 
SEC. 2. FINDINGS. 
Congress finds that— 
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(1) the strategic interests of the United States 
would be served by a reduction in the Nation’s de-
pendence upon imported oil to produce transpor-
tation fuels and other products vital to both the do-
mestic economy and national security; 
(2) this goal would be served by the develop-
ment of a viable, commercially competitive synthetic 
fuels industry reliant upon domestic coals and other 
plentiful, nontraditional carbonaceous feedstocks; 
and 
(3) temporary financial incentives are required 
to foster private investment in the technology, de-
sign, construction, and operation of strategic facili-
ties capable of producing synthetic fuels or synthetic 
gas on a commercial scale. 
SEC. 3. CARBONACEOUS FUELS FACILITY CREDIT. 
(a) ALLOWANCE OF CARBONACEOUS FUELS FACIL-
ITY CREDIT.—Section 46 of the Internal Revenue Code 
of 1986 is amended by striking ‘‘and’’ at the end of para-
graph (5), by striking the period at the end of paragraph 
(6) and inserting ‘‘, and’’ and by inserting after paragraph 
(6) the following new paragraph: 
‘‘(7) the carbonaceous fuels facility credit.’’. 
(b) AMOUNT OF CARBONACEOUS FUELS FACILITY 
CREDIT.—Subpart E of part IV of subchapter A of chap-
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ter 1 of such Code is amended by inserting after section 
48D the following new section: 
‘‘SEC. 48E. CARBONACEOUS FUELS FACILITY CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
carbonaceous fuels facility credit for any taxable year is 
an amount equal to 30 percent of the qualified investment 
in a carbonaceous fuels conversion facility for such taxable 
year. 
‘‘(b) QUALIFIED INVESTMENT.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘qualified invest-
ment’ means, with respect to any taxable year, the 
basis of property placed in service by the taxpayer 
during the taxable year as part of a carbonaceous 
fuels conversion facility— 
‘‘(A)(i) the construction, reconstruction, or 
erection of which is completed by the taxpayer, 
or 
‘‘(ii) which is acquired by the taxpayer if 
the original use of such property commences 
with the taxpayer, 
‘‘(B) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able, and 
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‘‘(C) which has a useful life of not less 
than 3 years. 
‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.— 
For purposes of paragraph (1)(A), in the case of a 
facility that— 
‘‘(A) is originally placed in service by a 
person, and 
‘‘(B) is sold and leased back by such per-
son, or is leased to such person, within 3 
months after the date such facility was origi-
nally placed in service, for a period of not less 
than 12 years, 
such facility shall be treated as originally placed in 
service not earlier than the date on which such prop-
erty is used under the leaseback (or lease) referred 
to in subparagraph (B). The preceding sentence 
shall not apply to any property if the lessee and les-
sor of such property make an election under this 
sentence. Such an election, once made, may be re-
voked only with the consent of the Secretary. 
‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI-
TURES RULES MADE APPLICABLE.—Rules similar to 
the rules of subsections (c)(4) and (d) of section 46 
(as in effect on the day before the enactment of the 
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Revenue Reconciliation Act of 1990) shall apply for 
purposes of this section. 
‘‘(c) CARBONACEOUS FUELS CONVERSION FACIL-
ITY.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘carbonaceous fuels conversion facility’ 
means a facility of the taxpayer used to produce a 
qualified fuel. 
‘‘(2) QUALIFIED FUEL.—For purposes of para-
graph (1), the term ‘qualified fuel’— 
‘‘(A) has the meaning given such term by 
section 45K(c), except that 
‘‘(B) in applying section 45K(c)(1)(C), the 
term ‘coal’ includes— 
‘‘(i) peat, and 
‘‘(ii) any byproduct (including syn-
thetic gas) or chemical— 
‘‘(I) that is from a coal, culm, or 
silt preparation facility, and 
‘‘(II) that contains fixed carbon 
derived from coal. 
‘‘(d) COORDINATION WITH OTHER CREDITS.—This 
section shall not apply to any property with respect to 
which any other credit is allowed unless the taxpayer elects 
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to waive the application of such other credits to such prop-
erty. 
‘‘(e) CREDIT MAY BE ASSIGNED.— 
‘‘(1) IN GENERAL.—If any taxpayer elects the 
application of this subsection for any taxable year, 
the amount of credit determined under this section 
for such year which would (but for this subsection) 
be allowable to the taxpayer shall be allowable to the 
person designated by the taxpayer. Such amount 
shall be determined by applying this section sepa-
rately from section 38 for such year. The person so 
designated shall be treated as the taxpayer with re-
spect to this section (other than this subsection) for 
purposes of this title (other than this paragraph). 
‘‘(2) TREATMENT OF AMOUNTS PAID FOR AS-
SIGNMENT.—If any amount is paid to the person 
who assigns the credit determined under this sec-
tion, no portion of such amount shall be includible 
in such person’s gross income. 
‘‘(f) APPLICATION OF SECTION.—This section shall 
apply to periods after the date of the enactment of this 
section and before January 1, 2024, under rules similar 
to the rules of section 48(m) (as in effect on the day before 
the date of the enactment of the Revenue Reconciliation 
Act of 1990).’’. 
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(c) RECAPTURE.— 
(1) IN GENERAL.—Subsection (a) of section 50 
of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(6) SPECIAL
RULES
RELATING
TO
CARBO-
NACEOUS FUELS CONVERSION FACILITY.—For pur-
poses of applying this subsection in the case of any 
credit allowable by reason of section 48E, the fol-
lowing shall apply: 
‘‘(A) IN GENERAL.—In lieu of the amount 
of the increase in tax under paragraph (1), the 
increase in tax shall be an amount equal to the 
investment tax credit allowed under section 38 
for all prior taxable years with respect to a car-
bonaceous fuels conversion facility (as defined 
by section 48E(c)) multiplied by a fraction 
whose numerator is the number of years re-
maining to fully depreciate under this chapter 
the carbonaceous fuels conversion facility dis-
posed of, and whose denominator is the total 
number of years over which such facility would 
otherwise have been subject to depreciation. For 
purposes of the preceding sentence, the year of 
disposition of the carbonaceous fuels conversion 
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facility property shall be treated as a year of re-
maining depreciation. 
‘‘(B) PROPERTY CEASES TO QUALIFY FOR 
PROGRESS
EXPENDITURES.—Rules similar to 
the rules of paragraph (2) shall apply in the 
case of qualified progress expenditures for a 
carbonaceous fuels conversion facility under sec-
tion 48E, except that the amount of the in-
crease in tax under subparagraph (A) of this 
paragraph shall be substituted in lieu of the 
amount described in such paragraph (2).’’. 
(2) Paragraph (4) of section 50(a) of such Code 
is amended by striking ‘‘and (2)’’ and inserting ‘‘, 
(2), and (6)’’. 
(d) APPLICATION
OF AT-RISK RULES.—Subpara-
graph (C) of section 49(a)(1) of such Code is amended 
by striking ‘‘and’’ at the end of clause (v), by striking the 
period at the end of clause (vi) and inserting ‘‘, and’’, and 
by adding at the end thereof the following new clause: 
‘‘(vii) the portion of the basis of any 
carbonaceous fuels conversion facility at-
tributable to any qualified investment (as 
defined by section 48E(b)).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart E of part IV of subchapter A of chapter 1 
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of such Code is amended by inserting after the item relat-
ing to section 48D the following new item: 
‘‘Sec. 48E. Carbonaceous fuels facility credit.’’ 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply taxable years ending after the date 
of the enactment of this Act. 
SEC. 4. EXEMPTION FROM MANUFACTURERS EXCISE TAX 
ON FUELS. 
(a) IN GENERAL.—Subsection (a) of section 4083 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
‘‘(4) QUALIFIED CARBONACEOUS FUEL.— 
‘‘(A) EXEMPTION.—The terms ‘taxable 
fuel’, ‘gasoline’, ‘diesel fuel’ and ‘kerosene’ do 
not include qualified carbonaceous fuel or that 
portion of a blend that is qualified carbo-
naceous fuel. 
‘‘(B) QUALIFIED
CARBONACEOUS
FUEL 
DEFINED.—For purposes of subparagraph (A), 
the term ‘qualified carbonaceous fuel’ means 
qualified fuel produced by a carbonaceous fuels 
conversion facility. 
‘‘(C) OTHER DEFINITIONS.—For purposes 
of subparagraph (B), the terms ‘qualified fuel’ 
and ‘carbonaceous fuels conversion facility’ have 
the meaning given such terms by section 48E. 
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‘‘(D) APPLICATION OF PARAGRAPH.—This 
paragraph shall apply during the period begin-
ning on the 91st day after the date of the en-
actment of this paragraph and ending on De-
cember 31, 2023.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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