I
106TH CONGRESS
1ST SESSION
H. R. 162
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 liquid fuels.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
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
liquid fuels.
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’’.
SEC. 2. FINDINGS.
Congress finds that—
(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 on a com-
mercial 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 (2), by striking the period at the end of paragraph
(3) and inserting ‘‘, and’’, and by inserting after para-
graph (3) the following new paragraph:
‘‘(4) the carbonaceous fuels facility credit.’’
(b) AMOUNT OF CARBONACEOUS FUELS FACILITY
CREDIT.—Section 48 of such Code (relating to the energy
credit and the reforestation credit) is amended by adding
after subsection (b) the following new subsection:
‘‘(c) CARBONACEOUS FUELS FACILITY CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the carbonaceous fuels facility credit for any taxable
year is an amount equal to 28 percent of the quali-
fied investment in a carbonaceous fuels conversion
facility for such taxable year.
‘‘(2) CARBONACEOUS FUELS CONVERSION FA-
CILITY.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘carbonaceous fuels conver-
sion facility’ means a facility of the taxpayer—
‘‘(i)(I) the original use of which com-
mences with the taxpayer or the recon-
struction of which is completed by the tax-
payer (but only with respect to that por-
tion of the basis which is properly attrib-
utable to such reconstruction), or
‘‘(II) that is acquired through pur-
chase (as defined by section 179(d)(2)),
‘‘(ii) that is depreciable under section
167,
‘‘(iii) that has a useful life of not less
than 4 years, and
‘‘(iv) that is used to produce a quali-
fied fuel.
‘‘(B) SPECIAL
RULE
FOR
SALE-LEASE-
BACKS.—For purposes of clause (i) of subpara-
graph (A), in the case of a facility that—
‘‘(i) is originally placed in service by a
person, and
‘‘(ii) is sold and leased back by such
person, or is leased to such person, within
3 months after the date such facility was
originally 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 property is used under the leaseback (or
lease) referred to in clause (ii). The preceding
sentence shall not apply to any property if the
lessee and lessor of such property make an elec-
tion under this sentence. Such an election, once
made, may be revoked only with the consent of
the Secretary.
‘‘(C) QUALIFIED FUEL.—For purposes of
clause (iv) of subparagraph (A), the term
‘qualified fuel’—
‘‘(i) has the meaning given such term
by section 29(c), except that
‘‘(ii) in respect of subparagraph (C) of
paragraph (1) of section 29(c), the term
‘coal’ shall, in addition to lignite, be
deemed to include standard anthracite,
peat, and any byproduct from a coal, culm,
or silt preparation facility that contains
fixed carbon.
‘‘(3) QUALIFIED
INVESTMENT.—For purposes
of paragraph (1), the term ‘qualified investment’
means, with respect to any taxable year, the basis of
a carbonaceous fuels conversion facility placed in
service by the taxpayer during such taxable year.
‘‘(4) QUALIFIED PROGRESS EXPENDITURES.—
‘‘(A) INCREASE
IN
QUALIFIED
INVEST-
MENT.—In the case of a taxpayer who has
made an election under subparagraph (E), the
amount of the qualified investment of such tax-
payer for the taxable year (determined under
paragraph (3) without regard to this sub-
section) shall be increased by an amount equal
to the aggregate of each qualified progress ex-
penditure for the taxable year with respect to
progress expenditure property.