To amend the Internal Revenue Code of 1986 to modify the refined coal credit to include qualified coal waste sludge recycling.

SECTION 1. MODIFICATION OF REFINED COAL CREDIT TO INCLUDE QUALIFIED 
              COAL WASTE SLUDGE RECYCLING.

    (a) In General.--Section 45 of the Internal Revenue Code of 1986 
(relating to electricity produced from certain renewable resources, 
etc.) is amended--
            (1) in subsection (b)(2) by inserting ``the $3.00 amount in 
        subsection (e)(8)(B),'' after ``the $4.375 amount in subsection 
        (e)(8)(A),'',
            (2) in subsection (b)(2) by striking ``subsection 
        (e)(8)(B)(i)'' and inserting ``subsection (e)(8)(C)(i)'',
            (3) in subsection (c)(7) by adding at the end the 
        following:
                    ``(C) Refined coal from a qualified coal waste 
                sludge recycling process.--Refined coal shall also 
                include, without regard to subparagraphs (A) and (B) 
                hereof, a solid fuel produced from a qualified coal 
                waste sludge recycling process.'',
            (4) in subsection (d)(8) by striking ``2009.'' and 
        inserting ``2009, or in the case of a facility that uses a 
        qualified coal waste sludge recycling process, a facility that 
        was placed in service not later than one year after the date of 
        enactment of the credit under this section for refined coal 
        from a qualified coal waste sludge recycling process. For 
        purposes of this subsection, a qualified coal waste sludge 
        recycling facility shall be treated as placed in service when 
        such facility is in place and functioning to process coal with 
        coal waste sludge. A `qualified coal waste sludge recycling 
        facility' includes a plant, comprised of one or more batch 
        tanks and/or one or more storage tanks, steam and spray pipes, 
        processing pumps, variable speed drives, a flowmeter and 
        related electrical equipment, that processes coal and liquefied 
        coal waste sludge.'',
            (5) in subsection (e)(8)(A) by inserting ``(other than 
        refined coal from a qualified coal waste sludge recycling 
        process)'' after ``refined coal'' the first place it appears,
            (6) in subsection (e)(8) by redesignating subparagraphs (B) 
        and (C) as subparagraphs (C) and (D), respectively, and by 
        inserting after subparagraph (A) the following new 
        subparagraph:
                    ``(B) Availability and determination of credit 
                amount for refined coal from a qualified coal waste 
                sludge recycling process.--In the case of a producer of 
                refined coal from a qualified coal waste sludge 
                recycling process, there shall be allowed a credit for 
                the taxable year under this section of $3.00 per 
                barrel-of-oil equivalent of refined coal from a 
                qualified coal waste sludge recycling process--
                            ``(i) produced by the taxpayer at a 
                        facility using a refined coal from qualified 
                        coal waste sludge recycling process during the 
                        period beginning on the date of enactment of 
                        this subparagraph and ending on the date that 
                        is four years from the later of the first day 
                        of the fifth full month after the date of 
                        enactment of this subparagraph or its placed-
                        in-service date, and
                            ``(ii) sold by the taxpayer--
                                    ``(I) to an unrelated person, and
                                    ``(II) during such period and 
                                taxable year.
                        For purposes of the preceding sentence, barrel-
                        of-oil equivalent is the amount of refined coal 
                        from a qualified coal waste sludge recycling 
                        process that has a Btu content of 5.8 
                        million.'',
            (7) in subsection (e)(8)(C), as redesignated by paragraph 
        (6), by striking ``The amount'' and inserting ``Except for a 
        facility producing refined coal from a qualified coal waste 
        sludge recycling process, the amount'',
            (8) in subsection (e)(8), as amended by paragraph (6), by 
        adding at the end the following new subparagraph:
                    ``(E) Qualified coal waste sludge recycling 
                process.--
                            ``(i) Definition.--For purposes of this 
                        section, a `qualified coal waste sludge 
                        recycling process' means a process using a 
                        facility to liquefy coal waste sludge and 
                        distribute the liquefied coal waste sludge on 
                        the coal to create a feedstock for the 
                        manufacture of coke. The term `coal waste 
                        sludge' means the tar decanter sludge and 
                        related byproducts of the coking process, 
                        including such materials that have been stored 
                        in ground, in tanks and in lagoons, that have 
                        been treated as hazardous wastes under 
                        applicable Federal environmental rules absent 
                        liquefaction and processing with coal into a 
                        feedstock for the manufacture of coke. The 
                        process liquefies coal waste sludge and 
                        distributes approximately one-quarter to one-
                        half gallon of liquefied coal waste sludge per 
                        each ton of metallurgical coal. Liquefied coal 
                        waste sludge in excess of such amounts would 
                        have adverse effects on the operations and 
                        equipment of the coke batteries that use 
                        refined coal from a qualified coal waste sludge 
                        recycling process as a feedstock for coke. Coal 
                        waste sludge has an energy content ranging from 
                        7,000 to 16,000 Btus per pound.
                            ``(ii) Interaction between section 45 and 
                        section 45k; cross reference.--A taxpayer 
                        selling refined coal from a qualified coal 
                        waste sludge recycling process shall be 
                        entitled to a credit under this section for all 
                        such refined coal that meets the requirements 
                        of this section. The credit under this section 
                        shall be available notwithstanding the fact 
                        that such refined coal is purchased for use as 
                        a feedstock for coke by a taxpayer that has 
                        previously claimed credits under section 45K 
                        for the production of coke or coke gas. For 
                        rules applicable to taxpayers producing coke or 
                        coke gas from refined coal from a qualified 
                        coal waste sludge recycling process, see 
                        section 45K(h).'', and
            (9) in subsection (e)(9)(B) by striking ``The term'' and 
        inserting ``Except for a facility producing refined coal from a 
        qualified coal waste sludge recycling process, the term''.
    (b) No Double Benefit; Cross Reference.--Section 45K of such Code 
is amended by adding at the end the following new subsection:
    ``(h) No Double Benefit; Cross Reference.--No credit shall be 
allowed under this section for coke or coke gas manufactured from 
refined coal from a qualified coal waste sludge recycling process (as 
defined by section 45(e)(8)(E)(i)) for which credits have been claimed 
under section 45; provided that taxpayers may claim the credit under 
this section for coke or coke gas produced from feedstocks for which a 
refined coal credit under section 45 has not been claimed. For rules 
governing the interaction of section 45 and this section that are 
applicable to taxpayers producing refined coal from a qualified coal 
waste sludge recycling process, see section 45(e)(8)(E)(ii).''.
    (c) Effective Date.--The amendments made by this Act shall apply to 
refined coal produced after the date of enactment of this Act.

Summary: Amends the Internal Revenue Code to expand the definition of "refined coal" for purposes of the tax credit for electricity produced from certain renewable resources to include coal produced from a qualified coal waste sludge recycling process. Defines "qualified coal waste sludge recycling process" as a process using a facility to liquefy coal waste sludge and distribute the liquefied coal waste sludge on the coal to create a feedstock for the manufacture of coke.