SECTION 4. PHASE II — Internal Revenue Bulletin 2009-16

ADVANCED COAL PROJECT PROGRAM

.01 In General . The Service will consider a project under the Phase II advanced coal program only if the DOE provides a certification (“DOE certification”) and ranking (if any) for the project. Accordingly, a taxpayer must submit, for each Phase II advanced coal project: (1) an application for certification by DOE that the project is technically and economically feasible (“application for DOE certification”), and (2) an application for certification under § 48A(d)(2) by the Service (“application for § 48A certification”). Both applications may be submitted only during the Phase II application period beginning on March 13, 2009, and ending on March 12, 2012. The Service will issue certifications and allocate credits to projects in annual allocation rounds. The first allocation round for Phase II advanced coal program will be conducted in 2009–10. If necessary, additional allocation rounds will be conducted in 2010–11 and 2011–12.

.02 Program Specifications . (1) The Service determines the amount of the Phase II advanced coal credits allocated to a Phase II advanced coal project at the time the Service accepts the application for § 48A certification for that project in accordance with section 4.02(11) of this notice (see section 5 of this notice for the requirements applicable to the application for DOE certification and the application for § 48A certification).

(2) The Phase II advanced coal credits of $1.25 billion and the applications for Phase II certifications will be separated into the following three pools:

(a) Projects using an advanced coalbased generation technology and using bituminous coal as a primary feedstock. For the 2009–10 allocation round, the aggregate amount of the Phase II advanced coal credit for this pool is $417 million.

(b) Projects using an advanced coal-based generation technology and using subbituminous coal as a primary feedstock. For the 2009–10 allocation round, the aggregate amount of the Phase II qualifying advanced coal project credit for this pool is $417 million.

2009–16 I.R.B. 819 April 20, 2009

and address for filing the application for DOE certification. The DOE will determine the technical and economic feasibility of the project and, if the project is determined to be feasible, will provide a DOE certification for the project to the Service. If the DOE certifies two or more projects in a pool described in section 4.02(2) of this notice, the DOE also will rank each of the projects it certifies (for example, first, second, third, etc.) relative to other certified projects in the same pool and credits will be allocated to projects based on the DOE ranking. If an application for DOE certification is postmarked on or before October 31 of a calendar year, the DOE will determine the feasibility of the project and (for projects determined to be feasible) provide the DOE certification and the DOE ranking (if any) to the Service by March 1 of the following calendar year. Thus, after application of § 7503, relating to the time for performance of acts when the last day falls on a Saturday, Sunday, or legal holiday, applications for DOE certification must be postmarked on or before November 2, 2009, to be considered in the 2009–10 allocation round, on or before November 1, 2010, to be considered in the 2010–11 allocation round, and on or before November 1, 2011, to be considered in the 2011–12 allocation round.

(11) By April 30 of the calendar year in which an application for § 48A certification is deemed to be submitted (as determined under section 4.02(7) of this notice), the Service will accept or reject the taxpayer’s application for § 48A certification and will notify the taxpayer, by letter, of its decision.

(12) If the taxpayer’s application for § 48A certification is accepted, the acceptance letter will state the amount of the credit allocated to the project. If a credit is allocated to a taxpayer’s project, the taxpayer will be required to execute a closing agreement in the form set forth in Appendix A to this notice. By June 30 of the calendar year in which an application for § 48A certification is accepted (July 2 after application of § 7503 for applications accepted in 2012), the taxpayer must execute and return the closing agreement to the Service at the appropriate address listed in section 5.04 of this notice or listed in later guidance published in the Internal Revenue Bulletin. The Service will execute and return the closing agreement to

(4) For each pool described in section 4.02(2) of this notice, DOE will rank the certified projects in descending order (that is, first, second, third, etc.). The amount available for allocation from the pool will be allocated as follows in the 2009–10 allocation round:

(a) If the requested allocation of credits for projects that DOE has certified for a pool described in section 4.02(2) of this notice does not exceed the amount available for allocation from that pool, each certified project will be allocated the full amount of credit requested.

(b) If the requested allocation of credits for projects that DOE has certified for a pool described in section 4.02(2) of this notice exceeds the amount available for allocation from that pool, the amount available for allocation will be allocated as follows:

(i) The project receiving the highest ranking (that is, first) will be allocated the full amount of credit requested (but not exceeding the amount available for allocation from the pool) before any credit is allocated to a lower-ranked project. The amount available for allocation from the pool is reduced by the amount of credit so allocated and only the remainder is available for allocation to a lower-ranked project.

(ii) Second and lower-ranked projects will be entitled to similar priority in the allocation of credits and allocations to such projects will similarly reduce the remainder of the amount available for allocation from the pool until the amount available for allocation from the pool is exhausted.

(5) If the amount available for allocation from a pool is not fully allocated in the 2009–10 allocation round, similar allocation rounds will be conducted in 2010–11 and 2011–12 until the available amount is fully allocated. The results of each allocation round will be announced. See section 10.01 of this notice for further information about this announcement.

(6) For each allocation round there will be an annual application period during which a taxpayer may file its application for § 48A certification. The Service will consider a project in an allocation round only if the application for § 48A certification for the project is submitted during the application period for that round and the DOE provides the DOE certification and

the DOE ranking (if any) for the project before the end of the application period.

(7) For the 2009–10 allocation round, the application period for § 48A certification begins on March 13, 2009, and ends on March 1, 2010, and any completed application for § 48A certification received by the Service after March 12, 2009, and before March 2, 2010, will be deemed to be submitted by the taxpayer on March 1, 2010. For the 2010–11 allocation round (if necessary), the application period for § 48A certification begins on March 2, 2010, and ends on March 1, 2011, and any completed application for § 48A certification received by the Service after March 1, 2010, and before March 2, 2011, will be deemed to be submitted by the taxpayer on March 1, 2011. For the 2011–12 allocation round (if necessary), the application period for § 48A certification begins on March 2, 2011, and ends on March 1, 2012, and any completed application for § 48A certification received by the Service after March 1, 2011, and before March 2, 2012, will be deemed to be submitted by the taxpayer on March 1, 2012.

(8) If the same project would otherwise be allocated credits under both the qualifying advanced coal project program of § 48A and the qualifying gasification project program of § 48B, the following rules apply:

(a) The qualifying gasification project credit may not be allocated to the project with respect to any qualified investment under § 48B for which a qualifying advanced coal project credit is allowed under § 48A; and

(b) The qualifying gasification project credit may be allocated to the project with respect to the qualified investment under § 48B for which a qualifying advanced coal project credit is not allowed under § 48A.

(9) For purposes of this notice, an application that is submitted by U.S. mail will be treated as received by the Service on the date of the postmark and an application submitted by a private delivery service will be treated as received by the Service on the date recorded or the date marked in accordance with § 7502(f)(2)(C).

(10) See section 5.02 of this notice and Appendix B to this notice for the information to be submitted to the DOE in an application for DOE certification. Appendix B to this notice also provides the instructions

April 20, 2009 820 2009–16 I.R.B.

(9) A statement specifying whether the project is a new electric generation unit (as defined in § 48A(c)(6)), a retrofit of an existing electric generation unit, or a repower of an existing electric generation unit.

(10) A statement specifying whether the project is entitled to priority for greenhouse gas capture capability (as defined in § 48A(c)(5)), increased by-product utilization, or a research partnership with an eligible educational institution (as defined in § 529(e)(5)) and, if entitled to priority, a statement identifying which of these priorities apply to the project.

(11) A statement specifying the number and types of generators to be used in the project (for example, two combustion turbine generators and one steam turbine generator).

(12) The exact total nameplate generating capacity (as defined in section 3.02 of this notice) of the project.

(13) In the case of a project that will not achieve 99-percent removal of sulfur dioxide, a statement that the project is designed for the use of a feedstock substantially all of which is subbituminous coal and will achieve an emission level of not more than 0.04 pounds of sulfur dioxide per million Btu, determined on a 30-day average. For this purpose, a project is designed for the use of feedstock substantially all of which is subbituminous coal if at all times 80 percent or more of the cumulative total fuel input (coal and any other fuel input) used in normal plant operations (as defined in section 3.03(2) of this notice) of the project will be subbituminous coal. Such a project meets the requirements in § 48A(f)(1) by achieving either 99-percent removal of sulfur dioxide or an emission level of not more than 0.04 pounds of sulfur dioxide per million Btu, determined on a 30-day average. All other qualifying advanced coal projects must achieve 99-percent removal of sulfur dioxide.

.03 Information To Be Included in the Application for § 48A Certification . Pursuant to § 48A(d)(2)(B), an application for § 48A certification must include all of the following:

(1) The name, address, and taxpayer identification number of the taxpayer. If the taxpayer is a member of an affiliated group filing consolidated returns, also provide the name, address, and taxpayer iden

the taxpayer by August 31 of such calendar year. The executed closing agreement applies only to the accepted taxpayer. Accordingly, any successor in interest must execute a new closing agreement with the Service no later than the due date (including extensions) of the successor in interest’s Federal income tax return for the taxable year in which the transfer occurs. If the successor in interest does not execute a new closing agreement, the following rules apply:

(a) In the case of an interest acquired at or before the time the qualifying advanced coal project is placed in service, any credit allocated to the project (including any credit allocated under the Phase I advanced coal program) will be fully forfeited (and rules similar to the recapture rules of § 50(a) apply with respect to qualified progress expenditures); and

(b) In the case of an interest acquired after the qualifying advanced coal project is placed in service, the project ceases to be investment credit property and the recapture rules of § 50(a) (and similar rules with respect to qualified progress expenditures) apply.

(13) The closing agreement relating to a credit allocation may be modified only if the modification is consistent with the objectives of the qualifying advanced coal project program, is requested by the taxpayer that received the credit allocation, involves moving the project site to improve the potential to capture and sequester CO emissions, reduce costs 2 of transporting feedstock, and serve a broader customer base. The Service will not modify a closing agreement if the dollar amount of tax credits available to the taxpayer under § 48A would increase as a result of the modification or if the project would not have been originally certified had such modification been included in the taxpayer’s application. In considering such modification, the Service will consult with the DOE.