n-06-25.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Qualifying Gasification Project Program

Notice 2006-25

SECTION 1. PURPOSE

This notice establishes the qualifying gasification project program under
§ 48B(d) of the Internal Revenue Code. The purpose of this program is to
consider and award certifications for qualified investment eligible for credits
under § 48B to qualifying gasification project sponsors.
SECTION 2. BACKGROUND
.01 Section 46 provides that the amount of the investment credit for any
taxable year is the sum of the credits listed in § 46. Section 1307(a) of the
Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594 (August 8, 2005) (the
“Act”), amended § 46 to add two new credits to that list: the qualifying advanced
coal project credit and the qualifying gasification project credit.
.02 The qualifying gasification project credit is provided under § 48B, as
added by § 1307(b) of the Act. Section 48B(a) provides that the qualifying
gasification project credit for a taxable year is an amount equal to 20 percent of
the qualified investment (as defined in § 48B(b)) for that taxable year in qualifying
gasification projects. Pursuant to § 48B(d)(1), the aggregate amount of credits
allocated to all qualifying gasification projects may not exceed $350 million.

.03 The term “qualifying gasification project” is defined in § 48B(c)(1) as
meaning any project that (A) employs gasification technology, (B) will be carried
out by an eligible entity (as defined in § 48B(c)(7)), and (C) includes a qualified
investment of which an amount not to exceed $650 million is certified under the
qualifying gasification program as eligible for credit under § 48B. Pursuant to
§ 48B(c)(2), gasification technology is any process that converts a solid or liquid
product from coal (as defined in § 48B(c)(6)), petroleum residue (as defined in
§ 48B(c)(8)), biomass (as defined in § 48B(c)(4)), or other materials that are
recovered for their energy or feedstock value into a synthesis gas composed
primarily of carbon monoxide and hydrogen for direct use or subsequent
chemical or physical conversion.
.04 The qualifying gasification project credit generally is allowed in the
taxable year in which the eligible property (as defined in § 48B(c)(3)) is placed in
service by the taxpayer. Further, the at-risk rules in § 49 and the recapture and
other special rules in § 50 apply to the qualifying gasification project credit.
SECTION 3. QUALIFYING GASIFICATION PROJECT PROGRAM
Section 48B(d)(1) provides that the Secretary, in consultation with the
Secretary of Energy, shall establish a qualifying gasification project program to
consider and award certifications for qualified investment eligible for credits
under § 48B to qualifying gasification project sponsors. The Treasury
Department and the Internal Revenue Service are establishing the qualifying
gasification project program under the rules set forth in sections 4 through 8 of
this notice. Pursuant to § 48B(d)(2), certificates of eligibility may be issued under

the program only during the 10-year period beginning on October 1, 2005.
SECTION 4. ESTABLISHMENT OF QUALIFYING GASIFICATION PROJECT
PROGRAM
.01 In General. The Service will consider a project under the qualifying
gasification project program only if the U.S. Department of Energy (“DOE”)
provides a certification of feasibility and consistency with energy policy goals
(“DOE certification”) for the project. Accordingly, for each qualifying gasification
project, a taxpayer must submit: (1) an application for certification by the DOE
(“application for DOE certification”), and (2) an application for certification under
§ 48B by the Service (“application for § 48B certification”). Both applications
may be submitted only during the 3-year period beginning on February 21, 2006.
Certifications will be issued and credits will be allocated to projects in annual
allocation rounds. The initial allocation round will be conducted in 2006. If
necessary, additional allocation rounds will be conducted in 2007 and 2008.
.02 Program Specifications.
(1) The Service will determine the amount of the qualifying gasification
project credits allocated to a qualifying gasification project at the time the Service
accepts the application for § 48B certification for that project in accordance with
section 4.02(9) of this notice. The qualified investment in the project will be
certified as eligible for the credit to the extent such investment does not exceed
the amount of the credit allocated to the project multiplied by five. See section 5
of this notice for the requirements applicable to the application for DOE
certification and the application for § 48B certification.

(2) The certification for a project cannot apply to more than $650 million
of the qualified investment in the project. Thus, the maximum amount of
qualifying gasification project credits that will be allocated to a project is $130
million.
(3) The aggregate credit of $350 million will be allocated as follows in
the initial round of allocations conducted in 2006:
(a) The aggregate credit will be allocated first to the projects that have
carbon capture capability (as defined in § 48B(c)(5)), use renewable fuel, or have
project teams with experience that demonstrates successful and reliable
operations of the gasification technology on the domestic fuels identified in
§ 48B(c)(2).
(b) If the requested allocation of credits for these priority projects
exceeds the aggregate credit of $350 million, the credit will be allocated to the
priority projects providing the highest ratio of the total amount of synthesis gas to
be supplied by the project (“nameplate capacity”) to requested allocation of
credits.
(c) If the requested allocation of credits for the priority projects does
not exceed the aggregate credit of $350 million, the remaining amount of the
credit will be allocated to the nonpriority projects providing the highest ratio of
nameplate capacity to requested allocation of credits.
(4) If the aggregate credit of $350 million is not fully allocated in the
initial round of allocations in 2006, similar allocation rounds will be conducted in
2007 and 2008 until the aggregate credit of $350 million is fully allocated.

Generally, the results of each year will be announced.
(5) If the same project would otherwise be allocated credits under both
the qualifying gasification project program under this notice and the qualifying
advanced coal project program under Notice 2006-24, 2006-11 I.R.B. ___, the
following rules apply:
(a) If the project is allocated the full amount of the qualifying advanced
coal project credit requested by the taxpayer, no qualifying gasification project
credit will be allocated to the project;
(b) If the project is allocated the full amount of the qualifying
gasification project credit requested by the taxpayer, no qualifying advanced coal
project credit will be allocated to the project;
(c) If the project is allocated less than the full amount of the qualifying
advanced coal project credit requested by the taxpayer, 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; and
(d) If the project is allocated less than the full amount of the qualifying
gasification project credit requested by the taxpayer, the qualifying advanced
coal project credit may be allocated to the project with respect to the qualified
investment under § 48A for which a qualifying gasification project credit is not
allowed under § 48B.
(6) For each allocation round, there will be an annual application period
during which a taxpayer may file its application for § 48B certification. The

Service will consider a project in an allocation round only if the application for §
48B certification for the project is submitted during the application period for that
round and the DOE provides the DOE certification for the project before the end
of that application period.
(7) For the initial allocation round conducted in 2006, the application
period begins on February 21, 2006, and ends on October 2, 2006. Any
completed application for § 48B certification received by the Service before
October 3, 2006, will be deemed to be submitted by the taxpayer on October 2,
2006. For 2007, the application period begins on October 3, 2006, and ends on
October 1, 2007, and any completed application for § 48B certification received
by the Service after October 2, 2006, and before October 2, 2007, will be
deemed to be submitted by the taxpayer on October 1, 2007. For 2008, the
application period begins on October 2, 2007, and ends on October 1, 2008, and
any completed application for § 48B certification received by the Service after
October 1, 2007, and before October 2, 2008, will be deemed to be submitted by
the taxpayer on October 1, 2008. 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).
(8) 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 and address for filing the

application for DOE certification. The DOE will determine the feasibility of the
project and its consistency with energy policy goals and, if the project is
determined to be feasible and consistent with energy policy goals, will provide a
DOE certification for the project to the Service. If an application for DOE
certification is postmarked on or before June 30 of a calendar year, the DOE will
determine the feasibility of the project and its consistency with energy policy
goals and (for projects determined to be feasible and consistent) provide the
DOE certification by October 1 of that calendar year.
(9) By November 30 of the calendar year in which an application for
§ 48B 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 § 48B certification and will notify the taxpayer, by letter, of its decision.
(10) A taxpayer that receives an acceptance letter under section 4.02(9)
of this notice has 7 years from the date of the acceptance letter to place the
project in service and if the project is not placed in service by the end of that
period then the acceptance letter is void.
(11) If the taxpayer’s application for § 48B certification is accepted, the
acceptance letter will state the amount of the credit allocated to the project and
the amount of qualified investment that is certified as eligible for the credit. 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
January 31 of the following year, 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 the
taxpayer by March 31 of such following 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. 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 gasification project is placed in service, any credit allocated to the
project 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 gasification
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.
SECTION 5. APPLICATIONS FOR CERTIFICATIONS
.01
In General. An application for § 48B certification and a separate
application for DOE certification must be submitted for each qualifying
gasification project. If an application for DOE certification does not include all of
the information required by section 5.02 of this notice and meet the requirements
in sections 6.01 and 6.02 of this notice, the DOE may decline to accept the
application. If an application for § 48B certification does not include all of the
information listed in section 5.03 of this notice and meet the requirements in
sections 6.01 and 6.02 of this notice, the application will not be accepted by the

Service.
.02 Information Required in the Application for DOE Certification. An
application for DOE certification must include all of the information requested in
Appendix B to this notice and all of the following:
(1) The name, address, and taxpayer identification number of the
taxpayer;
(2) The name and telephone number of a contact person;
(3) The name and address (or other unique identifying designation) of
the qualifying gasification project;
(4) A statement specifying the projected placed-in-service date of the
qualifying gasification project;
(5) The estimated total cost of the project and the estimated total
qualified investment in the eligible property that will be part of the project;
(6) The amount of the qualifying gasification project credit requested for
the project. The amount requested must not exceed $130 million (the maximum
amount permitted under § 48B(a) and (c)(1)(C));
(7) If the taxpayer is or will be requesting an amount of the qualifying
advanced coal project credit under § 48A for the same project, a statement
specifying the credit the taxpayer prefers to receive;
(8) The amount of synthesis gas to be supplied by the qualifying
gasification project (nameplate capacity). The synthesis gas must be composed
primarily of carbon monoxide and hydrogen for direct use or subsequent
chemical or physical conversion; and

(9) Documentation or other evidence establishing that the taxpayer is
financially viable without the receipt of additional federal funding associated with
the qualifying gasification project.
.03 Information Required in the Application for § 48B Certification. An
application for § 48B certification must include all of the following:
(1) The name, address, and taxpayer identification number of the
taxpayer;
(2) The name and telephone number of a contact person. If necessary,
attach any required power of attorney, preferably on Form 2848, Power of
Attorney and Declaration of Representative; and
(3) A paper copy of the completed application for DOE certification
submitted with respect to the project in accordance with section 5.02 of this
notice.
.04 Instructions and Address for Filing § 48B Application. Applications for
§ 48B certification should be marked: SECTION 48B APPLICATION FOR
CERTIFICATION. There is no user fee for these applications.
(1) Applications submitted by U. S. mail must be sent to:

Internal Revenue Service
Attn: CC:PSI:6, Room 5313
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Applications submitted by a private delivery service must be sent to:
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Ave., N.W.
Washington, DC 20224

(2) Applications may also be hand delivered Monday through Friday
between the hours of 8 a.m. and 4 p.m. to:
Courier's Desk
Internal Revenue Service
Attn: CC:PSI:6, Room 5313
1111 Constitution Avenue N.W.
Washington, DC 20224

SECTION 6. OTHER REQUIREMENTS
.01 Signature. Each submission under section 5 of this notice must be
signed and dated by the taxpayer. A stamped signature or faxed signature is not
permitted.
.02 Penalties of Perjury Statement.
(1) Each submission under section 5 of this notice must be accompanied
by the following declaration: “Under penalties of perjury, I declare that I have
examined this submission, including accompanying documents, and, to the best
of my knowledge and belief, all of the facts contained herein are true, correct,
and complete.”
(2) The declaration must be signed and dated by the taxpayer. The
person signing for the taxpayer must have personal knowledge of the facts. A
stamped signature or faxed signature is not permitted.
.03 Effect of an Acceptance or Allocation. An acceptance or allocation by
the Service under this notice is not a determination that a project qualifies for the
qualifying gasification project credit under § 48B. The Service may, upon
examination (and after any appropriate consultation with DOE), determine that
the project does not qualify for this credit.

.04 No Right to a Conference or Appeal. A taxpayer does not have a right
to a conference relating to any matters under this notice. Further, a taxpayer
does not have a right to appeal the decisions made under this notice (including
the acceptance or rejection of the application for DOE or § 48B certification or the
amount of credit allocated to the project) to an Associate Chief Counsel or any
other official of the Service.
SECTION 7. REVIEW AND REDISTRIBUTION
.01 In General. Section 48B(d)(1) provides for the review and
redistribution of credits allocated under the qualifying gasification project program
under rules similar to the rules of § 48A(d)(4).
.02 Review and Redistribution of Credits.
(1) In general. If, after the allocation round in 2008, the aggregate credit
of $350 million is not fully subscribed (i.e., the aggregate credit is not fully
allocated), an additional program for applications for certification to allocate the
remaining credits will be conducted. Future guidance will prescribe the
procedures applicable to applications for certification with respect to the
remaining credits.
(2)
Reduction or forfeiture of allocated credits. Under the closing
agreement set forth in Appendix A to this notice, the qualifying gasification
project credits allocated under section 4 of this notice will be reduced or forfeited
in certain situations. A taxpayer must notify the Service of the amount of any
reduction or forfeiture required under the closing agreement. This notification
must be sent to the appropriate address listed in section 5.04 of this notice or

listed in later guidance published in the Internal Revenue Bulletin.
The amount of any reduction or forfeiture of the allocated credits will be
returned and included in the aggregate credit remaining to be allocated in the
allocation round following the reduction or forfeiture. If the reduction or forfeiture
occurs after the allocation round in 2008, future guidance will prescribe
procedures applicable to applications for certification with respect to the returned
credits.
SECTION 8. QUALIFIED PROGRESS EXPENDITURES
.01 Section 48B(b)(3) provides that rules similar to the rules of § 46(c)(4)
and (d) (as in effect on the day before the enactment of the Revenue
Reconciliation Act of 1990) shall apply for purposes of § 48B. Former §§ 46(c)(4)
and 46(d) provided the rules for claiming the investment credit on qualified
progress expenditures (as defined in former § 46(d)(3)) made by a taxpayer
during the taxable year for the construction of progress expenditure property (as
defined in former § 46(d)(2)).
.02 In the case of self-constructed property (as defined in former
§ 46(d)(5)(A)), former § 46(d)(3)(A) defined qualified progress expenditures to
mean the amount that is properly chargeable (during the taxable year) to capital
account with respect to that property. With respect to a qualifying gasification
project that is self-constructed property, amounts paid or incurred are chargeable
to capital account at the time and to the extent they are properly includible in
computing basis under the taxpayer’s method of accounting (for example, after
applying the requirements of § 461, including the economic performance

requirement of § 461(h)).
.03 To claim the qualifying gasification project credit on the qualified
progress expenditures paid or incurred by a taxpayer during the taxable year for
construction of a qualifying gasification project, the taxpayer must make an
election under the rules set forth in § 1.46-5(o) of the Income Tax Regulations.
The taxpayer may not make the qualified progress expenditures election for a
qualifying gasification project until the taxpayer has received an acceptance letter
for the project under section 4.02(9) of this notice.
.04 If a taxpayer makes the qualified progress expenditures election
pursuant to section 8.03 of this notice, rules similar to the recapture rules in
§ 50(a)(2)(A)-(D) apply. In addition to the cessation events listed in § 50(a)(2)(A),
examples of other events that will cause the project to cease being a qualifying
gasification project are:
(1) Failure to place the project in service within 7 years from the date of
the acceptance letter under section 4.02(9) of this notice; or
(2) In the case of a project that was entitled to priority for carbon capture
capability, failure to provide that priority benefit on the date the project is placed
in service.
SECTION 9. EFFECTIVE DATE
This notice is effective February 21, 2006.
SECTION 10. PAPERWORK REDUCTION ACT
The collection of information contained in this notice has been reviewed
and approved by the Office of Management and Budget in accordance with the

Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-2002.
An agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection of information
displays a valid OMB control number.
The collections of information in this notice are in sections 4, 5, 6, 7, and
Appendix B of this notice. This information is required to obtain an allocation of
qualifying gasification project credits. This information will be used by the Service to
verify that the taxpayer is eligible for the qualifying gasification project credits. The
collection of information is required to obtain a benefit. The likely respondents are
business or other for-profit institutions.
The estimated total annual reporting burden is 1,700 hours.
The estimated annual burden per respondent varies from 50 to 125 hours,
depending on individual circumstances, with an estimated average of 85 hours.
The estimated number of respondents is 20.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection of information must be retained as
long as their contents may become material in the administration of any internal
revenue law. Generally, tax returns and tax return information are confidential,
as required by 26 U.S.C. 6103.
SECTION 11. DRAFTING INFORMATION
The principal author of this notice is Jennifer Bernardini of the Office of
Associate Chief Counsel (Passthroughs & Special Industries). For further
information regarding this notice contact Douglas H. Kim at (202) 622-3110 (not

a toll-free call).

APPENDIX A
CLOSING AGREEMENT

Under § 7121 of the Internal Revenue Code, [insert taxpayer’s name,
address, and identifying number] (“Taxpayer”) and the Commissioner of Internal
Revenue (“Commissioner”) make the following closing agreement:
WHEREAS:
1. On or before October [insert date and year], Taxpayer submitted to the
Internal Revenue Service (“IRS”), an application for certification under the
qualifying gasification project program described in Notice 2006-25 (“Application
for § 48B Certification”);
2. Taxpayer’s Application for § 48B Certification is for the qualifying
gasification project (the “Project”) described below--
(1) The Project will be located at [insert address or other identifying
designation];
(2) The Project will supply [insert number] mcf of synthesis gas that
is composed primarily of carbon monoxide and hydrogen for direct use or
subsequent chemical or physical conversion;
(3) The fuels identified in § 48B(c)(2) will at all times cumulatively
comprise at least 90 percent of the total fuels (fuels identified in § 48B(c)(2) and
any other fuel input) required by the Project for the production of chemical
feedstocks, liquid transportation fuels, or co-production of electricity;
[If the Project is a priority project, insert:
(4) The Project is entitled to priority under Notice 2006-25 [insert

either: “for carbon capture capability (as defined in § 48B(c)(5)) or use of
renewable fuels”; “because the project team has experience that demonstrates
successful and reliable operations of the gasification technology on domestic
fuels identified in § 48B(c)(2)”; or “both for carbon capture capability (as defined
in § 48B(c)(5)) or use of renewable fuels and because the project team has
experience that demonstrates successful and reliable operations of the
gasification technology on domestic fuels identified in § 48B(c)(2)”];] and
3. On or before November 30, [insert year], the IRS accepted Taxpayer’s
Application for § 48B Certification for the Project and allocated a qualifying
gasification project credit under § 48B in the amount of $[insert number] to the
Project.
NOW IT IS HEREBY DETERMINED AND AGREED FOR FEDERAL INCOME
TAX PURPOSES THAT:
1. The total amount of the qualifying gasification project credit to be
claimed for the Project under § 48B(a) must not exceed $[insert the number in
WHEREAS clause #3].
2. If the Project is not placed in service by Taxpayer within 7 years of
[insert date of acceptance letter issued under section 4.02(9) of Notice 2006-25],
the qualifying gasification project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is fully forfeited.
3. If the Project does not supply synthesis gas in the amount of [insert the
number in WHEREAS clause #2(2)] on the date the Project is placed in service,
the qualifying gasification project credit in the amount of $[insert the number in

WHEREAS clause #3] allocated to the Project is reduced proportionately.
[If the Project is not a priority project for carbon capture capability, for use
of renewable fuels, or because the project team has experience that
demonstrates successful and reliable operations of the gasification
technology on domestic fuels identified in § 48B(c)(2), insert:
4. (1) If the Project fails to use gasification technology as defined in
§ 48B(c)(2) or is not carried out by an eligible entity as defined in § 48B(c)(7), the
qualifying gasification project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is fully forfeited.
(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the
gasification technology for the Project do not cumulatively comprise at least 90
percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input)
required by the Project for the production of chemical feedstocks, liquid
transportation fuels, or co-production of electricity, the Project ceases to be
investment credit property and the recapture rules of § 50(a) apply.]
[If the Project is a priority project for carbon capture capability, for use of
renewable fuels, or because the project team has experience that
demonstrates successful and reliable operations of the gasification
technology on domestic fuels identified in § 48B(c)(2), insert:
4. (1) If the Project fails to use gasification technology as defined in
§ 48B(c)(2) or is not carried out by an eligible entity as defined in § 48B(c)(7), the
qualifying gasification project credit in the amount of $[insert the number in
WHEREAS clause #3] allocated to the Project is fully forfeited.

(2) If, at any time, the fuels identified in § 48B(c)(2) with respect to the
gasification technology for the Project do not cumulatively comprise at least 90
percent of the total fuels (fuels identified in § 48B(c)(2) and any other fuel input)
required by the Project for the production of chemical feedstocks, liquid
transportation fuels, or co-production of electricity, the Project ceases to be
investment credit property and the recapture rules of § 50(a) apply.
(3) If the Project fails to provide [insert priority benefits in WHEREAS
clause #2(4)] on the date the Project is placed in service, the qualifying
gasification project credit in the amount of $[insert the number in WHEREAS
clause #3] allocated to the Project is fully forfeited.]
5. Taxpayer will not claim the qualifying advanced coal project credit under
§ 48A for any qualified investment for which the qualifying gasification project
credit is allowed under § 48B.
6. If Taxpayer elects to claim the qualifying gasification project credit on
the qualified progress expenditures paid or incurred by Taxpayer during the
taxable year for construction of a qualifying gasification project, rules similar to
the recapture rules in § 50(a)(2)(A) through (D) apply.
7. This agreement applies only to Taxpayer. Any successor in interest
must execute a new closing agreement with the IRS. If the interest is acquired at
or before the time the Project is placed in service and the successor in interest
fails to execute a new closing agreement, the qualifying gasification project credit
in the amount of $[insert the number in WHEREAS clause #3] allocated to the
Project is fully forfeited. If the interest is acquired after the time the Project is

placed in service and the successor in interest fails to execute a new closing
agreement, the Project ceases to be investment credit property and the recapture
rules of § 50(a) apply.
THIS AGREEMENT IS FINAL AND CONCLUSIVE EXCEPT:
1. The matter it relates to may be reopened in the event of fraud,
malfeasance, or misrepresentation of a material fact;
2. It is subject to the Internal Revenue Code sections that expressly
provide that effect be given to their provisions (including any stated exception for
§ 7122) notwithstanding any law or rule of law; and
3. If it relates to a tax period ending after the date of this Closing
Agreement, it is subject to any law enacted after such date, which applies to the
tax period.

By signing, the parties certify that they have read and agreed to the terms of this
Closing Agreement.

Taxpayer: [insert name and identifying number]

By: __________________________________ Date Signed: ___________
[insert name]

Title: [insert title]
[insert taxpayer’s name]

Commissioner of Internal Revenue

By: __________________________________ Date Signed: ____________

[insert name]

Title: Associate Chief Counsel, Passthroughs and Special Industries, CC:PSI

I have examined the specific matters involved and recommend the
acceptance of the proposed agreement.
(Receiving Officer) ......................................................................
(Title) .................................................
Date Signed ....................................................

I have reviewed the specific matters involved and recommend the
acceptance of the proposed agreement.

(Reviewing Officer) ....................................................................
(Title) ...............................................
Date Signed ....................................................

APPENDIX B

APPLICATION FOR DOE CERTIFICATION

REQUEST FOR SUPPLEMENTAL APPLICATION INFORMATION FOR DOE

Pursuant to Notice 2006-25 establishing the Qualifying Gasification Project
Program, the Internal Revenue Service (“IRS”) will certify that the investment in a
project is eligible for a credit under § 48B of the Internal Revenue Code only if,
among other things, the IRS receives from the Department of Energy ("DOE") a
certification of feasibility and consistency with energy policy goals (“DOE
certification”) for the project. This DOE certification shall assure that the
applications selected meet the requirements of § 48B and the intent of § 48B to
provide credits to projects that are both technically and economically feasible.

The IRS and DOE seek to certify applications that demonstrate a high likelihood
of being successfully implemented by the applicants. To qualify, projects must
be economically feasible and use the appropriate gasification technology.

This request for submission of supplemental application information:

1. Describes the information to be provided by the applicant seeking a
DOE certification, and
2. Lists the evaluation criteria, and Program Policy Factors to be used by
DOE in the evaluation of applications.

In conducting this evaluation, the DOE may utilize assistance and advice from
qualified personnel from other Federal agencies and/or non-conflicted
contractors. DOE will obtain assurances in advance from all evaluators that
application information shall be kept confidential and used only for evaluation
purposes. DOE reserves the right to request clarifications and/or supplemental
information from some or all applicants through written submissions and/or oral
presentations.

Notice is given that DOE may determine whether or not to provide a DOE
certification to the IRS at any time after the application has been received,
without further exchanges or discussions. Therefore, all applicants are advised to
submit their most complete and responsive application.

Applications will not be returned.

SUBMISSION INFORMATION FOR DOE CERTIFICATION APPLICATION

A. General

This request, together with the information in sections 5.02, 6.01, and 6.02 of
Notice 2006-25 includes all the information needed to complete an application for
DOE certification. All applications shall be prepared in accordance with this
request in order to provide a standard basis for evaluation and to ensure that

each application will be uniform as to format and sequence.

Each application should clearly demonstrate the applicant’s capability,
knowledge, and experience in regard to the requirements described herein.

Applicants should fully address the requirements of Notice 2006-25 and this
request and not rely on the presumed background knowledge of reviewers.
DOE may reject an application that does not follow the instructions regarding the
organization and content of the application when the nature of the deviation
and/or omission precludes meaningful review of the application.

B. Unnecessarily Elaborate Applications

Unnecessarily elaborate brochures or other presentations beyond those sufficient
to present a complete and effective application are not desired. Elaborate art
work, graphics and pictures are neither required nor encouraged.

C. Application Submission for DOE Certification

The application submission to DOE must include the information and
documentation required by sections 5.02, 6.01, and 6.02 of Notice 2006-25.

A project will not be considered in the allocation round conducted in a calendar

year unless the application for DOE certification of the project is postmarked by
June 30 of that calendar year. Two paper copies and one electronic version on a
floppy disc or a CD of the Application must be submitted to:

Melissa Robe
National Energy Technology Laboratory
3610 Collins Ferry Road
Morgantown, WV 26507

Note that under section 5 of Notice 2006-25, one paper copy must be sent to the
IRS as part of the application for IRS certification. The project will not be
considered in the allocation round conducted in a calendar year unless the
application is submitted to the IRS by the date specified for that calendar year in
section 4.02(7) of Notice 2006-25.

THE INFORMATION REQUIRED BY THIS REQUEST MUST BE SUBMITTED
USING THE FORMAT AND THE HEADINGS OF THE PROJECT
INFORMATION MEMORANDUM AS DESCRIBED BELOW.

To aid in evaluation, applications shall be clearly and concisely written and
logically assembled. All pages of each part shall be appropriately numbered and
identified with the name of the applicant and the date.

The application, including the Project Information Memorandum, MUST be
formatted in one of the following software applications:

Microsoft Word
tm
2002 or later edition
Microsoft Excel
tm
2002 or later edition
Adobe Acrobat
tm
PDF 6.0 or later edition

Financial models should be submitted using the Excel
tm
spreadsheet and must
include calculation formulas and assumptions.

The applicant is responsible for the integrity and structure of the electronic files.
The DOE will not be responsible for reformatting, restructuring or converting any
files submitted under this announcement.

The Project Information Memorandum, excluding Appendices, shall not exceed
seventy-five (75) pages. Pages in excess of the page limitation will not be
considered for evaluation. All text shall be typed, single spaced, using 12 point
font, 1 inch margins, and unreduced 8-1/2-inch by 11-inch pages. Illustrations
and charts shall be legible with all text in legible font. Pages shall be sequentially
numbered. Except as otherwise noted herein the page guidelines previously set
forth constitute a limitation on the total amount of material that may be submitted
for evaluation. No material may be incorporated in any application by reference
as a means to circumvent the page limitation.

D. Form of Project Information Memorandum

PROJECT INFORMATION MEMORANDUM

I. SUMMARY AND INTRODUCTION

• Description of the Project
• Financing and Ownership Structure
• Describe the main parties to the project, including background,
ownership and related experience
• Current Project Status and Schedule to Beginning of Construction

II. TECHNOLOGY AND TECHNICAL INFORMATION

Provide a description of the proposed technology, including sufficient
supporting information (such as process flow diagrams, equipment
descriptions, information on each major process unit and the total plant,
compositions of major streams, and the technical plan for achieving the
goals proposed for the project) as would be needed to allow DOE to
confirm that the technical requirements of § 48B could, in principle, be
met. Specifically, the applicant should:

• Provide evidence sufficient to demonstrate that the proposed

technology will employ gasification technology as defined in §
48B(c)(2).
• Present information sufficient to justify the total amount of synthesis
gas (as defined in § 48B(c)(2)) to be produced by the project
(nameplate capacity).
• Provide evidence sufficient to ensure that fuels defined in § 48B(c)(2)
will comprise at least 90 percent of the total fuel input (fuels defined in
§ 48B(c)(2) and any other fuel input) for the project.
• Identify the domestic industry for which the proposed project is
intended to be used.
• Identify the specific products and quantities produced by the proposed
project, providing sufficient evidence to support claims.
• Provide information and data, including examples of prior similar
projects completed by applicant, EPC contractor, and suppliers of
major subsystems or equipment, which support the capabilities of the
applicant to construct and operate the facility.
• Provide evidence that indicates, for projects using nonrenewable fuels,
the gasification technology design reflects reasonable consideration
for, and is capable of, accommodating equipment necessary to capture
carbon dioxide for later use or sequestration. Include the project status
and relevant information from ongoing engineering activities. Also
include in an appendix any engineering report or reports used by the
applicant to develop the project and to estimate costs and operating

performance.

III. SITE CONTROL AND OWNERSHIP

• Provide evidence that the applicant owns or controls a site in the
United States of sufficient size to allow the proposed project to be
constructed and operated on a long-term basis.
• Describe the current infrastructure at the site available to meet the
needs of the project.
• Provide information supporting applicant's conclusion that the
proposed site can fully meet all environmental, feedstock supply, water
supply, transportation, and public policy requirements.

IV. UTILIZATION OF PROJECT OUTPUT

• Provide evidence that a market exists for the products of the proposed
project as evidenced by contracts or written statements of intent from
potential customers.
• Describe any sales arrangements that exist or that may be
contemplated and summaries of their key terms and conditions.
• Include as an appendix any independent Market Study that has been
done in connection with this project, or if no independent market study

has been completed, provide a copy of the applicant-prepared market
study.

V. PROJECT ECONOMICS

Describe the project economics and provide satisfactory evidence of
economic feasibility as demonstrated through the financial forecast and
the underlying project assumptions.

Discuss the market potential for the proposed technology beyond the
project proposed by the applicant.

Show calculation for the amount of tax credit applied for based on
allowable cost.

VI. PROJECT DEVELOPMENT AND FINANCIAL PLAN

Provide the total project budget and major plant costs,
e.g., development,
operating, capital, construction, and financing costs. Describe the overall
approach to project development and financing sufficient to demonstrate
project viability. Provide a complete explanation of the source and amount
of project equity. Provide a complete explanation of the source and
amount of project debt. Provide the audited financial statements for the

applicant for the most recently ended three fiscal years, and the unaudited
quarterly interim financial statements for the current fiscal year. Applicant
should demonstrate that the award recipient is financially viable without
the receipt of additional federal funding associated with the proposed
project.

For internally financed projects, provide evidence that the applicant has
sufficient assets to fund the project with its own resources. Identify any
internal approvals required to commit such assets. Include in an appendix
copies of any board resolution or other approval authorizing the applicant
to commit funds and proceed with the project.

For projects financed through debt instruments either unsecured or
secured by assets other than the project, provide evidence that the
applicant has sufficient creditworthiness to obtain such financing along
with a discussion of the status of such instruments. Identify any internal
approvals required to commit the applicant to pursue such financing.
Include in an appendix, copies of any board resolution or other approval
authorizing the applicant to commit to such financing.

For projects financed through investor equity contributions, discuss the
source and status of each contribution. Discuss each investor’s financial
capability to meet its commitments. Include in an appendix, copies of any

executed investment agreements.

If financing through a public offering or private placement of either debt or
equity is planned for the project, provide the expected debt rating for the
issue and an explanation of applicant's justification for the rating.
Describe the status of any discussions with prospective investment
bankers or other financial advisors.

For projects employing nonrecourse debt financing, provide a complete
discussion of the approach to, and status of, such financing.

In an appendix, provide (1) an Excel based financial model of the project,
with formulas, so that review of the model calculations and assumptions
may be facilitated; provide pro-forma project financial, economic, capital
cost, and operating assumptions, including details of all project capital
costs, development costs, interest during construction, transmission
interconnection costs, other operating expenses, and all other costs and
expenses, and (2) a report of an independent financial analyst in
accordance with the instructions in Section G of this Appendix B.

VII. PROJECT CONTRACT STRUCTURE

Describe the current status of each of the agreements set forth below.

Include as an appendix copies of the contracts or summaries of the key
provisions of each of the following agreements:

• Raw Material Input Supply: describe the source and price of raw
material inputs for the project. Include as an appendix any studies of
price and amount of raw materials that have been prepared. Include a
summary of any supply contracts and a copy of the contracts.
• Transportation: explain the arrangements for transporting project
inputs and outputs, including costs.
• Operations & Maintenance Agreement: include a summary of the
terms and conditions of the contract and a copy of the contract.
• Shareholders Agreement: summarize key terms and include the
agreement as an appendix.
• Engineering, Procurement and Construction Agreement: describe the
key terms of the existing or expected EPC contract arrangement,
including firm price, liquidated damages, hold-backs, performance
guarantees, etc.
• Water Supply Agreement: confirm the amount, source, and cost of
water supply.

VIII. PERMITS INCLUDING EVIRONMENTAL AUTHORIZATIONS

• Provide a complete list of all federal, state, and local permits, including
environmental authorizations or reviews, necessary to commence
construction of the project.
• Explain what actions have been taken to date to satisfy the required
authorizations and reviews, and the status of each.
• Provide a description of the applicant’s plan to obtain and complete all
necessary permits, and environmental authorizations and reviews.

IX. PROJECT SCHEDULE

• Provide an overall project schedule which includes technical, business,
financial, permitting and other factors to substantiate that the project
will meet the 7 year requirement for placing the plant in service.

APPENDICES

• Independent Financial Report.
• Copy of internal or external engineering reports.
• Copy of site plan, together with evidence that applicant owns or controls a
site. Examples of evidence would include a deed, or an executed contract
to purchase or lease the site.

• Information supporting applicant's conclusion that the site is fully
acceptable as the project site with respect to environment, raw material
supply, water supply, and public policy reasons.
• Project Market Study.
• Financial Model of project.
• Audited financial statements for the applicant for the most recently ended
three fiscal years, and the unaudited quarterly interim financial statements
for the current fiscal year.
• Project contracts or summary of thereof.
• If no contract currently exists, provide a summary of the expected terms
and conditions.
• List of all federal, state, and local permits, including environmental
authorizations or reviews, necessary to commence construction.
• Copies of any contract or written statements from customers of intent to
purchase project products.

If an appendix listed above is not provided, include in its place a complete
explanation of the reasons for the omission.

E. Evaluation Criteria:

Industrial Gasification Projects: will be evaluated on whether they meet all the
requirements of § 48B.

Technical: will be evaluated on whether the applicant has demonstrated the
capability to accomplish the technical objectives.

Site: will be evaluated on the basis that the site requirement for ownership or
control has been met, and that the site is suitable for the proposed project.

Economic: will be evaluated on whether the project has demonstrated economic
feasibility, taking into consideration the submitted financial and project
development and structural information and financial plan.

Schedule: will be evaluated on the applicant’s ability to meet the 7 year placed-
in-service requirement.

F. Program Policy Factors to be used by DOE in the evaluation of
applications and a description of how they will be applied.

These factors, while not indicators of the applicant’s merit,
e.g., technical
excellence, cost, applicant's ability, etc., may be essential to the process of
selecting the application(s) that, individually or collectively, will best achieve the
objectives the authorizing legislation. Such factors are often beyond the control
of the applicant. Applicants should recognize that some very good applications
may not receive selection for certification because they do not fit within a mix of

projects and technologies that maximize the probability of achieving the overall
objective of deployment of industrial gasification technology. Therefore, the
following Program Policy Factors may be used individually or collectively by DOE
following application of evaluation criteria to determine which of the applications
shall receive certification by DOE.

• Diversity of technology approaches and methods
• Geographic distribution of potential markets
• Presentation of unique environmental, economic, or performance
benefits

G. Instructions for independent financial reports
The applicant shall provide an independent report by a qualified Independent
Financial Analyst (such as a bank, investment bank, or other independent
financial advisory firm). In the report, the Independent Financial Analyst shall
describe qualifications and experience that establish the Analyst’s
competence to evaluate project financing for projects similar in scope and
size to the Applicant’s project. The Independent Financial Analyst shall
provide a thorough, independent review of the Applicant’s approach to project
financing. The report shall include the opinion of the Independent Financial
Analyst as to the Applicant’s likelihood to achieve financial closure in
accordance with the Applicant’s financing plan.

Required Certification by Independent Financial Analyst:

The report shall be certified by the Independent Financial Analyst, who
shall (a) acknowledge that the report has been prepared for submission
to the Department of Energy as a part of an application by applicant for
an investment credit, and (b) certify that the Independent Financial
Analyst has no obligation to the applicant and has acted to the best of
its ability as an independent expert.

At a minimum, the Independent Financial Analyst shall:
• Review the financial model.
• Review the project financial assumptions, including economic, capital
costs, operating assumptions, and all project development costs.
• Review the financial calculations, including rates of return and coverage
ratios.
• Confirm the calculation of the amount of the tax credit applied for.
• Review the project development cost budget.
• Review and comment on the source of funding and evidence of funding.
• Review and comment on project debt and equity sources.
• Confirm that the application includes the required financial reports and
debt ratings.

• Describe and comment on the capabilities of the applicant to provide the
required financing for the project, and the likelihood of obtaining financing
from a source other than the applicant, if such financing is required by the
project.

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