The companies are seeking the change, buried deep in a tax package pending in Congress, to make it easier for them to know how large a tax deduction they can count on for their "nonconventional" energy activities. In the process they would be guaranteed hundreds of millions of dollars in taxpayer subsidies this year for using a technology that some say is a boondoggle.

The nonconventional fuel tax credit was created by Congress in 1980 to spur development of new energy sources. As a result, billions of dollars have flowed to various energy companies, including companies that treat coal with chemicals they say allow it to burn better and cleaner.

Among them is Headwaters Inc., based in South Jordan. Last year, it received about $25 million in the so-called "synfuel" credits, slashing its tax liability by a third. But taking advantage of the credit is tricky. Companies don't find out until the end of the year how much of a credit they are getting. That makes it difficult for them to make business decisions, such as whether to ramp up or cut back production, said John Ward, vice president of government affairs for Headwaters.

Moreover, the credit is designed to phase out when oil prices are high, under the theory that when energy prices are high, the treated coal can be sold profitably without a subsidy. It hasn't been an issue until the recent oil price spike, prompting some companies, uncertain of their subsidies, to scale back or stop production.

So Hatch is pushing for a change, calculating the subsidy on the prior-year prices. That way, the companies would know what to anticipate.

It would also guarantee more than $1 billion in subsidies would be paid out this year. They could still be hit by the phaseout next year.

"Several key members of the Finance Committee, from both sides of the aisle, thought the current credit could be improved to make the synthetic fuels credit similar to other energy tax credits. That's what we tried to do with the tax reconciliation provision," Hatch said in a statement.

Others supporting the change include Sens. Gordon Smith, R-Ore.; Trent Lott, R-Miss.; Jay Rockefeller, D-W.Va.; and Kent Conrad, D-N.D.

Hatch has been a supporter of Headwaters since the company was founded. Company executives have backed him, as well.

In September, two months before the tax bill was introduced, Headwaters flew executives from across the country to Salt Lake City to hear a speech by Hatch. The executives gave $12,500 to the senator's re-election campaign that night, part of $32,500 they have donated to Hatch overall.

Sen. Bob Bennett has also received $11,500 and Rep. Jim Matheson has received $3,000.

How much is the tax credit worth to the companies?

The Joint Committee on Taxation estimated that taxpayers would send the nonconventional energy companies $5.1 billion between 2005 and 2009.

Headwaters Inc. reaped roughly $25 million in tax credits in 2005 from its stake in a coal-treatment plant. It also generated about $50 million in 2005 by licensing its treatment technology and selling chemicals used in the process to other refiners.

But that's small potatoes compared with the massive amounts taxpayers paid other companies.

The hotel chain Marriott International - founded by Mormon businessman J. Willard Marriott, and now headed by his son, J.W. Marriott Jr. - reported $421 million in tax credits for four synthetic fuel facilities in its most recent report filed with the Securities and Exchange Commission. It received more than $1 billion over three years.

DTE Energy Co., a Detroit company, operates nine facilities, including one in Price, Utah, and received a total of $440 million in tax credits in 2004 and a total of $1.2 billion from 2002-2004.

Progress Energy received $215 million in tax credits in 2004, making an instant profit out of an operation that otherwise would have been a $124 million loss, according to SEC filings.

It's been routinely condemned by Sen. John McCain, R-Ariz., and last year Rep. Lloyd Doggett, D-Texas, tried and failed to kill the tax credit in the House committee that sets tax policy.

"It is really all about tax dodging through synthetic accounting," Doggett said on the House floor last year. He said that unscrupulous companies get billions of dollars "by spraying starch on coal or pine tar on coal. This does not add to the energy capability of the coal. It does not cause the coal to burn in a less polluting manner. Its sole purpose is to generate significant tax dodging."

In 2003, the IRS investigated whether the processes used by the coal refiners really met the standards required to claim the tax credit. Hatch signed a letter urging the IRS to wrap up the study quickly, saying the uncertainty created havoc for companies banking on the credit.

"My concern has always been that Utah companies are treated fairly by the IRS," Hatch said. "If someone qualifies for the synthetic fuels credit under the law, they should get it. If they don't, they need to know that as well. I've had to push the IRS at times to make a decision - any decision - so these companies could make plans for the future."

The decision the IRS reached four months later was unusual. It said the coal treatments likely did not significantly change the coal makeup as required, but since the companies had made investments in technology previously deemed adequate by the IRS, the tax credits could continue.

Later that year, the Senate Permanent Select Committee on Investigations initiated a probe of the tax credit, which is officially ongoing. But Ward said his company has not seen any action since information was turned over to the committee in early 2004.

"This is, we believe, the worst energy subsidy that exists," said Keith Ashdown, vice president for the watchdog group Taxpayers for Common Sense. "This isn't about producing energy, this is about reducing tax liability, that's all it is. Otherwise, companies like Marriott wouldn't be in the business of doing it."

Ward disagrees. He says his company has done studies it believes show the treatment improves the coal-burning efficiency. It has also led to technological improvements, he said.

"We believe Headwaters is an excellent example of the benefits that come from this kind of investment in energy technology," Ward said. "We have succeeded in taking the benefits we've been able to derive from this program and plowed it back into a number of energy technologies that hold tremendous promise for the future."

The synfuel credit is due to expire Dec. 31, 2007. Ward said his company and an industry group that lobbies for the synfuel industry have said they won't push for renewal.