II 

109TH CONGRESS 

2D SESSION S. 2689 

To amend the Internal Revenue Code of 1986 to increase certain alternative 

fuel and vehicle tax incentives and to eliminate certain tax incentives 

for major integrated oil companies, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 1, 2006 

Ms. COLLINS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to increase 

certain alternative fuel and vehicle tax incentives and 

to eliminate certain tax incentives for major integrated 

oil companies, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. INCREASE IN CERTAIN ALTERNATIVE FUEL 

4 AND VEHICLE TAX INCENTIVES. 

5 (a) INCENTIVES FOR ALCOHOL FUELS.— 

6 (1) INCOME TAX CREDIT.—Section 40 of the 

7 Internal Revenue Code of 1986 (relating to alcohol 

8 used as fuel) is amended— 


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1 (A) by striking ‘‘60 cents’’ each place it 

2 appears and inserting ‘‘$1.20’’, 

3 (B) by striking ‘‘45 cents’’ each place it 

4 appears and inserting ‘‘90 cents’’, 

5 (C) by striking ‘‘2010’’ in the table con6 tained in subsection (h)(2) and inserting 

7 ‘‘2006’’, and 

8 (D) by adding at the end of such table the 

9 following new item: 

‘‘2007 through 2010 ................................ $1.02 .................................. 75.56 cents’’. 

10 (2) EXCISE TAX CREDIT.—Section 6426(b) of 

11 such Code (relating to alcohol fuel mixture credit) is 

12 amended— 

13 (A) by striking ‘‘51 cents’’ in paragraph 

14 (2)(A) and inserting ‘‘$1.02’’, and 

15 (B) by striking ‘‘60 cents’’ in paragraph 

16 (2)(B) and inserting ‘‘$1.20’’. 

17 (b) INCENTIVES FOR BIODIESEL AND RENEWABLE

18 DIESEL FUELS.— 

19 (1) INCOME TAX CREDIT.—Section 40A of the 

20 Internal Revenue Code of 1986 (relating to biodiesel 

21 and renewable diesel used as fuel) is amended— 

22 (A) by striking ‘‘$1.00’’ each place it ap23 pears and inserting ‘‘$2.00’’, 


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1 (B) by striking ‘‘50 cents’’ each place it 

2 appears and inserting ‘‘$1.00’’, and 

3 (C) by striking ‘‘10 cents’’ in subsection 

4 (b)(5)(A) and inserting ‘‘20 cents’’. 

5 (2) EXCISE TAX CREDIT.—Section 6426(c) of 

6 such Code (relating to biodiesel mixture credit) is 

7 amended— 

8 (A) by striking ‘‘50 cents’’ in paragraph 

9 (2)(A) and inserting ‘‘$1.00’’, and 

10 (B) by striking ‘‘$1.00’’ in paragraph 

11 (2)(B) and inserting ‘‘$2.00’’. 

12 (c) INCENTIVES FOR ALTERNATIVE FUELS.—Sub13 sections (d)(1) and (e)(1) of section 6426 of such the In14 ternal Revenue Code of 1986 (credit for alcohol fuel, bio15 diesel, and alternative fuel mixtures) are each amended 

16 by striking ‘‘50 cents’’ and inserting ‘‘$1.00’’. 

17 (d) ALTERNATIVE MOTOR VEHICLE CREDIT.— 

18 (1) NEW QUALIFIED FUEL CELL MOTOR VEHI19 CLE CREDIT.—Section 30B(b) of the Internal Rev20 enue Code of 1986 is amended— 

21 (A) by striking ‘‘$8,000’’, ‘‘$4,000’’, 

22 ‘‘$10,000’’, ‘‘$20,000’’, and ‘‘$40,000’’ in para23 graph (1) and inserting ‘‘$16,000’’, ‘‘$8,000’’, 

24 ‘‘$20,000’’, ‘‘$40,000’’, and ‘‘$80,000’’, respec25 tively, and 


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1 (B) by striking ‘‘$1,000’’, ‘‘$1,500’’, 

2 ‘‘$2,000’’, ‘‘$2,500’’, ‘‘$3,000’’, ‘‘$3,500’’, and 

3 ‘‘$4,000’’ in paragraph (2) and inserting 

4 ‘‘$2,000’’, ‘‘$3,000’’, ‘‘$4,000’’, ‘‘$5,000’’, 

5 ‘‘$6,000’’, ‘‘$7,000’’, and ‘‘$8,000’’, respec6 tively. 

7 (2) NEW ADVANCED LEAN BURN TECHNOLOGY

8 MOTOR VEHICLE CREDIT.—Section 30B(c) of such 

9 Code is amended— 

10 (A) by striking ‘‘$400’’, ‘‘$800’’, 

11 ‘‘$1,200’’, ‘‘$1,600’’, ‘‘$2,000’’, and ‘‘$2,400’’ 

12 in the table contained in paragraph (2)(A)(i) 

13 and inserting ‘‘$800’’, ‘‘$1,600’’, ‘‘$2,400’’, 

14 ‘‘$3,200’’, ‘‘$4,000’’, and ‘‘$4,800’’, respec15 tively, and 

16 (B) by striking ‘‘$250’’, ‘‘$500’’, ‘‘$750’’, 

17 and ‘‘$1,000’’ in the table contained in para18 graph (2)(B) and inserting ‘‘$500’’, ‘‘$1,000’’, 

19 ‘‘$1,500’’, and ‘‘$2,000’’, respectively. 

20 (3) NEW QUALIFIED HYBRID MOTOR VEHICLE

21 CREDIT.—Section 30B(d)(2)(B)(iii) of such Code 

22 (relating to qualified incremental hybrid cost) is 

23 amended by striking by striking ‘‘$7,500’’, 

24 ‘‘$15,000’’, and ‘‘$30,000’’ and inserting 

25 ‘‘$15,000’’, ‘‘$30,000’’, and ‘‘$60,000’’, respectively. 


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1 (4) NEW QUALIFIED ALTERNATIVE FUEL

2 MOTOR VEHICLE CREDIT.—Section 30B(e)(3) of 

3 such Code (relating to incremental cost) is amended 

4 by striking by striking ‘‘$5,000’’, ‘‘$10,000’’, 

5 ‘‘$25,000’’, and ‘‘$40,000’’ and inserting 

6 ‘‘$10,000’’, ‘‘$20,000’’, ‘‘$50,000’’, and ‘‘$80,000’’, 

7 respectively. 

8 (e) ALTERNATIVE FUEL VEHICLE REFUELING PROP9 ERTY CREDIT.—Section 30C(b) of the Internal Revenue 

10 Code of 1986 (relating to limitation) is amended— 

11 (1) by striking ‘‘$30,000’’ in paragraph (1) and 

12 inserting ‘‘$60,000’’, and 

13 (2) by striking ‘‘$1,000’’ in paragraph (2) and 

14 inserting ‘‘$2,000’’. 

15 (f) EFFECTIVE DATES.— 

16 (1) FUELS.—The amendments made by sub17 sections (a), (b), and (c) shall apply to any sale, use, 

18 or removal for any period after the date of the en19 actment of this Act. 

20 (2) VEHICLES AND REFUELING PROPERTY.— 

21 The amendments made by subsections (d) and (e) 

22 shall apply to property placed in service after the 

23 date of the enactment of this Act. 


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1 SEC. 2. ELIMINATION OF CERTAIN TAX INCENTIVES FOR 

2 MAJOR INTEGRATED OIL COMPANIES. 

3 (a) AMORTIZATION OF GEOLOGICAL AND GEO4 PHYSICAL EXPENDITURES.— 

5 (1) IN GENERAL.—Section 167(h) of the Inter6 nal Revenue Code of 1986 (relating to amortization 

7 of geological and geophysical expenditures) is 

8 amended by adding at the end the following new 

9 paragraph: 

10 ‘‘(5) NONAPPLICATION TO MAJOR INTEGRATED

11 OIL COMPANIES.—This subsection shall not apply to 

12 any sale during any taxable year by a taxpayer 

13 which is— 

14 ‘‘(A) an integrated oil company (as defined 

15 in section 291(b)(4)) which has an average 

16 daily worldwide production of crude oil of at 

17 least 500,000 barrels for such taxable year, or 

18 ‘‘(B) a related person to such company.’’. 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by this subsection shall apply to amounts paid or in21 curred in taxable years beginning after the date of 

22 the enactment of this Act. 

23 (b) PERCENTAGE DEPLETION ALLOWANCE FOR OIL

24 AND GAS PROPERTIES.— 

25 (1) IN GENERAL.—Section 613A is amended by 

26 adding at the end the following new subsection: 


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1 ‘‘(f) NONAPPLICATION TO MAJOR INTEGRATED OIL

2 COMPANIES.—The allowance for percentage depletion 

3 shall be zero during any taxable year with respect to a 

4 taxpayer which is— 

5 ‘‘(1) an integrated oil company (as defined in 

6 section 291(b)(4)) which has an average daily world7 wide production of crude oil of at least 500,000 bar8 rels for such taxable year, or 

9 ‘‘(2) a related person to such company.’’. 

10 (2) EFFECTIVE DATE.—The amendment made 

11 by this subsection shall apply to taxable years begin12 ning after the date of the enactment of this Act. 

13 (c) DEDUCTION FOR INTANGIBLE DRILLING AND

14 DEVELOPMENT COSTS.— 

15 (1) IN GENERAL.—Section 263(c) of the Inter16 nal Revenue Code of 1986 is amended by adding at 

17 the end the following new sentence: ‘‘This subsection 

18 shall not apply during any taxable year with respect 

19 to a taxpayer which is an integrated oil company (as 

20 defined in section 291(b)(4)) which has an average 

21 daily worldwide production of crude oil of at least 

22 500,000 barrels for such taxable year or a related 

23 person to such company.’’. 

24 (2) EFFECTIVE DATE.—The amendment made 

25 by this subsection shall apply to amounts paid or inVerDate Aug 31 2005 23:39 May 03, 2006 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2689.IS S2689

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1 curred in taxable years beginning after the date of 

2 the enactment of this Act. 

3 SEC. 3. PROHIBITION OF FUNDS FOR OIL AND NATURAL 

4 GAS ROYALTY RELIEF. 

5 (a) IN GENERAL.—No funds made available under 

6 any Act for any fiscal year for royalty and offshore min7 erals management may be used by the Secretary of the 

8 Interior to provide relief from a requirement to pay a roy9 alty for the production of oil or natural gas from Federal 

10 land during any period in which— 

11 (1) for the production of oil, the average price 

12 of crude oil in the United States is greater than $55 

13 a barrel; and 

14 (2) for the production of natural gas, the aver15 age price of natural gas in the United States is $10 

16 per 1,000 cubic feet of natural gas. 

17 (b) EXCEPTION.—In administering funds made avail18 able for royalty or offshore minerals management, the Sec19 retary of the Interior may waive or specify alternative re20 quirements if the Secretary of the Interior determines that 

21 royalty relief is necessary to avoid oil or natural gas supply 

22 disruptions as a consequence of hurricanes or other nat23 ural disasters. 

Æ 


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