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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8962 Introduced in House (IH)]

<DOC>

118th CONGRESS
  2d Session
                                H. R. 8962

   To amend the Internal Revenue Code of 1986 to establish a methane 
                      border adjustment mechanism.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              July 9, 2024

 Ms. Brownley introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
   To amend the Internal Revenue Code of 1986 to establish a methane 
                      border adjustment mechanism.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Methane Border Adjustment Mechanism 
Act''.

SECTION 2. FINDINGS.

    Congress finds the following:
            (1) Methane is a powerful greenhouse gas, with about 80 
        times the warming power of carbon dioxide on a 20-year time 
        horizon.
            (2) Rigorous estimates suggest that at least 25 percent of 
        the rise in global temperatures since the industrial revolution 
        is due to methane emissions.
            (3) Public health experts believe that methane is a key 
        contributor to the formation of ground level ozone and 
        particulate pollution, which causes a wide range of 
        cardiovascular and lung-related diseases.
            (4) These facts suggest that methane is a threat to human, 
        animal, and plant life and health.
            (5) The intended purpose of enacting a methane border 
        adjustment mechanism (MBAM) is to conserve exhaustible natural 
        resources by preventing emissions and is made effective in 
        conjunction with regulations and charges on methane emissions 
        from domestic oil and natural gas producers under section 136 
        of the Clean Air Act (42 U.S.C. 7436).
            (6) Highly cost-effective methods of reducing methane 
        emissions--such as MBAMs--have been well-studied and are ready 
        for implementation.
            (7) Research suggests that while the impact of an MBAM on 
        the price of fossil fuels would likely be minimal, it could 
        have a significant impact on methane emissions.
            (8) By working with countries that are major importers of 
        oil and gas to enact similar MBAMs, in partnership with the 
        European Union, having already enacted its own border measure, 
        the United States Government can both help strengthen the 
        market for exports of clean United States gas and encourage 
        other oil and gas producing countries to reduce their methane 
        emissions.

SEC. 3. ESTABLISHMENT OF METHANE BORDER ADJUSTMENT MECHANISM.

    (a) In General.--Chapter 38 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

          ``Subchapter E--Methane Border Adjustment Mechanism

``Sec. 4691. Methane border adjustment mechanism.

``SEC. 4691. METHANE BORDER ADJUSTMENT MECHANISM.

    ``(a) In General.--There is hereby imposed a tax on any methane 
adjustment substance sold or used by the importer thereof.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of tax imposed under 
        subsection (a) with respect to any methane adjustment substance 
        shall be the amount that bears the same ratio to the total 
        methane emissions charge for the country in which such 
        substance was produced or extracted (determined for the second 
        calendar year preceding the calendar year of such sale or use) 
        as--
                    ``(A) the volume of such substance, bears to
                    ``(B) the total volume of such substance produced 
                or extracted in such country (determined for such 
                second preceding calendar year).
            ``(2) Total methane emissions charge.--For purposes of this 
        section, the term `total methane emissions charge' means, with 
        respect to any foreign country, the total amount of charges 
        with respect to facilities located in such country which would 
        be imposed under section 136 of the Clean Air Act (42 U.S.C. 
        7436) if--
                    ``(A) such facilities were located in the United 
                States, and
                    ``(B) subsection (c) of such section were applied 
                without regard to `that reports more than 25,000 metric 
                tons of carbon dioxide' and all that follows.
        Except as otherwise provided by the Secretary in paragraph (4), 
        the total methane emissions charge with respect to any foreign 
        country shall be determined separately with respect to each 
        methane adjustment substance.
            ``(3) Natural gas measured by energy content.--In the case 
        of natural gas, subparagraphs (A) and (B) of paragraph (1) 
        shall each be applied by substituting `energy content' for 
        `volume'.
            ``(4) Methane adjustment substances produced or extracted 
        in more than 1 country.--The Secretary shall provide rules for 
        determining the tax imposed under paragraph (1) with respect to 
        a substance which was produced or extracted in more than 1 
        country which determines such tax on the basis of the 
        proportion of the production or extraction that occurred in 
        such country.
    ``(c) Methane Adjustment Substance.--
            ``(1) In general.--The term `methane adjustment substance' 
        means petroleum and natural gas.
            ``(2) Recommendation of additional substances.--
                    ``(A) In general.--Not later than 2 years after the 
                date of the enactment of this Act, and each 2 years 
                thereafter, the Secretary shall submit a written report 
                to Congress regarding whether additional substances 
                that are reliant on oil and natural gas as a feedstock 
                in industrial processes, or otherwise have notable 
                embodied methane emissions, should be added to the list 
                of methane adjustment substances subject to this 
                section.
                    ``(B) Consultation.--In assessing substances to 
                recommend for inclusion under this paragraph, the 
                Secretary shall consult with the United States 
                International Trade Commission and International Trade 
                Administration on whether domestic producers, including 
                specific domestic facilities, have lower embodied 
                methane emissions than producers in other countries.
                    ``(C) Analysis.--Each report under this paragraph 
                shall be accompanied by an analysis prepared by the 
                Secretary, after consultation with the United States 
                International Trade Commission, of--
                            ``(i) the effect of the proposed expansion 
                        of the methane border adjustment mechanism to 
                        include additional substances, and
                            ``(ii) the economic, employment, and 
                        environmental costs in the United States if the 
                        expansion does not include such additional 
                        substances.
    ``(d) Estimates.--
            ``(1) In general.--The total methane emissions charge, and 
        the amount described in subsection (b)(1)(B), with respect to 
        any foreign country for any calendar year shall be determined 
        by the Secretary on the basis of publicly available 
        information.
            ``(2) Establishment of international body to collect and 
        report information.--The Secretary, in consultation with the 
        governments of countries that are major importers and exporters 
        of methane adjustment substances, shall facilitate the 
        establishment of an international body responsible for 
        providing for international consultations for the establishment 
        of interoperable standards, establishing a multi-stage 
        certification process to track emissions throughout supply 
        chains, and collecting and reporting data related to methane 
        emissions. Standards developed under the preceding sentence 
        shall be updated not less frequently than every 2 years.
    ``(e) Alternative Tax Based on Supply Chain Emissions.--
            ``(1) In general.--In the case of any methane adjustment 
        substance which meets the requirements of paragraph (2), the 
        Secretary shall establish an alternative method (in lieu of 
        subsection (b)) for determining the amount of tax imposed under 
        subsection (a) which takes into account only such substance's 
        pro rata share of the charges which would be imposed under 
        section 136 of the Clean Air Act (42 U.S.C. 7436) (determined 
        with the adjustments described in subparagraphs (A) and (B) of 
        subsection (b)(2)) with respect to facilities in the supply 
        chain of such methane adjustment substance.
            ``(2) Requirements.--The requirements of this paragraph are 
        met if--
                    ``(A) the importer of the methane adjustment 
                substance provides the Secretary such information as 
                the Secretary may require to determine all of the 
                facilities in the supply chain of such substance, the 
                total production of such facilities, and the relevant 
                methane emissions therefrom, and
                    ``(B) each country in which such facilities are 
                located is a country with which the Customs-Trade 
                Partnership Against Terrorism (C-TPAT) has signed 
                mutual recognition arrangements with the customs 
                administration of such country.''.
    (b) International Cooperation on Methane Border Adjustment 
Mechanisms.--The Secretary of the Treasury (or the Secretary's 
delegate) shall encourage the 10 countries with the highest oil and gas 
imports that do not yet have methane border adjustment mechanisms to--
            (1) implement equally stringent border adjustment 
        mechanisms, and
            (2) participate in the creation of the international body 
        referred to in section 4691(d)(2) of the Internal Revenue Code 
        of 1986, as added by this section.
    (c) Clerical Amendment.--The table of subchapters for chapter 38 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

         ``subchapter e--methane border adjustment mechanism''.

    (d) Effective Date.--The amendments made by this section shall 
apply to sales and uses after December 31, 2024.
                                 <all>
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