I 
109TH CONGRESS 
2D SESSION 
H. R. 6417 
To repeal tax subsidies enacted by the Energy Policy Act of 2005 for oil 
and gas and certain other oil and gas subsidies in the Internal Revenue 
Code of 1986, and to establish a greenhouse gas intensity reduction 
investment tax credit. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 7, 2006 
Mr. MEEHAN introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To repeal tax subsidies enacted by the Energy Policy Act 
of 2005 for oil and gas and certain other oil and gas 
subsidies in the Internal Revenue Code of 1986, and 
to establish a greenhouse gas intensity reduction invest-
ment tax credit. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Climate Change In-
vestment Act of 2006’’. 
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SEC. 2. REPEAL OF TAX SUBSIDIES FOR THE OIL AND GAS 
INDUSTRY. 
(a) REPEAL OF ELECTION TO EXPENSE CERTAIN 
REFINERIES.— 
(1) Subparagraph (B) of section 179C(c)(2) of 
the Internal Revenue Code of 1986 is amended by 
striking ‘‘January 1, 2012’’ and inserting ‘‘the date 
of the enactment of the Climate Change Investment 
Act of 2006’’. 
(2) Paragraph (2) of section 179C(c) of such 
Code is amended by striking ‘‘January 1, 2008’’ 
each place it appears and inserting ‘‘the date of the 
enactment of the Climate Change Investment Act of 
2006’’. 
(b) REPEAL OF AMORTIZATION OF GEOLOGICAL AND 
GEOPHYSICAL EXPENDITURES.—Subsection (h) of section 
167 of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(5) TERMINATION.—This subsection shall not 
apply to any expenses paid or incurred in any tax-
able year beginning after the date of the enactment 
of this Act.’’. 
(c) REPEAL OF ENHANCED OIL RECOVERY CRED-
IT.—Section 43 of such Code (relating to enhanced oil re-
covery credit) is amended by adding at the end the fol-
lowing new subsection: 
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‘‘(f) TERMINATION.—This section shall not apply to 
taxable years beginning after the date of the enactment 
of this subsection.’’. 
(d) REPEAL OF CREDIT FOR PRODUCTION OF LOW 
SULFUR DIESEL FUEL.—Section 45H of such Code (re-
lating to credit for production of low sulfur diesel fuel) 
is amended by adding at the end the following new sub-
section: 
‘‘(h) TERMINATION.—This section shall not apply to 
taxable years beginning after the date of the enactment 
of this subsection.’’. 
(e) REPEAL
OF CREDIT
FOR PRODUCING FUEL 
FROM
A NONCONVENTIONAL SOURCE.—Subpart D of 
part IV of subchapter A of chapter 1 of such Code is 
amended by striking section 45K (relating to credit for 
producing fuel from a nonconventional source). 
(f) REPEAL OF DEDUCTION FOR CAPITAL COSTS IN-
CURRED IN COMPLYING WITH ENVIRONMENTAL PROTEC-
TION AGENCY SULFUR REGULATIONS.—Section 179B of 
such Code (relating to deduction for capital costs incurred 
in complying with Environmental Protection Agency sul-
fur regulations) is amended by adding at the end the fol-
lowing new subsection: 
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‘‘(f) TERMINATION.—This section shall not apply to 
taxable years beginning after the date of the enactment 
of this subsection.’’. 
(g) REPEAL
OF CERTAIN INTANGIBLE DRILLING 
AND DEVELOPMENT COSTS.—Subsection (c) of section 
263 of such Code (relating to intangible drilling and devel-
opment costs in the case of oil and gas wells and geo-
thermal wells) is amended by adding at the end the fol-
lowing new sentence: ‘‘This subsection shall not apply to 
costs incurred after the date of the enactment of this sen-
tence with respect to any oil or gas well.’’. 
(h) REPEAL
OF CERTAIN OIL
AND GAS PROVI-
SIONS.— 
(1) IN GENERAL.—Part I of subchapter I of 
chapter 1 of such Code (relating to deductions) is 
amended by adding at the end the following new sec-
tion: 
‘‘SEC. 618. OIL AND GAS LIMITATION. 
‘‘This part shall not apply with respect to any ex-
penditure which relates to any oil or gas well and which 
is paid or incurred after the date of the enactment of this 
section.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter I of chapter 1 of such 
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Code is amended by adding at the end the following 
new item: 
‘‘Sec. 618. Oil and gas limitation.’’. 
(i) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall take effect on the date of the enactment of this 
Act. 
(2) REPEAL OF CREDIT FOR PRODUCING FUEL 
FROM A NONCONVENTIONAL SOURCE.—The amend-
ment made by subsection (e) shall apply with respect 
to fuels sold or produced after the date of the enact-
ment of this Act. 
SEC. 3. GREENHOUSE GAS INTENSITY REDUCTION INVEST-
MENT TAX CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business-related cred-
its) is amended by adding at the end the following new 
section: 
‘‘SEC. 45N. GREENHOUSE GAS INTENSITY REDUCTION IN-
VESTMENT CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of section 38, 
in the case of a taxpayer’s investment in a green-
house gas intensity reduction project approved by 
the Secretary of Energy, the greenhouse gas inten-
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sity reduction investment credit determined under 
this section for the taxable year is an amount equal 
to— 
‘‘(A) the percentage reduction in green-
house gas intensity certified for such project for 
such year by the Secretary of Energy, multi-
plied by 
‘‘(B) the investment in such project during 
such year which is attributable, directly or indi-
rectly, to the taxpayer, as determined by the 
Secretary of Energy. 
‘‘(2) AGGREGATE
DOLLAR
LIMITATION.—The 
credit determined under paragraph (1) for any tax-
able year, when added to any credit allowed to the 
taxpayer with respect to the such project in any pre-
ceding taxable year, shall not exceed 50 percent of 
the investment attributable to the taxpayer with re-
spect to such project through such taxable year. 
‘‘(b) LIMITATION ON AGGREGATE CREDIT ALLOW-
ABLE.— 
‘‘(1) IN GENERAL.—The amount of the green-
house gas intensity reduction investment credit de-
termined under subsection (a) for any project, when 
added to all such credits allowed to all taxpayers 
with respect to the such project shall not exceed the 
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credit dollar amount allocated to such project under 
this subsection by the Secretary of Energy from the 
greenhouse gas intensity reduction investment credit 
limitation for the calendar year in which such alloca-
tion is made. 
‘‘(2) TIME FOR MAKING ALLOCATION.—An allo-
cation shall be taken into account under paragraph 
(1) only if it is made not later than the close of the 
calendar year in which the greenhouse gas intensity 
reduction project proposal with respect to such 
project is approved by the Secretary of Energy. 
‘‘(3) OVERALL
LIMITATION
ON
AGGREGATE 
CREDIT ALLOWABLE.—The Secretary of Energy may 
allocate the aggregate credit dollar amount to any 
such project for a period not to exceed a 10-year pe-
riod beginning with the calendar year described in 
paragraph (2). 
‘‘(c) LIMITATION ON AMOUNT OF CREDITS ALLO-
CATED.— 
‘‘(1) IN GENERAL.—There is a greenhouse gas 
intensity reduction investment credit limitation 
amount for each calendar year. Except as provided 
in paragraph (2), such limitation amount is 
$600,000,000 for each of calendar years 2008 
through 2012, and zero thereafter. 
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‘‘(2) CARRYOVER OF UNUSED ISSUANCE LIMI-
TATION.—If for any calendar year the limitation 
amount imposed by paragraph (1) exceeds the 
amount of greenhouse gas intensity reduction invest-
ment credits allocated during such year, such excess 
shall be carried forward to the succeeding calendar 
year as an addition to the limitation imposed by 
paragraph (1). 
‘‘(d) GREENHOUSE
GAS
INTENSITY
REDUCTION 
PROJECT; GREENHOUSE GAS INTENSITY.—For purposes 
of this section— 
‘‘(1) GREENHOUSE GAS INTENSITY REDUCTION 
PROJECT.—The term ‘greenhouse gas intensity re-
duction project’ means any project approved under 
this section by the Secretary of Energy. Such ap-
proval shall be based on the following criteria: 
‘‘(A) The extent of the reduction in green-
house gas intensity proposed for the project. 
‘‘(B) Improvements in system efficiency. 
‘‘(C) In the case of projects located outside 
the United States, the extent of technology 
transfer. 
‘‘(D) The existence and nature of agree-
ments for sharing project benefits and liability 
between the taxpayer and any host government. 
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‘‘(2) 
GREENHOUSE
GAS
INTENSITY.—The 
greenhouse gas intensity for any period is equal to 
the volume of emissions divided by the economic ac-
tivity associated with a project. 
‘‘(e) RECAPTURE OF CREDIT IN CERTAIN CASES.— 
‘‘(1) IN GENERAL.—If, at any time during the 
20-year period of a greenhouse gas intensity reduc-
tion project, there is a recapture event with respect 
to such project, then the tax imposed by this chapter 
for the taxable year in which such event occurs shall 
be increased by the credit recapture amount. 
‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur-
poses of paragraph (1)— 
‘‘(A) IN GENERAL.—The credit recapture 
amount is an amount equal to the recapture 
percentage of all greenhouse gas intensity re-
duction investment credits previously allowable 
to a taxpayer with respect to any investment in 
such project that is attributable to such tax-
payer. 
‘‘(B) RECAPTURE PERCENTAGE.—The re-
capture percentage shall be 100 percent if the 
recapture event occurs during the first 5 years 
of the project, 75 percent if the recapture event 
occurs during the second 5 years of the project, 
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50 percent if the recapture event occurs during 
the third 5 years of the project, 25 percent if 
the recapture event occurs during the fourth 5 
years of the project, and 0 percent if the recap-
ture event occurs at any time after the 20th 
year of the project. 
‘‘(3) RECAPTURE
EVENT.—For purposes of 
paragraph (1), there is a recapture event with re-
spect to a greenhouse gas intensity reduction project 
if— 
‘‘(A) the taxpayer violates a term or condi-
tion of the approval of the project by the Sec-
retary of Energy at any time, 
‘‘(B) the taxpayer adopts a practice which 
the Secretary of Energy has specified in its ap-
proval of the project as a practice which would 
tend to defeat the purposes of the program, or 
‘‘(C) the taxpayer disposes of any owner-
ship interest arising out of its investment that 
the Secretary of Energy has determined is at-
tributable to the project, unless the Secretary of 
Energy determines that such disposition will 
not have any adverse effect on the greenhouse 
gas intensity reduction project. 
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If an event which otherwise would be a recapture 
event is outside the control of the taxpayer, as deter-
mined by the Secretary of Energy, such event shall 
not be treated as a recapture event with respect to 
such taxpayer. 
‘‘(4) SPECIAL RULES.— 
‘‘(A) TAX
BENEFIT
RULE.—The tax for 
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed 
by reason of this section which were used to re-
duce tax liability. In the case of credits not so 
used to reduce tax liability, the carryforwards 
and carrybacks under section 39 shall be appro-
priately adjusted. 
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be 
treated as a tax imposed by this chapter for 
purposes of determining the amount of any 
credit under this chapter or for purposes of sec-
tion 55. 
‘‘(f) DISALLOWANCE OF DOUBLE BENEFIT.— 
‘‘(1) BASIS REDUCTION.—The basis of any in-
vestment in a greenhouse gas intensity reduction 
project shall be reduced by the amount of any credit 
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determined under this section with respect to such 
investment. 
‘‘(2) CHARITABLE DEDUCTION DISALLOWED.— 
No deduction shall be allowed to a taxpayer under 
section 170 with respect to any contribution which 
the Secretary of Energy certifies to the Secretary of 
the Treasury constitutes an investment in a green-
house gas intensity reduction project that is attrib-
utable to such taxpayer. 
‘‘(g) CERTIFICATION TO TREASURY.—The Secretary 
of Energy shall certify to the Secretary of the Treasury 
before January 31 of each year with respect to each tax-
payer which has made an investment in a greenhouse gas 
intensity reduction project— 
‘‘(1) the amount of the greenhouse gas intensity 
reduction investment credit allowable to such tax-
payer for the preceding calendar year, 
‘‘(2) whether a recapture event occurred with 
respect to such taxpayer during the preceding cal-
endar year, and 
‘‘(3) the credit recapture amount, if any, with 
respect to such taxpayer for the preceding calendar 
year. 
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‘‘(h) REGULATIONS.—The Secretary of the Treasury 
shall prescribe such regulations as may be appropriate to 
carry out this section, including regulations— 
‘‘(1) which limit the credit for investments 
which are directly or indirectly subsidized by other 
Federal benefits, 
‘‘(2) which prevent the abuse of the provisions 
of this section through the use of related parties, 
and 
‘‘(3) which impose appropriate reporting re-
quirements.’’. 
(b) CREDIT MADE PART OF GENERAL BUSINESS 
CREDIT.—Subsection (b) of section 38 is amended by 
striking ‘‘and’’ at the end of paragraph (29), by striking 
the period at the end of paragraph (30) and inserting ‘‘, 
and’’, and by adding at the end the following new para-
graph: 
‘‘(31) the greenhouse gas intensity reduction in-
vestment credit determined under section 45N(a).’’. 
(c) DEDUCTION FOR UNUSED CREDIT.—Subsection 
(c) of section 196 is amended by striking ‘‘and’’ at the 
end of paragraph (12), by striking the period at the end 
of paragraph (13) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
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‘‘(14) the greenhouse gas intensity reduction in-
vestment credit determined under section 45N(a).’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 45N. Greenhouse gas intensity reduction investment credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to investments made after Decem-
ber 31, 2007. 
Æ 
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