I 
109TH CONGRESS 
2D SESSION 
H. R. 5218 
To amend the Internal Revenue Code of 1986 to provide that oil and gas 
companies will not be eligible for the effective rate reductions enacted 
in 2004 for domestic manufacturers. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 27, 2006 
Mr. MCDERMOTT (for himself and Mr. LARSON of Connecticut) 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 provide 
that oil and gas companies will not be eligible for the 
effective rate reductions enacted in 2004 for domestic 
manufacturers. 
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 ‘‘Restore a Rational 
Tax Rate on Petroleum Production Act of 2006’’. 
SEC. 2. FINDINGS. 
The Congress finds that— 
VerDate Aug 31 2005 
17:16 Apr 30, 2006
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5218.IH
H5218
cchase on PROD1PC60 with BILLS
(1) like many other countries, the United States 
has long provided export-related benefits under its 
tax law, 
(2) producers and refiners of oil and natural 
gas were specifically denied the benefits of those ex-
port-related tax provisions, 
(3) those export-related tax provisions were suc-
cessfully challenged by the European Union as being 
inconsistent with our trade agreements, 
(4) the Congress responded by repealing the ex-
port-related benefits and enacting a substitute ben-
efit that was an effective rate reduction for United 
States manufacturers, 
(5) producers and refiners of oil and natural 
gas were made eligible for the rate reduction even 
though they suffered no detriment from repeal of the 
export-related benefits, and 
(6) the decision to provide the effective rate re-
duction to producers and refiners of oil and natural 
gas has operated as a reverse windfall profits tax, 
lowering the tax rate on the windfall profits they are 
currently enjoying. 
VerDate Aug 31 2005 
17:16 Apr 30, 2006
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5218.IH
H5218
cchase on PROD1PC60 with BILLS
SEC. 3. DENIAL OF DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION OF OIL, 
NATURAL 
GAS, 
OR 
PRIMARY 
PRODUCTS 
THEREOF. 
(a) IN GENERAL.—Subparagraph (B) of section 
199(c)(4) of the Internal Revenue Code of 1986 (relating 
to exceptions) is amended by striking ‘‘or’’ at the end of 
clause (ii), by striking the period at the end of clause (iii) 
and inserting ‘‘, or’’, and by inserting after clause (iii) the 
following new clause: 
‘‘(iv) the production, refining, proc-
essing, transportation, or distribution of 
oil, natural gas, or any primary product 
thereof.’’. 
(b) CONFORMING AMENDMENTS.—Section 199(c)(4) 
of such Code is amended— 
(1) in subparagraph (A)(i)(III) by striking 
‘‘electricity, natural gas,’’ and inserting ‘‘electricity’’, 
and 
(2) in subparagraph (B)(ii) by striking ‘‘elec-
tricity, natural gas,’’ and inserting ‘‘electricity’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
Æ 
VerDate Aug 31 2005 
17:16 Apr 30, 2006
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6301
E:\BILLS\H5218.IH
H5218
cchase on PROD1PC60 with BILLS