I
105TH CONGRESS
1ST SESSION
H. R. 1623
To amend the Internal Revenue Code of 1986 to provide that the rate
of tax on certain fuels derived from natural gas shall be based on
the Btu equivalence with a gallon of gasoline, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 15, 1997
Mr. ENSIGN (for himself, Mr. MATSUI, Mr. SAM JOHNSON of Texas, and Mr.
WATKINS) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
that the rate of tax on certain fuels derived from natural
gas shall be based on the Btu equivalence with a gallon
of gasoline, and for other purposes.
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 ‘‘Clean Fuels Tax Eq-
uity Act of 1997’’.
SEC. 2. RATE OF TAX ON CERTAIN FUELS DERIVED FROM
NATURAL GAS DETERMINED ON BASIS OF
BTU EQUIVALENCE WITH GASOLINE.
(a) LIQUEFIED NATURAL GAS AND LIQUEFIED PE-
TROLEUM GAS.—Paragraph (2) of section 4041(a) of the
Internal Revenue Code of 1986 (relating to special motor
fuels) is amended by inserting before the period at the
end of the last sentence ‘‘; except that the rate shall be
12 cents per gallon on liquefied natural gas and 13.6 cents
per gallon on liquefied petroleum gas’’.
(b) METHANOL FUEL PRODUCED FROM NATURAL
GAS.—
(1) IN
GENERAL.—Paragraph (1) of section
4041(m) of such Code is amended—
(A) by redesignating subparagraph (B) as
subparagraph (C),
(B) in subparagraph (A) by inserting ‘‘ex-
cept as provided in subparagraph (B),’’ after
‘‘(A)’’ and by striking ‘‘and’’ at the end, and
(C) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) in the case of fuel none of the alcohol
in which consists of ethanol, the rate of the tax
imposed by subsection (a)(2) shall be—
‘‘(i) the basic Btu equivalency rate
after the date of the enactment of this
clause and before October 1, 1999, and
‘‘(ii) the deficit reduction Btu equiva-
lency rate after September 30, 1999, and’’.
(2) BTU EQUIVALENCY RATES.—Subsection (m)
of section 4041 of such Code is amended by adding
at the end the following new paragraph:
‘‘(3) BTU EQUIVALENCY RATES.—For purposes
of paragraph (1)—
‘‘(A) BASIC
BTU
EQUIVALENCY
RATE.—
The term ‘basic Btu equivalency rate’ means,
with respect to any fuel, the number of cents
per gallon which bears the same ratio to the
number 
of 
cents 
specified 
in 
section
4081(a)(2)(A)(i) (at the time of the sale or use)
as the number of Btu’s in a gallon of such fuel
bears to the number of Btu’s in a gallon of gas-
oline.
‘‘(B) DEFICIT
REDUCTION
BTU
EQUIVA-
LENCY RATE.—The term ‘deficit reduction Btu
equivalency rate’ means the rate which would
be determined under subparagraph (A) if ‘4.3
cents’ were substituted for the number of cents
specified in section 4081(a)(2)(A)(i).’’
(c) REDUCTION IN RATES NOT BORNE BY HIGHWAY
TRUST FUND.—
(1) Subparagraph (A) of section 9503(f)(1) of
such Code is amended by striking all that follows
‘‘fuels,’’ and inserting ‘‘14 cents per gallon (12 cents
per gallon in the case of liquefied natural gas and
13.6 cents per gallon in the case of liquefied petro-
leum gas), and’’.
(2) Subparagraph (C) of section 9503(f)(3) of
such Code is amended by adding at the end the fol-
lowing new sentence: ‘‘For periods after the date of
the enactment of this sentence, in the case of fuel
none of the alcohol in which consists of ethanol,
clause (ii) shall be applied by substituting ‘deficit re-
duction Btu equivalency rate (as defined in section
4041(m)(3))’ for ‘4.3 cents per gallon’.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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