[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 480 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 480
To amend the Internal Revenue Code of 1986 to establish a methane
border adjustment mechanism.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 16, 2025
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''.
SEC. 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, 2025.
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