[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2982 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2982

 To enhance international conservation, to promote the role of carbon 
sequestration as a means of slowing the build-up of greenhouse gases in 
   the atmosphere, and to reward and encourage voluntary, pro-active 
      environmental efforts on the issue of global climate change.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 27, 2000

 Mr. Brownback (for himself, Mr. Daschle, Mr. DeWine, Mr. Kerrey, Mr. 
Grassley, Mr. Byrd, and Mr. Lugar) introduced the following bill; which 
        was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To enhance international conservation, to promote the role of carbon 
sequestration as a means of slowing the build-up of greenhouse gases in 
   the atmosphere, and to reward and encourage voluntary, pro-active 
      environmental efforts on the issue of global climate change.

    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 ``International Carbon Sequestration 
Incentive Act''.

                     TITLE I--INVESTMENT TAX CREDIT

SEC. 101. CARBON SEQUESTRATION INVESTMENT TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45D. CARBON SEQUESTRATION INVESTMENT CREDIT.

    ``(a) Allowance of Credit.--
            ``(1) In general.--For purposes of section 38, in the case 
        of an eligible taxpayer who is subject to the terms and 
        conditions of a carbon sequestration project contract with 
        respect to a sponsored carbon sequestration project outside the 
        United States during the taxable year, the carbon sequestration 
        investment credit determined under this section for such 
        taxable year is an amount equal to--
                    ``(A) $2.50, multiplied by
                    ``(B) the number of tons of carbon sequestrated in 
                such project during the taxable year and verified under 
                subsection (c)(4).
            ``(2) Aggregate dollar limitation.--The credit determined 
        under paragraph (1) for any taxable year, when added to any 
        credit allowed with respect to the sponsored project in any 
        preceding taxable year, shall not exceed 50 percent of the 
        investment paid or incurred with respect to such project 
        through such taxable year.
    ``(b) Annual Limitation on Aggregate Credit Allowable.--
            ``(1) In general.--The amount of the carbon sequestration 
        investment credit determined under subsection (a) for any 
        taxable year with respect to a carbon sequestration project 
        sponsored by an eligible taxpayer shall not exceed the 
        aggregate credit dollar amount allocated to such project under 
        this subsection by the implementing panel.
            ``(2) Time for making allocation.--An allocation 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 carbon 
        sequestration project contract with respect to such project is 
        entered into by the eligible taxpayer and the implementing 
        panel.
            ``(3) Aggregate credit dollar amount.--The aggregate credit 
        dollar amount which the implementing panel may allocate for any 
        calendar year is equal to $200,000,000.
    ``(c) Carbon Sequestration Project Contract.--For purposes of this 
section--
            ``(1) In general.--The term `carbon sequestration project 
        contract' means a contract entered into between an eligible 
        taxpayer and the implementing panel--
                    ``(A) based on a contract offer to increase the 
                sequestration of carbon in a project sponsored by the 
                eligible taxpayer and accepted by the implementing 
                panel under the carbon sequestration program 
                established under subsection (d)(1),
                    ``(B) the duration of which is not less than 30 
                years, and
                    ``(C) which includes the terms and conditions 
                described in paragraphs (2), (3), (4), and (5).
            ``(2) Carbon sequestration practices.--Under a carbon 
        sequestration project contract, the eligible taxpayer shall 
        agree to contract with other entities, including organizations 
        based in the country in which the sponsored carbon 
        sequestration project is located, to carry out carbon 
        sequestration practices proposed by the eligible taxpayer which 
        (as determined by the implementing panel)--
                    ``(A) provide for additional carbon sequestration 
                beyond that which would be provided in the absence of 
                the project sponsored by the eligible taxpayer, and
                    ``(B) contribute to a positive reduction of 
                greenhouse gases in the atmosphere through carbon 
                sequestration over at least a 30-year period.
            ``(3) Compliance with carbon sequestration project 
        contract.--
                    ``(A) In general.--Under a carbon sequestration 
                project contract, the eligible taxpayer shall provide 
                the implementing panel with verification through a 
                third party that the carbon sequestration project 
                sponsored by the eligible taxpayer is sequestering 
                carbon in accordance with the contract presented to the 
                implementing panel, including an annual audit of the 
                project, an actual verification of the practices at the 
                project site every 5 years, and such random inspections 
                as are necessary.
                    ``(B) Fraud or false statements.--Section 1001 of 
                title 18, United States Code, shall apply to a 
                statement, representation, writing, or document 
                provided by an eligible taxpayer under this paragraph.
                    ``(C) Confidentiality.--Information provided by an 
                eligible taxpayer under this paragraph shall be 
                considered to be confidential information for the 
                purposes of section 552(b)(4) of title 5, United States 
                Code.
            ``(4) Options for new eligible taxpayer.--Under a carbon 
        sequestration project contract, if, during the term of such 
        contract, an eligible taxpayer which sponsored the carbon 
        sequestration project sells or otherwise transfers the carbon 
        sequestration rights of the project to another eligible 
        taxpayer, the new eligible taxpayer may--
                    ``(A) continue the contract under the same terms or 
                conditions,
                    ``(B) enter into a new contract in accordance with 
                this section, or
                    ``(C) elect not to participate in the program 
                established under subsection (d)(1).
            ``(5) Termination of contracts.--Under a carbon 
        sequestration project contract, the implementing panel may 
        terminate such contract if--
                    ``(A) the eligible taxpayer agrees to the 
                termination, or
                    ``(B) the implementing panel determines that the 
                termination would be in the public interest.
    ``(d) Carbon Sequestration Program.--For purposes of this section--
            ``(1) In general.--Within 180 days after the date of the 
        enactment of the International Carbon Sequestration Incentive 
        Act, the implementing panel shall establish a carbon 
        sequestration program to permit eligible taxpayers to make 
        carbon sequestration project contract offers to the 
        implementing panel.
            ``(2) Acceptance of contract offers.--
                    ``(A) In general.--Under the carbon sequestration 
                program, the implementing panel shall accept a contract 
                offer from an eligible taxpayer only if--
                            ``(i) such taxpayer submits to the panel a 
                        needs assessment described in subparagraph (B), 
                        and
                            ``(ii) the contract offer identifies the 
                        benefits of carbon sequestration practices of 
                        the sponsored project under criteria developed 
                        to evaluate such benefits under paragraph (3) 
                        and under guidelines instituted to quantify 
                        such benefits under paragraph (4).
                    ``(B) Needs assessment.--A needs assessment 
                described in this subparagraph is an assessment of the 
                need for the carbon sequestration project sponsored by 
                the eligible taxpayer in the contract offer and the 
                ability of the eligible taxpayer to carry out the 
                carbon sequestration practices related to such project. 
                The assessment shall be developed by the eligible 
                taxpayer, in cooperation with the Agency for 
                International Development, nongovernmental 
                organizations, and independent third-party verifiers.
            ``(3) Criteria for evaluating benefits of carbon 
        sequestration practices.--
                    ``(A) In general.--The Chief of the Forest Service, 
                in consultation with other members of the implementing 
                panel, shall develop criteria for prioritizing, 
                determining the acceptability of, and evaluating, the 
                benefits of the carbon sequestration practices proposed 
                in projects sponsored by eligible taxpayers which will 
                increase the sequestration of carbon for the purposes 
                of determining the acceptability of contract offers 
                made by eligible taxpayers.
                    ``(B) Content.--The criteria shall ensure that 
                credits under this section should not be allocated to 
                projects whose primary purpose is to grow timber for 
                commercial harvest or to projects which replace native 
                ecological systems with commercial timber plantations. 
                Projects should be prioritized according to--
                            ``(i) native forest preservation, 
                        especially with respect to land which would 
                        otherwise cease to be native forest land,
                            ``(ii) reforestation of former forest land 
                        where such land has not been forested for at 
                        least 10 years,
                            ``(iii) biodiversity enhancement,
                            ``(iv) the prevention of greenhouse gas 
                        emissions through the preservation of carbon 
                        storing plants and trees,
                            ``(v) soil erosion management,
                            ``(vi) soil fertility restoration, and
                            ``(vii) the duration of the project, 
including any project under which other entities are engaged to extend 
the duration of the project beyond the minimum carbon sequestration 
project contract term.
            ``(4) Guidelines for quantifying benefits.--
                    ``(A) In general.--The Chief of the Forest Service, 
                in consultation with other members of the implementing 
                panel, shall institute guidelines for the development 
                of methodologies for quantifying the amount of carbon 
                sequestered by particular projects for the purposes of 
                determining the acceptability of projects sponsored by 
                eligible taxpayers. These guidelines should set 
                standards for eligible taxpayers with regard to--
                            ``(i) methodologies for measuring the 
                        carbon sequestered,
                            ``(ii) measures to assure the duration of 
                        projects sponsored,
                            ``(iii) criteria that verifies that the 
                        carbon sequestered is additional to the 
                        sequestration which would have occurred without 
                        the sponsored project,
                            ``(iv) reasonable criteria to evaluate the 
                        extent to which the project displaces activity 
                        that causes deforestation in another location, 
                        and
                            ``(v) the extent to which the project 
                        promotes sustainable development in a project 
                        area, particularly with regard to protecting 
                        the traditional land tenure of indigenous 
                        people.
                    ``(B) Basis.--In developing the guidelines, the 
                Chief of the Forest Service shall--
                            ``(i) consult with land grant universities 
                        and entities which specialize in carbon storage 
                        verification and measurement, and
                            ``(ii) use information reported to the 
                        Secretary of Energy from projects carried out 
                        under the voluntary reporting program of the 
                        Energy Information Administration under section 
                        1605 of the Energy Policy Act of 1992 (42 
                        U.S.C. 13385).
            ``(5) Reporting.--The Administrator of the Energy 
        Information Administration, in consultation with the Secretary 
        of Agriculture, shall develop forms to monitor carbon 
        sequestration improvements made as a result of the program 
        established under this section and the implementing panel shall 
        use such forms to report to the Administrator on--
                    ``(A) carbon sequestration improvements made as a 
                result of the program,
                    ``(B) carbon sequestration practices of eligible 
                taxpayers enrolled in the program, and
                    ``(C) compliance with contracts entered into under 
                this section.
    ``(e) Eligible Taxpayer; Implementing Panel.--For purposes of this 
section--
            ``(1) Eligible taxpayer.--A taxpayer is eligible for the 
        credit under this section with respect to a carbon 
        sequestration project contract if such taxpayer has not elected 
        the application of sections 201 and 202 of the International 
        Carbon Sequestration Incentive Act with respect to such 
        contract.
            ``(2) Implementing panel.--There is established an 
        implementing panel consisting of--
                    ``(A) the Secretary of Agriculture,
                    ``(B) the Secretary of State,
                    ``(C) the Secretary of Energy,
                    ``(D) the Chief of the Forest Service, and
                    ``(E) representatives of nongovernmental 
                organizations who have an expertise and experience in 
                carbon sequestration practices, appointed by the 
                Secretary of Agriculture.
        The Chief of the Forest Service shall act as chairperson of the 
        implementing panel.
    ``(f) Recapture of Credit in Certain Cases.--
            ``(1) In general.--If, at any time during the carbon 
        sequestration project contract period, there is a recapture 
        event with respect to the investment under the contract, 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 purposes of paragraph 
        (1), the credit recapture amount is an amount equal to the sum 
        of--
                    ``(A) the aggregate decrease in the credits allowed 
                to the taxpayer under section 38 for all prior taxable 
                years which would have resulted if no credit had been 
                determined under this section with respect to such 
                investment, plus
                    ``(B) interest at the overpayment rate established 
                under section 6621 on the amount determined under 
                subparagraph (A) for each prior taxable year for the 
                period beginning on the due date for filing the return 
                for the prior taxable year involved.
        No deduction shall be allowed under this chapter for interest 
        described in subparagraph (B).
            ``(3) Recapture event.--For purposes of paragraph (1), 
        there is a recapture event with respect to an investment under 
        the contract if--
                    ``(A) the eligible taxpayer violates a term or 
                condition of the contract with the implementing panel 
                at any time,
                    ``(B) the eligible taxpayer transfers the right and 
                interest of the taxpayer in the carbon sequestration 
                practices of the sponsored project, unless--
                            ``(i) the transferee agrees with the 
                        implementing panel to assume all obligations of 
                        the contract, or
                            ``(ii) the transferee and the implementing 
                        panel enter into a new carbon sequestration 
                        project contract,
                    ``(C) the eligible taxpayer adopts a practice 
                specified by the implementing panel in the contract as 
                a practice which would tend to defeat the purposes of 
                the carbon sequestration program, or
                    ``(D) the contract is terminated under subsection 
                (c)(5).
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase 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 section 55.
    ``(g) Basis Reduction.--The basis of any investment under a carbon 
sequestration project contract shall be reduced by the amount of any 
credit determined under this section with respect to such investment.
    ``(h) Regulations.--The Secretary 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 requirements.''.
    (b) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 of the 
        Internal Revenue Code of 1986 is amended by striking ``plus'' 
        at the end of paragraph (12), by striking the period at the end 
        of paragraph (13) and inserting ``, plus'', and by adding at 
        the end the following new paragraph:
            ``(14) the carbon sequestration investment credit 
        determined under section 45D(a).''
            (2) Limitation on carryback.--Subsection (d) of section 39 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(10) No carryback of carbon sequestration investment 
        credit before january 1, 2001.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the credit under section 45D may be carried back to a taxable 
        year ending before January 1, 2001.''
    (c) Deduction for Unused Credit.--Subsection (c) of section 196 of 
the Internal Revenue Code of 1986 is amended by striking ``and'' at the 
end of paragraph (7), by striking the period at the end of paragraph 
(8) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(9) the carbon sequestration investment credit determined 
        under section 45D(a).''
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 45D. Carbon sequestration 
                                        investment credit.''
    (e) Effective Date.--The amendments made by this section shall 
apply to investments made after December 31, 2000.

       TITLE II--LOAN GUARANTEES AND EQUITY INVESTMENT INSURANCE

SEC. 201. EXPORT-IMPORT BANK FINANCING.

    An owner or operator of property that is located outside of the 
United States may enter into a carbon sequestration project contract 
under the terms and conditions established under section 45D of the 
Internal Revenue Code of 1986 to be eligible for an extension of credit 
from the Export-Import Bank of the United States of up to 75 percent of 
the cost of carrying out the carbon sequestration practices specified 
in the contract to the extent that the Export-Import Bank determines 
that the cost sharing is appropriate, in the public interest, and 
otherwise meets the requirements of the Export-Import Bank Act of 1945.

SEC. 202. EQUITY INVESTMENT INSURANCE.

    An owner or operator of property that is located outside of the 
United States may enter into a carbon sequestration project contract 
under the terms and conditions established under section 45D of the 
Internal Revenue Code of 1986 to be eligible for investment insurance 
issued by the Overseas Private Investment Corporation pursuant to 
section 234 of the Foreign Assistance Act of 1961 (22 U.S.C. 2194) if 
the Corporation determines that issuance of the insurance is consistent 
with the provisions of such section 234.
                                 <all>