A bill to amend the Internal Revenue Code of 1954 to provide that certain deductions and credits not be allowed for expenditures within an environmental zone, and for other purposes.

Amends the Internal Revenue Code to provide that the depreciation and amortization deductions for property used predominantly within an environmental zone (as defined by this Act) shall be computed in the same manner as the deduction for property used predominantly outside the United States. Requires the depletion deduction with respect to any mining activity within, or oil or gas well, mine or geothermal or other deposit located in, an environmental zone to be computed using cost depletion rather than percentage depletion. Disallows the deductions with respect to: (1) the expensing of depreciable property used within the environmental zone; (2) the deduction for soil and water conservation and land clearing expenses in an environmental zone; and (3) the deductions for intangible drilling and development costs and tertiary injectants. Defines "environmental zone."

Denies the investment tax credit for property which is used predominantly within an environmental zone. Excludes from the calculation of the credit for production of nonconventional fuel sales of qualified fuels produced within or from property extracted or removed from an environmental zone.

Provides that the at-risk rules with respect to certain deductions shall not apply to real property located within an environmental zone, equipment leasing of property to be used predominantly within such zone, and business activity within such zone. Denies tax-exempt status for certain governmental obligations used to finance facilities in an environmental zone. Denies capital gain treatment of proceeds from the sale or exchange of timber, coal, or iron ore extracted from an environmental zone.