S.Amdt. 2964

SA 2964. Mr. SCHATZ submitted an amendment intended to be proposed by
him to the bill S. 2012, to provide for the modernization of the energy
policy of the United States, and for other purposes; which was ordered
to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. ___. PHASE OUT OF TAX PREFERENCES FOR FOSSIL FUELS.

(a) Findings.--Congress finds the following:
(1) United States tax policy has provided tax breaks for
oil and gas production for 100 years.
(2) United States tax policy has provided tax breaks for
coal production for over 80 years.
(3) A substantial majority of the American public,
including majorities from both political parties, support the
repeal of tax preferences for fossil fuels.
(4) A substantial majority of the American public,
including majorities from both political parties, favor
Federal support for renewable energy.
(5) In order to ensure that all sources of energy compete
on an equal footing, as tax credits for renewable energy are
phased out over the next 4 years, fossil fuel tax preferences
should be phased out on the same schedule.
(b) Expensing of Intangible Drilling Costs.--Section 263 of
the Internal Revenue Code of 1986 is amended--
(1) in subsection (c), by striking ``subsection (i)'' and
inserting ``subsections (i) and (j)'', and
(2) by adding at the end the following new subsection:
``(j) Phase Out of Deduction for Intangible Drilling
Costs.--In the case of intangible drilling and development
costs paid or incurred with respect to an oil or gas well,
the amount of such costs allowed as a deduction under
subsection (c) shall be reduced by--
``(1) in the case of any costs paid or incurred after
December 31, 2016, and before January 1, 2018, 20 percent,
``(2) in the case of any costs paid or incurred after
December 31, 2017, and before January 1, 2019, 40 percent,
``(3) in the case of any costs paid or incurred after
December 31, 2018, and before January 1, 2020, 60 percent,
and
``(4) in the case of any costs paid or incurred after
December 31, 2019, 100 percent.''.
(c) Percentage Depletion for Oil and Natural Gas Wells.--
Section 613A(d) of such Code is amended by adding at the end
the following new paragraph:
``(6) Phase out of percentage depletion for oil and natural
gas wells.--The amount allowed as a deduction for the taxable
year which is attributable to the application of subsection
(c) (determined after the application of paragraphs (1)
through (5) of this subsection and without regard to this
paragraph) shall be reduced by--
``(A) in the case of any crude oil or natural gas produced
after December 31, 2016, and before January 1, 2018, 20
percent,
``(B) in the case of any crude oil or natural gas produced
after December 31, 2017, and before January 1, 2019, 40
percent,
``(C) in the case of any crude oil or natural gas produced
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(D) in the case of any crude oil or natural gas produced
after December 31, 2019, 100 percent.''.
(d) Domestic Manufacturing Deduction for Fossil Fuels.--
Section 199(d)(9) of such Code is amended by adding at the
end the following new subparagraph:
``(D) Phase out of deduction for oil related qualified
production activities income.--The amount allowable as a
deduction under subsection (a) (determined after the
application of subparagraph (A) and without regard to this
subparagraph) shall be reduced by--
``(i) in the case of any oil related qualified production
activities income received or accrued after December 31,
2016, and before January 1, 2018, 20 percent,
``(ii) in the case of any oil related qualified production
activities income received or accrued after December 31,
2017, and before January 1, 2019, 40 percent,
``(iii) in the case of any oil related qualified production
activities income received or accrued after December 31,
2018, and before January 1, 2020, 60 percent, and
``(iv) in the case of any oil related qualified production
activities income received or accrued after December 31,
2019, 100 percent.''.
(e) Amortization of Geological and Geophysical
Expenditures.--Section 167(h) of such Code is amended by
adding at the end the following new paragraph:
``(6) Phase out of amortization of geological and
geophysical expenditures.--The amount of geological and
geophysical expenses paid or incurred by a taxpayer which are
allowed as a deduction under this subsection (without regard
to this paragraph) shall be reduced by--
``(A) in the case of any such expenses paid or incurred
after December 31, 2016, and before January 1, 2018, 20
percent,
``(B) in the case of any such expenses paid or incurred
after December 31, 2017, and before January 1, 2019, 40
percent,
``(C) in the case of any such expenses paid or incurred
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(D) in the case of any such expenses paid or incurred
after December 31, 2019, 100 percent.''.
(f) Percentage Depletion for Hard Mineral Fossil Fuels.--
Section 613 of such Code is amended by adding at the end the
following new subsection:
``(f) Phase Out of Percentage Depletion for Hard Mineral
Fossil Fuels.--In the case of coal, lignite, or oil shale,
the allowance for depletion determined under this section
(without regard to this subsection) shall be reduced by--
``(1) in the case of any income received or accrued from
the property after December 31, 2016, and before January 1,
2018, 20 percent,
``(2) in the case of any income received or accrued from
the property after December 31, 2017, and before January 1,
2019, 40 percent,
``(3) in the case of any income received or accrued from
the property after December 31, 2018, and before January 1,
2020, 60 percent, and
``(4) in the case of any income received or accrued from
the property after December 31, 2019, 100 percent.''.
(g) Expensing of Exploration and Development Costs for Hard
Mineral Fuels.--Section 617 of such Code is amended--
(1) by redesignating subsection (i) as subsection (j), and
(2) by inserting after subsection (h) the following new
subsection:
``(i) Phase Out of Expensing of Exploration and Development
Costs for Hard Mineral Fuels.--In the case of coal, lignite,
or oil shale, the amount of expenditures which are allowed as
a deduction under subsection (a) shall be reduced by--
``(1) in the case of any such expenditures paid or incurred
after December 31, 2016, and before January 1, 2018, 20
percent,
``(2) in the case of any such expenditures paid or incurred
after December 31, 2017, and before January 1, 2019, 40
percent,
``(3) in the case of any such expenditures paid or incurred
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(4) in the case of any such expenditures paid or incurred
after December 31, 2019, 100 percent.''.
(h) Capital Gains Treatment for Royalties of Coal.--Section
631 of such Code is amended by adding at the end the
following new subsection:
``(d) Phase Out of Capital Gains Treatment for Royalties of
Coal.--In the case of coal (including lignite), the amount of
gain or loss on the sale of such coal to which subsection (c)
applies shall be reduced by--
``(1) in the case of any such gain or loss after December
31, 2016, and before January 1, 2018, 20 percent,
``(2) in the case of any such gain or loss after December
31, 2017, and before January 1, 2019, 40 percent,
``(3) in the case of any such gain or loss after December
31, 2018, and before January 1, 2020, 60 percent, and
``(4) in the case of any such gain or loss after December
31, 2019, 100 percent.''.
(i) Deduction for Tertiary Injectants.--Section 193 of such
Code is amended by adding at the end the following new
subsection:
``(d) Phase Out of Deduction for Tertiary Injectants.--The
amount of qualified tertiary injectant expenses allowable as
a deduction under subsection (a) shall be reduced by--
``(1) in the case of any such expenditures paid or incurred
after December 31, 2016, and before January 1, 2018, 20
percent,
``(2) in the case of any such expenditures paid or incurred
after December 31, 2017, and before January 1, 2019, 40
percent,
``(3) in the case of any such expenditures paid or incurred
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(4) in the case of any such expenditures paid or incurred
after December 31, 2019, 100 percent.''.
(j) Exception to Passive Loss Limitation for Working
Interests in Oil and Natural

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Gas Properties.--Section 469(c) of such Code is amended by
adding at the end the following new paragraph:
``(8) Phase out of exception to passive loss limitation for
working interests in oil and natural gas properties.--In the
case of any loss from a working interest in any oil or gas
property, the amount of such loss to which paragraph (3)
applies shall be reduced by--
``(A) in the case of any such loss after December 31, 2016,
and before January 1, 2018, 20 percent,
``(B) in the case of any such loss after December 31, 2017,
and before January 1, 2019, 40 percent,
``(C) in the case of any such loss after December 31, 2018,
and before January 1, 2020, 60 percent, and
``(D) in the case of any such loss after December 31, 2019,
100 percent.''.
(k) Marginal Wells Credit.--Section 45I(d) of such Code is
amended by adding at the end the following new paragraph:
``(4) Phase out of marginal wells credit.--The amount of
the credit determined under subsection (a) shall be reduced
by--
``(A) in the case of any qualified crude oil production or
qualified natural gas production after December 31, 2016, and
before January 1, 2018, 20 percent,
``(B) in the case of any qualified crude oil production or
qualified natural gas production after December 31, 2017, and
before January 1, 2019, 40 percent,
``(C) in the case of any qualified crude oil production or
qualified natural gas production after December 31, 2018, and
before January 1, 2020, 60 percent, and
``(D) in the case of any qualified crude oil production or
qualified natural gas production after December 31, 2019, 100
percent.''.
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