II
109th CONGRESS
1st Session
S. 1039
IN THE SENATE OF THE UNITED STATES
May 16, 2005
Mr. Hatch introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to modify the treatment of depreciation of refinery property.
Short title
This Act may be cited as the
Gas Price Reduction Through Increased
Refinery Capacity Act of 2005
.
Incentives for investment in oil refineries
Election to expense qualified refineries
In general
Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 179B the following new section:
Election to expense certain refineries
Treatment as expenses
A taxpayer may elect to treat the cost of any qualified refinery property as an expense which is not chargeable to a capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the qualified refinery is placed in service.
Election
In general
An election under this section for any taxable year shall be made on the taxpayer's return of the tax imposed by this chapter for the taxable year. Such election shall be made in such manner as the Secretary may by regulations prescribe.
Election irrevocable
Any election made under this section may not be revoked except with the consent of the Secretary.
Qualified refinery property
The term qualified refinery property means any refinery or portion of a refinery—
with respect to the construction of which there is a binding construction contract before January 1, 2008,
which is placed in service by the taxpayer before January 1, 2012,
in the case of any portion of a refinery, which meets the requirements of subsection (d), and
which meets all applicable environmental laws in effect on the date such refinery or portion thereof was placed in service.
Production capacity
The requirements of this subsection are met if the portion of the refinery—
increases the rated capacity of the existing refinery by 5 percent or more over the capacity of such refinery as reported by the Energy Information Agency on January 1, 2005, or
enables the existing refinery to process qualified fuels (as defined in section 29(c)) at a rate which is equal to or greater than 25 percent of the total throughput of such refinery on an average daily basis.
Ineligible refineries
No deduction shall be allowed under subsection (a) for any qualified refinery property—
the primary purpose of which is for use as a topping plant, asphalt plant, lube oil facility, crude or product terminal, or blending facility, or
which is built solely to comply with Federally mandated projects or consent decrees.
.
Conforming amendment
The table of sections for part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 179B the following new item:
.
Class life for refineries
In general
Subparagraph (B) of section 168(e)(3) of the Internal
Revenue Code of 1986 (relating to 5-year property) is amended by striking
and
at the end of clause (v), by striking the period at the end
of clause (vi) and inserting , and
, and by adding at the end the
following new clause:
any petroleum refining property.
.
Petroleum refining asset
Section 168(i) of such Code is amended by adding at the end the following new paragraph:
Petroleum refining property
In general
The term petroleum refining property means any asset for petroleum refining, including assets used for the distillation, fractionation, and catalytic cracking of crude petroleum into gasoline and its other components.
Asset must meet environmental laws
Such term shall not include any asset which does not meet all applicable environmental laws in effect on the date such asset was placed in service. For purposes of the preceding sentence, a waiver under the Clean Air Act shall not be taken into account in determining whether the applicable environmental laws have been met.
Special rule for mergers and acquisitions
Such term shall not include any asset with respect to which a deduction was taken under subsection (e)(3)(B) by any other taxpayer in any preceding year.
.
Effective date
In general
The amendments made by this section shall apply to refineries placed in service after the date of the enactment of this Act.
Exception
The amendments made by this section shall not apply to any refinery with respect to which the taxpayer has entered into a binding contract for the construction thereof on or before the date of the enactment of this Act.