I
110th CONGRESS
2d Session
H. R. 6697
IN THE HOUSE OF REPRESENTATIVES
July 31, 2008
Mr. Boren (for himself and Mr. Conaway) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce and Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To provide for marginal well production preservation and enhancement.
Short title
This Act may be cited as the
Marginal Well Production Preservation
and Enhancement Act
.
Tax treatment for prolonged marginal production
Increase in percentage depletion for oil and natural gas produced from marginal properties
In general
Paragraph (6) of section 613A(c) of the Internal Revenue Code of 1986 (relating to oil and natural gas produced from marginal properties), as amended by this Act, is amended to read as follows:
Oil and natural gas produced from marginal properties
In general
Except as provided in subsection (d)—
the allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to the taxpayer's marginal production of domestic crude oil and domestic natural gas, and
27.5 percent shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of that section.
Coordination with other production of domestic oil and natural gas
For purposes of this subsection—
no allowance for depletion shall be allowed by reason of paragraph (1) with respect to the taxpayer's marginal production of domestic crude oil and domestic natural gas, and
such production shall not be taken into account—
in determining under paragraph (1) how much of the taxpayer's depletable oil quantity or depletable natural gas quantity has been used, or
for purposes of applying subparagraph (A), (B), or (C) of paragraph (7).
Marginal production
The term marginal production means domestic crude oil or domestic natural gas which is produced during any taxable year from a property which—
is a stripper well property for the calendar year in which the taxable year begins, or
is a property substantially all of the production of which during such calendar year is heavy oil.
Stripper well property
For purposes of this paragraph, the term stripper well property means, with respect to any calendar year, any property with respect to which the amount determined by dividing—
the average daily production of domestic crude oil and domestic natural gas from producing wells on such property for such calendar year, by
the number of such wells,
Heavy oil
For purposes of this paragraph, the term heavy oil means domestic crude oil produced from any property if such crude oil had a weighted average gravity of 20 degrees API or less (corrected to 60 degrees Fahrenheit).
Nonapplication of taxable income limit with respect to marginal production
The second sentence of subsection (a) of section 613 shall not apply to so much of the allowance for depletion as is determined under subparagraph (A).
.
Conforming amendments
Section 613A(c)(3) of the Internal Revenue Code of 1986 (defining depletable oil quantity) is amended to read as follows:
Depletable oil quantity
For purposes of paragraph (1), the taxpayer's depletable oil quantity shall be 1,000 barrels.
.
Subparagraphs (A)
and (B) of section 613A(c)(7) of such Code are each amended by striking
or (6), as the case may be
.
Effective date
The amendment made by this subsection shall apply to taxable years beginning after December 31, 2008.
1-year extension of suspension of taxable income limit
Section 613A(c)(6)(H) of the Internal
Revenue Code of 1986 (relating to temporary suspension of taxable income limit
with respect to marginal production) is amended by striking 2008
and inserting 2009
.
Oil and gas wells and pipeline facilities technical amendment
Section 112(n)(4)(A) of the Clean Air Act
(42 U.S.C. 7412(n)(4)(A)) is amended by striking this section
and inserting this Act
.
National response system
Section 311(j) of the Federal Water Pollution Control Act (33 U.S.C. 1321(j)) is amended by striking paragraph (1) and inserting the following:
System
Definition of wastewater treatment facility
In this paragraph, the term wastewater treatment facility includes produced water from an oil production facility.
Regulations
Consistent with the National Contingency Plan required under subsection (d), as soon as practicable after the effective date of this section, and from time to time thereafter, the President shall promulgate regulations consistent with maritime safety and marine and navigation laws—
establishing methods and procedures for removal of discharged oil and hazardous substances;
establishing criteria for the development and implementation of local and regional oil and hazardous substance removal contingency plans;
establishing procedures, methods, and requirements and other requirements for equipment to prevent discharges of oil and hazardous substances from vessels and from onshore facilities and offshore facilities (other than wastewater treatment facilities), and to contain those discharges; and
governing the inspection of vessels carrying cargoes of oil and hazardous substances and the inspection of those cargoes in order to reduce the likelihood of discharges of oil from vessels in violation of this section.
Small facilities
In carrying out clause (iii) of subparagraph (B), not later than 1 year after the date of enactment of that clause, the Administrator shall establish procedures, methods, and equipment requirements and other requirements for, and consider the cost-effectiveness of those requirements on, small facilities (including agricultural and oil production facilities) to prevent discharges from facilities and offshore facilities, and to contain those discharges, by developing regulations based on storage volume and capacity that, with respect to those small facilities—
apply to any facility the total oil storage capacity of which is at least 1,320 gallons but less than 50,000 gallons, and at which no single tank exceeds a nominal capacity of 21,000 gallons; and
establish minimal requirements and plans by eliminating engineer certification, flow lines, loading and unloading areas, integrity testing, and other requirements, as determined by the Administrator, that do not take into consideration and meet cost-effectiveness standards.
.
Recovery period for depreciation of property used to inject qualified tertiary injectants
In general
Section 168(e)(3)(A) of the Internal Revenue Code of 1986
(defining 3-year property) is amended by striking and
at the end
of clause (ii), by striking the period at the end of clause (iii) and inserting
, and
, and by adding at the end the following new clause:
any qualified tertiary injectant property.
.
Qualified tertiary injectant property
Section 168(e) of the Internal Revenue Code of 1986 (relating to classification of property) is amended by adding at the end the following new paragraph:
Qualified tertiary injectant property
The term qualified tertiary injectant property means—
any property—
the principal use of which is to inject any tertiary injectant as a part of a tertiary recovery method (as defined in section 193(b)(3)), or
which is a pipeline used to carry any tertiary injectant in connection with such tertiary recovery method, and
which has a class life of more than 4 years.
.
Alternative system
The table contained in section 168(g)(3)(B) of the Internal Revenue Code of 1986 is amended by inserting after the item relating to subparagraph (A)(iii) the following new item:
| (A)(iv) | 7 |
.
Effective date
The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.