I
113th CONGRESS
1st Session
H. R. 601
IN THE HOUSE OF REPRESENTATIVES
February 8, 2013
Mr. Markey (for himself and Mr. Blumenauer) introduced the following bill; which was referred to the Committee on Natural Resources, and in addition to the Committee on Ways and Means, 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 direct the Secretary of the Interior to establish an annual production incentive fee with respect to Federal onshore and offshore lands that are subject to a lease for production of oil or natural gas under which production is not occurring, and for other purposes.
Short title
This Act may be cited as the
Permanent Repeal of Oil Subsidies
Act
.
Table of contents
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
Title I—USE IT Act
Sec. 101. Short title.
Sec. 102. Production incentive fee.
Title II—Deficit Reduction Through Fair Oil Royalties
Sec. 201. Short title.
Sec. 202. Eligibility for new leases and the transfer of leases.
Sec. 203. Price thresholds for royalty suspension provisions.
Sec. 204. Repeal of royalty relief provisions.
Title III—OCS Facility Inspections
Sec. 301. Short title.
Sec. 302. OCS facility inspection fees.
Title IV—Repeal of Fossil Fuel Subsidies For Large Oil Companies
Sec. 401. Short title.
Sec. 402. Amortization of geological and geophysical expenditures.
Sec. 403. Producing oil and gas from marginal wells.
Sec. 404. Enhanced oil recovery credit.
Sec. 405. Intangible drilling and development costs in the case of oil and gas wells.
Sec. 406. Percentage depletion.
Sec. 407. Tertiary injectants.
Sec. 408. Passive activity losses and credits limited.
Sec. 409. Income attributable to domestic production activities.
Sec. 410. Prohibition on using last-in, first-out accounting for major integrated oil companies.
Sec. 411. Modifications of foreign tax credit rules applicable to dual capacity taxpayers.
USE IT Act
Short title
This title may be cited
as the United States Exploration on
Idle Tracts Act
or the USE IT Act
.
Production incentive fee
Establishment
The Secretary of the Interior shall, within 180 days after the date of enactment of this Act, issue regulations to establish an annual production incentive fee with respect to Federal onshore and offshore lands that are subject to a lease for production of oil or natural gas under which production is not occurring. Such fee shall apply with respect to lands that are subject to such a lease that is in effect on the date final regulations are promulgated under this subsection or that is issued thereafter.
Amount
The amount of the fee shall be, for each acre of land from which oil or natural gas is produced for less than 90 days in a calendar year—
in the case of onshore land—
for each of the first 3 years of the lease, $4 per acre in 2011 dollars;
for the fourth year of the lease, $6 per acre in 2011 dollars; and
for the fifth year of the lease and each year thereafter for which the lease is otherwise in effect, $8 per acre in 2011 dollars; and
in the case of offshore land—
for each of the third, fourth, and fifth years of the lease, $4 per acre in 2011 dollars;
for the sixth year of the lease, $6 per acre in 2011 dollars; and
for the seventh year of the lease and each year thereafter for which the lease is otherwise in effect, $8 per acre in 2011 dollars.
Assessment and collection
The Secretary shall assess and collect the fee established under this section.
Deposit
Amounts received by the United States as the fee under this section shall be deposited in the general fund of the Treasury.
Regulations
The Secretary of the Interior may issue regulations to prevent evasion of the fee under this section.
Deficit Reduction Through Fair Oil Royalties
Short title
This title may be cited
as the Deficit Reduction Through Fair
Oil Royalties Act
.
Eligibility for new leases and the transfer of leases
Issuance of New Leases
In general
The Secretary shall not issue any new lease that authorizes the production of oil or natural gas under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) to a person described in paragraph (2) unless the person has renegotiated each covered lease with respect to which the person is a lessee, to modify the payment responsibilities of the person to require the payment of royalties if the price of oil and natural gas is greater than or equal to the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
Persons described
A person referred to in paragraph (1) is a person that—
is a lessee that—
holds a covered lease on the date on which the Secretary considers the issuance of the new lease; or
was issued a covered lease before the date of enactment of this Act, but transferred the covered lease to another person or entity (including a subsidiary or affiliate of the lessee) after the date of enactment of this Act; or
any other person that has any direct or indirect interest in, or that derives any benefit from, a covered lease.
Multiple lessees
In general
For purposes of paragraph (1), if there are multiple lessees that own a share of a covered lease, the Secretary may implement separate agreements with any lessee with a share of the covered lease that modifies the payment responsibilities with respect to the share of the lessee to include price thresholds that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
Treatment of share as covered lease
Beginning on the effective date of an agreement under subparagraph (A), any share subject to the agreement shall not constitute a covered lease with respect to any lessees that entered into the agreement.
Transfers
A lessee or any other person who has any direct or indirect interest in, or who derives a benefit from, a lease shall not be eligible to obtain by sale or other transfer (including through a swap, spinoff, servicing, or other agreement) any covered lease, the economic benefit of any covered lease, or any other lease for the production of oil or natural gas in the Gulf of Mexico under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), unless the lessee or other person has—
renegotiated each covered lease with respect to which the lessee or person is a lessee, to modify the payment responsibilities of the lessee or person to include price thresholds that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); or
entered into an agreement with the Secretary to modify the terms of all covered leases of the lessee or other person to include limitations on royalty relief based on market prices that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
Use of amounts for deficit reduction
Notwithstanding any other provision of law, any amounts received by the United States as rentals or royalties under covered leases shall be deposited in the Treasury and used for Federal budget deficit reduction or, if there is no Federal budget deficit, for reducing the Federal debt in such manner as the Secretary of the Treasury considers appropriate.
Definitions
In this section—
Covered lease
The term covered lease means a lease for oil or gas production in the Gulf of Mexico that is—
in existence on the date of enactment of this Act;
issued by the Department of the Interior under section 304 of the Outer Continental Shelf Deep Water Royalty Relief Act (43 U.S.C. 1337 note; Public Law 104–58); and
not subject to limitations on royalty relief based on market price that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
Lessee
The term lessee includes any person or other entity that controls, is controlled by, or is in or under common control with, a lessee.
Secretary
The term Secretary means the Secretary of the Interior.
Price thresholds for royalty suspension provisions
The Secretary of the Interior shall agree to a request by any lessee to amend any lease issued for any Central and Western Gulf of Mexico tract in the period of January 1, 1996, through November 28, 2000, to incorporate price thresholds applicable to royalty suspension provisions, that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). Any amended lease shall impose the new or revised price thresholds effective October 1, 2013. Existing lease provisions shall prevail through September 30, 2013.
Repeal of royalty relief provisions
Repeal of provisions of Energy Policy Act of 2005
The following provisions of the Energy Policy Act of 2005 (Public Law 109–58) are repealed:
Section 344 (42 U.S.C. 15904; relating to incentives for natural gas production from deep wells in shallow waters of the Gulf of Mexico).
Section 345 (42 U.S.C. 15905; relating to royalty relief for deep water production in the Gulf of Mexico).
Repeal of provisions relating to Planning Areas offshore Alaska
Section
8(a)(3)(B) of the Outer Continental Shelf Lands Act (43 U.S.C.
1337(a)(3)(B)) is amended by striking and in the
Planning Areas offshore Alaska
.
OCS Facility Inspections
Short title
This title may be cited
as the No Free Inspections for Oil
Companies Act
.
OCS facility inspection fees
Section 22 of the Outer Continental Shelf Lands Act (43 U.S.C. 1348) is amended by adding at the end of the section the following:
Inspection Fees
Establishment
The Secretary of the Interior shall establish, by rule, and collect from the operators of facilities subject to inspection under subsection (c) nonrefundable fees for such inspections—
at an aggregate level equal to the amount necessary to offset the annual expenses of inspections of outer Continental Shelf facilities (including mobile offshore drilling units) by the Department of the Interior; and
using a schedule that reflects the differences in complexity among the classes of facilities to be inspected.
Ocean energy enforcement fund
There is established in the Treasury a fund, to
be known as the Ocean Energy Enforcement Fund
(referred to in
this subsection as the Fund
), into which shall be deposited
amounts collected as fees under paragraph (1) and which shall be available as
provided under paragraph (3).
Availability of fees
Notwithstanding section 3302 of title 31, United States Code, all amounts collected by the Secretary under this section—
shall be credited as offsetting collections;
shall be available for expenditure only for purposes of carrying out inspections of outer Continental Shelf facilities (including mobile offshore drilling units) and the administration of the inspection program under this section;
shall be available only to the extent provided for in advance in an appropriations Act; and
shall remain available until expended.
Annual reports
In general
Not later than 60 days after the end of each fiscal year beginning with fiscal year 2013, the Secretary shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Natural Resources of the House of Representatives a report on the operation of the Fund during the fiscal year.
Contents
Each report shall include, for the fiscal year covered by the report, the following:
A statement of the amounts deposited into the Fund.
A description of the expenditures made from the Fund for the fiscal year, including the purpose of the expenditures.
Recommendations for additional authorities to fulfill the purpose of the Fund.
A statement of the balance remaining in the Fund at the end of the fiscal year.
.
Repeal of Fossil Fuel Subsidies For Large Oil Companies
Short title
This Act may be cited as
the End Big Oil Tax Subsidies Act of
2013
.
Amortization of geological and geophysical expenditures
In general
Subparagraph (A) of
section 167(h)(5) of the Internal Revenue Code of 1986 is amended by striking
major integrated oil company
and inserting covered large
oil company
.
Covered large oil company
Paragraph (5) of section 167(h) of such Act is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
Covered large oil company
For purposes of this paragraph, the term covered large oil company means a taxpayer which—
is a major integrated oil company, or
has gross receipts in excess of $50,000,000 for the taxable year.
.
Conforming amendment
The heading for paragraph (5) of section 167(h) of such
Code is amended by inserting and other large taxpayers
.
Effective date
The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2012.
Producing oil and gas from marginal wells
In general
Section 45I of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Exception for taxpayer with gross receipts in excess of $50,000,000
In general
Subsection (a) shall not apply to any taxpayer whose aggregate gross receipts for the taxable year are in excess of $50,000,000.
Aggregation rule
For purposes of paragraph (1), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.
.
Effective date
The amendment made by subsection (a) shall apply to credits determined for taxable years beginning after December 31, 2012.
Enhanced oil recovery credit
In general
Section 43 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Exception for taxpayer with gross receipts in excess of $50,000,000
In general
Subsection (a) shall not apply to any taxpayer whose aggregate gross receipts for the taxable year are in excess of $50,000,000.
Aggregation rule
For purposes of paragraph (1), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.
.
Effective date
The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2012.
Intangible drilling and development costs in the case of oil and gas wells
In general
Subsection (c) of
section 263 of the Internal Revenue Code of 1986 is amended by adding at the
end the following new sentence: This subsection shall not apply to
amounts paid or incurred by a taxpayer in any taxable year in which such
taxpayer has aggregate gross receipts for the taxable year in excess of
$50,000,000, determined by deeming all persons treated as a single employer
under subsections (a) and (b) of section 52 as 1 person.
.
Effective date
The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2012.
Percentage depletion
In general
Section 613A of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Exception for taxpayer with gross receipts in excess of $50,000,000
In general
This section and section 611 shall not apply to any taxpayer which has aggregate gross receipts for the taxable year in excess of $50,000,000.
Aggregation rule
For purposes of paragraph (1), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.
.
Conforming amendment
Section 613A(c)(1) of such Code is amended by striking
subsection (d)
and inserting subsections (d) and
(f)
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2012.
Tertiary injectants
In general
Section 193 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Exception for taxpayer with gross receipts in excess of $50,000,000
In general
Subsection (a) shall not apply to any taxpayer which has aggregate gross receipts for the taxable year in excess of $50,000,000.
Aggregation rule
For purposes of paragraph (1), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.
.
Effective date
The amendment made by this section shall apply to expenses incurred after December 31, 2012.
Passive activity losses and credits limited
Rules relating to working interests in oil and gas property
Paragraph (3) of section 469(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following:
Exception for taxpayer with gross receipts in excess of $50,000,000
In general
Subparagraph (A) shall not apply to any taxpayer which has aggregate gross receipts for the taxable year in excess of $50,000,000.
Aggregation rule
For purposes of clause (i), all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2012.
Income attributable to domestic production activities
Denial of deduction
Paragraph (4) of section 199(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:
Special rule for certain oil and gas income
In the case of any taxpayer who is a
major integrated oil company (as defined in section 167(h)) for the taxable
year, the term domestic production gross receipts
shall not
include gross receipts from the production, transportation, or distribution of
oil, natural gas, or any primary product (within the meaning of subsection
(d)(9))
thereof.
.
Effective date
The amendment made by this section shall apply to taxable years beginning after December 31, 2012.
Prohibition on using last-in, first-out accounting for major integrated oil companies
In general
Section 472 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
Major integrated oil companies
Notwithstanding any other provision of this section, a major integrated oil company (as defined in section 167(h)) may not use the method provided in subsection (b) in inventorying of any goods.
.
Effective date and special rule
In general
The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2012.
Change in method of accounting
In the case of any taxpayer required by the amendment made by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act—
such change shall be treated as initiated by the taxpayer,
such change shall be treated as made with the consent of the Secretary of the Treasury, and
the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account ratably over a period (not greater than 8 taxable years) beginning with such first taxable year.
Modifications of foreign tax credit rules applicable to dual capacity taxpayers
In general
Section 901 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:
Special rules relating to major integrated oil companies which are dual capacity taxpayers
General rule
Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company (as defined in section 167(h)) to a foreign country or possession of the United States for any period shall not be considered a tax—
if, for such period, the foreign country or possession does not impose a generally applicable income tax, or
to the extent such amount exceeds the amount (determined in accordance with regulations) which—
is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or
would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.
Dual capacity taxpayer
For purposes of this subsection, the term dual
capacity taxpayer
means, with respect to any foreign country or
possession of the United States, a person who—
is subject to a levy of such country or possession, and
receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.
Generally applicable income tax
For purposes of this subsection—
In general
The term generally applicable income tax
means an income tax (or a series of income taxes) which is generally imposed
under the laws of a foreign country or possession on income derived from the
conduct of a trade or business within such country or possession.
Exceptions
Such term shall not include a tax unless it has substantial application, by its terms and in practice, to—
persons who are not dual capacity taxpayers, and
persons who are citizens or residents of the foreign country or possession.
.
Effective date
In general
The amendments made by this section shall apply to taxes paid or accrued in taxable years beginning after December 31, 2012.
Contrary treaty obligations upheld
The amendments made by this section shall not apply to the extent contrary to any treaty obligation of the United States.