National Energy Strategy Act of 1991

National Energy Strategy Act of 1991 - Expresses the sense of the Congress that the President, as an economic and national security imperative, should: (1) formulate and implement a national energy policy based on achieving a domestic core supply of energy; and (2) work with the Congress in implementing such policy.

Amends the Internal Revenue Code to impose an excise tax on the first sale within the United States of imports of: (1) crude oil; (2) refined petroleum products; and (3) petrochemical feedstocks or petrochemical derivatives.

Sets the rate of the tax as the difference between $22 per barrel ($24.50 for petroleum and petrochemical products) and the most recently published average price of a barrel of internationally traded oil, as determined by the Secretary of the Treasury in accordance with a specified formula.

Treats certain geological and geophysical costs and surface casing costs as intangible drilling and development costs that a taxpayer may elect to capitalize or to deduct for income tax purposes.

Exempts oil and gas wells from the application of the net income limitation on percentage depletion.

Revises the percentage depletion allowance applicable to oil and gas wells, retaining a 15 percent minimum, but increasing the percentage incrementally (to a maximum of 30 percent) as the average annual removal price falls below $20.

Repeals provisions that tax as ordinary income any gains from dispositions of oil, gas, or geothermal wells.

Establishes a marginal production income tax credit for producers who maintain economically unproductive oil wells. Applies the credit to domestic crude that is: (1) from stripper well property; (2) heavy oil; or (3) oil recovered through a tertiary recovery method. Fixes the credit at ten percent of the qualified cost (determined in accordance with a formula set forth in this Act) of each barrel produced by the producer during the tax year.

Establishes a crude oil and natural gas exploration and development tax credit. Allows a ten percent credit for qualified investments exceeding $1,000,000, 20 percent for those of $1,000,000 or less. Permits the credit as an offset against both minimum tax liability and regular liability.

Repeals provisions that identify intangible drilling costs as a tax preference item for purposes of determining alternative minimum tax liability and corporate preference reductions.

Allows 50 percent of the marginal production depletion preference (currently the alternative tax energy preference deduction) as a deduction in computing the alternative minimum tax.

Increases from 65 to 100 percent the taxable income limitation on the percentage depletion deduction for oil and gas property.

Permits a taxpayer to elect to carry forward to the next succeeding taxable year any portion of excess depletion allowances.

Permits an income tax credit for investments in qualified clean-burning (natural gas, liquefied petroleum gas, or alcohol) motor vehicle fuel property. Permits a 20 percent credit from 1992 through 2001, phasing out the credit in five percent increments annually thereafter to reach zero percent at the end of 2004. Applies the credit to depreciable property that is: (1) equipment designed either to modify a motor vehicle so that it will be propelled only be a clean-burning fuel or to assist in delivering such fuel into such vehicles; or (2) a motor vehicle propelled by clean-burning fuel.

Authorizes the Secretary of the Treasury to make credit-equivalent payments to States and to local governments in connection with qualified property.

 
HR 706 IH
102d CONGRESS
1st Session
 H. R. 706
To amend the Internal Revenue Code of 1986 to impose a fee on imported
petroleum products and derivatives, to provide incentives for oil and natural
gas exploration, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
January 29, 1991
Mr. ANDREWS of Texas introduced the following bill; which was referred to
the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to impose a fee on imported
petroleum products and derivatives, to provide incentives for oil and natural
gas exploration, and for other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `National Energy Strategy Act of 1991'.
SEC. 2. TABLE OF CONTENTS.
Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. National energy policy.
Sec. 4. Fee on imported crude oil, refined petroleum products, and
petrochemical feedstocks or petrochemical derivatives.
Sec. 5. Geological, geophysical, and surface casing costs treated like
intangible drilling and development costs.
Sec. 6. Net income limitation on percentage depletion not to apply to oil
and gas wells.
Sec. 7. Increase in percentage depletion based on removal price.
Sec. 8. Repeal of recapture provisions dealing with dispositions of oil,
gas, or geothermal property interests.
Sec. 9. Crude oil production credit for maintaining economically marginal
wells.
Sec. 10. Crude oil and natural gas exploration and development credit.
Sec. 11. Removal of intangible drilling costs from the alternative minimum
tax and corporate preference reductions.
Sec. 12. Repeal of taxable income limitation for percentage depletion.
Sec. 13. Election to carry forward depletion deduction in excess of basis.
Sec. 14. Investment tax credit for vehicles fueled by clean-burning fuels,
for property converting vehicles to be so fueled, and for facilities for
the retail delivery of such fuels.
SEC. 3. NATIONAL ENERGY POLICY.
  It is the sense of the Congress that the President, as an economic and
  national security imperative, should--
  (1) formulate and implement a national energy policy based on achieving a
  domestic core supply of energy with 20,000,000 barrels per day equivalent of
  natural gas, natural gas liquids, and crude oil constituting the petroleum
  portion of this core supply; and
  (2) work with the Congress in the formulation of the specific measures to
  be taken to implement such a national energy policy.
SEC. 4. FEE ON IMPORTED CRUDE OIL, REFINED PETROLEUM PRODUCTS, AND
PETROCHEMICAL FEEDSTOCKS OR PETROCHEMICAL DERIVATIVES.
  (a) IN GENERAL- Subtitle E of the Internal Revenue Code of 1986 (relating
  to alcohol, tobacco, and certain other excise taxes) is amended by adding
  at the end thereof the following new chapter:
`CHAPTER 55--IMPORTED CRUDE OIL, REFINED PETROLEUM PRODUCTS, AND PETROCHEMICAL
FEEDSTOCKS OR PETROCHEMICAL DERIVATIVES
`Sec. 5891. Imposition of tax.
`Sec. 5892. Definitions.
`Sec. 5893. Registration.
`SEC. 5891. IMPOSITION OF TAX.
  `(a) IMPOSITION OF TAX- In addition to any other tax imposed under this
  title, an excise tax is hereby imposed on--
  `(1) the first sale within the United States of--
  `(A) any crude oil,
  `(B) any refined petroleum product, or
  `(C) any petrochemical feedstock or petrochemical derivative,
that has been imported into the United States, and
  `(2) the use within the United States of--
  `(A) any crude oil, or
  `(B) any refined petroleum product, or
  `(C) any petrochemical feedstock or petrochemical derivative,
that has been imported into the United States if no tax has been imposed
with respect to such crude oil or refined petroleum product prior to such use.
  `(b) Rate of Tax-
  `(1) CRUDE OIL- For purposes of paragraphs (1)(A) and (2)(A) of subsection
  (a) the rate of tax shall be the excess, if any, of--
  `(A) $22 per barrel, over
  `(B) the most recently published average price of a barrel of internationally
  traded oil.
  `(2) REFINED PETROLEUM PRODUCT- For purposes of paragraphs (1)(B) and
  (2)(B) of subsection (a), the rate of tax shall be the excess, if any, of--
  `(A) $24.50 per barrel, over
  `(B) the most recently published average price of a barrel of internationally
  traded oil.
  `(3) PETROCHEMICAL FEEDSTOCK OR PETROCHEMICAL DERIVATIVE- For purposes
  of paragraphs (1)(C) and (2)(C) of subsection (a), the rate of tax
  shall be equal to the rate of tax determined under paragraph (2) of this
  subsection, except that `barrel equivalent of crude oil feedstocks used
  in the manufacture of such petrochemical feedstocks or petrochemical
  derivative' shall be substituted for `barrel' the first place it appears
  in such paragraph (1).
  `(4) FRACTIONAL PARTS OF BARRELS- In the case of a fraction of a barrel,
  the tax imposed by subsection (a) shall be the same fraction of the amount
  of such tax imposed on the whole barrel.
  `(c) Determination of Average Price-
  `(1) IN GENERAL- For purposes of this section, the average price of
  internationally traded oil with respect to any week during which the tax
  under subsection (a) is imposed shall be determined by the Secretary and
  published in the Federal Register on the first day of such week.
  `(2) BASIS OF DETERMINATION- For purposes of paragraph (1), the Secretary,
  after consultation with the Administrator of the Energy Information
  Administration of the Department of Energy, shall determine the average
  price of internationally traded oil for the preceding 4 weeks, pursuant
  to the formula for determining such international price as is used in
  publishing the Weekly Petroleum Status Report and as is in effect on the
  date of enactment of this section.
  `(d) Liability for Payment of Tax-
  `(1) SALES- The taxes imposed by subsection (a)(1) shall be paid by the first
  person who sells the crude oil, refined petroleum product, petrochemical
  feedstock, or petrochemical derivative within the United States.
  `(2) USE- The taxes imposed by subsection (a)(2) shall be paid by the person
  who uses the crude oil, refined petroleum product, petrochemical feedstock,
  or petrochemical derivative.
`SEC. 5892. DEFINITIONS.
  `For purposes of this chapter--
  `(1) CRUDE OIL- The term `crude oil' means crude oil other than crude oil
  produced from a well located in the United States (within the meaning
  of section 638(1)) or in a possession of the United States (within the
  meaning of section 638(2)).
  `(2) BARREL- The term `barrel' means 42 United States gallons.
  `(3) REFINED PETROLEUM PRODUCT- The term `refined petroleum product' shall
  have the same meaning given to such term by section 3(5) of the Emergency
  Petroleum Allocation Act of 1973 (15 U.S.C. 752(5)).
  `(4) EXPORT- The term `export' includes shipment to a possession of the
  United States; and the term `exported' includes shipment to a possession
  of the United States.
`SEC. 5893. REGISTRATION.
  `Every person subject to tax under section 5891 shall, before incurring
  any liability for tax under such section, register with the Secretary.'
  (b) CONFORMING AMENDMENT- The table of chapters for subtitle E of such
  Code is amended by adding at the end thereof the following new item:
`CHAPTER 55. Imported crude oil, refined petroleum products, and petrochemical
feedstocks or petrochemical derivatives.'
  (c) DEDUCTIBILITY OF IMPORTED OIL TAX- The first sentence of section 164(a)
  of such Code (relating to deductions for taxes) is amended by inserting
  after paragraph (5) the following new paragraph:
  `(6) The taxes imposed by section 5891.'
  (d) EFFECTIVE DATE- The amendments made by this section shall apply with
  respect to sales and use of imported crude oil, imported refined petroleum
  products, petrochemical feedstocks, or petrochemical derivatives on or
  after October 1, 1991.
SEC. 5. GEOLOGICAL, GEOPHYSICAL, AND SURFACE CASING COSTS TREATED LIKE
INTANGIBLE DRILLING AND DEVELOPMENT COSTS.
  (a) IN GENERAL- Subsection (c) of section 263 of the Internal Revenue Code
  of 1986 (relating to intangible drilling and development costs in the case
  of oil and gas wells and geothermal wells) is amended by inserting before
  the last sentence the following new sentence: `In the case of oil and
  gas wells, the tax treatment which applies to the taxpayer's intangible
  drilling and development costs shall also apply to surface casing costs
  and to geological and geophysical costs for the purpose of ascertaining the
  existence, location, extent, or quality of any deposit of oil or gas within
  the United States (within the meaning of section 638(1)) or a possession
  of the United States (within the meaning of section 638(2)).'
  (b) EFFECTIVE DATE- The amendments made by this section shall apply to
  costs paid or incurred after the date of the enactment of this Act in
  taxable years ending after such date.
SEC. 6. NET INCOME LIMITATION ON PERCENTAGE DEPLETION NOT TO APPLY TO OIL
AND GAS WELLS.
  (a) IN GENERAL- The second sentence of subsection (a) of section 613 of
  the Internal Revenue Code of 1986 (relating to percentage depletion) is
  amended by striking out `Such allowance' and inserting in lieu thereof
  `Except in the case of an oil or gas well, such allowance'.
  (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to
  taxable years beginning after the date of the enactment of this Act.
SEC. 7. INCREASE IN PERCENTAGE DEPLETION BASED ON REMOVAL PRICE.
  (a) IN GENERAL- Section 613A(c) of the Internal Revenue Code of 1986 is
  amended by inserting after paragraph (4) the following new paragraph:
  `(5) APPLICABLE PERCENTAGE- For purposes of paragraph (1)--
  `(A) IN GENERAL- In the case of production during calendar years beginning
  after the date of the enactment of this subparagraph--
  `If the average annual
--
   removal price during the
--The applicable
   calendar year is:
--percentage is:
Less than $10
--30
At least $10 but less than $15
--25
At least $15 but less than $20
--20
At least $20
--15.
  (B) AVERAGE ANNUAL REMOVAL PRICE- For purposes of subparagraph (A), the
  average annual removal price for any calendar year shall be determined
  by dividing the taxpayer's aggregate production of domestic crude oil or
  natural gas during such calendar year by the aggregate amount for which
  such domestic crude oil or natural gas, as the case may be, was sold
  (determined after application of paragraphs (2), (3), and (4) of section
  4988(c), as in effect before their repeal) by the taxpayer.'
  (b) TECHNICAL AMENDMENT- Paragraph (1) of section 613A(c) of such Code is
  amended by striking `15 percent' and inserting `the applicable percentage
  (determined in accordance with the table contained in paragraph (5))'.
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  production during calendar years beginning after the date of the enactment
  of this Act.
SEC. 8. REPEAL OF RECAPTURE PROVISIONS DEALING WITH DISPOSITIONS OF OIL,
GAS, OR GEOTHERMAL PROPERTY INTERESTS.
  (a) In General-
  (1) PROVISIONS IN EFFECT BEFORE TAX REFORM ACT OF 1986- Section 1254
  of the Internal Revenue Code of 1986 (relating to gain from disposition
  of interest in oil, gas, or geothermal property) shall not apply to any
  disposition to which the amendments made by section 413 of the Tax Reform
  Act of 1986 do not apply.
  (2) PROVISIONS IN EFFECT AFTER TAX REFORM ACT OF 1986- Section 1254 of such
  Code, as in effect after the amendments made by the Tax Reform Act of 1986,
  is amended--
  (A) by striking out `263, 616,' in subsection (a)(1)(A)(i) and inserting
  in lieu thereof `616', and
  (B) by adding at the end of subsection (a)(3) the following: `The term
  `section 1254 property' does not include any oil, gas, or geothermal well.'
  (b) Conforming Amendment-
  (1) Sections 59(e)(5)(A) and 291(b)(3) of such Code are each amended by
  striking out `263(c), 616(a),' and inserting in lieu thereof `616(a)'.
  (2) The heading for section 1254 of such Code, as amended by the Tax Reform
  Act of 1986, is amended by striking out `oil, gas, geothermal, or other'
  and inserting in lieu thereof `certain'.
  (3) The item relating to section 1254 in the table of sections for part
  IV of subchapter P of chapter 1 of such Code is amended to read as follows:
`Sec. 1254. Gain from disposition of interest in certain mineral properties.'
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  dispositions after the date of the enactment of this Act.
SEC. 9. CRUDE OIL PRODUCTION CREDIT FOR MAINTAINING ECONOMICALLY MARGINAL
WELLS.
  (a) IN GENERAL- Subpart B of part IV of subchapter A of chapter 1 of the
  Internal Revenue Code of 1986 is amended by adding at the end thereof the
  following new section:
`SEC. 30. CRUDE OIL PRODUCTION CREDIT FOR MAINTAINING ECONOMICALLY MARGINAL
WELLS.
  `(a) ALLOWANCE OF CREDIT- There shall be allowed as credit against the tax
  imposed by this chapter for the taxable year to the producer of eligible
  crude oil an amount equal to 10 percent of the qualified cost of each barrel
  of such oil (or fractional part thereof) produced during the taxable year.
  `(b) QUALIFIED COST- For purposes of this section, the term `qualified cost'
  means, with respect to each barrel of eligible crude oil, the sum of--
  `(1) such barrel's pro rata share of--
  `(A) the lease operating expenses (other than business overhead expenses)
  paid or incurred by the producer of such barrel during the taxable year
  in which such barrel was produced,
  `(B) the amount allowed to such producer for such taxable year for
  depreciation under sections 167 and 168 with respect to the property used
  in the production of such barrel,
  `(C) the amount allowed to such producer for such taxable year for
  depletion under section 611 (but not in excess of the adjusted basis of
  the property), and
  `(D) the business overhead expenses paid or incurred during such taxable
  year by such producer, plus
  `(2) the amount of severance tax paid or incurred by such producer with
  respect to such barrel.
  `(c) DEFINITIONS- For purposes of this section--
  `(1) ELIGIBLE CRUDE OIL- The term `eligible crude oil' means domestic
  crude oil which is--
  `(A) from a stripper well property within the meaning of the June 1979
  energy regulations,
  `(B) heavy oil, or
  `(C) oil recovered through a tertiary recovery method.
  `(2) Other definitions-
  `(A) CRUDE OIL- The term `crude oil' has the meaning given to such term
  by the June 1979 energy regulations.
  `(B) BARREL- The term `barrel' means 42 United States gallons.
  `(C) DOMESTIC- The term `domestic' when used with respect to crude oil,
  means crude oil produced from a well located in the United States or in
  a possession of the United States.
  `(D) UNITED STATES- The term `United States' has the meaning given to such
  term by paragraph (1) of section 638 (relating to Continental Shelf areas).
  `(E) POSSESSION OF THE UNITED STATES- The term `possession of the United
  States' has the meaning given to such term by paragraph (2) of section 638.
  `(F) HEAVY OIL- The term `heavy oil' means all crude oil which is produced
  from a property if crude oil produced and sold from such property during--
  `(i) the last month before July 1979 in which crude oil was produced and
  sold from such property, or
  `(ii) the taxable year had a weighted average gravity of 20 degrees API
  or less (corrected to 60 degrees Fahrenheit).
  `(G) TERTIARY RECOVERY METHOD- The term `tertiary recovery method' means--
  `(i) any method which is described in subparagraphs (1) through (9) of
  section 212.78(c) of the October 1979 energy regulations, or
  `(ii) any other method to provide tertiary enhanced recovery which is
  approved by the Secretary for purposes of this section.
  `(H) SEVERANCE TAX- The term `severance tax' means a tax imposed by a State
  or political subdivision thereof with respect to the extraction of crude oil.
  `(I) Energy regulations-
  `(i) IN GENERAL- The term `energy regulations' means regulations prescribed
  under section 4(a) of the Energy Petroleum Allocation Act of 1973 (15
  U.S.C. 753(a)).
  `(ii) JUNE 1979 ENERGY REGULATIONS- The June 1979 energy regulations shall
  be the terms of the energy regulations as such terms existed on June 1, 1979.
  `(iii) OCTOBER 1979 ENERGY REGULATIONS- The October 1979 energy regulations
  shall be the terms of the energy regulations as such terms existed on
  October 30, 1979.
  `(iv) CONTINUED APPLICATION OF REGULATIONS AFTER DECONTROL- Energy
  regulations shall be treated as continuing in effect without regard to
  decontrol of oil prices or any other termination of the application of
  such regulations.
  `(d) Limitation Based on Amount of Tax-
  `(1) LIABILITY FOR TAX- The credit allowable under subsection (a) for any
  taxable year shall not exceed the excess (if any) of--
  `(A) the sum of--
  `(i) the taxpayer's tentative minimum tax liability under section 55(b)
  for such taxable year determined without regard to this section, plus
  `(ii) the taxpayer's regular tax liability for such taxable year (as
  defined in section 26(b)), over
  `(B) the sum of the credits allowable against the taxpayer's regular tax
  liability under part IV (other than section 43 and this section).
  `(2) APPLICATION OF THE CREDIT- Each of the following amounts shall be
  reduced by the full amount of the credit determined under paragraph (1):
  `(A) the taxpayer's tentative minimum tax under section 55(b) for the
  taxable year, and
  `(B) the taxpayer's regular tax liability (as defined in section 26(b))
  reduced by the sum of the credits allowable under part IV (other than
  section 43 and this section).
If the amount of the credit determined under paragraph (1) exceeds the amount
described in subparagraph (B) of paragraph (2), then the excess shall be
deemed to be the adjusted net minimum tax for such taxable year for purposes
of section 53.
  `(3) Carryback and carryforward of unused credit-
  `(A) IN GENERAL- If the amount of the credit allowed under subsection (a)
  for any taxable year exceeds the limitation under paragraph (1) for such
  taxable year (hereinafter in this paragraph referred to as the `unused
  credit year'), such excess shall be--
  `(i) an oil production credit carryback to each of the 7 taxable years
  preceding the unused credit year, and
  `(ii) an oil production credit carryforward to each of the 15 taxable
  years following the unused credit year,
and shall be added to the amount allowable as a credit under subsection (a)
for such years. If any portion of such excess is a carryback to a taxable
year beginning on or before the date of the enactment of this section,
this section shall be deemed to have been in effect for such taxable year
for purposes of allowing such carryback as a credit under this section. The
entire amount of the unused credit shall be carried to the earliest of the
22 taxable years to which such credit may be carried, and then to each of
the other 21 taxable years to the extent that, because of the limitation
contained in subparagraph (B), such unused credit may not be added for a
prior taxable year to which such unused credit may be carried.
  `(B) LIMITATIONS- The amount of the unused credit which may be taken into
  account under subparagraph (A) for any succeeding taxable year shall not
  exceed the amount by which the limitation provided by paragraph (1) for
  such taxable year exceeds the sum of--
  `(i) the credit allowable under subsection (a) for such taxable year, and
  `(ii) the amounts which, by reason of this paragraph, are added to the
  amount allowable for such taxable year and which are attributable to
  taxable years preceding the unused credit year.
  `(e) PASS-THRU IN THE CASE OF ESTATES AND TRUSTS- Under regulations
  prescribed by the Secretary, rules similar to the rules of subsection (d)
  of section 52 shall apply.'
  (b) CLERICAL AMENDMENT- The table of sections for subpart B of part IV
  of subchapter A of chapter 1 of such Code is amended by adding at the end
  thereof the following new item:
`Sec. 30. Crude oil production credit for maintaining marginally economic
wells.'.
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to oil
  produced in taxable years beginning after the date of enactment of this Act.
SEC. 10. CRUDE OIL AND NATURAL GAS EXPLORATION AND DEVELOPMENT CREDIT.
  (a) CRUDE OIL AND NATURAL GAS EXPLORATION AND DEVELOPMENT CREDIT- Subpart
  B of part IV of subchapter A of chapter 1 of the Internal Revenue Code
  of 1986, as amended by section 9, is amended by adding at the end thereof
  the following new section:
`SEC. 30A. CRUDE OIL AND NATURAL GAS EXPLORATION AND DEVELOPMENT CREDIT.
  `(a) GENERAL RULE- For purposes of section 38, the crude oil and natural
  gas exploration and development credit determined under this section for
  any taxable year shall be an amount equal to the sum of--
  `(1) 20 percent of so much of the taxpayer's qualified investment for the
  taxable year as does not exceed $1,000,000, plus
  `(2) 10 percent of so much of such qualified investment for the taxable
  year as exceeds $1,000,000.
  `(b) QUALIFIED INVESTMENT- For purposes of this section, the term `qualified
  investment' means amounts paid or incurred--
  `(1) for the purpose of ascertaining the existence, location, extent, or
  quality of any crude oil or natural gas deposit, including core testing
  and drilling test wells,
  `(2) for the purpose of developing a property on which there is a reservoir
  capable of commercial production and such amounts are paid or incurred in
  connection with activities which are intended to result in the recovery
  of crude oil or natural gas on such property, or
  `(3) for the purpose of performing secondary or tertiary recovery technique
  on a well located in the United States or in a possession of the United
  States as defined in section 638.
  `(c) LIMITATION BASED ON AMOUNT OF TAX-
  `(1) LIABILITY FOR TAX- The credit allowable under subsection (a) for any
  taxable year shall not exceed the excess (if any) of--
  `(A) the sum of--
  `(i) the taxpayer's tentative minimum tax liability under section 55(b)
  for such taxable year determined without regard to this section, plus
  `(ii) the taxpayer's regular tax liability for such taxable year (as
  defined in section 26(b)), over
  `(B) the sum of the credits allowable against the taxpayer's regular tax
  liability under part IV (other than section 43 and this section).
  `(2) APPLICATION OF THE CREDIT- Each of the following amounts shall be
  reduced by the full amount of the credit determined under paragraph (1):
  `(A) the taxpayer's tentative minimum tax under section 55(b) for the
  taxable year, and
  `(B) the taxpayer's regular tax liability (as defined in section 26(b))
  reduced by the sum of the credits allowable under part IV (other than
  section 43 and this section).
If the amount of the credit determined under paragraph (1) exceeds the amount
described in subparagraph (B) of paragraph (2), then the excess shall be
deemed to be the adjusted net minimum tax for such taxable year for purposes
of section 53.
  `(3) Carryback and carryforward of unused credit-
  `(A) IN GENERAL- If the amount of the credit allowed under subsection (a)
  for any taxable year exceeds the limitation under paragraph (1) for such
  taxable year (hereinafter in this paragraph referred to as the `unused
  credit year'), such excess shall be--
  `(i) an oil production credit carryback to each of the 7 taxable years
  preceding the unused credit year, and
  `(ii) an oil production credit carryforward to each of the 15 taxable
  years following the unused credit year,
and shall be added to the amount allowable as a credit under subsection (a)
for such years. If any portion of such excess is a carryback to a taxable
year beginning on or before the date of the enactment of this section,
this section shall be deemed to have been in effect for such taxable year
for purposes of allowing such carryback as a credit under this section. The
entire amount of the unused credit shall be carried to the earliest of the
22 taxable years to which such credit may be carried, and then to each of
the other 21 taxable years to the extent that, because of the limitation
contained in subparagraph (B), such unused credit may not be added for a
prior taxable year to which such unused credit may be carried.
  `(B) LIMITATIONS- The amount of the unused credit which may be taken into
  account under subparagraph (A) for any succeeding taxable year shall not
  exceed the amount by which the limitation provided by paragraph (1) for
  such taxable year exceeds the sum of--
  `(i) the credit allowable under subsection (a) for such taxable year, and
  `(ii) the amounts which, by reason of this paragraph, are added to the
  amount allowable for such taxable year and which are attributable to
  taxable years preceding the unused credit year.
  (b) CLERICAL AMENDMENT- The table of sections for subpart B of part IV
  of subchapter A of chapter 1 of such Code, as amended by section 8, is
  amended by adding at the end thereof the following new item:
`Sec. 30A. Crude oil and natural gas exploration and development credit.'.
  (c) EFFECTIVE DATE- The amendments made by this section shall apply to
  expenditures paid or incurred in taxable years beginning after the date
  of the enactment of this Act.
SEC. 11. REMOVAL OF INTANGIBLE DRILLING COSTS FROM THE ALTERNATIVE MINIMUM
TAX AND CORPORATE PREFERENCE REDUCTIONS.
  (a) ALTERNATIVE MINIMUM TAX-
  (1) Sections 57(a)(2) and 57(b) of the Internal Revenue Code of 1986 are
  hereby repealed.
  (2) Subparagraph (A) of section 56(h)(1) of such Code is amended to read
  as follows:
  `(A) 50 percent of the marginal production depletion preference, or'.
  (3) Subsection (h) of section 56 of such Code is amended by striking
  paragraphs (3), (4), and (6) and by redesignating paragraphs (5), (7),
  and (8) as paragraphs (3), (4), and (5), respectively.
  (4) Paragraph (4) of section 56(h) of such Code (as redesignated by paragraph
  (3)) is amended to read as follows:
  `(4) SPECIAL RULE- For purposes of paragraphs (1)(B) and (3), alternative
  minimum taxable income shall be determined without regard to the deduction
  allowable under this subsection and the alternative tax net operating loss
  deduction under subsection (a)(4).'
  (b) Corporate Preference Items-
  (1) IN GENERAL- Paragraph (1) of section 291(b) of such Code is amended
  to read as follows:
  `(1) IN GENERAL- The amount allowable as a deduction for any taxable year
  under section 616(a) or 617(a) (determined without regard to this section)
  shall be reduced by 30 percent.'
  (2) Conforming amendments-
  (A) Paragraphs (2) and (3) of section 291(b) of such Code are each amended
  by striking out `263(c), 616(a),' and inserting in lieu thereof `616(a)'.
  (B) Section 291(b) of such Code is amended by striking out paragraph (4)
  and by redesignating paragraph (5) as paragraph (4).
  (C) The heading of section 291(b) of such Code is amended by striking out
  `INTANGIBLE DRILLING COSTS AND'.
  (D) Clause (i) of section 56(g)(4)(D) of such Code is hereby repealed.
  (E) Section 59(e)(2) of such Code is amended by striking out subparagraph (C)
  and by redesignating subparagraphs (D) and (E) as subparagraphs (C) and (D).
  (F) Section 263(c) of such Code is amended by striking out the last sentence.
  (c) EFFECTIVE DATE- The repeal made by this section shall apply to costs
  paid or incurred after the date of the enactment of this Act, in taxable
  years ending after such date.
SEC. 12. REPEAL OF TAXABLE INCOME LIMITATION ON PERCENTAGE DEPLETION.
  (a) IN GENERAL- Section 613(A)(d)(1) of the Internal Revenue Code of 1986 is
  amended by deleting `65 percent' and inserting in lieu thereof `100 percent'.
  (b) EFFECTIVE DATE- The amendments made by this section shall apply to
  the taxable years beginning after the date of the enactment of this Act.
SEC. 13. ELECTION TO CARRY FORWARD DEPLETION DEDUCTION IN EXCESS OF BASIS.
  (a) IN GENERAL- Section 59 of the Internal Revenue Code of 1986 (relating
  to other definitions and special rules for minimum tax) is amended by
  adding at the end thereof the following new subsection:
  `(k) Optional Carryforward of Excess Depletion Allowances-
  `(1) IN GENERAL- For purposes of this title, a taxpayer may elect to
  treat any portion of the excess amount described in section 57(a)(1)
  for any taxable year as a deduction arising in the succeeding taxable year.
  `(2) NO OTHER DEDUCTION ALLOWED- No deduction shall be allowed under any
  other section for any amount to which an election under this subsection
  applies for the taxable year.
  `(3) ELECTION; PREFERENCE ITEMS- Rules similar to the rules of paragraphs (4)
  and (6) of subsection (e) shall apply to amounts to which this subsection
  applies.'
  (b) EFFECTIVE DATE- The amendment made by this section shall apply to
  taxable years beginning after the date of the enactment of this Act.
SEC. 14. INVESTMENT TAX CREDIT FOR VEHICLES FUELED BY CLEAN-BURNING FUELS,
FOR PROPERTY CONVERTING VEHICLES TO BE SO FUELED, AND FOR FACILITIES FOR
THE RETAIL DELIVERY OF SUCH FUELS.
  (a) ALLOWANCE OF INVESTMENT CREDIT- Section 46 of the Internal Revenue
  Code of 1986 (relating to amount of credit) is amended by striking `and'
  at the end of paragraph (2), by striking the period at the end of paragraph
  (3) and inserting `, and', and by adding at the end thereof the following
  new paragraph:
  `(4) the qualified clean-burning motor vehicle credit.'
  (b) QUALIFIED CLEAN-BURNING MOTOR VEHICLE CREDIT- Section 48 of such Code
  is amended by adding at the end thereof the following new subsection:
  `(c) QUALIFIED CLEAN-BURNING MOTOR VEHICLE CREDIT-
  `(1) IN GENERAL- For purposes of section 46, the qualified clean-burning
  motor vehicle credit for any taxable year is the air quality percentage
  of the basis of each qualified clean-burning motor vehicle fuel property
  placed in service during such taxable year.
  `(2) AIR QUALITY PERCENTAGE- For purposes of paragraph (1), the air quality
  percentage is--
  `(A) 20 percent for the period beginning January 1, 1992, and ending
  December 31, 2001,
  `(B) 15 percent for the period beginning January 1, 2002, and ending
  December 31, 2002,
  `(C) 10 percent for the period beginning January 1, 2003, and ending
  December 31, 2003,
  `(D) 5 percent for the period beginning January 1, 2004, and ending December
  31, 2004, and
  `(E) 0 for the period after December 31, 2004.
  `(3) QUALIFIED CLEAN-BURNING MOTOR VEHICLE FUEL PROPERTY- For purposes of
  paragraph (1), the term `qualified clean-burning motor vehicle fuel property'
  means any tangible property (not including a building and its structural
  components) the original use of which commences with the taxpayer--
  `(A) which is equipment designed to modify a motor vehicle which is
  propelled by a fuel which is not a clean-burning fuel so that the vehicle
  may be propelled by a clean-burning fuel,
  `(B) which is a motor vehicle propelled only by a clean-burning fuel but
  only to the extent of the portion of the basis of such vehicle which is
  attributable to the storage or delivery to the engine of such fuel or the
  exhaust of gases from combustion, or
  `(C) which is directly related to the delivery of a clean-burning fuel
  into the fuel tank of a motor vehicle propelled by such fuel (including
  storage tanks for such fuel at the point where such fuel is so delivered).
  `(4) CLEAN-BURNING FUEL- For purposes of paragraph (3), the term
  `clean-burning fuel' means--
  `(A) natural gas,
  `(B) liquefied petroleum gas,
  `(C) liquefied natural gas,
  `(D) electricity, and
  `(E) any fuel at least 85 percent of which is 1 or more of the following:
  methanol, ethanol, any other alcohol, or ether.'
  (d) BASIS ADJUSTMENT NOT TO APPLY- Subsection (c) of section 50 of such Code
  (relating to basis adjustment to investment credit property) is amended
  by adding at the end thereof the following new paragraph:
  `(6) BASIS ADJUSTMENT NOT TO APPLY TO QUALIFIED CLEAN-BURNING MOTOR VEHICLE
  FUEL PROPERTY- Paragraph (1) shall not apply to the credit determined
  under section 46(4).'
  (e) CREDIT-EQUIVALENT PAYMENTS FOR PROPERTY OWNED BY STATE AND LOCAL
  GOVERNMENTS-
  (1) IN GENERAL- The Secretary of the Treasury or his delegate shall pay to
  each State governmental unit which files a claim under this paragraph for
  any calendar year an amount equal to the credit which would be determined
  under section 46(4) of the Internal Revenue Code of 1986 if--
  (A) all qualified clean-burning motor vehicle fuel property (as defined
  in section 48(c) of such Code) held by such unit were used in a trade
  or business,
  (B) such unit were subject to tax under chapter 1 of such Code, and
  (C) such year were such unit's taxable year.
  (2) COORDINATION WITH RECAPTURE RULES- For purposes of section 50(a) of
  such Code, any payment under paragraph (1) shall be treated as a credit
  allowed by section 38.
  (3) TREATMENT AS OVERPAYMENT- For purposes of any law of the United
  States, any payment under paragraph (1) shall be treated as a refund of
  an overpayment of tax imposed by chapter 1 of such Code.
  (4) STATE GOVERNMENTAL UNIT- For purposes of this subsection, the term
  `State governmental unit' means any State or political subdivision thereof,
  the District of Columbia, and any agency or instrumentality of any of
  the foregoing.
  (f) RECAPTURE OF CREDIT IF PROPERTY CEASES TO BE QUALIFIED CLEAN-BURNING
  MOTOR VEHICLE FUEL PROPERTY- Subsection (a) of section 50 of such Code
  (relating to certain dispositions, etc., of investment credit property)
  is amended by redesignating paragraph (5) as paragraph (6) and by inserting
  after paragraph (4) the following new subparagraph:
  `(5) SPECIAL RULES FOR QUALIFIED CLEAN-BURNING MOTOR VEHICLE FUEL PROPERTY-
  If, during any taxable year, property with respect to which the taxpayer was
  allowed any qualified clean-burning motor vehicle credit under section 38
  ceases to be qualified clean-burning motor vehicle fuel property at any
  time during the taxable year (but otherwise continues to be investment
  credit property), this paragraph shall be applied--
  `(i) as if such property ceased to be investment credit property at the
  time of such cessation, and
  `(ii) by taking into account only the portion of the credit allowed by
  section 38 which is attributable to the qualified clean-burning motor
  vehicle credit.'
  (g) CLERICAL AMENDMENTS-
  (1) The section heading for section 48 of such Code is amended by inserting
  before the period `; qualified clean-burning motor vehicle credit'.
  (2) The table of sections for subpart E of part IV of subchapter A of
  chapter 1 of such Code is amended by inserting before the period in the item
  relating to section 48  `; qualified clean-burning motor vehicle credit'.
  (h) EFFECTIVE DATE- The amendments made by this section shall apply to
  periods after December 31, 1991, under rules similar to the rules of section
  48(m) of the Internal Revenue Code of 1986 (as in effect on the day before
  the date of the enactment of the Revenue Reconciliation Act of 1990).