TABLE OF CONTENTS:
Title I: Energy Independence Incentives
Title II: Infrastructure Incentives
Title III: Investment Incentives
Energy Independence, Infrastructure, and Investment Act of 1993 - Title I: Energy Independence Incentives - Amends the Internal Revenue Code to impose an excise tax on the first sale within the United States of any crude oil or refined petroleum product imported into the United States. (The tax is imposed on first use if no prior tax has been imposed.) Exempts crude oil and refined petroleum products purchased for export.
Title II: Infrastructure Incentives - Amends the Internal Revenue Code to increase the percentage depletion for stripper wells.
Repeals the net income limitation on percentage depletion for oil and gas properties.
Establishes a crude oil and natural gas exploration and development tax credit. Allows a ten percent credit for qualified investments exceeding $1 million, 20 percent for those of $1 million or less. Permits the credit as an offset against both minimum tax liability and regular liability. Requires any deduction allowed for costs taken into account in computing such credit to be reduced by the amount of the credit attributable to such costs.
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.
Expands the enhanced oil recovery tax credit to apply to the advanced secondary recovery costs of independent producers.
Increases the required production of barrels of oil or natural gas per day for stripper wells.
Title III: Investment Incentives - Treats certain geological and geophysical costs and surface casing costs as intangible drilling and development costs that a taxpayer may elect to amortize or to deduct for income tax purposes.
Makes depreciation adjustments in computing such income inapplicable to environmental improvement assets.
[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1024 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 1024
To amend the Internal Revenue Code of 1986 to provide incentives for
domestic oil and natural gas exploration and production, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 22, 1993
Mr. Andrews of Texas (for himself and Mr. Brewster) 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 provide incentives for
domestic oil and natural gas exploration and production, 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; AMENDMENT OF 1986 CODE.
(a) Short Title.--This Act may be cited as the ``Energy
Independence, Infrastructure, and Investment Act of 1993''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
TITLE I--ENERGY INDEPENDENCE INCENTIVES
SEC. 101. FEE ON IMPORTED CRUDE OIL AND REFINED PETROLEUM PRODUCTS.
(a) In General.--Subtitle E (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 AND REFINED PETROLEUM PRODUCTS
``Sec. 5891. Imposition of tax.
``Sec. 5892. Definitions.
``Sec. 5893. Registration.
``Sec. 5894. Procedures; returns;
penalties.
``Sec. 5895. Adjustment for inflation.
``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 each
barrel (or its equivalent) of--
``(A) any crude oil, or
``(B) any refined petroleum product,
that has been imported into the United States, and
``(2) the use within the United States of each barrel (or
its equivalent) of--
``(A) any crude oil, or
``(B) any refined petroleum product,
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 on any barrel (or its
equivalent) shall be the excess, if any, of--
``(A) $25, over
``(B) the energy policy price per barrel of crude
oil.
``(2) Refined petroleum product.--For purposes of
paragraphs (1)(B) and (2)(B) of subsection (a), the rate of tax
on any barrel (or its equivalent) shall be equal to--
``(A) $3, plus
``(B) the tax determined under paragraph (1) of
this subsection.
``(3) 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 Energy Policy Price.--
``(1) In general.--For purposes of this section, the energy
policy price 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 energy policy price for any week is the weighted
average international price of a barrel of crude oil for the
preceding 4 weeks as determined by the Secretary, after
consultation with the Administrator of the Energy Information
Administration of the Department of Energy, pursuant to the
formula for determining such international price as used in
publishing the Weekly Petroleum Status Report and as in effect
on the date of the 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 or refined
petroleum product within the United States.
``(2) Use.--The taxes imposed by subsection (a)(2) shall be
paid by the person who uses the crude oil or refined petroleum
product.
``(3) Tax-free exports.--
``(A) In general.--Under regulations prescribed by
the Secretary, no tax shall be imposed under this
chapter on the sale of crude oil or refined petroleum
product for export or for resale by the purchaser to a
second purchaser for export.
``(B) Proof of export.--Where any crude oil or
refined petroleum product has been sold free of tax
under subparagraph (A), such subparagraph shall cease
to apply with respect to the sale of such crude oil or
refined petroleum product, unless, within the 6-month
period which begins on the date of the sale, the seller
receives proof that the crude oil or refined petroleum
product has been exported.
``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(2)) or a possession
of the United States.
``(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.
``SEC. 5894. PROCEDURES; RETURNS; PENALTIES.
``For purposes of this title, the tax imposed by section 5891 shall
be treated in the same manner as the tax imposed by section 4986 (as in
effect before its repeal).
``SEC. 5895. ADJUSTMENT FOR INFLATION.
``In the case of any calendar year beginning after 1993, the dollar
amount referred to in section 5891(b)(1)(A) and section 5891(b)(2)(A)
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year, by
substituting `calendar year 1992' for `calendar year
1989' in subparagraph (B) thereof.''.
(b) Conforming Amendment.--The table of chapters for subtitle E is
amended by adding at the end thereof the following new item:
``Chapter 55. Imported crude oil and
refined petroleum products.''.
(c) Deductibility of Imported Oil Tax.--The first sentence of
section 164(a) (relating to deductions for taxes) is amended by
inserting after paragraph (5) the following new paragraph:
``(6) The imported oil 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 or refined
petroleum products on or after the date of the enactment of this Act.
TITLE II--INFRASTRUCTURE INCENTIVES
SEC. 201. INCREASE IN PERCENTAGE DEPLETION FOR STRIPPER WELLS.
(a) In General.--Subparagraph (C) of section 613A(c)(6) (relating
to oil and natural gas produced from marginal properties) is amended--
(1) by striking ``25 percent'' and inserting ``27.5
percent'' in the matter preceding clause (i), and
(2) by striking ``$20'' and inserting ``$28'' in clause
(ii).
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1992.
SEC. 202. NET INCOME LIMITATION ON PERCENTAGE DEPLETION REPEALED FOR
OIL AND GAS PROPERTIES.
(a) In General.--Section 613(a) (relating to percentage depletion)
is amended by striking the second sentence and inserting: ``Except in
the case of oil and gas properties, such allowance shall not exceed 50
percent of the taxpayer's taxable income from the property (computed
without allowances for depletion).''.
(b) Conforming Amendment.--Section 613A(c)(7) (relating to special
rules) is amended by striking subparagraph (C) and redesignating
subparagraph (D) as subparagraph (C).
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1992.
SEC. 203. 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 (relating to foreign
tax credit, etc.) is amended by adding the following new section:
``SEC. 30A. CRUDE OIL AND NATURAL GAS EXPLORATION AND DEVELOPMENT
CREDIT.
``(a) General Rule.--There shall be allowed as a credit against the
tax imposed by this chapter for the taxable year 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 geological and geophysical expenditures incurred
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 drilling and equipping crude oil
and natural gas wells (including pollution control equipment
used in connection with such wells), or
``(3) for the purpose of performing secondary or tertiary
recovery techniques,
on properties located in the United States or in a possession of the
United States as defined in section 638 (relating to Continental Shelf
areas), but only to the extent that the expenditure is not a qualified
cost under section 30B.
``(c) Limitation Based on Amount of Tax.--
``(1) Liability for tax.--The credit allowable under
subsection (a) for any taxable year shall not exceed--
``(A) the sum of--
``(i) the taxpayer's minimum tax liability
under section 55(a) for such taxable year, 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 subparts A and D
of this part and sections 27, 28, 29, and 30.
``(2) 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 and gas exploration and
development credit carryback to each of the 3
taxable years preceding the unused credit year,
and
``(ii) an oil and gas exploration and
development 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 18 taxable years to which such credit
may be carried, and then to each of the other 17
taxable years to the extent that, because of the
limitation contained in paragraph (1), 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.
``(d) Special Rules.--For purposes of this section--
``(1) Aggregation of qualified investment expenses.--
``(A) Controlled groups; common control.--In
determining the amount of the credit under this
section, all members of the same controlled group of
corporations (within the meaning of section 52(a)) and
all persons under common control (within the meaning of
section 52(b)) shall be treated as a single taxpayer
for purposes of this section.
``(B) Apportionment of credit.--The credit (if any)
allowable by this section to members of any group (or
to any person) described in subparagraph (A) shall be
such member's or person's proportionate share of the
qualified investment expenses giving rise to the credit
determined under regulations prescribed by the
Secretary.
``(2) Partnerships, s corporations, estates and trusts.--
``(A) Partnerships and s corporations.--In the case
of a partnership, the credit shall be allocated among
partners under regulations prescribed by the Secretary.
A similar rule shall apply in the case of an S
corporation and its shareholders.
``(B) 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.
``(3) Adjustments for certain acquisitions and
dispositions.--Under regulations prescribed by the Secretary,
rules similar to the rules contained in section 41(f)(3) shall
apply with respect to the acquisition or disposition of a
taxpayer.
``(4) Short taxable years.--In the case of any short
taxable year, qualified investment expenses shall be annualized
in such circumstances and under such methods as the Secretary
may prescribe by regulation.
``(5) Denial of double benefit.--
``(A) Disallowance of deduction.--Any deduction
allowable under this chapter for any costs taken into
account in computing the amount of the credit
determined under subsection (a) shall be reduced by the
amount of such credit attributable to such costs.
``(B) Basis adjustments.--For purposes of this
subtitle, if a credit is determined under this section
for any expenditure with respect to any property, the
increase in the basis of such property which would (but
for this subsection) result from such expenditures
shall be reduced by the amount of the credit so
allowed.''.
(b) Clerical Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 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 after the date of enactment of
this Act in taxable years ending after such date.
SEC. 204. MARGINAL PRODUCTION CREDIT.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
(relating to foreign tax credit, etc.), as amended by section 203(a),
is amended by adding the following new section:
``SEC. 30B. MARGINAL PRODUCTION CREDIT.
``(a) Allowance of Credit.--There shall be allowed as a credit
against the tax imposed by this chapter for the taxable year to the
producer of eligible crude oil or eligible natural gas an amount equal
to 20 percent of the qualified cost of each barrel of such oil or each
barrel-of-oil equivalent of such gas (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 or each barrel-of-oil equivalent of eligible natural gas, the sum
of--
``(1) such barrel's or barrel-of-oil equivalent's pro rata
share of the lease operating expenses (other than business
overhead expenses) paid or incurred by the producer of such
barrel or barrel-of-oil equivalent during the taxable year in
which such barrel or barrel-of-oil equivalent was produced,
plus
``(2) the amount of severance tax paid or incurred by such
producer with respect to such barrel or barrel-of-oil
equivalent.
``(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,
``(B) heavy oil,
``(C) oil recovered through a tertiary recovery
method, or
``(D) harsh environment oil.
``(2) Eligible natural gas.--The term `eligible natural
gas' means gas, other than gas qualifying for the credit under
section 29, which is--
``(A) from a stripper well property, or
``(B) natural gas recovered through a tertiary
recovery method.
``(3) 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) Barrel-of-oil equivalent.--The term `barrel-
of-oil equivalent' with respect to any natural gas
means that amount of such natural gas which has a Btu
content of 5.8 million.
``(D) Domestic.--The term `domestic' when used with
respect to crude oil, means crude oil produced from a
property located in the United States or a possession
of the United States.
``(E) United states.--The term `United States' has
the meaning given to such term by paragraph (1) of
section 638 (relating to Continental Shelf areas).
``(F) 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.
``(G) Stripper well property.--The term `stripper
well property' has the meaning given to such term by
subparagraph (E) of section 613A(c)(6).
``(H) Property.--The term `property' means property
as defined in section 614.
``(I) 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).
``(J) 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 (including steam generation)
which is approved by the Secretary for purposes
of this section.
``(K) Harsh environment oil.--The term `harsh
environment oil' means oil produced from a property
located north of the 49th parallel or under at least
400 feet of water.
``(L) 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.
``(M) 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) Special Rule for Offshore Wells.--In the case of eligible
crude oil or eligible natural gas produced from a property located
under at least 400 feet (but less than 1,200 feet) of water, the
percentage determined under the following table shall be substituted
for `20 percent' in subsection (a):
``If distance (in feet) of the property under water is--
At least But less than The percentage is--
400 600 5 percent
600 900 10 percent
900 1,200 15 percent
``(e) Limitation Based on Amount of Tax.--
``(1) Liability for tax.--The credit allowable under
subsection (a) for any taxable year shall not exceed--
``(A) the sum of--
``(i) the taxpayer's minimum tax liability
under section 55(a) for such taxable year, 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 subparts A and D
of this part and sections 27, 28, 29, 30, and 30A.
``(2) 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 and gas production credit
carryback to each of the 3 taxable years
preceding the unused credit year, and
``(ii) an oil and gas 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 18 taxable years to which such credit
may be carried, and then to each of the other 17
taxable years to the extent that, because of the
limitation contained in paragraph (1), 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, as amended by section 203(b), is
amended by adding at the end thereof the following new item:
``Sec. 30B. Marginal production
credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to expenditures paid or incurred after the date of enactment of
this Act in taxable years ending after such date.
SEC. 205. EXPANSION OF ENHANCED OIL RECOVERY CREDIT.
(a) In General.--Section 43(a) (relating to enhanced oil recovery
credit) is amended to read as follows:
``(a) General Rule.--For purposes of section 38, the enhanced oil
recovery credit for any taxable year is an amount equal to--
``(1) 15 percent of the taxpayer's qualified enhanced oil
recovery costs for such taxable year, plus
``(2) in the case of a taxpayer (other than an integrated
oil company as defined in section 291(b)(4)), 15 percent of the
taxpayer's advanced secondary recovery costs for such taxable
year.''.
(b) Advanced Secondary Recovery Costs, Etc.--Section 43(c)
(defining qualified enhanced oil recovery costs) is amended by
redesignating paragraphs (3) and (4) as paragraphs (4) and (5),
respectively, and by inserting after paragraph (2) the following new
paragraph:
``(3) Advanced secondary recovery costs.--
``(A) In general.--The term `advanced secondary
recovery costs' means any of the following:
``(i) Any amount paid or incurred during
the taxable year for tangible property--
``(I) which is an integral part of
a qualified advanced secondary recovery
project, and
``(II) with respect to which
depreciation (or amortization in lieu
of depreciation) is allowable under
this chapter.
``(ii) Any intangible drilling and
development costs--
``(I) which are paid or incurred in
connection with a qualified advanced
secondary recovery project, and
``(II) with respect to which the
taxpayer may make an election under
section 263(c) for the taxable year.
``(iii) Any qualified secondary advanced
injectant expenses which are paid or incurred
in connection with a qualified advanced
secondary recovery project.
``(B) Qualified advanced secondary recovery
project.--The term `qualified advanced secondary
recovery project' means any project which meets the
requirements of subparagraph (C) and which involves 1
of the following advanced secondary recovery methods:
``(i) A method which is used to produce
unrecovered oil which remains in a reservoir
after conventional production because of
heterogeneity and mobility differences between
oil and water.
``(ii) A reservoir characterization
technique which pinpoints the location of new
well sites without regard to traditional
spacing requirements (including advanced well
logging, advanced geophysical detection
technologies, advanced geocellular reservoir
computer modeling, and precision drilling).
``(iii) A drilling method in which the
wellbore is deviated from the vertical by a
short- or long-range radius technique at a
direction parallel to the bedding plane.
``(iv) Any other advanced secondary
recovery method approved by the Secretary for
purposes of this section.
``(C) Requirements for qualified advanced secondary
recovery project.--
``(i) In general.--A project meets the
requirements of a qualified advanced secondary
recovery project if--
``(I) such project involves the
application (in accordance with sound
engineering principles) of 1 or more
advanced secondary recovery methods
which can reasonably be expected to
result in more than an insignificant
increase in the amount of crude oil
which will ultimately be recovered,
``(II) such project is located
within the United States (within the
meaning of section 638(1)), and
``(III) such project commences
after December 31, 1992.
``(ii) Certification.--A project shall not
be treated as a qualified advanced secondary
recovery project unless the operator submits to
the Secretary (at such times and in such manner
as the Secretary provides) a certification from
a petroleum engineer that the project meets
(and continues to meet) the requirements of
clause (i).''.
(c) No Double Certification.--Section 43(c), as amended by
subsection (b), is amended by adding at the end thereof the following
new paragraph:
``(6) Only 1 certification allowed.--For purposes of this
section, the term `qualified enhanced oil recovery project'
shall not include any project which is certified as a qualified
advanced secondary recovery project under paragraph (3) and the
term `qualified advanced secondary recovery project' shall not
include any project which is certified as an enhanced oil
recovery project under paragraph (2).''.
(d) Conforming Amendments.--
(1) Paragraph (4) of section 43(c), as redesignated, is
amended by inserting ``and qualified advanced secondary
recovery costs'' after ``qualified enhanced oil recovery
costs''.
(2) The heading for subsection (c) of section 43 is amended
by inserting ``and Qualified Advanced Secondary Recovery
Costs'' after ``Costs''.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply in the case of amounts paid or incurred in taxable years
beginning after December 31, 1992.
(2) Expansion of projects.--For purposes of section
43(c)(3)(C)(i)(III) of the Internal Revenue Code of 1986 (as
added by subsection (b)), any significant expansion after
December 31, 1992, of a project begun before January 1, 1993,
shall be treated as a project which commences after December
31, 1992.
SEC. 206. EXPANSION OF STRIPPER WELL DEFINITION.
(a) In General.--Clause (i) of section 613A(c)(6)(E) (defining
stripper well property) is amended by striking ``15'' and inserting
``25''.
(b) Effective Date.--The amendment made by this section shall apply
to expenditures paid or incurred after the date of enactment of this
Act in taxable years ending after such date.
TITLE III--INVESTMENT INCENTIVES
SEC. 301. AMORTIZATI0N OF GEOLOGICAL AND GEOPHYSICAL COSTS.
(a) In General.--Section 263 (relating to capital expenditures) is
amended by adding at the end the following new subsection:
``(j) Special Rule for Certain Geological and Geophysical Costs.--
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))
shall be allowed as a deduction ratably over the 5-year period
beginning with the taxable year in which such costs were paid or
incurred.''.
(b) Effective Date.--The amendment 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. 302. DEPRECIATION ADJUSTMENTS NOT TO APPLY TO ENVIRONMENTAL
PROPERTY.
(a) In General.--Subparagraph (B) of section 56(a)(1) (relating to
depreciation adjustments) is amended to read as follows:
``(B) Exception.--With respect to any oil or gas
producer, this paragraph shall not apply to--
``(i) property described in paragraph (1),
(2), (3), or (4) of section 168(f), or
``(ii) environmental improvement assets (as
defined in section 59(k)).''.
(b) Environmental Improvement Assets.--Section 59 (relating to
definition and special rules) is amended by adding at the end the
following new subsection:
``(k) Environmental Improvement Assets.--
``(1) In general.--For purposes of section 56(a)(1)(B)(ii),
the term `environmental improvement asset' means tangible
property which is--
``(A) of a character subject to the allowance for
depreciation provided in section 167 or is
nondepreciable real property;
``(B) used for, or is functionally related to
property used for, one or more of the following
purposes--
``(i) source reduction,
``(ii) solid waste minimization,
``(iii) waste conversion or recycling,
``(iv) reduction of environmental hazards,
``(v) compliance with environmental
permits, rules, and similar requirements,
``(vi) prevention, containment or control
of unplanned releases, or
``(vii) the manufacture, distribution and
sale of alternate fuels and blending stocks or
fuel additives for reformulated fuels, and
``(C) located and used exclusively in the United
States during the taxable year.
If only a portion of property described in subparagraphs (A)
and (C) is described in subparagraph (B), such portion shall be
treated as an environmental improvement asset.
``(2) Other definitions.--For purposes of this subsection--
``(A) Source reduction.--The term `source
reduction' means reduction of the amount of regulated
substances or other pollutants from fixed or mobile
sources released into the environment if such reduction
reduces hazards to public health or environment.
``(B) Waste minimization.--The term `waste
minimization' means the reduction in the generation of,
or the recovery of commercially usable products from,
residual materials which are classified as, or which if
disposed would be classified as, solid wastes (within
the meaning of the Resource Conservation and Recovery
Act).
``(C) Waste conversion or recycling.--The term
`waste conversion or recycling' means the processing or
conversion of liquid, solid, or gaseous wastes into
fuel, energy, or other commercially usable products,
and the production of such products if production
occurs at the same facility as the conversion.
``(D) Abatement of environmental hazards.--The term
`abatement of environmental hazards' includes the
abatement, reduction, monitoring, or stabilization of
potential human exposure to toxic chemicals, hazardous
or extremely hazardous substances, or harmful
radiation.
``(E) Unplanned releases.--The term `unplanned
releases' means any release of regulated substances
(except federally permitted releases), including indoor
releases.
``(F) Regulated substance.--The term `regulated
substance' includes any substance the release or
emission of which is prohibited, limited, or regulated
by Federal or State law or by Federal regulations (as
determined without regard to whether a particular
release would have been prohibited or limited).
``(G) Release.--The term `release' means any
spilling, leaking, pouring, discharging, escaping,
dumping, or disposing into the environment, including
the abandonment or discarding of barrels or other
closed receptacles.''.
(c) Conforming Amendment.--Subparagraph (A) of section 56(g)(4) is
amended by adding at the end the following new clause:
``(vi) This subparagraph shall not apply to
environmental improvement assets (as defined in
section 59(k)).''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
December 31, 1992.
<all>
HR 1024 IH----2
HR 1024 IH----3
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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