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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5198 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 5198
To amend the Internal Revenue Code of 1986 to provide for oil and
natural gas well remediation and restoration accounts, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 25, 2024
Mr. Marshall (for himself and Mr. Lankford) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for oil and
natural gas well remediation and restoration accounts, 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 ``Small Energy Producers Performance
Enhancement Act''.
SEC. 2. OIL AND NATURAL GAS WELL REMEDIATION AND RESTORATION ACCOUNTS.
(a) In General.--Part VI of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new section:
``SEC. 199B. OIL AND NATURAL GAS REMEDIATION AND RESTORATION ACCOUNTS.
``(a) In General.--In the case of an eligible small producer, there
shall be allowed as a deduction for the taxable year an amount equal to
the aggregate amount paid in cash during such taxable year to an oil
and natural gas remediation and restoration account for which the
eligible small producer is the account beneficiary.
``(b) Limitation.--
``(1) In general.--The amount allowable as a deduction
under subsection (a) to any taxpayer shall not exceed $35,000.
``(2) Inflation adjustment.--
``(A) In general.--In the case of a taxable year
beginning after 2025, the $35,000 amount in paragraph
(1) shall be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year in which the taxable year begins,
determined by substituting `calendar year 2024'
for `calendar year 2016' in subparagraph
(A)(ii) thereof.
``(B) Rounding.--Any increase determined under
subparagraph (A) which is not a multiple of $1,000
shall be rounded to the nearest multiple of $1,000.
``(c) Eligible Small Producer.--For purposes of this section--
``(1) In general.--The term `eligible small producer'
means, with respect to any taxable year, any taxpayer--
``(A) which had no more than 500 full-time
equivalent employees (as defined in section 45R(d)) for
the preceding taxable year, and
``(B) which--
``(i) is allowed a deduction under section
611 with respect any oil or gas well, and
``(ii) computes all such deductions in
accordance with section 613 by reason of the
application of subsections (b) or (c) of
section 613A.
``(2) Aggregation.--All persons treated as a single
employer under subsection (a) or (b) of section 52 or
subsection (m) or (o) of section 414 shall be treated as one
person for purposes of paragraph (1).
``(d) Oil and Natural Gas Remediation and Restoration Account.--For
purposes of this section--
``(1) In general.--The term `oil and natural gas
remediation and restoration account' means a trust created or
organized in the United States as an oil and natural gas
remediation and restoration account exclusively for the purpose
of paying the qualified well capping, closing, and remediation
costs of the account beneficiary, but only if the written
governing instrument creating the trust meets the following
requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(5), no contribution will be
accepted--
``(i) unless it is in cash, or
``(ii) to the extent it exceeds the dollar
amount in effect under subsection (b).
``(B) The trustee is a bank (as defined in section
408(n)) or such other person who demonstrates to the
satisfaction of the Secretary that the manner in which
such other person will administer the trust will be
consistent with the requirements of this section.
``(C) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(D) The interest of an account beneficiary in the
balance in the account is nonforfeitable.
``(2) Qualified well capping, closing, and remediation
costs.--The term `qualified well capping, closing, and
remediation costs' means amounts paid or incurred by an account
beneficiary which are related to the capping, closing, and
remediation of oil producing, injection, and natural gas wells,
including--
``(A) costs associated with meeting Federal, state,
or tribal regulatory and permitting requirements
associated with capping, closing, and remediating an
oil producing, injection, or natural gas well,
``(B) labor costs associated with removing oil
producing, injection, and natural gas well
infrastructure,
``(C) the cost of materials used to cap, close, and
remediate an oil producing, injection, or natural gas
well, and
``(D) labor costs associated with the application
of materials and the use of equipment to prepare, cap,
close, and remediate an oil producing, injection, or
natural gas well.
``(e) Tax Treatment of Accounts.--
``(1) In general.--An oil and natural gas remediation and
restoration account is exempt from taxation under this
subtitle. Notwithstanding the preceding sentence, any such
account is subject to the taxes imposed by section 511
(relating to imposition of tax on unrelated business income of
charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to oil and
natural gas remediation and restoration accounts, and any
amount treated as distributed under such rules shall be treated
as not used to pay qualified well capping, closing, and
remediation costs.
``(f) Treatment of Distributions.--
``(1) Amounts used for qualified well capping, closing, and
remediation costs.--Any amount paid or distributed out of an
oil and natural gas remediation and restoration account which
is used exclusively to pay qualified well capping, closing, and
remediation costs of any account beneficiary shall not be
includible in gross income.
``(2) Inclusion of amounts not used for qualified well
capping, closing and remediation costs.--Any amount paid or
distributed out of an oil and natural gas remediation and
restoration account which is not used exclusively to pay the
qualified well capping, closing, and remediation costs of the
account beneficiary shall be included in the gross income of
such beneficiary.
``(3) Treatment of excess contributions returned before due
date of return.--Rules similar to the rules of section
223(f)(3) shall apply for purposes of this section.
``(4) Additional tax on distributions not used for
qualified well capping, closing, and remediation costs.--The
tax imposed by this chapter on the account beneficiary for any
taxable year in which there is a payment or distribution from
an oil and natural gas remediation and restoration account of
such beneficiary which is includible in gross income under
paragraph (2) shall be increased by 25 percent of the amount
which is so includible.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from an oil and natural
gas remediation and restoration account to the account
beneficiary to the extent the amount received is paid
into an oil and natural gas remediation and restoration
account for the benefit of such beneficiary not later
than the 60th day after the day on which the
beneficiary receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from an oil and natural gas remediation
and restoration account if, at any time during the 1-
year period ending on the day of such receipt, such
individual received any other amount described in
subparagraph (A) from an oil and natural gas
remediation and restoration account which was not
includible in the individual's gross income because of
the application of this paragraph.
``(g) Natural Gas.--For purposes of this section, the term `natural
gas' has the meaning given such term under section 613A(e)(2).''.
(b) Excess Contributions.--
(1) In general.--Section 4973(a) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
paragraph (5), by inserting ``or'' at the end of paragraph (6),
and by inserting after paragraph (6) the following new
paragraph:
``(7) an oil and natural gas remediation and restoration
account (within the meaning of section 199B),''.
(2) Excess contributions.--Section 4973 of such Code is
amended by adding at the end the following new subsection:
``(i) Excess Contributions to Oil and Natural Gas Remediation and
Restoration Accounts.--
``(1) In general.--In the case of an oil and natural gas
remediation and restoration account, the term `excess
contributions' means the amount by which the amount contributed
for the taxable year to such account (other than contributions
under section 199B(f)(5)) exceeds the contribution limitation
determined under section 199B(d)(1)(A)(ii).
``(2) Special rule.--For purposes of this subsection, any
contribution which is distributed out of the account in a
distribution to which section 199B(f)(3) applies shall be
treated as an amount not contributed.''.
(c) Application of Prohibited Transaction Rules.--
(1) In general.--Section 4975(e)(1) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
subparagraph (F), by redesignating subparagraph (G) as
subparagraph (H), and by inserting after subparagraph (F) the
following new subparagraph:
``(G) an oil and natural gas remediation and
restoration account described in section 199B, or''.
(2) Special rule.--Section 4975(c) of such Code is amended
by adding at the end the following new paragraph:
``(8) Special rule for oil and natural gas remediation and
restoration accounts.--An individual for whose benefit an oil
and natural gas remediation and restoration account (within the
meaning of section 199B) is established shall be exempt from
the tax imposed by this section with respect to any transaction
concerning such account (which would otherwise be taxable under
this section) if, with respect to such transaction, the account
ceases to be an oil and natural gas remediation and restoration
account by reason of the application of section 199B(d)(2) to
such account.''.
(d) Clerical Amendment.--The table of sections for part VI of
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Sec. 199B. Oil and natural gas remediation and restoration
accounts.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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