113 HR 601 IH: Permanent Repeal of Oil Subsidies Act
U.S. House of Representatives
2013-02-08
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.This Act may be cited as the
Permanent Repeal of Oil Subsidies
Act
.
2.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.
<enum>I</enum><header>USE
IT Act</header>
<section id="HE2EA604F40F146098145ACAA44C2102D" section-type="subsequent-section"><enum>101.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>United States Exploration on
Idle Tracts Act</short-title></quote> or the <quote><short-title>USE IT Act</short-title></quote>.</text>
</section><section id="H1C9C52AC5EE841CCBDC4C1EDA1B21E1E"><enum>102.</enum><header>Production
incentive fee</header>
<subsection id="HC491486095C14B8F8C3684996BEFAC80"><enum>(a)</enum><header>Establishment</header><text>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.</text>
</subsection><subsection id="H2B70DBF6D99D47D6822619E39BE2A766"><enum>(b)</enum><header>Amount</header><text>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—</text>
<paragraph id="HC40C4C2774CE4B6098B4861B4F0102AB"><enum>(1)</enum><text>in the case of
onshore land—</text>
<subparagraph id="H5179942A297C498BB329581E04819986"><enum>(A)</enum><text>for each of the
first 3 years of the lease, $4 per acre in 2011 dollars;</text>
</subparagraph><subparagraph id="HF31B1E8562E64D13B12B55906FD880A3"><enum>(B)</enum><text>for the fourth
year of the lease, $6 per acre in 2011 dollars; and</text>
</subparagraph><subparagraph id="HB5A6F5B4248C4B75B1AA42CC59AEB26B"><enum>(C)</enum><text>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</text>
</subparagraph></paragraph><paragraph display-inline="no-display-inline" id="HD5ADDA36FF894DEA98572A3ADBAA631E"><enum>(2)</enum><text>in the case of
offshore land—</text>
<subparagraph id="HEBC3D554D9A444D4BD1359BCA8B4F812"><enum>(A)</enum><text>for each of the
third, fourth, and fifth years of the lease, $4 per acre in 2011
dollars;</text>
</subparagraph><subparagraph id="H41D8853D9B5B4B8892E4A2F01604C4BC"><enum>(B)</enum><text>for the sixth year
of the lease, $6 per acre in 2011 dollars; and</text>
</subparagraph><subparagraph id="H1468F85A1451418C87306DDAB4CFB64B"><enum>(C)</enum><text>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.</text>
</subparagraph></paragraph></subsection><subsection id="H7889DD0A89A44789A3840FBE04ABFFE1"><enum>(c)</enum><header>Assessment and
collection</header><text>The Secretary shall assess and collect the fee
established under this section.</text>
</subsection><subsection id="H50F416D14CC447F5AB15A23A8942B27A"><enum>(d)</enum><header>Deposit</header><text>Amounts
received by the United States as the fee under this section shall be deposited
in the general fund of the Treasury.</text>
</subsection><subsection id="H8784917947764F18B72C0E44E4BA7FF1"><enum>(e)</enum><header>Regulations</header><text>The
Secretary of the Interior may issue regulations to prevent evasion of the fee
under this section.</text>
</subsection></section><enum>II</enum><header>Deficit Reduction
Through Fair Oil Royalties</header>
<section id="H9C3535DBBBCB4AF7B650D6260D3B5031" section-type="subsequent-section"><enum>201.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>Deficit Reduction Through Fair
Oil Royalties Act</short-title></quote>.</text>
</section><section id="H9A598A9F425E4586A1284366899A6749"><enum>202.</enum><header>Eligibility for
new leases and the transfer of leases</header>
<subsection id="HA87D4052E320451E8D4CCAED554482C2"><enum>(a)</enum><header>Issuance of New
Leases</header>
<paragraph id="H2A20381115274DE89773C17DBBB67F5D"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">The Secretary shall
not issue any new lease that authorizes the production of oil or natural gas
under the Outer Continental Shelf Lands Act (<external-xref legal-doc="usc" parsable-cite="usc/43/1331">43 U.S.C. 1331 et seq.</external-xref>) 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 (<external-xref legal-doc="usc" parsable-cite="usc/43/1337">43 U.S.C. 1337(a)(3)(C)</external-xref>).</text>
</paragraph><paragraph id="H36E97BA6FB9149D085DD570E54215B5C"><enum>(2)</enum><header>Persons
described</header><text>A person referred to in paragraph (1) is a person
that—</text>
<subparagraph id="H2D43327EB78E4A7FB43B1AF1FC218EBD"><enum>(A)</enum><text>is a lessee
that—</text>
<clause id="HB28ADA55DCDE4C668E8BA79AB0ED0577"><enum>(i)</enum><text>holds a covered
lease on the date on which the Secretary considers the issuance of the new
lease; or</text>
</clause><clause id="HBA09BC9A639342E1AB4566CA2A414C43"><enum>(ii)</enum><text>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</text>
</clause></subparagraph><subparagraph id="H13662D186FD14627871EE737ADC050E0"><enum>(B)</enum><text>any other person
that has any direct or indirect interest in, or that derives any benefit from,
a covered lease.</text>
</subparagraph></paragraph><paragraph id="HE679C8B21ACB433186FF55A057E930FF"><enum>(3)</enum><header>Multiple
lessees</header>
<subparagraph id="H5410040DE0CE4E07B742D1E1D5BD17D5"><enum>(A)</enum><header>In
general</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/43/1337">43 U.S.C. 1337(a)(3)(C)</external-xref>).</text>
</subparagraph><subparagraph id="H011F85275B9342AB9661221A0F6B2CC1"><enum>(B)</enum><header>Treatment of
share as covered lease</header><text>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.</text>
</subparagraph></paragraph></subsection><subsection id="HF9D0889D2DD14128B50C46A7F020D458"><enum>(b)</enum><header>Transfers</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/43/1331">43 U.S.C. 1331 et seq.</external-xref>), unless the
lessee or other person has—</text>
<paragraph id="H4835EBEAA664420A8365A12AA5694C48"><enum>(1)</enum><text>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</text>
</paragraph><paragraph id="H9047A62E1C7A49D2916C2549078C3F63"><enum>(2)</enum><text display-inline="yes-display-inline">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)).</text>
</paragraph></subsection><subsection id="HD866283537D946738B82B74F9C41348E"><enum>(c)</enum><header>Use of amounts
for deficit reduction</header><text>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.</text>
</subsection><subsection id="H67AEE34AC52840BCABAEC6F5A89A64AE"><enum>(d)</enum><header>Definitions</header><text display-inline="yes-display-inline">In this section—</text>
<paragraph id="HC1D62EECD2E04AE39442A4B4E4E79815"><enum>(1)</enum><header>Covered
lease</header><text>The term <term>covered lease</term> means a lease for oil
or gas production in the Gulf of Mexico that is—</text>
<subparagraph id="HFDDBA0A70E6B446CA2CCCF01D5986AB0"><enum>(A)</enum><text>in existence on
the date of enactment of this Act;</text>
</subparagraph><subparagraph id="H1040D0527BB746C08C6AF2C8A143D00E"><enum>(B)</enum><text>issued by the
Department of the Interior under section 304 of the Outer Continental Shelf
Deep Water Royalty Relief Act (<external-xref legal-doc="usc" parsable-cite="usc/43/1337">43 U.S.C. 1337</external-xref> note;
Public Law
104–58); and</text>
</subparagraph><subparagraph id="HBD0232F3C2054138B888F267B0CC1FEB"><enum>(C)</enum><text>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)).</text>
</subparagraph></paragraph><paragraph id="H507D1CD0E22F4FACACD0FC337CC2511A"><enum>(2)</enum><header>Lessee</header><text>The
term <term>lessee</term> includes any person or other entity that controls, is
controlled by, or is in or under common control with, a lessee.</text>
</paragraph><paragraph id="H9BE19C235A3248E5A31DC2A338DE5063"><enum>(3)</enum><header>Secretary</header><text>The
term <term>Secretary</term> means the Secretary of the Interior.</text>
</paragraph></subsection></section><section id="H7915086CCDB9472A9B30F5F6F8DA6AB2"><enum>203.</enum><header>Price
thresholds for royalty suspension provisions</header><text display-inline="no-display-inline">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.</text>
</section><section id="H36901838A66C4920B6EAB3CE7A3C0171"><enum>204.</enum><header>Repeal of
royalty relief provisions</header>
<subsection id="H68EDC5C591994F5B8DFB9A1E8F258328"><enum>(a)</enum><header>Repeal of
provisions of Energy Policy Act of 2005</header><text>The following provisions
of the Energy Policy Act of 2005 (<external-xref legal-doc="public-law" parsable-cite="pl/109/58">Public Law 109–58</external-xref>) are
repealed:</text>
<paragraph id="HC8403818306E4439B54BC0F4FC30656B"><enum>(1)</enum><text>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).</text>
</paragraph><paragraph id="H6666FD29E6DC4F73B4BE8E219220F52F"><enum>(2)</enum><text>Section 345 (42
U.S.C. 15905; relating to royalty relief for deep water production in the Gulf
of Mexico).</text>
</paragraph></subsection><subsection id="HC5B60D39502D4C1791D07C283B61178B"><enum>(b)</enum><header>Repeal of
provisions relating to Planning Areas offshore Alaska</header><text>Section
8(a)(3)(B) of the Outer Continental Shelf Lands Act (43 U.S.C.
1337(a)(3)(B)) is amended by striking <quote>and in the
Planning Areas offshore Alaska</quote>.</text>
</subsection></section><enum>III</enum><header>OCS
Facility Inspections</header>
<section id="HED81520AB72648EEB6C1E28BD2F7991E" section-type="subsequent-section"><enum>301.</enum><header>Short
title</header><text display-inline="no-display-inline">This title may be cited
as the <quote><short-title>No Free Inspections for Oil
Companies Act</short-title></quote>.</text>
</section><section id="HC9F62FA70B244238A3E67DC80D705565"><enum>302.</enum><header>OCS facility
inspection fees</header><text display-inline="no-display-inline">Section 22 of
the Outer Continental Shelf Lands Act (<external-xref legal-doc="usc" parsable-cite="usc/43/1348">43 U.S.C. 1348</external-xref>) is amended by
adding at the end of the section the following:</text>
<quoted-block id="HECB3D1F2190E4356940693A4F04357D9" style="OLC">
<subsection id="H891F3F4DF57C4798B12DECB46E63241D"><enum>(g)</enum><header>Inspection
Fees</header>
<paragraph id="H29181BF216764749BCC43534D8CC6159"><enum>(1)</enum><header>Establishment</header><text>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—</text>
<subparagraph id="H6690D0BD6E3F40CDAA03FAC958E29A35"><enum>(A)</enum><text>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</text>
</subparagraph><subparagraph id="HDEC620F8362C43E1B49F24C7D5AB62FF"><enum>(B)</enum><text>using a schedule
that reflects the differences in complexity among the classes of facilities to
be inspected.</text>
</subparagraph></paragraph><paragraph id="H768B5E74D94C4C1092256F8FB9BA6BAB"><enum>(2)</enum><header>Ocean energy
enforcement fund</header><text>There is established in the Treasury a fund, to
be known as the <quote>Ocean Energy Enforcement Fund</quote> (referred to in
this subsection as the <quote>Fund</quote>), into which shall be deposited
amounts collected as fees under paragraph (1) and which shall be available as
provided under paragraph (3).</text>
</paragraph><paragraph id="HF42A4846D87F4F8D97E970E433E623C0"><enum>(3)</enum><header>Availability of
fees</header><text>Notwithstanding
section
3302 of title 31, United States Code, all amounts collected by
the Secretary under this section—</text>
<subparagraph id="HC42DB109B234453995FB62B09FBCBBC6"><enum>(A)</enum><text>shall be credited
as offsetting collections;</text>
</subparagraph><subparagraph id="H4713BC9B8BEB43B0B2C8263D1490A232"><enum>(B)</enum><text>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;</text>
</subparagraph><subparagraph id="H4460EB2F606848239A16F96BD634D336"><enum>(C)</enum><text>shall be available
only to the extent provided for in advance in an appropriations Act; and</text>
</subparagraph><subparagraph id="HBEFA37B8AD8841DBB77B2745F72EA7DD"><enum>(D)</enum><text>shall remain
available until expended.</text>
</subparagraph></paragraph><paragraph id="H6D547876588E47AA9709C64C9624EB4D"><enum>(4)</enum><header>Annual
reports</header>
<subparagraph id="H641E9E4A920D4EEDB9BFE86ABCC07393"><enum>(A)</enum><header>In
general</header><text>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.</text>
</subparagraph><subparagraph id="H5958C64330E54EE6BD2D80827FB432DD"><enum>(B)</enum><header>Contents</header><text>Each
report shall include, for the fiscal year covered by the report, the
following:</text>
<clause id="H99DCC4A82DA34B47BB5DB3E20F41E0BF"><enum>(i)</enum><text>A
statement of the amounts deposited into the Fund.</text>
</clause><clause id="HDB24CB57E184402AB41215594F6728D4"><enum>(ii)</enum><text>A
description of the expenditures made from the Fund for the fiscal year,
including the purpose of the expenditures.</text>
</clause><clause id="HA180EB4BA4144692A6FE25C9388CDB11"><enum>(iii)</enum><text>Recommendations
for additional authorities to fulfill the purpose of the Fund.</text>
</clause><clause id="HDDA3C3D5B7D841378860554540D57B6A"><enum>(iv)</enum><text>A
statement of the balance remaining in the Fund at the end of the fiscal
year.</text>
</clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><enum>IV</enum><header>Repeal of Fossil
Fuel Subsidies For Large Oil Companies</header>
<section id="H1BB6E2FA05D049E6933ED092CA172B21" section-type="subsequent-section"><enum>401.</enum><header>Short
title</header><text display-inline="no-display-inline">This Act may be cited as
the <quote><short-title>End Big Oil Tax Subsidies Act of
2013</short-title></quote>.</text>
</section><section id="HA2F87898924F4FB1BAB67765008897E6" section-type="subsequent-section"><enum>402.</enum><header>Amortization of
geological and geophysical expenditures</header>
<subsection id="H686F72C9D13F4EFA8417B5EFA0505727"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subparagraph (A) of
<external-xref legal-doc="usc" parsable-cite="usc/26/167">section 167(h)(5)</external-xref> of the Internal Revenue Code of 1986 is amended by striking
<quote>major integrated oil company</quote> and inserting <quote>covered large
oil company</quote>.</text>
</subsection><subsection id="HA6A42A6584FE4B5C8BBB6F7960E1E577"><enum>(b)</enum><header>Covered large
oil company</header><text>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:</text>
<quoted-block display-inline="no-display-inline" id="H9A2D813A178746308C1D1686CE6A10C8" style="OLC">
<subparagraph id="H49783C91BD7D423890C50037E821630F"><enum>(B)</enum><header>Covered large
oil company</header><text display-inline="yes-display-inline">For purposes of
this paragraph, the term <term>covered large oil company</term> means a
taxpayer which—</text>
<clause id="H799E9E3BC9D345E6946A93B1AF711157"><enum>(i)</enum><text>is
a major integrated oil company, or</text>
</clause><clause id="HA6B66CA86F8F4EEFA9882D7DE8C50023"><enum>(ii)</enum><text>has gross
receipts in excess of $50,000,000 for the taxable year.</text>
</clause><continuation-text continuation-text-level="subparagraph">For
purposes of clause (ii), all persons treated as a single employer under
subsections (a) and (b) of section 52 shall be treated as 1
person.</continuation-text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB8FDDE4B580D410085332F1934419847"><enum>(c)</enum><header>Conforming
amendment</header><text>The heading for paragraph (5) of section 167(h) of such
Code is amended by inserting <quote><header-in-text level="paragraph" style="OLC">and other large taxpayers</header-in-text></quote>.</text>
</subsection><subsection id="H542A123BEEFA40898C038A6CDE7EEE77"><enum>(d)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to amounts
paid or incurred in taxable years beginning after December 31, 2012.</text>
</subsection></section><section id="HA7A84B05D2224E91B6D6EFB79B04FE87"><enum>403.</enum><header>Producing oil
and gas from marginal wells</header>
<subsection id="HC963ADF2E0B448178D7FB32EE342726D"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 45I of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H8EC824B2CD784C90BF8427C775D81D40" style="OLC">
<subsection id="HD2D2E8D6AFCF4A0095DA77D7ABD8B99C"><enum>(e)</enum><header>Exception for
taxpayer with gross receipts in excess of $50,000,000</header>
<paragraph id="H100348835D2D44D8B76C929BB59521A5"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) shall
not apply to any taxpayer whose aggregate gross receipts for the taxable year
are in excess of $50,000,000.</text>
</paragraph><paragraph id="H95D7C1A65310438AAAA027EF5869C8BC"><enum>(2)</enum><header>Aggregation
rule</header><text display-inline="yes-display-inline">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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H3F61D74BDDCC47D4A89340CD9492AC58"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
subsection (a) shall apply to credits determined for taxable years beginning
after December 31, 2012.</text>
</subsection></section><section id="HAB1B68322ED3452E990E1EA3BF59D576"><enum>404.</enum><header>Enhanced oil
recovery credit</header>
<subsection id="H6B3F716BEFCE43B5BAC808833DD7EB86"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 43 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H68BA24A4EA7D42CF9DF51DB0376B9D3B" style="OLC">
<subsection id="H30AFA436C75B4E4DA6FB82589E43402A"><enum>(f)</enum><header>Exception for
taxpayer with gross receipts in excess of $50,000,000</header>
<paragraph id="H40A79AF5EF2D417DB93C1BBBB7C42434"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) shall
not apply to any taxpayer whose aggregate gross receipts for the taxable year
are in excess of $50,000,000.</text>
</paragraph><paragraph id="HD8AF1D2D90D54D248E4C155599A803A2"><enum>(2)</enum><header>Aggregation
rule</header><text display-inline="yes-display-inline">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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HB9373D8E09084739AED55DF792374626"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendments made by
this section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2012.</text>
</subsection></section><section id="H77A803C003754680A5A399A65FD0D01A"><enum>405.</enum><header>Intangible
drilling and development costs in the case of oil and gas wells</header>
<subsection commented="no" display-inline="no-display-inline" id="H7CDAF92BEBBB4BA3895F4A19BFBAE207"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (c) of
<external-xref legal-doc="usc" parsable-cite="usc/26/263">section 263</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the
end the following new sentence: <quote>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.</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HD04D0BEF0113486286BA8B18C02D3373"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to amounts paid or incurred in taxable years beginning
after December 31, 2012.</text>
</subsection></section><section id="H2F15B4C042AC488CB96D01D335406FC9"><enum>406.</enum><header>Percentage
depletion</header>
<subsection id="H27F27F90387C452692A50D5AE12CC4C7"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 613A of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HDE61009B6CE54F5D95756D00138556ED" style="OLC">
<subsection id="H49503D02D1BC4C0C81174FFA2EC2B90B"><enum>(f)</enum><header>Exception for
taxpayer with gross receipts in excess of $50,000,000</header>
<paragraph id="HF8D23AA36C6445B8958C4F8607B89448"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">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.</text>
</paragraph><paragraph id="H749BDB02B5534CDCA5A854DA7B7B21B6"><enum>(2)</enum><header>Aggregation
rule</header><text display-inline="yes-display-inline">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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H2F6EF6CD3E72472F8548FAC5D7C3A711"><enum>(b)</enum><header>Conforming
amendment</header><text>Section 613A(c)(1) of such Code is amended by striking
<quote>subsection (d)</quote> and inserting <quote>subsections (d) and
(f)</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H20E83BBCA0C649AA8E0BF90DB5B185BF"><enum>(c)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2012.</text>
</subsection></section><section id="H057E8C2634DE4C6CBE6A6AB7713B317A"><enum>407.</enum><header>Tertiary
injectants</header>
<subsection id="HA6CB4BD4936C432DAF9F406D3525CBEC"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 193 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="H55F7EE7703344CC59B1C84368FCF3011" style="OLC">
<subsection id="H544F272B31B54C7794F8D5CB0F830D1C"><enum>(d)</enum><header>Exception for
taxpayer with gross receipts in excess of $50,000,000</header>
<paragraph id="H06AD6D21971C48D39B30D44CAEE8E621"><enum>(1)</enum><header>In
general</header><text display-inline="yes-display-inline">Subsection (a) shall
not apply to any taxpayer which has aggregate gross receipts for the taxable
year in excess of $50,000,000.</text>
</paragraph><paragraph id="HF3C6323C4CDC4F0C88E3562E35F13587"><enum>(2)</enum><header>Aggregation
rule</header><text display-inline="yes-display-inline">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.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H75F5F62D0DA546D2982EE7958024807B"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to expenses incurred after December 31, 2012.</text>
</subsection></section><section id="H6E3DDE400B6E4FD2ACE2B5F69E7C78DA"><enum>408.</enum><header>Passive
activity losses and credits limited</header>
<subsection id="HF7290107D0BA432282AFF2B04D246206"><enum>(a)</enum><header>Rules relating
to working interests in oil and gas property</header><text display-inline="yes-display-inline">Paragraph (3) of section 469(c) of the
Internal Revenue Code of 1986 is amended by adding at the end the
following:</text>
<quoted-block display-inline="no-display-inline" id="H24CD791B76CF4D5085DA9EFE6BDE542C" style="OLC">
<subparagraph id="H2095885C2ECB4B47A81DF16F1ECBC2C4"><enum>(C)</enum><header>Exception for
taxpayer with gross receipts in excess of $50,000,000</header>
<clause id="H5AA9F002A2074849B07442220092F222"><enum>(i)</enum><header>In
general</header><text display-inline="yes-display-inline">Subparagraph (A)
shall not apply to any taxpayer which has aggregate gross receipts for the
taxable year in excess of $50,000,000.</text>
</clause><clause id="H326297A82EF54782B5177A13E3D4F28F"><enum>(ii)</enum><header>Aggregation
rule</header><text display-inline="yes-display-inline">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.</text>
</clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="HEE4F2AFC2ABE4CCA8FB273DA9A6200BA"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2012.</text>
</subsection></section><section id="HCC2BCB5AE25C4121B7A1B18BE69AC01E"><enum>409.</enum><header>Income
attributable to domestic production activities</header>
<subsection id="H8BE7064116444BE694891845023D21E0"><enum>(a)</enum><header>Denial of
deduction</header><text>Paragraph (4) of section 199(c) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:</text>
<quoted-block id="H28FB055887494C458A505CA6BBB5AFC2" style="OLC">
<subparagraph id="H128D6F8784DC4D74A749C76075C2E939"><enum>(E)</enum><header>Special rule for
certain oil and gas income</header><text>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 <quote>domestic production gross receipts</quote> 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.</text>
</subparagraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H4FE465B90BAB47F9BF6518CC063107B9"><enum>(b)</enum><header>Effective
date</header><text display-inline="yes-display-inline">The amendment made by
this section shall apply to taxable years beginning after December 31,
2012.</text>
</subsection></section><section display-inline="no-display-inline" id="HA0F0091599BA4D79ABB9F0C6FCDEF725" section-type="subsequent-section"><enum>410.</enum><header>Prohibition on using
last-in, first-out accounting for major integrated oil companies</header>
<subsection id="H6F43CB4825A94AC890E4DFB256CB8C6B"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 472 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
subsection:</text>
<quoted-block display-inline="no-display-inline" id="HAA097E362D294C49B5CD89D743553584" style="OLC">
<subsection id="H826836F4D5094E7DB8EB4CB6038F67DA"><enum>(h)</enum><header>Major integrated
oil companies</header><text display-inline="yes-display-inline">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.</text>
</subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H93A3E9A95BA140D283BCE7D232D9F329"><enum>(b)</enum><header>Effective date
and special rule</header>
<paragraph id="H7F1659CDAEA14439B24A710012C8F282"><enum>(1)</enum><header>In
general</header><text>The amendment made by subsection (a) shall apply to
taxable years beginning after December 31, 2012.</text>
</paragraph><paragraph id="H4BBA38F5F5E5483B8032A9E484296C31"><enum>(2)</enum><header>Change in method
of accounting</header><text display-inline="yes-display-inline">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—</text>
<subparagraph id="H1F84A9F993814940AF5253B3D0D78AFC"><enum>(A)</enum><text>such change shall
be treated as initiated by the taxpayer,</text>
</subparagraph><subparagraph id="H1FEEE0485B9F4A628E5EE273C87376A9"><enum>(B)</enum><text>such change shall
be treated as made with the consent of the Secretary of the Treasury,
and</text>
</subparagraph><subparagraph id="H0A8BA681F0564A9BB387CD45BEB06BD6"><enum>(C)</enum><text>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.</text>
</subparagraph></paragraph></subsection></section><section id="HCE9A9E4998D74EDA878598E7AE16D891"><enum>411.</enum><header>Modifications
of foreign tax credit rules applicable to dual capacity taxpayers</header>
<subsection id="H1C85D3E95DC94F97B9EDFD06680031D3"><enum>(a)</enum><header>In
general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/901">Section 901</external-xref> 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:</text>
<quoted-block id="HB0394FC815924EA081EB20F40E707123" style="OLC">
<subsection id="H5EF21A9FBCE1412E866912BB20B0E25A"><enum>(n)</enum><header>Special rules
relating to major integrated oil companies which are dual capacity
taxpayers</header>
<paragraph id="H1C4F86E1FC5940F4AC52145A297AC612"><enum>(1)</enum><header>General
rule</header><text>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—</text>
<subparagraph id="H06798DEEB2434C9EB417D511A1CE5CFA"><enum>(A)</enum><text>if, for such
period, the foreign country or possession does not impose a generally
applicable income tax, or</text>
</subparagraph><subparagraph id="HC15454605CB34A45BFA010833D54AD47"><enum>(B)</enum><text>to the extent such
amount exceeds the amount (determined in accordance with regulations)
which—</text>
<clause id="H6496544D6FCD47E0A31FDC0AD1B7AD34"><enum>(i)</enum><text>is
paid by such dual capacity taxpayer pursuant to the generally applicable income
tax imposed by the country or possession, or</text>
</clause><clause id="HA1987C57E1584DF09D7EF036F5975217"><enum>(ii)</enum><text>would be paid if
the generally applicable income tax imposed by the country or possession were
applicable to such dual capacity taxpayer.</text>
</clause></subparagraph><continuation-text continuation-text-level="paragraph">Nothing
in this paragraph shall be construed to imply the proper treatment of any such
amount not in excess of the amount determined under subparagraph (B).</continuation-text></paragraph><paragraph id="H12C9C594E250469CB7FB20E97CBEB1CA"><enum>(2)</enum><header>Dual capacity
taxpayer</header><text>For purposes of this subsection, the term <quote>dual
capacity taxpayer</quote> means, with respect to any foreign country or
possession of the United States, a person who—</text>
<subparagraph id="H3C52D6172CFA46328D2C7A431A011A55"><enum>(A)</enum><text>is subject to a
levy of such country or possession, and</text>
</subparagraph><subparagraph id="H84963CFAC5724050888C63D2EBC13238"><enum>(B)</enum><text>receives (or will
receive) directly or indirectly a specific economic benefit (as determined in
accordance with regulations) from such country or possession.</text>
</subparagraph></paragraph><paragraph id="HBDE82EBEBBF34E47822C0B67EE0DD321"><enum>(3)</enum><header>Generally
applicable income tax</header><text>For purposes of this subsection—</text>
<subparagraph id="H4BCF65AD837244F2B765EF9F8ACBE947"><enum>(A)</enum><header>In
general</header><text>The term <quote>generally applicable income tax</quote>
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.</text>
</subparagraph><subparagraph id="H4ED54B118B0E4288B9434EB62E7607E9"><enum>(B)</enum><header>Exceptions</header><text>Such
term shall not include a tax unless it has substantial application, by its
terms and in practice, to—</text>
<clause id="HCFAD08B1E9924D4492309345907B627F"><enum>(i)</enum><text>persons who are
not dual capacity taxpayers, and</text>
</clause><clause id="H7BD0FFD58D064043AC09BC42577BBE01"><enum>(ii)</enum><text>persons who are
citizens or residents of the foreign country or
possession.</text>
</clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="HE6B9D990E0FE44F19DE884664F80B437"><enum>(b)</enum><header>Effective
date</header>
<paragraph id="HAF6941826B75464399592223225A56C7"><enum>(1)</enum><header>In
general</header><text>The amendments made by this section shall apply to taxes
paid or accrued in taxable years beginning after December 31, 2012.</text>
</paragraph><paragraph id="H27D3E751CFCB414690833F027E62BCFD"><enum>(2)</enum><header>Contrary treaty
obligations upheld</header><text>The amendments made by this section shall not
apply to the extent contrary to any treaty obligation of the United
States.</text>
</paragraph></subsection></section>