[Congressional Record Volume 157, Number 69 (Wednesday, May 18, 2011)]
[Senate]
[Pages S3107-S3108]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS ON MAY 17, 2011

      By Mr. INHOFE:
  S. 1007. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the taxable income limit on percentage depletion for oil and 
natural gas produced from marginal properties; to the Committee on 
Finance.
  Mr. INHOFE. Mr. President, I would like to announce the 
reintroduction of a bill to amend the Internal Revenue Code to 
eliminate the taxable income limit on percentage depletion for oil and 
natural gas produced from marginal properties.
  Since 1926 small producers and millions of royalty owners have had 
the option to utilize percentage depletion to both simplify their 
accounting methodology and to account for the decline in the value of 
minerals produced from a property. Percentage depletion is particularly 
important to America's 611,000 low-volume marginal wells. The average 
marginal well produces barely 2 barrels per day, yet cumulatively they 
account for nearly 28 percent of domestic production in the lower 48 
States. Since every on-shore natural gas and oil well eventually 
declines into marginal production, the economic life span and 
corresponding production of all wells is extended by allowing the use 
of percentage depletion.
  Until 1998, the deduction marginal producers could take from 
percentage depletion was limited to 100 percent of taxable income from 
each individual property. Many producers, however, specialize in 
marginally producing wells and have many properties operating 
simultaneously. Naturally, some wells in a producer's portfolio are 
more productive than others. Some would have depletion rates greater 
than 100 percent of taxable income, while others would have depletion 
rates lower than the limit. Removing the taxable income limitation 
allows producers to take percentage depletion deductions on a 
portfolio-wide basis, which makes their entire operation more 
efficient.
  Since 1998, Congress has understood this fact and has suspended the 
limitation. Unfortunately, the provision has never been made permanent. 
It has just been extended year after year as part of the Tax Extenders 
Package. Since we have had this suspension on the books for more than a 
decade, I think it is time to give producers the predictability they 
need by making this common sense tax accounting provision permanent.
  At a time when our unemployment rate is at 9 percent, we need to be 
doing everything we can to encourage economic growth. The energy 
industry is a major contributor to our economy, and it has a lot of 
room to grow. The Congressional Research Service recently released a 
report that says the United States has the most energy potential under 
its soil than any other country on earth. Hiding beneath our soil are 
jobs, wealth, and lower deficits. We should allow this sector to grow. 
This is a common sense, easy way to do this, so I urge swift passage.
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      By Mr. INHOFE:
  S. 1008. A bill to amend the Internal Revenue Code of 1986 to 
permanently extend the depreciation rules for property used 
predominantly within an Indian reservation; to the Committee on 
Finance.
  Mr. INHOFE. Mr. President, I would like to bring to your attention a 
bill I am reintroducing that would make permanent the current tax 
provision that allows capital assets on Indian lands to be depreciated 
on an accelerated schedule.
  For many years, the Federal tax code has provided an incentive for 
businesses to invest in operations on Indian reservations and lands 
across the country. According to the law, businesses that purchase 
capital equipment and use it on Indian lands will be able to depreciate 
it, on average, more than 40 percent faster than would otherwise be 
allowed.
  This tax provision is important to Oklahoma because of our 
longstanding history and unique relationship with Indian tribes. In 
light of the weak and ongoing economic recovery, we need to be doing 
all that we can to encourage businesses to reinvest in and expand their 
operations. This alone is what will create sustainable job growth.
  The accelerated depreciation schedule helps do that by giving 
businesses the opportunity to recover investment dollars in capital 
assets more rapidly. This frees up capital and allows companies to 
reinvest that money more quickly than would have otherwise been 
possible. This is money that would have been tied up in the value of 
their capital assets, things like buildings, equipment, and machinery.
  According to the Oklahoma Department of Commerce, 96 companies in 
Oklahoma announced $1.7 billion of investments during the 2009-2010 
period, creating an estimated 10,500 jobs. The trickledown effect of 
these investments

[[Page S3108]]

is strong: 12,000 additional jobs and additional capital stock 
investments of over $200 million. Companies enjoyed at least $50 
million in economic incentives as a direct result of the accelerated 
depreciation schedule.
  The Oklahoma Department of Commerce has also reported that many 
companies attribute this provision as a key reason for relocating to 
and expanding within the State. One Oklahoma food processing plant 
manager recently stated that the credit was a significant factor in the 
company's decision to expand. Had the credit not been there, the 
business may not have expanded, and the unemployment rate would be 
worse than it is today.
  The accelerated schedule is currently allowed, but the law states 
that it will expire at the end of this year. While the provision has 
typically been renewed each year, many business leaders have expressed 
concern that it is not permanent. I can understand why. As a former 
businessman myself, I understand the problem of unpredictability. More 
and more, unpredictability is the most serious concern I hear of from 
Oklahoma's business leaders. They are frustrated that many government 
policies, ranging from environmental regulations to the tax code, are 
changing so dramatically that they have no way of estimating how the 
new regulations will impact their businesses. How do you expect anyone 
to make investment decisions in that kind of environment? Businesses 
need stability, and this is particularly true during times of economic 
weakness. We in Congress should take this point seriously, and we can 
take a step in the right direction by making permanent this important 
tax provision. I urge swift passage.

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