I

104TH CONGRESS

2D SESSION H. R. 3446

To amend the Clean Air Act and certain other environmental laws to provide

regulatory relief and preserve jobs, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 10, 1996

Mr. STOCKMAN introduced the following bill; which was referred to the Committee on Commerce, and in addition to the Committee on Ways and

Means, for a period to be subsequently determined by the Speaker, in

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Clean Air Act and certain other environmental

laws to provide regulatory relief and preserve jobs, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Regulatory Relief and Job Preservation Act of 1996’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.
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TITLE I—AMENDMENTS OF THE CLEAN AIR ACT

Sec. 101. Enhanced monitoring repeal.

Sec. 102. Reformulated gasoline flexibility.

Sec. 103. Reform of State operating permit procedures.

Sec. 104. Ozone-depleting compounds production and use amendments.

Sec. 105. Mact standards.

Sec. 106. Motor vehicle inspection and maintenance.

Sec. 107. Attainment date for moderate ozone nonattainment areas.

Sec. 108. Ozone exceedences in nonattainment areas.

Sec. 109. Redesignation of attainment areas.

TITLE II—ENVIRONMENTAL SELF-AUDITS

Sec. 201. Voluntary environmental self-audits.

TITLE III—REGULATION OF CHLORINE COMPOUND PRODUCTION

Sec. 301. Broad banning of chlorine compounds prohibited.

TITLE IV—AMENDMENT OF THE SOLID WASTE DISPOSAL ACT

Sec. 401. Recycling of certain materials as manufacturing feedstocks.

TITLE V—AMENDMENT OF THE INTERNAL REVENUE CODE OF

1986

Sec. 501. Intangible drilling costs include geological and geophysical costs.

Sec. 502. Expanded definition of marginal production.

Sec. 503. Tax relief for marginal domestic oil and gas production.

Sec. 504. Repeal of annual increase in tax on ozone-depleting chemicals.

Sec. 505. Reduction in rate of tax on certain reformulated gasoline.

1 TITLE I—AMENDMENTS OF THE

2 CLEAN AIR ACT

3 SEC. 101. ENHANCED MONITORING REPEAL.

4 Section 114(a)(3) of the Clean Air Act (relating to

5 enhanced monitoring) is repealed.

6 SEC. 102. REFORMULATED GASOLINE FLEXIBILITY.

7 Section 211(k)(3)(A)(v) of the Clean Air Act is

8 amended to read as follows:

9 ‘‘(v) The Administrator may not specify a minimum

10 level or percentage by weight of oxygen content for refor11 mulated gasoline, and any such minimum percentage con-
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1 tained in any regulation promulgated before the enact2 ment of the Regulatory Relief and Job Preservation Act

3 of 1996 shall cease to have any force and effect upon the

4 enactment of this Act.’’.

5 SEC. 103. REFORM OF STATE OPERATING PERMIT PROCE6 DURES.

7 States with an interim Operating Permits Program

8 under the Clean Air Act which has been submitted to the

9 Environmental Protection Agency shall not be required to

10 implement an Environmental Protection Agency-run per11 mit program under regulations of the Administrator solely

12 because the States have not yet received approval of their

13 own program. Until final Environmental Protection Agen14 cy approval or disapproval is received, the interim State

15 program shall prevail.

16 SEC. 104. OZONE-DEPLETING COMPOUNDS PRODUCTION

17 AND USE AMENDMENTS.

18 (a) FIRE SUPPRESSION EQUIPMENT.—Section

19 610(d)(1)(A) of the Clean Air Act is amended by inserting

20 after class II substance the following: ‘‘(other than com21 mercial fire suppression equipment containing class II

22 substances).’’.

23 (b) LABELING.—Subsections (c), (d), and (e) of sec24 tion 611 of the Clean Air Act are repealed.
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1 SEC. 105. MACT STANDARDS.

2 (a) BASIC STANDARD.—Section 112(d)(2) of the

3 Clean Air Act is amended by adding the following at the

4 end thereof: ‘‘For each emissions standard promulgated

5 or revised under this subsection after the date of the en6 actment of the Energy and Petrochemical Relief and Job

7 Preservation Act of 1996, the Administrator shall provide

8 a benefit-cost analysis. No emissions standard promul9 gated or revised under this subsection after such date shall

10 be established at a level of at which the incremental costs

11 of compliance with the standard exceeds the incremental

12 benefits of such compliance. For all hazardous air pollut13 ants for which standards were promulgated after the en14 actment of the Clean Air Act Amendments of 1990, the

15 Administrator shall revise such standards as promptly as

16 practicable after the date of enactment of the Energy and

17 Petrochemical Relief and Job Preservation Act of 1996

18 to conform to the amendments made to this subsection

19 by the Energy and Petrochemical Relief and Job Preserva20 tion Act of 1996, the Administrator shall provide a bene21 fit-cost analysis.’’.

22 (b) RESIDUAL RISK.—Section 112(f)(2) of the Clean

23 Air Act is amended by adding the following at the end

24 thereof:

25 ‘‘(D) For each emissions standard promulgated

26 or revised under this subsection after the date of the
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1 enactment of the Energy and Petrochemical Relief

2 and Job Preservation Act of 1996, the Adminis3 trator shall provide a benefit-cost analysis. No emis4 sions standard promulgated or revised under this

5 subsection after such date shall be established at a

6 level of at which the incremental costs of compliance

7 with the standard exceeds the incremental benefits

8 of such compliance.’’. For all hazardous air pollut9 ants for which standards were promulgated after the

10 enactment of the Clean Air Act Amendments of

11 1990, the Administrator shall revise such standards

12 as promptly as practicable after the date of enact13 ment of the Energy and Petrochemical Relief and

14 Job Preservation Act of 1996 to conform to the pro15 visions of this section in effect immediately prior to

16 the enactment of the Clean Air Act Amendments of

17 1990.’’.

18 SEC. 106. MOTOR VEHICLE INSPECTION AND MAINTE19 NANCE.

20 (a) FINDINGS AND PURPOSE.—

21 (1) FINDINGS.—Congress finds that, in carry22 ing out title I of the Clean Air Act (42 U.S.C. 7401

23 et seq.), the Administrator of Environmental Protec24 tion Agency has failed to—
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1 (A) recognize the intent of Congress to

2 allow States to design and implement vehicle in3 spection and maintenance programs that fit

4 their specific needs; and

5 (B) allow States the opportunity to up6 grade existing programs and prove the effective7 ness of such programs.

8 (2) PURPOSE.—The purpose of this section is

9 to require the Administrator to—

10 (A) follow new guidelines clearly stated by

11 Congress; and

12 (B) issue new regulations governing in13 spection and maintenance programs that—

14 (i) allow States to operate decentral15 ized test and repair programs; and

16 (ii) allow States to fairly prove pro17 gram effectiveness based on performance.

18 (b) IMPLEMENTATION OF ENHANCED VEHICLE IN19 SPECTION PROGRAMS.—

20 (1) MINIMUM STANDARDS REDEFINED.—Sec21 tion 182(c)(3)(C) of the Clean Air Act (42 U.S.C.

22 7511a(c)(3)(C)) is amended by striking subpara23 graph (C) and inserting in lieu thereof the following:

24 ‘‘(C) STATE PROGRAM.—The State pro25 gram required under subparagraph (A) shall in-
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1 clude, at a minimum, each of the following ele2 ments:

3 ‘‘(i) Computerized emission analyzers,

4 including on-road testing devices.

5 ‘‘(ii) No waivers for vehicles and parts

6 covered by the emission control perform7 ance warranty as provided for in section

8 207(b) (42 U.S.C. 7541(b)) unless a war9 ranty remedy has been denied in writing,

10 or for tampering-related repairs.

11 ‘‘(iii) In view of the air quality pur12 pose of the program, if, for any vehicle,

13 waivers are permitted for emissions-related

14 repairs not covered by warranty, the mini15 mum expenditure shall be: at least $300

16 and beginning January 1, 1998 a mini17 mum of $450, and at least $75 for pre18 1981 model year vehicles (adjusted annu19 ally as determined by the Administrator on

20 the basis of the Consumer Price Index in

21 the same manner as provided in title V. A

22 State may elect to implement a waiver or

23 assisted repair program for the elderly,

24 handicapped, and low income individuals.
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1 ‘‘(iv) Enforcement through denial of

2 vehicle registration or safety inspection

3 sticker.

4 ‘‘(v) Annual emission testing and nec5 essary adjustment, repair, and mainte6 nance.

7 ‘‘(vi) Operation of the program on a

8 centralized basis. However, an electroni9 cally connected testing system, a licensing

10 system, or other measures (or any com11 bination thereof) may be considered as

12 centralized.

13 ‘‘(vii) Inspection of emission control

14 diagnostic systems and the maintenance or

15 repair of malfunctions or system deteriora16 tion identified by or affecting such

17 diagnostics systems. The vehicle manufac18 turer shall make available relevant data

19 and repair procedures to certified emission

20 testing and certified emission repair facili21 ties via electronic data transfer or other

22 means.

23 ‘‘(viii) Each State shall biannually

24 prepare a report to the Administrator

25 which assesses the emission reductions
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1 achieved by the program required under

2 this paragraph based on data collected

3 during inspection and repair of vehicles.

4 The methods used to assess the emission

5 reductions shall be those established by the

6 State and may include data collected

7 through remote sensing, out-of-cycle test8 ing and pilot programs (as described in

9 clause (xi) of this section).

10 ‘‘(ix) The Administrator shall not re11 quire any area or county in attainment to

12 implement enhanced testing. However, the

13 State may require emission testing, remote

14 sensing testing, or pilot programs for a

15 county or that portion of a county or re16 gion if a significant number of vehicles

17 registered in that county or region or por18 tion thereof are operated daily in a non19 attainment county or region of a State.

20 ‘‘(x) The State shall implement

21 through and in cooperation with private in22 dustry, foundations, educational institu23 tions and citizens, the following: I/M re24 view committees, public education pro25 grams concerning vehicle maintenance, re-
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1 pair and proper disposal of associated

2 motor vehicle wastes, emission inspector

3 certification training programs with writ4 ten and hands-on testing, and certified

5 technician training. Congress shall appro6 priate through the Environmental Protec7 tion Agency, funding to the States to offset

8 implementation costs of such programs.

9 ‘‘(xi) Additional credits may be grant10 ed to States which implement pilot pro11 grams. Pilot programs may include:

12 ‘‘(I) Methods used to help a

13 State assess emission reductions, in14 cluding but not limited to out-of-cycle

15 testing, remote sensing, idle, transient

16 testing, or the equivalent.

17 ‘‘(II) New and existing partner18 ships between point sources and mo19 bile sources to promote public edu20 cation, assisted repair to offset waiv21 ers, voluntary out-of-cycle testing,

22 Mobile Emission Reduction Credit

23 creation and trading, and alternatives

24 to vehicle scrappage.
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1 ‘‘(III) Testing of various fuel for2 mulations and fuel additives to deter3 mine emission reduction effectiveness

4 in specific areas.

5 ‘‘(xii) Emission testing fees shall be

6 market driven, except for testing centers

7 owned by the State.’’.

8 (2) REASSESSMENT OF REGULATIONS.—The

9 Administrator shall immediately rescind the regula10 tions of the Administrator set forth in 40 CFR ch.

11 1 subpart s-51.350-end and shall issue new regula12 tions in accordance with section 182(c)(3)(C) of the

13 Clean Air Act (42 U.S.C. 7511a(c)(3)(C)) as

14 amended by this Act.

15 SEC. 107. ATTAINMENT DATE FOR MODERATE OZONE NON16 ATTAINMENT AREAS.

17 (a) FINDINGS.—Congress finds that the Environ18 mental Protection Agency failed to follow the congres19 sional intent by forcing centralized I/M 240 vehicle emis20 sions testing in nonattainment areas. States which fol21 lowed Environmental Protection Agency guidelines by im22 plementing such programs have suffered from public back23 lash and have found the programs unworkable in many

24 cases. Legislation recently signed has addressed this prob25 lem. However, some areas are now facing ozone attain-
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1 ment deadlines that cannot now be met, possibly due to

2 the delay caused by the failure of centralized programs.

3 Therefore, Congress finds it necessary to extend the dead4 line for ozone attainment in moderate nonattainment

5 areas.

6 (b) EXTENSION OF PRIMARY STANDARD ATTAIN7 MENT DATE FOR MODERATE OZONE NONATTAINMENT

8 AREAS.—Section 181(a) of the Clean Air Act (42 U.S.C.

9 7511(a)(1)) is amended in table I by striking ‘‘6 years

10 after enactment’’ and inserting ‘‘8 years after enactment’’.

11 SEC. 108. OZONE EXCEEDENCES IN NONATTAINMENT

12 AREAS.

13 For purposes of the nonattainment provisions of title

14 I of the Clean Air Act, ozone monitor readings shall be

15 averaged over an 8-hour period. An exceedence shall occur

16 if the reading over such a period averages above 0.10ppm

17 at 2 or more monitors in a nonattainment region. A non18 attainment region shall be allowed 4 such exceedences over

19 a one-year period.

20 SEC. 109. REDESIGNATION OF ATTAINMENT AREAS.

21 (a) FINDINGS.—Congress finds that:

22 (1) The year 1995 was a climatological anom23 aly, with data collection revealing unparalleled, fre24 quent high temperatures.
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1 (2) The frequency and persistence of high tem2 perature days are the most significant factors in

3 causing ambient ozone air pollution episodes.

4 (b) DISCOUNTING OF ANOMALOUS YEARS HIGH AND

5 LOW.—For the purpose of redesignation of areas as at6 tainment or nonattainment under the Clean Air Act, a

7 span of 5 years will be used to establish a baseline trend.

8 The year with the highest number of exceedences shall be

9 dropped, as well as the year with the lowest number of

10 exceedences. The baseline shall be established by the 3 re11 maining years.

12 TITLE II—ENVIRONMENTAL

13 SELF-AUDITS

14 SEC. 201. VOLUNTARY ENVIRONMENTAL SELF-AUDITS.

15 (a) DEFINITIONS.—As used in this section:

16 (1) VOLUNTARY ENVIRONMENTAL SELF17 AUDIT.—The term ‘‘voluntary environmental self18 audit’’ means an assessment, audit, investigation, or

19 review that is performed by or for a person or entity

20 to determine whether the person or entity is in com21 pliance with environmental laws, improve such per22 son or entity’s compliance with environmental laws,

23 or assess the effectiveness of any environmental

24 management compliance system (or any part there25 of).
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1 (2) VOLUNTARY ENVIRONMENTAL SELF-AUDIT

2 REPORT.—The term ‘‘voluntary environmental self3 audit report’’ means any report, finding, opinion, or

4 other document or communication relating to a vol5 untary environmental self-audit.

6 (b) NONDISCLOSURE PRIVILEGE.—No information

7 contained in any voluntary environmental self-audit re8 port, and no testimony relating to a voluntary environ9 mental self-audit performed by or on behalf of any entity

10 shall be admissible evidence in any Federal or State ad11 ministrative or judicial proceeding under any environ12 mental law or environmentally related litigation, or subject

13 to discovery in any such proceeding.

14 (c) IN GENERAL.—No information relating to the

15 violation by any entity of any environmental law that is

16 disclosed by such entity to the Federal or State agency

17 administering such law as a result of a voluntary environ18 mental self-audit performed by such entity may be used

19 against such entity or against an officer, employee, or

20 agent of such entity in any Federal or State administra21 tive, civil, or criminal negligence proceeding regarding

22 such violation if—

23 (1) such entity (or officer, employee, or agent)

24 ensures that the disclosure is made promptly after

25 receiving knowledge of the information;
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1 (2) such entity (or officer, employee, or agent)

2 initiates efforts to achieve compliance with the law

3 within a reasonable period of time in a manner con4 sistent with applicable provisions of law;

5 (3) such entity (or officer, employee, or agent)

6 is not asserting the applicability of the immunity

7 under this subsection for a fraudulent purpose;

8 (4) such information is not disclosed for the

9 purpose of avoiding penalties in an investigative, ad10 ministrative, or judicial proceeding that, at the time

11 of disclosure, was in progress; or

12 (5) such entity (or officer, employee, or agent)

13 discloses such other information relating to the vio14 lation as the agency concerned requests, other than

15 information subject to a nondisclosure privilege

16 under any authority of law.

17 (d) EXCLUSIONS.—The immunity under subsection

18 (b) shall not apply to information with respect to an inten19 tional or willful violation of an environmental law or any

20 violation of any such law which knowingly endangers the

21 health or safety of any individual.
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1 TITLE III—REGULATION OF

2 CHLORINE COMPOUND PRO3 DUCTION

4 SEC. 301. BROAD BANNING OF CHLORINE COMPOUNDS

5 PROHIBITED.

6 Notwithstanding any provision of title VI of the Clean

7 Air Act or any other authority of law, the Administrator

8 of the Environmental Protection Agency shall not take any

9 action or prohibit the manufacture, use, or distribution in

10 commerce of chlorine compounds in the absence of a spe11 cific authorization by Congress, enacted into law after the

12 submission to Congress of the proposed regulation.

13 TITLE IV—AMENDMENT OF THE

14 SOLID WASTE DISPOSAL ACT

15 SEC. 401. RECYCLING OF CERTAIN MATERIALS AS MANU16 FACTURING FEEDSTOCKS.

17 Section 1004(5) of the Solid Waste Disposal Act is

18 amended by adding the following at the end thereof: ‘‘The

19 term ‘hazardous waste’ shall not include any solid waste

20 that is used as a feedstock in any manufacturing process

21 unless such waste is stored after generation and prior to

22 such use for a period in excess of 90 days, or is trans23 ported for a distance of more than 25 miles.’’.
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1 TITLE V—AMENDMENT OF THE

2 INTERNAL REVENUE CODE

3 OF 1986

4 SEC. 501. INTANGIBLE DRILLING COSTS INCLUDE GEO5 LOGICAL AND GEOPHYSICAL COSTS.

6 (a) IN GENERAL.—Subsection (c) of section 263 of

7 the Internal Revenue Code of 1986 (relating to intangible

8 drilling and development costs in the case of oil and gas

9 wells and geothermal wells) is amended by inserting before

10 the last sentence the following new sentence: ‘‘In the case

11 of oil and gas wells, the tax treatment under this sub12 section which applies to the taxpayers intangible drilling

13 and development costs shall also apply to geological and

14 geophysical costs for the purposes of ascertaining the ex15 istence, location, extent or quality of any deposit of oil or

16 gas within the United States (within the meaning of sec17 tion 638).’’.

18 SEC. 502. EXPANDED DEFINITION OF MARGINAL PRODUC19 TION.

20 (a) IN GENERAL.—Subparagraph (E) of section

21 613A(c)(6) of the Internal Revenue Code of 1986 (defin22 ing stripper well property) is amended by adding at the

23 end the following new sentence: ‘‘The preceding sentence

24 shall be applied by substituting ‘25’ for ‘15’ with respect
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1 to any well which produces water at a rate not less than

2 95 percent of total well effluent.’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to production in calendar years

5 beginning after the date of the enactment of this Act.

6 SEC. 503. TAX RELIEF FOR MARGINAL DOMESTIC OIL AND

7 GAS PRODUCTION.

8 (a) CREDIT FOR PRODUCING OIL AND GAS FROM

9 MARGINAL WELLS.—Subpart D of part IV of subchapter

10 A of chapter I of the Internal Revenue Code of 1986 (re11 lating to business credits) is amended by adding at the

12 end the following new section:

13 ‘‘SEC. 45C. CREDIT FOR PRODUCING OIL AND GAS FROM

14 MARGINAL WELLS.

15 ‘‘(a) GENERAL RULE.—For purposes of section 38,

16 the marginal well production credit for any taxable year

17 in an amount equal to the product of—

18 ‘‘(1) the credit amount, and

19 ‘‘(2) the qualified crude oil production and the

20 qualified natural gas production which is attrib21 utable to the taxpayer.

22 ‘‘(b) CREDIT AMOUNT.—For purposes of this sec23 tion—

24 ‘‘(1) IN GENERAL.—The credit amount is—
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1 ‘‘(A) $3 per barrel of qualified crude oil

2 production, and

3 ‘‘(B) 50 cents per 1,000 cubic feet of

4 qualified natural gas production.

5 ‘‘(2) REDUCTION AS OIL AND GAS PRICES IN6 CREASE.—

7 ‘‘(A) IN GENERAL.—The $3 and 50 cents

8 amounts under paragraph (1) shall each be re9 duced (but not below zero) by an amount which

10 bears the same ratio to such amount (deter11 mined without regard to this paragraph) as—

12 ‘‘(i) the amount by which the ref13 erence price for the calendar year preced14 ing the calendar year in which the taxable

15 year begins exceeds $17 ($2.50 for quali16 fied natural gas production), bears to

17 ‘‘(ii) $8 ($1 for qualified natural gas

18 production).

19 ‘‘(B) INFLATION ADJUSTMENT.—In the

20 case of any taxable year beginning in a calendar

21 year after 1995, each of the dollar amounts

22 contained in subparagraph (A) shall be in23 creased to an amount equal to such dollar

24 amount multiplied by the inflation adjustment

25 factor for such calendar year (determined under
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1 section 43(c)(3)(B) by substituting ‘1994’ for

2 ‘1990’).

3 ‘‘(C) REFERENCE PRICE.—For purposes of

4 this paragraph, the term reference price means

5 with respect to any calendar year—

6 ‘‘(i) in the case of qualified crude oil

7 production, the reference price determined

8 under section 29(d)(2)(C), and

9 ‘‘(ii) in the case of qualified natural

10 gas production, the Secretary’s estimate of

11 the annual average wellhead price per

12 1,000 cubic feet for all domestic natural

13 gas.

14 ‘‘(c) QUALIFIED CRUDE OIL AND NATURAL GAS

15 PRODUCTION.—For purposes of this section—

16 ‘‘(1) IN GENERAL.—The terms ‘qualified crude

17 oil production’ and ‘qualified natural gas production’

18 mean domestic crude oil or natural gas which is pro19 duced from a marginal well.

20 ‘‘(2) LIMITATION ON AMOUNT OF PRODUCTION

21 WHICH MAY QUALIFY.—

22 ‘‘(A) IN GENERAL.—Crude oil or natural

23 gas produced during any taxable year from any

24 well shall not be treated as qualified crude oil

25 production or qualified natural gas production
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1 to the extent production from the well during

2 the taxable year exceeds—

3 ‘‘(i) 1,095 barrels in the case of crude

4 oil, and

5 ‘‘(ii) 25,000 cubic feet in the case of

6 natural gas.

7 ‘‘(B) PROPORTIONATE REDUCTIONS.—

8 ‘‘(i) SHORT TAXABLE YEARS.—In the

9 case of a short taxable year, the limitations

10 under this paragraph shall be proportion11 ately reduced to reflect the ratio which the

12 number of days in the year bears to 365.

13 ‘‘(ii) WELLS NOT IN PRODUCTION EN14 TIRE YEAR.—In the case of a well which is

15 not capable of production during each day

16 of a taxable year, the limitations under

17 this paragraph applicable to the well shall

18 be proportionately reduced to reflect the

19 ratio which the number of days of produc20 tion bears to the total number of days in

21 the taxable year.

22 ‘‘(3) DEFINITIONS.—

23 ‘‘(A) MARGINAL WELL.—The term ‘mar24 ginal well’ means a domestic well—
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1 ‘‘(i) the production from which during

2 the taxable year is treated as marginal

3 production under section 613A(c)(6), or

4 ‘‘(ii) which, during the taxable year—

5 ‘‘(I) has average daily production

6 of not more than 25 barrel equiva7 lents, and

8 ‘‘(II) produces water at a rate

9 not less than 95 percent of total well

10 effluent.

11 ‘‘(B) CRUDE OIL, ETC.—The terms ‘crude

12 oil’, ‘natural gas’, ‘domestic’, and ‘barrel’ have

13 the meanings given such terms by section

14 613A(e).

15 ‘‘(C) BARREL EQUIVALENT.—The term

16 ‘barrel equivalent’ means with respect to natu17 ral gas, a conversion ratio of 6,000 cubic feet

18 of natural gas to 1 barrel of crude oil.

19 ‘‘(d) OTHER RULES.—

20 ‘‘(1) PRODUCTION ATTRIBUTABLE TO THE TAX21 PAYER.—In the case of a marginal well in which

22 there is more than one owner of operating interests

23 in the well and the crude oil or natural gas produc24 tion exceeds the limitation under subsection (c)(2),

25 qualifying crude oil production or qualifying natural
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1 gas production attributable to the taxpayer shall be

2 determined on the basis of the ratio which taxpayers

3 revenue interest in the production bears to the ag4 gregate of the revenue interests of all operating in5 terest owners in the production.

6 ‘‘(2) OPERATING INTEREST REQUIRED.—Any

7 credit under this section may be claimed only on

8 production which is attributable to the holder of an

9 operating interest as defined in section 614(d).

10 ‘‘(3) PRODUCTION FROM NONCONVENTIONAL

11 SOURCES EXCLUDED.—In the case of production

12 from a marginal well which is eligible for the credit

13 allowed under section 29 for the taxable year, no

14 credit shall be allowable under this section unless

15 the taxpayer elects not to claim the credit under sec16 tion 29 with respect to the well.’’

17 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec18 tion 38(b) of such Code is amended by striking ‘‘plus’’

19 at the end of paragraph (10), by striking the period at

20 the end of paragraph (11) and inserting ‘‘, plus’’, and by

21 adding at the end the following new paragraph:

22 ‘‘(12) the marginal oil and gas well production

23 credit determined under section 45C(a).’’

24 (c) CREDIT ALLOWED AGAINST REGULAR AND MINI25 MUM TAX.—
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1 (1) IN GENERAL.—Subsection (c) of section 38

2 of such Code (relating to limitation based on amount

3 of tax) is amended by redesignating paragraph (3)

4 as paragraph (4) and by inserting after paragraph

5 (2) the following new paragraph:

6 ‘‘(3) SPECIAL RULES FOR OIL AND GAS PRO7 DUCTION CREDIT.—

8 ‘‘(A) IN GENERAL.—In the case of the oil

9 and gas production credit—

10 ‘‘(i) this section and section 39 shall

11 be applied separately with respect to the

12 credit, and

13 ‘‘(ii) in applying paragraph (1) to the

14 credit—

15 ‘‘(I) subparagraph (A) shall not

16 apply, and

17 ‘‘(II) the limitation under para18 graph (1) (as modified by subclause

19 (I)) shall be reduced by the credit al20 lowed under subsection (a) for the

21 taxable year (other than the oil and

22 gas production credit).

23 ‘‘(B) OIL AND GAS PRODUCTION CRED24 IT.—For purposes of this subsection, the term

25 ‘oil and gas production credit’ means the credit
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1 allowable under subsection (a) by reason of sec2 tion 45C(a).’’

3 (2) CONFORMING AMENDMENT.—Subclause (II)

4 of section 38(c)(2)(A)(ii) of such Code is amended

5 by inserting ‘‘or the oil and gas production credit’’

6 after ‘‘employment credit’’.

7 (d) COORDINATION WITH SECTION 29.—Section

8 29(a) of such Code is amended by striking ‘‘There’’ and

9 inserting ‘‘At the election of the taxpayer, there’’.

10 (e) CLERICAL AMENDMENT.—The table of sections

11 for subpart D of part IV of subchapter A of chapter I

12 of such Code is amended by adding at the end the follow13 ing item:

‘‘SEC. 45C. Credit for producing oil and gas from marginal

wells.’’

14 (f) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to production after the date of the

16 enactment of this Act.

17 SEC. 504. REPEAL OF ANNUAL INCREASE IN TAX ON OZONE18 DEPLETING CHEMICALS.

19 (a) IN GENERAL.—Paragraph (1) of section 4681(b)

20 of the Internal Revenue Code of 1986 (relating to amount

21 of tax) is amended by striking subparagraphs (B) and (C)

22 and by inserting after subparagraph (A) the following new

23 subparagraph:
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1 ‘‘(B) BASE AMOUNT.—The base amount is

2 $5.80.’’

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall take effect on January 1, 1997.

5 SEC. 505. REDUCTION IN RATE OF TAX ON CERTAIN REFOR6 MULATED GASOLINE.

7 (a) IN GENERAL.—Subparagraph (A) of section

8 4081(a)(2) of the Internal Revenue Code of 1986 (relating

9 to rate of tax on gasoline) is amended by—

10 (1) by inserting ‘‘(15.3 cents per gallon in the

11 case of qualified reformulated gasoline)’’ before the

12 comma at the end of clause (i), and

13 (2) by adding at the end the following flush

14 sentence:

15 ‘‘For purposes of clause (i), the term ‘qualified

16 reformulated gasoline’ means reformulated gas17 oline that meets the requirements of section

18 211(k) of the Clean Air Act and has at least a

19 2 percent oxygen content (by weight).’’

20 (b) CREDIT OR REFUND FOR GASOLINE USED TO

21 MAKE REFORMULATED GASOLINE.—

22 (1) Section 6427 of such Code is amended by

23 inserting after subsection (l) the following new sub24 section:
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1 ‘‘(m) GASOLINE USED TO PRODUCE QUALIFIED RE2 FORMULATED GASOLINE.—

3 ‘‘(1) IN GENERAL.—Except as provided in sub4 section (k), if any gasoline on which tax was im5 posed by section 4081 at the rate of tax specified in

6 section 4081(a)(2)(A)(i) (other than as qualified re7 formulated gasoline) is used by any person in pro8 ducing qualified reformulated gasoline which is sold

9 or used in such person’s trade or business, the Sec10 retary shall pay (without interest) to such person an

11 amount equal to 3 cents per gallon of the gasoline

12 so used.

13 ‘‘(2) QUALIFIED REFORMULATED GASOLINE.—

14 For purposes of paragraph (1), the term ‘qualified

15 reformulated gasoline’ means reformulated gasoline

16 that meets the requirements of section 211(k) of the

17 Clean Air Act and has at least a 2 percent oxygen

18 content (by weight).’’.

19 ‘‘(3) COORDINATION WITH OTHER REPAYMENT

20 PROVISIONS.—No amount shall be payable under

21 paragraph (1) with respect to gasoline with respect

22 to which an amount is payable under subsection (d),

23 (e), or (l) of this section or under section 6420 or

24 6421.’’
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1 (2) Paragraph (1) of section 6427(i) of such

2 Code is amended by striking ‘‘(l), or (q)’’ and insert3 ing ‘‘(q), (l), or (m)’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall take effect on January 1, 1997.

Æ