I

103D CONGRESS

1ST SESSION H. R. 3239

To amend the Internal Revenue Code of 1986 to deny any deduction for

certain oil cleanup costs, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 7, 1993

Ms. BYRNE 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 deny any

deduction for certain oil cleanup costs, 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. DISALLOWANCE OF DEDUCTION FOR CERTAIN

4 OIL CLEANUP COSTS.

5 (a) GENERAL RULE.—Part IX of subchapter B of

6 chapter 1 of the Internal Revenue Code of 1986 (relating

7 to certain items not deductible) is amended by adding at

8 the end thereof the following new section:
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1 ‘‘SEC. 280I. DISALLOWANCE OF CERTAIN OIL CLEANUP

2 COSTS.

3 ‘‘(a) GENERAL RULE.—Except as otherwise provided

4 in this section, no deduction shall be allowed for any appli5 cable discharge costs.

6 ‘‘(b) EXCEPTIONS.—

7 ‘‘(1) SMALL SPILLS.—Subsection (a) shall not

8 apply to any applicable discharge costs of any tax9 payer which are attributable to any oil discharge in10 volving less than 36,000 gallons of oil. For purposes

11 of the preceding sentence, all discharges at a facility

12 during any 6-month period shall be aggregated and

13 treated as one discharge.

14 ‘‘(2) FACILITY CLOSED AND CLEANUP COM15 PLETED.—Subsection (a) shall not apply to any ap16 plicable discharge costs of the taxpayer which are at17 tributable to any oil discharge from any facility if—

18 ‘‘(A) the Administrator of the Environ19 mental Protection Agency certifies to the Sec20 retary that all cleanup and other remediation

21 actions required by reason of such discharge

22 have been completed, and

23 ‘‘(B) all operations (whether by the tax24 payer or any other person) at such facility in25 volving the transportation, storage, or process26 ing of oil have been permanently terminated.
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1 ‘‘(3) TAXPAYER WITH COMPLETE LIABILITY

2 DEFENSE.—

3 ‘‘(A) IN GENERAL.—Subsection (a) shall

4 not apply to any applicable discharge costs of

5 any taxpayer which are attributable to any oil

6 discharge if such taxpayer has a complete liabil7 ity defense with respect to such discharge.

8 ‘‘(B) COMPLETE LIABILITY DEFENSE.—

9 For purposes of subparagraph (A), a taxpayer

10 has a complete liability defense with respect to

11 any oil discharge, if it is determined under sec12 tion 1003 of the Oil Pollution Act of 1990 or

13 section 311 of the Clean Water Act that such

14 taxpayer has no liability under section 1002 of

15 the Oil Pollution Act of 1990 or section 311 of

16 the Clean Water Act.

17 ‘‘(c) APPLICABLE DISCHARGE COSTS.—For purposes

18 of this section, the term ‘applicable discharge costs’ means

19 any of the following costs incurred in connection with any

20 oil discharge:

21 ‘‘(1) Any costs incurred in removing or at22 tempting to remove the oil.

23 ‘‘(2) Any costs to prevent, minimize, or mitigate

24 pollution or other damages resulting from such dis25 charge.
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1 ‘‘(3) Any costs attributable to liabilities for

2 damages, fines, or penalties from such discharge.

3 ‘‘(4) Any costs incurred in determining the

4 amount of the taxpayer’s liability for any of the fore5 going.

6 ‘‘(5) Any amount deductible on account of the

7 loss of the material discharged or released.

8 ‘‘(d) OIL DISCHARGE.—For purposes of this section,

9 the term ‘oil discharge’ means any discharge (as defined

10 in section 1001 of the Oil Pollution Act of 1990 or section

11 311 of the Clean Water Act) of oil (as defined in such

12 sections).

13 ‘‘(e) TREATMENT OF CERTAIN INSURANCE PRO14 CEEDS, ETC.—Gross income shall include any compensa15 tion by insurance or otherwise received with respect to

16 costs for which a deduction is disallowed under subsection

17 (a).’’

18 (b) PROHIBITION AGAINST OFFSET BY NET OPERAT19 ING LOSS DEDUCTION.—Section 172 of such Code is

20 amended by redesignating subsection (i) as subsection (j)

21 and by inserting after subsection (h) the following new

22 subsection:

23 ‘‘(i) LIMITATION ON USE TO OFFSET DEDUCTIONS

24 DISALLOWED UNDER SECTION 280I.—The deduction al25 lowed under this section shall not reduce taxable income
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1 for any taxable year to an amount less than the amount

2 disallowed under section 280I for such taxable year. Ap3 propriate adjustments in the application of subsection

4 (b)(2) shall be made to take into account the provisions

5 of this subsection.’’

6 (c) CLERICAL AMENDMENT.—The table of sections

7 for part IX of subchapter B of chapter 1 of such Code

8 is amended by adding at the end thereof the following new

9 item:

‘‘Sec. 280I. Disallowance of certain oil cleanup costs.’’

10 (d) EFFECTIVE DATE.—The amendments made by

11 this section shall apply in the case of any applicable dis12 charge costs paid after the date of the enactment of this

13 Act.

14 SEC. 2. EXPENSE TREATMENT FOR EXPENDITURE TO RE15 DUCE RISK OF OIL SPILLS.

16 (a) GENERAL RULE.—Part VI of subchapter B of

17 chapter 1 of the Internal Revenue Code of 1986 (relating

18 to itemized deductions for individuals and corporations)

19 is amended by adding at the end thereof the following new

20 section:

21 ‘‘SEC. 198. EXPENDITURES TO REDUCE RISKS OF OIL

22 SPILLS.

23 ‘‘(a) TREATMENT AS EXPENSES.—Any qualified oil

24 facility expenditures paid or incurred by the taxpayer dur25 ing the taxable year shall be treated as expenses which
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1 are not chargeable to capital account. The expenditures

2 so treated shall be allowed as a deduction for such taxable

3 year.

4 ‘‘(b) QUALIFIED OIL FACILITY EXPENDITURES.—

5 For purposes of this section—

6 ‘‘(1) IN GENERAL.—The term ‘qualified oil fa7 cility expenditures’ means expenditures which—

8 ‘‘(A) are paid or incurred in connection

9 with a trade or business of the taxpayer,

10 ‘‘(B) are paid or incurred for purposes of

11 reducing the risk of a discharge of oil from any

12 facility operated by the taxpayer,

13 ‘‘(C) the Administrator of the Environ14 mental Protection Agency has certified to the

15 Secretary as being necessary or appropriate for

16 purposes of reducing the risk of such dis17 charges; and

18 ‘‘(D) the taxpayer elects to take into ac19 count under this section.

20 ‘‘(2) DEFINITIONS.—For purposes of this sub21 section, the term ‘discharge’, has the meaning given

22 such term by section 1001 of the Oil Pollution Act

23 of 1990 or section 311 of the Clean Water Act and

24 the term ‘oil’ has the meaning given such term by

25 such sections.’’
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for part VI of subchapter B of chapter 1 of such Code

3 is amended by adding at the end thereof the following new

4 item:

‘‘Sec. 198. Expenditures to reduce risks of oil spills.’’

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

6 this section shall apply to expenditures paid or incurred

7 after the date of the enactment of this Act.

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