I 

116TH CONGRESS 

1ST SESSION H. R. 880 

To amend the Internal Revenue Code of 1986 to repeal loopholes for major 

integrated oil companies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 30, 2019 

Ms. BROWNLEY of California introduced the following bill; which was referred 

to the Committee on Ways and Means, and in addition to the Committee 

on Transportation and Infrastructure, 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 Internal Revenue Code of 1986 to repeal 

loopholes for major integrated oil companies, 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 ‘‘Surface Transportation Investment Act of 2019’’. 

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

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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TITLE I—CLOSE BIG OIL TAX LOOPHOLES 

Sec. 2. Modifications of foreign tax credit rules applicable to major integrated 

oil companies which are dual capacity taxpayers. 

Sec. 3. Limitation on deduction for intangible drilling and development costs; 

amortization of disallowed amounts. 

Sec. 4. Limitation on percentage depletion allowance for oil and gas wells. 

Sec. 5. Limitation on deduction for tertiary injectants. 

Sec. 6. Modification of definition of major integrated oil company. 

TITLE II—TRANSPORTATION BLOCK GRANTS 

Sec. 201. Use of revenue for transportation block grants. 

1 TITLE I—CLOSE BIG OIL TAX 

2 LOOPHOLES 

3 SEC. 2. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

4 APPLICABLE TO MAJOR INTEGRATED OIL 

5 COMPANIES WHICH ARE DUAL CAPACITY 

6 TAXPAYERS. 

7 (a) IN GENERAL.—Section 901 of the Internal Rev8 enue Code of 1986 is amended by redesignating subsection 

9 (n) as subsection (o) and by inserting after subsection (m) 

10 the following new subsection: 

11 ‘‘(n) SPECIAL RULES RELATING TO MAJOR INTE12 GRATED OIL COMPANIES WHICH ARE DUAL CAPACITY

13 TAXPAYERS.— 

14 ‘‘(1) GENERAL RULE.—Notwithstanding any 

15 other provision of this chapter, any amount paid or 

16 accrued by a dual capacity taxpayer which is a 

17 major integrated oil company (within the meaning of 

18 section 167(h)(5)) to a foreign country or possession 


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1 of the United States for any period shall not be con2 sidered a tax— 

3 ‘‘(A) if, for such period, the foreign coun4 try or possession does not impose a generally 

5 applicable income tax, or 

6 ‘‘(B) to the extent such amount exceeds 

7 the amount (determined in accordance with reg8 ulations) which— 

9 ‘‘(i) is paid by such dual capacity tax10 payer pursuant to the generally applicable 

11 income tax imposed by the country or pos12 session, or 

13 ‘‘(ii) would be paid if the generally ap14 plicable income tax imposed by the country 

15 or possession were applicable to such dual 

16 capacity taxpayer. 

17 Nothing in this paragraph shall be construed to 

18 imply the proper treatment of any such amount not 

19 in excess of the amount determined under subpara20 graph (B). 

21 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur22 poses of this subsection, the term ‘dual capacity tax23 payer’ means, with respect to any foreign country or 

24 possession of the United States, a person who— 


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1 ‘‘(A) is subject to a levy of such country or 

2 possession, and 

3 ‘‘(B) receives (or will receive) directly or 

4 indirectly a specific economic benefit (as deter5 mined in accordance with regulations) from 

6 such country or possession. 

7 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

8 For purposes of this subsection— 

9 ‘‘(A) IN GENERAL.—The term ‘generally 

10 applicable income tax’ means an income tax (or 

11 a series of income taxes) which is generally im12 posed under the laws of a foreign country or 

13 possession on income derived from the conduct 

14 of a trade or business within such country or 

15 possession. 

16 ‘‘(B) EXCEPTIONS.—Such term shall not 

17 include a tax unless it has substantial applica18 tion, by its terms and in practice, to— 

19 ‘‘(i) persons who are not dual capacity 

20 taxpayers, and 

21 ‘‘(ii) persons who are citizens or resi22 dents of the foreign country or posses23 sion.’’. 

24 (b) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—The amendments made by 

2 this section shall apply to taxes paid or accrued in 

3 taxable years beginning after the date of the enact4 ment of this Act. 

5 (2) CONTRARY TREATY OBLIGATIONS

6 UPHELD.—The amendments made by this section 

7 shall not apply to the extent contrary to any treaty 

8 obligation of the United States. 

9 SEC. 3. LIMITATION ON DEDUCTION FOR INTANGIBLE 

10 DRILLING AND DEVELOPMENT COSTS; AMOR11 TIZATION OF DISALLOWED AMOUNTS. 

12 (a) IN GENERAL.—Section 263(c) of the Internal 

13 Revenue Code of 1986 is amended to read as follows: 

14 ‘‘(c) INTANGIBLE DRILLING AND DEVELOPMENT

15 COSTS IN THE CASE OF OIL AND GAS WELLS AND GEO16 THERMAL WELLS.— 

17 ‘‘(1) IN GENERAL.—Notwithstanding subsection 

18 (a), and except as provided in subsection (i), regula19 tions shall be prescribed by the Secretary under this 

20 subtitle corresponding to the regulations which 

21 granted the option to deduct as expenses intangible 

22 drilling and development costs in the case of oil and 

23 gas wells and which were recognized and approved 

24 by the Congress in House Concurrent Resolution 50, 

25 Seventy-ninth Congress. Such regulations shall also 


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1 grant the option to deduct as expenses intangible 

2 drilling and development costs in the case of wells 

3 drilled for any geothermal deposit (as defined in sec4 tion 613(e)(2)) to the same extent and in the same 

5 manner as such expenses are deductible in the case 

6 of oil and gas wells. This subsection shall not apply 

7 with respect to any costs to which any deduction is 

8 allowed under section 59(e) or 291. 

9 ‘‘(2) EXCLUSION.— 

10 ‘‘(A) IN GENERAL.—This subsection shall 

11 not apply to amounts paid or incurred by a tax12 payer in any taxable year in which such tax13 payer is a major integrated oil company (within 

14 the meaning of section 167(h)(5)). 

15 ‘‘(B) AMORTIZATION OF AMOUNTS NOT AL16 LOWABLE AS DEDUCTIONS UNDER SUBPARA17 GRAPH (A).—The amount not allowable as a 

18 deduction for any taxable year by reason of 

19 subparagraph (A) shall be allowable as a deduc20 tion ratably over the 60-month period beginning 

21 with the month in which the costs are paid or 

22 incurred. For purposes of section 1254, any de23 duction under this subparagraph shall be treat24 ed as a deduction under this subsection.’’. 


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

2 this section shall apply to amounts paid or incurred in tax3 able years beginning after December 31, 2019. 

4 SEC. 4. LIMITATION ON PERCENTAGE DEPLETION ALLOW5 ANCE FOR OIL AND GAS WELLS. 

6 (a) IN GENERAL.—Section 613A of the Internal Rev7 enue Code of 1986 is amended by adding at the end the 

8 following new subsection: 

9 ‘‘(f) APPLICATION WITH RESPECT TO MAJOR INTE10 GRATED OIL COMPANIES.—In the case of any taxable year 

11 in which the taxpayer is a major integrated oil company 

12 (within the meaning of section 167(h)(5)), the allowance 

13 for percentage depletion shall be zero.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2019. 

17 SEC. 5. LIMITATION ON DEDUCTION FOR TERTIARY 

18 INJECTANTS. 

19 (a) IN GENERAL.—Section 193 of the Internal Rev20 enue Code of 1986 is amended by adding at the end the 

21 following new subsection: 

22 ‘‘(d) APPLICATION WITH RESPECT TO MAJOR INTE23 GRATED OIL COMPANIES.— 

24 ‘‘(1) IN GENERAL.—This section shall not apply 

25 to amounts paid or incurred by a taxpayer in any 


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1 taxable year in which such taxpayer is a major inte2 grated oil company (within the meaning of section 

3 167(h)(5)). 

4 ‘‘(2) AMORTIZATION OF AMOUNTS NOT ALLOW5 ABLE AS DEDUCTIONS UNDER PARAGRAPH (1).— 

6 The amount not allowable as a deduction for any 

7 taxable year by reason of paragraph (1) shall be al8 lowable as a deduction ratably over the 60-month 

9 period beginning with the month in which the costs 

10 are paid or incurred.’’. 

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

12 this section shall apply to amounts paid or incurred in tax13 able years beginning after December 31, 2019. 

14 SEC. 6. MODIFICATION OF DEFINITION OF MAJOR INTE15 GRATED OIL COMPANY. 

16 (a) IN GENERAL.—Section 167(h)(5) of the Internal 

17 Revenue Code of 1986 is amended by adding at the end 

18 the following new subparagraph: 

19 ‘‘(C) CERTAIN SUCCESSORS IN INTER20 EST.—For purposes of this paragraph, the term 

21 ‘major integrated oil company’ includes any 

22 successor in interest of a company that was de23 scribed in subparagraph (B) in any taxable 

24 year, if such successor controls more than 50 


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1 percent of the crude oil production or natural 

2 gas production of such company.’’. 

3 (b) CONFORMING AMENDMENTS.— 

4 (1) IN GENERAL.—Section 167(h)(5)(B) of the 

5 Internal Revenue Code of 1986 is amended by in6 serting ‘‘except as provided in subparagraph (C),’’ 

7 after ‘‘For purposes of this paragraph,’’. 

8 (2) TAXABLE YEARS TESTED.—Section 

9 167(h)(5)(B)(iii) of such Code is amended— 

10 (A) by striking ‘‘does not apply by reason 

11 of paragraph (4) of section 613A(d)’’ and in12 serting ‘‘did not apply by reason of paragraph 

13 (4) of section 613A(d) for any taxable year 

14 after 2004’’, and 

15 (B) by striking ‘‘does not apply’’ in sub16 clause (II) and inserting ‘‘did not apply for the 

17 taxable year’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2019. 


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1 TITLE II—TRANSPORTATION 

2 BLOCK GRANTS 

3 SEC. 201. USE OF REVENUE FOR TRANSPORTATION BLOCK 

4 GRANTS. 

5 (a) IN GENERAL.—Subchapter A of chapter 98 of the 

6 Internal Revenue Code of 1986 is amended by adding at 

7 the end the following new section: 

8 ‘‘SEC. 9512. TRANSPORTATION BLOCK GRANT FUND. 

9 ‘‘(a) ESTABLISHMENT.—There is established in the 

10 Treasury a fund to be known as the ‘Transportation Block 

11 Grant Fund’ consisting of such amounts as may be appro12 priated or credited to the fund as provided in this section 

13 or section 9602(b). 

14 ‘‘(b) TRANSFER TO FUND.—There is hereby appro15 priated to the fund such amounts as the Secretary esti16 mates are equivalent to the increase in revenue received 

17 in the Treasury by reason of the enactment of title I of 

18 the Surface Transportation Investment Act of 2019, and 

19 the amendments made thereby. 

20 ‘‘(c) EXPENDITURES FROM THE FUND.—Amounts in 

21 the fund shall be available for making grants under the 

22 surface transportation block grant program established 

23 under section 133 of title 23, United States Code.’’. 


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

2 for subchapter A of chapter 98 of such Code is amended 

3 by adding at the end the following new item: 

‘‘Sec. 9512. Transportation Block Grant Fund.’’. 

Æ 


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