II 

112TH CONGRESS 

2D SESSION S. 3080 

To eliminate certain subsidies for fossil-fuel production. 

IN THE SENATE OF THE UNITED STATES 

MAY 10, 2012 

Mr. SANDERS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To eliminate certain subsidies for fossil-fuel production. 

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. 

4 This Act may be cited as the ‘‘End Polluter Welfare 

5 Act of 2012’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 

8 (1) President Obama joined other world leaders 

9 from the Group of Twenty in pledging to phase out 

10 wasteful fossil-fuel subsidies; 

11 (2) the Environmental Law Institute found that 

12 from 2002 through 2008, Federal fossil-fuel subVerDate Mar 15 2010 02:55 May 15, 2012 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S3080.IS S3080

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1 sidies in the United States totaled over 

2 $72,000,000,000, while Federal renewable-energy in3 vestments totaled $12,200,000,000; 

4 (3) the Congressional Research Service esti5 mates that from 1948 to the present, United States 

6 investments in fossil-fuel research and development 

7 totaled over $48,000,000,000 (in 2011 dollars), 

8 while investments in renewable energy totaled over 

9 $22,000,000,000; 

10 (4) the 5 largest oil corporations have made 

11 more than $1,000,000,000 in profits in the decade 

12 prior to the date of enactment of this Act; and 

13 (5) United States taxpayers should not be sub14 sidizing oil, natural gas, and coal companies in a pe15 riod of record debt. 

16 SEC. 3. ROYALTY RELIEF. 

17 (a) IN GENERAL.— 

18 (1) OUTER CONTINENTAL SHELF LANDS ACT.— 

19 Section 8(a)(3) of the Outer Continental Shelf 

20 Lands Act (43 U.S.C. 1337(a)(3)) is amended— 

21 (A) by striking subparagraph (B); and 

22 (B) by redesignating subparagraph (C) as 

23 subparagraph (B). 

24 (2) ENERGY POLICY ACT OF 2005.— 


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1 (A) INCENTIVES FOR NATURAL GAS PRO2 DUCTION FROM DEEP WELLS IN THE SHALLOW

3 WATERS OF THE GULF OF MEXICO.—Section 

4 344 of the Energy Policy Act of 2005 (42 

5 U.S.C. 15904) is repealed. 

6 (B) DEEP WATER PRODUCTION.—Section 

7 345 of the Energy Policy Act of 2005 (42 

8 U.S.C. 15905) is repealed. 

9 (b) FUTURE PROVISIONS.—Notwithstanding any 

10 other provision of law (including regulations), royalty re11 lief shall not be permitted under a lease issued under sec12 tion 8 of the Outer Continental Shelf Lands Act (43 

13 U.S.C. 1337). 

14 SEC. 4. ROYALTIES UNDER MINERAL LEASING ACT. 

15 (a) COAL LEASES.—Section 7(a) of the Mineral 

16 Leasing Act (30 U.S.C. 207(a)) is amended by striking 

‘‘121⁄2’’ and inserting ‘‘183 17 ⁄4’’. 

18 (b) LEASES ON LAND ON WHICH OIL OR NATURAL

19 GAS IS DISCOVERED.—Section 14 of the Mineral Leasing 

Act (30 U.S.C. 223) is amended by striking ‘‘121 20 ⁄2’’ and 

inserting ‘‘183 21 ⁄4’’. 

22 (c) LEASES ON LAND KNOWN OR BELIEVED TO CON23 TAIN OIL OR NATURAL GAS.—Section 17 of the Mineral 

24 Leasing Act (30 U.S.C. 226) is amended— 

25 (1) in subsection (b)— 


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1 (A) in paragraph (1)(A), by striking ‘‘12.5 

percent’’ and inserting ‘‘183 2 ⁄4 per centum’’; and 

3 (B) in paragraph (2)(A)(ii), by striking 

‘‘121⁄2’’ and inserting ‘‘183 4 ⁄4’’; 

5 (2) in subsection (c)(1), by striking ‘‘12.5 percent’’ and inserting ‘‘183 6 ⁄4 per centum’’; 

(3) in subsection (l), by striking ‘‘121 7 ⁄2’’ each 

time it appears and inserting ‘‘183 8 ⁄4’’; and 

(4) in subsection (n)(1)(C), by striking ‘‘121 9 ⁄2’’ 

and inserting ‘‘183 10 ⁄4’’. 

11 SEC. 5. ULTRA-DEEPWATER AND UNCONVENTIONAL NAT12 URAL GAS AND OTHER PETROLEUM RE13 SOURCES. 

14 Subtitle J of title IX of the Energy Policy Act of 

15 2005 (42 U.S.C. 16371 et seq.) is repealed. 

16 SEC. 6. REMOVAL OF LIMITS ON LIABILITY FOR OFFSHORE 

17 FACILITIES AND PIPELINE OPERATORS. 

18 Section 1004(a) of the Oil Pollution Act of 1990 (33 

19 U.S.C. 2704(a)) is amended— 

20 (1) in paragraph (3), by striking ‘‘plus 

21 $75,000,000; and’’ and inserting ‘‘and the liability 

22 of the responsible party under section 1002;’’; 

23 (2) in paragraph (4)— 

24 (A) by inserting ‘‘(except an onshore pipe25 line transporting diluted bitumen, bituminous 


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1 mixtures, or any oil manufactured from bitu2 men)’’ after ‘‘for any onshore facility’’; and 

3 (B) by striking the period at the end and 

4 inserting ‘‘; and’’; and 

5 (3) by adding at the end the following: 

6 ‘‘(5) for any onshore facility transporting di7 luted bitumen, bituminous mixtures, or any oil man8 ufactured from bitumen, the liability of the respon9 sible party under section 1002.’’. 

10 SEC. 7. FUNDS TO WORLD BANK FOR FINANCING 

11 PROJECTS THAT SUPPORT COAL, OIL, OR 

12 NATURAL GAS. 

13 (a) RESCISSION OF FUNDS.—Effective on the date 

14 of enactment of this Act, there are rescinded all unobli15 gated balances of the amounts made available to the Inter16 national Bank for Reconstruction and Development and 

17 the International Development Association (commonly 

18 known as the ‘‘World Bank’’), and each other similar 

19 international financing entity that has received amounts 

20 from the United States, as determined by the Secretary 

21 of the Treasury, to carry out any project that supports 

22 coal, oil, or natural gas. 

23 (b) FUTURE FUNDS.—Notwithstanding any other 

24 provision of law, any amounts made available to the World 

25 Bank or any other international financing entity shall not 


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1 be used to carry out any project that supports coal, oil, 

2 or natural gas. 

3 SEC. 8. OFFICE OF FOSSIL ENERGY RESEARCH AND DEVEL4 OPMENT. 

5 (a) IN GENERAL.—Section 203(a)(2) of the Depart6 ment of Energy Organization Act (42 U.S.C. 7133(a)(2)) 

7 is amended— 

8 (1) in subparagraph (C), by inserting ‘‘and’’ 

9 after the semicolon at the end; 

10 (2) by striking subparagraph (D); and 

11 (3) by redesignating subparagraph (E) as sub12 paragraph (D). 

13 (b) TERMINATION.—Notwithstanding any other pro14 vision of law, the Office of Fossil Energy Research and 

15 Development and the authority to carry out any program 

16 or activity of the Office (as in existence on the day before 

17 the date of enactment of this Act) is terminated. 

18 SEC. 9. ADVANCED RESEARCH PROJECTS AGENCY—EN19 ERGY. 

20 None of the funds made available to the Advanced 

21 Research Projects Agency—Energy shall be used to carry 

22 out any project that supports coal, oil, or natural gas. 

23 SEC. 10. INCENTIVES FOR INNOVATIVE TECHNOLOGIES. 

24 (a) IN GENERAL.—Section 1703 of the Energy Policy 

25 Act of 2005 (42 U.S.C. 16513) is amended— 


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1 (1) in subsection (b)— 

2 (A) by striking paragraph (2); 

3 (B) by striking paragraph (10); and 

4 (C) by redesignating paragraphs (3) 

5 through (9) as paragraphs (2) through (8) re6 spectively; 

7 (2) by striking subsection (c); and 

8 (3) by redesignating subsections (d) and (e) as 

9 paragraphs (c) and (d) respectively. 

10 (b) CONFORMING AMENDMENT.—Section 1704 of the 

11 Energy Policy Act of 2005 is amended— 

12 (1) in subsection (a), by striking ‘‘(a) IN GEN13 ERAL.—’’; and 

14 (2) by striking subsection (b). 

15 SEC. 11. RURAL UTILITY SERVICE LOAN GUARANTEES. 

16 The Secretary of Agriculture shall not make a loan 

17 under title III of the Rural Electrification Act of 1936 

18 (7 U.S.C. 931 et seq.) to an applicant for the purpose 

19 of carrying out any project that will use coal, oil, or nat20 ural gas. 


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1 SEC. 12. FUNDS TO THE OVERSEAS PRIVATE INVESTMENT 

2 CORPORATION OR THE EXPORT-IMPORT 

3 BANK OF THE UNITED STATES FOR FINANC4 ING PROJECTS, TRANSACTIONS, OR OTHER 

5 ACTIVITIES THAT SUPPORT COAL, OIL, OR 

6 NATURAL GAS. 

7 (a) RESCISSION OF FUNDS.—Effective on the date 

8 of enactment of this Act, there are rescinded all unobli9 gated balances of the amounts made available to the Over10 seas Private Investment Corporation or the Export-Import 

11 Bank of the United States to carry out any project, trans12 action, or other activity that supports coal, oil, or natural 

13 gas production. 

14 (b) FUTURE FUNDS.—Notwithstanding any other 

15 provision of law, any amounts made available to the Over16 seas Private Investment Corporation or the Export-Import 

17 Bank of the United States shall not be used to carry out 

18 any project, transaction, or other activity that supports 

19 coal, oil, or natural gas production. 

20 SEC. 13. TRANSPORTATION FUNDS FOR GRANTS, LOANS, 

21 LOAN GUARANTEES, AND OTHER DIRECT AS22 SISTANCE. 

23 Notwithstanding any other provision of law, any 

24 amounts made available to the Department of Transpor25 tation (including the Federal Railroad Administration) 

26 shall not be used to award any grant, loan, loan guarantee, 


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1 or provide any other direct assistance to any rail or port 

2 project that transports coal, oil, or natural gas. 

3 SEC. 14. TERMINATION OF VARIOUS TAX EXPENDITURES 

4 RELATING TO FOSSIL FUELS. 

5 (a) IN GENERAL.—Subchapter C of chapter 90 of the 

6 Internal Revenue Code of 1986 is amended by adding at 

7 the end the following new section: 

8 ‘‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS RELAT9 ING TO FOSSIL FUEL INCENTIVES. 

10 ‘‘(a) IN GENERAL.—The following provisions shall 

11 not apply to taxable years beginning after the date of the 

12 enactment of the End Polluter Welfare Act of 2012: 

13 ‘‘(1) Section 43 (relating to enhanced oil recov14 ery credit). 

15 ‘‘(2) Section 45I (relating to credit for pro16 ducing oil and natural gas from marginal wells). 

17 ‘‘(3) Section 45K (relating to credit for pro18 ducing fuel from a nonconventional source). 

19 ‘‘(4) Section 193 (relating to tertiary 

20 injectants). 

21 ‘‘(5) Section 199(d)(9) (relating to special rule 

22 for taxpayers with oil related qualified production 

23 activities income). 

24 ‘‘(6) Section 461(i)(2) (relating to special rule 

25 for spudding of oil or natural gas wells). 


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1 ‘‘(7) Section 469(c)(3) (relating to working in2 terests in oil and natural gas property). 

3 ‘‘(8) Section 613A (relating to limitations on 

4 percentage depletion in case of oil and natural gas 

5 wells). 

6 ‘‘(9) Section 617 (relating to deduction and re7 capture of certain mining exploration expenditures). 

8 ‘‘(10) Section 7704(d)(1)(E) (relating to quali9 fying income). 

10 ‘‘(b) PROVISIONS RELATING TO PROPERTY.—The 

11 following provisions shall not apply to property placed in 

12 service after the date of the enactment of the End Polluter 

13 Welfare Act of 2012: 

14 ‘‘(1) Subparagraphs (C)(iii) and (E)(viii) of 

15 section 168(e)(3) (relating to classification of certain 

16 property). 

17 ‘‘(2) Section 169 (relating to amortization of 

18 pollution control facilities) with respect to any at19 mospheric pollution control facility. 

20 ‘‘(3) Section 179C (relating to election to ex21 pense certain refineries). 

22 ‘‘(c) PROVISIONS RELATING TO COSTS AND EX23 PENSES.—The following provisions shall not apply to costs 

24 or expenses paid or incurred after the date of the enact25 ment of the End Polluter Welfare Act of 2012: 


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1 ‘‘(1) Section 179B (relating to deduction for 

2 capital costs incurred in complying with Environ3 mental Protection Agency sulfur regulations). 

4 ‘‘(2) Section 198 (relating to expensing of envi5 ronmental remediation costs). 

6 ‘‘(3) Section 263(c) (relating to intangible drill7 ing and development costs) with respect to costs in 

8 the case of oil and natural gas wells. 

9 ‘‘(4) Section 468 (relating to special rules for 

10 mining and solid waste reclamation and closing 

11 costs). 

12 ‘‘(d) 5-YEAR CARRYBACK FOR MARGINAL OIL AND

13 NATURAL GAS WELL PRODUCTION CREDIT.—Section 

14 39(a)(3) (relating to 5-year carryback for marginal oil and 

15 natural gas well production credit) shall not apply to cred16 its determined in taxable years beginning after the date 

17 of the enactment of the End Polluter Welfare Act of 2012. 

18 ‘‘(e) CREDIT FOR CARBON DIOXIDE SEQUESTRA19 TION.—Section 45Q (relating to credit for carbon dioxide 

20 sequestration) shall not apply to carbon dioxide captured 

21 after the date of the enactment of the End Polluter Wel22 fare Act of 2012. 

23 ‘‘(f) ALLOCATED CREDITS.—No new credits shall be 

24 certified under section 48A (relating to qualifying ad25 vanced coal project credit) or section 48B (relating to 


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1 qualifying gasification project credit) after the date of the 

2 enactment of the End Polluter Welfare Act of 2012. 

3 ‘‘(g) ARBITRAGE BONDS.—Section 148(b)(4) (relat4 ing to safe harbor for prepaid natural gas) shall not apply 

5 to obligations issued after the date of the enactment of 

6 the End Polluter Welfare Act of 2012’’. 

7 (b) CONFORMING AMENDMENT.—The table of sec8 tions for subchapter C of chapter 90 is amended by adding 

9 at the end the following new item: 

‘‘Sec. 7875. Termination of certain provisions.’’. 

10 SEC. 15. TERMINATION OF ALTERNATIVE FUEL VEHICLE 

11 REFUELING PROPERTY CREDIT WITH RE12 SPECT TO FOSSIL FUELS. 

13 (a) IN GENERAL.—Paragraph (2) of section 30C(c) 

14 of the Internal Revenue Code of 1986 is amended— 

15 (1) by striking ‘‘, natural gas, compressed nat16 ural gas, liquefied natural gas, liquefied petroleum 

17 gas,’’ in subparagraph (A), 

18 (2) by striking subparagraph (B), and 

19 (3) by redesignating subparagraph (C) as sub20 paragraph (B). 

21 (b) TECHNICAL AMENDMENT.—Paragraph (2) of 

22 section 30C(g) of the Internal Revenue Code of 1986 is 

23 amended by striking the second period. 


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

2 this section shall apply to property placed in service after 

3 December 31, 2011. 

4 SEC. 16. UNIFORM SEVEN-YEAR AMORTIZATION FOR GEO5 LOGICAL AND GEOPHYSICAL EXPENDITURES. 

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

7 Revenue Code of 1986 is amended— 

8 (1) by striking ‘‘24-month period’’ each place it 

9 appears in paragraphs (1) and (4) and inserting ‘‘7- 

10 year period’’, and 

11 (2) by striking paragraph (5). 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to amounts paid or incurred after 

14 the date of the enactment of this Act. 

15 SEC. 17. NATURAL GAS GATHERING LINES TREATED AS 15- 

16 YEAR PROPERTY. 

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

18 168(e)(3) of the Internal Revenue Code of 1986 is amend19 ed by striking ‘‘and’’ at the end of clause (viii), by striking 

20 the period at the end of clause (ix) and inserting ‘‘, and’’, 

21 and by adding at the end the following new clause: 

22 ‘‘(x) any natural gas gathering line 

23 the original use of which commences with 

24 the taxpayer after the date of the enact25 ment of this clause.’’. 


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1 (b) ALTERNATIVE SYSTEM.—The table contained in 

2 section 168(g)(3)(B) of the Internal Revenue Code of 

3 1986 is amended by inserting after the item relating to 

4 subparagraph (E)(ix) the following new item: 

‘‘(E)(x) ...................................................................................................... 22’’. 

5 (c) CONFORMING AMENDMENT.—Clause (iv) of sec6 tion 168(e)(3)(C) of the Internal Revenue Code of 1986 

7 is amended by inserting ‘‘and on or before the date of the 

8 enactment of the End Polluter Welfare Act of 2012’’ after 

9 ‘‘April 11, 2005’’. 

10 (d) EFFECTIVE DATE.— 

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

12 this section shall apply to property placed in service 

13 on and after the date of the enactment of this Act. 

14 (2) EXCEPTION.—The amendments made by 

15 this section shall not apply to any property with re16 spect to which the taxpayer or a related party has 

17 entered into a binding contract for the construction 

18 thereof on or before the date of the enactment of 

19 this Act, or, in the case of self-constructed property, 

20 has started construction on or before such date. 

21 SEC. 18. REPEAL OF DOMESTIC MANUFACTURING DEDUC22 TION FOR HARD MINERAL MINING. 

23 (a) IN GENERAL.—Subparagraph (B) of section 

24 199(c)(4) of the Internal Revenue Code of 1986 is amend25 ed by striking ‘‘and’’ at the end of clause (ii), by striking 


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1 the period at the end of clause (iii) and inserting ‘‘, and’’, 

2 and by adding at the end the following new clause: 

3 ‘‘(iv) the mining of any hard min4 eral.’’. 

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

6 this section shall apply to taxable years beginning after 

7 the date of the enactment of this Act. 

8 SEC. 19. LIMITATION ON DEDUCTION FOR INCOME ATTRIB9 UTABLE TO DOMESTIC PRODUCTION OF OIL, 

10 NATURAL GAS, OR PRIMARY PRODUCTS 

11 THEREOF. 

12 (a) DENIAL OF DEDUCTION.—Paragraph (4) of sec13 tion 199(c) of the Internal Revenue Code of 1986 is 

14 amended by adding at the end the following new subpara15 graph: 

16 ‘‘(E) SPECIAL RULE FOR OIL, NATURAL

17 GAS, AND COAL INCOME.—The term ‘domestic 

18 production gross receipts’ shall not include 

19 gross receipts from the production, refining, 

20 processing, transportation, or distribution of oil, 

21 natural gas, or coal, or any primary product 

22 (within the meaning of subsection (d)(9)) there23 of.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 20. TERMINATION OF LAST-IN, FIRST-OUT METHOD OF 

5 INVENTORY FOR OIL, NATURAL GAS, AND 

6 COAL COMPANIES. 

7 (a) IN GENERAL.—Section 472 of the Internal Rev8 enue Code of 1986 is amended by adding at the end the 

9 following new subsection: 

10 ‘‘(h) TERMINATION FOR OIL, NATURAL GAS, AND

11 COAL COMPANIES.—Subsection (a) shall not apply to any 

12 taxpayer that is in the trade or business of the production, 

13 refining, processing, transportation, or distribution of oil, 

14 natural gas, or coal for any taxable year beginning after 

15 December 31, 2012.’’. 

16 (b) ADDITIONAL TERMINATION.—Section 473 of the 

17 Internal Revenue Code of 1986 is amended by adding at 

18 the end the following new subsection: 

19 ‘‘(h) TERMINATION FOR OIL, NATURAL GAS, AND

20 COAL COMPANIES.—This section shall not apply to any 

21 taxpayer that is in the trade or business of the production, 

22 refining, processing, transportation, or distribution of oil, 

23 natural gas, or coal for any taxable year beginning after 

24 December 31, 2012.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 21. REPEAL OF PERCENTAGE DEPLETION FOR COAL 

5 AND HARD MINERAL FOSSIL FUELS. 

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

8 following new subsection: 

9 ‘‘(f) TERMINATION WITH RESPECT TO COAL AND

10 HARD MINERAL FOSSIL FUELS.—In the case of coal, lig11 nite, and oil shale (other than oil shale described in sub12 section (b)(5)), the allowance for depletion shall be com13 puted without reference to this section. for any taxable 

14 year beginning after the date of the enactment of the End 

15 Polluter Welfare Act of 2012.’’. 

16 (b) CONFORMING AMENDMENTS.— 

17 (1) COAL AND LIGNITE.—Section 613(b)(4) of 

18 the Internal Revenue Code of 1986 is amended by 

19 striking ‘‘coal, lignite,’’. 

20 (2) OIL SHALE.—Section 613(b)(2) of such 

21 Code is amended to read as follows: 

22 ‘‘(2) 15 PERCENT.—If, from deposits in the 

23 United States, gold, silver, copper, and iron ore.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 22. TERMINATION OF CAPITAL GAINS TREATMENT 

5 FOR ROYALTIES FROM COAL. 

6 (a) IN GENERAL.—Subsection (c) of section 631 of 

7 the Internal Revenue Code of 1986 is amended— 

8 (1) by striking ‘‘coal (including lignite), or iron 

9 ore’’ and inserting ‘‘iron ore’’, 

10 (2) by striking ‘‘coal or iron ore’’ each place it 

11 appears and inserting ‘‘iron ore’’, 

12 (3) by striking ‘‘iron ore or coal’’ each place it 

13 appears and inserting ‘‘iron ore’’, and 

14 (4) by striking ‘‘COAL OR’’ in the heading. 

15 (b) CONFORMING AMENDMENT.—The heading of sec16 tion 631 of the Internal Revenue Code of 1986 is amended 

17 by striking ‘‘, COAL,’’. 

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

19 this section shall apply to dispositions after the date of 

20 the enactment of this Act. 


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1 SEC. 23. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

2 APPLICABLE TO OIL, NATURAL GAS, AND 

3 COAL COMPANIES WHICH ARE DUAL CAPAC4 ITY TAXPAYERS. 

5 (a) IN GENERAL.—Section 901 of the Internal Rev6 enue Code of 1986 is amended by redesignating subsection 

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

8 the following new subsection: 

9 ‘‘(n) SPECIAL RULES RELATING TO OIL, NATURAL

10 GAS, AND COAL COMPANIES WHICH ARE DUAL CAPACITY

11 TAXPAYERS.— 

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

13 other provision of this chapter, any amount paid or 

14 accrued to a foreign country or possession of the 

15 United States for any period by a dual capacity tax16 payer which is in the trade or business of the pro17 duction, refining, processing, transportation, or dis18 tribution of oil, natural gas, or coal shall not be con19 sidered a tax— 

20 ‘‘(A) if, for such period, the foreign coun21 try or possession does not impose a generally 

22 applicable income tax, or 

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

24 the amount (determined in accordance with reg25 ulations) which— 


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1 ‘‘(i) is paid by such dual capacity tax2 payer pursuant to the generally applicable 

3 income tax imposed by the country or pos4 session, or 

5 ‘‘(ii) would be paid if the generally ap6 plicable income tax imposed by the country 

7 or possession were applicable to such dual 

8 capacity taxpayer. 

9 Nothing in this paragraph shall be construed to 

10 imply the proper treatment of any such amount not 

11 in excess of the amount determined under subpara12 graph (B). 

13 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur14 poses of this subsection, the term ‘dual capacity tax15 payer’ means, with respect to any foreign country or 

16 possession of the United States, a person who— 

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

18 possession, and 

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

20 indirectly a specific economic benefit (as deter21 mined in accordance with regulations) from 

22 such country or possession. 

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

24 For purposes of this subsection— 


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

2 applicable income tax’ means an income tax (or 

3 a series of income taxes) which is generally im4 posed under the laws of a foreign country or 

5 possession on income derived from the conduct 

6 of a trade or business within such country or 

7 possession. 

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

9 include a tax unless it has substantial applica10 tion, by its terms and in practice, to— 

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

12 taxpayers, and 

13 ‘‘(ii) persons who are citizens or resi14 dents of the foreign country or posses15 sion.’’. 

16 (b) EFFECTIVE DATE.— 

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

18 this section shall apply to taxes paid or accrued in 

19 taxable years beginning after the date of the enact20 ment of this Act. 

21 (2) CONTRARY TREATY OBLIGATIONS

22 UPHELD.—The amendments made by this section 

23 shall not apply to the extent contrary to any treaty 

24 obligation of the United States. 


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1 SEC. 24. INCREASE IN OIL SPILL LIABILITY TRUST FUND FI2 NANCING RATE. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 4611(c)(2) of the Internal Revenue Code of 1986 is 

5 amended to read as follows: 

6 ‘‘(B) the Oil Spill Liability Trust Fund fi7 nancing rate is— 

8 ‘‘(i) in the case of crude oil received 

9 or petroleum products entered before Jan10 uary 1, 2013, 8 cents a barrel, 

11 ‘‘(ii) in the case of crude oil received 

12 or petroleum products entered after De13 cember 31, 2012, and before January 1, 

14 2017, 9 cents a barrel, and 

15 ‘‘(iii) in the case of crude oil received 

16 or petroleum products entered after De17 cember 31, 2016, 10 cents a barrel.’’. 

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

19 this section shall apply to crude oil received and petroleum 

20 products entered after the date of the enactment of this 

21 Act. 

22 SEC. 25. APPLICATION OF CERTAIN ENVIRONMENTAL 

23 TAXES TO SYNTHETIC CRUDE OIL. 

24 (a) IN GENERAL.—Paragraph (1) of section 4612(a) 

25 of the Internal Revenue Code of 1986 is amended to read 

26 as follows: 


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1 ‘‘(1) CRUDE OIL.— 

2 ‘‘(A) IN GENERAL.—The term ‘crude oil’ 

3 includes crude oil condensates, natural gasoline, 

4 and synthetic crude oil. 

5 ‘‘(B) SYNTHETIC CRUDE OIL.—For pur6 poses of subparagraph (A), the term ‘synthetic 

7 crude oil’ means any bitumen and bituminous 

8 mixtures, any oil manufactured from bitumen 

9 and bituminous mixtures, and any liquid fuel 

10 manufactured from coal.’’. 

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

12 this section shall apply to oil and petroleum products re13 ceived or entered during calendar quarters beginning more 

14 than 60 days after the date of the enactment of this Act. 

15 SEC. 26. DENIAL OF DEDUCTION FOR REMOVAL COSTS AND 

16 DAMAGES FOR CERTAIN OIL SPILLS. 

17 (a) IN GENERAL.—Part IX of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 is amended 

19 by adding at the end the following new section: 

20 ‘‘SEC. 280I. EXPENSES FOR REMOVAL COSTS AND DAMAGES 

21 RELATING TO CERTAIN OIL SPILL LIABILITY. 

22 ‘‘No deduction shall be allowed under this chapter for 

23 any amount paid or incurred with respect to any costs or 

24 damages for which the taxpayer is liable under section 

25 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702).’’. 


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

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

3 is amended by adding at the end the following new item: 

‘‘Sec. 280I. Expenses for removal costs and damages relating to certain oil spill 

liability.’’. 

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

5 this section shall apply with respect to any liability arising 

6 in taxable years ending after the date of the enactment 

7 of this Act. 

8 SEC. 27. TAX ON CRUDE OIL AND NATURAL GAS PRODUCED 

9 FROM THE OUTER CONTINENTAL SHELF IN 

10 THE GULF OF MEXICO. 

11 (a) IN GENERAL.—Subtitle E of the Internal Rev12 enue Code of 1986 is amended by adding at the end the 

13 following new chapter: 

14 ‘‘CHAPTER 56—TAX ON SEVERANCE OF 

15 CRUDE OIL AND NATURAL GAS FROM 

16 THE OUTER CONTINENTAL SHELF IN 

17 THE GULF OF MEXICO 

‘‘Sec. 5896. Imposition of tax. 

‘‘Sec. 5897. Taxable crude oil or natural gas and removal price. 

‘‘Sec. 5898. Special rules and definitions. 

18 ‘‘SEC. 5896. IMPOSITION OF TAX. 

19 ‘‘(a) IN GENERAL.—In addition to any other tax im20 posed under this title, there is hereby imposed a tax equal 

21 to 13 percent of the removal price of any taxable crude 


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1 oil or natural gas removed from the premises during any 

2 taxable period. 

3 ‘‘(b) CREDIT FOR FEDERAL ROYALTIES PAID.— 

4 ‘‘(1) IN GENERAL.—There shall be allowed as a 

5 credit against the tax imposed by subsection (a) with 

6 respect to the production of any taxable crude oil or 

7 natural gas an amount equal to the aggregate 

8 amount of royalties paid under Federal law with re9 spect to such production. 

10 ‘‘(2) LIMITATION.—The aggregate amount of 

11 credits allowed under paragraph (1) to any taxpayer 

12 for any taxable period shall not exceed the amount 

13 of tax imposed by subsection (a) for such taxable pe14 riod. 

15 ‘‘(c) TAX PAID BY PRODUCER.—The tax imposed by 

16 this section shall be paid by the producer of the taxable 

17 crude oil or natural gas. 

18 ‘‘SEC. 5897. TAXABLE CRUDE OIL OR NATURAL GAS AND RE19 MOVAL PRICE. 

20 ‘‘(a) TAXABLE CRUDE OIL OR NATURAL GAS.—For 

21 purposes of this chapter, the term ‘taxable crude oil or 

22 natural gas’ means crude oil or natural gas which is pro23 duced from Federal submerged lands on the outer Conti24 nental Shelf in the Gulf of Mexico pursuant to a lease 


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1 entered into with the United States which authorizes the 

2 production. 

3 ‘‘(b) REMOVAL PRICE.—For purposes of this chap4 ter— 

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the term ‘removal price’ 

7 means— 

8 ‘‘(A) in the case of taxable crude oil, the 

9 amount for which a barrel of such crude oil is 

10 sold, and 

11 ‘‘(B) in the case of taxable natural gas, the 

12 amount per 1,000 cubic feet for which such 

13 natural gas is sold. 

14 ‘‘(2) SALES BETWEEN RELATED PERSONS.—In 

15 the case of a sale between related persons, the re16 moval price shall not be less than the constructive 

17 sales price for purposes of determining gross income 

18 from the property under section 613. 

19 ‘‘(3) OIL OR NATURAL GAS REMOVED FROM

20 PROPERTY BEFORE SALE.—If crude oil or natural 

21 gas is removed from the property before it is sold, 

22 the removal price shall be the constructive sales 

23 price for purposes of determining gross income from 

24 the property under section 613. 


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1 ‘‘(4) REFINING BEGUN ON PROPERTY.—If the 

2 manufacture or conversion of crude oil into refined 

3 products begins before such oil is removed from the 

4 property— 

5 ‘‘(A) such oil shall be treated as removed 

6 on the day such manufacture or conversion be7 gins, and 

8 ‘‘(B) the removal price shall be the con9 structive sales price for purposes of determining 

10 gross income from the property under section 

11 613. 

12 ‘‘(5) PROPERTY.—The term ‘property’ has the 

13 meaning given such term by section 614. 

14 ‘‘SEC. 5898. SPECIAL RULES AND DEFINITIONS. 

15 ‘‘(a) ADMINISTRATIVE REQUIREMENTS.— 

16 ‘‘(1) WITHHOLDING AND DEPOSIT OF TAX.— 

17 The Secretary shall provide for the withholding and 

18 deposit of the tax imposed under section 5896 on a 

19 quarterly basis. 

20 ‘‘(2) RECORDS AND INFORMATION.—Each tax21 payer liable for tax under section 5896 shall keep 

22 such records, make such returns, and furnish such 

23 information (to the Secretary and to other persons 

24 having an interest in the taxable crude oil or natural 


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1 gas) with respect to such oil as the Secretary may 

2 by regulations prescribe. 

3 ‘‘(3) TAXABLE PERIODS; RETURN OF TAX.— 

4 ‘‘(A) TAXABLE PERIOD.—Except as pro5 vided by the Secretary, each calendar year shall 

6 constitute a taxable period. 

7 ‘‘(B) RETURNS.—The Secretary shall pro8 vide for the filing, and the time for filing, of the 

9 return of the tax imposed under section 5896. 

10 ‘‘(b) DEFINITIONS.—For purposes of this chapter— 

11 ‘‘(1) PRODUCER.—The term ‘producer’ means 

12 the holder of the economic interest with respect to 

13 the crude oil or natural gas. 

14 ‘‘(2) CRUDE OIL.—The term ‘crude oil’ includes 

15 crude oil condensates and natural gasoline. 

16 ‘‘(3) PREMISES AND CRUDE OIL PRODUCT.— 

17 The terms ‘premises’ and ‘crude oil product’ have 

18 the same meanings as when used for purposes of de19 termining gross income from the property under sec20 tion 613. 

21 ‘‘(c) ADJUSTMENT OF REMOVAL PRICE.—In deter22 mining the removal price of oil or natural gas from a prop23 erty in the case of any transaction, the Secretary may ad24 just the removal price to reflect clearly the fair market 

25 value of oil or natural gas removed. 


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1 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be necessary or appropriate to 

3 carry out the purposes of this chapter.’’. 

4 (b) DEDUCTIBILITY OF TAX.—The first sentence of 

5 section 164(a) is amended by inserting after paragraph 

6 (6) the following new paragraph: 

7 ‘‘(7) The tax imposed by section 5896(a) (after 

8 application of section 5896(b)) on the severance of 

9 crude oil or natural gas from the outer Continental 

10 Shelf in the Gulf of Mexico.’’. 

11 (c) CLERICAL AMENDMENT.—The table of chapters 

12 for subtitle E is amended by adding at the end the fol13 lowing new item: 

‘‘CHAPTER 56. Tax on severance of crude oil and natural gas 

from the outer Continental Shelf in the Gulf of 

Mexico.’’. 

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

15 this section shall apply to crude oil or natural gas removed 

16 after December 31, 2012. 

17 SEC. 28. POWDER RIVER BASIN. 

18 (a) DESIGNATION OF THE POWDER RIVER BASIN AS

19 A COAL PRODUCING REGION.—The Director of the Bu20 reau of Land Management shall designate the Powder 

21 River Basin as a coal producing region. 

22 (b) REPORT.—Not later than 1 year after the date 

23 of enactment of this Act, the Director of the Bureau of 


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1 Land Management shall submit to Congress a report that 

2 includes— 

3 (1) a study of the fair market value and the 

4 amount of royalties paid on coal leases in the Pow5 der River Basin compared to other national and 

6 international coal markets; and 

7 (2) any policy recommendations to capture the 

8 future market value of the coal leases in the Powder 

9 River Basin. 

10 SEC. 29. REPORTS. 

11 (a) DEFINITION OF FOSSIL-FUEL-PRODUCTION SUB12 SIDY.—In this section, the term ‘‘subsidy for fossil-fuel 

13 production’’ means any direct funding, tax treatment or 

14 incentive, risk-reduction benefit, financing assistance or 

15 guarantee, royalty relief, or other provision that provides 

16 a financial benefit to an oil, natural gas, or coal company 

17 for the production of fossil fuels. 

18 (b) REPORT TO CONGRESS.—Not later than 1 year 

19 after the date of enactment of this Act, the Secretary of 

20 the Treasury, in coordination with the Secretary of En21 ergy, shall submit to Congress a report detailing each Fed22 eral law (including regulations), other than those amended 

23 by this Act, as in effect on the date on which the report 

24 is submitted, that includes a subsidy for fossil-fuel produc25 tion. 


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1 (c) REPORT ON MODIFIED RECOVERY PERIOD.— 

2 (1) IN GENERAL.—Not later than 1 year after 

3 the date of enactment of this Act, the Secretary, in 

4 coordination with the Commissioner of Internal Rev5 enue, shall submit to Congress a report on the appli6 cable recovery period under the accelerated cost re7 covery system provided in section 168 of the Inter8 nal Revenue Code of 1986 for each type of property 

9 involved in fossil-fuel production, including pipelines, 

10 power generation property, refineries, and drilling 

11 equipment, to determine if any assets are receiving 

12 a subsidy for fossil-fuel production. 

13 (2) ELIMINATION OF SUBSIDY.—In the case of 

14 any type of property that the Commissioner of Inter15 nal Revenue determines is receiving a subsidy for 

16 fossil-fuel production under such section 168, for 

17 property placed in service in taxable years beginning 

18 after the date of such determination, such section 

19 168 shall not apply. The preceding sentence shall 

20 not apply to any property with respect to a taxable 

21 year unless such determination is published before 

22 the first day of such taxable year. 

Æ 


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