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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 601 Introduced in House (IH)]

113th CONGRESS
  1st Session
                                H. R. 601

    To direct the Secretary of the Interior to establish an annual 
 production incentive fee with respect to Federal onshore and offshore 
lands that are subject to a lease for production of oil or natural gas 
    under which production is not occurring, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            February 8, 2013

 Mr. Markey (for himself and Mr. Blumenauer) introduced the following 
bill; which was referred to the Committee on Natural Resources, 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 direct the Secretary of the Interior to establish an annual 
 production incentive fee with respect to Federal onshore and offshore 
lands that are subject to a lease for production of oil or natural gas 
    under which production is not occurring, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Permanent Repeal of Oil Subsidies 
Act''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
                          TITLE I--USE IT ACT

Sec. 101. Short title.
Sec. 102. Production incentive fee.
         TITLE II--DEFICIT REDUCTION THROUGH FAIR OIL ROYALTIES

Sec. 201. Short title.
Sec. 202. Eligibility for new leases and the transfer of leases.
Sec. 203. Price thresholds for royalty suspension provisions.
Sec. 204. Repeal of royalty relief provisions.
                  TITLE III--OCS FACILITY INSPECTIONS

Sec. 301. Short title.
Sec. 302. OCS facility inspection fees.
   TITLE IV--REPEAL OF FOSSIL FUEL SUBSIDIES FOR LARGE OIL COMPANIES

Sec. 401. Short title.
Sec. 402. Amortization of geological and geophysical expenditures.
Sec. 403. Producing oil and gas from marginal wells.
Sec. 404. Enhanced oil recovery credit.
Sec. 405. Intangible drilling and development costs in the case of oil 
                            and gas wells.
Sec. 406. Percentage depletion.
Sec. 407. Tertiary injectants.
Sec. 408. Passive activity losses and credits limited.
Sec. 409. Income attributable to domestic production activities.
Sec. 410. Prohibition on using last-in, first-out accounting for major 
                            integrated oil companies.
Sec. 411. Modifications of foreign tax credit rules applicable to dual 
                            capacity taxpayers.

                          TITLE I--USE IT ACT

SEC. 101. SHORT TITLE.

    This title may be cited as the ``United States Exploration on Idle 
Tracts Act'' or the ``USE IT Act''.

SEC. 102. PRODUCTION INCENTIVE FEE.

    (a) Establishment.--The Secretary of the Interior shall, within 180 
days after the date of enactment of this Act, issue regulations to 
establish an annual production incentive fee with respect to Federal 
onshore and offshore lands that are subject to a lease for production 
of oil or natural gas under which production is not occurring. Such fee 
shall apply with respect to lands that are subject to such a lease that 
is in effect on the date final regulations are promulgated under this 
subsection or that is issued thereafter.
    (b) Amount.--The amount of the fee shall be, for each acre of land 
from which oil or natural gas is produced for less than 90 days in a 
calendar year--
            (1) in the case of onshore land--
                    (A) for each of the first 3 years of the lease, $4 
                per acre in 2011 dollars;
                    (B) for the fourth year of the lease, $6 per acre 
                in 2011 dollars; and
                    (C) for the fifth year of the lease and each year 
                thereafter for which the lease is otherwise in effect, 
                $8 per acre in 2011 dollars; and
            (2) in the case of offshore land--
                    (A) for each of the third, fourth, and fifth years 
                of the lease, $4 per acre in 2011 dollars;
                    (B) for the sixth year of the lease, $6 per acre in 
                2011 dollars; and
                    (C) for the seventh year of the lease and each year 
                thereafter for which the lease is otherwise in effect, 
                $8 per acre in 2011 dollars.
    (c) Assessment and Collection.--The Secretary shall assess and 
collect the fee established under this section.
    (d) Deposit.--Amounts received by the United States as the fee 
under this section shall be deposited in the general fund of the 
Treasury.
    (e) Regulations.--The Secretary of the Interior may issue 
regulations to prevent evasion of the fee under this section.

         TITLE II--DEFICIT REDUCTION THROUGH FAIR OIL ROYALTIES

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Deficit Reduction Through Fair Oil 
Royalties Act''.

SEC. 202. ELIGIBILITY FOR NEW LEASES AND THE TRANSFER OF LEASES.

    (a) Issuance of New Leases.--
            (1) In general.--The Secretary shall not issue any new 
        lease that authorizes the production of oil or natural gas 
        under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et 
        seq.) to a person described in paragraph (2) unless the person 
        has renegotiated each covered lease with respect to which the 
        person is a lessee, to modify the payment responsibilities of 
        the person to require the payment of royalties if the price of 
        oil and natural gas is greater than or equal to the price 
        thresholds described in clauses (v) through (vii) of section 
        8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 
        1337(a)(3)(C)).
            (2) Persons described.--A person referred to in paragraph 
        (1) is a person that--
                    (A) is a lessee that--
                            (i) holds a covered lease on the date on 
                        which the Secretary considers the issuance of 
                        the new lease; or
                            (ii) was issued a covered lease before the 
                        date of enactment of this Act, but transferred 
                        the covered lease to another person or entity 
                        (including a subsidiary or affiliate of the 
                        lessee) after the date of enactment of this 
                        Act; or
                    (B) any other person that has any direct or 
                indirect interest in, or that derives any benefit from, 
                a covered lease.
            (3) Multiple lessees.--
                    (A) In general.--For purposes of paragraph (1), if 
                there are multiple lessees that own a share of a 
                covered lease, the Secretary may implement separate 
                agreements with any lessee with a share of the covered 
                lease that modifies the payment responsibilities with 
                respect to the share of the lessee to include price 
                thresholds that are equal to or less than the price 
                thresholds described in clauses (v) through (vii) of 
                section 8(a)(3)(C) of the Outer Continental Shelf Lands 
                Act (43 U.S.C. 1337(a)(3)(C)).
                    (B) Treatment of share as covered lease.--Beginning 
                on the effective date of an agreement under 
                subparagraph (A), any share subject to the agreement 
                shall not constitute a covered lease with respect to 
                any lessees that entered into the agreement.
    (b) Transfers.--A lessee or any other person who has any direct or 
indirect interest in, or who derives a benefit from, a lease shall not 
be eligible to obtain by sale or other transfer (including through a 
swap, spinoff, servicing, or other agreement) any covered lease, the 
economic benefit of any covered lease, or any other lease for the 
production of oil or natural gas in the Gulf of Mexico under the Outer 
Continental Shelf Lands Act (43 U.S.C. 1331 et seq.), unless the lessee 
or other person has--
            (1) renegotiated each covered lease with respect to which 
        the lessee or person is a lessee, to modify the payment 
        responsibilities of the lessee or person to include price 
        thresholds that are equal to or less than the price thresholds 
        described in clauses (v) through (vii) of section 8(a)(3)(C) of 
        the Outer Continental Shelf Lands Act (43 U.S.C. 
        1337(a)(3)(C)); or
            (2) entered into an agreement with the Secretary to modify 
        the terms of all covered leases of the lessee or other person 
        to include limitations on royalty relief based on market prices 
        that are equal to or less than the price thresholds described 
        in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer 
        Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
    (c) Use of Amounts for Deficit Reduction.--Notwithstanding any 
other provision of law, any amounts received by the United States as 
rentals or royalties under covered leases shall be deposited in the 
Treasury and used for Federal budget deficit reduction or, if there is 
no Federal budget deficit, for reducing the Federal debt in such manner 
as the Secretary of the Treasury considers appropriate.
    (d) Definitions.--In this section--
            (1) Covered lease.--The term ``covered lease'' means a 
        lease for oil or gas production in the Gulf of Mexico that is--
                    (A) in existence on the date of enactment of this 
                Act;
                    (B) issued by the Department of the Interior under 
                section 304 of the Outer Continental Shelf Deep Water 
                Royalty Relief Act (43 U.S.C. 1337 note; Public Law 
                104-58); and
                    (C) not subject to limitations on royalty relief 
                based on market price that are equal to or less than 
                the price thresholds described in clauses (v) through 
                (vii) of section 8(a)(3)(C) of the Outer Continental 
                Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)).
            (2) Lessee.--The term ``lessee'' includes any person or 
        other entity that controls, is controlled by, or is in or under 
        common control with, a lessee.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.

SEC. 203. PRICE THRESHOLDS FOR ROYALTY SUSPENSION PROVISIONS.

    The Secretary of the Interior shall agree to a request by any 
lessee to amend any lease issued for any Central and Western Gulf of 
Mexico tract in the period of January 1, 1996, through November 28, 
2000, to incorporate price thresholds applicable to royalty suspension 
provisions, that are equal to or less than the price thresholds 
described in clauses (v) through (vii) of section 8(a)(3)(C) of the 
Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)). Any 
amended lease shall impose the new or revised price thresholds 
effective October 1, 2013. Existing lease provisions shall prevail 
through September 30, 2013.

SEC. 204. REPEAL OF ROYALTY RELIEF PROVISIONS.

    (a) Repeal of Provisions of Energy Policy Act of 2005.--The 
following provisions of the Energy Policy Act of 2005 (Public Law 109-
58) are repealed:
            (1) Section 344 (42 U.S.C. 15904; relating to incentives 
        for natural gas production from deep wells in shallow waters of 
        the Gulf of Mexico).
            (2) Section 345 (42 U.S.C. 15905; relating to royalty 
        relief for deep water production in the Gulf of Mexico).
    (b) Repeal of Provisions Relating to Planning Areas Offshore 
Alaska.--Section 8(a)(3)(B) of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1337(a)(3)(B)) is amended by striking ``and in the Planning 
Areas offshore Alaska''.

                  TITLE III--OCS FACILITY INSPECTIONS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``No Free Inspections for Oil 
Companies Act''.

SEC. 302. OCS FACILITY INSPECTION FEES.

    Section 22 of the Outer Continental Shelf Lands Act (43 U.S.C. 
1348) is amended by adding at the end of the section the following:
    ``(g) Inspection Fees.--
            ``(1) Establishment.--The Secretary of the Interior shall 
        establish, by rule, and collect from the operators of 
        facilities subject to inspection under subsection (c) 
        nonrefundable fees for such inspections--
                    ``(A) at an aggregate level equal to the amount 
                necessary to offset the annual expenses of inspections 
                of outer Continental Shelf facilities (including mobile 
                offshore drilling units) by the Department of the 
                Interior; and
                    ``(B) using a schedule that reflects the 
                differences in complexity among the classes of 
                facilities to be inspected.
            ``(2) Ocean energy enforcement fund.--There is established 
        in the Treasury a fund, to be known as the `Ocean Energy 
        Enforcement Fund' (referred to in this subsection as the 
        `Fund'), into which shall be deposited amounts collected as 
        fees under paragraph (1) and which shall be available as 
        provided under paragraph (3).
            ``(3) Availability of fees.--Notwithstanding section 3302 
        of title 31, United States Code, all amounts collected by the 
        Secretary under this section--
                    ``(A) shall be credited as offsetting collections;
                    ``(B) shall be available for expenditure only for 
                purposes of carrying out inspections of outer 
                Continental Shelf facilities (including mobile offshore 
                drilling units) and the administration of the 
                inspection program under this section;
                    ``(C) shall be available only to the extent 
                provided for in advance in an appropriations Act; and
                    ``(D) shall remain available until expended.
            ``(4) Annual reports.--
                    ``(A) In general.--Not later than 60 days after the 
                end of each fiscal year beginning with fiscal year 
                2013, the Secretary shall submit to the Committee on 
                Energy and Natural Resources of the Senate and the 
                Committee on Natural Resources of the House of 
                Representatives a report on the operation of the Fund 
                during the fiscal year.
                    ``(B) Contents.--Each report shall include, for the 
                fiscal year covered by the report, the following:
                            ``(i) A statement of the amounts deposited 
                        into the Fund.
                            ``(ii) A description of the expenditures 
                        made from the Fund for the fiscal year, 
                        including the purpose of the expenditures.
                            ``(iii) Recommendations for additional 
                        authorities to fulfill the purpose of the Fund.
                            ``(iv) A statement of the balance remaining 
                        in the Fund at the end of the fiscal year.''.

   TITLE IV--REPEAL OF FOSSIL FUEL SUBSIDIES FOR LARGE OIL COMPANIES

SEC. 401. SHORT TITLE.

    This Act may be cited as the ``End Big Oil Tax Subsidies Act of 
2013''.

SEC. 402. AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES.

    (a) In General.--Subparagraph (A) of section 167(h)(5) of the 
Internal Revenue Code of 1986 is amended by striking ``major integrated 
oil company'' and inserting ``covered large oil company''.
    (b) Covered Large Oil Company.--Paragraph (5) of section 167(h) of 
such Act is amended by redesignating subparagraph (B) as subparagraph 
(C) and by inserting after subparagraph (A) the following new 
subparagraph:
                    ``(B) Covered large oil company.--For purposes of 
                this paragraph, the term `covered large oil company' 
                means a taxpayer which--
                            ``(i) is a major integrated oil company, or
                            ``(ii) has gross receipts in excess of 
                        $50,000,000 for the taxable year.
                For purposes of clause (ii), all persons treated as a 
                single employer under subsections (a) and (b) of 
                section 52 shall be treated as 1 person.''.
    (c) Conforming Amendment.--The heading for paragraph (5) of section 
167(h) of such Code is amended by inserting ``and other large 
taxpayers''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2012.

SEC. 403. PRODUCING OIL AND GAS FROM MARGINAL WELLS.

    (a) In General.--Section 45I of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(e) Exception for Taxpayer With Gross Receipts in Excess of 
$50,000,000.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        taxpayer whose aggregate gross receipts for the taxable year 
        are in excess of $50,000,000.
            ``(2) Aggregation rule.--For purposes of paragraph (1), all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to credits determined for taxable years beginning after December 
31, 2012.

SEC. 404. ENHANCED OIL RECOVERY CREDIT.

    (a) In General.--Section 43 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
    ``(f) Exception for Taxpayer With Gross Receipts in Excess of 
$50,000,000.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        taxpayer whose aggregate gross receipts for the taxable year 
        are in excess of $50,000,000.
            ``(2) Aggregation rule.--For purposes of paragraph (1), all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2012.

SEC. 405. INTANGIBLE DRILLING AND DEVELOPMENT COSTS IN THE CASE OF OIL 
              AND GAS WELLS.

    (a) In General.--Subsection (c) of section 263 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
sentence: ``This subsection shall not apply to amounts paid or incurred 
by a taxpayer in any taxable year in which such taxpayer has aggregate 
gross receipts for the taxable year in excess of $50,000,000, 
determined by deeming all persons treated as a single employer under 
subsections (a) and (b) of section 52 as 1 person.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred in taxable years beginning after December 
31, 2012.

SEC. 406. PERCENTAGE DEPLETION.

    (a) In General.--Section 613A of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(f) Exception for Taxpayer With Gross Receipts in Excess of 
$50,000,000.--
            ``(1) In general.--This section and section 611 shall not 
        apply to any taxpayer which has aggregate gross receipts for 
        the taxable year in excess of $50,000,000.
            ``(2) Aggregation rule.--For purposes of paragraph (1), all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.''.
    (b) Conforming Amendment.--Section 613A(c)(1) of such Code is 
amended by striking ``subsection (d)'' and inserting ``subsections (d) 
and (f)''.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2012.

SEC. 407. TERTIARY INJECTANTS.

    (a) In General.--Section 193 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(d) Exception for Taxpayer With Gross Receipts in Excess of 
$50,000,000.--
            ``(1) In general.--Subsection (a) shall not apply to any 
        taxpayer which has aggregate gross receipts for the taxable 
        year in excess of $50,000,000.
            ``(2) Aggregation rule.--For purposes of paragraph (1), all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to expenses incurred after December 31, 2012.

SEC. 408. PASSIVE ACTIVITY LOSSES AND CREDITS LIMITED.

    (a) Rules Relating to Working Interests in Oil and Gas Property.--
Paragraph (3) of section 469(c) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:
                    ``(C) Exception for taxpayer with gross receipts in 
                excess of $50,000,000.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to any taxpayer which has aggregate 
                        gross receipts for the taxable year in excess 
                        of $50,000,000.
                            ``(ii) Aggregation rule.--For purposes of 
                        clause (i), all persons treated as a single 
                        employer under subsections (a) and (b) of 
                        section 52 shall be treated as 1 person.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2012.

SEC. 409. INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES.

    (a) Denial of Deduction.--Paragraph (4) of section 199(c) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subparagraph:
                    ``(E) Special rule for certain oil and gas 
                income.--In the case of any taxpayer who is a major 
                integrated oil company (as defined in section 167(h)) 
                for the taxable year, the term `domestic production 
                gross receipts' shall not include gross receipts from 
                the production, transportation, or distribution of oil, 
                natural gas, or any primary product (within the meaning 
                of subsection (d)(9)) thereof.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2012.

SEC. 410. PROHIBITION ON USING LAST-IN, FIRST-OUT ACCOUNTING FOR MAJOR 
              INTEGRATED OIL COMPANIES.

    (a) In General.--Section 472 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(h) Major Integrated Oil Companies.--Notwithstanding any other 
provision of this section, a major integrated oil company (as defined 
in section 167(h)) may not use the method provided in subsection (b) in 
inventorying of any goods.''.
    (b) Effective Date and Special Rule.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to taxable years beginning after December 31, 2012.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendment made by this section to 
        change its method of accounting for its first taxable year 
        beginning after the date of the enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account ratably over a period (not greater than 8 
                taxable years) beginning with such first taxable year.

SEC. 411. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO DUAL 
              CAPACITY TAXPAYERS.

    (a) In General.--Section 901 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (n) as subsection (o) and by 
inserting after subsection (m) the following new subsection:
    ``(n) Special Rules Relating to Major Integrated Oil Companies 
Which Are Dual Capacity Taxpayers.--
            ``(1) General rule.--Notwithstanding any other provision of 
        this chapter, any amount paid or accrued by a dual capacity 
        taxpayer which is a major integrated oil company (as defined in 
        section 167(h)) to a foreign country or possession of the 
        United States for any period shall not be considered a tax--
                    ``(A) if, for such period, the foreign country or 
                possession does not impose a generally applicable 
                income tax, or
                    ``(B) to the extent such amount exceeds the amount 
                (determined in accordance with regulations) which--
                            ``(i) is paid by such dual capacity 
                        taxpayer pursuant to the generally applicable 
                        income tax imposed by the country or 
                        possession, or
                            ``(ii) would be paid if the generally 
                        applicable income tax imposed by the country or 
                        possession were applicable to such dual 
                        capacity taxpayer.
        Nothing in this paragraph shall be construed to imply the 
        proper treatment of any such amount not in excess of the amount 
        determined under subparagraph (B).
            ``(2) Dual capacity taxpayer.--For purposes of this 
        subsection, the term `dual capacity taxpayer' means, with 
        respect to any foreign country or possession of the United 
        States, a person who--
                    ``(A) is subject to a levy of such country or 
                possession, and
                    ``(B) receives (or will receive) directly or 
                indirectly a specific economic benefit (as determined 
                in accordance with regulations) from such country or 
                possession.
            ``(3) Generally applicable income tax.--For purposes of 
        this subsection--
                    ``(A) In general.--The term `generally applicable 
                income tax' means an income tax (or a series of income 
                taxes) which is generally imposed under the laws of a 
                foreign country or possession on income derived from 
                the conduct of a trade or business within such country 
                or possession.
                    ``(B) Exceptions.--Such term shall not include a 
                tax unless it has substantial application, by its terms 
                and in practice, to--
                            ``(i) persons who are not dual capacity 
                        taxpayers, and
                            ``(ii) persons who are citizens or 
                        residents of the foreign country or 
                        possession.''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxes paid or accrued in taxable years beginning after 
        December 31, 2012.
            (2) Contrary treaty obligations upheld.--The amendments 
        made by this section shall not apply to the extent contrary to 
        any treaty obligation of the United States.
                                 <all>
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