I

106TH CONGRESS

1ST SESSION H. R. 1204

To amend the Internal Revenue Code of 1986 to impose a tax on the

importation of crude oil and petroleum products.

IN THE HOUSE OF REPRESENTATIVES

MARCH 18, 1999

Mr. STENHOLM (for himself and Mr. WATKINS) 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 impose

a tax on the importation of crude oil and petroleum products.

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 ‘‘Environmental Equali5 zation and Energy Security Act of 1999’’.

6 SEC. 2. EXCISE TAX ON IMPORTED CRUDE OIL AND PETRO7 LEUM PRODUCTS.

8 (a) IN GENERAL.—Subtitle E of the Internal Rev9 enue Code of 1986 (relating to alcohol, tobacco, and cer-
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1 tain other excise taxes) is amended by adding at the end

2 thereof the following new chapter:

3 ‘‘CHAPTER 55—IMPORTED CRUDE OIL AND

4 PETROLEUM PRODUCTS

‘‘Sec. 5891. Imposition of tax.

‘‘Sec. 5892. Determination of prices.

‘‘Sec. 5893. Definitions.

‘‘Sec. 5894. Registration.

‘‘Sec. 5895. Procedures; returns; penalties.

5 ‘‘SEC. 5891. IMPOSITION OF TAX.

6 ‘‘(a) IMPOSITION OF TAX.—In addition to any other

7 tax imposed under this title, an excise tax is hereby im8 posed on—

9 ‘‘(1) the first sale within the United States of—

10 ‘‘(A) any crude oil, or

11 ‘‘(B) any petroleum product,

12 that has been imported into the United States, and

13 ‘‘(2) the use within the United States of—

14 ‘‘(A) any crude oil, or

15 ‘‘(B) any petroleum product,

16 that has been imported into the United States if no

17 tax has been imposed with respect to such crude oil

18 or petroleum product prior to such use.

19 ‘‘(b) RATES OF TAX.—

20 ‘‘(1) CRUDE OIL.—The taxes imposed by para21 graph (1)(A) and (2)(A) of subsection (a) shall be

22 imposed at the rate equal to the applicable environ23 mental equalization fee per barrel of crude oil.
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1 ‘‘(2) PETROLEUM PRODUCTS.—The taxes im2 posed by paragraph (1)(B) and (2)(B) of subsection

3 (a) shall be imposed at the rate equal to the applica4 ble environmental equalization fee per barrel of pe5 troleum products.

6 ‘‘(3) FRACTIONAL PARTS OF BARRELS.—In the

7 case of a fraction of a barrel, the taxes imposed by

8 subsection (a) shall be the same fraction of the

9 amount of such tax imposed on the whole barrel.

10 ‘‘(c) LIABILITY FOR PAYMENT OF TAX.—

11 ‘‘(1) SALES.—The taxes imposed by subsection

12 (a)(1) shall be paid by the first person who sells the

13 crude oil or petroleum product within the United

14 States.

15 ‘‘(2) USE.—The taxes imposed by subsection

16 (a)(2) shall be paid by the person who uses the

17 crude oil or petroleum product.

18 ‘‘(d) EXEMPTIONS.—

19 ‘‘(1) EXPORTS.—

20 ‘‘(A) IN GENERAL.—Under regulations

21 prescribed by the Secretary, no tax shall be im22 posed under this chapter on the sale of crude

23 oil or petroleum products for export or for re24 sale by the purchaser to a second purchaser for

25 export.
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1 ‘‘(B) PROOF OF EXPORT.—Where any

2 crude oil or petroleum product has been sold

3 free of tax under subparagraph (A), such sub4 paragraph shall cease to apply with respect to

5 the sale of such crude oil or petroleum product

6 unless, within the 6-month period which begins

7 on the date of the sale, the seller receives proof

8 that the crude oil or petroleum product has

9 been exported.

10 ‘‘(2) PRODUCTS IN THE NATIONAL INTER11 EST.—No tax shall be imposed under this chapter on

12 the sale or use of any petroleum product during any

13 period if the President determines that it is in the

14 national interest not to impose the tax under this

15 chapter on such product during such period.

16 ‘‘(3) PRODUCTS FROM CANADA.—No tax shall

17 be imposed by this chapter on the sale or use of—

18 ‘‘(A) any crude oil produced from a well lo19 cated in Canada, or

20 ‘‘(B) any petroleum product produced from

21 crude oil described in subparagraph (A).

22 ‘‘SEC. 5892. DETERMINATION OF ENVIRONMENTAL EQUALI23 ZATION FEE.

24 ‘‘(a) ENVIRONMENTAL EQUALIZATION FEE.—For

25 purposes of this chapter, the environmental equalization
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1 fee is the amount determined by the Secretary of Energy

2 under subsection (b).

3 ‘‘(b) DETERMINATION BY SECRETARY OF ENERGY.—

4 The Secretary of Energy, after conducting a study and

5 in consultation with the Administrator of the Environ6 mental Protection Agency and representatives from the

7 domestic petroleum industry, shall from time to time de8 termine the amount of the environmental equalization fee.

9 The amount shall be the Secretary’s estimate—

10 ‘‘(1) in the case of crude oil, of the average

11 amount per barrel of the price of domestic crude oil

12 which is attributable to costs of complying with envi13 ronmental laws and regulations of the United States;

14 and

15 ‘‘(2) in the case of petroleum products, of the

16 average amount per barrel of the price of domestic

17 petroleum products which is attributable to such

18 costs.

19 ‘‘SEC. 5893. DEFINITIONS.

20 ‘‘For purposes of this chapter—

21 ‘‘(1) CRUDE OIL.—The term ‘crude oil’ means

22 crude oil (as defined in section 4612(a)(1)) other

23 than crude oil produced from a well located in the

24 United States (as defined in section 4612(a)(4)).
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1 ‘‘(2) DOMESTIC CRUDE OIL.—The term ‘domes2 tic crude oil’ means crude oil produced from a well

3 located in the United States.

4 ‘‘(3) BARREL.—The term ‘barrel’ means 42

5 United States gallons.

6 ‘‘(4) PETROLEUM PRODUCT.—The term ‘petro7 leum product’ has the meaning given such term

8 under section 4612(a)(3).

9 ‘‘(5) EXPORT.—The term ‘export’ includes ship10 ment to a possession of the United States, and the

11 term ‘exported’ includes shipment to a possession of

12 the United States.

13 ‘‘SEC. 5894. REGISTRATION.

14 ‘‘Every person subject to tax under section 5891

15 shall, before incurring any liability for tax under such sec16 tion, register with the Secretary.’’.

17 (b) CONFORMING AMENDMENT.—The table of chap18 ters for subtitle E of such Code is amended by adding

19 at the end thereof the following new item:

‘‘Chapter 55. Imported crude oil and petroleum products.’’

20 (c) DEDUCTIBILITY OF IMPORTED CRUDE OIL

21 TAX.—The first sentence of section 164(a) of such Code

22 (relating to deduction for taxes) is amended by inserting

23 after paragraph (5) the following new paragraph:

24 ‘‘(6) The taxes imposed by section 5891 (relat25 ing to imported crude oil and petroleum products).’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this Act shall take effect on the 30th day after the date

3 of the enactment of this Act.

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