II 

111TH CONGRESS 

1ST SESSION S. 1087 

To amend the Internal Revenue Code of 1986 to repeal certain tax incentives 

related to oil and gas. 

IN THE SENATE OF THE UNITED STATES 

MAY 20, 2009 

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

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to repeal 

certain tax incentives related to oil and gas. 

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 ‘‘Energy Fairness for 

5 America Act’’. 


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1 SEC. 2. DENIAL OF DEDUCTION FOR INCOME ATTRIB2 UTABLE TO DOMESTIC PRODUCTION OF OIL, 

3 NATURAL GAS, OR PRIMARY PRODUCTS 

4 THEREOF. 

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

6 199(c)(4) of the Internal Revenue Code of 1986 (relating 

7 to exceptions) is amended by striking ‘‘or’’ at the end of 

8 clause (ii), by striking the period at the end of clause (iii) 

9 and inserting ‘‘, or’’, and by inserting after clause (iii) the 

10 following new clause: 

11 ‘‘(iv) the production, refining, proc12 essing, transportation, or distribution of 

13 oil, natural gas, or any primary product 

14 thereof.’’. 

15 (b) PRIMARY PRODUCT.—Section 199(c)(4)(B) of 

16 such Code is amended by adding at the end the following 

17 flush sentence: 

18 ‘‘For purposes of clause (iv), the term ‘primary 

19 product’ has the same meaning as when used in 

20 section 927(a)(2)(C), as in effect before its re21 peal.’’. 

22 (c) CONFORMING AMENDMENTS.— 

23 (1) Section 199(c)(4) of such Code is amend24 ed— 


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1 (A) in subparagraph (A)(i)(III) by striking 

2 ‘‘electricity, natural gas,’’ and inserting ‘‘elec3 tricity’’, and 

4 (B) in subparagraph (B)(ii) by striking 

5 ‘‘electricity, natural gas,’’ and inserting ‘‘elec6 tricity’’. 

7 (2) Section 199(d) of such Code is amended by 

8 striking paragraph (9) and by redesignating para9 graph (10) as paragraph (9). 

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

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 SEC. 3. TERMINATION OF CREDIT FOR PRODUCING OIL 

14 AND GAS FROM MARGINAL WELLS. 

15 (a) IN GENERAL.—Section 45I of the Internal Rev16 enue Code of 1986 is amended by adding at the end the 

17 following new subsection: 

18 ‘‘(e) TERMINATION.—This section shall not apply to 

19 any taxable year beginning after the date of the enactment 

20 of this subsection.’’. 

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

22 this section shall apply to taxable years beginning after 

23 the date of the enactment of this Act. 


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1 SEC. 4. REPEAL OF EXCEPTION FROM PASSIVE ACTIVITY 

2 RULES FOR WORKING INTERESTS IN OIL OR 

3 GAS PROPERTY. 

4 (a) IN GENERAL.—Section 469(c) of the Internal 

5 Revenue Code of 1986 is amended by striking paragraph 

6 (3). 

7 (b) CONFORMING AMENDMENT.—Paragraph (4) of 

8 section 469(c) of such Code is amended— 

9 (1) by striking ‘‘Paragraphs (2) and (3)’’ and 

10 inserting ‘‘Paragraph (2)’’, and 

11 (2) by striking ‘‘PARAGRAPHS (2) AND (3)’’ in 

12 the heading and inserting ‘‘PARAGRAPH (2)’’. 

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

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

16 SEC. 5. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEO17 PHYSICAL EXPENDITURES FOR ALL OIL AND 

18 GAS EXPLORATION AND DEVELOPMENT. 

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

20 Revenue Code of 1986 is amended— 

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

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

23 year period’’, and 

24 (2) by striking paragraph (5). 


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1 (b) 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. 6. TERMINATION OF DEDUCTION FOR INTANGIBLE 

5 DRILLING AND DEVELOPMENT COSTS. 

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

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

8 the following new sentence: ‘‘This subsection shall not 

9 apply to any taxable year beginning after the date of the 

10 enactment of this sentence.’’. 

11 (b) CONFORMING AMENDMENTS.—Paragraphs (2) 

12 and (3) of section 291(b) of such Code are each amended 

13 by striking ‘‘section 263(c), 616(a),’’ and inserting ‘‘sec14 tion 616(a)’’. 

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

16 this section shall apply to taxable years beginning after 

17 the date of the enactment of this Act. 

18 SEC. 7. TERMINATION OF PERCENTAGE DEPLETION AL19 LOWANCE FOR OIL AND GAS WELLS. 

20 (a) IN GENERAL.—Section 613A of the Internal Rev21 enue Code of 1986 is amended by adding at the end the 

22 following new subsection: 

23 ‘‘(f) TERMINATION.—For purposes of any taxable 

24 year beginning after the date of the enactment of this subVerDate Nov 24 2008 01:40 May 22, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1087.IS S1087

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1 section, the allowance for percentage depletion shall be 

2 zero.’’. 

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

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

Æ 


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