II 

113TH CONGRESS 

1ST SESSION S. 329 

To eliminate certain fuel subsidies and to amend the Internal Revenue Code 

of 1986 to extend certain energy tax incentives. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 14, 2013 

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

to the Committee on Finance 

A BILL 

To eliminate certain fuel subsidies and to amend the Internal 

Revenue Code of 1986 to extend certain energy tax incentives. 

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 ‘‘Sustainable Energy 

5 Act’’. 

6 TITLE I—ELIMINATION OF FUEL 

7 SUBSIDIES 

8 SEC. 101. FINDINGS. 

9 Congress finds that— 


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1 (1) President Obama joined other world leaders 

2 from the Group of Twenty in pledging to phase out 

3 wasteful fossil-fuel subsidies; 

4 (2) the Environmental Law Institute found that 

5 from 2002 through 2008, Federal fossil-fuel sub6 sidies in the United States totaled over 

7 $72,000,000,000, while Federal renewable-energy in8 vestments totaled $12,200,000,000; 

9 (3) the Congressional Research Service esti10 mates that from 1948 to the present, United States 

11 investments in fossil-fuel research and development 

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

13 while investments in renewable energy totaled over 

14 $22,000,000,000; 

15 (4) the 5 largest oil corporations have made 

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

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

18 (5) United States taxpayers should not be sub19 sidizing oil, natural gas, and coal companies in a pe20 riod of record debt. 

21 SEC. 102. ROYALTY RELIEF. 

22 (a) IN GENERAL.— 

23 (1) OUTER CONTINENTAL SHELF LANDS ACT.— 

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

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


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

2 (B) by redesignating subparagraph (C) as 

3 subparagraph (B). 

4 (2) ENERGY POLICY ACT OF 2005.— 

5 (A) INCENTIVES FOR NATURAL GAS PRO6 DUCTION FROM DEEP WELLS IN THE SHALLOW

7 WATERS OF THE GULF OF MEXICO.—Section 

8 344 of the Energy Policy Act of 2005 (42 

9 U.S.C. 15904) is repealed. 

10 (B) DEEP WATER PRODUCTION.—Section 

11 345 of the Energy Policy Act of 2005 (42 

12 U.S.C. 15905) is repealed. 

13 (b) FUTURE PROVISIONS.—Notwithstanding any 

14 other provision of law (including regulations), royalty re15 lief shall not be permitted under a lease issued under sec16 tion 8 of the Outer Continental Shelf Lands Act (43 

17 U.S.C. 1337). 

18 SEC. 103. ROYALTIES UNDER MINERAL LEASING ACT. 

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

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

‘‘121⁄2’’ and inserting ‘‘183 21 ⁄4’’. 

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

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

Act (30 U.S.C. 223) is amended by striking ‘‘121 24 ⁄2’’ and 

inserting ‘‘183 25 ⁄4’’. 


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1 (c) LEASES ON LAND KNOWN OR BELIEVED TO

2 CONTAIN OIL OR NATURAL GAS.—Section 17 of the Min3 eral Leasing Act (30 U.S.C. 226) is amended— 

4 (1) in subsection (b)— 

5 (A) in paragraph (1)(A), by striking 

‘‘12.5’’ and inserting ‘‘183 6 ⁄4’’; and 

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

‘‘121⁄2’’ and inserting ‘‘183 8 ⁄4’’; 

9 (2) in subsection (c)(1), by striking ‘‘12.5’’ and 

inserting ‘‘183 10 ⁄4’’; 

(3) in subsection (l), by striking ‘‘121 11 ⁄2’’ each 

time it appears and inserting ‘‘183 12 ⁄4’’; and 

(4) in subsection (n)(1)(C), by striking ‘‘121 13 ⁄2’’ 

and inserting ‘‘183 14 ⁄4’’. 

15 SEC. 104. ULTRA-DEEPWATER AND UNCONVENTIONAL NAT16 URAL GAS AND OTHER PETROLEUM RE17 SOURCES. 

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

19 2005 (42 U.S.C. 16371 et seq.) is repealed. 

20 SEC. 105. REMOVAL OF LIMITS ON LIABILITY FOR OFF21 SHORE FACILITIES AND PIPELINE OPERA22 TORS. 

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

24 U.S.C. 2704(a)) is amended— 


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

2 $75,000,000; and’’ and inserting ‘‘and the liability 

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

4 (2) in paragraph (4)— 

5 (A) by inserting ‘‘(except an onshore pipe6 line transporting diluted bitumen, bituminous 

7 mixtures, or any oil manufactured from bitu8 men)’’ after ‘‘for any onshore facility’’; and 

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

10 inserting ‘‘; and’’; and 

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

12 ‘‘(5) for any onshore facility transporting di13 luted bitumen, bituminous mixtures, or any oil man14 ufactured from bitumen, the liability of the respon15 sible party under section 1002.’’. 

16 SEC. 106. FUNDS TO WORLD BANK FOR FINANCING 

17 PROJECTS THAT SUPPORT COAL, OIL, OR 

18 NATURAL GAS. 

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

20 of enactment of this Act, there are rescinded all unobli21 gated balances of the amounts made available to the Inter22 national Bank for Reconstruction and Development and 

23 the International Development Association (commonly 

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

25 international financing entity that has received amounts 


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1 from the United States, as determined by the Secretary 

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

3 coal, oil, or natural gas. 

4 (b) FUTURE FUNDS.—Notwithstanding any other 

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

6 Bank or any other international financing entity shall not 

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

8 or natural gas. 

9 SEC. 107. OFFICE OF FOSSIL ENERGY RESEARCH AND DE10 VELOPMENT. 

11 (a) IN GENERAL.—Section 203(a)(2) of the Depart12 ment of Energy Organization Act (42 U.S.C. 7133(a)(2)) 

13 is amended— 

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

15 after the semicolon at the end; 

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

17 (3) by redesignating subparagraph (E) as sub18 paragraph (D). 

19 (b) TERMINATION.—Notwithstanding any other pro20 vision of law, the Office of Fossil Energy Research and 

21 Development and the authority to carry out any program 

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

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


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1 SEC. 108. ADVANCED RESEARCH PROJECTS AGENCY—EN2 ERGY. 

3 None of the funds made available to the Advanced 

4 Research Projects Agency—Energy shall be used to carry 

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

6 SEC. 109. INCENTIVES FOR INNOVATIVE TECHNOLOGIES. 

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

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

9 (1) in subsection (b)— 

10 (A) by striking paragraph (2); 

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

12 (C) by redesignating paragraphs (3) 

13 through (9) as paragraphs (2) through (8) re14 spectively; 

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

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

17 paragraphs (c) and (d) respectively. 

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

19 Energy Policy Act of 2005 (42 U.S.C. 16514) is amend20 ed— 

21 (1) in subsection (a), by striking ‘‘(a) IN GEN22 ERAL.—’’; and 

23 (2) by striking subsection (b). 

24 SEC. 110. RURAL UTILITY SERVICE LOAN GUARANTEES. 

25 The Secretary of Agriculture shall not make a loan 

26 under title III of the Rural Electrification Act of 1936 


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1 (7 U.S.C. 931 et seq.) to an applicant for the purpose 

2 of carrying out any project that will use coal, oil, or nat3 ural gas. Nothing in this section shall be construed to af4 fect the eligibility for landfill gas and agricultural methane 

5 digesters for loans under such Act. 

6 SEC. 111. FUNDS TO THE OVERSEAS PRIVATE INVESTMENT 

7 CORPORATION OR THE EXPORT-IMPORT 

8 BANK OF THE UNITED STATES FOR FINANC9 ING PROJECTS, TRANSACTIONS, OR OTHER 

10 ACTIVITIES THAT SUPPORT COAL, OIL, OR 

11 NATURAL GAS. 

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

13 of enactment of this Act, there are rescinded all unobli14 gated balances of the amounts made available to the Over15 seas Private Investment Corporation or the Export-Import 

16 Bank of the United States to carry out any project, trans17 action, or other activity that supports coal, oil, or natural 

18 gas production. 

19 (b) FUTURE FUNDS.—Notwithstanding any other 

20 provision of law, any amounts made available to the Over21 seas Private Investment Corporation or the Export-Import 

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

23 any project, transaction, or other activity that supports 

24 coal, oil, or natural gas production. 


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1 SEC. 112. TRANSPORTATION FUNDS FOR GRANTS, LOANS, 

2 LOAN GUARANTEES, AND OTHER DIRECT AS3 SISTANCE. 

4 Notwithstanding any other provision of law, any 

5 amounts made available to the Department of Transpor6 tation (including the Federal Railroad Administration) 

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

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

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

10 SEC. 113. TERMINATION OF VARIOUS TAX EXPENDITURES 

11 RELATING TO FOSSIL FUELS. 

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

13 Internal Revenue Code of 1986 is amended by adding at 

14 the end the following new section: 

15 ‘‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS RELAT16 ING TO FOSSIL FUEL INCENTIVES. 

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

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

19 enactment of the Sustainable Energy Act: 

20 ‘‘(1) Section 43 (relating to enhanced oil recov21 ery credit). 

22 ‘‘(2) Section 45I (relating to credit for pro23 ducing oil and natural gas from marginal wells). 

24 ‘‘(3) Section 45K (relating to credit for pro25 ducing fuel from a nonconventional source). 


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

2 injectants). 

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

4 for taxpayers with oil related qualified production 

5 activities income). 

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

7 for spudding of oil or natural gas wells). 

8 ‘‘(7) Section 469(c)(3) (relating to working in9 terests in oil and natural gas property). 

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

11 percentage depletion in case of oil and natural gas 

12 wells). 

13 ‘‘(9) Section 617 (relating to deduction and re14 capture of certain mining exploration expenditures). 

15 ‘‘(10) Section 7704(d)(1)(E) (relating to quali16 fying income). 

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

18 following provisions shall not apply to property placed in 

19 service after the date of the enactment of the Sustainable 

20 Energy Act: 

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

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

23 property). 


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

2 pollution control facilities) with respect to any at3 mospheric pollution control facility. 

4 ‘‘(3) Section 179C (relating to election to ex5 pense certain refineries). 

6 ‘‘(c) PROVISIONS RELATING TO COSTS AND EX7 PENSES.—The following provisions shall not apply to costs 

8 or expenses paid or incurred after the date of the enact9 ment of the Sustainable Energy Act: 

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

11 capital costs incurred in complying with Environ12 mental Protection Agency sulfur regulations). 

13 ‘‘(2) Section 198 (relating to expensing of envi14 ronmental remediation costs). 

15 ‘‘(3) Section 263(c) (relating to intangible drill16 ing and development costs) with respect to costs in 

17 the case of oil and natural gas wells. 

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

19 mining and solid waste reclamation and closing 

20 costs). 

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

22 NATURAL GAS WELL PRODUCTION CREDIT.—Section 

23 39(a)(3) (relating to 5-year carryback for marginal oil and 

24 natural gas well production credit) shall not apply to credVerDate Mar 15 2010 00:21 Feb 26, 2013 Jkt 029200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S329.IS S329

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1 its determined in taxable years beginning after the date 

2 of the enactment of the Sustainable Energy Act. 

3 ‘‘(e) CREDIT FOR CARBON DIOXIDE SEQUESTRA4 TION.—Section 45Q (relating to credit for carbon dioxide 

5 sequestration) shall not apply to carbon dioxide captured 

6 after the date of the enactment of the Sustainable Energy 

7 Act. 

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

9 certified under section 48A (relating to qualifying ad10 vanced coal project credit) or section 48B (relating to 

11 qualifying gasification project credit) after the date of the 

12 enactment of the Sustainable Energy Act. 

13 ‘‘(g) ARBITRAGE BONDS.—Section 148(b)(4) (relat14 ing to safe harbor for prepaid natural gas) shall not apply 

15 to obligations issued after the date of the enactment of 

16 the Sustainable Energy Act.’’. 

17 (b) CONFORMING AMENDMENT.—The table of sec18 tions for subchapter C of chapter 90 is amended by adding 

19 at the end the following new item: 

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

20 SEC. 114. TERMINATION OF ALTERNATIVE FUEL VEHICLE 

21 REFUELING PROPERTY CREDIT WITH RE22 SPECT TO FOSSIL FUELS. 

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

24 of the Internal Revenue Code of 1986 is amended— 


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1 (1) by striking ‘‘, natural gas, compressed nat2 ural gas, liquefied natural gas, liquefied petroleum 

3 gas,’’ in subparagraph (A), 

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

5 (3) by redesignating subparagraph (C) as sub6 paragraph (B). 

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

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

9 amended by striking the second period. 

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

11 this section shall apply to property placed in service after 

12 the date of the enactment of this Act. 

13 SEC. 115. UNIFORM SEVEN-YEAR AMORTIZATION FOR GEO14 LOGICAL AND GEOPHYSICAL EXPENDITURES. 

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

16 Revenue Code of 1986 is amended— 

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

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

19 year period’’, and 

20 (2) by striking paragraph (5). 

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

22 this section shall apply to amounts paid or incurred after 

23 the date of the enactment of this Act. 


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1 SEC. 116. NATURAL GAS GATHERING LINES TREATED AS 15- 

2 YEAR PROPERTY. 

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

4 168(e)(3) of the Internal Revenue Code of 1986 is amend5 ed by striking ‘‘and’’ at the end of clause (viii), by striking 

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

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

8 ‘‘(x) any natural gas gathering line 

9 the original use of which commences with 

10 the taxpayer after the date of the enact11 ment of this clause.’’. 

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

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

14 1986 is amended by inserting after the item relating to 

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

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

16 (c) CONFORMING AMENDMENT.—Clause (iv) of sec17 tion 168(e)(3)(C) of the Internal Revenue Code of 1986 

18 is amended by inserting after ‘‘April 11, 2005’’. 

19 (d) EFFECTIVE DATE.— 

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

21 this section shall apply to property placed in service 

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

23 (2) EXCEPTION.—The amendments made by 

24 this section shall not apply to any property with re25 spect to which the taxpayer or a related party has 


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1 entered into a binding contract for the construction 

2 thereof on or before the date of the enactment of 

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

4 has started construction on or before such date. 

5 SEC. 117. REPEAL OF DOMESTIC MANUFACTURING DEDUC6 TION FOR HARD MINERAL MINING. 

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

8 199(c)(4) of the Internal Revenue Code of 1986 is amend9 ed by striking ‘‘and’’ at the end of clause (ii), by striking 

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

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

12 ‘‘(iv) the mining of any hard min13 eral.’’. 

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

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

17 SEC. 118. LIMITATION ON DEDUCTION FOR INCOME AT18 TRIBUTABLE TO DOMESTIC PRODUCTION OF 

19 OIL, NATURAL GAS, OR PRIMARY PRODUCTS 

20 THEREOF. 

21 (a) DENIAL OF DEDUCTION.—Paragraph (4) of sec22 tion 199(c) of the Internal Revenue Code of 1986 is 

23 amended by adding at the end the following new subpara24 graph: 


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1 ‘‘(E) SPECIAL RULE FOR OIL, NATURAL

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

3 production gross receipts’ shall not include 

4 gross receipts from the production, refining, 

5 processing, transportation, or distribution of oil, 

6 natural gas, or coal, or any primary product 

7 (within the meaning of subsection (d)(9)) there8 of.’’. 

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

10 this section shall apply to taxable years beginning after 

11 the date of the enactment of this Act. 

12 SEC. 119. TERMINATION OF LAST-IN, FIRST-OUT METHOD 

13 OF INVENTORY FOR OIL, NATURAL GAS, AND 

14 COAL COMPANIES. 

15 (a) IN GENERAL.—Section 472 of the Internal Rev16 enue Code of 1986 is amended by adding at the end the 

17 following new subsection: 

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

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

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

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

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

23 the date of the enactment of this subsection.’’. 


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

2 Internal Revenue Code of 1986 is amended by adding at 

3 the end the following new subsection: 

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

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

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

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

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

9 the date of the enactment of this subsection.’’. 

10 (c) 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. 120. REPEAL OF PERCENTAGE DEPLETION FOR COAL 

14 AND HARD MINERAL FOSSIL FUELS. 

15 (a) IN GENERAL.—Section 613 of the Internal Rev16 enue Code of 1986 is amended by adding at the end the 

17 following new subsection: 

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

19 HARD MINERAL FOSSIL FUELS.—In the case of coal, lig20 nite, and oil shale (other than oil shale described in sub21 section (b)(5)), the allowance for depletion shall be com22 puted without reference to this section, for any taxable 

23 year beginning after the date of the enactment of the Sus24 tainable Energy Act.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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

2 the Internal Revenue Code of 1986 is amended by 

3 striking ‘‘coal, lignite,’’. 

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

5 Code is amended to read as follows: 

6 ‘‘(2) 15 PERCENT.—If, from deposits in the 

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

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

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 121. TERMINATION OF CAPITAL GAINS TREATMENT 

12 FOR ROYALTIES FROM COAL. 

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

14 the Internal Revenue Code of 1986 is amended— 

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

16 ore’’ and inserting ‘‘iron ore’’, 

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

18 appears and inserting ‘‘iron ore’’, 

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

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

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

22 (b) CONFORMING AMENDMENT.—The heading of sec23 tion 631 of the Internal Revenue Code of 1986 is amended 

24 by striking ‘‘, COAL,’’. 


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

2 this section shall apply to dispositions after the date of 

3 the enactment of this Act. 

4 SEC. 122. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

5 APPLICABLE TO OIL, NATURAL GAS, AND 

6 COAL COMPANIES WHICH ARE DUAL CAPAC7 ITY TAXPAYERS. 

8 (a) IN GENERAL.—Section 901 of the Internal Rev9 enue Code of 1986 is amended by redesignating subsection 

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

11 the following new subsection: 

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

13 GAS, AND COAL COMPANIES WHICH ARE DUAL CAPACITY

14 TAXPAYERS.— 

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

16 other provision of this chapter, any amount paid or 

17 accrued to a foreign country or possession of the 

18 United States for any period by a dual capacity tax19 payer which is in the trade or business of the pro20 duction, refining, processing, transportation, or dis21 tribution of oil, natural gas, or coal shall not be con22 sidered a tax— 

23 ‘‘(A) if, for such period, the foreign coun24 try or possession does not impose a generally 

25 applicable income tax, or 


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

2 the amount (determined in accordance with reg3 ulations) which— 

4 ‘‘(i) is paid by such dual capacity tax5 payer pursuant to the generally applicable 

6 income tax imposed by the country or pos7 session, or 

8 ‘‘(ii) would be paid if the generally ap9 plicable income tax imposed by the country 

10 or possession were applicable to such dual 

11 capacity taxpayer. 

12 Nothing in this paragraph shall be construed to 

13 imply the proper treatment of any such amount not 

14 in excess of the amount determined under subpara15 graph (B). 

16 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur17 poses of this subsection, the term ‘dual capacity tax18 payer’ means, with respect to any foreign country or 

19 possession of the United States, a person who— 

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

21 possession, and 

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

23 indirectly a specific economic benefit (as deter24 mined in accordance with regulations) from 

25 such country or possession. 


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

2 For purposes of this subsection— 

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

4 applicable income tax’ means an income tax (or 

5 a series of income taxes) which is generally im6 posed under the laws of a foreign country or 

7 possession on income derived from the conduct 

8 of a trade or business within such country or 

9 possession. 

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

11 include a tax unless it has substantial applica12 tion, by its terms and in practice, to— 

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

14 taxpayers, and 

15 ‘‘(ii) persons who are citizens or resi16 dents of the foreign country or posses17 sion.’’. 

18 (b) EFFECTIVE DATE.— 

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

20 this section shall apply to taxes paid or accrued in 

21 taxable years beginning after the date of the enact22 ment of this Act. 

23 (2) CONTRARY TREATY OBLIGATIONS

24 UPHELD.—The amendments made by this section 


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1 shall not apply to the extent contrary to any treaty 

2 obligation of the United States. 

3 SEC. 123. INCREASE IN OIL SPILL LIABILITY TRUST FUND 

4 FINANCING RATE. 

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

6 4611(c)(2) of the Internal Revenue Code of 1986 is 

7 amended to read as follows: 

8 ‘‘(B) the Oil Spill Liability Trust Fund fi9 nancing rate is— 

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

11 or petroleum products entered before Jan12 uary 1, 2014, 8 cents a barrel, 

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

14 or petroleum products entered after De15 cember 31, 2013, and before January 1, 

16 2018, 9 cents a barrel, and 

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

18 or petroleum products entered after De19 cember 31, 2017, 10 cents a barrel.’’. 

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

21 this section shall apply to crude oil received and petroleum 

22 products entered after the date of the enactment of this 

23 Act. 


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1 SEC. 124. APPLICATION OF CERTAIN ENVIRONMENTAL 

2 TAXES TO SYNTHETIC CRUDE OIL. 

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

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

5 as follows: 

6 ‘‘(1) CRUDE OIL.— 

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

8 includes crude oil condensates, natural gasoline, 

9 and synthetic crude oil. 

10 ‘‘(B) SYNTHETIC CRUDE OIL.—For pur11 poses of subparagraph (A), the term ‘synthetic 

12 crude oil’ means any bitumen and bituminous 

13 mixtures, any oil manufactured from bitumen 

14 and bituminous mixtures, and any liquid fuel 

15 manufactured from coal.’’. 

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

17 this section shall apply to oil and petroleum products re18 ceived or entered during calendar quarters beginning more 

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

20 SEC. 125. DENIAL OF DEDUCTION FOR REMOVAL COSTS 

21 AND DAMAGES FOR CERTAIN OIL SPILLS. 

22 (a) IN GENERAL.—Part IX of subchapter B of chap23 ter 1 of the Internal Revenue Code of 1986 is amended 

24 by adding at the end the following new section: 


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

2 RELATING TO CERTAIN OIL SPILL LIABILITY. 

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

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

5 damages for which the taxpayer is liable under section 

6 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702).’’. 

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

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

9 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.’’. 

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

11 this section shall apply with respect to any liability arising 

12 in taxable years ending after the date of the enactment 

13 of this Act. 

14 SEC. 126. TAX ON CRUDE OIL AND NATURAL GAS PRO15 DUCED FROM THE OUTER CONTINENTAL 

16 SHELF IN THE GULF OF MEXICO. 

17 (a) IN GENERAL.—Subtitle E of the Internal Rev18 enue Code of 1986 is amended by adding at the end the 

19 following new chapter: 

20 ‘‘CHAPTER 56—TAX ON SEVERANCE OF 

21 CRUDE OIL AND NATURAL GAS FROM 

22 THE OUTER CONTINENTAL SHELF IN 

23 THE GULF OF MEXICO 

‘‘Sec. 5896. Imposition of tax. 


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

‘‘Sec. 5898. Special rules and definitions. 

1 ‘‘SEC. 5896. IMPOSITION OF TAX. 

2 ‘‘(a) IN GENERAL.—In addition to any other tax im3 posed under this title, there is hereby imposed a tax equal 

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

5 oil or natural gas removed from the premises during any 

6 taxable period. 

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

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

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

10 respect to the production of any taxable crude oil or 

11 natural gas an amount equal to the aggregate 

12 amount of royalties paid under Federal law with re13 spect to such production. 

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

15 credits allowed under paragraph (1) to any taxpayer 

16 for any taxable period shall not exceed the amount 

17 of tax imposed by subsection (a) for such taxable pe18 riod. 

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

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

21 crude oil or natural gas. 


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1 ‘‘SEC. 5897. TAXABLE CRUDE OIL OR NATURAL GAS AND RE2 MOVAL PRICE. 

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

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

5 natural gas’ means crude oil or natural gas which is pro6 duced from Federal submerged lands on the outer Conti7 nental Shelf in the Gulf of Mexico pursuant to a lease 

8 entered into with the United States which authorizes the 

9 production. 

10 ‘‘(b) REMOVAL PRICE.—For purposes of this chap11 ter— 

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘removal price’ 

14 means— 

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

16 amount for which a barrel of such crude oil is 

17 sold, and 

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

19 amount per 1,000 cubic feet for which such 

20 natural gas is sold. 

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

22 the case of a sale between related persons, the re23 moval price shall not be less than the constructive 

24 sales price for purposes of determining gross income 

25 from the property under section 613. 


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

2 PROPERTY BEFORE SALE.—If crude oil or natural 

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

4 the removal price shall be the constructive sales 

5 price for purposes of determining gross income from 

6 the property under section 613. 

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

8 manufacture or conversion of crude oil into refined 

9 products begins before such oil is removed from the 

10 property— 

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

12 on the day such manufacture or conversion be13 gins, and 

14 ‘‘(B) the removal price shall be the con15 structive sales price for purposes of determining 

16 gross income from the property under section 

17 613. 

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

19 meaning given such term by section 614. 

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

21 ‘‘(a) ADMINISTRATIVE REQUIREMENTS.— 

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

23 The Secretary shall provide for the withholding and 

24 deposit of the tax imposed under section 5896 on a 

25 quarterly basis. 


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1 ‘‘(2) RECORDS AND INFORMATION.—Each tax2 payer liable for tax under section 5896 shall keep 

3 such records, make such returns, and furnish such 

4 information (to the Secretary and to other persons 

5 having an interest in the taxable crude oil or natural 

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

7 by regulations prescribe. 

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

9 ‘‘(A) TAXABLE PERIOD.—Except as pro10 vided by the Secretary, each calendar year shall 

11 constitute a taxable period. 

12 ‘‘(B) RETURNS.—The Secretary shall pro13 vide for the filing, and the time for filing, of the 

14 return of the tax imposed under section 5896. 

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

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

17 the holder of the economic interest with respect to 

18 the crude oil or natural gas. 

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

20 crude oil condensates and natural gasoline. 

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

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

23 the same meanings as when used for purposes of de24 termining gross income from the property under sec25 tion 613. 


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1 ‘‘(c) ADJUSTMENT OF REMOVAL PRICE.—In deter2 mining the removal price of oil or natural gas from a prop3 erty in the case of any transaction, the Secretary may ad4 just the removal price to reflect clearly the fair market 

5 value of oil or natural gas removed. 

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

7 such regulations as may be necessary or appropriate to 

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

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

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

11 (6) the following new paragraph: 

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

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

14 crude oil or natural gas from the outer Continental 

15 Shelf in the Gulf of Mexico.’’. 

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

17 for subtitle E is amended by adding at the end the fol18 lowing new item: 

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

from the outer Continental Shelf in the Gulf of 

Mexico.’’. 

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

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

21 after December 31, 2013. 

22 SEC. 127. POWDER RIVER BASIN. 

23 (a) DESIGNATION OF THE POWDER RIVER BASIN AS

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1 reau of Land Management shall designate the Powder 

2 River Basin as a coal producing region. 

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

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

5 Land Management shall submit to Congress a report that 

6 includes— 

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

8 amount of royalties paid on coal leases in the Pow9 der River Basin compared to other national and 

10 international coal markets; and 

11 (2) any policy recommendations to capture the 

12 future market value of the coal leases in the Powder 

13 River Basin. 

14 SEC. 128. REPORTS. 

15 (a) DEFINITION OF FOSSIL-FUEL PRODUCTION SUB16 SIDY.—In this section, the term ‘‘subsidy for fossil-fuel 

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

18 incentive, risk-reduction benefit, financing assistance or 

19 guarantee, royalty relief, or other provision that provides 

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

21 for the production of fossil fuels. 

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

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

24 the Treasury, in coordination with the Secretary of En25 ergy, shall submit to Congress a report detailing each FedVerDate Mar 15 2010 00:21 Feb 26, 2013 Jkt 029200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S329.IS S329

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1 eral law (including regulations), other than those amended 

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

3 is submitted, that includes a subsidy for fossil-fuel produc4 tion. 

5 (c) REPORT ON MODIFIED RECOVERY PERIOD.— 

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

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

8 coordination with the Commissioner of Internal Rev9 enue, shall submit to Congress a report on the appli10 cable recovery period under the accelerated cost re11 covery system provided in section 168 of the Inter12 nal Revenue Code of 1986 for each type of property 

13 involved in fossil-fuel production, including pipelines, 

14 power generation property, refineries, and drilling 

15 equipment, to determine if any assets are receiving 

16 a subsidy for fossil-fuel production. 

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

18 any type of property that the Commissioner of Inter19 nal Revenue determines is receiving a subsidy for 

20 fossil-fuel production under such section 168, for 

21 property placed in service in taxable years beginning 

22 after the date of such determination, such section 

23 168 shall not apply. The preceding sentence shall 

24 not apply to any property with respect to a taxable 


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1 year unless such determination is published before 

2 the first day of such taxable year. 

3 TITLE II—EXTENSION OF CER4 TAIN ENERGY TAX INCEN5 TIVES 

6 SEC. 201. EXTENSION OF CREDIT FOR ELECTRICITY PRO7 DUCED FROM CERTAIN RENEWABLE RE8 SOURCES. 

9 (a) IN GENERAL.—Subsection (d) of section 45 of the 

10 Internal Revenue Code of 1986 is amended by striking 

11 ‘‘2014’’ each place it appears in paragraphs (1), (2), (3), 

12 (4), (6), (7), (9), and (11) and inserting ‘‘2021’’. 

13 (b) ELECTION OF INVESTMENT CREDIT IN LIEU OF

14 PRODUCTION CREDIT.—Clause (ii) of section 48(a)(5)(C) 

15 of such Code, as amended by the American Taxpayer Re16 lief Act of 2012, is amended by striking ‘‘2014’’ and in17 serting ‘‘2021’’. 

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

19 this section shall take effect on the date of the enactment 

20 of this Act. 

21 SEC. 202. EXTENSION OF ENERGY CREDIT. 

22 (a) EXTENSION.— 

23 (1) SOLAR ENERGY PROPERTY.— 

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1 ternal Revenue Code of 1986 is amended by 

2 striking ‘‘January 1, 2017’’ and inserting ‘‘Jan3 uary 1, 2021’’. 

4 (B) ILLUMINATION.—Clause (ii) of section 

5 48(a)(3)(A) of such Code is amended by strik6 ing ‘‘January 1, 2017’’ and inserting ‘‘January 

7 1, 2021’’. 

8 (2) GEOTHERMAL HEAT PUMP SYSTEMS.— 

9 Clause (vii) of section 48(a)(3)(A) of such Code is 

10 amended by striking ‘‘January 1, 2017’’ and insert11 ing ‘‘January 1, 2021’’. 

12 (3) FUEL CELL PROPERTY.—Subparagraph (D) 

13 of section 48(c)(1) of such Code is amended by 

14 striking ‘‘December 31, 2016’’ and inserting ‘‘De15 cember 31, 2020’’. 

16 (4) QUALIFIED MICROTURBINE PROPERTY.— 

17 Subparagraph (D) of section 48(c)(2) of such Code 

18 is amended by striking ‘‘December 31, 2016’’ and 

19 inserting ‘‘December 31, 2020’’. 

20 (5) COMBINED HEAT AND POWER SYSTEMS.— 

21 Clause (iv) of section 48(c)(3)(A) of such Code is 

22 amended by striking ‘‘January 1, 2017’’ and insert23 ing ‘‘January 1, 2021’’. 

24 (6) QUALIFIED SMALL WIND ENERGY PROP25 ERTY.—Subparagraph (C) of section 48(c)(4) of 


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1 such Code is amended by striking ‘‘December 31, 

2 2016’’ and inserting ‘‘December 31, 2020’’. 

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

4 this section shall apply to property placed in service after 

5 the date of the enactment of this Act. 

6 SEC. 203. EXTENSION AND MODIFICATION OF THE AD7 VANCED ENERGY PROJECT CREDIT. 

8 (a) IN GENERAL.—Subsection (d) of section 48C of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(6) ADDITIONAL ALLOCATIONS.— 

12 ‘‘(A) IN GENERAL.—Not later than 180 

13 days after the date of the enactment of this 

14 paragraph, the Secretary, in consultation with 

15 the Secretary of Energy, shall establish a pro16 gram to consider and award certifications for 

17 qualified investments eligible for credits under 

18 this section to qualifying advanced energy 

19 project sponsors with respect to applications re20 ceived in calendar years during the 5-year pe21 riod beginning with the calendar year which in22 cludes the date of the enactment of this para23 graph. 

24 ‘‘(B) LIMITATION.—The total amount of 

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1 gram described in subparagraph (A) for any 

2 calendar year shall not exceed $2,300,000,000. 

3 ‘‘(C) APPLICATION OF CERTAIN RULES.— 

4 Rules similar to the rules of paragraphs (2), 

5 (3), (4), and (5) shall apply for purposes of the 

6 program described in subparagraph (A).’’. 

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

8 this section shall take effect on the date of the enactment 

9 of this Act. 

Æ 


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