SHELTER Act of 2018

To eliminate certain tax breaks and benefits and use the savings for investment in affordable housing for extremely low- and very low-income families, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Stronger, Healthier Environment for Low-Income Tenants and Economic Renewal Act of 2018 SHELTER Act of 2018 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Title I—Eliminating fossil fuel tax breaks Sec. 101. Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers. Sec. 102. Limitation on deduction for intangible drilling and development costs; amortization of disallowed amounts. Sec. 103. Limitation on percentage depletion allowance for oil and gas wells. Sec. 104. Limitation on deduction for tertiary injectants. Sec. 105. Modification of definition of major integrated oil company. Title II—Outer Continental Shelf oil and natural gas Sec. 201. Repeal of outer Continental Shelf deep water and deep gas royalty relief. Title III—Investment in affordable housing Sec. 301. Use of savings for Housing Trust Fund investment. Sec. 302. Treatment of area median incomes and income ceilings. Title IV—Budgetary effects Sec. 401. Compliance with Pay-Go. I Eliminating fossil fuel tax breaks 101. Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers (a) In general Section 901 (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 (within the meaning of section 167(h)(5)) 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 (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 (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 the date of the enactment of this Act. (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. 102. Limitation on deduction for intangible drilling and development costs; amortization of disallowed amounts (a) In general Section 263(c) (c) Intangible drilling and development costs in the case of oil and gas wells and geothermal wells (1) In general Notwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. Such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e) or 291. (2) Exclusion (A) In general This subsection shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)). (B) Amortization of amounts not allowable as deductions under subparagraph (A) The amount not allowable as a deduction for any taxable year by reason of subparagraph (A) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. For purposes of section 1254, any deduction under this subparagraph shall be treated as a deduction under this subsection. . (b) Effective date The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2018. 103. Limitation on percentage depletion allowance for oil and gas wells (a) In general Section 613A (f) Application with respect to major integrated oil companies In the case of any taxable year in which the taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)), the allowance for percentage depletion shall be zero. . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2018. 104. Limitation on deduction for tertiary injectants (a) In general Section 193 (d) Application with respect to major integrated oil companies (1) In general This section shall not apply to amounts paid or incurred by a taxpayer in any taxable year in which such taxpayer is a major integrated oil company (within the meaning of section 167(h)(5)). (2) Amortization of amounts not allowable as deductions under paragraph (1) The amount not allowable as a deduction for any taxable year by reason of paragraph (1) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. . (b) Effective date The amendment made by this section shall apply to amounts paid or incurred in taxable years beginning after December 31, 2018. 105. Modification of definition of major integrated oil company (a) In general Paragraph (5) of section 167(h) (C) Certain successors in interest For purposes of this paragraph, the term major integrated oil company . (b) Conforming amendments (1) In general Subparagraph (B) of section 167(h)(5) except as provided in subparagraph (C), For purposes of this paragraph, (2) Taxable years tested Clause (iii) of section 167(h)(5)(B) of such Code is amended— (A) by striking does not apply by reason of paragraph (4) of section 613A(d) did not apply by reason of paragraph (4) of section 613A(d) for any taxable year after 2004 (B) by striking does not apply did not apply for the taxable year (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2018. II Outer Continental Shelf oil and natural gas 201. Repeal of outer Continental Shelf deep water and deep gas royalty relief (a) In general Sections 344 and 345 of the Energy Policy Act of 2005 ( 42 U.S.C. 15904 (b) Administration The Secretary of the Interior shall not be required to provide for royalty relief in the lease sale terms beginning with the first lease sale held on or after the date of enactment of this Act for which a final notice of sale has not been published. III Investment in affordable housing 301. Use of savings for Housing Trust Fund investment (a) Use of savings For each of the years 2019 through 2028, the Secretary of the Treasury shall determine the amount of revenues accruing to the general fund of the Treasury by reason of the enactment of titles I and II of this Act and shall credit an amount equal to such revenues to the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ( 12 U.S.C. 4568 (b) Environmental rehabilitation activities Of any amount credited to the Housing Trust Fund for a year pursuant to subsection (a), 10 percent shall be allocated for and distributed to States, in accordance with the formula established pursuant to subsection (c)(3) of such section 1338, for use only to conduct activities to remediate environmental hazards, including activities for reduction, elimination, and abatement of lead-based paint hazards, in housing for extremely low- and very low-income households. (c) Childhood lead prevention Section 1338 (g)(2)(D) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 ( 12 U.S.C. 4568(g)(2)(D) (1) in clause (v), by striking and (2) in clause (vi), by striking the period at the end and inserting ; and (3) by adding at the end the following new clause: (vii) the ratio of children living in an applicant's jurisdiction that suffer from blood lead levels higher than 5 micrograms per deciliter. . 302. Treatment of area median incomes and income ceilings Subparagraph (D) of section 3(b)(2) of the United States Housing Act of 1937 ( 42 U.S.C. 1437a(b)(2)(D) (1) in the second sentence, by inserting and Wayne County in the State of Michigan, State of New York, (2) in the third sentence, by striking such metropolitan statistical area the metropolitan statistical area in which Westchester and Rockland Counties are located but (3) by inserting after the period at the end of the third sentence the following: In determining such area median incomes or establishing such income ceilings or limits for the portion of the metropolitan statistical area in which Wayne County is located but that does not include Wayne County, the Secretary shall determine or establish area median incomes and income ceilings and limits as if such portion included Wayne County. In determining such income ceilings or limits for the portion of such metropolitan statistical areas that include Detroit, Michigan, the Secretary shall determine for units in Detroit such income ceilings or limits exclusive of Livonia, Michigan. IV Budgetary effects 401. Compliance with Pay-Go The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled Budgetary Effects of PAYGO Legislation

Summary: Stronger, Healthier Environment for Low-Income Tenants and Economic Renewal Act of 2018 or the SHELTER Act of 2018 This bill limits or repeals several tax deductions, credits, and related rules that benefit major integrated oil companies. It also repeals royalty relief (suspension of royalties) for (1) natural gas production from deep wells in shallow waters of the Gulf of Mexico, and (2) deep water oil and gas production in the Western and Central Planning Area of the Gulf (including a specified portion of the Eastern Planning Area). Any increase in revenues as a result of this bill must be credited to the Housing Trust Fund, which provides funding to states for activities to increase affordable housing. The bill also specifies requirements for the fund regarding funding for (1) environmental rehabilitation activities, and (2) childhood lead prevention.