Permanent Repeal of Oil Subsidies Act

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. 1. Short title This Act may be cited as the Permanent Repeal of Oil Subsidies Act 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. I USE IT Act 101. Short title This title may be cited as the United States Exploration on Idle Tracts Act USE IT Act 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. II Deficit Reduction Through Fair Oil Royalties 201. Short title This title may be cited as the Deficit Reduction Through Fair Oil Royalties Act 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. 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. (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 (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 (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 (3) Secretary The term Secretary 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. 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 (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 III OCS Facility Inspections 301. Short title This title may be cited as the No Free Inspections for Oil Companies Act 302. OCS facility inspection fees Section 22 of the Outer Continental Shelf Lands Act ( 43 U.S.C. 1348 (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 Fund (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. . IV Repeal of Fossil Fuel Subsidies For Large Oil Companies 401. Short title This Act may be cited as the End Big Oil Tax Subsidies Act of 2013 402. Amortization of geological and geophysical expenditures (a) In general Subparagraph (A) of section 167(h)(5) major integrated oil company 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 (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. 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. 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. 405. Intangible drilling and development costs in the case of oil and gas wells (a) In general Subsection (c) of section 263 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. 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) subsections (d) and (f) (c) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2012. 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. 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. 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 . (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2012. 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. 411. Modifications of foreign tax credit rules applicable to 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 (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 (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 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.

Summary: Permanent Repeal of Oil Subsidies Act - United States Exploration on Idle Tracts Act or USE IT Act - Directs the Secretary of the Interior to: (1) issue regulations establishing a graduated annual production incentive fee governing federal onshore and offshore lands subject to an oil or natural gas production lease but for which such production is not occurring, and (2) deposit the prescribed fee assessment into the general fund of the Treasury. Deficit Reduction Through Fair Oil Royalties Act - Prohibits the Secretary from issuing new oil or natural gas production leases in the Gulf of Mexico under the Outer Continental Shelf Lands Act (OCSLA) to a person that does not renegotiate its existing leases in order to require royalty payments if oil and natural gas prices are greater than or equal to specified price thresholds. Authorizes the Secretary, in the case of multiple lessees, to implement a separate agreement modifying payment responsibilities (including such price thresholds) with any lessee that owns a lease share. Prescribes analogous requirements for lease transfers. Requires rentals or royalties received by the United States to be deposited in the Treasury for federal budget deficit reduction or, if there is no federal budget deficit, for reducing the federal debt. Directs the Secretary to agree to a lessee's request 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 requirements that are equal to or less than the price thresholds specified under OCSLA. No Free Inspections for Oil Companies Act - Amends the OCSLA to direct the Secretary to establish and collect nonrefundable facility inspection fees from operators of Outer Continental Shelf (OCS) facilities. Establishes in the Treasury the Ocean Energy Enforcement Fund as depository for such fees. Requires amounts collected by the Secretary to be credited as offsetting collections and to be made available for expenditure only for implementing inspections of OCS facilities (including mobile offshore drilling units) and for administration of the inspection program. End Big Oil Tax Subsidies Act of 2013 - Amends the Internal Revenue Code, with respect to the amortization of geological and geophysical expenditures, to apply the special rule for major integrated oil companies to any covered large oil company with gross receipts exceeding $50 million for the taxable year. Excepts any taxpayer with gross receipts exceeding $50 million for the taxable year from: (1) the requirement to include all items of gross income in gross income for the year, (2) the enhanced oil recovery credit, (3) the deduction for intangible drilling and development costs in the case of oil and gas wells, (4) the percentage oil depletion allowance, (5) the deduction for tertiary injectants, (6) passive activity losses and credits, and (7) the deduction for income attributable to domestic production activities. Denies the use of last-in, first-out (LIFO) accounting for major integrated oil companies. Prescribes a special rule for the treatment of foreign taxes paid by a dual capacity taxpayer that is a major integrated oil company.