I
103D CONGRESS
1ST SESSION
H. R. 3239
To amend the Internal Revenue Code of 1986 to deny any deduction for
certain oil cleanup costs, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 7, 1993
Ms. BYRNE 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 deny any
deduction for certain oil cleanup costs, and for other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. DISALLOWANCE OF DEDUCTION FOR CERTAIN
OIL CLEANUP COSTS.
(a) GENERAL RULE.—Part IX of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 (relating
to certain items not deductible) is amended by adding at
the end thereof the following new section:
‘‘SEC. 280I. DISALLOWANCE OF CERTAIN OIL CLEANUP
COSTS.
‘‘(a) GENERAL RULE.—Except as otherwise provided
in this section, no deduction shall be allowed for any appli-
cable discharge costs.
‘‘(b) EXCEPTIONS.—
‘‘(1) SMALL SPILLS.—Subsection (a) shall not
apply to any applicable discharge costs of any tax-
payer which are attributable to any oil discharge in-
volving less than 36,000 gallons of oil. For purposes
of the preceding sentence, all discharges at a facility
during any 6-month period shall be aggregated and
treated as one discharge.
‘‘(2) FACILITY
CLOSED
AND
CLEANUP
COM-
PLETED.—Subsection (a) shall not apply to any ap-
plicable discharge costs of the taxpayer which are at-
tributable to any oil discharge from any facility if—
‘‘(A) the Administrator of the Environ-
mental Protection Agency certifies to the Sec-
retary that all cleanup and other remediation
actions required by reason of such discharge
have been completed, and
‘‘(B) all operations (whether by the tax-
payer or any other person) at such facility in-
volving the transportation, storage, or process-
ing of oil have been permanently terminated.
‘‘(3) TAXPAYER
WITH
COMPLETE
LIABILITY
DEFENSE.—
‘‘(A) IN
GENERAL.—Subsection (a) shall
not apply to any applicable discharge costs of
any taxpayer which are attributable to any oil
discharge if such taxpayer has a complete liabil-
ity defense with respect to such discharge.
‘‘(B) COMPLETE
LIABILITY
DEFENSE.—
For purposes of subparagraph (A), a taxpayer
has a complete liability defense with respect to
any oil discharge, if it is determined under sec-
tion 1003 of the Oil Pollution Act of 1990 or
section 311 of the Clean Water Act that such
taxpayer has no liability under section 1002 of
the Oil Pollution Act of 1990 or section 311 of
the Clean Water Act.
‘‘(c) APPLICABLE DISCHARGE COSTS.—For purposes
of this section, the term ‘applicable discharge costs’ means
any of the following costs incurred in connection with any
oil discharge:
‘‘(1) Any costs incurred in removing or at-
tempting to remove the oil.
‘‘(2) Any costs to prevent, minimize, or mitigate
pollution or other damages resulting from such dis-
charge.
‘‘(3) Any costs attributable to liabilities for
damages, fines, or penalties from such discharge.
‘‘(4) Any costs incurred in determining the
amount of the taxpayer’s liability for any of the fore-
going.
‘‘(5) Any amount deductible on account of the
loss of the material discharged or released.
‘‘(d) OIL DISCHARGE.—For purposes of this section,
the term ‘oil discharge’ means any discharge (as defined
in section 1001 of the Oil Pollution Act of 1990 or section
311 of the Clean Water Act) of oil (as defined in such
sections).
‘‘(e) TREATMENT
OF CERTAIN INSURANCE PRO-
CEEDS, ETC.—Gross income shall include any compensa-
tion by insurance or otherwise received with respect to
costs for which a deduction is disallowed under subsection
(a).’’
(b) PROHIBITION AGAINST OFFSET BY NET OPERAT-
ING LOSS DEDUCTION.—Section 172 of such Code is
amended by redesignating subsection (i) as subsection (j)
and by inserting after subsection (h) the following new
subsection:
‘‘(i) LIMITATION ON USE TO OFFSET DEDUCTIONS
DISALLOWED UNDER SECTION 280I.—The deduction al-
lowed under this section shall not reduce taxable income
for any taxable year to an amount less than the amount
disallowed under section 280I for such taxable year. Ap-
propriate adjustments in the application of subsection
(b)(2) shall be made to take into account the provisions
of this subsection.’’
(c) CLERICAL AMENDMENT.—The table of sections
for part IX of subchapter B of chapter 1 of such Code
is amended by adding at the end thereof the following new
item:
‘‘Sec. 280I. Disallowance of certain oil cleanup costs.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of any applicable dis-
charge costs paid after the date of the enactment of this
Act.
SEC. 2. EXPENSE TREATMENT FOR EXPENDITURE TO RE-
DUCE RISK OF OIL SPILLS.
(a) GENERAL RULE.—Part VI of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 (relating
to itemized deductions for individuals and corporations)
is amended by adding at the end thereof the following new
section:
‘‘SEC. 198. EXPENDITURES TO REDUCE RISKS OF OIL
SPILLS.
‘‘(a) TREATMENT AS EXPENSES.—Any qualified oil
facility expenditures paid or incurred by the taxpayer dur-
ing the taxable year shall be treated as expenses which
are not chargeable to capital account. The expenditures
so treated shall be allowed as a deduction for such taxable
year.
‘‘(b) QUALIFIED OIL FACILITY EXPENDITURES.—
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified oil fa-
cility expenditures’ means expenditures which—
‘‘(A) are paid or incurred in connection
with a trade or business of the taxpayer,
‘‘(B) are paid or incurred for purposes of
reducing the risk of a discharge of oil from any
facility operated by the taxpayer,
‘‘(C) the Administrator of the Environ-
mental Protection Agency has certified to the
Secretary as being necessary or appropriate for
purposes of reducing the risk of such dis-
charges; and
‘‘(D) the taxpayer elects to take into ac-
count under this section.
‘‘(2) DEFINITIONS.—For purposes of this sub-
section, the term ‘discharge’, has the meaning given
such term by section 1001 of the Oil Pollution Act
of 1990 or section 311 of the Clean Water Act and
the term ‘oil’ has the meaning given such term by
such sections.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part VI of subchapter B of chapter 1 of such Code
is amended by adding at the end thereof the following new
item:
‘‘Sec. 198. Expenditures to reduce risks of oil spills.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to expenditures paid or incurred
after the date of the enactment of this Act.
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