I
106TH CONGRESS
1ST SESSION
H. R. 497
To amend the Internal Revenue Code of 1986 to exclude from gross income
gain from oil and gas produced from certain recovered inactive wells.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 2, 1999
Mr. THORNBERRY 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 exclude
from gross income gain from oil and gas produced from
certain recovered inactive wells.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Emergency Oil and
Gas Recovery Act’’.
SEC. 2. EXCLUSION OF CERTAIN AMOUNTS RECEIVED
FROM RECOVERED INACTIVE WELLS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 139 as section 140 and by insert-
ing after section 138 the following new section:
‘‘SEC. 139. OIL OR GAS PRODUCED FROM A RECOVERED IN-
ACTIVE WELL.
‘‘(a) IN GENERAL.—Gross income does not include
income attributable to independent producer oil from a re-
covered inactive well during the exclusion period.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) INDEPENDENT PRODUCER OIL.—The term
‘independent producer oil’ means crude oil or natu-
ral gas in which the economic interest of the inde-
pendent producer is attributable to an operating
mineral interest (within the meaning of section
614(d)), overriding royalty interest, production pay-
ment, net profits interest, or similar interest.
‘‘(2) CRUDE
OIL
AND
NATURAL
GAS.—The
terms ‘crude oil’ and ‘natural gas’ have the mean-
ings given such terms by section 613A(e).
‘‘(3) RECOVERED INACTIVE WELL.—The term
‘recovered inactive well’ means a well if—
‘‘(A) throughout the 60-day period ending
on the date of the enactment of this section,
such well is inactive or has been plugged and
abandoned, as determined by the agency of the
State in which such well is located that is re-
sponsible for regulating such wells, and
‘‘(B) during the 5-year period beginning on
the date of the enactment of this section, such
well resumes producing crude oil or natural gas.
‘‘(4) INDEPENDENT
PRODUCER.—The term
‘independent producer’ means a producer of crude
oil or natural gas whose allowance for depletion is
determined under section 613A(c).
‘‘(5) EXCLUSION PERIOD.—
‘‘(A) IN
GENERAL.—The term ‘exclusion
period’ means, with respect to a recovered inac-
tive well, the period beginning on the date such
well resumes production and ending on the last
day of the benchmark period.
‘‘(B) BENCHMARK PERIOD.—For purposes
of subparagraph (A), the term ‘benchmark pe-
riod’ means the first 60-day period beginning
after the date of the enactment of Emergency
Oil and Gas Recovery Act for which the domes-
tic first purchase price on each day of such pe-
riod for West Texas intermediate crude (as
published by the Energy Information Agency,
Department of Energy) is not less than $15 per
barrel.
‘‘(c) DEDUCTIONS.—No deductions directly con-
nected with amounts excluded from gross income by sub-
section (a) shall be allowed.
‘‘(d) ELECTION.—
‘‘(1) IN GENERAL.—This section shall apply for
any fiscal year only at the election of the taxpayer.
‘‘(2) MANNER.—Such election shall be made, in
accordance with regulations prescribed by the Sec-
retary, not later than the time prescribed for filing
the return (including extensions thereof) and shall
be made annually on a property-by-property basis.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by striking the item relating to section 138
and inserting the following:
‘‘Sec. 139. Oil or gas produced from a recovered inactive well.
‘‘Sec. 140. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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