I 
113TH CONGRESS 
1ST SESSION 
H. R. 601 
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. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 8, 2013 
Mr. MARKEY (for himself and Mr. BLUMENAUER) introduced the following 
bill; which was referred to the Committee on Natural Resources, and in 
addition to the Committee on Ways and Means, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
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 produc-
tion of oil or natural gas under which production is 
not occurring, 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. SHORT TITLE. 
This Act may be cited as the ‘‘Permanent Repeal of 
Oil Subsidies Act’’. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
SEC. 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. 
TITLE I—USE IT ACT 
SEC. 101. SHORT TITLE. 
This title may be cited as the ‘‘United States Explo-
ration on Idle Tracts Act’’ or the ‘‘USE IT Act’’. 
SEC. 102. PRODUCTION INCENTIVE FEE. 
(a) ESTABLISHMENT.—The Secretary of the Interior 
shall, within 180 days after the date of enactment of this 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
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 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
(C) for the seventh year of the lease and 
each year thereafter for which the lease is oth-
erwise in effect, $8 per acre in 2011 dollars. 
(c) ASSESSMENT AND COLLECTION.—The Secretary 
shall assess and collect the fee established under this sec-
tion. 
(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. 
TITLE II—DEFICIT REDUCTION 
THROUGH FAIR OIL ROYALTIES 
SEC. 201. SHORT TITLE. 
This title may be cited as the ‘‘Deficit Reduction 
Through Fair Oil Royalties Act’’. 
SEC. 202. ELIGIBILITY FOR NEW LEASES AND THE TRANS-
FER 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.) to a per-
son described in paragraph (2) unless the person has 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
renegotiated each covered lease with respect to which 
the person is a lessee, to modify the payment re-
sponsibilities of the person to require the payment of 
royalties if the price of oil and natural gas is greater 
than or equal to 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) 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 en-
actment of this Act; or 
(B) any other person that has any direct 
or indirect interest in, or that derives any ben-
efit from, a covered lease. 
(3) MULTIPLE LESSEES.— 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
(A) IN GENERAL.—For purposes of para-
graph (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 thresh-
olds 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, serv-
icing, 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 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
under the Outer Continental Shelf Lands Act (43 U.S.C. 
1331 et seq.), unless the lessee or other person has— 
(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 Con-
tinental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); 
or 
(2) entered into an agreement with the Sec-
retary 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 Fed-
eral budget deficit, for reducing the Federal debt in such 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
manner as the Secretary of the Treasury considers appro-
priate. 
(d) DEFINITIONS.—In this section— 
(1) COVERED
LEASE.—The term ‘‘covered 
lease’’ means a lease for oil or gas production in the 
Gulf of Mexico that is— 
(A) in existence on the date of enactment 
of this Act; 
(B) issued by the Department of the Inte-
rior under section 304 of the Outer Continental 
Shelf Deep Water Royalty Relief Act (43 
U.S.C. 1337 note; Public Law 104–58); and 
(C) not subject to limitations on royalty re-
lief 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’’ includes any 
person or other entity that controls, is controlled by, 
or is in or under common control with, a lessee. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Interior. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
SEC. 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. Ex-
isting lease provisions shall prevail through September 30, 
2013. 
SEC. 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) are repealed: 
(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 PLAN-
NING AREAS OFFSHORE ALASKA.—Section 8(a)(3)(B) of 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
the Outer Continental Shelf Lands Act (43 U.S.C. 
1337(a)(3)(B)) is amended by striking ‘‘and in the Plan-
ning Areas offshore Alaska’’. 
TITLE III—OCS FACILITY 
INSPECTIONS 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘No Free Inspections 
for Oil Companies Act’’. 
SEC. 302. OCS FACILITY INSPECTION FEES. 
Section 22 of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1348) is amended by adding at the end of the 
section the following: 
‘‘(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 inspec-
tions— 
‘‘(A) at an aggregate level equal to the 
amount necessary to offset the annual expenses 
of inspections of outer Continental Shelf facili-
ties (including mobile offshore drilling units) by 
the Department of the Interior; and 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
‘‘(B) using a schedule that reflects the dif-
ferences in complexity among the classes of fa-
cilities 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’ 
(referred to in this subsection as the ‘Fund’), into 
which shall be deposited amounts collected as fees 
under paragraph (1) and which shall be available as 
provided under paragraph (3). 
‘‘(3) AVAILABILITY OF FEES.—Notwithstanding 
section 3302 of title 31, United States Code, all 
amounts collected by the Secretary under this sec-
tion— 
‘‘(A) shall be credited as offsetting collec-
tions; 
‘‘(B) shall be available for expenditure only 
for purposes of carrying out inspections of 
outer Continental Shelf facilities (including mo-
bile offshore drilling units) and the administra-
tion of the inspection program under this sec-
tion; 
‘‘(C) shall be available only to the extent 
provided for in advance in an appropriations 
Act; and 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
‘‘(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 sub-
mit to the Committee on Energy and Natural 
Resources of the Senate and the Committee on 
Natural Resources of the House of Representa-
tives a report on the operation of the Fund dur-
ing the fiscal year. 
‘‘(B) CONTENTS.—Each report shall in-
clude, for the fiscal year covered by the report, 
the following: 
‘‘(i) A statement of the amounts de-
posited into the Fund. 
‘‘(ii) A description of the expenditures 
made from the Fund for the fiscal year, in-
cluding the purpose of the expenditures. 
‘‘(iii) Recommendations for additional 
authorities to fulfill the purpose of the 
Fund. 
‘‘(iv) A statement of the balance re-
maining in the Fund at the end of the fis-
cal year.’’. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
TITLE IV—REPEAL OF FOSSIL 
FUEL SUBSIDIES FOR LARGE 
OIL COMPANIES 
SEC. 401. SHORT TITLE. 
This Act may be cited as the ‘‘End Big Oil Tax Sub-
sidies Act of 2013’’. 
SEC. 402. AMORTIZATION OF GEOLOGICAL AND GEO-
PHYSICAL EXPENDITURES. 
(a) IN GENERAL.—Subparagraph (A) of section 
167(h)(5) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘major integrated oil company’’ and insert-
ing ‘‘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 ‘cov-
ered large oil company’ means a taxpayer 
which— 
‘‘(i) is a major integrated oil com-
pany, or 
‘‘(ii) has gross receipts in excess of 
$50,000,000 for the taxable year. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00013
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
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 tax-
able years beginning after December 31, 2012. 
SEC. 403. PRODUCING OIL AND GAS FROM MARGINAL 
WELLS. 
(a) IN GENERAL.—Section 45I of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(e) EXCEPTION FOR TAXPAYER WITH GROSS RE-
CEIPTS IN EXCESS OF $50,000,000.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer whose aggregate gross re-
ceipts 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 em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00014
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to credits determined for taxable 
years beginning after December 31, 2012. 
SEC. 404. ENHANCED OIL RECOVERY CREDIT. 
(a) IN GENERAL.—Section 43 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) EXCEPTION FOR TAXPAYER WITH GROSS RE-
CEIPTS IN EXCESS OF $50,000,000.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer whose aggregate gross re-
ceipts 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 em-
ployer 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 tax-
able years beginning after December 31, 2012. 
SEC. 405. INTANGIBLE DRILLING AND DEVELOPMENT 
COSTS IN THE CASE OF OIL AND GAS WELLS. 
(a) IN GENERAL.—Subsection (c) of section 263 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new sentence: ‘‘This subsection 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00015
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
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 sec-
tion 52 as 1 person.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after December 31, 2012. 
SEC. 406. PERCENTAGE DEPLETION. 
(a) IN GENERAL.—Section 613A of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) EXCEPTION FOR TAXPAYER WITH GROSS RE-
CEIPTS IN EXCESS OF $50,000,000.— 
‘‘(1) IN
GENERAL.—This section and section 
611 shall not apply to any taxpayer which has ag-
gregate 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 em-
ployer under subsections (a) and (b) of section 52 
shall be treated as 1 person.’’. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
(b) CONFORMING AMENDMENT.—Section 613A(c)(1) 
of such Code is amended by striking ‘‘subsection (d)’’ and 
inserting ‘‘subsections (d) and (f)’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2012. 
SEC. 407. TERTIARY INJECTANTS. 
(a) IN GENERAL.—Section 193 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(d) EXCEPTION FOR TAXPAYER WITH GROSS RE-
CEIPTS IN EXCESS OF $50,000,000.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to any taxpayer which has aggregate gross re-
ceipts for the taxable year in excess of $50,000,000. 
‘‘(2) AGGREGATION
RULE.—For purposes of 
paragraph (1), all persons treated as a single em-
ployer 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 Decem-
ber 31, 2012. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
SEC. 408. PASSIVE ACTIVITY LOSSES AND CREDITS LIM-
ITED. 
(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 pur-
poses 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. 
SEC. 409. INCOME ATTRIBUTABLE TO DOMESTIC PRODUC-
TION ACTIVITIES. 
(a) DENIAL OF DEDUCTION.—Paragraph (4) of sec-
tion 199(c) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subpara-
graph: 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
‘‘(E) SPECIAL
RULE
FOR
CERTAIN
OIL 
AND GAS INCOME.—In the case of any taxpayer 
who is a major integrated oil company (as de-
fined in section 167(h)) for the taxable year, 
the term ‘domestic production gross receipts’ 
shall not include gross receipts from the pro-
duction, transportation, or distribution of oil, 
natural gas, or any primary product (within the 
meaning of subsection (d)(9)) thereof.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2012. 
SEC. 410. PROHIBITION ON USING LAST-IN, FIRST-OUT AC-
COUNTING FOR MAJOR INTEGRATED OIL 
COMPANIES. 
(a) IN GENERAL.—Section 472 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(h) MAJOR INTEGRATED OIL COMPANIES.—Not-
withstanding 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.— 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
(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 ac-
counting for its first taxable year beginning after the 
date of the enactment of this Act— 
(A) such change shall be treated as initi-
ated by the taxpayer, 
(B) such change shall be treated as made 
with the consent of the Secretary of the Treas-
ury, and 
(C) the net amount of the adjustments re-
quired 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) be-
ginning with such first taxable year. 
SEC. 411. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
APPLICABLE TO DUAL CAPACITY TAXPAYERS. 
(a) IN GENERAL.—Section 901 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(n) as subsection (o) and by inserting after subsection (m) 
the following new subsection: 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
‘‘(n) SPECIAL RULES RELATING TO MAJOR INTE-
GRATED 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 coun-
try or possession does not impose a generally 
applicable income tax, or 
‘‘(B) to the extent such amount exceeds 
the amount (determined in accordance with reg-
ulations) which— 
‘‘(i) is paid by such dual capacity tax-
payer pursuant to the generally applicable 
income tax imposed by the country or pos-
session, or 
‘‘(ii) would be paid if the generally ap-
plicable income tax imposed by the country 
or possession were applicable to such dual 
capacity taxpayer. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
Nothing in this paragraph shall be construed to 
imply the proper treatment of any such amount not 
in excess of the amount determined under subpara-
graph (B). 
‘‘(2) DUAL
CAPACITY
TAXPAYER.—For pur-
poses of this subsection, the term ‘dual capacity tax-
payer’ means, with respect to any foreign country or 
possession of the United States, a person who— 
‘‘(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 deter-
mined 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’ means an income tax (or 
a series of income taxes) which is generally im-
posed under the laws of a foreign country or 
possession on income derived from the conduct 
of a trade or business within such country or 
possession. 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS
‘‘(B) EXCEPTIONS.—Such term shall not 
include a tax unless it has substantial applica-
tion, by its terms and in practice, to— 
‘‘(i) persons who are not dual capacity 
taxpayers, and 
‘‘(ii) persons who are citizens or resi-
dents of the foreign country or posses-
sion.’’. 
(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. 
Æ 
VerDate Mar 15 2010 
03:38 Feb 16, 2013
Jkt 029200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6301
E:\BILLS\H601.IH
H601
smartinez on DSK6TPTVN1PROD with BILLS