I 
112TH CONGRESS 
2D SESSION 
H. R. 5745 
To eliminate certain subsidies for fossil-fuel production. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 15, 2012 
Mr. ELLISON introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Trans-
portation and Infrastructure, Natural Resources, Science, Space, and 
Technology, Energy and Commerce, Agriculture, Appropriations, Finan-
cial Services, and Foreign Affairs, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To eliminate certain subsidies for fossil-fuel production. 
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 ‘‘End Polluter Welfare 
Act of 2012’’. 
SEC. 2. FINDINGS. 
Congress finds that— 
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(1) President Obama joined other world leaders 
from the Group of Twenty in pledging to phase out 
wasteful fossil-fuel subsidies; 
(2) the Environmental Law Institute found that 
from 2002 through 2008, Federal fossil-fuel sub-
sidies 
in 
the 
United 
States 
totaled 
over 
$72,000,000,000, while Federal renewable-energy in-
vestments totaled $12,200,000,000; 
(3) the Congressional Research Service esti-
mates that from 1948 to the present, United States 
investments in fossil-fuel research and development 
totaled over $48,000,000,000 (in 2011 dollars), 
while investments in renewable energy totaled over 
$22,000,000,000; 
(4) the 5 largest oil corporations have made 
more than $1,000,000,000,000 in profits in the dec-
ade prior to the date of enactment of this Act; and 
(5) United States taxpayers should not be sub-
sidizing oil, natural gas, and coal companies in a pe-
riod of record debt. 
SEC. 3. ROYALTY RELIEF. 
(a) IN GENERAL.— 
(1) OUTER CONTINENTAL SHELF LANDS ACT.— 
Section 8(a)(3) of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337(a)(3)) is amended— 
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(A) by striking subparagraph (B); and 
(B) by redesignating subparagraph (C) as 
subparagraph (B). 
(2) ENERGY POLICY ACT OF 2005.— 
(A) INCENTIVES FOR NATURAL GAS PRO-
DUCTION FROM DEEP WELLS IN THE SHALLOW 
WATERS
OF
THE
GULF
OF
MEXICO.—Section 
344 of the Energy Policy Act of 2005 (42 
U.S.C. 15904) is repealed. 
(B) DEEP WATER PRODUCTION.—Section 
345 of the Energy Policy Act of 2005 (42 
U.S.C. 15905) is repealed. 
(b) FUTURE
PROVISIONS.—Notwithstanding any 
other provision of law (including regulations), royalty re-
lief shall not be permitted under a lease issued under sec-
tion 8 of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337). 
SEC. 4. ROYALTIES UNDER MINERAL LEASING ACT. 
(a) COAL LEASES.—Section 7(a) of the Mineral 
Leasing Act (30 U.S.C. 207(a)) is amended by striking 
‘‘121⁄2’’ and inserting ‘‘183⁄4’’. 
(b) LEASES ON LAND ON WHICH OIL OR NATURAL 
GAS IS DISCOVERED.—Section 14 of the Mineral Leasing 
Act (30 U.S.C. 223) is amended by striking ‘‘121⁄2’’ and 
inserting ‘‘183⁄4’’. 
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(c) LEASES ON LAND KNOWN OR BELIEVED TO CON-
TAIN OIL OR NATURAL GAS.—Section 17 of the Mineral 
Leasing Act (30 U.S.C. 226) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1)(A), by striking ‘‘12.5 
percent’’ and inserting ‘‘183⁄4 per centum’’; and 
(B) in paragraph (2)(A)(ii), by striking 
‘‘121⁄2’’ and inserting ‘‘183⁄4’’; 
(2) in subsection (c)(1), by striking ‘‘12.5 per-
cent’’ and inserting ‘‘183⁄4 per centum’’; 
(3) in subsection (l), by striking ‘‘121⁄2’’ each 
time it appears and inserting ‘‘183⁄4’’; and 
(4) in subsection (n)(1)(C), by striking ‘‘121⁄2’’ 
and inserting ‘‘183⁄4’’. 
SEC. 5. ULTRA-DEEPWATER AND UNCONVENTIONAL NAT-
URAL GAS AND OTHER PETROLEUM RE-
SOURCES. 
Subtitle J of title IX of the Energy Policy Act of 
2005 (42 U.S.C. 16371 et seq.) is repealed. 
SEC. 6. REMOVAL OF LIMITS ON LIABILITY FOR OFFSHORE 
FACILITIES AND PIPELINE OPERATORS. 
Section 1004(a) of the Oil Pollution Act of 1990 (33 
U.S.C. 2704(a)) is amended— 
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(1) in paragraph (3), by striking ‘‘plus 
$75,000,000; and’’ and inserting ‘‘and the liability 
of the responsible party under section 1002;’’; 
(2) in paragraph (4)— 
(A) by inserting ‘‘(except an onshore pipe-
line transporting diluted bitumen, bituminous 
mixtures, or any oil manufactured from bitu-
men)’’ after ‘‘for any onshore facility’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(5) for any onshore facility transporting di-
luted bitumen, bituminous mixtures, or any oil man-
ufactured from bitumen, the liability of the respon-
sible party under section 1002.’’. 
SEC. 
7. 
FUNDS 
TO 
WORLD 
BANK 
FOR 
FINANCING 
PROJECTS THAT SUPPORT COAL, OIL, OR 
NATURAL GAS. 
(a) RESCISSION OF FUNDS.—Effective on the date 
of enactment of this Act, there are rescinded all unobli-
gated balances of the amounts made available to the Inter-
national Bank for Reconstruction and Development and 
the International Development Association (commonly 
known as the ‘‘World Bank’’), and each other similar 
international financing entity that has received amounts 
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from the United States, as determined by the Secretary 
of the Treasury, to carry out any project that supports 
coal, oil, or natural gas. 
(b) FUTURE FUNDS.—Notwithstanding any other 
provision of law, any amounts made available to the World 
Bank or any other international financing entity shall not 
be used to carry out any project that supports coal, oil, 
or natural gas. 
SEC. 8. OFFICE OF FOSSIL ENERGY RESEARCH AND DEVEL-
OPMENT. 
(a) IN GENERAL.—Section 203(a)(2) of the Depart-
ment of Energy Organization Act (42 U.S.C. 7133(a)(2)) 
is amended— 
(1) in subparagraph (C), by inserting ‘‘and’’ 
after the semicolon at the end; 
(2) by striking subparagraph (D); and 
(3) by redesignating subparagraph (E) as sub-
paragraph (D). 
(b) TERMINATION.—Notwithstanding any other pro-
vision of law, the Office of Fossil Energy Research and 
Development and the authority to carry out any program 
or activity of the Office (as in existence on the day before 
the date of enactment of this Act) is terminated. 
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SEC. 9. ADVANCED RESEARCH PROJECTS AGENCY—EN-
ERGY. 
None of the funds made available to the Advanced 
Research Projects Agency—Energy shall be used to carry 
out any project that supports coal, oil, or natural gas. 
SEC. 10. INCENTIVES FOR INNOVATIVE TECHNOLOGIES. 
(a) IN GENERAL.—Section 1703 of the Energy Policy 
Act of 2005 (42 U.S.C. 16513) is amended— 
(1) in subsection (b)— 
(A) by striking paragraph (2); 
(B) by striking paragraph (10); and 
(C) 
by 
redesignating 
paragraphs 
(3) 
through (9) as paragraphs (2) through (8) re-
spectively; 
(2) by striking subsection (c); and 
(3) by redesignating subsections (d) and (e) as 
paragraphs (c) and (d) respectively. 
(b) CONFORMING AMENDMENT.—Section 1704 of the 
Energy Policy Act of 2005 is amended— 
(1) in subsection (a), by striking ‘‘(a) IN GEN-
ERAL.—’’; and 
(2) by striking subsection (b). 
SEC. 11. RURAL UTILITY SERVICE LOAN GUARANTEES. 
The Secretary of Agriculture shall not make a loan 
under title III of the Rural Electrification Act of 1936 
(7 U.S.C. 931 et seq.) to an applicant for the purpose 
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of carrying out any project that will use coal, oil, or nat-
ural gas. 
SEC. 12. FUNDS TO THE OVERSEAS PRIVATE INVESTMENT 
CORPORATION 
OR 
THE 
EXPORT-IMPORT 
BANK OF THE UNITED STATES FOR FINANC-
ING PROJECTS, TRANSACTIONS, OR OTHER 
ACTIVITIES THAT SUPPORT COAL, OIL, OR 
NATURAL GAS. 
(a) RESCISSION OF FUNDS.—Effective on the date 
of enactment of this Act, there are rescinded all unobli-
gated balances of the amounts made available to the Over-
seas Private Investment Corporation or the Export-Import 
Bank of the United States to carry out any project, trans-
action, or other activity that supports coal, oil, or natural 
gas production. 
(b) FUTURE FUNDS.—Notwithstanding any other 
provision of law, any amounts made available to the Over-
seas Private Investment Corporation or the Export-Import 
Bank of the United States shall not be used to carry out 
any project, transaction, or other activity that supports 
coal, oil, or natural gas production. 
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SEC. 13. TRANSPORTATION FUNDS FOR GRANTS, LOANS, 
LOAN GUARANTEES, AND OTHER DIRECT AS-
SISTANCE. 
Notwithstanding any other provision of law, any 
amounts made available to the Department of Transpor-
tation (including the Federal Railroad Administration) 
shall not be used to award any grant, loan, loan guarantee, 
or provide any other direct assistance to any rail or port 
project that transports coal, oil, or natural gas. 
SEC. 14. TERMINATION OF VARIOUS TAX EXPENDITURES 
RELATING TO FOSSIL FUELS. 
(a) IN GENERAL.—Subchapter C of chapter 90 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new section: 
‘‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS RELAT-
ING TO FOSSIL FUEL INCENTIVES. 
‘‘(a) IN GENERAL.—The following provisions shall 
not apply to taxable years beginning after the date of the 
enactment of the End Polluter Welfare Act of 2012: 
‘‘(1) Section 43 (relating to enhanced oil recov-
ery credit). 
‘‘(2) Section 45I (relating to credit for pro-
ducing oil and natural gas from marginal wells). 
‘‘(3) Section 45K (relating to credit for pro-
ducing fuel from a nonconventional source). 
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‘‘(4) 
Section 
193 
(relating 
to 
tertiary 
injectants). 
‘‘(5) Section 199(d)(9) (relating to special rule 
for taxpayers with oil related qualified production 
activities income). 
‘‘(6) Section 461(i)(2) (relating to special rule 
for spudding of oil or natural gas wells). 
‘‘(7) Section 469(c)(3) (relating to working in-
terests in oil and natural gas property). 
‘‘(8) Section 613A (relating to limitations on 
percentage depletion in case of oil and natural gas 
wells). 
‘‘(9) Section 617 (relating to deduction and re-
capture of certain mining exploration expenditures). 
‘‘(10) Section 7704(d)(1)(E) (relating to quali-
fying income). 
‘‘(b) PROVISIONS RELATING
TO PROPERTY.—The 
following provisions shall not apply to property placed in 
service after the date of the enactment of the End Polluter 
Welfare Act of 2012: 
‘‘(1) Subparagraphs (C)(iii) and (E)(viii) of 
section 168(e)(3) (relating to classification of certain 
property). 
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‘‘(2) Section 169 (relating to amortization of 
pollution control facilities) with respect to any at-
mospheric pollution control facility. 
‘‘(3) Section 179C (relating to election to ex-
pense certain refineries). 
‘‘(c) PROVISIONS RELATING
TO COSTS
AND EX-
PENSES.—The following provisions shall not apply to costs 
or expenses paid or incurred after the date of the enact-
ment of the End Polluter Welfare Act of 2012: 
‘‘(1) Section 179B (relating to deduction for 
capital costs incurred in complying with Environ-
mental Protection Agency sulfur regulations). 
‘‘(2) Section 198 (relating to expensing of envi-
ronmental remediation costs). 
‘‘(3) Section 263(c) (relating to intangible drill-
ing and development costs) with respect to costs in 
the case of oil and natural gas wells. 
‘‘(4) Section 468 (relating to special rules for 
mining and solid waste reclamation and closing 
costs). 
‘‘(d) 5-YEAR CARRYBACK FOR MARGINAL OIL AND 
NATURAL GAS WELL PRODUCTION CREDIT.—Section 
39(a)(3) (relating to 5-year carryback for marginal oil and 
natural gas well production credit) shall not apply to cred-
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its determined in taxable years beginning after the date 
of the enactment of the End Polluter Welfare Act of 2012. 
‘‘(e) CREDIT
FOR CARBON DIOXIDE SEQUESTRA-
TION.—Section 45Q (relating to credit for carbon dioxide 
sequestration) shall not apply to carbon dioxide captured 
after the date of the enactment of the End Polluter Wel-
fare Act of 2012. 
‘‘(f) ALLOCATED CREDITS.—No new credits shall be 
certified under section 48A (relating to qualifying ad-
vanced coal project credit) or section 48B (relating to 
qualifying gasification project credit) after the date of the 
enactment of the End Polluter Welfare Act of 2012. 
‘‘(g) ARBITRAGE BONDS.—Section 148(b)(4) (relat-
ing to safe harbor for prepaid natural gas) shall not apply 
to obligations issued after the date of the enactment of 
the End Polluter Welfare Act of 2012’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for subchapter C of chapter 90 is amended by adding 
at the end the following new item: 
‘‘Sec. 7875. Termination of certain provisions.’’. 
SEC. 15. TERMINATION OF ALTERNATIVE FUEL VEHICLE 
REFUELING PROPERTY CREDIT WITH RE-
SPECT TO FOSSIL FUELS. 
(a) IN GENERAL.—Paragraph (2) of section 30C(c) 
of the Internal Revenue Code of 1986 is amended— 
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(1) by striking ‘‘, natural gas, compressed nat-
ural gas, liquefied natural gas, liquefied petroleum 
gas,’’ in subparagraph (A), 
(2) by striking subparagraph (B), and 
(3) by redesignating subparagraph (C) as sub-
paragraph (B). 
(b) TECHNICAL AMENDMENT.—Paragraph (2) of 
section 30C(g) of the Internal Revenue Code of 1986 is 
amended by striking the second period. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2011. 
SEC. 16. UNIFORM SEVEN-YEAR AMORTIZATION FOR GEO-
LOGICAL AND GEOPHYSICAL EXPENDITURES. 
(a) IN GENERAL.—Section 167(h) of the Internal 
Revenue Code of 1986 is amended— 
(1) by striking ‘‘24-month period’’ each place it 
appears in paragraphs (1) and (4) and inserting ‘‘7- 
year period’’, and 
(2) by striking paragraph (5). 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
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SEC. 17. NATURAL GAS GATHERING LINES TREATED AS 15- 
YEAR PROPERTY. 
(a) IN GENERAL.—Subparagraph (E) of section 
168(e)(3) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘and’’ at the end of clause (viii), by striking 
the period at the end of clause (ix) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(x) any natural gas gathering line 
the original use of which commences with 
the taxpayer after the date of the enact-
ment of this clause.’’. 
(b) ALTERNATIVE SYSTEM.—The table contained in 
section 168(g)(3)(B) of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to 
subparagraph (E)(ix) the following new item: 
‘‘(E)(x) ......................................................................................................
22’’. 
(c) CONFORMING AMENDMENT.—Clause (iv) of sec-
tion 168(e)(3)(C) of the Internal Revenue Code of 1986 
is amended by inserting ‘‘and on or before the date of the 
enactment of the End Polluter Welfare Act of 2012’’ after 
‘‘April 11, 2005’’. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to property placed in service 
on and after the date of the enactment of this Act. 
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(2) EXCEPTION.—The amendments made by 
this section shall not apply to any property with re-
spect to which the taxpayer or a related party has 
entered into a binding contract for the construction 
thereof on or before the date of the enactment of 
this Act, or, in the case of self-constructed property, 
has started construction on or before such date. 
SEC. 18. REPEAL OF DOMESTIC MANUFACTURING DEDUC-
TION FOR HARD MINERAL MINING. 
(a) IN GENERAL.—Subparagraph (B) of section 
199(c)(4) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘and’’ at the end of clause (ii), by striking 
the period at the end of clause (iii) and inserting ‘‘, and’’, 
and by adding at the end the following new clause: 
‘‘(iv) the mining of any hard min-
eral.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 19. LIMITATION ON DEDUCTION FOR INCOME ATTRIB-
UTABLE TO DOMESTIC PRODUCTION OF OIL, 
NATURAL 
GAS, 
OR 
PRIMARY 
PRODUCTS 
THEREOF. 
(a) DENIAL OF DEDUCTION.—Paragraph (4) of sec-
tion 199(c) of the Internal Revenue Code of 1986 is 
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amended by adding at the end the following new subpara-
graph: 
‘‘(E) SPECIAL
RULE
FOR
OIL, NATURAL 
GAS, AND COAL INCOME.—The term ‘domestic 
production gross receipts’ shall not include 
gross receipts from the production, refining, 
processing, transportation, or distribution of oil, 
natural gas, or coal, or any primary product 
(within the meaning of subsection (d)(9)) there-
of.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 20. TERMINATION OF LAST-IN, FIRST-OUT METHOD OF 
INVENTORY FOR OIL, NATURAL GAS, AND 
COAL 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) TERMINATION FOR OIL, NATURAL GAS, AND 
COAL COMPANIES.—Subsection (a) shall not apply to any 
taxpayer that is in the trade or business of the production, 
refining, processing, transportation, or distribution of oil, 
natural gas, or coal for any taxable year beginning after 
December 31, 2012.’’. 
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(b) ADDITIONAL TERMINATION.—Section 473 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new subsection: 
‘‘(h) TERMINATION FOR OIL, NATURAL GAS, AND 
COAL COMPANIES.—This section shall not apply to any 
taxpayer that is in the trade or business of the production, 
refining, processing, transportation, or distribution of oil, 
natural gas, or coal for any taxable year beginning after 
December 31, 2012.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 21. REPEAL OF PERCENTAGE DEPLETION FOR COAL 
AND HARD MINERAL FOSSIL FUELS. 
(a) IN GENERAL.—Section 613 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(f) TERMINATION WITH RESPECT TO COAL AND 
HARD MINERAL FOSSIL FUELS.—In the case of coal, lig-
nite, and oil shale (other than oil shale described in sub-
section (b)(5)), the allowance for depletion shall be com-
puted without reference to this section for any taxable 
year beginning after the date of the enactment of the End 
Polluter Welfare Act of 2012.’’. 
(b) CONFORMING AMENDMENTS.— 
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(1) COAL AND LIGNITE.—Section 613(b)(4) of 
the Internal Revenue Code of 1986 is amended by 
striking ‘‘coal, lignite,’’. 
(2) OIL
SHALE.—Section 613(b)(2) of such 
Code is amended to read as follows: 
‘‘(2) 15 PERCENT.—If, from deposits in the 
United States, gold, silver, copper, and iron ore.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 22. TERMINATION OF CAPITAL GAINS TREATMENT 
FOR ROYALTIES FROM COAL. 
(a) IN GENERAL.—Subsection (c) of section 631 of 
the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘coal (including lignite), or iron 
ore’’ and inserting ‘‘iron ore’’, 
(2) by striking ‘‘coal or iron ore’’ each place it 
appears and inserting ‘‘iron ore’’, 
(3) by striking ‘‘iron ore or coal’’ each place it 
appears and inserting ‘‘iron ore’’, and 
(4) by striking ‘‘COAL OR’’ in the heading. 
(b) CONFORMING AMENDMENT.—The heading of sec-
tion 631 of the Internal Revenue Code of 1986 is amended 
by striking ‘‘, COAL,’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions after the date of 
the enactment of this Act. 
SEC. 23. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 
APPLICABLE TO OIL, NATURAL GAS, AND 
COAL COMPANIES WHICH ARE DUAL CAPAC-
ITY 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: 
‘‘(n) SPECIAL RULES RELATING TO OIL, NATURAL 
GAS, AND COAL COMPANIES WHICH ARE DUAL CAPACITY 
TAXPAYERS.— 
‘‘(1) GENERAL
RULE.—Notwithstanding any 
other provision of this chapter, any amount paid or 
accrued to a foreign country or possession of the 
United States for any period by a dual capacity tax-
payer which is in the trade or business of the pro-
duction, refining, processing, transportation, or dis-
tribution of oil, natural gas, or coal shall not be con-
sidered a tax— 
‘‘(A) if, for such period, the foreign coun-
try or possession does not impose a generally 
applicable income tax, or 
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‘‘(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. 
‘‘(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 the date of the enact-
ment of this Act. 
(2) 
CONTRARY
TREATY
OBLIGATIONS 
UPHELD.—The amendments made by this section 
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shall not apply to the extent contrary to any treaty 
obligation of the United States. 
SEC. 24. INCREASE IN OIL SPILL LIABILITY TRUST FUND FI-
NANCING RATE. 
(a) IN GENERAL.—Subparagraph (B) of section 
4611(c)(2) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(B) the Oil Spill Liability Trust Fund fi-
nancing rate is— 
‘‘(i) in the case of crude oil received 
or petroleum products entered before Jan-
uary 1, 2013, 8 cents a barrel, 
‘‘(ii) in the case of crude oil received 
or petroleum products entered after De-
cember 31, 2012, and before January 1, 
2017, 9 cents a barrel, and 
‘‘(iii) in the case of crude oil received 
or petroleum products entered after De-
cember 31, 2016, 10 cents a barrel.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to crude oil received and petroleum 
products entered after the date of the enactment of this 
Act. 
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SEC. 25. APPLICATION OF CERTAIN ENVIRONMENTAL 
TAXES TO SYNTHETIC CRUDE OIL. 
(a) IN GENERAL.—Paragraph (1) of section 4612(a) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(1) CRUDE OIL.— 
‘‘(A) IN GENERAL.—The term ‘crude oil’ 
includes crude oil condensates, natural gasoline, 
and synthetic crude oil. 
‘‘(B) SYNTHETIC
CRUDE
OIL.—For pur-
poses of subparagraph (A), the term ‘synthetic 
crude oil’ means any bitumen and bituminous 
mixtures, any oil manufactured from bitumen 
and bituminous mixtures, and any liquid fuel 
manufactured from coal.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to oil and petroleum products re-
ceived or entered during calendar quarters beginning more 
than 60 days after the date of the enactment of this Act. 
SEC. 26. DENIAL OF DEDUCTION FOR REMOVAL COSTS AND 
DAMAGES FOR CERTAIN OIL SPILLS. 
(a) IN GENERAL.—Part IX of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new section: 
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‘‘SEC. 280I. EXPENSES FOR REMOVAL COSTS AND DAMAGES 
RELATING TO CERTAIN OIL SPILL LIABILITY. 
‘‘No deduction shall be allowed under this chapter for 
any amount paid or incurred with respect to any costs or 
damages for which the taxpayer is liable under section 
1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702).’’. 
(b) 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 the following new item: 
‘‘Sec. 280I. Expenses for removal costs and damages relating to certain oil spill 
liability.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to any liability arising 
in taxable years ending after the date of the enactment 
of this Act. 
SEC. 27. TAX ON CRUDE OIL AND NATURAL GAS PRODUCED 
FROM THE OUTER CONTINENTAL SHELF IN 
THE GULF OF MEXICO. 
(a) IN GENERAL.—Subtitle E of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new chapter: 
‘‘CHAPTER 56—TAX ON SEVERANCE OF 
CRUDE OIL AND NATURAL GAS FROM 
THE OUTER CONTINENTAL SHELF IN 
THE GULF OF MEXICO 
‘‘Sec. 5896. Imposition of tax. 
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‘‘Sec. 5897. Taxable crude oil or natural gas and removal price. 
‘‘Sec. 5898. Special rules and definitions. 
‘‘SEC. 5896. IMPOSITION OF TAX. 
‘‘(a) IN GENERAL.—In addition to any other tax im-
posed under this title, there is hereby imposed a tax equal 
to 13 percent of the removal price of any taxable crude 
oil or natural gas removed from the premises during any 
taxable period. 
‘‘(b) CREDIT FOR FEDERAL ROYALTIES PAID.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
credit against the tax imposed by subsection (a) with 
respect to the production of any taxable crude oil or 
natural gas an amount equal to the aggregate 
amount of royalties paid under Federal law with re-
spect to such production. 
‘‘(2) LIMITATION.—The aggregate amount of 
credits allowed under paragraph (1) to any taxpayer 
for any taxable period shall not exceed the amount 
of tax imposed by subsection (a) for such taxable pe-
riod. 
‘‘(c) TAX PAID BY PRODUCER.—The tax imposed by 
this section shall be paid by the producer of the taxable 
crude oil or natural gas. 
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‘‘SEC. 5897. TAXABLE CRUDE OIL OR NATURAL GAS AND RE-
MOVAL PRICE. 
‘‘(a) TAXABLE CRUDE OIL OR NATURAL GAS.—For 
purposes of this chapter, the term ‘taxable crude oil or 
natural gas’ means crude oil or natural gas which is pro-
duced from Federal submerged lands on the outer Conti-
nental Shelf in the Gulf of Mexico pursuant to a lease 
entered into with the United States which authorizes the 
production. 
‘‘(b) REMOVAL PRICE.—For purposes of this chap-
ter— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘removal price’ 
means— 
‘‘(A) in the case of taxable crude oil, the 
amount for which a barrel of such crude oil is 
sold, and 
‘‘(B) in the case of taxable natural gas, the 
amount per 1,000 cubic feet for which such 
natural gas is sold. 
‘‘(2) SALES BETWEEN RELATED PERSONS.—In 
the case of a sale between related persons, the re-
moval price shall not be less than the constructive 
sales price for purposes of determining gross income 
from the property under section 613. 
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‘‘(3) OIL
OR
NATURAL
GAS
REMOVED
FROM 
PROPERTY BEFORE SALE.—If crude oil or natural 
gas is removed from the property before it is sold, 
the removal price shall be the constructive sales 
price for purposes of determining gross income from 
the property under section 613. 
‘‘(4) REFINING BEGUN ON PROPERTY.—If the 
manufacture or conversion of crude oil into refined 
products begins before such oil is removed from the 
property— 
‘‘(A) such oil shall be treated as removed 
on the day such manufacture or conversion be-
gins, and 
‘‘(B) the removal price shall be the con-
structive sales price for purposes of determining 
gross income from the property under section 
613. 
‘‘(5) PROPERTY.—The term ‘property’ has the 
meaning given such term by section 614. 
‘‘SEC. 5898. SPECIAL RULES AND DEFINITIONS. 
‘‘(a) ADMINISTRATIVE REQUIREMENTS.— 
‘‘(1) WITHHOLDING AND DEPOSIT OF TAX.— 
The Secretary shall provide for the withholding and 
deposit of the tax imposed under section 5896 on a 
quarterly basis. 
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‘‘(2) RECORDS AND INFORMATION.—Each tax-
payer liable for tax under section 5896 shall keep 
such records, make such returns, and furnish such 
information (to the Secretary and to other persons 
having an interest in the taxable crude oil or natural 
gas) with respect to such oil as the Secretary may 
by regulations prescribe. 
‘‘(3) TAXABLE PERIODS; RETURN OF TAX.— 
‘‘(A) TAXABLE PERIOD.—Except as pro-
vided by the Secretary, each calendar year shall 
constitute a taxable period. 
‘‘(B) RETURNS.—The Secretary shall pro-
vide for the filing, and the time for filing, of the 
return of the tax imposed under section 5896. 
‘‘(b) DEFINITIONS.—For purposes of this chapter— 
‘‘(1) PRODUCER.—The term ‘producer’ means 
the holder of the economic interest with respect to 
the crude oil or natural gas. 
‘‘(2) CRUDE OIL.—The term ‘crude oil’ includes 
crude oil condensates and natural gasoline. 
‘‘(3) PREMISES AND CRUDE OIL PRODUCT.— 
The terms ‘premises’ and ‘crude oil product’ have 
the same meanings as when used for purposes of de-
termining gross income from the property under sec-
tion 613. 
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‘‘(c) ADJUSTMENT OF REMOVAL PRICE.—In deter-
mining the removal price of oil or natural gas from a prop-
erty in the case of any transaction, the Secretary may ad-
just the removal price to reflect clearly the fair market 
value of oil or natural gas removed. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this chapter.’’. 
(b) DEDUCTIBILITY OF TAX.—The first sentence of 
section 164(a) is amended by inserting after paragraph 
(6) the following new paragraph: 
‘‘(7) The tax imposed by section 5896(a) (after 
application of section 5896(b)) on the severance of 
crude oil or natural gas from the outer Continental 
Shelf in the Gulf of Mexico.’’. 
(c) CLERICAL AMENDMENT.—The table of chapters 
for subtitle E is amended by adding at the end the fol-
lowing new item: 
‘‘CHAPTER 56. Tax on severance of crude oil and natural gas 
from the outer Continental Shelf in the Gulf of 
Mexico.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to crude oil or natural gas removed 
after December 31, 2012. 
SEC. 28. POWDER RIVER BASIN. 
(a) DESIGNATION OF THE POWDER RIVER BASIN AS 
A COAL PRODUCING REGION.—The Director of the Bu-
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reau of Land Management shall designate the Powder 
River Basin as a coal producing region. 
(b) REPORT.—Not later than 1 year after the date 
of enactment of this Act, the Director of the Bureau of 
Land Management shall submit to Congress a report that 
includes— 
(1) a study of the fair market value and the 
amount of royalties paid on coal leases in the Pow-
der River Basin compared to other national and 
international coal markets; and 
(2) any policy recommendations to capture the 
future market value of the coal leases in the Powder 
River Basin. 
SEC. 29. REPORTS. 
(a) DEFINITION OF FOSSIL-FUEL-PRODUCTION SUB-
SIDY.—In this section, the term ‘‘subsidy for fossil-fuel 
production’’ means any direct funding, tax treatment or 
incentive, risk-reduction benefit, financing assistance or 
guarantee, royalty relief, or other provision that provides 
a financial benefit to an oil, natural gas, or coal company 
for the production of fossil fuels. 
(b) REPORT TO CONGRESS.—Not later than 1 year 
after the date of enactment of this Act, the Secretary of 
the Treasury, in coordination with the Secretary of En-
ergy, shall submit to Congress a report detailing each Fed-
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eral law (including regulations), other than those amended 
by this Act, as in effect on the date on which the report 
is submitted, that includes a subsidy for fossil-fuel produc-
tion. 
(c) REPORT ON MODIFIED RECOVERY PERIOD.— 
(1) IN GENERAL.—Not later than 1 year after 
the date of enactment of this Act, the Secretary, in 
coordination with the Commissioner of Internal Rev-
enue, shall submit to Congress a report on the appli-
cable recovery period under the accelerated cost re-
covery system provided in section 168 of the Inter-
nal Revenue Code of 1986 for each type of property 
involved in fossil-fuel production, including pipelines, 
power generation property, refineries, and drilling 
equipment, to determine if any assets are receiving 
a subsidy for fossil-fuel production. 
(2) ELIMINATION OF SUBSIDY.—In the case of 
any type of property that the Commissioner of Inter-
nal Revenue determines is receiving a subsidy for 
fossil-fuel production under such section 168, for 
property placed in service in taxable years beginning 
after the date of such determination, such section 
168 shall not apply. The preceding sentence shall 
not apply to any property with respect to a taxable 
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year unless such determination is published before 
the first day of such taxable year. 
Æ 
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