I
103D CONGRESS
1ST SESSION
H. R. 1816
To amend the Internal Revenue Code of 1986 to increase the percentage
depletion deduction for oil and natural gas produced from stripper well
properties, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 22, 1993
Mr. BREWSTER (for himself and Mr. MCCRERY) 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 increase
the percentage depletion deduction for oil and natural
gas produced from stripper well properties, 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 ‘‘Stripper Well Opera-
tors Preservation Act of 1993’’.
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SEC. 2. INCREASED PERCENTAGE DEPLETION FOR OIL AND
NATURAL GAS PRODUCED FROM STRIPPER
WELL PROPERTIES.
(a) IN GENERAL.—Subparagraph (C) of section
613A(c)(6) of the Internal Revenue Code of 1986 (relating
to oil and natural gas from marginal properties) is amend-
ed—
(1) by striking ‘‘25 percent’’ and inserting
‘‘28.5 percent’’,
(2) by striking ‘‘15 percent’’ and inserting ‘‘20
percent’’, and
(3) by striking ‘‘$20’’ and inserting ‘‘$28’’.
(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. 3. NET INCOME LIMITATION ON PERCENTAGE DEPLE-
TION REPEALED FOR STRIPPER WELL PROP-
ERTIES.
(a) IN GENERAL.—Section 613(a) of the Internal
Revenue Code of 1986 (relating to percentage depletion)
is amended by striking the second sentence and inserting:
‘‘Except in the case of stripper well properties as defined
in section 613A(c)(6)(E) for which depletion is computed
in accordance with section 613A(c)(6), such allowance
shall not exceed 50 percent (100 percent in the case of
oil and gas properties other than stripper well properties
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as defined in section 613a(c)(6)(E) for which depletion is
computed in accordance with section 613A(c)(6)) of the
taxpayer’s taxable income from the property (computed
without allowance for depletion).’’
(b) CONFORMING AMENDMENT.—Section 613A(c)(7)
of such Code (relating to special rules) is amended by
striking subparagraph (C) and redesignating subpara-
graph (D) as subparagraph (C).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
the date of enactment of this Act.
SEC. 4. EXPANSION OF ENHANCED OIL RECOVERY CREDIT.
(a) IN GENERAL.—Section 43(a) of the Internal Rev-
enue Code of 1986 (relating to enhanced oil recovery cred-
it) is amended to read as follows:
‘‘(a) GENERAL RULE.—For purposes of section 38,
the enhanced oil recovery credit for any taxable year is
an amount equal to—
‘‘(1) 15 percent of the taxpayer’s qualified en-
hanced oil recovery costs for such taxable year, plus
‘‘(2) in the case of a taxpayer (other than an
integrated oil company as defined in section
291(b)(4)), 15 percent of the taxpayer’s stripper
well production costs for such taxable year.’’.
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(b) STRIPPER WELL PRODUCTION COSTS, ETC.—
Section 43(c) of such Code (defining qualified enhanced
oil recovery costs) is amended by redesignating para-
graphs (3) and (4) as paragraphs (4) and (5), respectively,
and by inserting after paragraph (2) the following new
paragraph:
‘‘(3) STRIPPER WELL PRODUCTION COSTS.—
‘‘(A) IN
GENERAL.—The term ‘Stripper
Well Production costs’ means any of the follow-
ing:
‘‘(i) Any amount paid or incurred dur-
ing the taxable year for tangible prop-
erty—
‘‘(I) which is an integral part of
a qualified stripper well recovery
project, and
‘‘(II) with respect to which de-
preciation (or amortization in lieu of
depreciation) is allowable under this
chapter.
‘‘(ii) Any intangible drilling and devel-
opment costs—
‘‘(I) which are paid or incurred
in connection with a qualified stripper
well recovery project, and
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‘‘(II) with respect to which the
taxpayer may make an election under
section 263(c) of the taxable year.
‘‘(B) QUALIFIED STRIPPER WELL RECOV-
ERY
PROJECT.—The term ‘qualified stripper
well recovery project’ means any project
which—
‘‘(i) involves a stripper well property
as defined in section 613A(c)(6)(E),
‘‘(ii) involves the application (in ac-
cordance with sound engineering prin-
ciples) of recovery methods approved by
the Secretary for purposes of this section
which can reasonably be expected to result
in prolongation of the productive life of
such stripper well property and in more
than an insignificant increase in the
amount of crude oil which will ultimately
be recovered, and
‘‘(iii) is located within the United
States (within the meaning of section
638(1)).
‘‘(C) CERTIFICATION.—A project shall not
be treated as a qualified stripper well recovery
project unless the operator submits to the Sec-
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retary (at such times and in such manner as
the Secretary provides) a certification that the
project meets (and continues to meet) the re-
quirement of subparagraph (B).’’.
(c) NO DOUBLE CERTIFICATION.—Section 43(c) of
such Code, as amended by subsection (b), is amended by
adding at the end thereof the following new paragraph:
‘‘(6) ONLY 1 CERTIFICATION ALLOWED.—For
purposes of this section, the term ‘qualified en-
hanced oil recovery project’ shall not include any
project which is certified as a qualified advanced sec-
ondary recovery project under paragraph (3) and the
term ‘qualified stripper well recovery project’ shall
not include any project which is certified as an en-
hanced oil recovery project under paragraph (2).’’.
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (4) of section 43(c) of such
Code, as redesignated, is amended by inserting ‘‘and
qualified stripper well recovery costs’’ after ‘‘quali-
fied enhanced oil recovery costs’’.
(2) The heading for subsection (c) of section 43
of such Code is amended by inserting ‘‘AND QUALI-
FIED STRIPPER WELL RECOVERY COSTS’’ after
‘‘COSTS’’.
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(e) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of amounts paid or
incurred in taxable years beginning after the date of en-
actment of this Act.
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