To provide for marginal well production preservation and enhancement.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Marginal Well Production 
Preservation and Enhancement Act''.

SEC. 2. TAX TREATMENT FOR PROLONGED MARGINAL PRODUCTION.

    (a) Increase in Percentage Depletion for Oil and Natural Gas 
Produced From Marginal Properties.--
            (1) In general.--Paragraph (6) of section 613A(c) of the 
        Internal Revenue Code of 1986 (relating to oil and natural gas 
        produced from marginal properties) is amended to read as 
        follows:
            ``(6) Oil and natural gas produced from marginal 
        properties.--
                    ``(A) In general.--Except as provided in subsection 
                (d)--
                            ``(i) the allowance for depletion under 
                        section 611 shall be computed in accordance 
                        with section 613 with respect to the taxpayer's 
                        marginal production of domestic crude oil and 
                        domestic natural gas, and
                            ``(ii) 27.5 percent shall be deemed to be 
                        specified in subsection (b) of section 613 for 
                        purposes of subsection (a) of that section.
                    ``(B) Coordination with other production of 
                domestic oil and natural gas.--For purposes of this 
                subsection--
                            ``(i) no allowance for depletion shall be 
                        allowed by reason of paragraph (1) with respect 
                        to the taxpayer's marginal production of 
                        domestic crude oil and domestic natural gas, 
                        and
                            ``(ii) such production shall not be taken 
                        into account--
                                    ``(I) in determining under 
                                paragraph (1) how much of the 
                                taxpayer's depletable oil quantity or 
                                depletable natural gas quantity has 
                                been used, or
                                    ``(II) for purposes of applying 
                                subparagraph (A), (B), or (C) of 
                                paragraph (7).
                    ``(C) Marginal production.--The term `marginal 
                production' means domestic crude oil or domestic 
                natural gas which is produced during any taxable year 
                from a property which--
                            ``(i) is a stripper well property for the 
                        calendar year in which the taxable year begins, 
                        or
                            ``(ii) is a property substantially all of 
                        the production of which during such calendar 
                        year is heavy oil.
                    ``(D) Stripper well property.--For purposes of this 
                paragraph, the term `stripper well property' means, 
                with respect to any calendar year, any property with 
                respect to which the amount determined by dividing--
                            ``(i) the average daily production of 
                        domestic crude oil and domestic natural gas 
                        from producing wells on such property for such 
                        calendar year, by
                            ``(ii) the number of such wells,
                is 15 barrel equivalents or less.
                    ``(E) Heavy oil.--For purposes of this paragraph, 
                the term `heavy oil' means domestic crude oil produced 
                from any property if such crude oil had a weighted 
                average gravity of 20 degrees API or less (corrected to 
                60 degrees Fahrenheit).
                    ``(F) Nonapplication of taxable income limit with 
                respect to marginal production.--The second sentence of 
                subsection (a) of section 613 shall not apply to so 
                much of the allowance for depletion as is determined 
                under subparagraph (A).''.
            (2) Conforming amendments.--
                    (A) Section 613A(c)(3) of the Internal Revenue Code 
                of 1986 (defining depletable oil quantity) is amended 
                to read as follows:
            ``(3) Depletable oil quantity.--For purposes of paragraph 
        (1), the taxpayer's depletable oil quantity shall be 1,000 
        barrels.''.
                    (B) Subparagraphs (A) and (B) of section 613A(c)(7) 
                of such Code are each amended by striking ``or (6), as 
                the case may be''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning after December 31, 2008.
    (b) 1-Year Extension of Suspension of Taxable Income Limit.--
Section 613A(c)(6)(H)(ii) of the Internal Revenue Code of 1986 
(relating to temporary suspension of taxable income limit with respect 
to marginal production) is amended by striking ``2010'' and inserting 
``2011''.

SEC. 3. OIL AND GAS WELLS AND PIPELINE FACILITIES TECHNICAL AMENDMENT.

    Section 112(n)(4)(A) of the Clean Air Act (42 U.S.C. 7412(n)(4)(A)) 
is amended by striking ``this section'' and inserting ``this Act''.

SEC. 4. NATIONAL RESPONSE SYSTEM.

    Section 311(j) of the Federal Water Pollution Control Act (33 
U.S.C. 1321(j)) is amended by striking paragraph (1) and inserting the 
following:
            ``(1) System.--
                    ``(A) Definition of wastewater treatment 
                facility.--In this paragraph, the term `wastewater 
                treatment facility' includes produced water from an oil 
                production facility.
                    ``(B) Regulations.--Consistent with the National 
                Contingency Plan required under subsection (d), as soon 
                as practicable after the effective date of this 
                section, and from time to time thereafter, the 
                President shall promulgate regulations consistent with 
                maritime safety and marine and navigation laws--
                            ``(i) establishing methods and procedures 
                        for removal of discharged oil and hazardous 
                        substances;
                            ``(ii) establishing criteria for the 
                        development and implementation of local and 
                        regional oil and hazardous substance removal 
                        contingency plans;
                            ``(iii) establishing procedures, methods, 
                        and requirements and other requirements for 
                        equipment to prevent discharges of oil and 
                        hazardous substances from vessels and from 
                        onshore facilities and offshore facilities 
                        (other than wastewater treatment facilities), 
                        and to contain those discharges; and
                            ``(iv) governing the inspection of vessels 
                        carrying cargoes of oil and hazardous 
                        substances and the inspection of those cargoes 
                        in order to reduce the likelihood of discharges 
                        of oil from vessels in violation of this 
                        section.
                    ``(C) Small facilities.--In carrying out clause 
                (iii) of subparagraph (B), not later than 1 year after 
                the date of enactment of that clause, the Administrator 
                shall establish procedures, methods, and equipment 
                requirements and other requirements for, and consider 
                the cost-effectiveness of those requirements on, small 
                facilities (including agricultural and oil production 
                facilities) to prevent discharges from facilities and 
                offshore facilities, and to contain those discharges, 
                by developing regulations based on storage volume and 
                capacity that, with respect to those small facilities--
                            ``(i) apply to any facility the total oil 
                        storage capacity of which is at least 1,320 
                        gallons but less than 50,000 gallons, and at 
                        which no single tank exceeds a nominal capacity 
                        of 21,000 gallons; and
                            ``(ii) establish minimal requirements and 
                        plans by eliminating engineer certification, 
                        flow lines, loading and unloading areas, 
                        integrity testing, and other requirements, as 
                        determined by the Administrator, that do not 
                        take into consideration and meet cost-
                        effectiveness standards.''.

SEC. 5. RECOVERY PERIOD FOR DEPRECIATION OF PROPERTY USED TO INJECT 
              QUALIFIED TERTIARY INJECTANTS.

    (a) In General.--Section 168(e)(3)(A) of the Internal Revenue Code 
of 1986 (defining 3-year property) is amended 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) any qualified tertiary injectant 
                        property.''.
    (b) Qualified Tertiary Injectant Property.--Section 168(e) of the 
Internal Revenue Code of 1986 (relating to classification of property) 
is amended by adding at the end the following new paragraph:
            ``(9) Qualified tertiary injectant property.--The term 
        `qualified tertiary injectant property' means--
                    ``(A) any property--
                            ``(i) the principal use of which is to 
                        inject any tertiary injectant as a part of a 
                        tertiary recovery method (as defined in section 
                        193(b)(3)), or
                            ``(ii) which is a pipeline used to carry 
                        any tertiary injectant in connection with such 
                        tertiary recovery method, and
                    ``(B) which has a class life of more than 4 
                years.''.
    (c) 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 (A)(iii) the 
following new item:

        ``(A)(iv)..............................................    7''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, in taxable years ending after such date.

Summary: Marginal Well Production Preservation and Enhancement Act - Amends the Internal Revenue Code to: (1) increase to 27.5% the percentage depletion allowance for domestic crude oil and natural gas production from marginal properties; (2) extend through 2010 the temporary suspension of the taxable income limit with respect to marginal production of crude oil and natural gas; and (3) accelerate to three years the recovery period of qualified tertiary injectant property for depreciation purposes.

Amends the Clean Air Act with respect to emissions from small oil and gas exploration and production-related equipment.

Amends the Federal Water Pollution Control Act to: (1) amend the definition of "wastewater treatment facility" to include produced water from an oil production facility; and (2) require the Administrator of the Environmental Protection Agency (EPA) to establish cost-effective minimal requirements for the prevention of oil and hazardous substance discharges for small facilities with oil storage capacities of less than 50,000 gallons at which no single tank exceeds a nominal capacity of 21,000 gallons.