Surface Transportation Investment Act of 2021
Bill: H.R.1329 | Sponsor: Rep. Brownley, Julia (D-CA)
Policy area: Taxation

Summary:
Surface Transportation Investment Act of 2021
This bill limits or repeals certain tax benefits for major integrated oil companies, including (1) the foreign tax credit for companies that are dual capacity taxpayers, (2) the tax deduction for intangible drilling and development costs, (3) the percentage depletion allowance for oil and gas wells, and (4) the tax deduction for qualified tertiary injectant expenses.
The bill modifies the definition of major integrated oil company to include certain successors in interest that control more than 50% of the crude oil production or natural gas production of the company.
The bill establishes a Transportation Block Grant Fund and appropriates to the fund amounts equal to the increase in revenues as a result of this bill. The funds must be used for making grants under the Surface Transportation Block Grant Program.

To amend the Internal Revenue Code of 1986 to repeal loopholes for 
        major integrated oil companies, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Surface 
Transportation Investment Act of 2021''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                  TITLE I--CLOSE BIG OIL TAX LOOPHOLES

Sec. 2. Modifications of foreign tax credit rules applicable to major 
                            integrated oil companies which are dual 
                            capacity taxpayers.
Sec. 3. Limitation on deduction for intangible drilling and development 
                            costs; amortization of disallowed amounts.
Sec. 4. Limitation on percentage depletion allowance for oil and gas 
                            wells.
Sec. 5. Limitation on deduction for tertiary injectants.
Sec. 6. Modification of definition of major integrated oil company.
                 TITLE II--TRANSPORTATION BLOCK GRANTS

Sec. 201. Use of revenue for transportation block grants.

                  TITLE I--CLOSE BIG OIL TAX LOOPHOLES

SEC. 2. MODIFICATIONS OF FOREIGN TAX CREDIT RULES APPLICABLE TO MAJOR 
              INTEGRATED OIL COMPANIES WHICH ARE DUAL CAPACITY 
              TAXPAYERS.

    (a) In General.--Section 901 of the Internal Revenue 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 Major Integrated 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 (within the 
        meaning of section 167(h)(5)) 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 country or 
                possession does not impose a generally applicable 
                income tax, or
                    ``(B) to the extent such amount exceeds the amount 
                (determined in accordance with regulations) which--
                            ``(i) is paid by such dual capacity 
                        taxpayer pursuant to the generally applicable 
                        income tax imposed by the country or 
                        possession, or
                            ``(ii) would be paid if the generally 
                        applicable income tax imposed by the country or 
                        possession were applicable to such dual 
                        capacity taxpayer.
        Nothing in this paragraph shall be construed to imply the 
        proper treatment of any such amount not in excess of the amount 
        determined under subparagraph (B).
            ``(2) Dual capacity taxpayer.--For purposes of this 
        subsection, the term `dual capacity taxpayer' 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 determined 
                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 imposed 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 application, by its terms 
                and in practice, to--
                            ``(i) persons who are not dual capacity 
                        taxpayers, and
                            ``(ii) persons who are citizens or 
                        residents of the foreign country or 
                        possession.''.
    (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 enactment of this Act.
            (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.

SEC. 3. LIMITATION ON DEDUCTION FOR INTANGIBLE DRILLING AND DEVELOPMENT 
              COSTS; AMORTIZATION OF DISALLOWED AMOUNTS.

    (a) In General.--Section 263(c) of the Internal Revenue Code of 
1986 is amended to read as follows:
    ``(c) Intangible Drilling and Development Costs in the Case of Oil 
and Gas Wells and Geothermal Wells.--
            ``(1) In general.--Notwithstanding subsection (a), and 
        except as provided in subsection (i), regulations shall be 
        prescribed by the Secretary under this subtitle corresponding 
        to the regulations which granted the option to deduct as 
        expenses intangible drilling and development costs in the case 
        of oil and gas wells and which were recognized and approved by 
        the Congress in House Concurrent Resolution 50, Seventy-ninth 
        Congress. Such regulations shall also grant the option to 
        deduct as expenses intangible drilling and development costs in 
        the case of wells drilled for any geothermal deposit (as 
        defined in section 613(e)(2)) to the same extent and in the 
        same manner as such expenses are deductible in the case of oil 
        and gas wells. This subsection shall not apply with respect to 
        any costs to which any deduction is allowed under section 59(e) 
        or 291.
            ``(2) Exclusion.--
                    ``(A) In general.--This subsection shall not apply 
                to amounts paid or incurred by a taxpayer in any 
                taxable year in which such taxpayer is a major 
                integrated oil company (within the meaning of section 
                167(h)(5)).
                    ``(B) Amortization of amounts not allowable as 
                deductions under subparagraph (A).--The amount not 
                allowable as a deduction for any taxable year by reason 
                of subparagraph (A) shall be allowable as a deduction 
                ratably over the 60-month period beginning with the 
                month in which the costs are paid or incurred. For 
                purposes of section 1254, any deduction under this 
                subparagraph shall be treated as a deduction under this 
                subsection.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred in taxable years beginning after December 
31, 2021.

SEC. 4. LIMITATION ON PERCENTAGE DEPLETION ALLOWANCE FOR OIL AND GAS 
              WELLS.

    (a) In General.--Section 613A of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(f) Application With Respect to Major Integrated Oil Companies.--
In the case of any taxable year in which the taxpayer is a major 
integrated oil company (within the meaning of section 167(h)(5)), the 
allowance for percentage depletion shall be zero.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2021.

SEC. 5. LIMITATION ON DEDUCTION FOR TERTIARY INJECTANTS.

    (a) In General.--Section 193 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(d) Application With Respect to Major Integrated Oil Companies.--
            ``(1) In general.--This section shall not apply to amounts 
        paid or incurred by a taxpayer in any taxable year in which 
        such taxpayer is a major integrated oil company (within the 
        meaning of section 167(h)(5)).
            ``(2) Amortization of amounts not allowable as deductions 
        under paragraph (1).--The amount not allowable as a deduction 
        for any taxable year by reason of paragraph (1) shall be 
        allowable as a deduction ratably over the 60-month period 
        beginning with the month in which the costs are paid or 
        incurred.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or incurred in taxable years beginning after December 
31, 2021.

SEC. 6. MODIFICATION OF DEFINITION OF MAJOR INTEGRATED OIL COMPANY.

    (a) In General.--Section 167(h)(5) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new subparagraph:
                    ``(C) Certain successors in interest.--For purposes 
                of this paragraph, the term `major integrated oil 
                company' includes any successor in interest of a 
                company that was described in subparagraph (B) in any 
                taxable year, if such successor controls more than 50 
                percent of the crude oil production or natural gas 
                production of such company.''.
    (b) Conforming Amendments.--
            (1) In general.--Section 167(h)(5)(B) of the Internal 
        Revenue Code of 1986 is amended by inserting ``except as 
        provided in subparagraph (C),'' after ``For purposes of this 
        paragraph,''.
            (2) Taxable years tested.--Section 167(h)(5)(B)(iii) of 
        such Code is amended--
                    (A) by striking ``does not apply by reason of 
                paragraph (4) of section 613A(d)'' and inserting ``did 
                not apply by reason of paragraph (4) of section 613A(d) 
                for any taxable year after 2004'', and
                    (B) by striking ``does not apply'' in subclause 
                (II) and inserting ``did not apply for the taxable 
                year''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2021.

                 TITLE II--TRANSPORTATION BLOCK GRANTS

SEC. 201. USE OF REVENUE FOR TRANSPORTATION BLOCK GRANTS.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 9512. TRANSPORTATION BLOCK GRANT FUND.

    ``(a) Establishment.--There is established in the Treasury a fund 
to be known as the `Transportation Block Grant Fund' consisting of such 
amounts as may be appropriated or credited to the fund as provided in 
this section or section 9602(b).
    ``(b) Transfer to Fund.--There is hereby appropriated to the fund 
such amounts as the Secretary estimates are equivalent to the increase 
in revenue received in the Treasury by reason of the enactment of title 
I of the Surface Transportation Investment Act of 2021, and the 
amendments made thereby.
    ``(c) Expenditures From the Fund.--Amounts in the fund shall be 
available for making grants under the surface transportation block 
grant program established under section 133 of title 23, United States 
Code.''.
    (b) Clerical Amendment.--The table of sections for subchapter A of 
chapter 98 of such Code is amended by adding at the end the following 
new item:

``Sec. 9512. Transportation Block Grant Fund.''.
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