[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2996 Introduced in Senate (IS)]
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114th CONGRESS
2d Session
S. 2996
To amend the Internal Revenue Code of 1986 to phase out tax preferences
for fossil fuels on the same schedule as the phase out of the tax
credits for wind facilities.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 26, 2016
Mr. Schatz (for himself, Mr. Whitehouse, Mrs. Feinstein, Mr. Merkley,
Ms. Warren, and Mr. Markey) introduced the following bill; which was
read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to phase out tax preferences
for fossil fuels on the same schedule as the phase out of the tax
credits for wind facilities.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fossil Aid is Inefficient and
Regressive Energy Policy Act'' or the ``FAIR Energy Policy Act''.
SEC. 2. PHASE OUT OF TAX PREFERENCES FOR FOSSIL FUELS.
(a) Findings.--Congress finds the following:
(1) United States tax policy has provided tax preferences,
such as special deductions, special tax rates, tax credits, and
grants in lieu of tax credits, for oil and gas production for
100 years.
(2) United States tax policy has provided tax preferences
for coal production for over 80 years.
(3) In order to ensure that all sources of energy compete
on an equal footing, as tax credits for renewable energy are
phased out over the next 4 years, fossil fuel tax preferences
should be phased out on the same schedule.
(b) Expensing of Intangible Drilling Costs.--Section 263 of the
Internal Revenue Code of 1986 is amended--
(1) in subsection (c), by striking ``subsection (i)'' and
inserting ``subsections (i) and (j)'', and
(2) by adding at the end the following new subsection:
``(j) Phase Out of Deduction for Intangible Drilling Costs.--In the
case of a dual capacity taxpayer which is a major integrated oil
company (within the meaning of section 167(h)(5)), for any intangible
drilling and development costs paid or incurred with respect to an oil
or gas well, the amount of such costs allowed as a deduction under
subsection (c) shall be reduced by--
``(1) in the case of any costs paid or incurred after
December 31, 2016, and before January 1, 2018, 20 percent,
``(2) in the case of any costs paid or incurred after
December 31, 2017, and before January 1, 2019, 40 percent,
``(3) in the case of any costs paid or incurred after
December 31, 2018, and before January 1, 2020, 60 percent, and
``(4) in the case of any costs paid or incurred after
December 31, 2019, 100 percent.''.
(c) Percentage Depletion for Oil and Natural Gas Wells.--Section
613A(d) of such Code is amended by adding at the end the following new
paragraph:
``(6) Phase out of percentage depletion for oil and natural
gas wells.--In the case of a dual capacity taxpayer which is a
major integrated oil company (within the meaning of section
167(h)(5)), the amount allowed as a deduction for the taxable
year which is attributable to the application of subsection (c)
(determined after the application of paragraphs (1) through (5)
of this subsection and without regard to this paragraph) shall
be reduced by--
``(A) in the case of any crude oil or natural gas
produced after December 31, 2016, and before January 1,
2018, 20 percent,
``(B) in the case of any crude oil or natural gas
produced after December 31, 2017, and before January 1,
2019, 40 percent,
``(C) in the case of any crude oil or natural gas
produced after December 31, 2018, and before January 1,
2020, 60 percent, and
``(D) in the case of any crude oil or natural gas
produced after December 31, 2019, 100 percent.''.
(d) Domestic Manufacturing Deduction for Fossil Fuels.--Section
199(d)(9) of such Code is amended by adding at the end the following
new subparagraph:
``(D) Phase out of deduction for oil related
qualified production activities income.--In the case of
a dual capacity taxpayer which is a major integrated
oil company (within the meaning of section 167(h)(5)),
the amount allowable as a deduction under subsection
(a) (determined after the application of subparagraph
(A) and without regard to this subparagraph) shall be
reduced by--
``(i) in the case of any oil related
qualified production activities income received
or accrued after December 31, 2016, and before
January 1, 2018, 20 percent,
``(ii) in the case of any oil related
qualified production activities income received
or accrued after December 31, 2017, and before
January 1, 2019, 40 percent,
``(iii) in the case of any oil related
qualified production activities income received
or accrued after December 31, 2018, and before
January 1, 2020, 60 percent, and
``(iv) in the case of any oil related
qualified production activities income received
or accrued after December 31, 2019, 100
percent.''.
(e) Amortization of Geological and Geophysical Expenditures.--
Section 167(h) of such Code is amended by adding at the end the
following new paragraph:
``(6) Phase out of amortization of geological and
geophysical expenditures.--In the case of a dual capacity
taxpayer which is a major integrated oil company (within the
meaning of section 167(h)(5)), the amount of geological and
geophysical expenses paid or incurred by a taxpayer which are
allowed as a deduction under this subsection (without regard to
this paragraph) shall be reduced by--
``(A) in the case of any such expenses paid or
incurred after December 31, 2016, and before January 1,
2018, 20 percent,
``(B) in the case of any such expenses paid or
incurred after December 31, 2017, and before January 1,
2019, 40 percent,
``(C) in the case of any such expenses paid or
incurred after December 31, 2018, and before January 1,
2020, 60 percent, and
``(D) in the case of any such expenses paid or
incurred after December 31, 2019, 100 percent.''.
(f) Percentage Depletion for Oil Shale.--Section 613 of such Code
is amended by adding at the end the following new subsection:
``(f) Phase Out of Percentage Depletion for Oil Shale.--In the case
of a dual capacity taxpayer which is a major integrated oil company
(within the meaning of section 167(h)(5)), the allowance for depletion
for oil shale determined under this section (without regard to this
subsection) shall be reduced by--
``(1) in the case of any income received or accrued from
the property after December 31, 2016, and before January 1,
2018, 20 percent,
``(2) in the case of any income received or accrued from
the property after December 31, 2017, and before January 1,
2019, 40 percent,
``(3) in the case of any income received or accrued from
the property after December 31, 2018, and before January 1,
2020, 60 percent, and
``(4) in the case of any income received or accrued from
the property after December 31, 2019, 100 percent.''.
(g) Expensing of Exploration and Development Costs for Oil Shale.--
Section 617 of such Code is amended--
(1) by redesignating subsection (i) as subsection (j), and
(2) by inserting after subsection (h) the following new
subsection:
``(i) Phase Out of Expensing of Exploration and Development Costs
for Oil Shale.--In the case of a dual capacity taxpayer which is a
major integrated oil company (within the meaning of section 167(h)(5)),
the amount of expenditures related to oil shale which are allowed as a
deduction under subsection (a) shall be reduced by--
``(1) in the case of any such expenditures paid or incurred
after December 31, 2016, and before January 1, 2018, 20
percent,
``(2) in the case of any such expenditures paid or incurred
after December 31, 2017, and before January 1, 2019, 40
percent,
``(3) in the case of any such expenditures paid or incurred
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(4) in the case of any such expenditures paid or incurred
after December 31, 2019, 100 percent.''.
(h) Capital Gains Treatment for Royalties of Coal.--Section 631 of
such Code is amended by adding at the end the following new subsection:
``(d) Phase Out of Capital Gains Treatment for Royalties of Coal.--
In the case of coal (including lignite), the amount of gain or loss on
the sale of such coal to which subsection (c) applies shall be reduced
by--
``(1) in the case of any such gain or loss after December
31, 2016, and before January 1, 2018, 20 percent,
``(2) in the case of any such gain or loss after December
31, 2017, and before January 1, 2019, 40 percent,
``(3) in the case of any such gain or loss after December
31, 2018, and before January 1, 2020, 60 percent, and
``(4) in the case of any such gain or loss after December
31, 2019, 100 percent.''.
(i) Deduction for Tertiary Injectants.--Section 193 of such Code is
amended by adding at the end the following new subsection:
``(d) Phase Out of Deduction for Tertiary Injectants.--In the case
of a dual capacity taxpayer which is a major integrated oil company
(within the meaning of section 167(h)(5)), the amount of qualified
tertiary injectant expenses allowable as a deduction under subsection
(a) shall be reduced by--
``(1) in the case of any such expenditures paid or incurred
after December 31, 2016, and before January 1, 2018, 20
percent,
``(2) in the case of any such expenditures paid or incurred
after December 31, 2017, and before January 1, 2019, 40
percent,
``(3) in the case of any such expenditures paid or incurred
after December 31, 2018, and before January 1, 2020, 60
percent, and
``(4) in the case of any such expenditures paid or incurred
after December 31, 2019, 100 percent.''.
(j) Exception to Passive Loss Limitation for Working Interests in
Oil and Natural Gas Properties.--Section 469(c) of such Code is amended
by adding at the end the following new paragraph:
``(8) Phase out of exception to passive loss limitation for
working interests in oil and natural gas properties.--In the
case of a dual capacity taxpayer which is a major integrated
oil company (within the meaning of section 167(h)(5)), for any
loss from a working interest in any oil or gas property, the
amount of such loss to which paragraph (3) applies shall be
reduced by--
``(A) in the case of any such loss after December
31, 2016, and before January 1, 2018, 20 percent,
``(B) in the case of any such loss after December
31, 2017, and before January 1, 2019, 40 percent,
``(C) in the case of any such loss after December
31, 2018, and before January 1, 2020, 60 percent, and
``(D) in the case of any such loss after December
31, 2019, 100 percent.''.
(k) Marginal Wells Credit.--Section 45I(d) of such Code is amended
by adding at the end the following new paragraph:
``(4) Phase out of marginal wells credit.--In the case of a
dual capacity taxpayer which is a major integrated oil company
(within the meaning of section 167(h)(5)), the amount of the
credit determined under subsection (a) shall be reduced by--
``(A) in the case of any qualified crude oil
production or qualified natural gas production after
December 31, 2016, and before January 1, 2018, 20
percent,
``(B) in the case of any qualified crude oil
production or qualified natural gas production after
December 31, 2017, and before January 1, 2019, 40
percent,
``(C) in the case of any qualified crude oil
production or qualified natural gas production after
December 31, 2018, and before January 1, 2020, 60
percent, and
``(D) in the case of any qualified crude oil
production or qualified natural gas production after
December 31, 2019, 100 percent.''.
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