End Polluter Welfare Act of 2021

“(5) for any onshore facility transporting diluted bitumen, bituminous mixtures, or any oil manufactured from bitumen, the liability of the responsible party under section 1002.”

“7875. Termination of certain provisions relating 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 2021:

“(1) Section 43 (relating to enhanced oil recovery credit).

“(2) Section 45I (relating to credit for producing oil and natural gas from marginal wells).

“(3) Section 461(i)(2) (relating to special rule for spudding of oil or natural gas wells).

“(4) Section 469(c)(3)(A) (relating to working interests in oil and natural gas property).

“(5) Section 613A (relating to limitations on percentage depletion in case of oil and natural gas wells).

“(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 2021:

“(1) Section 168(e)(3)(C)(iii) (relating to classification of certain property).

“(2) Section 169 (relating to amortization of pollution control facilities) with respect to any atmospheric pollution control facility.

“(c) Provisions relating to costs and expenses—The following provisions shall not apply to costs or expenses paid or incurred after the date of the enactment of the End Polluter Welfare Act of 2021:

“(1) Section 179B (relating to deduction for capital costs incurred in complying with Environmental Protection Agency sulfur regulations).

“(2) Section 468 (relating to special rules for mining and solid waste reclamation and closing costs).

“(d) Allocated credits—No new credits shall be certified under section 48A (relating to qualifying advanced 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 2021.

“(e) Arbitrage bonds—Section 148(b)(4) (relating 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 2021.”

“(11) Fossil fuel property

“(A) In general—This subsection shall not apply with respect to any property which is primarily used for fossil fuel activities and is placed in service during any taxable year beginning after the date of the enactment of the End Polluter Welfare Act of 2021.

“(B) Fossil fuel activities—For purposes of this paragraph, the term fossil fuel activities means the exploration, development, mining or production, processing, refining, transportation (including pipelines transporting gas, oil, or products thereof), distribution, or marketing of coal, petroleum, natural gas, or any derivative of coal, petroleum, or natural gas that is used for fuel.

“(C) Exception—The property described in subparagraph (A) shall not include any motor vehicle service station or convenience store which does not qualify as a retail motor fuels outlet under subsection (e)(3)(E)(iii).”

“(viii) Any item of gain or loss derived from fossil fuel activities (as defined in section 168(k)(11)(B)) during any taxable year beginning after the date of the enactment of the End Polluter Welfare Act of 2021.”

“(I) Fossil fuel activities—Any research related to fossil fuel activities (as defined in section 168(k)(11)(B)) which is conducted after the date of the enactment of the End Polluter Welfare Act of 2021.”

“(V) any income derived from fossil fuel activities (as defined in section 168(k)(11)(B)) during any taxable year beginning after the date of the enactment of the End Polluter Welfare Act of 2021, and”

“(2) Exceptions—This subsection shall not apply to—

“(A) any exchange of real property held primarily for sale, or

“(B) any exchange of real property which—

“(i) is used for fossil fuel activities (as defined in section 168(k)(11)(B)), and

“(ii) occurs after the date of the enactment of the End Polluter Welfare Act of 2021.”

“(viii) any natural gas gathering line the original use of which commences with the taxpayer after the date of the enactment of this clause.”

“(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 the date of enactment of the End Polluter Welfare Act of 2021.”

“(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 the date of enactment of the End Polluter Welfare Act of 2021.”

“(f) Termination with respect to coal and hard mineral fossil fuels—In the case of coal, lignite, and oil shale (other than oil shale described in subsection (b)(5)), the allowance for depletion shall be computed without reference to this section for any taxable year beginning after the date of the enactment of the End Polluter Welfare Act of 2021.”

“(n) Special rules relating to 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 taxpayer which is in the trade or business of the production, refining, processing, transportation, or distribution of fossil fuel 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 no amount other than the amount required to be paid by such taxpayer under the generally applicable income tax imposed by the country or possession were paid or accrued by such dual capacity taxpayer.

“(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—

“(I) citizens or residents of the foreign country or possession, or

“(II) organized or incorporated under the laws of the foreign country or possession.

“(4) Fossil fuel—For purposes of this subsection, the term fossil fuel means coal, petroleum, natural gas, or any derivative of coal, petroleum, or natural gas that is used for fuel.”

“(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 purposes of subparagraph (A), the term synthetic crude oil means—

“(i) any bitumen and bituminous mixtures,

“(ii) any oil derived from bitumen and bituminous mixtures (including oil derived from tar sands),

“(iii) any liquid fuel derived from coal, and

“(iv) any oil derived from kerogen-bearing sources (including oil derived from oil shale).”

“(10) Regulatory authority to address other types of crude oil and petroleum products—Under such regulations as the Secretary may prescribe, the Secretary may include as crude oil or as a petroleum product subject to tax under section 4611, any fuel feedstock or finished fuel product customarily transported by pipeline, vessel, railcar, or tanker truck if the Secretary determines that—

“(A) the classification of such fuel feedstock or finished fuel product is consistent with the definition of oil under the Oil Pollution Act of 1990, and

“(B) such fuel feedstock or finished fuel product is produced in sufficient commercial quantities as to pose a significant risk of hazard in the event of a discharge.”

“56 Tax on severance of crude oil and natural gas from the outer Continental Shelf in the Gulf of Mexico

“5901. Imposition of tax

“(a) In general—In addition to any other tax imposed 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 respect 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 period.

“(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.

“5902. Taxable crude oil or natural gas and removal 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 produced from Federal submerged lands on the outer Continental 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 chapter—

“(1) In general—Except as otherwise provided 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 removal price shall not be less than the constructive sales price for purposes of determining gross income from the property under section 613.

“(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 begins, and

“(B) the removal price shall be the constructive 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.

“5903. 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 5901 on a quarterly basis.

“(2) Records and information—Each taxpayer liable for tax under section 5901 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 provided by the Secretary, each calendar year shall constitute a taxable period.

“(B) Returns—The Secretary shall provide for the filing, and the time for filing, of the return of the tax imposed under section 5901.

“(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 determining gross income from the property under section 613.

“(c) Adjustment of removal price—In determining the removal price of oil or natural gas from a property in the case of any transaction, the Secretary may adjust 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.”

“(5) The tax imposed by section 5901(a) (after application of section 5901(b)) on the severance of crude oil or natural gas from the outer Continental Shelf in the Gulf of Mexico.”

“616. Amortization of development expenditures

“(a) In general—Any expenditures paid or incurred for the development of a mine or other natural deposit (other than an oil or gas well) if paid or incurred after the existence of ores or minerals in commercially marketable quantities has been disclosed shall be allowed as a deduction ratably over the 84-month period beginning on the date that such expenditure was paid or incurred.

“(b) Mid-Month convention—For purposes of subsection (a), any expenditures paid or incurred during any month shall be treated as paid or incurred on the mid-point of such month.

“(c) Exclusive method—Except as provided in this section, no depreciation or amortization deduction shall be allowed with respect to expenditures described in subsection (a).

“(d) Treatment upon abandonment—If any property with respect to which expenditures described in subsection (a) are paid or incurred is retired or abandoned during the 84-month period described in such subsection, no deduction shall be allowed on account of such retirement or abandonment and the amortization deduction under this section shall continue with respect to such payment.”

“617. Amortization of certain mining exploration expenditures

“(a) In general—Any expenditures paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral, and paid or incurred before the beginning of the development stage of the mine, shall be allowed as a deduction ratably over the 84-month period beginning on the date that such expense was paid or incurred.

“(b) Mid-Month convention—For purposes of subsection (a), any expenditures paid or incurred during any month shall be treated as paid or incurred on the mid-point of such month.

“(c) Exclusive method—Except as provided in this section, no depreciation or amortization deduction shall be allowed with respect to expenditures described in subsection (a).

“(d) Treatment upon abandonment—If any property with respect to which expenditures described in subsection (a) are paid or incurred is retired or abandoned during the 84-month period described in such subsection, no deduction shall be allowed on account of such retirement or abandonment and the amortization deduction under this section shall continue with respect to such payment.”

“(c) Intangible drilling and development costs in the case of oil and gas wells and geothermal wells—Notwithstanding subsection (a), and except as provided in subsection (i), in the case of any expenses paid or incurred in connection with intangible drilling and development costs related to oil and gas wells and wells drilled for any geothermal deposit (as defined in section 613(e)(2))—

“(1) such expenses shall be allowed as a deduction ratably over the 84-month period beginning on the date that such expense was paid or incurred,

“(2) any such expenses paid or incurred during any month shall be treated as paid or incurred on the mid-point of such month,

“(3) except as provided in this subsection, no depreciation or amortization deduction shall be allowed with respect to such expenses, and

“(4) if any property with respect to which such intangible drilling and development costs are paid or incurred is retired or abandoned during such 84-month period, no deduction shall be allowed on account of such retirement or abandonment and the amortization deduction under this subsection shall continue with respect to such payment.”

“(4) the foreign base company oil related income for the taxable year (determined under subsection (g) and reduced as provided in subsection (b)(5)).”

“(g) Foreign base company oil related income—For purposes of this section—

“(1) In general—Except as otherwise provided in this subsection, the term foreign base company oil related income means foreign oil related income (within the meaning of paragraphs (2) and (3) of section 907(c)) other than income derived from a source within a foreign country in connection with—

“(A) oil or gas which was extracted from an oil or gas well located in such foreign country, or

“(B) oil, gas, or a primary product of oil or gas which is sold by the foreign corporation or a related person for use or consumption within such country or is loaded in such country on a vessel or aircraft as fuel for such vessel or aircraft.

“(2) Paragraph (1) applies only where corporation has produced 1,000 barrels per day or more

“(A) In general—The term foreign base company oil related income shall not include any income of a foreign corporation if such corporation is not a large oil producer for the taxable year.

“(B) Large oil producer—For purposes of subparagraph (A), the term large oil producer means any corporation if, for the taxable year or for the preceding taxable year, the average daily production of foreign crude oil and natural gas of the related group which includes such corporation equaled or exceeded 1,000 barrels.

“(C) Related group—The term related group means a group consisting of the foreign corporation and any other person who is a related person with respect to such corporation.

“(D) Average daily production of foreign crude oil and natural gas—For purposes of this paragraph, the average daily production of foreign crude oil or natural gas of any related group for any taxable year (and the conversion of cubic feet of natural gas into barrels) shall be determined under rules similar to the rules of section 613A (as in effect on the day before the date of enactment of the End Polluter Welfare Act of 2021) except that only crude oil or natural gas from a well located outside the United States shall be taken into account.”

“(i) Termination—This section shall not apply with respect to any qualified carbon oxide captured after the date of enactment of the End Polluter Welfare Act of 2021.”