§ 43. Enhanced oil recovery credit

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1990

   Revenue Reconciliation Act of 1990

   Pub. L. 101–508 title XI § 11511(a) · 104 Stat. 1388

   Enacted · 26 U.S.C. § 43

   Added Pub. L. 101–508, title XI, § 11511(a), Nov. 5, 1990, 104 Stat. 1388–483

   Source evidence

   Code source credit
   Added Pub. L. 101–508, title XI, § 11511(a), Nov. 5, 1990, 104 Stat. 1388–483

   Enacted provision · exact public law section
   (a) In General.— Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end thereof the following new section: “SEC. 43. ENHANCED OIL RECOVERY CREDIT. “(a) General Rule.— For purposes of section 38, the enhanced oil recovery credit for any taxable year is an amount equal to 15 percent of the taxpayer’s qualified enhanced oil recovery costs for such taxable year. “(b) Phase-Out of Credit as Crude Oil Prices Increase.— “(1) In general.— The amount of the credit determined under subsection (a) for any taxable year shall be reduced by an amount which bears the same ratio to the amount of such credit (determined without regard to this paragraph) as— “(A) the amount by which the reference price for the calendar year preceding the calendar year in which the taxable year begins exceeds $28, bears to “(B) $6. “(2) Reference price.— For purposes of this subsection, the term ‘reference price’ means, with respect to any calendar year, the reference price determined for such calendar year under section 29(d)(2)(C). “(3) Inflation adjustment.— “(A) In general.— In the case of any taxable year beginning in a calendar year after 1991, there shall be substituted for the $28 amount under paragraph (1)(A) an amount equal to the product of— “(i) $28, multiplied by “(ii) the inflation adjustment factor for such calendar year. “(B) Inflation adjustment factor.— The term ‘inflation adjustment factor’ means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 1990. For purposes of the preceding sentence, the term ‘GNP implicit price deflator’ means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of any calendar year, the Secretary shall publish the inflation adjustment factor for the preceding calendar year. “(c) Qualified Enhanced Oil Recovery Costs.— For purposes of this section— “(1) In general.— The term ‘qualified enhanced oil recovery costs’ means any of the following: “(A) Any amount paid or incurred during the taxable year for tangible property— “(i) which is an integral part of a qualified enhanced oil recovery project, and “(ii) with respect to which depreciation (or amortization in lieu of depreciation) is allowable under this chapter. “(B) Any intangible drilling and development costs— “(i) which are paid or incurred in connection with a qualified enhanced oil recovery project, and “(ii) with respect to which the taxpayer may make an election under section 263(c) for the taxable year. “(C) Any qualified tertiary injectant expenses which are paid or incurred in connection with a qualified enhanced oil recovery project and for which a deduction is allowable under section 193 for the taxable year. “(2) Qualified enhanced on, recovery project.— For purposes of this subsection— “(A) In general.— The term ‘qualified enhanced oil recovery project’ means any project— (i) which involves the application (in accordance with sound engineering principles) of 1 or more tertiary recovery methods (as defined in section 193(b)(3)) which can reasonably be expected to result in more than an insignificant increase in the amount of crude oil which will ultimately be recovered, “(ii) which is located within the United States (within the meaning of section 638(1)), and “(iii) with respect to which the first injection of liquids, gases, or other matter commences after December 31, 1990. “(B) Certification.— A project shall not be treated as a qualified enhanced oil recovery project unless the operator submits to the Secretary (at such times and in such manner as the Secretary provides) a certification from a petroleum engineer that the project meets (and continues to meet) the requirements of subparagraph (A). “(3) At-risk limitation.— For purposes of determining qualified enhanced oil recovery costs, rules similar to the rules of section 49(a)(D, section 49(a)(2),_and section 49(b) shall apply. “(4) Special rule for certain gas displacement projects.— For purposes of this section, immiscible non-hydrocarbon gas displacement shall be treated as a tertiary recovery method under section 193(b)(3). “(d) Other Rules.— “(1) Disallowance of deduction.— Any deduction allowable under this chapter for any costs taken into account in computing the amount of the credit determined under subsection (a) shall be reduced by the amount of such credit attributable to such costs. “(2) Basis adjustments.— For purposes of this subtitle, if a credit is determined under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed. “(e) Election To Have Credit Not Apply.— “(1) In general.— A taxpayer may elect to have this section not apply for any taxable year. “(2) Time for making election.— An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions). “(3) Manner of making election.— An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.”

2. 2000

   Consolidated Appropriations Act, 2001

   Pub. L. 106–554 § 1(a)(7)(tIII)(s317)(a) · 114 Stat. 2763

   1. Inserted · 26 U.S.C. § 43(c)(1)(C)

      Pub. L. 106–554 inserted “(as defined in section 193(b))” after “expenses”

   2. Struck · 26 U.S.C. § 43(c)(1)(C)

      Pub. L. 106–554 struck out “under section 193” after “allowable”

   Source evidence

   Code amendment note
   Subsec. (c)(1)(C). Pub. L. 106–554 inserted “(as defined in section 193(b))” after “expenses” and struck out “under section 193” after “allowable”.

   Enacted provision · exact public law section
   (7) H.R. 5662, as introduced on December 14, 2000.

3. 2004

   Pub. L. 108–357 § 707(a) · 118 Stat. 1418

   Added · 26 U.S.C. § 43(c)(1)(D)

   Pub. L. 108–357, § 707(a), added subpar. (D)

   Source evidence

   Code amendment note
   Subsec. (c)(1)(D). Pub. L. 108–357, § 707(a), added subpar. (D).

   Enacted provision · exact public law section
   (a) In General.— Section 43(c)(1) (defining qualified enhanced oil recovery costs) is amended by adding at the end the following new subparagraph: “(D) Any amount which is paid or incurred during the taxable year to construct a gas treatment plant which— “(i) is located in the area of the United States (within the meaning of section 638(1)) lying north of 64 degrees North latitude, “(ii) prepares Alaska natural gas for transportation through a pipeline with a capacity of at least 2,000,000,000,000 Btu of natural gas per day, and “(iii) produces carbon dioxide which is injected into hydrocarbon-bearing geological formations.” .

4. 2004

   Pub. L. 108–357 § 707(b) · 118 Stat. 1418

   Added · 26 U.S.C. § 43(c)(5)

   Pub. L. 108–357, § 707(b), added par. (5)

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 108–357, § 707(b), added par. (5).

   Enacted provision · exact public law section
   (b) Alaska Natural Gas.— Section 43(c) is amended by adding at the end the following new paragraph: “(5) Alaska natural gas.— For purposes of paragraph (1)(D)— “(1) In general.— The term ‘Alaska natural gas’ means natural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well— “(A) located in the area of the State of Alaska lying north of 64 degrees North latitude, determined by excluding the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)), and “(B) pursuant to the applicable State and Federal pollution prevention, control, and permit requirements from such area (including the continental shelf thereof within the meaning of section 638(1)). “(2) Natural gas.— The term ‘natural gas’ has the meaning given such term by section 613A(e)(2).” .

5. 2005

   Energy Tax Incentives Act of 2005

   Pub. L. 109–58 title XIII § 1322(a)(3)(B) · 119 Stat. 594

   Substituted · 26 U.S.C. § 43(b)(2)

   Pub. L. 109–58 substituted “section 45K(d)(2)(C)” for “section 29(d)(2)(C)”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 109–58 substituted “section 45K(d)(2)(C)” for “section 29(d)(2)(C)”.

   Enacted provision · exact public law section
   (B) Sections 43(b)(2), 45I(b)(2)(C)(i), and 613A(c)(6)(C) are each amended by striking “section 29(d)(2)(C)” and inserting “section 45K(d)(2)(C)”.

   Effective date note
   Amendment by Pub. L. 109–58 applicable to credits determined under the Internal Revenue Code of 1986 for taxable years ending after Dec. 31, 2005, see section 1322(c)(1) of Pub. L. 109–58, set out as a note under section 45K of this title.

6. 2005

   Tax Technical Corrections Act of 2005

   Pub. L. 109–135 title IV § 412(i) · 119 Stat. 2577

   Amended · 26 U.S.C. § 43(c)(5)

   Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of paragraph (1)(D)—

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 109–135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of paragraph (1)(D)—

   “(1) In general.—The term ‘Alaska natural gas’ means natural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well— “(A) located in the area of the State of Alaska lying north of 64 degrees North latitude, determined by excluding the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)), and “(B) pursuant to the applicable State and Federal pollution prevention, control, and permit requirements from such area (including the continental shelf thereof within the meaning of section 638(1)). “(2) Natural gas.—The term ‘natural gas’ has the meaning given such term by section 613A(e)(2).”

   Enacted provision · exact public law section
   (i) Paragraph (5) of section 43(c) is amended to read as follows: “(5) Alaska natural gas.— For purposes of paragraph (1)(D)— “(A) In general.— The term ‘Alaska natural gas’ means natural gas entering the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined without regard to subparagraph (B) thereof)) which is produced from a well— “(i) located in the area of the State of Alaska lying north of 64 degrees North latitude, determined by excluding the area of the Alaska National Wildlife Refuge (including the continental shelf thereof within the meaning of section 638(1)), and “(ii) pursuant to the applicable State and Federal pollution prevention, control, and permit requirements from such area (including the continental shelf thereof within the meaning of section 638(1)). “(B) Natural gas.— The term ‘natural gas’ has the meaning given such term by section 613A(e)(2).” .

7 of 7 references resolved to an enrolled provision