Reversing itself, the House ways and means committee has voted alternative minimum tax (AMT) relief for independent producers.
On Apr. 29 the committee rejected 20-16 an amendment by Rep. Bill Archer (R-Tex.) to reduce preference treatment for intangible drilling costs to 50% from 100% for independents and majors (OGJ, May 4, p. 52).
But the next day Archer returned with an adjusted amendment that won approval 19-16.
ADJUSTED AMENDMENT
Archer's new amendment limits AMT relief to 1993 through 1997 and to independents.
It would eliminate the AMT current earnings adjustment for IDCs and percentage depletion and end the AMT preference item for percentage depletion.
It will require independents to compute a "hypothetical AMT income" (AMTI) using present rules for determining the AMT preference for IDCS.
It would end the AMT preference for excess IDCS. But independents could not reduce their overall AMTI by more than 30% of their hypothetical AMTI in 1993 and 40% in 1994-97.
The Independent Petroleum Association of America said the Archer amendment provides "much needed reform" of the AMT on drilling and depletion. "It will help put natural gas and oil field workers back to work in America. 11
The amendment still faces two hurdles: approval by the House of Representatives when the omnibus energy bill goes to the floor this month, then approval by a House-Senate conference committee because the Senate bill has no AMT provision.
The original Archer amendment would have given majors and independents $1.2 billion in tax relief during 5 years, and the approved version gives independents $900 million.
Meanwhile, Rep. Billy Tauzin (D-La.) is preparing another amendment for introduction when the House energy bill reaches the floor.
He is incensed about an Outer Continental Shelf revenue sharing provision in a House merchant marine committee bill.
At the urging of some coastal states, the bill bans leasing on the OCS everywhere except the Gulf of Mexico and Alaska. It also requires the federal government to share as much as 4% of its OCS revenues with all coastal states.
The logic behind the bill is that the federal government shares 50% of its onshore leasing revenues with the states involved, so it should share part of its OCS revenues too.
At first, Alaska, California, Louisiana, and Texas would get $11.2 million each, Alabama and Mississippi $5.6 million, and all other coastal states nearly $2 million each.
TAUZIN'S REASONING
In the committee markup, Tauzin argued that if states have no offshore production or want to ban exploration off their coasts, they should not be allowed to reap the rewards. But he lacked the votes to strike the provision.
Tauzin said, "What we are saying in this bill is that we're going to reward states for stepping out of the drilling program. It's an incredible mistake."
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