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A BILL TO BE ENTITLED
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AN ACT
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relating to the appraisal for ad valorem tax purposes of a real |
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property interest in oil or gas in place. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 23.175, Tax Code, is amended to read as |
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follows: |
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Sec. 23.175. OIL OR GAS INTEREST. (a) If a real property |
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interest in oil or gas in place is appraised by a method that takes |
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into account the future income from the sale of oil or gas to be |
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produced from the interest, the method must use the average price of |
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the oil or gas from the interest for the preceding two calendar |
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years [year multiplied by a price adjustment factor] as the price at |
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which the oil or gas produced from the interest is projected to be |
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sold in each calendar [the current] year of the appraisal. The |
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average price for the preceding two calendar years [year] is |
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calculated by dividing the sum of the monthly average prices for |
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which oil and gas from the interest was selling during each month of |
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the preceding two calendar years [year] by 24 [12]. If there was no |
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production of oil or gas from the interest during any month of the |
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preceding two calendar years [year], the average price for which |
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similar oil and gas from comparable interests was selling during |
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that month is to be used. [Except as otherwise provided by this |
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subsection, the chief appraiser shall calculate the price |
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adjustment factor by dividing the spot price of West Texas |
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Intermediate crude oil in nominal dollars per barrel or the spot |
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price of natural gas at the Henry Hub in nominal dollars per million |
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British thermal units, as applicable, as projected for the current |
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calendar year by the United States Energy Information |
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Administration in the most recently published edition of the Annual |
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Energy Outlook by the spot price of West Texas Intermediate crude |
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oil in nominal dollars per barrel or the spot price of natural gas |
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at the Henry Hub in nominal dollars per million British thermal |
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units, as applicable, for the preceding calendar year as stated in |
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the same report. If as of March 1 of the current calendar year the |
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most recently published edition of the Annual Energy Outlook was |
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published before December 1 of the preceding calendar year, the |
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chief appraiser shall use the projected current and preceding |
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calendar year spot price of West Texas Intermediate crude oil in |
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nominal dollars per barrel or the spot price of natural gas at the |
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Henry Hub in nominal dollars per million British thermal units, as |
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applicable, as stated in the Short-Term Energy Outlook report |
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published in January of the current calendar year by the United |
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States Energy Information Administration in the price adjustment |
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factor calculations. The price for the interest used in the second |
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through the sixth calendar year of the appraisal may not reflect an |
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annual escalation or de-escalation rate that exceeds the average |
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annual percentage change from 1982 to the most recent year for which |
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the information is available in the producer price index for |
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domestically produced petroleum or for natural gas, as applicable, |
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as published by the Bureau of Labor Statistics of the United States |
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Department of Labor. The price for the interest used in the sixth |
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calendar year of the appraisal must be used in each subsequent year |
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of the appraisal.] |
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(b) The comptroller by rule shall develop and distribute to |
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each appraisal office appraisal manuals that specify the [formula |
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to be used in computing the limit on the price for an interest used |
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in the second through the sixth year of an appraisal and the] |
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methods and procedures to discount future income from the sale of |
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oil or gas from the interest to present value. |
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(c) Each appraisal office shall use the [formula,] |
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methods[,] and procedures specified by the appraisal manuals |
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developed under Subsection (b). |
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SECTION 2. This Act applies to the appraisal for ad valorem |
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tax purposes of a real property interest in oil or gas in place only |
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for a tax year beginning on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2022. |