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A BILL TO BE ENTITLED
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AN ACT
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relating to the applicability of the gas production tax to flared or |
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vented gas at an increased rate; imposing a tax. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 201.052, Tax Code, is amended to read as |
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follows: |
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Sec. 201.052. RATES [RATE] OF TAX. [(a)] The tax imposed |
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by this chapter is at the rate of: |
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(1) 7.5 percent of the market value of gas produced and |
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saved in this state by the producer; and |
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(2) 25 percent of the market value of gas produced and |
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flared or vented in this state by the producer. |
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SECTION 2. Section 201.053, Tax Code, is amended to read as |
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follows: |
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Sec. 201.053. GAS NOT TAXED. The tax imposed by this |
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chapter does not apply to gas: |
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(1) injected into the earth in this state, unless sold |
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for that purpose; |
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(2) [produced from oil wells with oil and lawfully |
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vented or flared; |
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[(3)] used for lifting oil, unless sold for that |
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purpose; or |
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(3) [(4)] produced in this state from a well that |
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qualifies under Section 202.056 or 202.060, except as provided by |
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Section 201.062. |
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SECTION 3. Section 201.054(b), Tax Code, is amended to read |
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as follows: |
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(b) The rate of the tax imposed by this section is the same |
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as the rate of the tax imposed by Section 201.052(1) [201.052 of |
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this code]. |
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SECTION 4. Section 201.057(c), Tax Code, is amended to read |
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as follows: |
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(c) High-cost gas produced from a well that is spudded or |
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completed after August 31, 1996, is entitled to a reduction of the |
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tax imposed by this chapter for the first 120 consecutive calendar |
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months beginning on the first day of production, or until the |
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cumulative value of the tax reduction equals 50 percent of the |
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drilling and completion costs incurred for the well, whichever |
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occurs first. The amount of tax reduction shall be computed by |
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subtracting from the tax rate imposed by Section 201.052(1) |
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[201.052] the product of that tax rate times the ratio of drilling |
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and completion costs incurred for the well to twice the median |
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drilling and completion costs for high-cost wells spudded or |
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completed during the previous state fiscal year, except that the |
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effective rate of tax may not be reduced below zero. |
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SECTION 5. Subchapter B, Chapter 201, Tax Code, is amended |
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by adding Sections 201.061 and 201.062 to read as follows: |
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Sec. 201.061. ANNUAL EXEMPTION FOR FLARED OR VENTED GAS. |
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(a) Each calendar year, a producer is entitled to an exemption from |
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the tax imposed at the rate provided by Section 201.052(2). |
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(b) The exemption applies to gas produced and flared or |
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vented in this state by the producer during a calendar year in an |
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amount equal to, at the producer's election: |
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(1) 1,000 mcf; or |
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(2) 0.5 percent of the total amount of gas produced in |
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this state by the producer during the calendar year. |
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(c) The comptroller by rule shall provide procedures for a |
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producer to claim the exemption, including electing an amount under |
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Subsection (b) and allocating the amount among all gas produced and |
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flared or vented by the producer during a calendar year. |
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(d) The exemption under this section may not be transferred |
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to another producer or calendar year. |
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Sec. 201.062. APPLICABILITY OF CERTAIN PROVISIONS TO FLARED |
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OR VENTED GAS. Notwithstanding any other law including Section |
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201.058(a), Sections 201.057, 201.059, 202.056, 202.057, and |
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202.060 do not apply to gas that is flared or vented and may not be |
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used to reduce any amount of tax imposed at the rate provided by |
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Section 201.052(2). |
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SECTION 6. Sections 201.101(a) and (c), Tax Code, are |
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amended to read as follows: |
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(a) Except as provided by Section 201.1011, the [The] market |
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value of gas is its value at the mouth of the well from which it is |
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produced. The value of gas at the mouth of the well is determined by |
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ascertaining the producer's actual marketing costs and subtracting |
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those costs from the producer's gross cash receipts from the sale of |
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the gas. |
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(c) Marketing costs do not include: |
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(1) costs incurred in producing the gas; |
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(2) costs incurred in normal lease separation of the |
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oil or condensate; [or] |
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(3) insurance premiums on the marketing facility; |
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(4) the value of gas that is flared or vented; or |
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(5) any cost associated with flaring or venting gas. |
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SECTION 7. Subchapter C, Chapter 201, Tax Code, is amended |
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by adding Section 201.1011 to read as follows: |
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Sec. 201.1011. MARKET VALUE OF FLARED OR VENTED GAS. (a) |
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The market value of flared or vented gas is equal to the amount |
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determined under Subsection (b) for the month in which the gas is |
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produced. |
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(b) The comptroller shall determine the average cash value |
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at the mouth of the well for all gas produced and saved in this state |
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during each month, with no deduction for marketing costs. The |
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comptroller shall publish the amount determined on the |
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comptroller's Internet website. |
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(c) The comptroller may determine an amount under |
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Subsection (b) using a price index or other available statistical |
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data. |
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SECTION 8. Section 201.151, Tax Code, is amended to read as |
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follows: |
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Sec. 201.151. PRODUCER'S RECORDS. (a) A producer shall |
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keep accurate records of all gas the producer produces, including |
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the amount of gas produced and saved and the amount of gas produced |
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and flared or vented. |
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(b) The records shall be kept in the state. |
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SECTION 9. Section 201.201, Tax Code, is amended to read as |
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follows: |
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Sec. 201.201. TAX DUE. The tax imposed by this chapter for |
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gas produced [and saved] is due at the office of the comptroller in |
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Austin on the 20th day of the second month following the month of |
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production. |
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SECTION 10. Section 201.203(a), Tax Code, is amended to |
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read as follows: |
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(a) On or before the 20th day of the second month following |
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the month in which gas was produced, the producer shall file a |
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report with the comptroller on forms prescribed by the comptroller. |
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The report must contain the following information concerning gas |
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produced during the month being reported: |
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(1) the gross amount of gas produced that is subject to |
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the tax imposed by this chapter, including separate statements of |
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the amount of gas produced and saved and the amount of gas produced |
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and flared or vented; |
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(2) the leases from which the gas was produced; |
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(3) the names and addresses of the first purchasers of |
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the gas, if applicable; and |
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(4) other information the comptroller may reasonably |
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require. |
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SECTION 11. The changes in law made by this Act do not |
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affect tax liability accruing before the effective date of this |
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Act. That liability continues in effect as if this Act had not been |
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enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 12. This Act takes effect September 1, 2023. |