By Craddick H.B. No. 1974
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to tax credits for the discovery of new oil or gas fields;
1-3 providing penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle I, Title 2, Tax Code, is amended by
1-6 adding Chapter 204 to read as follows:
1-7 CHAPTER 204. TAX CREDIT FOR NEW FIELD DISCOVERIES
1-8 Sec. 204.001. DEFINITIONS. In this chapter:
1-9 (1) "Commission" means the Railroad Commission of
1-10 Texas.
1-11 (2) "Field" means an accumulation of oil or gas or
1-12 both that is not in natural pressure communication or otherwise
1-13 connected to any other accumulation of oil or gas or both.
1-14 (3) "New field" means a field that has been certified
1-15 by the commission as a previously unrecognized and unidentified
1-16 field.
1-17 (4) "Discovery well" means an oil or gas well by which
1-18 a new field discovery is made.
1-19 (5) "Spud" means the initial penetration of the earth
1-20 by the drill bit for an oil or gas well under proper permit from
1-21 the commission.
1-22 (6) "Completed" means the well has been equipped to
1-23 produce hydrocarbons and the commission has been notified as
2-1 required by commission rules.
2-2 Sec. 204.002. TAX CREDIT FOR NEW FIELD DISCOVERIES.
2-3 (a) Persons who obtain a certification of a new field discovery
2-4 from the commission as the result of a discovery well spudded
2-5 during the period of January 1, 1994, through December 31, 1994,
2-6 are eligible for a tax credit applicable against the taxes imposed
2-7 by Chapters 201 and 202 upon the commission notifying the
2-8 comptroller that 521 new fields have been discovered as the result
2-9 of wells spudded during 1994.
2-10 (b) The amount of the tax credit shall be as follows:
2-11 (1) $10,000 for each discovery well spudded during
2-12 1994 if the number of discovery wells spudded that year is 521 or
2-13 more, but less than 721;
2-14 (2) $25,000 for each discovery well spudded during
2-15 1994 if the number of discovery wells spudded that year is 721 or
2-16 more.
2-17 Sec. 204.003. CERTIFICATION OF NEW FIELD DISCOVERY.
2-18 (a) The commission shall have the authority to establish the
2-19 method of determining whether a new field has been discovered. The
2-20 commission may require an applicant for a new field discovery to
2-21 provide the commission with any relevant information required to
2-22 administer this chapter. Upon determining that a well spudded
2-23 during 1994 resulted in the discovery of a new field, the
2-24 commission shall furnish a certificate of new field discovery to
2-25 the applicant.
3-1 (b) For purposes of obtaining a tax credit under this
3-2 chapter, applications for new field discoveries must be made to the
3-3 commission within 90 days of the date the discovery well is
3-4 completed in the proposed new field. In no event will an
3-5 application for new field discovery be accepted by the commission,
3-6 for purposes of obtaining a tax credit, after 180 days from the
3-7 cessation of drilling operations.
3-8 Sec. 204.004. TAX CREDIT FOR ADDITIONAL WELLS IN A NEW
3-9 FIELD. Upon the commission notifying the comptroller that 842
3-10 discovery wells have been spudded in 1994, persons obtaining a new
3-11 field discovery during that year shall be eligible for an
3-12 additional $25,000 tax credit for each additional well spudded and
3-13 producing from that field, within 10 years from the spud date of
3-14 the discovery well. The tax credit is available to persons who
3-15 obtain a new field discovery regardless of who drills the
3-16 additional well.
3-17 Sec. 204.005. APPLICATION. To qualify for the tax credit, a
3-18 person who receives a new field discovery certificate from the
3-19 commission must apply to the comptroller. The comptroller shall
3-20 approve the application of a person who demonstrates eligibility
3-21 for a tax credit. The comptroller shall have the power to
3-22 establish procedures in order to comply with this chapter and may
3-23 require a person applying for the tax credit to provide any
3-24 relevant information. The commission shall immediately notify the
3-25 comptroller in writing if it determines that the new field
4-1 designation obtained by the applicant has been revoked or if it
4-2 discovers any information that affects the tax credit.
4-3 Sec. 204.006. APPLICABILITY OF TAX CREDIT. (a) Tax credits
4-4 earned under this chapter may only be applied against the severance
4-5 taxes imposed by Chapters 201 and 202 of this code. The tax credit
4-6 may not be used until September 1, 1995, and may not be used after
4-7 August 31, 2000. The tax credit may be applied to either oil or
4-8 gas severance taxes regardless of the field from which the
4-9 production originates.
4-10 (b) Tax credits provided under this chapter shall only be
4-11 available if at the time the application for a tax credit is made,
4-12 the discovery well that is the basis for the tax credit is
4-13 producing oil or gas from the discovery field.
4-14 Sec. 204.007. TRANSFERABILITY OF TAX CREDIT. The tax credit
4-15 earned under this chapter is fully transferable.
4-16 Sec. 204.008. REVOCATION OF NEW FIELD DESIGNATION. (a) If
4-17 the commission determines that a designated new field is connected
4-18 with another recognized field, the tax credit provided by this
4-19 chapter is canceled.
4-20 (b) Persons responsible for paying the severance tax will
4-21 not be liable for any taxes offset by tax credits available under
4-22 this chapter prior to the date of cancellation unless the tax
4-23 credits were obtained in violation of this chapter or any rules or
4-24 orders of the commission.
4-25 Sec. 204.009. PENALTIES. (a) Any person who makes or
5-1 subscribes any application, report, or other document and submits
5-2 it to the commission to form the basis for an application for a tax
5-3 credit under this chapter knowing that the application, report, or
5-4 other document is false or untrue in a material fact may be subject
5-5 to the penalties imposed by Chapters 85 and 91, Natural Resources
5-6 Code.
5-7 (b) Upon notice from the commission that the certification
5-8 for a new field discovery has been revoked, the tax credit may not
5-9 be applied to oil or gas production sold after the date of
5-10 notification. Any person who violates this subsection is liable to
5-11 the state for a civil penalty if the person applies or attempts to
5-12 apply the tax credit allowed by this chapter after the
5-13 certification for new field discovery is revoked. The amount of
5-14 the penalty may not exceed the sum of:
5-15 (1) $10,000; and
5-16 (2) the difference between the amount of taxes paid or
5-17 attempted to be paid and the amount of taxes due.
5-18 (c) The attorney general may recover a penalty under
5-19 Subsection (b) in a suit brought on behalf of the state. Venue for
5-20 the suit is in Travis County.
5-21 Sec. 204.010. RULES AND ORDERS. The commission has broad
5-22 discretion in administering this chapter and may adopt and enforce
5-23 any appropriate rules or orders that the commission finds necessary
5-24 to administer this chapter.
5-25 SECTION 2. This Act takes effect September 1, 1993.
6-1 SECTION 3. The importance of this legislation and the
6-2 crowded condition of the calendars in both houses create an
6-3 emergency and an imperative public necessity that the
6-4 constitutional rule requiring bills to be read on three several
6-5 days in each house be suspended, and this rule is hereby suspended,
6-6 and that this Act take effect and be in force from and after its
6-7 passage, and it is so enacted.