1-1 By: Craddick (Senate Sponsor - Carriker, Bivins) H.B. No. 1974
1-2 (In the Senate - Received from the House April 26, 1993;
1-3 April 27, 1993, read first time and referred to Committee on State
1-4 Affairs; May 5, 1993, rereferred to Committee on Finance;
1-5 May 10, 1993, reported favorably by the following vote: Yeas 11,
1-6 Nays 0; May 10, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Montford x
1-10 Turner x
1-11 Armbrister x
1-12 Barrientos x
1-13 Bivins x
1-14 Ellis x
1-15 Haley x
1-16 Moncrief x
1-17 Parker x
1-18 Ratliff x
1-19 Sims x
1-20 Truan x
1-21 Zaffirini x
1-22 A BILL TO BE ENTITLED
1-23 AN ACT
1-24 relating to tax credits for the discovery of new oil or gas fields;
1-25 providing penalties.
1-26 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-27 SECTION 1. Subtitle I, Title 2, Tax Code, is amended by
1-28 adding Chapter 204 to read as follows:
1-29 CHAPTER 204. TAX CREDIT FOR NEW FIELD DISCOVERIES
1-30 Sec. 204.001. DEFINITIONS. In this chapter:
1-31 (1) "Commission" means the Railroad Commission of
1-32 Texas.
1-33 (2) "Field" means an accumulation of oil or gas or
1-34 both that is not in natural pressure communication or otherwise
1-35 connected to any other accumulation of oil or gas or both.
1-36 (3) "New field" means a field that has been certified
1-37 by the commission as a previously unrecognized and unidentified
1-38 field.
1-39 (4) "Discovery well" means an oil or gas well by which
1-40 a new field discovery is made.
1-41 (5) "Spud" means the initial penetration of the earth
1-42 by the drill bit for an oil or gas well under proper permit from
1-43 the commission.
1-44 (6) "Completed" means the well has been equipped to
1-45 produce hydrocarbons and the commission has been notified as
1-46 required by commission rules.
1-47 Sec. 204.002. TAX CREDIT FOR NEW FIELD DISCOVERIES.
1-48 (a) Persons who obtain a certification of a new field discovery
1-49 from the commission as the result of a discovery well spudded
1-50 during the period of January 1, 1994, through December 31, 1994,
1-51 are eligible for a tax credit applicable against the taxes imposed
1-52 by Chapters 201 and 202 upon the commission notifying the
1-53 comptroller that 521 new fields have been discovered as the result
1-54 of wells spudded during 1994.
1-55 (b) The amount of the tax credit shall be as follows:
1-56 (1) $10,000 for each discovery well spudded during
1-57 1994 if the number of discovery wells spudded that year is 521 or
1-58 more, but less than 721;
1-59 (2) $25,000 for each discovery well spudded during
1-60 1994 if the number of discovery wells spudded that year is 721 or
1-61 more.
1-62 Sec. 204.003. CERTIFICATION OF NEW FIELD DISCOVERY.
1-63 (a) The commission shall have the authority to establish the
1-64 method of determining whether a new field has been discovered. The
1-65 commission may require an applicant for a new field discovery to
1-66 provide the commission with any relevant information required to
1-67 administer this chapter. Upon determining that a well spudded
1-68 during 1994 resulted in the discovery of a new field, the
2-1 commission shall furnish a certificate of new field discovery to
2-2 the applicant.
2-3 (b) For purposes of obtaining a tax credit under this
2-4 chapter, applications for new field discoveries must be made to the
2-5 commission within 90 days of the date the discovery well is
2-6 completed in the proposed new field. In no event will an
2-7 application for new field discovery be accepted by the commission,
2-8 for purposes of obtaining a tax credit, after 180 days from the
2-9 cessation of drilling operations.
2-10 Sec. 204.004. TAX CREDIT FOR ADDITIONAL WELLS IN A NEW
2-11 FIELD. Upon the commission notifying the comptroller that 842
2-12 discovery wells have been spudded in 1994, persons obtaining a new
2-13 field discovery during that year shall be eligible for an
2-14 additional $25,000 tax credit for each additional well spudded and
2-15 producing from that field, within 10 years from the spud date of
2-16 the discovery well. The tax credit is available to persons who
2-17 obtain a new field discovery regardless of who drills the
2-18 additional well.
2-19 Sec. 204.005. APPLICATION. To qualify for the tax credit, a
2-20 person who receives a new field discovery certificate from the
2-21 commission must apply to the comptroller. The comptroller shall
2-22 approve the application of a person who demonstrates eligibility
2-23 for a tax credit. The comptroller shall have the power to
2-24 establish procedures in order to comply with this chapter and may
2-25 require a person applying for the tax credit to provide any
2-26 relevant information. The commission shall immediately notify the
2-27 comptroller in writing if it determines that the new field
2-28 designation obtained by the applicant has been revoked or if it
2-29 discovers any information that affects the tax credit.
2-30 Sec. 204.006. APPLICABILITY OF TAX CREDIT. (a) Tax credits
2-31 earned under this chapter may only be applied against the severance
2-32 taxes imposed by Chapters 201 and 202 of this code. The tax credit
2-33 may not be used until September 1, 1995, and may not be used after
2-34 August 31, 2000. The tax credit may be applied to either oil or
2-35 gas severance taxes regardless of the field from which the
2-36 production originates.
2-37 (b) Tax credits provided under this chapter shall only be
2-38 available if at the time the application for a tax credit is made,
2-39 the discovery well that is the basis for the tax credit is
2-40 producing oil or gas from the discovery field.
2-41 Sec. 204.007. TRANSFERABILITY OF TAX CREDIT. The tax credit
2-42 earned under this chapter is fully transferable.
2-43 Sec. 204.008. REVOCATION OF NEW FIELD DESIGNATION. (a) If
2-44 the commission determines that a designated new field is connected
2-45 with another recognized field, the tax credit provided by this
2-46 chapter is canceled.
2-47 (b) Persons responsible for paying the severance tax will
2-48 not be liable for any taxes offset by tax credits available under
2-49 this chapter prior to the date of cancellation unless the tax
2-50 credits were obtained in violation of this chapter or any rules or
2-51 orders of the commission.
2-52 Sec. 204.009. PENALTIES. (a) Any person who makes or
2-53 subscribes any application, report, or other document and submits
2-54 it to the commission to form the basis for an application for a tax
2-55 credit under this chapter knowing that the application, report, or
2-56 other document is false or untrue in a material fact may be subject
2-57 to the penalties imposed by Chapters 85 and 91, Natural Resources
2-58 Code.
2-59 (b) Upon notice from the commission that the certification
2-60 for a new field discovery has been revoked, the tax credit may not
2-61 be applied to oil or gas production sold after the date of
2-62 notification. Any person who violates this subsection is liable to
2-63 the state for a civil penalty if the person applies or attempts to
2-64 apply the tax credit allowed by this chapter after the
2-65 certification for new field discovery is revoked. The amount of
2-66 the penalty may not exceed the sum of:
2-67 (1) $10,000; and
2-68 (2) the difference between the amount of taxes paid or
2-69 attempted to be paid and the amount of taxes due.
2-70 (c) The attorney general may recover a penalty under
3-1 Subsection (b) in a suit brought on behalf of the state. Venue for
3-2 the suit is in Travis County.
3-3 Sec. 204.010. RULES AND ORDERS. The commission has broad
3-4 discretion in administering this chapter and may adopt and enforce
3-5 any appropriate rules or orders that the commission finds necessary
3-6 to administer this chapter.
3-7 SECTION 2. This Act takes effect September 1, 1993.
3-8 SECTION 3. The importance of this legislation and the
3-9 crowded condition of the calendars in both houses create an
3-10 emergency and an imperative public necessity that the
3-11 constitutional rule requiring bills to be read on three several
3-12 days in each house be suspended, and this rule is hereby suspended,
3-13 and that this Act take effect and be in force from and after its
3-14 passage, and it is so enacted.
3-15 * * * * *
3-16 Austin,
3-17 Texas
3-18 May 10, 1993
3-19 Hon. Bob Bullock
3-20 President of the Senate
3-21 Sir:
3-22 We, your Committee on Finance to which was referred H.B. No. 1974,
3-23 have had the same under consideration, and I am instructed to
3-24 report it back to the Senate with the recommendation that it do
3-25 pass and be printed.
3-26 Montford,
3-27 Chairman
3-28 * * * * *
3-29 WITNESSES
3-30 FOR AGAINST ON
3-31 ___________________________________________________________________
3-32 Name: James E. Nugent x
3-33 Representing: Texas Railroad Commission
3-34 City: Austin
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3-36 Name: David Garlick x
3-37 Representing: Texas Railroad Commission
3-38 City: Austin
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