By:  Bivins                                            S.B. No. 734
       73R2812 JD-D
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to the appraisal of oil and gas properties for ad valorem
    1-3  tax purposes.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Subchapter B, Chapter 23, Tax Code, is amended by
    1-6  adding Section 23.14 to read as follows:
    1-7        Sec. 23.14.  OIL AND GAS MINERAL PROPERTIES.  (a)  The
    1-8  comptroller by rule shall develop and distribute to each appraisal
    1-9  office appraisal manuals that specify the methods to apply and the
   1-10  procedures to use in appraising oil and gas properties.
   1-11        (b)  Each appraisal office shall use the methods and
   1-12  procedures specified by the appraisal manuals developed under this
   1-13  section in appraising oil and gas properties.
   1-14        (c)  Appraisal manuals developed by the comptroller under
   1-15  this section shall:
   1-16              (1)  require that a fixed price of oil or gas be used
   1-17  in making an appraisal that is equal to the average price of the
   1-18  oil or gas from the property being appraised during the preceding
   1-19  12 months, or from comparable properties if there has been no
   1-20  production from that property during that period;
   1-21              (2)  require that actual costs of drilling, developing,
   1-22  and operating the property incurred during the year be used in
   1-23  appraising the property, or the costs of drilling, developing, and
   1-24  operating comparable properties if actual costs are not available;
    2-1              (3)  allow a charge for indirect expenses associated
    2-2  with drilling, developing, and operating the property in an amount
    2-3  not to exceed 75 percent of the uniform accounting limits; and
    2-4              (4)  require that a fixed amount for expenses be used,
    2-5  equal to actual expenses relating to the property being appraised
    2-6  during the preceding 12 months, or from comparable properties if
    2-7  actual expenses are not available, and treat all expenses as
    2-8  constant throughout the tax year for purposes of projecting the
    2-9  value of a well.
   2-10        SECTION 2.  This Act takes effect January 1, 1994, and
   2-11  applies only to the appraisal of property for taxes imposed in 1994
   2-12  and subsequent years.
   2-13        SECTION 3.  The importance of this legislation and the
   2-14  crowded condition of the calendars in both houses create an
   2-15  emergency and an imperative public necessity that the
   2-16  constitutional rule requiring bills to be read on three several
   2-17  days in each house be suspended, and this rule is hereby suspended.