By: Bivins S.B. No. 735
73R2213 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to an exemption from the gas and oil production taxes for
1-3 gas and oil produced from discovery wells.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended
1-6 by adding Section 201.058 to read as follows:
1-7 Sec. 201.058. EXEMPTION FOR PRODUCTION FROM DISCOVERY WELLS.
1-8 (a) In this section:
1-9 (1) "Commission" means the Railroad Commission of
1-10 Texas.
1-11 (2) "Completion date" means the date on which a well
1-12 is actually made capable of producing gas, as shown on the
1-13 completion report filed by the operator with the commission.
1-14 (3) "Discovery date" means the completion date for a
1-15 discovery well.
1-16 (4) "Discovery well" means the well that has the
1-17 earliest completion date in a field that the commission classifies
1-18 as a new field discovery.
1-19 (5) "Operator" means the person responsible for the
1-20 actual physical operation of a gas well.
1-21 (6) "Spud date" means the date on which drilling
1-22 operations on a well are initiated by cutting the initial hole into
1-23 the ground, as shown on the completion report filed by the operator
1-24 with the commission.
2-1 (b) Gas, condensate, and other liquid hydrocarbons produced
2-2 from a discovery well are exempt from the taxes imposed by this
2-3 chapter if the discovery well has:
2-4 (1) a spud date that is on or after September 1, 1993;
2-5 and
2-6 (2) a completion date that is not later than August
2-7 31, 1995.
2-8 (c) To qualify for the exemption, a person must apply in
2-9 writing to the comptroller for the exemption and include with the
2-10 application a certification issued by the commission that the gas,
2-11 condensate, and other liquid hydrocarbons are produced from a
2-12 discovery well that qualifies for the exemption.
2-13 (d) To qualify for certification by the commission, an
2-14 application for new field discovery for the field in which a well
2-15 is located must be filed with the commission not later than
2-16 September 1, 1996. The commission shall adopt rules relating to
2-17 the qualifications for certification under this section.
2-18 (e) The operator of a discovery well shall report the
2-19 volumes of the well's gas, condensate, and other liquid hydrocarbon
2-20 production to the commission and the comptroller in accordance with
2-21 the commission's production reporting rules.
2-22 (f) The comptroller shall revoke the tax exemption for a
2-23 discovery well if the commission determines after certification
2-24 that the field in which the well is located is not a new field but
2-25 is actually a part of another field that has an earlier discovery
2-26 date and if the commission consolidates the two fields. A
2-27 revocation takes effect on the date that the fields are
3-1 consolidated. If the fields are consolidated under a contested
3-2 case proceeding, the revocation takes effect on the date the
3-3 commission's field consolidation order becomes final and appealable
3-4 under the Administrative Procedure and Texas Register Act (Article
3-5 6252-13a, Vernon's Texas Civil Statutes). If a court on appeal
3-6 reverses a field consolidation order and the new field discovery is
3-7 reinstated by court or commission order, the comptroller shall
3-8 reinstate the tax exemption retroactive to the date the exemption
3-9 was revoked.
3-10 (g) The commission shall notify the comptroller of any
3-11 action that the commission takes or that a court takes in relation
3-12 to a commission order that affects the qualification of a well for
3-13 a tax exemption under this section.
3-14 (h) A person is liable to the state for a civil penalty if
3-15 the person attempts to obtain a tax exemption under this section
3-16 by:
3-17 (1) applying for a new field discovery for a
3-18 completion that the operator knows or should have known is in an
3-19 existing field; or
3-20 (2) reporting false production volumes.
3-21 (i) The penalty provided by Subsection (h) may not exceed
3-22 the sum of $10,000 plus an amount equal to the difference between
3-23 the tax required to be paid without the exemption and the tax
3-24 actually paid. The attorney general may sue to recover the penalty
3-25 and the costs of the suit. The suit must be brought in Travis
3-26 County or the county in which the defendant resides. A penalty
3-27 collected under this section shall be deposited to the credit of
4-1 the oil-field cleanup fund.
4-2 SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
4-3 by adding Section 202.055 to read as follows:
4-4 Sec. 202.055. EXEMPTION FOR PRODUCTION FROM DISCOVERY WELLS.
4-5 (a) In this section:
4-6 (1) "Commission" means the Railroad Commission of
4-7 Texas.
4-8 (2) "Completion date" means the date on which a well
4-9 is actually made capable of producing oil, as shown on the
4-10 completion report filed by the operator with the commission.
4-11 (3) "Discovery date" means the completion date for a
4-12 discovery well.
4-13 (4) "Discovery well" means the well that has the
4-14 earliest completion date in a field that the commission classifies
4-15 as a new field discovery.
4-16 (5) "Operator" means the person responsible for the
4-17 actual physical operation of an oil well.
4-18 (6) "Spud date" means the date on which drilling
4-19 operations on a well are initiated by cutting the initial hole into
4-20 the ground, as shown on the completion report filed by the operator
4-21 with the commission.
4-22 (b) Oil produced from a discovery well is exempt from the
4-23 taxes imposed by this chapter if the discovery well has:
4-24 (1) a spud date that is on or after September 1, 1993;
4-25 and
4-26 (2) a completion date that is not later than August
4-27 31, 1995.
5-1 (c) To qualify for the exemption, a person must apply in
5-2 writing to the comptroller for the exemption and include with the
5-3 application a certification issued by the commission that the oil
5-4 is produced from a discovery well that qualifies for the exemption.
5-5 (d) To qualify for certification by the commission, an
5-6 application for new field discovery for the field in which the well
5-7 is located must be filed with the commission not later than
5-8 September 1, 1996. The commission shall adopt rules relating to
5-9 the qualifications for certification under this section.
5-10 (e) The operator of a discovery well shall report the volume
5-11 of the well's oil production to the commission and the comptroller
5-12 in accordance with the commission's production reporting rules.
5-13 (f) The comptroller shall revoke the tax exemption for a
5-14 discovery well if the commission determines after certification
5-15 that the field in which the well is located is not a new field but
5-16 is actually part of another field that has an earlier discovery
5-17 date and if the commission consolidates the two fields. A
5-18 revocation takes effect on the date that the fields are
5-19 consolidated. If the fields are consolidated under a contested
5-20 case proceeding, the revocation takes effect on the date the
5-21 commission's field consolidation order becomes final and appealable
5-22 under the Administrative Procedure and Texas Register Act (Article
5-23 6252-13a, Vernon's Texas Civil Statutes). If a court on appeal
5-24 reverses a field consolidation order and the new field discovery is
5-25 reinstated by court or commission order, the comptroller shall
5-26 reinstate the tax exemption retroactive to the date the exemption
5-27 was revoked.
6-1 (g) The commission shall notify the comptroller of any
6-2 action that the commission takes or that a court takes in relation
6-3 to a commission order that affects the qualification of a well for
6-4 a tax exemption under this section.
6-5 (h) A person is liable to the state for a civil penalty if
6-6 the person attempts to obtain a tax exemption under this section
6-7 by:
6-8 (1) applying for a new field discovery for a
6-9 completion that the operator knows or should have known is in an
6-10 existing field; or
6-11 (2) reporting false production volumes.
6-12 (i) The penalty provided by Subsection (h) may not exceed
6-13 the sum of $10,000 plus an amount equal to the difference between
6-14 the tax required to be paid without the exemption and the tax
6-15 actually paid. The attorney general may sue to recover the penalty
6-16 and the costs of the suit. The suit must be brought in Travis
6-17 County or the county in which the defendant resides. A penalty
6-18 collected under this section shall be deposited to the credit of
6-19 the oil-field cleanup fund.
6-20 SECTION 3. Section 81.111, Natural Resources Code, is
6-21 amended by adding Subsection (d) to read as follows:
6-22 (d) Oil that is exempt from the tax imposed by Chapter 202,
6-23 Tax Code, is exempt from the tax imposed by this section.
6-24 SECTION 4. Section 91.111(c), Natural Resources Code, is
6-25 amended to read as follows:
6-26 (c) The fund consists of:
6-27 (1) penalties imposed under Section 85.381 of this
7-1 code for violation of a law, order, or rule relating to well
7-2 plugging requirements;
7-3 (2) proceeds from bonds and other financial assurances
7-4 required by this chapter, subject to the refund provisions of
7-5 Section 91.1091 of this code;
7-6 (3) private contributions, including contributions
7-7 made under Section 89.084 of this code;
7-8 (4) expenses collected under Section 89.083 of this
7-9 code;
7-10 (5) drilling permit fees imposed under Subsections (a)
7-11 and (c) of Section 85.2021 of this code;
7-12 (6) civil penalties collected for violations of
7-13 Chapter 89 of this code or of rules or orders relating to plugging
7-14 that are adopted under this code;
7-15 (7) proceeds collected under Section 89.085 of this
7-16 code;
7-17 (8) interest earned on the funds deposited in the
7-18 fund;
7-19 (9) fees collected under Section 91.104 of this code;
7-20 (10) civil penalties or costs recovered under Section
7-21 91.457 or Section 91.459 of this code;
7-22 (11) oil and gas waste hauler permit application fees
7-23 collected under Section 29.015, Water Code;
7-24 (12) costs recovered under Subsection (f) of Section
7-25 91.113 of this code;
7-26 (13) hazardous oil and gas waste generation fees
7-27 collected under Section 91.605 of this code;
8-1 (14) oil-field cleanup regulatory fees on oil
8-2 collected under Section 81.116 of this code;
8-3 (15) oil-field cleanup regulatory fees on gas
8-4 collected under Section 81.117 of this code;
8-5 (16) fees for a reissued certificate collected under
8-6 Section 85.167 of this code;
8-7 (17) fees collected under Subsection (b) of Section
8-8 91.1013 of this code; <and>
8-9 (18) civil penalties collected under Sections 201.058
8-10 and 202.055, Tax Code; and
8-11 (19) legislative appropriations.
8-12 SECTION 5. This Act takes effect September 1, 1993.
8-13 SECTION 6. The importance of this legislation and the
8-14 crowded condition of the calendars in both houses create an
8-15 emergency and an imperative public necessity that the
8-16 constitutional rule requiring bills to be read on three several
8-17 days in each house be suspended, and this rule is hereby suspended.