By: Carriker S.B. No. 844
A BILL TO BE ENTITLED
AN ACT
1-1 relating to tax credits for the discovery of new oil or gas fields.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. The Tax Code is amended by adding Chapter 204 to
1-4 read as follows:
1-5 Sec. 204.001. DEFINITIONS
1-6 In this chapter:
1-7 (1) "Commission" means the Railroad Commission of
1-8 Texas.
1-9 (2) "Field" means an accumulation of oil or gas or
1-10 both that is not in natural pressure communication, or otherwise
1-11 connected to any other accumulation of oil or gas or both.
1-12 (3) "New field" means a field that has been certified
1-13 by the commission as a previously unrecognized and unidentified
1-14 field.
1-15 (4) "Discovery well" means an oil or gas well by which
1-16 a new field discovery is made.
1-17 (5) "Spud" means the initial penetration of the earth
1-18 by the drill bit for an oil or gas well under proper permit from
1-19 the commission.
1-20 (6) "Completed" means the well has been equipped to
1-21 produce hydrocarbons and the commission has been notified as
1-22 required by commission rules.
1-23 Sec. 204.002. TAX CREDIT FOR NEW FIELD DISCOVERIES
2-1 (a) Persons who obtain a certification of a new field
2-2 discovery from the commission as the result of a discovery well
2-3 spudded during the period of January 1, 1994 through December 31,
2-4 1994 are eligible for a tax credit applicable against the taxes
2-5 imposed by Chapters 201 and 202 of this code upon the commission
2-6 notifying the comptroller that 521 new fields have been discovered
2-7 as the result of wells spudded during 1994.
2-8 (b) The amount of the tax credit shall be as follows:
2-9 (1) $10,000 for each discovery well spudded during
2-10 1994 if the number of discovery wells spudded that year is 521 or
2-11 more, but less than 721;
2-12 (2) $25,000 for each discovery well spudded during
2-13 1994 if the number of discovery wells spudded that year is 721 or
2-14 more.
2-15 Sec. 204.003. CERTIFICATION OF NEW FIELD DISCOVERY
2-16 (a) The commission shall have the authority to establish the
2-17 method of determining whether a new field has been discovered. The
2-18 commission may require an applicant for a new field discovery to
2-19 provide the commission with any relevant information required to
2-20 administer this chapter. Upon determining that a well spudded
2-21 during 1994 resulted in the discovery of a new field, the
2-22 commission shall furnish a certificate of new field discovery to
2-23 the applicant.
2-24 (b) For purposes of obtaining a tax credit under this
2-25 chapter, applications for new field discoveries must be made to the
3-1 commission within 90 days of the date the discovery well is
3-2 completed in the proposed new field. In no event will an
3-3 application for new field discovery be accepted by the commission,
3-4 for purposes of obtaining a tax credit, after 180 days from the
3-5 cessation of drilling operations.
3-6 Sec. 204.004. TAX CREDIT FOR ADDITIONAL WELLS IN A NEW FIELD
3-7 Upon the commission notifying the comptroller that 842 discovery
3-8 wells have been spudded in 1994, persons obtaining a new field
3-9 discovery during that year shall be eligible for an additional
3-10 $25,000 tax credit for each additional well spudded and producing
3-11 from that field, within 10 years from the spud date of the
3-12 discovery well. The tax credit is available to persons who obtain
3-13 a new field discovery regardless of who drills the additional well.
3-14 Sec. 204.101. APPLICATION
3-15 To qualify for the tax credit, a person who receives a new
3-16 field discovery certificate from the commission must apply to the
3-17 comptroller. The comptroller shall approve the application of a
3-18 person who demonstrates eligibility for a tax credit. The
3-19 comptroller shall have the power to establish procedures in order
3-20 to comply with this Act, and may require a person applying for the
3-21 tax credit to provide any relevant information. The commission
3-22 shall immediately notify the comptroller in writing if it
3-23 determines that the new field designation obtained by the applicant
3-24 has been revoked or if it discovers any information that affects
3-25 the tax credit.
4-1 Sec. 204.201. APPLICABILITY OF TAX CREDIT
4-2 (a) Tax credits earned under this chapter may only be
4-3 applied against the severance taxes imposed by Chapters 201 and 202
4-4 of this code. The tax credit must be used within five years after
4-5 it is approved by the comptroller and may be applied to either oil
4-6 or gas severance taxes regardless of the field from which the
4-7 production originates.
4-8 (b) Tax credits provided under this chapter shall only be
4-9 available if at the time the application for a tax credit is made,
4-10 the discovery well that is the basis for the tax credit is
4-11 producing oil or gas from the discovery field.
4-12 Sec. 204.202. TRANSFERABILITY OF TAX CREDIT
4-13 The tax credit earned under this chapter is fully
4-14 transferable.
4-15 Sec. 204.301. REVOCATION OF NEW FIELD DESIGNATION
4-16 (a) If the commission determines that a designated new field
4-17 is connected with another recognized field, the tax credit provided
4-18 by this chapter is cancelled.
4-19 (b) Persons responsible for paying the severance tax will
4-20 not be liable for any taxes offset by tax credits available under
4-21 this chapter prior to the date of cancellation unless the tax
4-22 credits were obtained in violation of this chapter or any rules or
4-23 orders of the commission.
4-24 Sec. 204.302. PENALTIES
4-25 (a) Any person who makes or subscribes any application,
5-1 report, or other document and submits it to the commission to form
5-2 the basis for an application for a tax credit under this chapter,
5-3 knowing that the application, report, or other document is false or
5-4 untrue in a material fact, may be subject to the penalties imposed
5-5 by Chapters 85 and 91, Natural Resources Code.
5-6 (b) Upon notice from the commission that the certification
5-7 for a new field discovery has been revoked, the tax credit may not
5-8 be applied to oil or gas production sold after the date of
5-9 notification. Any person who violates this subsection is liable to
5-10 the state for a civil penalty if the person applies or attempts to
5-11 apply the tax credit allowed by this chapter after the
5-12 certification for new field discovery is revoked. The amount of
5-13 the penalty may not exceed the sum of:
5-14 (1) $10,000; and
5-15 (2) the difference between the amount of taxes paid or
5-16 attempted to be paid and the amount of taxes due.
5-17 (c) The attorney general may recover a penalty under
5-18 subsection (b) of this section in a suit brought on behalf of the
5-19 state. Venue for the suit is in Travis County.
5-20 Sec. 204.400. RULES AND ORDERS
5-21 The commission has broad discretion in administering this
5-22 chapter and may adopt and enforce any appropriate rules or orders
5-23 that the commission finds necessary to administer this chapter.
5-24 SECTION 2. This Act takes effect September 1, 1993.
5-25 SECTION 3. EMERGENCY. The importance of this legislation
6-1 and the crowded condition of the calendars in both houses create an
6-2 emergency and an imperative public necessity that the
6-3 constitutional rule requiring bills to be read on three several
6-4 days in each house be suspended, and this rule is hereby suspended,
6-5 and that this Act take effect and be in force from and after its
6-6 passage, and it is so enacted.