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.
    1-3        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.
    3-7  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.