By Sims S.B. No. 1110
74R4285 CBH-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the application of the oil production tax to new or
1-3 expanded enhanced recovery projects.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 202.054(c), (d), and (g), Tax Code, are
1-6 amended to read as follows:
1-7 (c) This section applies to an enhanced recovery project
1-8 that begins active operation on or after September 1, 1989, and to
1-9 an expansion that the commission approves on or after September 1,
1-10 1991. An application for approval under this section must be filed
1-11 on or after September 1, 1989, <and before January 1, 1998,> for a
1-12 new enhanced recovery project, including any co-production project.
1-13 An application for approval under this section must be filed on or
1-14 after September 1, 1991, <and before January 1, 1998,> for an
1-15 expansion of an existing enhanced recovery project. A project may
1-16 not qualify as an expansion if the project has qualified as a new
1-17 enhanced recovery project under this section. An application may
1-18 be filed on or after September 1, 1989, even if a separate
1-19 application for approval of the project or expansion has already
1-20 been filed under Subchapter B, Chapter 101, Natural Resources Code,
1-21 or for approval as a tertiary recovery project for purposes of
1-22 Section 4993, Internal Revenue Code of 1986, if the operation of a
1-23 new project or the expansion of an existing project, other than a
1-24 co-production project, does not begin before the application for
2-1 approval under this section is approved by the commission;
2-2 provided, however, nothing herein shall require commission approval
2-3 of a co-production project prior to commencing active operations on
2-4 such project in order for such project to be eligible for the
2-5 recovered oil tax rate.
2-6 (d) An applicant for commission approval of a co-production
2-7 project shall submit a written application for approval to the
2-8 commission. <Such application must be filed before January 1,
2-9 1994.> The applicant shall provide the commission with any
2-10 relevant information required to administer this section, including
2-11 evidence demonstrating that the reservoir is eligible for the
2-12 designation and demonstrating the minimum volumes of high-volume
2-13 water withdrawal required to recover oil and/or gas from the
2-14 reservoir that would not be produced by conventional production
2-15 methods. A commission representative may administratively approve
2-16 the application. If the commission representative denies
2-17 administrative approval, the applicant shall have the right to a
2-18 hearing upon request.
2-19 (g) Subject to the provisions of Subsections (b) and (h) of
2-20 this section, the recovered oil tax rate applies to oil on which a
2-21 tax is imposed by this chapter for the 10 years beginning the first
2-22 day of the month following the date the commission certifies that,
2-23 in the case of an enhanced recovery project including a
2-24 co-production project, a positive production response has occurred
2-25 or, in the case of an expansion, other than related to a
2-26 co-production project, incremental production has occurred, if the
2-27 application for certification is filed:
3-1 (1) not later than five <three> years from the date
3-2 the commission approves the project if the project is designated as
3-3 a new or existing project other than a co-production project that
3-4 uses a secondary recovery process; or
3-5 (2) not later than seven <five> years from the date
3-6 the commission approves the project if the project is designated as
3-7 a new or existing project that uses a tertiary recovery process or
3-8 is a co-production project.
3-9 SECTION 2. This Act takes effect September 1, 1995.
3-10 SECTION 3. The importance of this legislation and the
3-11 crowded condition of the calendars in both houses create an
3-12 emergency and an imperative public necessity that the
3-13 constitutional rule requiring bills to be read on three several
3-14 days in each house be suspended, and this rule is hereby suspended.