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.