SRC-TNM C.S.S.B. 126 75(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 126
By: Bivins
Finance
4-25-97
Committee Report (Substituted)


DIGEST 

In the 73rd Legislature,  H.B. 1975 was passed to provide severance tax
relief for wells which have been returned to active status after three
years or more of inactivity.  According to the Texas Railroad Commission,
the exemption has been responsible for a great number of wells being
reworked and producing again.  However, the application to apply for that
exemption expired in August 1995. C.S.S.B. 126 would provide a new program
to allow for a 10-year severance tax exemption for wells that are brought
back to production after at least two years of inactivity.  The bill also
broadens the definition of hydrocarbons that currently receive tax relief
under Section 202.056, Tax Code.  

PURPOSE

As proposed, C.S.S.B. 126 outlines provisions relating to tax exemption
for hydrocarbon production from certain inactive oil and gas leases
returned to production. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 202.056(a), Tax Code, by amending Subdivision
(2) and adding Subdivision (4), to redefine "hydrocarbons" and define
"two-year inactive well." 

SECTION 2. Amends Sections 202.056(b)-(e) and (h), Tax Code, to provide
that hydrocarbons produced from a well qualify for a 10-year severance tax
exemption if the Railroad Commission of Texas (commission) designates the
well as a three- or  two-year inactive well. Prohibits the commission from
designating a three-year inactive well under this section after February
29, 1996. Requires the commission to issue a certificate designating a
well as a two-year inactive well, if the commission designates a two-year
inactive well under this section.  Prohibits the commission from
designating a two-year inactive well under this section after February 29,
2000.  Requires an application for two-year inactive well certification to
be made during the period of September 1, 1997, through August 31, 1999,
to qualify for the tax exemption under this section.  Requires the
operator to apply to the comptroller for the credit before the expiration
of the applicable period for filing a tax refund claim under Section
111.104.  Deletes text requiring the operator to apply to the comptroller
for the credit not later than the first anniversary after the date the
commission certifies that the well is a three-year inactive well.  Makes
conforming changes. 

SECTION 3. Amends Section 202.056(i)(2), Tax Code, to make conforming
changes. 

SECTION 4.  Effective date: September 1, 1997.

SECTION 5.  Emergency clause.






 SUMMARY OF COMMITTEE CHANGES

SECTION 2.

Amends Sections 202.056(b) and (h), Tax Code, to add text regarding a
requirement for an applicant.  Deletes text regarding the eligibility of a
well and deletes text authorizing the commission to designate a well
without an application.  Deletes text "not later than the first
anniversary after the date the commission certifies that the well is a
three-year inactive well" and replaces it with "before the expiration of
the applicable period for filing a tax refund claim under Section
111.104."