Bill not drafted by TLC or Senate E&E.
Line and page numbers may not match official copy.
By Holzheauser H.B. No. 1179
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(b) and (c), Tax Code, are
1-6 amended to read as follows:
1-7 (b) Oil produced from an enhanced recovery project other
1-8 than a co-production project qualifies for the recovered oil tax
1-9 rate if, before the project begins active operation, the Commission
1-10 approves the project and designates the area to be affected by the
1-11 project. The incremental production from an expanded enhanced
1-12 recovery project other than a co-production project qualifies for
1-13 the recovered oil tax rate if, before the expansion begins, the
1-14 Commission approves the expansion and designates the area to be
1-15 affected by the expansion. For a new or expanded enhanced recovery
1-16 project, other than a co-production project, for which an
1-17 application for approval under this section is filed with the
1-18 Commission on or after January 1, 1994, severance tax for all oil
1-19 produced during the period from January 1, 1994, through August 31,
1-20 1995, to which the recovered tax rate is applicable, must be paid
1-21 when due at the rate provided by Section 202.052(a) of this code.
1-22 On or after January 1, 1996, the payor may apply to the comptroller
1-23 for and shall be entitled to receive a tax credit equal to the
1-24 difference between the tax paid and the tax which would have been
2-1 due at the recovered oil tax rate for all production to which the
2-2 recovered tax rate is applicable during the period from January 1,
2-3 1994, through August 31, 1995. The tax credit may be applied to
2-4 either oil or gas severance taxes regardless of the field from
2-5 which the production originates. Oil produced from a Commission
2-6 approved co-production project, whether a new enhanced recovery
2-7 project or an expanded enhanced recovery project, qualifies for the
2-8 recovered oil tax rate following Commission certification of a
2-9 positive production response without regard to whether the
2-10 Commission approval is before or after the project began active
2-11 operations; provided, however, tax must be paid when due at the
2-12 rate provided in Section 202.052(a) of this code for all oil
2-13 produced on or before July 31, 1995. On or after September 1,
2-14 1995, the operator may apply to the comptroller for a refund and
2-15 shall be entitled to receive a refund equal to the difference
2-16 between the tax paid on all oil produced from a Commission approved
2-17 coproduction project after Commission certification of a positive
2-18 production response and the tax due at the recovered oil tax rate
2-19 for all oil produced after Commission certification of a positive
2-20 production response from such co-production project. The operator
2-21 of a proposed project[,] ,or a proposed expansion[, or a proposed
2-22 or existing co-production project] may apply to the Commission for
2-23 approval of the project or expansion under this section. The
2-24 Commission may require an applicant to provide the Commission with
2-25 any relevant information required to administer this section. If
2-26 approval by the Commission of a unitization agreement under
2-27 Subchapter B, Chapter 101, Natural Resources Code, is required for
2-28 purposes of carrying out the project or expansion, the Commission
2-29 may not approve the project or expansion unless it approves the
2-30 unitization agreement. A person may apply for approval of a
3-1 proposed enhanced recovery project[,] or a proposed expansion[, or
3-2 a proposed or existing co-production project] under this subsection
3-3 concurrently with an application for approval of a unitization
3-4 agreement for purposes of carrying out the enhanced recovery
3-5 project or expansion under Section 101.011, Natural Resources Code,
3-6 or with an application for certification of the project or
3-7 expansion as a tertiary recovery project for purposes of Section
3-8 4993, Internal Revenue Code of 1986, or may make a separate
3-9 application for approval.
3-10 (c) This section applies to an enhanced recovery project
3-11 that begins active operation on or after September 1, 1989, and to
3-12 an expansion that the commission approves on or after September 1,
3-13 1991. An application for approval under this section must be filed
3-14 on or after September 1, 1989, and before January 1, 2008 [1998],
3-15 for a new enhanced recovery project[, including any co-production
3-16 project]. An application for approval under this section must be
3-17 filed on or after September 1, 1991, and before January 1, 2008
3-18 [1998], for an expansion of an existing enhanced recovery project.
3-19 A project may not qualify as an expansion if the project has
3-20 qualified as a new enhanced recovery project under this section.
3-21 An application may be filed on or after September 1, 1989, even if
3-22 a separate application for approval of the project or expansion has
3-23 already been filed under Subchapter B, Chapter 101, Natural
3-24 Resources Code, or for approval as a tertiary recovery project for
3-25 purposes of Section 4993, Internal Revenue Code of 1986, if the
3-26 operation of a new project or the expansion of an existing project,
3-27 other than a co-production project, does not begin before the
3-28 application for approval under this section is approved by the
3-29 commission; provided, however, nothing herein shall require
3-30 commission approval of a co-production project prior to commencing
4-1 active operations on such project in order for such project to be
4-2 eligible for the recovered oil tax rate.
4-3 SECTION 2. This Act takes effect September 1, 1997.
4-4 SECTION 3. The importance of this legislation and the
4-5 crowded condition of the calendars in both houses create an
4-6 emergency and an imperative public necessity that the
4-7 constitutional rule requiring bills to be read on three several
4-8 days in each house be suspended, and this rule is hereby suspended.