1-1 By: Ratliff, Bivins S.B. No. 582
1-2 (In the Senate - Filed February 12, 1997; February 18, 1997,
1-3 read first time and referred to Committee on Finance;
1-4 February 25, 1997, reported favorably by the following vote: Yeas
1-5 10, Nays 0; February 25, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the application of the oil production tax to new or
1-9 expanded enhanced recovery projects.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Subsection (b), Section 202.054, Tax Code, as
1-12 amended by Chapters 335 and 958, Acts of the 73rd Legislature,
1-13 1993, is amended to read as follows:
1-14 (b) Oil produced from an enhanced recovery project other
1-15 than a co-production project qualifies for the recovered oil tax
1-16 rate if, before the project begins active operation, the commission
1-17 approves the project and designates the area to be affected by the
1-18 project. The incremental production from an expanded enhanced
1-19 recovery project other than a co-production project qualifies for
1-20 the recovered oil tax rate if, before the expansion begins, the
1-21 commission approves the expansion and designates the area to be
1-22 affected by the expansion. For a new or expanded enhanced recovery
1-23 project, other than a co-production project, for which an
1-24 application for approval under this section is filed with the
1-25 commission on or after January 1, 1994, severance tax for all oil
1-26 produced during the period from January 1, 1994, through August 31,
1-27 1995, to which the recovered tax rate is applicable, must be paid
1-28 when due at the rate provided by Section 202.052(a) of this code.
1-29 On or after January 1, 1996, the payor may apply to the comptroller
1-30 for and shall be entitled to receive a tax credit equal to the
1-31 difference between the tax paid and the tax which would have been
1-32 due at the recovered oil tax rate for all production to which the
1-33 recovered tax rate is applicable during the period from January 1,
1-34 1994, through August 31, 1995. The tax credit may be applied to
1-35 either oil or gas severance taxes regardless of the field from
1-36 which the production originates. Oil produced from a commission
1-37 approved co-production project, whether a new enhanced recovery
1-38 project or an expanded enhanced recovery project, qualifies for the
1-39 recovered oil tax rate following commission certification of a
1-40 positive production response without regard to whether the
1-41 commission approval is before or after the project began active
1-42 operations; provided, however, tax must be paid when due at the
1-43 rate provided in Section 202.052(a) of this code for all oil
1-44 produced on or before July 31, 1995. On or after September 1,
1-45 1995, the operator may apply to the comptroller for a refund and
1-46 shall be entitled to receive a refund equal to the difference
1-47 between the tax paid on all oil produced from a commission approved
1-48 co-production project after commission certification of a positive
1-49 production response and the tax due at the recovered oil tax rate
1-50 for all oil produced after commission certification of a positive
1-51 production response from such co-production project. The operator
1-52 of a proposed project or[,] a proposed expansion[, or a proposed or
1-53 existing co-production project] may apply to the commission for
1-54 approval of the project or expansion under this section. The
1-55 commission may require an applicant to provide the commission with
1-56 any relevant information required to administer this section. If
1-57 approval by the commission of a unitization agreement under
1-58 Subchapter B, Chapter 101, Natural Resources Code, is required for
1-59 purposes of carrying out the project or expansion, the commission
1-60 may not approve the project or expansion unless it approves the
1-61 unitization agreement. A person may apply for approval of a
1-62 proposed enhanced recovery project or[,] a proposed expansion[, or
1-63 a proposed co-production project] under this subsection
1-64 concurrently with an application for approval of a unitization
2-1 agreement for purposes of carrying out the enhanced recovery
2-2 project or expansion under Section 101.011, Natural Resources Code,
2-3 or with an application for certification of the project or
2-4 expansion as a tertiary recovery project for purposes of Section
2-5 4993, Internal Revenue Code of 1986, or may make a separate
2-6 application for approval.
2-7 SECTION 2. Subsection (c), Section 202.054, Tax Code, is
2-8 amended to read as follows:
2-9 (c) This section applies to an enhanced recovery project
2-10 that begins active operation on or after September 1, 1989, and to
2-11 an expansion that the commission approves on or after September 1,
2-12 1991. An application for approval under this section must be filed
2-13 on or after September 1, 1989, and before January 1, 2008 [1998],
2-14 for a new enhanced recovery project[, including any co-production
2-15 project]. An application for approval under this section must be
2-16 filed on or after September 1, 1991, and before January 1, 2008
2-17 [1998], for an expansion of an existing enhanced recovery project.
2-18 A project may not qualify as an expansion if the project has
2-19 qualified as a new enhanced recovery project under this section.
2-20 An application may be filed on or after September 1, 1989, even if
2-21 a separate application for approval of the project or expansion has
2-22 already been filed under Subchapter B, Chapter 101, Natural
2-23 Resources Code, or for approval as a tertiary recovery project for
2-24 purposes of Section 4993, Internal Revenue Code of 1986, if the
2-25 operation of a new project or the expansion of an existing project,
2-26 other than a co-production project, does not begin before the
2-27 application for approval under this section is approved by the
2-28 commission; provided, however, nothing herein shall require
2-29 commission approval of a co-production project prior to commencing
2-30 active operations on such project in order for such project to be
2-31 eligible for the recovered oil tax rate.
2-32 SECTION 3. This Act takes effect September 1, 1997.
2-33 SECTION 4. The importance of this legislation and the
2-34 crowded condition of the calendars in both houses create an
2-35 emergency and an imperative public necessity that the
2-36 constitutional rule requiring bills to be read on three several
2-37 days in each house be suspended, and this rule is hereby suspended.
2-38 * * * * *