By:  Lucio                                            S.B. No. 1407

                                A BILL TO BE ENTITLED

                                       AN ACT

 1-1     relating to temporary tax exemptions for certain high-cost gas.

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Subsection (e), Section 201.057, Tax Code, is

 1-4     amended to read as follows:

 1-5           (e)  The operator of a proposed or existing gas well,

 1-6     including a gas well that has not been completed, or the operator

 1-7     of any proposed or existing oil or gas well within a commission

 1-8     approved co-production project, may apply to the commission for

 1-9     certification that the well produces or will produce high-cost gas.

1-10     Such application, if seeking certification as high-cost gas

1-11     according to Subsection (a)(2)(A), may be made at any time [must be

1-12     made in writing no later than the 180th day] after the first day of

1-13     production.  The application may be made but is not required to be

1-14     made concurrently with a request for a determination that gas

1-15     produced from the well is high-cost natural gas for purposes of the

1-16     Natural Gas Policy Act of 1978 (15 U.S.C. Section 3301 et seq.) or

1-17     with a request for commission approval of a co-production project.

1-18     The commission may require an applicant to provide the commission

1-19     with any relevant information required to administer this section.

1-20     For purposes of this section, a determination that gas is high-cost

1-21     natural gas according to Subsection (a)(2)(A) or a determination

1-22     that gas is produced from within a commission approved

1-23     co-production project is a certification that the gas is high-cost

 2-1     gas for purposes of this section, and in that event additional

 2-2     certification is not required to qualify for the exemption or tax

 2-3     reduction provided by this section.

 2-4           SECTION 2.  Subsection (f), Section 201.057, Tax Code, is

 2-5     amended to read as follows:

 2-6           (f)  To qualify for the exemption or tax reduction provided

 2-7     by this section, the person responsible for paying the tax must

 2-8     apply to the comptroller.  The application must contain the

 2-9     certification of the commission that the well produces high-cost

2-10     gas and, if the application is for a well spudded or completed

2-11     after September 1, 1995, must contain a report of drilling and

2-12     completion costs incurred for each well on a form and in the detail

2-13     as determined by the comptroller.  To obtain the maximum tax

2-14     exemption or tax reduction, an [An] application to the comptroller

2-15     for certification according to Subsection (a)(2)(A) may not be

2-16     filed after the 180th day after the first day of production or 45

2-17     days after the date of approval or certification by the commission,

2-18     whichever is later.  If the application is filed after the 180th

2-19     day after the first day of production or 45 days after the date of

2-20     approval or certification by the commission, whichever is later,

2-21     then the tax exemption or tax reduction shall be reduced by an

2-22     amount equal to 10 percent of the tax exemption or tax reduction

2-23     for the period of time between the 180th day after the first day of

2-24     production and the day on which the application is filed with the

2-25     comptroller.  An application to the comptroller for certification

 3-1     according to Subsection (a)(2)(B) may not be filed before January

 3-2     1, 1990, or after December 31, 1998.  The comptroller shall approve

 3-3     the application of a person who demonstrates that the gas is

 3-4     eligible for the exemption or tax reduction.  The comptroller may

 3-5     require a person applying for the exemption or tax reduction to

 3-6     provide any relevant information in the person's monthly report

 3-7     that the comptroller considers necessary to administer this

 3-8     section.  The commission shall notify the comptroller in writing

 3-9     immediately if it determines that an oil or gas well previously

3-10     certified as producing high-cost gas does not produce high-cost gas

3-11     or if it takes any action or discovers any information that affects

3-12     the eligibility of gas for an exemption or tax reduction under this

3-13     section.

3-14           SECTION 3.  The importance of this legislation and the

3-15     crowded condition of the calendars in both houses create an

3-16     emergency and an imperative public necessity that the

3-17     constitutional rule requiring bills to be read on three several

3-18     days in each house be suspended, and this rule is hereby suspended,

3-19     and that this Act take effect and be in force from and after its

3-20     passage, and it is so enacted.