1-1     By:  Lucio                                            S.B. No. 1407

 1-2           (In the Senate - Filed March 13, 1997; March 19, 1997, read

 1-3     first time and referred to Committee on Finance; April 25, 1997,

 1-4     reported favorably by the following vote:  Yeas 11, Nays 0;

 1-5     April 25, 1997, sent to printer.)

 1-6                            A BILL TO BE ENTITLED

 1-7                                   AN ACT

 1-8     relating to temporary tax exemptions for certain high-cost gas.

 1-9           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-10           SECTION 1.  Subsection (e), Section 201.057, Tax Code, is

1-11     amended to read as follows:

1-12           (e)  The operator of a proposed or existing gas well,

1-13     including a gas well that has not been completed, or the operator

1-14     of any proposed or existing oil or gas well within a commission

1-15     approved co-production project, may apply to the commission for

1-16     certification that the well produces or will produce high-cost gas.

1-17     Such application, if seeking certification as high-cost gas

1-18     according to Subsection (a)(2)(A), may be made at any time [must be

1-19     made in writing no later than the 180th day] after the first day of

1-20     production.  The application may be made but is not required to be

1-21     made concurrently with a request for a determination that gas

1-22     produced from the well is high-cost natural gas for purposes of the

1-23     Natural Gas Policy Act of 1978 (15 U.S.C. Section 3301 et seq.) or

1-24     with a request for commission approval of a co-production project.

1-25     The commission may require an applicant to provide the commission

1-26     with any relevant information required to administer this section.

1-27     For purposes of this section, a determination that gas is high-cost

1-28     natural gas according to Subsection (a)(2)(A) or a determination

1-29     that gas is produced from within a commission approved

1-30     co-production project is a certification that the gas is high-cost

1-31     gas for purposes of this section, and in that event additional

1-32     certification is not required to qualify for the exemption or tax

1-33     reduction provided by this section.

1-34           SECTION 2.  Subsection (f), Section 201.057, Tax Code, is

1-35     amended to read as follows:

1-36           (f)  To qualify for the exemption or tax reduction provided

1-37     by this section, the person responsible for paying the tax must

1-38     apply to the comptroller.  The application must contain the

1-39     certification of the commission that the well produces high-cost

1-40     gas and, if the application is for a well spudded or completed

1-41     after September 1, 1995, must contain a report of drilling and

1-42     completion costs incurred for each well on a form and in the detail

1-43     as determined by the comptroller.  To obtain the maximum tax

1-44     exemption or tax reduction, an [An] application to the comptroller

1-45     for certification according to Subsection (a)(2)(A) may not be

1-46     filed after the 180th day after the first day of production or 45

1-47     days after the date of approval or certification by the commission,

1-48     whichever is later.  If the application is filed after the 180th

1-49     day after the first day of production or 45 days after the date of

1-50     approval or certification by the commission, whichever is later,

1-51     then the tax exemption or tax reduction shall be reduced by an

1-52     amount equal to 10 percent of the tax exemption or tax reduction

1-53     for the period of time between the 180th day after the first day of

1-54     production and the day on which the application is filed with the

1-55     comptroller.  An application to the comptroller for certification

1-56     according to Subsection (a)(2)(B) may not be filed before January

1-57     1, 1990, or after December 31, 1998.  The comptroller shall approve

1-58     the application of a person who demonstrates that the gas is

1-59     eligible for the exemption or tax reduction.  The comptroller may

1-60     require a person applying for the exemption or tax reduction to

1-61     provide any relevant information in the person's monthly report

1-62     that the comptroller considers necessary to administer this

1-63     section.  The commission shall notify the comptroller in writing

1-64     immediately if it determines that an oil or gas well previously

 2-1     certified as producing high-cost gas does not produce high-cost gas

 2-2     or if it takes any action or discovers any information that affects

 2-3     the eligibility of gas for an exemption or tax reduction under this

 2-4     section.

 2-5           SECTION 3.  The importance of this legislation and the

 2-6     crowded condition of the calendars in both houses create an

 2-7     emergency and an imperative public necessity that the

 2-8     constitutional rule requiring bills to be read on three several

 2-9     days in each house be suspended, and this rule is hereby suspended,

2-10     and that this Act take effect and be in force from and after its

2-11     passage, and it is so enacted.

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