By Hawley H.B. No. 1164
76R5501 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to an exemption from the severance tax for oil and gas
1-3 produced from certain wells under certain market conditions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter B, Chapter 202, Tax Code, is amended
1-6 by adding Section 202.060 to read as follows:
1-7 Sec. 202.060. EXEMPTION FOR OIL FROM CERTAIN WELLS UNDER
1-8 CERTAIN MARKET CONDITIONS. (a) In this section:
1-9 (1) "Commission" means the Railroad Commission of
1-10 Texas.
1-11 (2) "Qualifying lease" means a commission-designated
1-12 oil lease whose production during the three-month period is no more
1-13 than 15 barrels of oil per day per active producing well, excluding
1-14 gas flared pursuant to the rules of the commission. For purposes
1-15 of qualifying a lease, production per well per day is determined by
1-16 computing the average daily per well production from the lease
1-17 using the P-1 monthly lease production report.
1-18 (3) "Spudded" has the meaning assigned that term by
1-19 Section 204.001.
1-20 (b) The comptroller shall certify the dates that the monthly
1-21 average closing daily price of West Texas Intermediate crude oil is
1-22 below $15 per barrel, as recorded on the New York Mercantile
1-23 Exchange (NYMEX) for three consecutive months.
1-24 (c) Oil is exempt from the severance tax imposed by this
2-1 chapter if the oil is produced from a well spudded during a
2-2 three-month period certified by the comptroller under Subsection
2-3 (b). The exemption expires on the end of the month following the
2-4 second anniversary of the date on which the well is completed.
2-5 (d) Oil produced from a qualifying lease is exempt from the
2-6 severance tax imposed by this chapter for each calendar month
2-7 during a three-month period certified by the comptroller under
2-8 Subsection (b).
2-9 (e) A person filing a report under this chapter must include
2-10 the number of barrels of oil purchased or produced during the
2-11 period covered by the report that are exempt under this section.
2-12 (f) If the tax is paid on a barrel of oil exempt under this
2-13 section at the full rate provided by Section 202.052(a) or (b), the
2-14 person paying the tax is entitled to a credit against taxes imposed
2-15 by this chapter for the amount paid. To receive the credit, the
2-16 person must apply to the comptroller for the credit not later than
2-17 the expiration of the applicable period for filing a tax refund
2-18 under Section 111.104.
2-19 (g) To qualify for an exemption under Subsection (c), the
2-20 person responsible for paying the tax must certify to the
2-21 comptroller on a form prescribed by the comptroller the month in
2-22 which the well was spudded.
2-23 SECTION 2. Subchapter B, Chapter 201, Tax Code, is amended
2-24 by adding Section 201.059 to read as follows:
2-25 Sec. 201.059. EXEMPTION FOR GAS FROM CERTAIN WELLS UNDER
2-26 CERTAIN MARKET CONDITIONS. (a) In this section:
2-27 (1) "Commission" means the Railroad Commission of
3-1 Texas.
3-2 (2) "MCF" means 1,000 cubic feet of gas as measured in
3-3 accordance with Section 91.052, Natural Resources Code.
3-4 (3) "Qualifying lease" means a commission-designated
3-5 oil lease or gas well whose production during the three-month
3-6 period is no more than 90 MCF per day per well, excluding gas
3-7 flared pursuant to the rules of the commission. For purposes of
3-8 qualifying a lease, production per well per day is determined by
3-9 computing the average daily per well production from the lease
3-10 using the P-2 monthly lease production report.
3-11 (4) "Spudded" has the meaning assigned that term by
3-12 Section 204.001.
3-13 (b) The comptroller shall certify the dates that the monthly
3-14 average closing price of gas is below $1.80 per MMBtu as recorded
3-15 on the New York Mercantile Exchange (NYMEX) for three consecutive
3-16 months.
3-17 (c) Gas is exempt from the severance tax imposed by this
3-18 chapter if the gas is produced from a well spudded during a
3-19 three-month period certified by the comptroller under Subsection
3-20 (b). The exemption expires on the end of the month following the
3-21 second anniversary of the date on which the well is completed.
3-22 (d) Gas produced from a qualifying lease is exempt from the
3-23 severance tax imposed by this chapter for each calendar month
3-24 during a three-month period certified by the comptroller under
3-25 Subsection (b).
3-26 (e) A person filing a report under this chapter must include
3-27 the gas purchased or produced during the period covered by the
4-1 report that is exempt under this section.
4-2 (f) If the tax is paid on gas exempt under this section at
4-3 the full rate provided by Section 201.052(a) or (b), the person
4-4 paying the tax is entitled to a credit against taxes imposed by
4-5 this chapter for the amount paid. To receive the credit, the
4-6 person must apply to the comptroller for the credit not later than
4-7 the expiration of the applicable period for filing a tax refund
4-8 under Section 111.104.
4-9 (g) To qualify for an exemption under Subsection (c), the
4-10 person responsible for paying the tax must certify to the
4-11 comptroller on a form prescribed by the comptroller the month in
4-12 which the well was spudded.
4-13 SECTION 3. (a) This Act takes effect September 1, 1999.
4-14 (b) The exemption from the tax imposed under Chapter 202,
4-15 Tax Code, by Section 202.060(c), Tax Code, as added by this Act,
4-16 applies only to oil produced from a well spudded on or after the
4-17 effective date of this Act. The exemption from the tax imposed
4-18 under Chapter 202, Tax Code, by Section 202.060(d), as added by
4-19 this Act, applies only to oil produced on or after the effective
4-20 date of this Act.
4-21 (c) The exemption from the tax imposed under Chapter 201,
4-22 Tax Code, by Section 201.059(c), Tax Code, as added by this Act,
4-23 applies only to gas produced from a well spudded on or after the
4-24 effective date of this Act. The exemption from the tax imposed
4-25 under Chapter 202, Tax Code, by Section 201.059(d), as added by
4-26 this Act, applies only to gas produced on or after the effective
4-27 date of this Act.
5-1 SECTION 4. The importance of this legislation and the
5-2 crowded condition of the calendars in both houses create an
5-3 emergency and an imperative public necessity that the
5-4 constitutional rule requiring bills to be read on three several
5-5 days in each house be suspended, and this rule is hereby suspended.