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.