AN ACT
1-1 relating to a temporary exemption from the severance tax for oil
1-2 and gas produced from wells under certain market conditions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended
1-5 by adding Section 201.059 to read as follows:
1-6 Sec. 201.059. TEMPORARY EXEMPTION FOR GAS FROM CERTAIN WELLS
1-7 UNDER CERTAIN MARKET CONDITIONS. (a) In this section:
1-8 (1) "Commission" means the Railroad Commission of
1-9 Texas.
1-10 (2) "Mcf" means 1,000 cubic feet of gas as measured in
1-11 accordance with Section 91.052, Natural Resources Code.
1-12 (3) "Qualifying well" means a commission-designated
1-13 gas well whose production during the three-month period beginning
1-14 on October 1, 1998, and ending on December 31, 1998, is no more
1-15 than 90 Mcf per day, excluding gas flared pursuant to the rules of
1-16 the commission. For purposes of qualifying a gas well, production
1-17 per well per day is determined by computing the average daily
1-18 production from the well using the "P-2" monthly well production
1-19 report made to the commission. The commission shall certify to the
1-20 comptroller a list of qualifying wells.
1-21 (b) The comptroller shall certify the dates that the monthly
1-22 average closing price of gas is below $1.80 per MMBtu, as recorded
1-23 on the New York Mercantile Exchange (NYMEX), for three consecutive
1-24 months. The comptroller shall perform the first certification
2-1 determination under this subsection for the three-month period
2-2 beginning on November 1, 1998.
2-3 (c) Gas produced from a qualifying well or from a qualifying
2-4 lease under Section 202.060 on or after February 1, 1999, and
2-5 before August 1, 1999, is exempt from the severance tax imposed by
2-6 this chapter for each calendar month succeeding a three-month
2-7 period certified by the comptroller under Subsection (b).
2-8 (d) A person filing a report under this chapter must include
2-9 the amount of the gas purchased or produced during the period
2-10 covered by the report that is exempt under this section.
2-11 (e) If the tax is paid on gas exempt under this section at
2-12 the full rate provided by Section 201.052(a) or (b), the person
2-13 paying the tax is entitled to a credit against taxes imposed by
2-14 this chapter for the amount paid. To receive the credit, the
2-15 person must apply to the comptroller for the credit not later than
2-16 the expiration of the applicable period for filing a tax refund
2-17 under Section 111.104.
2-18 (f) This section expires on the earlier of September 1,
2-19 1999, or the last day of the month in which the total taxes
2-20 exempted under this section and Section 202.060 equal $45 million.
2-21 Beginning on March 1, 1999, the comptroller shall make a monthly
2-22 determination of the total taxes that have been exempted under this
2-23 section and Section 202.060. If the comptroller determines that
2-24 the total taxes exempted under this section and Section 202.060
2-25 will exceed $45 million, the comptroller shall certify the month in
2-26 which this will occur and shall prorate the amount of the exemption
3-1 for that month.
3-2 (g) The comptroller shall publish certifications under this
3-3 section in the Texas Register.
3-4 (h) The exemption from severance taxes provided by this
3-5 section does not exempt the gas subject to the exemption from any
3-6 other fees or taxes, including the fee imposed under Section
3-7 81.117, Natural Resources Code.
3-8 SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
3-9 by adding Section 202.060 to read as follows:
3-10 Sec. 202.060. TEMPORARY EXEMPTION FOR OIL FROM CERTAIN WELLS
3-11 UNDER CERTAIN MARKET CONDITIONS. (a) In this section:
3-12 (1) "Commission" means the Railroad Commission of
3-13 Texas.
3-14 (2) "Qualifying lease" means a commission-designated
3-15 oil lease whose production during the three-month period beginning
3-16 on October 1, 1998, and ending on December 31, 1998, is no more
3-17 than 15 barrels of oil per day per well. For purposes of
3-18 qualifying a lease, production per well per day is determined by
3-19 computing the average daily per well production from the lease
3-20 using the "P-1" monthly lease production report made to the
3-21 commission. For purposes of qualifying a lease, production per
3-22 well per day is measured by dividing the sum of lease production
3-23 during the three-month period by the sum of the number of
3-24 well-days, where a well-day is one well producing for one day. The
3-25 commission shall certify to the comptroller a list of qualifying
3-26 leases.
4-1 (b) The comptroller shall certify the dates that the monthly
4-2 average closing price of West Texas Intermediate crude oil is below
4-3 $15 per barrel, as recorded on the New York Mercantile Exchange
4-4 (NYMEX), for three consecutive months. The comptroller shall
4-5 perform the first certification determination under this subsection
4-6 for the three-month period beginning on November 1, 1998.
4-7 (c) Oil produced from a qualifying lease on or after
4-8 February 1, 1999, and before August 1, 1999, is exempt from the
4-9 severance tax imposed by this chapter for each calendar month
4-10 succeeding a three-month period certified by the comptroller under
4-11 Subsection (b).
4-12 (d) A person filing a report under this chapter must include
4-13 the number of barrels of oil purchased or produced during the
4-14 period covered by the report that are exempt under this section.
4-15 (e) If the tax is paid on a barrel of oil exempt under this
4-16 section at the full rate provided by Section 202.052(a) or (b), the
4-17 person paying the tax is entitled to a credit against taxes imposed
4-18 by this chapter for the amount paid. To receive the credit, the
4-19 person must apply to the comptroller for the credit not later than
4-20 the expiration of the applicable period for filing a tax refund
4-21 under Section 111.104.
4-22 (f) This section expires on the earlier of September 1,
4-23 1999, or the last day of the month in which the total taxes
4-24 exempted under this section and Section 201.059 equal $45 million.
4-25 Beginning on March 1, 1999, the comptroller shall make a monthly
4-26 determination of the total taxes that have been exempted under this
5-1 section and Section 201.059. If the comptroller determines that
5-2 the total taxes exempted under this section and Section 201.059
5-3 will exceed $45 million, the comptroller shall certify the month in
5-4 which this will occur and shall prorate the amount of the exemption
5-5 for that month.
5-6 (g) The comptroller shall publish certifications under this
5-7 section in the Texas Register.
5-8 (h) The exemption from severance taxes provided by this
5-9 section does not exempt the oil subject to the exemption from any
5-10 other fees or taxes, including the fee imposed under Section
5-11 81.116, Natural Resources Code.
5-12 SECTION 3. The importance of this legislation and the
5-13 crowded condition of the calendars in both houses create an
5-14 emergency and an imperative public necessity that the
5-15 constitutional rule requiring bills to be read on three several
5-16 days in each house be suspended, and this rule is hereby suspended,
5-17 and that this Act take effect and be in force from and after its
5-18 passage, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 290 passed the Senate on
February 9, 1999, by the following vote: Yeas 25, Nays 1, four
present not voting.
_______________________________
Secretary of the Senate
I hereby certify that S.B. No. 290 passed the House on
March 11, 1999, by the following vote: Yeas 128, Nays 8, seven
present not voting.
_______________________________
Chief Clerk of the House
Approved:
_______________________________
Date
_______________________________
Governor