By Brown, et al. S.B. No. 290
76R4302 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to a temporary exemption from the severance tax for oil
1-3 and gas produced from 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 201, Tax Code, is amended
1-6 by adding Section 201.059 to read as follows:
1-7 Sec. 201.059. TEMPORARY EXEMPTION FOR GAS FROM CERTAIN WELLS
1-8 UNDER CERTAIN MARKET CONDITIONS. (a) In this section:
1-9 (1) "Commission" means the Railroad Commission of
1-10 Texas.
1-11 (2) "Mcf" means 1,000 cubic feet of gas as measured in
1-12 accordance with Section 91.052, Natural Resources Code.
1-13 (3) "Qualifying lease" means a commission-designated
1-14 oil lease or gas well whose production during the three-month
1-15 period is no more than 90 Mcf per day per well, excluding gas
1-16 flared pursuant to the rules of the commission. For purposes of
1-17 qualifying a lease, production per well per day is determined by
1-18 computing the average daily per well production from the lease
1-19 using the "P-1" monthly lease production report made to the
1-20 commission beginning in January 1999.
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 lease on or after
2-4 February 1, 1999, and before August 1, 1999, is exempt from the
2-5 severance tax imposed by this chapter for each calendar month
2-6 succeeding a three-month period certified by the comptroller under
2-7 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
2-27 for that month.
3-1 (g) The comptroller shall publish certifications under this
3-2 section in the Texas Register.
3-3 SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended
3-4 by adding Section 202.060 to read as follows:
3-5 Sec. 202.060. TEMPORARY EXEMPTION FOR OIL FROM CERTAIN WELLS
3-6 UNDER CERTAIN MARKET CONDITIONS. (a) In this section:
3-7 (1) "Commission" means the Railroad Commission of
3-8 Texas.
3-9 (2) "Qualifying lease" means a commission-designated
3-10 oil lease whose production during the three-month period is no more
3-11 than 15 barrels of oil per day per well, excluding gas flared
3-12 pursuant to the rules of the commission. For purposes of
3-13 qualifying a lease, production per well per day is determined by
3-14 computing the average daily per well production from the lease
3-15 using the "P-1" monthly lease production report made to the
3-16 commission beginning in January 1999.
3-17 (b) The comptroller shall certify the dates that the monthly
3-18 average closing price of West Texas Intermediate crude oil is below
3-19 $15 per barrel, as recorded on the New York Mercantile Exchange
3-20 (NYMEX), for three consecutive months. The comptroller shall
3-21 perform the first certification determination under this subsection
3-22 for the three-month period beginning on November 1, 1998.
3-23 (c) Oil produced from a qualifying lease on or after
3-24 February 1, 1999, and before August 1, 1999, is exempt from the
3-25 severance tax imposed by this chapter for each calendar month
3-26 succeeding a three-month period certified by the comptroller under
3-27 Subsection (b).
4-1 (d) A person filing a report under this chapter must include
4-2 the number of barrels of oil purchased or produced during the
4-3 period covered by the report that are exempt under this section.
4-4 (e) If the tax is paid on a barrel of oil exempt under this
4-5 section at the full rate provided by Section 202.052(a) or (b), the
4-6 person paying the tax is entitled to a credit against taxes imposed
4-7 by this chapter for the amount paid. To receive the credit, the
4-8 person must apply to the comptroller for the credit not later than
4-9 the expiration of the applicable period for filing a tax refund
4-10 under Section 111.104.
4-11 (f) This section expires on the earlier of September 1,
4-12 1999, or the last day of the month in which the total taxes
4-13 exempted under this section and Section 201.059 equal $45 million.
4-14 Beginning on March 1, 1999, the comptroller shall make a monthly
4-15 determination of the total taxes that have been exempted under this
4-16 section and Section 201.059. If the comptroller determines that
4-17 the total taxes exempted under this section and Section 201.059
4-18 will exceed $45 million, the comptroller shall certify the month in
4-19 which this will occur and shall prorate the amount of the exemption
4-20 for that month.
4-21 (g) The comptroller shall publish certifications under this
4-22 section in the Texas Register.
4-23 SECTION 3. The importance of this legislation and the
4-24 crowded condition of the calendars in both houses create an
4-25 emergency and an imperative public necessity that the
4-26 constitutional rule requiring bills to be read on three several
4-27 days in each house be suspended, and this rule is hereby suspended,
5-1 and that this Act take effect and be in force from and after its
5-2 passage, and it is so enacted.