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.