By Counts                                             H.B. No. 3099
         77R9384 T                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the extension of existing severance tax incentives to
 1-3     maintain existing levels of production of natural gas and crude
 1-4     oil.
 1-5           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-6           SECTION 1. Section 201.057(b), Tax Code, is amended to read
 1-7     as follows:
 1-8           (b)  High-cost gas as defined in Subsection (a)(2)(A) of this
 1-9     section produced from a well that is spudded or completed between
1-10     May 24, 1989, and September 1, 1996, is exempt from the tax imposed
1-11     by this chapter during the period beginning September 1, 1991, and
1-12     ending August 31, 2005 [2001].  High-cost gas as defined in
1-13     Subsection (a)(2)(B) of this section produced from any well
1-14     regardless of spud date or completion date is eligible for refunds
1-15     of tax paid and exemption from the tax imposed by this chapter for
1-16     production occurring during the period beginning the first day of
1-17     the month after commission approval of a co-production project and
1-18     ending August 31, 2005 [2001]; provided, however, in the event
1-19     co-production ceases, the exemption shall also cease on the first
1-20     day of the first calendar month that begins on or after the 91st
1-21     day following the date of termination or co-production operations.
1-22     Tax must be paid when due at the rate provided in Section 201.052
1-23     of this code for all high-cost gas, as defined in Subsection
1-24     (a)(2)(B) of this section, produced on or before July 31, 1995.  On
 2-1     or after September 1, 1995, the operator may apply to the
 2-2     comptroller for a refund and shall be entitled to receive a refund
 2-3     of all taxes paid on such high-cost gas produced on or after the
 2-4     first day of the calendar month after commission approval of the
 2-5     co-production project from which such gas was produced and that is
 2-6     otherwise eligible for the tax exemption.
 2-7           SECTION 2. Section 201.057(c), Tax Code, is amended to read
 2-8     as follows:
 2-9           (c)  High-cost gas as defined in Subsection (a)(2)(A)
2-10     produced from a well that is spudded or completed after August 31,
2-11     1996, and before September 1, 2001 [2010], is entitled to a
2-12     reduction of the tax imposed by this chapter for the first 120
2-13     consecutive calendar months beginning on the first day of
2-14     production, or until the cumulative value of the tax reduction
2-15     equals 50 percent of the drilling and completion costs incurred for
2-16     the well, whichever occurs first.  The amount of tax reduction
2-17     shall be computed by subtracting from the tax rate imposed by
2-18     Section 201.052 the product of that tax rate times the ratio of
2-19     drilling and completion costs incurred for the well to twice the
2-20     median drilling and completion costs for high-cost wells as defined
2-21     in Subsection (a)(2)(A) spudded or completed during the previous
2-22     state fiscal year, except that the effective rate of tax may not be
2-23     reduced below zero.
2-24           SECTION 3. Section 201.057, Tax Code, is amended by adding a
2-25     new subchapter (d) as follows and renumbering subsequent
2-26     subchapters:
2-27           (d)  High-cost gas as defined in Subsection (a)(2)(A)
 3-1     produced from a well that is spudded or completed after August 31,
 3-2     2001, and before September 1, 2005, is exempt from the tax imposed
 3-3     by this chapter for the first 120 consecutive calendar months
 3-4     beginning on the first day of production.
 3-5           SECTION 4. Section 202.054, Tax Code, is amended by adding
 3-6     Subsection (o) to read as follows:
 3-7           (o)  Notwithstanding any other provisions of this chapter any
 3-8     oil produced in this state that qualifies for the recovered oil tax
 3-9     rate on or before August 31, 2001 shall continue to be taxed at the
3-10     recovered oil tax rate until August 31, 2005 or the ten years
3-11     provided in subsection (g) of this Section, whichever is later.
3-12           SECTION 5. Section 202.056, Tax Code, is amended by adding
3-13     Subsection (j) to read as follows:
3-14           (j)  Notwithstanding any other provisions of this section,
3-15     all production from certified three year inactive wells shall be
3-16     exempt from taxes imposed by this chapter until August 31, 2005.
3-17           SECTION 6.  (a)  This Act takes effect September 1, 2001.