1-1     By:  Bivins                                            S.B. No. 344
 1-2           (In the Senate - Filed January 23, 2001; January 24, 2001,
 1-3     read first time and referred to Committee on Finance;
 1-4     April 24, 2001, reported adversely, with favorable Committee
 1-5     Substitute by the following vote:  Yeas 10, Nays 0, 1 present, not
 1-6     voting; April 24, 2001, sent to printer.)
 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 344                    By:  Truan
 1-8                            A BILL TO BE ENTITLED
 1-9                                   AN ACT
1-10     relating to the rates of the gas and oil severance taxes.
1-11           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12                                  ARTICLE 1
1-13           SECTION 1.01.  Section 201.052, Tax Code, is amended to read
1-14     as follows:
1-15           Sec. 201.052.  Rate of Tax.  (a)  Each month, the comptroller
1-16     shall certify the average closing cost of gas, as recorded on the
1-17     New York Mercantile Exchange (NYMEX), for the previous three
1-18     months.  The comptroller shall publish certifications under this
1-19     subsection in the Texas Register.  The tax imposed by this chapter
1-20     on gas produced and saved during a particular month is at the rate
1-21     of:
1-22                 (1)  7.5 percent of the market value of gas produced
1-23     and saved in this state by the producer during that month if the
1-24     average closing price of gas certified by the comptroller for the
1-25     previous three-month period is more than $3 per MMBtu;
1-26                 (2)  five percent of the market value of gas produced
1-27     and saved in this state by the producer during that month if the
1-28     average closing price of gas certified by the comptroller for the
1-29     previous three-month period is equal to or more than $1.25 per
1-30     MMBtu but not more than $3 per MMBtu; and
1-31                 (3)  two percent of the market value of gas produced
1-32     and saved in this state by the producer during that month if the
1-33     average closing price of gas certified by the comptroller for the
1-34     previous three-month period is less than $1.25 per MMBtu.
1-35           (b)  The minimum tax rate on sweet and sour gas produced and
1-36     saved in this state is 121/1,500 of one cent for each 1,000 cubic
1-37     feet.
1-38           (c)  If the tax is paid on gas at a higher rate than required
1-39     by Subsection (a), the person paying the tax in entitled to a
1-40     credit against taxes imposed by this chapter for the amount
1-41     overpaid.  To receive the credit, the person must apply to the
1-42     comptroller for the credit not later than the expiration of the
1-43     applicable period for filing a tax refund under Section 111.104.
1-44           SECTION 1.02.  Subchapter B, Chapter 201, Tax Code, is
1-45     amended by adding Section 201.0525 to read as follows:
1-46           Sec. 201.0525.  TAX CREDIT FOR CERTAIN TAX PAYMENTS.  (a)  A
1-47     person paying a tax under this chapter during the period beginning
1-48     on September 1, 2001, and ending on August 31, 2004, is entitled to
1-49     a credit against taxes imposed by this chapter in an amount equal
1-50     to the difference between:
1-51                 (1)  the amount of taxes the person paid under this
1-52     chapter during that period under the tax rates prescribed by
1-53     Section 201.052, as that section existed during that period; and
1-54                 (2)  the amount of taxes the person would have paid
1-55     under this chapter during that period under the tax rates
1-56     prescribed by Section 201.052, as that section exists on September
1-57     1, 2004.
1-58           (b)  To receive the credit, the person must apply to the
1-59     comptroller for the credit on or after September 1, 2004, and not
1-60     later than the expiration of the applicable period for filing a tax
1-61     refund under Section 111.104.
1-62           SECTION 1.03.  Section 202.052, Tax Code, is amended to read
1-63     as follows:
1-64           Sec. 202.052.  RATE OF TAX.  (a)  Each month, the comptroller
 2-1     shall certify the average closing cost of West Texas Intermediate
 2-2     crude oil, as recorded on the New York Mercantile Exchange (NYMEX),
 2-3     for the previous three months.  The comptroller shall publish
 2-4     certifications under this subsection in the Texas Register.  The
 2-5     tax imposed by this chapter on oil produced in this state during a
 2-6     particular month is at the rate of:
 2-7                 (1)  4.6 percent of the market value of oil produced in
 2-8     this state during that month if the average closing price of West
 2-9     Texas Intermediate crude oil certified by the comptroller for the
2-10     previous three-month period is more than $20 per barrel, or 4.6
2-11     cents for each barrel of 42 standard gallons of oil produced in
2-12     this state during that month, whichever rate results in the greater
2-13     amount of tax;
2-14                 (2)  2.3 percent of the market value of oil produced in
2-15     this state during that month if the average closing price of West
2-16     Texas Intermediate crude oil certified by the comptroller for the
2-17     previous three-month period is equal to or more than $12 but not
2-18     more than $20 per barrel, or 2.3 cents for each barrel of 42
2-19     standard gallons of oil produced in this state during that month,
2-20     whichever rate results in the greater amount of tax; and
2-21                 (3)  one percent of the market value of oil produced in
2-22     this state during that month if the average closing price of West
2-23     Texas Intermediate crude oil certified by the comptroller for the
2-24     previous three-month period is less than $12, or one cent for each
2-25     barrel of 42 standard gallons of oil produced in this state during
2-26     that month, whichever rate results in the greater amount of tax.
2-27           (b)  For oil produced in this state from a new or expanded
2-28     enhanced recovery project that qualifies under Section 202.054 of
2-29     this code, the rate of the tax imposed by this chapter is one-half
2-30     of the applicable rate prescribed by Subsection (a) [2.3 percent of
2-31     the market value of the oil].
2-32           (c)  The exemptions described by Sections 202.056 and 202.059
2-33     apply to oil produced in this state from a well that qualifies
2-34     under Section 202.056 or 202.059, subject to the certifications and
2-35     approvals required by those sections.
2-36           (d)  If the tax is paid on oil at a higher rate than required
2-37     by Subsection (a) or (b), the person paying the tax is entitled to
2-38     a credit against taxes imposed by this chapter for the amount
2-39     overpaid.  To receive the credit, the person must apply to the
2-40     comptroller for the credit not later than the expiration of the
2-41     applicable period for filing a tax refund under Section 111.104.
2-42           SECTION 1.04.  Subchapter B, Chapter 202, Tax Code, is
2-43     amended by adding Section 202.0525 to read as follows:
2-44           Sec. 202.0525.  TAX CREDIT FOR CERTAIN TAX PAYMENTS.  (a)  A
2-45     person paying a tax under this chapter during the period beginning
2-46     on September 1, 2001, and ending on August 31, 2004, is entitled to
2-47     a credit against taxes imposed by this chapter in an amount equal
2-48     to the difference between:
2-49                 (1)  the amount of taxes the person paid under this
2-50     chapter during that period under the tax rates prescribed by
2-51     Section 202.052, as that section existed during that period; and
2-52                 (2)  the amount of taxes the person would have paid
2-53     under this chapter during that period under the tax rates
2-54     prescribed by Section 202.052, as that section exists on September
2-55     1, 2004.
2-56           (b)  To receive the credit, the person must apply to the
2-57     comptroller for the credit on or after September 1, 2004, and not
2-58     later than the expiration of the applicable period for filing a tax
2-59     refund under Section 111.104.
2-60           SECTION 1.05.  (a)  Sections 1.01 through 1.04 of this Act
2-61     takes effect September 1, 2004.  This section takes effect
2-62     September 1, 2001.
2-63           (b)  Beginning September 1, 2001, the comptroller of public
2-64     accounts shall monitor market prices to determine the validity of
2-65     any credit applications submitted under Sections 201.0525 and
2-66     202.0525, Tax Code, as added by this Act.
2-67           (c)  As soon as practicable after the effective date of
2-68     Sections 1.01 through 1.04 of this Act, the comptroller of public
2-69     accounts shall perform the initial certification determination
 3-1     required by Sections 201.052 and 202.052, Tax Code, as amended by
 3-2     this Act.  The initial certification determination must cover the
 3-3     three-month period beginning on June 1, 2004.
 3-4           (d)  The change in law made by Sections 1.01 through 1.04 of
 3-5     this Act does not affect tax liability accruing before the
 3-6     effective date of those sections.  That liability continues in
 3-7     effect as if Sections 1.01 through 1.04 of this Act had not been
 3-8     enacted, and the former law is continued in effect for the
 3-9     collection of taxes due and for civil and criminal enforcement of
3-10     the liability for those taxes.
3-11                                  ARTICLE 2
3-12           SECTION 2.01.  Section 201.052, Tax Code, is amended to read
3-13     as follows:
3-14           Sec. 201.052.  RATE OF TAX.  (a)  The tax imposed by this
3-15     chapter is at the rate of 7.5 percent of the market value of gas
3-16     produced and saved in this state by the producer.
3-17           (b)  The minimum tax rate on sweet and sour gas produced and
3-18     saved in this state is 121/1,500 of one cent for each 1,000 cubic
3-19     feet.
3-20           SECTION 2.02.  Section 202.052, Tax Code, is amended to read
3-21     as follows:
3-22           Sec. 202.052.  RATE OF TAX.  (a)  The tax imposed by this
3-23     chapter is at the rate of 4.6 percent of the market value of oil
3-24     produced in this state or 4.6 cents for each barrel of 42 standard
3-25     gallons of oil produced in this state, whichever rate results in
3-26     the greater amount of tax.
3-27           (b)  For oil produced in this state from a new or expanded
3-28     enhanced recovery project that qualifies under Section 202.054 of
3-29     this code, the rate of the tax imposed by this Chapter is 2.3
3-30     percent of the market value of the oil.
3-31           (c)  The exemptions described by Sections 202.056 and 202.059
3-32     apply to oil produced in this state from a well that qualifies
3-33     under Section 202.056 or 202.059, subject to the certifications and
3-34     approvals required by those sections.
3-35           SECTION 2.03.  (a)  This article takes effect September 1,
3-36     2006, and applies to gas and oil produced on or after that date.
3-37     Gas and oil produced before the effective date of this article are
3-38     governed by law in effect when the gas and oil were produced, and
3-39     that law is continued in effect for that purpose.
3-40           (b)  The change in law made by this article does not affect
3-41     tax liability accruing before the effective date of this article.
3-42     That liability continues in effect as if this article had not been
3-43     enacted, and the former law is continued in effect for the
3-44     collection of taxes due and for civil and criminal enforcement of
3-45     the liability for those taxes.
3-46                                  * * * * *