79R7404 KLA-D

By:  Keffer of Eastland                                           H.B. No. 1766



A BILL TO BE ENTITLED

AN ACT

relating to exemptions from and reductions to the gas production 
tax.       
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  The heading to Section 201.058, Tax Code, is 
amended to read as follows:
	Sec. 201.058.  TAX EXEMPTIONS AND REDUCTIONS.                           
	SECTION 2.  Section 201.058, Tax Code, is amended by 
amending Subsection (b) and adding Subsections (a-1), (c), and (d) 
to read as follows:
	(a-1)  In this section, "commission" means the Railroad 
Commission of Texas.
	(b)  Operators increasing production by marketing gas from 
an oil well or lease that has been released into the air for six [12] 
months or more pursuant to the rules of the commission shall be 
entitled to an exemption from the tax imposed by this chapter on the 
production resulting from the marketing of such gas for the life of 
the well or lease.
	(c)  An operator that increases production by gathering and 
marketing gas from a well or lease that has been released into the 
air pursuant to the rules of the commission is entitled to an 
exemption from the tax imposed by this chapter on the production 
resulting from the marketing of the gas.  The operator is entitled 
to the exemption for the life of the well or lease.
	(d)  An operator that increases production by gathering and 
marketing gas from a well or lease that is subject to release into 
the air pursuant to the rules of the commission because of the 
capital costs associated with gathering the gas is entitled to a 
reduction of the tax imposed by this chapter on the production 
resulting from the marketing of the gas.  The operator is entitled 
to the reduction of the tax for the first 120 consecutive calendar 
months beginning on the first day of production, or until the 
cumulative value of the tax reduction equals 75 percent of the 
capital costs incurred for the gathering and marketing of the gas, 
whichever occurs first.
	SECTION 3.  Section 201.058, Tax Code, as amended by this 
Act, applies only to an operator that increases production by 
marketing gas that is initially marketed on or after the effective 
date of this Act.  An operator that increases production by 
marketing gas that is initially marketed before the effective date 
of this Act is governed by the law in effect on the date the operator 
began marketing the gas, and the former law is continued in effect 
for that purpose.
	SECTION 4.  This Act takes effect September 1, 2005.