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A BILL TO BE ENTITLED
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AN ACT
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relating to the capture, use, and geologic sequestration of |
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anthropogenic carbon dioxide. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 11.31(b), Tax Code, is amended to read as |
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follows: |
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(b) In this section, "facility, device, or method for the |
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control of air, water, or land pollution" means land that is |
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acquired after January 1, 1994, or any structure, building, |
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installation, excavation, machinery, equipment, or device, and any |
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attachment or addition to or reconstruction, replacement, or |
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improvement of that property, that is used, constructed, acquired, |
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or installed wholly or partly to meet or exceed rules or regulations |
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adopted by any environmental protection agency of the United |
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States, this state, or a political subdivision of this state for the |
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prevention, monitoring, control, or reduction of air, water, or |
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land pollution. Whether or not carbon dioxide is considered a |
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pollutant, the term includes property that is used, constructed, |
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acquired, or installed wholly or partly to capture carbon dioxide |
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from an anthropogenic source that is used in an enhanced recovery |
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project for which a producer of oil receives a severance tax |
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exemption under Section 202.0545, or that is geologically |
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sequestered. This section does not apply to a motor vehicle. |
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SECTION 2. Subchapter B, Chapter 202, Tax Code, is amended |
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by adding Section 202.0545 to read as follows: |
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Sec. 202.0545. TAX EXEMPTION FOR ENHANCED RECOVERY PROJECTS |
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USING ANTHROPOGENIC CARBON DIOXIDE. (a) Subject to the |
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limitations provided by this section, the producer of oil recovered |
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through an enhanced oil recovery project that qualifies under |
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Section 202.054 for the recovered oil tax rate provided by Section |
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202.052(b) is entitled to an additional 50 percent reduction in |
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that tax rate if in the recovery of the oil the enhanced oil |
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recovery project uses carbon dioxide that: |
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(1) is captured from an anthropogenic source; |
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(2) would otherwise be released into the atmosphere as |
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industrial emission; |
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(3) is measurable at the source of capture; and |
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(4) is sequestered in one or more geological |
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formations following the enhanced oil recovery process; |
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(b) In the event that a portion of the carbon dioxide used in |
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the enhanced oil recovery project is anthropogenic carbon dioxide |
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that satisfies the criteria of Subsection (a) and a portion of the |
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carbon dioxide used in the project fails to satisfy the criteria of |
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Subsection (a) because it is not anthropogenic, the tax reduction |
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provided by Subsection (a) shall be reduced to reflect the |
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proportion of the carbon dioxide used in the project that satisfies |
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the criteria of Subsection (a). |
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(c) To qualify for the tax rate reduction under this |
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section, the operator must apply to the comptroller for the |
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reduction and include with the application any information and |
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documentation that the comptroller may require. |
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(d) To qualify for the tax rate reduction under this |
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Section, the operator must apply for a certification from the |
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agency or agencies responsible, under the federal Safe Drinking |
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Water Act, for the regulation of underground injection of the |
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carbon dioxide to be sequestered pursuant to Subsection (a)(4). |
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The agency or agencies must certify, based on substantial evidence, |
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that there is a reasonable expectation that: |
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(1) the operator's planned sequestration program will |
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assure that at least 99% of the carbon dioxide sequestered as |
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required by Subsection (a)(4) will remain sequestered for at least |
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1000 years; and |
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(2) the operator's planned sequestration program will |
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include appropriately designed monitoring and verification |
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measures that will be employed for a period of time sufficient to |
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demonstrate whether or not the sequestration program is performing |
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as expected. |
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(e) The tax rate reduction shall not apply if the operator's |
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sequestration program or the operator's monitoring and |
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verification measures differs substantially from the planned |
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program as described in Subsection (d), and the operator shall |
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refund the difference between the tax paid on oil produced pursuant |
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to this Section and the tax that would have applied in the absence |
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of this Section. |
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(f) The comptroller shall approve the application if the |
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operator submits the certification or certifications required by |
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Subsection (d) and if the comptroller determines that the oil is |
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otherwise eligible under this section. |
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(g) If, before the comptroller approves an application for |
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the tax rate reduction under this section, the tax imposed by this |
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chapter is paid at the rate provided by Section 202.052(a) or (b) on |
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oil that qualifies under this section, the producer or producers of |
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the oil are entitled to a credit against taxes imposed by this |
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chapter in an amount equal to the difference between the tax paid on |
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the oil and the tax due on the oil after the rate reduction under |
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this section is applied. The credit is allowed to each producer |
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according to the producer's proportionate share in the oil. To |
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receive a credit, one or more of the producers of the oil must apply |
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to the comptroller for the credit not later than the first |
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anniversary of the date the oil is produced. |
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(h) The comptroller may enact rules and establish |
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procedures to implement and administer this section. |
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(i) The Railroad Commission may enact rules and establish |
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procedures to implement and administer this section. |
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(j) The Texas Commission on Environmental Quality may enact |
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rules and establish procedures to implement and administer this |
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section. |
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SECTION 3. (a) Except as provided by Subsection (b) of this |
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section, this Act takes effect September 1, 2007. |
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(b) Section 1 of this Act takes effect January 1, 2008. |