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A BILL TO BE ENTITLED
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AN ACT
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relating to a sales and use tax exemption and an oil and gas |
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severance tax credit for the use of alternative base fluids in |
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energized fracturing operations; imposing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended |
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by adding Section 151.3555 to read as follows: |
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Sec. 151.3555. ALTERNATIVE BASE FLUIDS AND RELATED TANGIBLE |
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PERSONAL PROPERTY. (a) In this section, "alternative base fluids" |
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has the meaning assigned by Section 205.001. |
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(b) The following are exempted from the taxes imposed by |
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this chapter: |
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(1) the sale, use, or other consumption of alternative |
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base fluids used in connection with an energized fracturing |
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operation in an oil or gas well; and |
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(2) tangible personal property specifically used to |
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process, reuse, or recycle alternative base fluids that will be |
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used in energized fracturing work performed at an oil or gas well. |
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SECTION 2. Subtitle I, Title 2, Tax Code, is amended by |
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adding Chapter 205 to read as follows: |
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CHAPTER 205. TAX CREDIT FOR OIL AND GAS PRODUCED USING ALTERNATIVE |
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BASE FLUIDS |
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Sec. 205.001. DEFINITIONS. In this chapter: |
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(1) "Alternative base fluids" means a continuous phase |
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fluid that is used in energized fracturing operations to produce |
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oil and gas. The term includes nitrogen, carbon dioxide, and fluids |
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other than water. |
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(2) "Operator" means the person responsible for the |
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actual physical operation of an oil or gas well. |
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Sec. 205.002. CREDIT FOR USE OF ALTERNATIVE BASE |
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FLUIDS. (a) The operator of an oil or gas well is entitled to a |
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credit as provided by this chapter if the volume of alternative base |
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fluids the operator uses as a substitution for water to produce the |
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oil or gas in an energized fracturing operation is equal to at least |
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20 percent of the total volume of fluid used in the fracturing |
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operation. |
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(b) The amount of credit to which an operator is entitled |
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under this chapter is an amount equal to a percentage of the taxes |
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imposed by Chapter 201 or 202 in the absence of the credit, but |
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after any other applicable tax credits or exemptions. The |
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percentage is equal to the lesser of: |
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(1) the percentage of the total volume of the base |
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fluids used in the fracturing operation that is alternative base |
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fluids; or |
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(2) 50 percent. |
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(c) The credit is allocated to each person who bears the tax |
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under Section 201.205 or 202.156, as applicable, according to the |
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person's proportionate share in the oil or gas produced. |
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Sec. 205.003. APPLICATION. (a) To qualify for the credit |
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provided under this chapter, the person responsible for paying the |
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tax must apply to the comptroller. |
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(b) The application must include any information required |
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by the comptroller and the FracFocus.org Hydraulic Fracturing Fluid |
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Product Component Information Disclosure report documenting the |
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Maximum Ingredient Concentration in HF Fluid (% by Mass) converted |
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to volume of the alternative base fluids for energized fracturing |
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operations for oil and gas production. The volume of alternative |
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base fluids is calculated according to the normal volume that the |
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base fluids would occupy as measured at the temperature and |
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pressure conditions at the ground surface before injection into the |
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well bore. |
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Sec. 205.004. PENALTIES. (a) A person is liable to this |
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state for a civil penalty if the person makes or subscribes an |
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application, report, or other document that forms the basis for an |
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application under Section 205.003 and submits it to the comptroller |
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knowing that it contains a false or untrue material fact. The amount |
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of the penalty may not exceed the sum of: |
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(1) $10,000; and |
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(2) the amount of the credit claimed. |
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(b) The attorney general may recover a penalty under |
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Subsection (a) in a suit brought on behalf of the state. Venue for |
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the suit is in Travis County. |
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SECTION 3. The comptroller shall adopt rules necessary to |
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administer Chapter 205, Tax Code, as added by this Act, not later |
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than December 31, 2015. |
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SECTION 4. Chapter 205, Tax Code, as added by this Act |
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applies only to oil or gas produced on or after the effective date |
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of this Act. Oil or gas produced before the effective date of this |
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Act is subject to the law in effect when the oil or gas was produced, |
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and that law is continued in effect for that purpose. |
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SECTION 5. The change in law made by this Act does not |
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affect tax liability accruing before the effective date of this |
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Act. That liability continues in effect as if this Act had not been |
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enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 6. (a) Except as provided by Subsection (b) of this |
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section, this Act takes effect January 1, 2016. |
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(b) Section 3 of this Act takes effect immediately if this |
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Act receives a vote of two-thirds of all the members elected to each |
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house, as provided by Section 39, Article III, Texas Constitution. |
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If this Act does not receive the vote necessary for immediate |
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effect, Section 3 of this Act takes effect September 1, 2015. |