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A BILL TO BE ENTITLED
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AN ACT
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Relating to creating a tax severance credit for oil and gas |
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operators for use of alternative fluids in place of fresh water |
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solely in the process of hydraulic fracturing (fracking). |
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BE IT ENACTED BY THE STATE OF TEXAS: |
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Section 1. Subchapter B, Chapter 201 Tax Code, is amended by |
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adding Section 201.061 to read as follows: |
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Sec. 201.061 TAX REFUND OR CREDIT FOR USE OF ALTERNATIVE |
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FLUIDS IN HYDRAULIC FRACTURING. |
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(a) In this section: |
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(1) "Fresh water" means any surface or fresh |
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groundwater with less than 3,000 milligrams per liter total |
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dissolved solids. |
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(2) "Brackish Groundwater" means any groundwater |
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3,000 milligrams per liter or more total dissolved solids (TDS), as |
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defined by the Railroad Commission of Texas as base of |
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usable-quality groundwater. |
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(3) "Hydraulic fracturing fluid" means the fluid used |
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to hydraulically fracture a well at the time of its initial |
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completion. |
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(4) "Alternative fluid" includes brackish |
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groundwater, desalinated, recycled, municipal treated water or any |
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other technologies that may be developed as alternative to fresh |
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water. |
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(5) "Comptroller" means the Texas Comptroller of |
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Public Accounts. |
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(6) "RRC" means the Railroad Commission of Texas. |
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(b) The operator of an oil or natural gas well may apply for |
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a $50,000 per well tax credit from the taxes imposed under Title 2, |
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Chapter 201 and 202, providing the hydraulic fracturing fluid |
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consists entirely of fluids other than fresh water. |
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(c) The RRC will collect and maintain the requisite data to |
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monitor qualification for the tax credit. Specifically, the RRC |
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will append to its existing reporting requirement for newly drilled |
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wells for this optional tax credit: |
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(1) the volume of fluids used in hydraulic fracturing; |
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(2) location of source of alternative fluid, if not |
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groundwater; |
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(3) for groundwater, respondents must provide quality |
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of the groundwater expressed in TDS (parts per million of total |
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dissolved solids); and |
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(4) for groundwater, the GPS location of the source |
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well. |
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(d) Each quarter, the RRC will provide to the Comptroller a |
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list of new wells qualifying for the tax credit and identify the |
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|
operator. To receive the tax credit, the operator of the well must |
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apply to the Comptroller for the tax credit. |
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(e) The RRC by rule shall create or use a form or forum for |
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producers to certify the qualification for the credit. |
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(f) The RRC may conduct random inspections to enforce this |
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section as the RRC deems appropriate. |
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(g) Penalty for claiming a tax credit based on false |
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information supplied to the RRC which would otherwise disqualify |
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the claim will result in a penalty as deemed appropriate by RRC. |
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(h) The RRC may recognize oil and gas operators who made |
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significant progress in the use of alternative fluids. |
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(i) The tax credit will begin January 1, 2016 and by |
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December 31, 2019, the RRC will report the status of the program's |
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progress to further discuss extension of the incentive program. |
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Section 2. Subchapter B, Chapter 202 Tax Code, is amended by |
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|
adding Section 202.064 to read as follows: |
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|
Sec. 202.064 TAX REFUND OR CREDIT FOR USE OF ALTERNATIVE |
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|
FLUIDS IN HYDRAULIC FRACTURING. |
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|
(a) In this section: |
|
|
(1) "Fresh water" means any surface or fresh |
|
|
groundwater with less than 3,000 milligrams per liter total |
|
|
dissolved solids. |
|
|
(2) "Brackish Groundwater" means any groundwater |
|
|
3,000 milligrams per liter or more total dissolved solids (TDS), as |
|
|
defined by the Railroad Commission of Texas as base of |
|
|
usable-quality groundwater. |
|
|
(3) "Hydraulic fracturing fluid" means the fluid used |
|
|
to hydraulically fracture a well at the time of its initial |
|
|
completion. |
|
|
(4) "Alternative fluid" includes brackish |
|
|
groundwater, desalinated, recycled, municipal treated water or any |
|
|
other technologies that may be developed as alternative to fresh |
|
|
water. |
|
|
(5) "Comptroller" means the Texas Comptroller of |
|
|
Public Accounts. |
|
|
(6) "RRC" means the Railroad Commission of Texas. |
|
|
(b) The operator of an oil or natural gas well may apply for |
|
|
a $50,000 per well tax credit from the taxes imposed under Title 2, |
|
|
Chapter 201 and 202, providing the hydraulic fracturing fluid |
|
|
consists entirely of fluids other than fresh water. |
|
|
(c) The RRC will collect and maintain the requisite data to |
|
|
monitor qualification for the tax credit. Specifically, the RRC |
|
|
will append to its existing reporting requirement for newly drilled |
|
|
wells for this optional tax credit: |
|
|
(1) the volume of fluids used in hydraulic fracturing; |
|
|
(2) location of source of alternative fluid, if not |
|
|
groundwater; |
|
|
(3) for groundwater, respondents must provide quality |
|
|
of the groundwater expressed in TDS (parts per million of total |
|
|
dissolved solids); and |
|
|
(4) for groundwater, the GPS location of the source |
|
|
well. |
|
|
(d) Each quarter, the RRC will provide to the Comptroller a |
|
|
list of new wells qualifying for the tax credit and identify the |
|
|
operator. To receive the tax credit, the operator of the well must |
|
|
apply to the Comptroller for the tax credit. |
|
|
(e) The RRC by rule shall create or use a form or forum for |
|
|
producers to certify the qualification for the credit. |
|
|
(f) The RRC may conduct random inspections to enforce this |
|
|
section as the RRC deems appropriate. |
|
|
(g) Penalty for claiming a tax credit based on false |
|
|
information supplied to the RRC which would otherwise disqualify |
|
|
the claim will result in a penalty as deemed appropriate by RRC. |
|
|
(h) The RRC may recognize oil and gas operators who made |
|
|
significant progress in the use of alternative fluids. |
|
|
(i) The tax credit will begin January 1, 2016 and by |
|
|
December 31, 2019, the RRC will report the status of the program's |
|
|
progress to discuss extension of the incentive program. |