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A BILL TO BE ENTITLED
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AN ACT
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relating to an exemption from the severance tax for gas produced |
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from certain wells that is consumed on site and would otherwise have |
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been lawfully vented or flared. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended |
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by adding Section 201.061 to read as follows: |
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Sec. 201.061. EXEMPTION FOR GAS PRODUCED THAT WOULD |
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OTHERWISE HAVE BEEN VENTED OR FLARED. (a) In this section: |
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(1) "Commission" means the Railroad Commission of |
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Texas. |
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(2) "Qualifying well" means a well that: |
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(A) is connected to a pipeline on which pipeline |
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takeaway capacity is not expected to meet the demand for gas |
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produced from the well; |
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(B) is not connected to a pipeline and for which |
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connection to a pipeline is technically or commercially unfeasible |
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but is operated by a well operator who has contractually dedicated |
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the well, the gas produced from the well, or the land or lease on |
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which the well is located to a pipeline operator; or |
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(C) is not connected to a pipeline and is |
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operated by a well operator who has not contractually dedicated the |
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well, the gas produced from the well, or the land or lease on which |
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the well is located to a pipeline operator. |
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(3) "Well operator" means the person responsible for |
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the actual physical operation of an oil or gas well. |
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(b) Gas produced from a qualifying well that is consumed on |
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the well site and would otherwise have been lawfully vented or |
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flared is not subject to the tax imposed by this chapter. |
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(c) A well operator and a pipeline operator, as applicable, |
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may apply to the commission in the manner provided by Subsection |
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(d), (e), or (f), as applicable, for certification that a well is a |
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qualifying well. |
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(d) An application that relates to a well described by |
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Subsection (a)(2)(A) must: |
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(1) include an attestation that pipeline takeaway |
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capacity is not expected to meet the demand for gas produced from |
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the well; |
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(2) be submitted jointly by the well operator and the |
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pipeline operator; and |
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(3) certify that the commission authorized gas from |
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the well to be flared for at least 30 days during the year preceding |
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the year in which the application is filed. |
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(e) An application that relates to a well described by |
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Subsection (a)(2)(B) must: |
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(1) attest that: |
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(A) the well is not connected to a pipeline; and |
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(B) it is technically or commercially unfeasible |
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to connect the well to a pipeline; |
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(2) be submitted jointly by the well operator and the |
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pipeline operator; and |
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(3) certify that the commission authorized gas from |
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the well to be flared for at least 30 days during the year preceding |
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the year in which the application is filed. |
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(f) An application that relates to a well described by |
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Subsection (a)(2)(C) must: |
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(1) attest that the well: |
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(A) is not connected to a pipeline; and |
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(B) is operated by a well operator who has not |
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contractually dedicated the well, the gas produced from the well, |
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or the land or lease on which the well is located to a pipeline |
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operator; |
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(2) be submitted by the well operator; and |
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(3) certify that the commission authorized gas from |
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the well to be flared for at least 30 days during the year preceding |
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the year in which the application is filed. |
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(g) The commission may require an applicant described by |
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Subsection (c) to provide the commission with any information the |
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commission determines is relevant to determining whether a well is |
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a qualifying well. If the commission approves an application |
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submitted under Subsection (c), the commission shall issue a |
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certificate designating the well as a qualifying well. A |
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certificate issued under this subsection expires one year after the |
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date on which the commission issues the certificate. |
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(h) A well described by Subsection (a)(2)(A) for which the |
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commission issues a certificate under Subsection (g) must use all |
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available pipeline takeaway capacity before consuming gas on the |
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well site and receiving an exemption under this section. |
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(i) To qualify for the exemption provided by this section, |
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the person responsible for paying the tax imposed by this chapter |
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must apply to the comptroller. The application must contain the |
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certificate issued by the commission under Subsection (g). The |
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comptroller may require a person applying for the exemption to |
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provide any additional information the comptroller determines is |
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relevant to determining whether the gas is eligible for the |
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exemption. |
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(j) The commission, well operator, or pipeline operator |
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shall notify the comptroller in writing immediately if a well |
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certified under this section is no longer a qualifying well. |
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(k) The commission and the comptroller may adopt rules |
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necessary to implement and administer this section. |
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SECTION 2. 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 3. This Act takes effect September 1, 2023. |