Bill Text: TX HB2691 | 2015-2016 | 84th Legislature | Engrossed
Bill Title: Relating to a sales and use tax exemption and an oil and gas severance tax credit for the use of alternative base fluids in energized fracturing operations; imposing a civil penalty.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Engrossed - Dead) 2015-05-13 - Referred to Finance [HB2691 Detail]
Download: Texas-2015-HB2691-Engrossed.html
| 84R6819 CBH-F | ||
| By: King of Uvalde, Darby, et al. | H.B. No. 2691 | |
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| relating to a sales and use tax exemption and an oil and gas | ||
| severance tax credit for the use of alternative base fluids in | ||
| energized fracturing operations; imposing a civil penalty. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Subchapter H, Chapter 151, Tax Code, is amended | ||
| by adding Section 151.3555 to read as follows: | ||
| Sec. 151.3555. ALTERNATIVE BASE FLUIDS AND RELATED TANGIBLE | ||
| PERSONAL PROPERTY. (a) In this section, "alternative base fluids" | ||
| has the meaning assigned by Section 205.001. | ||
| (b) The following are exempted from the taxes imposed by | ||
| this chapter: | ||
| (1) the sale, use, or other consumption of alternative | ||
| base fluids used in connection with an energized fracturing | ||
| operation in an oil or gas well; and | ||
| (2) tangible personal property specifically used to | ||
| process, reuse, or recycle alternative base fluids that will be | ||
| used in energized fracturing work performed at an oil or gas well. | ||
| SECTION 2. Subtitle I, Title 2, Tax Code, is amended by | ||
| adding Chapter 205 to read as follows: | ||
| CHAPTER 205. TAX CREDIT FOR OIL AND GAS PRODUCED USING ALTERNATIVE | ||
| BASE FLUIDS | ||
| Sec. 205.001. DEFINITIONS. In this chapter: | ||
| (1) "Alternative base fluids" means a continuous phase | ||
| fluid that is used in energized fracturing operations to produce | ||
| oil and gas. The term includes nitrogen, carbon dioxide, and fluids | ||
| other than water. | ||
| (2) "Operator" means the person responsible for the | ||
| actual physical operation of an oil or gas well. | ||
| Sec. 205.002. CREDIT FOR USE OF ALTERNATIVE BASE | ||
| FLUIDS. (a) The operator of an oil or gas well is entitled to a | ||
| credit as provided by this chapter if the volume of alternative base | ||
| fluids the operator uses as a substitution for water to produce the | ||
| oil or gas in an energized fracturing operation is equal to at least | ||
| 20 percent of the total volume of fluid used in the fracturing | ||
| operation. | ||
| (b) The amount of credit to which an operator is entitled | ||
| under this chapter is an amount equal to a percentage of the taxes | ||
| imposed by Chapter 201 or 202 in the absence of the credit, but | ||
| after any other applicable tax credits or exemptions. The | ||
| percentage is equal to the lesser of: | ||
| (1) the percentage of the total volume of the base | ||
| fluids used in the fracturing operation that is alternative base | ||
| fluids; or | ||
| (2) 50 percent. | ||
| (c) The credit is allocated to each person who bears the tax | ||
| under Section 201.205 or 202.156, as applicable, according to the | ||
| person's proportionate share in the oil or gas produced. | ||
| Sec. 205.003. APPLICATION. (a) To qualify for the credit | ||
| provided under this chapter, the person responsible for paying the | ||
| tax must apply to the comptroller. | ||
| (b) The application must include any information required | ||
| by the comptroller and the FracFocus.org Hydraulic Fracturing Fluid | ||
| Product Component Information Disclosure report documenting the | ||
| Maximum Ingredient Concentration in HF Fluid (% by Mass) converted | ||
| to volume of the alternative base fluids for energized fracturing | ||
| operations for oil and gas production. The volume of alternative | ||
| base fluids is calculated according to the normal volume that the | ||
| base fluids would occupy as measured at the temperature and | ||
| pressure conditions at the ground surface before injection into the | ||
| well bore. | ||
| Sec. 205.004. PENALTIES. (a) A person is liable to this | ||
| state for a civil penalty if the person makes or subscribes an | ||
| application, report, or other document that forms the basis for an | ||
| application under Section 205.003 and submits it to the comptroller | ||
| knowing that it contains a false or untrue material fact. The amount | ||
| of the penalty may not exceed the sum of: | ||
| (1) $10,000; and | ||
| (2) the amount of the credit claimed. | ||
| (b) The attorney general may recover a penalty under | ||
| Subsection (a) in a suit brought on behalf of the state. Venue for | ||
| the suit is in Travis County. | ||
| SECTION 3. The comptroller shall adopt rules necessary to | ||
| administer Chapter 205, Tax Code, as added by this Act, not later | ||
| than December 31, 2015. | ||
| SECTION 4. Chapter 205, Tax Code, as added by this Act | ||
| applies only to oil or gas produced on or after the effective date | ||
| of this Act. Oil or gas produced before the effective date of this | ||
| Act is subject to the law in effect when the oil or gas was produced, | ||
| and that law is continued in effect for that purpose. | ||
| SECTION 5. The change in law made by this Act does not | ||
| affect tax liability accruing before the effective date of this | ||
| Act. That liability continues in effect as if this Act had not been | ||
| enacted, and the former law is continued in effect for the | ||
| collection of taxes due and for civil and criminal enforcement of | ||
| the liability for those taxes. | ||
| SECTION 6. (a) Except as provided by Subsection (b) of this | ||
| section, this Act takes effect January 1, 2016. | ||
| (b) Section 3 of this Act takes effect immediately if this | ||
| Act receives a vote of two-thirds of all the members elected to each | ||
| house, as provided by Section 39, Article III, Texas Constitution. | ||
| If this Act does not receive the vote necessary for immediate | ||
| effect, Section 3 of this Act takes effect September 1, 2015. | ||
