Bill Text: TX HB3554 | 2015-2016 | 84th Legislature | Comm Sub
Bill Title: Relating to an oil and gas severance tax credit for the use of incremental production increase techniques.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2015-05-11 - Committee report sent to Calendars [HB3554 Detail]
Download: Texas-2015-HB3554-Comm_Sub.html
84R27699 CJC-F | |||
By: Dale | H.B. No. 3554 | ||
Substitute the following for H.B. No. 3554: | |||
By: Dale | C.S.H.B. No. 3554 |
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relating to an oil and gas severance tax credit for the use of | ||
incremental production increase techniques. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. 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 INCREMENTAL | ||
PRODUCTION INCREASE TECHNIQUE | ||
Sec. 205.001. DEFINITIONS. In this chapter: | ||
(1) "Baseline production" means: | ||
(A) for an existing gas well, the average monthly | ||
production from that well for the four highest months of production | ||
during the calendar year preceding the year in which an incremental | ||
production increase technique is implemented; and | ||
(B) for an oil well, the average monthly | ||
production from the lease on which that well is located for the four | ||
highest months of production during the calendar year preceding the | ||
year in which an incremental production increase technique is | ||
implemented. | ||
(2) "Commission" means the Railroad Commission of | ||
Texas. | ||
(3) "Enhanced incremental production increase" means | ||
an incremental production increase from an oil or gas well or lease | ||
that constitutes an increase in production of at least 25 percent | ||
over baseline production from that well or lease each month for a | ||
period of at least four months and that results from the | ||
implementation of an incremental production increase technique. | ||
(4) "Incremental production increase" means | ||
production from an oil or gas well or lease in excess of baseline | ||
production. | ||
(5) "Incremental production increase technique" means | ||
a chemical, mechanical, or operational addition to a fracture | ||
stimulation, acidization, or any other recognized well completion | ||
process that has a cost of at least $50,000, as determined by the | ||
commission, and that results in an incremental production increase | ||
from an oil or gas well or lease. | ||
(6) "Operator" means the person responsible for the | ||
actual physical operation of an oil or gas well or lease. | ||
Sec. 205.002. CERTIFICATION OF ENHANCED INCREMENTAL | ||
PRODUCTION INCREASE BY COMMISSION. (a) Subject to Subsection (d), | ||
an operator may request that the commission certify: | ||
(1) that an incremental production increase technique | ||
implemented by the operator has resulted in an enhanced incremental | ||
production increase from the oil or gas well or lease; and | ||
(2) the cost to the operator to implement the | ||
incremental production increase technique described by Subdivision | ||
(1). | ||
(b) The commission may require an operator seeking | ||
certification by the commission under this section to provide to | ||
the commission any information the commission considers necessary | ||
to make the certification under Subsection (a). | ||
(c) Subject to Subsection (e), the commission shall issue a | ||
certificate to the operator of an oil or gas well or lease if the | ||
commission determines that an incremental production increase | ||
technique implemented by the operator has resulted in an enhanced | ||
incremental production increase from the oil or gas well or lease. | ||
The certificate must state the amount of the enhanced incremental | ||
production increase attributable to the incremental production | ||
increase technique and the cost to the operator to implement the | ||
incremental production increase technique. | ||
(d) An operator may not request a certificate under this | ||
section before the first anniversary of the date on which the period | ||
of the enhanced incremental production increase for which the | ||
operator is seeking certification ends. | ||
(e) The commission may not issue a certificate under this | ||
section until 18 months have elapsed after the date on which the | ||
period of the enhanced incremental production increase for which | ||
the operator is seeking certification ends. | ||
(f) A determination made by the commission under this | ||
section is final and not appealable. | ||
Sec. 205.003. TAX CREDIT. (a) Subject to Subsection (d), | ||
the operator of an oil or gas well who is issued a certificate under | ||
Section 205.002 is entitled to a credit against the tax imposed | ||
under Chapter 201 or 202, as applicable, on oil or gas produced from | ||
that well. | ||
(b) Subject to Subsection (c), the total amount of the | ||
credit to which an operator is entitled under this chapter is equal | ||
to the lesser of: | ||
(1) an amount equal to 50 percent of the taxes paid by | ||
the operator on the amount of the enhanced incremental production | ||
increase stated in the certificate issued to the operator by the | ||
commission, at the rate provided by Section 201.052 or 202.052, as | ||
applicable; | ||
(2) $100,000; or | ||
(3) the operator's total cost of implementation of an | ||
incremental production increase technique for which the operator | ||
has been issued a certificate under Section 205.002. | ||
(c) An operator may not claim an amount of the credit on a | ||
report that exceeds the amount of tax due on the report. Any unused | ||
amount of the credit may be carried forward and claimed on | ||
subsequent reports until the credit amount is exhausted. | ||
(d) The total amount of tax credits that the comptroller may | ||
award under this section in a state fiscal year is $10 million. The | ||
comptroller by rule shall prescribe procedures by which the | ||
comptroller may allocate credits under this chapter. The | ||
procedures must provide that credits are allocated on a first-come, | ||
first-served basis, based on the date of an operator's | ||
certification under Section 205.002. | ||
Sec. 205.004. APPLICATION. (a) To qualify for the credit | ||
provided under this chapter, the person responsible for paying the | ||
tax must apply to the comptroller. The application must be filed | ||
not later than the first anniversary of the date the commission | ||
issues a certificate to an operator under Section 205.002. | ||
(b) The application must include a copy of the certificate | ||
issued by the commission under Section 205.002 and any other | ||
information required by the comptroller. | ||
SECTION 2. The comptroller of public accounts and the | ||
Railroad Commission of Texas shall adopt rules necessary to | ||
administer Chapter 205, Tax Code, as added by this Act, not later | ||
than December 31, 2015. | ||
SECTION 3. The credit authorized by 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 4. 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 5. (a) Except as provided by Subsection (b) of this | ||
section, this Act takes effect January 1, 2016. | ||
(b) Section 2 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 2 of this Act takes effect September 1, 2015. |