Bill Text: TX SB256 | 2023-2024 | 88th Legislature | Introduced

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Bill Title: Relating to the applicability of the gas production tax to flared or vented gas at an increased rate.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2023-02-15 - Referred to Finance [SB256 Detail]

Download: Texas-2023-SB256-Introduced.html

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88R836 BEF-D
By: Eckhardt S.B. No. 256

A BILL TO BE ENTITLED
AN ACT
relating to the applicability of the gas production tax to flared or
vented gas at an increased rate.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 201.052, Tax Code, is amended to read as
follows:
Sec. 201.052. RATES [RATE] OF TAX. [(a)] The tax imposed
by this chapter is at the rate of:
(1) 7.5 percent of the market value of gas produced and
saved in this state by the producer; and
(2) 25 percent of the market value of gas produced and
flared or vented in this state by the producer.
SECTION 2. Section 201.053, Tax Code, is amended to read as
follows:
Sec. 201.053. GAS NOT TAXED. The tax imposed by this
chapter does not apply to gas:
(1) injected into the earth in this state, unless sold
for that purpose;
(2) [produced from oil wells with oil and lawfully
vented or flared;
[(3)] used for lifting oil, unless sold for that
purpose; or
(3) [(4)] produced in this state from a well that
qualifies under Section 202.056 or 202.060, except as provided by
Section 201.062.
SECTION 3. Section 201.054(b), Tax Code, is amended to read
as follows:
(b) The rate of the tax imposed by this section is the same
as the rate of the tax imposed by Section 201.052(1) [201.052 of
this code].
SECTION 4. Section 201.057(c), Tax Code, is amended to read
as follows:
(c) High-cost gas produced from a well that is spudded or
completed after August 31, 1996, is entitled to a reduction of the
tax imposed by this chapter for the first 120 consecutive calendar
months beginning on the first day of production, or until the
cumulative value of the tax reduction equals 50 percent of the
drilling and completion costs incurred for the well, whichever
occurs first. The amount of tax reduction shall be computed by
subtracting from the tax rate imposed by Section 201.052(1)
[201.052] the product of that tax rate times the ratio of drilling
and completion costs incurred for the well to twice the median
drilling and completion costs for high-cost wells spudded or
completed during the previous state fiscal year, except that the
effective rate of tax may not be reduced below zero.
SECTION 5. Subchapter B, Chapter 201, Tax Code, is amended
by adding Sections 201.061 and 201.062 to read as follows:
Sec. 201.061. ANNUAL EXEMPTION FOR FLARED OR VENTED GAS.
(a) Each calendar year, a producer is entitled to an exemption from
the tax imposed at the rate provided by Section 201.052(2).
(b) The exemption applies to gas produced and flared or
vented in this state by the producer during a calendar year in an
amount equal to, at the producer's election:
(1) 1,000 mcf; or
(2) 0.005 percent of the total amount of gas produced
in this state by the producer during the calendar year.
(c) The comptroller by rule shall provide procedures for a
producer to claim the exemption, including electing an amount under
Subsection (b) and allocating the amount among all gas produced and
flared or vented by the producer during a calendar year.
(d) The exemption under this section may not be transferred
to another producer or calendar year.
Sec. 201.062. APPLICABILITY OF CERTAIN PROVISIONS TO FLARED
OR VENTED GAS. Notwithstanding any other law including Section
201.058(a), Sections 201.057, 201.059, 202.056, 202.057, and
202.060 do not apply to gas that is flared or vented and may not be
used to reduce any amount of tax imposed at the rate provided by
Section 201.052(2).
SECTION 6. Sections 201.101(a) and (c), Tax Code, are
amended to read as follows:
(a) Except as provided by Section 201.1011, the [The] market
value of gas is its value at the mouth of the well from which it is
produced. The value of gas at the mouth of the well is determined by
ascertaining the producer's actual marketing costs and subtracting
those costs from the producer's gross cash receipts from the sale of
the gas.
(c) Marketing costs do not include:
(1) costs incurred in producing the gas;
(2) costs incurred in normal lease separation of the
oil or condensate; [or]
(3) insurance premiums on the marketing facility;
(4) the value of gas that is flared or vented; or
(5) any cost associated with flaring or venting gas.
SECTION 7. Subchapter C, Chapter 201, Tax Code, is amended
by adding Section 201.1011 to read as follows:
Sec. 201.1011. MARKET VALUE OF FLARED OR VENTED GAS. (a)
The market value of flared or vented gas is equal to the amount
determined under Subsection (b) for the month in which the gas is
produced.
(b) The comptroller shall determine the average cash value
at the mouth of the well for all gas produced and saved in this state
during each month, with no deduction for marketing costs. The
comptroller shall publish the amount determined on the
comptroller's Internet website.
(c) The comptroller may determine an amount under
Subsection (b) using a price index or other available statistical
data.
SECTION 8. Section 201.151, Tax Code, is amended to read as
follows:
Sec. 201.151. PRODUCER'S RECORDS. (a) A producer shall
keep accurate records of all gas the producer produces, including
the amount of gas produced and saved and the amount of gas produced
and flared or vented.
(b) The records shall be kept in the state.
SECTION 9. Section 201.201, Tax Code, is amended to read as
follows:
Sec. 201.201. TAX DUE. The tax imposed by this chapter for
gas produced [and saved] is due at the office of the comptroller in
Austin on the 20th day of the second month following the month of
production.
SECTION 10. Section 201.203(a), Tax Code, is amended to
read as follows:
(a) On or before the 20th day of the second month following
the month in which gas was produced, the producer shall file a
report with the comptroller on forms prescribed by the comptroller.
The report must contain the following information concerning gas
produced during the month being reported:
(1) the gross amount of gas produced that is subject to
the tax imposed by this chapter, including separate statements of
the amount of gas produced and saved and the amount of gas produced
and flared or vented;
(2) the leases from which the gas was produced;
(3) the names and addresses of the first purchasers of
the gas, if applicable; and
(4) other information the comptroller may reasonably
require.
SECTION 11. Section 202.056(h), Tax Code, is amended to
read as follows:
(h) If the tax is paid at the full rate provided by Section
201.052 [201.052(a)] or 202.052(a) before the comptroller approves
an application for an exemption provided for in this chapter, the
operator is entitled to a credit against taxes imposed by this
chapter in an amount equal to the tax paid. To receive a credit, the
operator must apply to the comptroller for the credit before the
expiration of the applicable period for filing a tax refund claim
under Section 111.104.
SECTION 12. Section 202.057(d), Tax Code, is amended to
read as follows:
(d) If the tax is paid at the full rate provided by Section
201.052 [201.052(a) or (b)] or Section 202.052(a) or (b) before the
comptroller approves an application for an exemption provided in
this chapter, the operator is entitled to a credit against taxes
imposed by this chapter in an amount equal to 50 percent of the tax
paid on the incremental production. To receive the credit, the
operator must apply to the comptroller for the credit not later than
the first anniversary after the date the commission certifies the
incremental ratio for a qualifying lease.
SECTION 13. The changes in law made by this Act do 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 14. This Act takes effect September 1, 2023.