DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 461 Reengrossed 2017 Regular Session Bishop
Abstract: Establishes 10 year severance tax rate reductions for production from an inactive or
orphan oil and gas well from July 1, 2018, through June 30, 2023, with production from an
inactive well subject to a severance tax rate of 50% of the normal rate, and production from
an orphan well subject to a severance tax rate of 75% of the normal rate.
Present law authorizes a five year exemption from severance tax for production from oil and gas
wells that are returned to service after being inactive for two or more years or having thirty days or
less of production during the past two years (inactive well), effective July 1, 2006, through June 30,
2010.
Present law provides for a severance tax rate on oil and gas production of 12%.
Proposed law changes present law by changing the incentive for production from an inactive well
from a five year exemption to a 50% rate reduction for 10 years, and by establishing a new effective
period beginning July 1, 2018, through June 30, 2023.
Proposed law establishes an incentive for production from a well with orphan well designation for
at least 60 months. Production would be taxed at 75% of the normal rate for 10 years, effective for
the period from July 1, 2018, through June 30, 2023.
(Amends R.S. 47:633(7)(c)(iv))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Add a limit on the duration of the exemptions, July 1, 2018, through June 30, 2022.
2. Add technical changes regarding administration.
The House Floor Amendments to the engrossed bill:
1. Change the expiration date from June 30, 2022 to June 30, 2023. 2. Add technical changes clarifying that the incentive is a special rate.