Texas Senate Bill SB1293

Texas 2021 - 87th Regular

Caption

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

Impact

The changes introduced by SB1293 are expected to encourage natural gas producers in Texas to adopt practices that reduce flaring and venting, helping to mitigate the environmental impact associated with these activities. Furthermore, the bill offers an annual exemption from the flared or vented gas tax for producers, either up to 1,000 mcf or 0.005% of their total gas production per year. This exemption provides a degree of flexibility and support for producers while maintaining pressure to reduce flaring and venting overall.

Summary

SB1293 amends the Texas Tax Code regarding the applicability of the gas production tax specifically to flared and vented gas. The bill establishes a significantly higher tax rate of 25% on the market value of gas that is flared or vented in comparison to the 7.5% tax on gas that is produced and saved. This approach aims to incentivize producers to minimize wasteful flaring and venting practices, thereby promoting more environmentally responsible gas production methods.

Contention

There are notable points of contention regarding the implementation of SB1293. Opponents of the bill may argue that the increased tax burden on flared and vented gas could disproportionately affect smaller producers or those operating in higher-cost environments, potentially reducing their competitiveness. Furthermore, concerns may arise about the adequacy of existing market infrastructure to handle increased regulatory requirements stemming from these tax adjustments. Overall, the legislation represents a significant shift in the regulatory landscape related to gas production in Texas.