| 1 | 1 | | 84R16466 SMH-F |
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| 2 | 2 | | By: Bonnen of Brazoria H.B. No. 1946 |
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| 3 | 3 | | Substitute the following for H.B. No. 1946: |
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| 4 | 4 | | By: Button C.S.H.B. No. 1946 |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to the appraisal for ad valorem tax purposes of a real |
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| 10 | 10 | | property interest in oil or gas in place. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Section 23.175(a), Tax Code, is amended to read |
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| 13 | 13 | | as follows: |
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| 14 | 14 | | (a) If a real property interest in oil or gas in place is |
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| 15 | 15 | | appraised by a method that takes into account the future income from |
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| 16 | 16 | | the sale of oil or gas to be produced from the interest, the method |
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| 17 | 17 | | must use the average price of the oil or gas from the interest for |
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| 18 | 18 | | the preceding calendar year multiplied by a price adjustment factor |
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| 19 | 19 | | as the price at which the oil or gas produced from the interest is |
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| 20 | 20 | | projected to be sold in the current year of the appraisal. The |
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| 21 | 21 | | average price for the preceding calendar year is calculated by |
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| 22 | 22 | | dividing the sum of the monthly average prices for which oil and gas |
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| 23 | 23 | | from the interest was selling during each month of the preceding |
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| 24 | 24 | | calendar year by 12. If there was no production of oil or gas from |
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| 25 | 25 | | the interest during any month of the preceding calendar year, the |
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| 26 | 26 | | average price for which similar oil and gas from comparable |
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| 27 | 27 | | interests was selling during that month is to be used. Except as |
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| 28 | 28 | | otherwise provided by this subsection, the [The] chief appraiser |
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| 29 | 29 | | shall calculate the price adjustment factor by dividing the spot |
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| 30 | 30 | | price of West Texas Intermediate [imported low-sulfur light] crude |
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| 31 | 31 | | oil in nominal dollars per barrel or the spot price of natural gas |
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| 32 | 32 | | at the Henry Hub in nominal dollars per million British thermal |
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| 33 | 33 | | units, as applicable, as projected for the current calendar year by |
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| 34 | 34 | | the United States Energy Information Administration in the most |
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| 35 | 35 | | recently published edition [Early Release Overview] of the Annual |
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| 36 | 36 | | Energy Outlook by the spot price of West Texas Intermediate |
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| 37 | 37 | | [imported low-sulfur light] crude oil in nominal dollars per barrel |
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| 38 | 38 | | or the spot price of natural gas at the Henry Hub in nominal dollars |
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| 39 | 39 | | per million British thermal units, as applicable, for the preceding |
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| 40 | 40 | | calendar year as stated in the same report. If as of March 1 of the |
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| 41 | 41 | | current calendar year the most recently published edition of the |
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| 42 | 42 | | Annual Energy Outlook was published before December 1 of the |
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| 43 | 43 | | preceding calendar year, the chief appraiser shall use the |
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| 44 | 44 | | projected current and preceding calendar year spot price of West |
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| 45 | 45 | | Texas Intermediate crude oil in nominal dollars per barrel or the |
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| 46 | 46 | | spot price of natural gas at the Henry Hub in nominal dollars per |
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| 47 | 47 | | million British thermal units, as applicable, as stated in the |
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| 48 | 48 | | Short-Term Energy Outlook report published in January of the |
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| 49 | 49 | | current calendar year by the United States Energy Information |
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| 50 | 50 | | Administration in the price adjustment factor calculations. The |
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| 51 | 51 | | price for the interest used in the second through the sixth calendar |
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| 52 | 52 | | year of the appraisal may not reflect an annual escalation or |
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| 53 | 53 | | de-escalation rate that exceeds the average annual percentage |
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| 54 | 54 | | change from 1982 to the most recent year for which the information |
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| 55 | 55 | | is available in the producer price index for domestically produced |
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| 56 | 56 | | petroleum or for natural gas, as applicable, as published by the |
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| 57 | 57 | | Bureau of Labor Statistics of the United States Department of |
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| 58 | 58 | | Labor. The price for the interest used in the sixth calendar year |
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| 59 | 59 | | of the appraisal must be used in each subsequent year of the |
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| 60 | 60 | | appraisal. |
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| 61 | 61 | | SECTION 2. This Act applies only to the appraisal for ad |
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| 62 | 62 | | valorem tax purposes of a real property interest in oil or gas in |
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| 63 | 63 | | place for a tax year beginning on or after the effective date of |
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| 64 | 64 | | this Act. |
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| 65 | 65 | | SECTION 3. This Act takes effect January 1, 2016. |
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