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
A BILL TO BE ENTITLED
AN ACT
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.