Texas 2019 - 86th Regular

Texas House Bill HB3067 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	86R5507 CBH/JXC-F
2	2	By: Ashby H.B. No. 3067
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to an oil and gas production tax credit for oil and gas
8	8	producers that provide produced water for recycling.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subtitle I, Title 2, Tax Code, is amended by
11	11	adding Chapter 207 to read as follows:
12	12	CHAPTER 207. TAX CREDIT FOR PROVIDING PRODUCED WATER TO BE RECYCLED
13	13	Sec. 207.0001. DEFINITIONS. In this chapter:
14	14	(1) "Permit holder" means a person who holds all
15	15	federal and state permits required to recycle produced water so
16	16	that the water may be discharged into or adjacent to water in the
17	17	state.
18	18	(2) "Produced water" means water produced in oil or
19	19	gas drilling, completion, flowback, or production.
20	20	(3) "Producer" has the meaning assigned by Section
21	21	201.001 or 202.001, as appropriate.
22	22	(4) "Railroad commission" means the Railroad
23	23	Commission of Texas.
24	24	(5) "Water in the state" has the meaning assigned by
25	25	Section 26.001, Water Code.
26	26	Sec. 207.0002. TAX CREDIT. (a) A producer is entitled to a
27	27	credit against the tax imposed under Chapter 201 or 202, as
28	28	applicable, in the amount and under the conditions and limitations
29	29	provided by this chapter if:
30	30	(1) the producer provides to a permit holder produced
31	31	water that has a total dissolved solids concentration of more than
32	32	90,000 milligrams per liter;
33	33	(2) the permit holder recycles the produced water so
34	34	that the water may be discharged into or adjacent to water in the
35	35	state or sold, regardless of whether the water is actually
36	36	discharged or is sold, and complies with any federal and state
37	37	permit requirements for recycling the produced water; and
38	38	(3) the resulting fresh water meets standards for
39	39	discharge into water in the state under the federal National
40	40	Pollutant Discharge Elimination System program and the permit
41	41	holder complies with any state or federal requirements for testing
42	42	and reporting the quality of the water before discharge.
43	43	(b) Except as provided by Section 207.0003, the total amount
44	44	of the credit under this chapter for a reporting period is computed
45	45	by:
46	46	(1) determining the total number of barrels of
47	47	produced water described by Subsection (a) provided to a permit
48	48	holder during the reporting period that is subsequently recycled
49	49	during that period;
50	50	(2) multiplying the number of barrels determined under
51	51	Subdivision (1) by the monthly average closing price of a barrel of
52	52	West Texas Intermediate crude oil as recorded on the New York
53	53	Mercantile Exchange (NYMEX); and
54	54	(3) multiplying the amount determined under
55	55	Subdivision (2) by:
56	56	(A) 3.75 percent if the credit is claimed under
57	57	Chapter 201; or
58	58	(B) 2.3 percent if the credit is claimed under
59	59	Chapter 202.
60	60	(c) Produced water provided to a permit holder may be
61	61	counted only once in determining the amount of a credit. Only one
62	62	producer may claim a credit for the same produced water.
63	63	Sec. 207.0003. LIMITATION ON CREDIT AMOUNT. (a) Except as
64	64	provided by Subsection (b), the total amount of credits that may be
65	65	claimed under this chapter each state fiscal year may not exceed $25
66	66	million.
67	67	(b) If in the first year of a state fiscal biennium the
68	68	amount claimed under this chapter is less than $25 million, the
69	69	amount of credits that may be claimed in the second year of the
70	70	state fiscal biennium is equal to the sum of:
71	71	(1) $25 million; and
72	72	(2) the difference between $25 million and the amount
73	73	of credits claimed in the first state fiscal year.
74	74	(c) Each month, the comptroller shall post on the
75	75	comptroller's Internet website the amount of unclaimed credit
76	76	remaining for the state fiscal year.
77	77	(d) The comptroller by rule shall prescribe procedures by
78	78	which the comptroller may allocate credits if the limit prescribed
79	79	by Subsection (a) is reached before the end of the state fiscal
80	80	year.
81	81	Sec. 207.0004. PERMIT HOLDER REQUIREMENTS; MONTHLY REPORT.
82	82	The railroad commission shall adopt a registration process for
83	83	permit holders who participate in the program established by this
84	84	chapter. Each registered permit holder shall submit to the
85	85	railroad commission a monthly report that includes, for the
86	86	preceding month:
87	87	(1) the metered volume in gallons of produced water
88	88	the permit holder received from each producer and recycled;
89	89	(2) the total dissolved solids concentration of the
90	90	produced water received from each producer before recycling; and
91	91	(3) the volume of recycled water discharged into water
92	92	in the state or sold.
93	93	Sec. 207.0005. CERTIFICATION. (a) To be eligible for the
94	94	credit under this chapter, the producer must apply to the railroad
95	95	commission for certification that:
96	96	(1) the producer has, during the reporting period,
97	97	provided to a permit holder produced water that has a total
98	98	dissolved solids concentration of more than 90,000 milligrams per
99	99	liter; and
100	100	(2) the permit holder recycled the water during the
101	101	reporting period.
102	102	(b) The producer shall include with the certificate
103	103	application any information the railroad commission determines is
104	104	necessary to certify eligibility for the credit and the amount of
105	105	the credit, including information sufficient for the railroad
106	106	commission to identify:
107	107	(1) the metered volume in gallons of produced water
108	108	provided to a permit holder for which the producer intends to claim
109	109	a credit; and
110	110	(2) the total dissolved solids concentration of that
111	111	metered volume of produced water.
112	112	(c) The railroad commission shall consider the information
113	113	provided by the permit holder under Section 207.0004 in determining
114	114	whether to certify eligibility for the credit and the amount of the
115	115	credit.
116	116	(d) If the producer and permit holder provide sufficient
117	117	information under this section and Section 207.0004, the railroad
118	118	commission shall issue a certificate of eligibility to the
119	119	producer. The certificate must include:
120	120	(1) the information the permit holder is required to
121	121	provide under Section 207.0004; and
122	122	(2) the information the producer is required to
123	123	provide under Subsection (b) of this section.
124	124	(e) The railroad commission shall immediately notify the
125	125	comptroller in writing if the railroad commission:
126	126	(1) determines that a producer that previously
127	127	received a certificate under this section was not eligible for the
128	128	certified credit or is no longer eligible to receive the certified
129	129	credit; or
130	130	(2) takes any action or discovers any information that
131	131	affects the eligibility of the producer for a credit.
132	132	Sec. 207.0006. APPLICATION. (a) To claim the credit under
133	133	this chapter, the person responsible for paying the tax imposed
134	134	under Chapter 201 or 202, as appropriate, must apply to the
135	135	comptroller.
136	136	(b) The application must include a copy of the certificate
137	137	issued by the railroad commission under Section 207.0005 for the
138	138	reporting period and any other information required by the
139	139	comptroller to sufficiently demonstrate that the producer is
140	140	eligible for the credit and the amount of the credit.
141	141	(c) In addition to the information required by Subsection
142	142	(b), the comptroller may require additional information on a report
143	143	required under Subchapter E, Chapter 201, or Subchapter E, Chapter
144	144	202.
145	145	(d) The comptroller shall approve the application of a
146	146	person who demonstrates that the recycled water is eligible for the
147	147	credit.
148	148	Sec. 207.0007. RULES. The comptroller and the railroad
149	149	commission shall adopt rules necessary to implement this chapter.
150	150	SECTION 2. Chapter 207, Tax Code, as added by this Act,
151	151	applies only to produced water provided to a permit holder, as
152	152	described by Chapter 207, Tax Code, as added by this Act, on or
153	153	after the effective date of this Act. Produced water provided
154	154	before the effective date of this Act is subject to the law in
155	155	effect when the produced water was provided, and that law is
156	156	continued in effect for that purpose.
157	157	SECTION 3. The change in law made by this Act does not
158	158	affect tax liability accruing before the effective date of this
159	159	Act. That liability continues in effect as if this Act had not been
160	160	enacted, and the former law is continued in effect for the
161	161	collection of taxes due and for civil and criminal enforcement of
162	162	the liability for those taxes.
163	163	SECTION 4. This Act takes effect September 1, 2019.