87R8711 SMH-F
By: Landgraf H.B. No. 2292
A BILL TO BE ENTITLED
AN ACT
relating to the appraisal for ad valorem tax purposes of a real
property interest in oil or gas in place.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 23.175, Tax Code, is amended to read as
follows:
Sec. 23.175. OIL OR GAS INTEREST. (a) If a real property
interest in oil or gas in place is appraised by a method that takes
into account the future income from the sale of oil or gas to be
produced from the interest, the method must use the average price of
the oil or gas from the interest for the preceding two calendar
years [year multiplied by a price adjustment factor] as the price at
which the oil or gas produced from the interest is projected to be
sold in each calendar [the current] year of the appraisal. The
average price for the preceding two calendar years [year] is
calculated by dividing the sum of the monthly average prices for
which oil and gas from the interest was selling during each month of
the preceding two calendar years [year] by 24 [12]. If there was no
production of oil or gas from the interest during any month of the
preceding two calendar years [year], the average price for which
similar oil and gas from comparable interests was selling during
that month is to be used. [Except as otherwise provided by this
subsection, the chief appraiser shall calculate the price
adjustment factor by dividing the spot price of West Texas
Intermediate crude oil in nominal dollars per barrel or the spot
price of natural gas at the Henry Hub in nominal dollars per million
British thermal units, as applicable, as projected for the current
calendar year by the United States Energy Information
Administration in the most recently published edition of the Annual
Energy Outlook by the spot price of West Texas Intermediate crude
oil in nominal dollars per barrel or the spot price of natural gas
at the Henry Hub in nominal dollars per million British thermal
units, as applicable, for the preceding calendar year as stated in
the same report. If as of March 1 of the current calendar year the
most recently published edition of the Annual Energy Outlook was
published before December 1 of the preceding calendar year, the
chief appraiser shall use the projected current and preceding
calendar year spot price of West Texas Intermediate crude oil in
nominal dollars per barrel or the spot price of natural gas at the
Henry Hub in nominal dollars per million British thermal units, as
applicable, as stated in the Short-Term Energy Outlook report
published in January of the current calendar year by the United
States Energy Information Administration in the price adjustment
factor calculations. The price for the interest used in the second
through the sixth calendar year of the appraisal may not reflect an
annual escalation or de-escalation rate that exceeds the average
annual percentage change from 1982 to the most recent year for which
the information is available in the producer price index for
domestically produced petroleum or for natural gas, as applicable,
as published by the Bureau of Labor Statistics of the United States
Department of Labor. The price for the interest used in the sixth
calendar year of the appraisal must be used in each subsequent year
of the appraisal.]
(b) The comptroller by rule shall develop and distribute to
each appraisal office appraisal manuals that specify the [formula
to be used in computing the limit on the price for an interest used
in the second through the sixth year of an appraisal and the]
methods and procedures to discount future income from the sale of
oil or gas from the interest to present value.
(c) Each appraisal office shall use the [formula,]
methods[,] and procedures specified by the appraisal manuals
developed under Subsection (b).
SECTION 2. This Act applies to the appraisal for ad valorem
tax purposes of a real property interest in oil or gas in place only
for a tax year beginning on or after the effective date of this Act.
SECTION 3. This Act takes effect January 1, 2022.