Texas 2023 - 88th Regular

Texas House Bill HB2056 Compare Versions

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1	1	88R7943 CJD-F
2	2	By: Darby H.B. No. 2056
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a severance tax exemption for oil and gas produced from
8	8	certain restimulation wells; providing a civil penalty.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subchapter B, Chapter 202, Tax Code, is amended
11	11	by adding Section 202.062 to read as follows:
12	12	Sec. 202.062. TAX EXEMPTION FOR OIL AND GAS PRODUCED FROM
13	13	RESTIMULATION WELLS. (a) In this section:
14	14	(1) "Commission" means the Railroad Commission of
15	15	Texas.
16	16	(2) "Consecutive months" means months in consecutive
17	17	order, regardless of whether an oil or gas well produces
18	18	hydrocarbons during any or all of those months.
19	19	(3) "Hydrocarbons" means the oil, gas, condensate, and
20	20	other hydrocarbons produced from an oil or gas well.
21	21	(4) "Operator" means the person responsible for the
22	22	actual physical operation of an oil or gas well.
23	23	(5) "Qualifying well" means a restimulation well that
24	24	has been certified by the commission under this section as a
25	25	qualifying well.
26	26	(6) "Restimulation costs" means expenses that are
27	27	directly attributable to payment for the restimulation treatment
28	28	performed on a restimulation well.
29	29	(7) "Restimulation treatment" means the treatment of
30	30	an oil or gas well with an application of fluid under pressure for
31	31	the purpose of initiating or propagating fractures in a target
32	32	geologic formation to enhance the production of hydrocarbons from
33	33	the well.
34	34	(8) "Restimulation well" means a previously completed
35	35	oil or gas well that:
36	36	(A) is classified by the commission as a marginal
37	37	well, as described by Section 85.122, Natural Resources Code, or a
38	38	marginal gas well, as defined by Section 86.091, Natural Resources
39	39	Code; and
40	40	(B) following production of hydrocarbons,
41	41	received a restimulation treatment.
42	42	(b) This section does not apply to an oil or gas well that:
43	43	(1) has less than 60 months of production reported to
44	44	the commission before the date a restimulation treatment is
45	45	performed;
46	46	(2) is part of an enhanced oil recovery project, as
47	47	defined by Section 89.002, Natural Resources Code; or
48	48	(3) is drilled but not completed and that does not have
49	49	a record of hydrocarbon production reported to the commission.
50	50	(c) Hydrocarbons produced from a qualifying well are exempt
51	51	from the taxes imposed by Chapter 201 and this chapter until the
52	52	earlier of:
53	53	(1) the last day of the 60th consecutive month
54	54	following the month in which the well first produces hydrocarbons
55	55	after a restimulation treatment is completed; or
56	56	(2) the date on which the cumulative amount of taxes
57	57	exempted under Chapter 201 and this chapter and any credit under
58	58	Subsection (l) equals:
59	59	(A) if the qualifying well is a restimulation
60	60	well, 50 percent of the restimulation costs described by Subsection
61	61	(j); or
62	62	(B) if the qualifying well is a restimulation
63	63	well on which the restimulation treatment was performed using
64	64	hydraulic fracturing pumps powered exclusively by electricity or
65	65	natural gas, 75 percent of the restimulation costs described by
66	66	Subsection (j).
67	67	(d) Notwithstanding Section 201.057, gas produced from a
68	68	qualifying well that was previously certified by the commission as
69	69	a well that produces or will produce high-cost gas is not eligible
70	70	for the tax reduction provided by that section during the period the
71	71	gas is exempt from tax under Subsection (c) of this section.
72	72	(e) The operator of a restimulation well may apply to the
73	73	commission for certification that the well is a qualifying well.
74	74	The application may be made at any time after the first day the well
75	75	produces hydrocarbons following the date a restimulation treatment
76	76	is completed. The commission may require an applicant to provide
77	77	any relevant information required to administer this section.
78	78	(f) If the commission approves an application submitted
79	79	under Subsection (e), the commission shall issue a certificate
80	80	designating the well as a qualifying well and specifying whether
81	81	the restimulation treatment was performed using hydraulic
82	82	fracturing pumps powered exclusively by electricity or natural gas.
83	83	(g) The commission may revoke a certificate issued under
84	84	Subsection (f) if the commission determines that:
85	85	(1) a well that was certified as a qualifying well is
86	86	not a restimulation well;
87	87	(2) if the certificate specifies that the
88	88	restimulation treatment was performed on a qualifying well using
89	89	hydraulic fracturing pumps powered exclusively by electricity or
90	90	natural gas, the restimulation treatment was performed using a
91	91	method other than the method specified in the certificate; or
92	92	(3) the operator is claiming or has claimed an
93	93	exemption under this section for hydrocarbons produced from a well
94	94	that is not a qualifying well.
95	95	(h) The commission shall notify an operator that a
96	96	certificate issued under Subsection (f) has been revoked. An
97	97	exemption provided by this section is automatically revoked on the
98	98	date the commission revokes a certificate unless the commission
99	99	issues a new certificate for the well. Hydrocarbons produced from
100	100	the well after the date a certificate is revoked are not eligible
101	101	for the exemption provided by this section.
102	102	(i) To qualify for the exemption provided by this section,
103	103	the person responsible for paying the tax must apply to the
104	104	comptroller. The comptroller shall determine the form and content
105	105	of the application, which must include:
106	106	(1) the certificate issued by the commission under
107	107	Subsection (f); and
108	108	(2) a report of the restimulation costs incurred to
109	109	perform the restimulation treatment on the qualifying well from
110	110	which the hydrocarbons that are the subject of the application are
111	111	produced.
112	112	(j) For the purposes of Subsection (i)(2), restimulation
113	113	costs include only the current and contemporaneous restimulation
114	114	costs associated with performing the restimulation treatment.
115	115	(k) The comptroller shall approve an application for an
116	116	exemption provided by this section if the application meets the
117	117	requirements of this section. The comptroller may require the
118	118	person applying for the exemption to provide any relevant
119	119	information necessary to administer this section. The comptroller
120	120	by rule may establish procedures to comply with this section.
121	121	(l) If the tax imposed under Chapter 201 or this chapter, as
122	122	applicable, is paid at the applicable rate on hydrocarbons produced
123	123	from a qualifying well on or after the date the commission issues a
124	124	certificate for the well under Subsection (f) but before the date
125	125	the comptroller approves an application for an exemption for
126	126	hydrocarbons produced from the well under Subsection (k), the
127	127	person responsible for paying the tax is entitled to a credit
128	128	against the taxes due under Chapter 201 or this chapter in an amount
129	129	equal to the amount of tax paid during that period on hydrocarbons
130	130	produced from the qualifying well. To receive the credit, the
131	131	person responsible for paying the tax must apply to the comptroller
132	132	before the expiration of the applicable period for filing a tax
133	133	refund claim under Section 111.104.
134	134	(m) A person who makes or submits an application, report, or
135	135	other document or item of information to the commission or the
136	136	comptroller under this section that the person knows is false or
137	137	untrue in a material fact is subject to the penalties imposed by
138	138	Chapters 85 and 91, Natural Resources Code.
139	139	(n) A person who applies or attempts to apply for an
140	140	exemption under this section for hydrocarbons produced from a well
141	141	the person knows is not a qualifying well is liable to the state for
142	142	a civil penalty. The amount of the penalty may not exceed the sum
143	143	of:
144	144	(1) $10,000; and
145	145	(2) the difference between the amount of taxes paid or
146	146	attempted to be paid and the amount of taxes due.
147	147	(o) The attorney general may recover a penalty under
148	148	Subsection (n) in a suit brought on behalf of the state. Venue for
149	149	the suit is in Travis County.
150	150	(p) The commission may adopt rules necessary to administer
151	151	this section.
152	152	SECTION 2. Section 202.062, Tax Code, as added by this Act,
153	153	applies only to hydrocarbons produced on or after January 1, 2024.
154	154	SECTION 3. The change in law made by this Act does not
155	155	affect tax liability accruing before the effective date of this
156	156	Act. That liability continues in effect as if this Act had not been
157	157	enacted, and the former law is continued in effect for the
158	158	collection of taxes due and for civil and criminal enforcement of
159	159	the liability for those taxes.
160	160	SECTION 4. This Act takes effect January 1, 2024.