H.B. No. 591
AN ACT
relating to an exemption from the severance tax for gas produced
from certain wells that is consumed near the well and would
otherwise have been lawfully vented or flared.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 201, Tax Code, is amended
by adding Section 201.061 to read as follows:
Sec. 201.061. EXEMPTION FOR GAS PRODUCED THAT WOULD
OTHERWISE HAVE BEEN VENTED OR FLARED. (a) In this section:
(1) "Commission" means the Railroad Commission of
Texas.
(2) "Qualifying well" means a well that:
(A) is connected to a pipeline on which pipeline
takeaway capacity is not expected to meet the demand for gas
produced from the well;
(B) is not connected to a pipeline and for which
connection to a pipeline is technically or commercially unfeasible
but is operated by a well operator who has contractually dedicated
the well, the gas produced from the well, or the land or lease on
which the well is located to a pipeline operator; or
(C) is not connected to a pipeline and is
operated by a well operator who has not contractually dedicated the
well, the gas produced from the well, or the land or lease on which
the well is located to a pipeline operator.
(3) "Well operator" means the person responsible for
the actual physical operation of an oil or gas well.
(b) Gas produced from a qualifying well that is consumed
within 1,000 feet of the qualifying well and would otherwise have
been lawfully vented or flared is not subject to the tax imposed by
this chapter.
(c) A well operator and a pipeline operator, as applicable,
may apply to the commission in the manner provided by Subsection
(d), (e), or (f), as applicable, for certification that a well is a
qualifying well.
(d) An application that relates to a well described by
Subsection (a)(2)(A) must:
(1) include an attestation that pipeline takeaway
capacity is not expected to meet the demand for gas produced from
the well;
(2) be submitted jointly by the well operator and the
pipeline operator; and
(3) certify that the commission authorized gas from
the well to be flared for at least 30 days during the year preceding
the year in which the application is filed.
(e) An application that relates to a well described by
Subsection (a)(2)(B) must:
(1) attest that:
(A) the well is not connected to a pipeline; and
(B) it is technically or commercially unfeasible
to connect the well to a pipeline;
(2) be submitted jointly by the well operator and the
pipeline operator; and
(3) certify that the commission authorized gas from
the well to be flared for at least 30 days during the year preceding
the year in which the application is filed.
(f) An application that relates to a well described by
Subsection (a)(2)(C) must:
(1) attest that the well:
(A) is not connected to a pipeline; and
(B) is operated by a well operator who has not
contractually dedicated the well, the gas produced from the well,
or the land or lease on which the well is located to a pipeline
operator;
(2) be submitted by the well operator; and
(3) certify that the commission authorized gas from
the well to be flared for at least 30 days during the year preceding
the year in which the application is filed.
(g) The commission may require an applicant described by
Subsection (c) to provide the commission with any information the
commission determines is relevant to determining whether a well is
a qualifying well. If the commission approves an application
submitted under Subsection (c), the commission shall issue a
certificate designating the well as a qualifying well. A
certificate issued under this subsection expires one year after the
date on which the commission issues the certificate.
(h) A well described by Subsection (a)(2)(A) for which the
commission issues a certificate under Subsection (g) must use all
available pipeline takeaway capacity before gas produced from the
well may receive an exemption under this section.
(i) To qualify for the exemption provided by this section,
the person responsible for paying the tax imposed by this chapter
must apply annually to the comptroller for the exemption. The
application must contain the certificate issued by the commission
under Subsection (g). The comptroller may require a person
applying for the exemption to provide any additional information
the comptroller determines is relevant to determining whether the
gas is eligible for the exemption.
(j) The commission, well operator, or pipeline operator
shall notify the comptroller in writing immediately if a well
certified under this section is no longer a qualifying well.
(k) The commission and the comptroller may adopt rules
necessary to implement and administer this section.
SECTION 2. 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 3. This Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 591 was passed by the House on April
14, 2023, by the following vote: Yeas 141, Nays 1, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 591 on May 15, 2023, by the following vote: Yeas 142, Nays 0, 1
present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 591 was passed by the Senate, with
amendments, on May 10, 2023, by the following vote: Yeas 26, Nays
4.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor