By: Capriglione H.B. No. 591
A BILL TO BE ENTITLED
AN ACT
relating to an exemption from the severance tax for gas produced
from certain wells that is consumed on site 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 by 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 on
the well site 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) attest that the pipeline takeaway capacity is not
expected to meet the demand for gas produced by the well;
(2) be submitted jointly by the well operator and the
pipeline operator; and
(3) certify that the well has received an exemption to
flare from the commission totaling 30 days in the year preceding
their application.
(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.
(3) certify that the well has received an exemption to
flare from the commission totaling 30 days in the year preceding
their application.
(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;
(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 well has received an exemption to
flare from the commission totaling 30 days in the year preceding
their application.
(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. The
certificate shall expire one year after the commission issues the
certification.
(h) A qualified well certified under subsection (d) must use
all available pipeline takeaway capacity before using gas for on
site uses which qualify for the exemption provided by 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 to the comptroller. 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.