Texas 2025 - 89th Regular

Texas House Bill HB3159 Compare Versions

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

Old	New	Differences
1	1	89R3538 CJD-F
2	2	By: Darby H.B. No. 3159
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7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to a severance tax exemption for oil and gas produced from
10	10	certain restimulation wells; providing a civil penalty.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Subchapter B, Chapter 202, Tax Code, is amended
13	13	by adding Section 202.062 to read as follows:
14	14	Sec. 202.062. TAX EXEMPTION FOR OIL AND GAS PRODUCED FROM
15	15	RESTIMULATION WELLS. (a) In this section:
16	16	(1) "Commission" means the Railroad Commission of
17	17	Texas.
18	18	(2) "Consecutive months" means months in consecutive
19	19	order, regardless of whether an oil or gas well produces
20	20	hydrocarbons during any or all of those months.
21	21	(3) "Hydrocarbons" means the oil, gas, condensate, and
22	22	other hydrocarbons produced from an oil or gas well.
23	23	(4) "Operator" means the person responsible for the
24	24	actual physical operation of an oil or gas well.
25	25	(5) "Qualifying well" means a restimulation well that
26	26	has been certified by the commission under this section as a
27	27	qualifying well.
28	28	(6) "Restimulation costs" means expenses that are
29	29	directly attributable to payment for the restimulation treatment
30	30	performed on a restimulation well.
31	31	(7) "Restimulation treatment" means the treatment of
32	32	an oil or gas well with an application of fluid under pressure for
33	33	the purpose of initiating or propagating fractures in a target
34	34	geologic formation to enhance the production of hydrocarbons from
35	35	the well.
36	36	(8) "Restimulation well" means a previously completed
37	37	oil or gas well that, following production of hydrocarbons,
38	38	received a restimulation treatment.
39	39	(b) This section does not apply to an oil or gas well that:
40	40	(1) has less than 60 months of production reported to
41	41	the commission before the date a restimulation treatment is
42	42	performed;
43	43	(2) is part of an enhanced oil recovery project, as
44	44	defined by Section 89.002, Natural Resources Code; or
45	45	(3) is drilled but not completed and that does not have
46	46	a record of hydrocarbon production reported to the commission.
47	47	(c) Hydrocarbons produced from a qualifying well are exempt
48	48	from the taxes imposed by Chapter 201 and this chapter until the
49	49	earlier of:
50	50	(1) the last day of the 36th consecutive month
51	51	following the month in which the well first produces hydrocarbons
52	52	after a restimulation treatment is completed; or
53	53	(2) the date on which the cumulative amount of taxes
54	54	exempted under Chapter 201 and this chapter and any credit under
55	55	Subsection (l) equals the lesser of:
56	56	(A) the restimulation costs described by
57	57	Subsection (j); or
58	58	(B) $750,000.
59	59	(d) Notwithstanding Section 201.057, gas produced from a
60	60	qualifying well that was previously certified by the commission as
61	61	a well that produces or will produce high-cost gas is not eligible
62	62	for the tax reduction provided by that section during the period the
63	63	gas is exempt from tax under Subsection (c) of this section.
64	64	(e) The operator of a restimulation well may apply to the
65	65	commission for certification that the well is a qualifying well.
66	66	The application may be made at any time after the first day the well
67	67	produces hydrocarbons following the date a restimulation treatment
68	68	is completed. The commission may require an applicant to provide
69	69	any relevant information required to administer this section.
70	70	(f) If the commission approves an application submitted
71	71	under Subsection (e), the commission shall issue a certificate
72	72	designating the well as a qualifying well.
73	73	(g) The commission may revoke a certificate issued under
74	74	Subsection (f) if the commission determines that:
75	75	(1) a well that was certified as a qualifying well is
76	76	not a restimulation well; or
77	77	(2) the operator is claiming or has claimed an
78	78	exemption under this section for hydrocarbons produced from a well
79	79	that is not a qualifying well.
80	80	(h) The commission shall notify an operator that a
81	81	certificate issued under Subsection (f) has been revoked. An
82	82	exemption provided by this section is automatically revoked on the
83	83	date the commission revokes a certificate unless the commission
84	84	issues a new certificate for the well. Hydrocarbons produced from
85	85	the well after the date a certificate is revoked are not eligible
86	86	for the exemption provided by this section.
87	87	(i) To qualify for the exemption provided by this section,
88	88	the person responsible for paying the tax must apply to the
89	89	comptroller. The comptroller shall determine the form and content
90	90	of the application, which must include:
91	91	(1) the certificate issued by the commission under
92	92	Subsection (f); and
93	93	(2) a report of the restimulation costs incurred to
94	94	perform the restimulation treatment on the qualifying well from
95	95	which the hydrocarbons that are the subject of the application are
96	96	produced.
97	97	(j) For the purposes of Subsection (i)(2), restimulation
98	98	costs include only the current and contemporaneous restimulation
99	99	costs associated with performing the restimulation treatment.
100	100	(k) The comptroller shall approve an application for an
101	101	exemption provided by this section if the application meets the
102	102	requirements of this section. The comptroller may require the
103	103	person applying for the exemption to provide any relevant
104	104	information necessary to administer this section. The comptroller
105	105	by rule may establish procedures to comply with this section.
106	106	(l) If the tax imposed under Chapter 201 or this chapter, as
107	107	applicable, is paid at the applicable rate on hydrocarbons produced
108	108	from a qualifying well on or after the date the commission issues a
109	109	certificate for the well under Subsection (f) but before the date
110	110	the comptroller approves an application for an exemption for
111	111	hydrocarbons produced from the well under Subsection (k), the
112	112	person responsible for paying the tax is entitled to a credit
113	113	against the taxes due under Chapter 201 or this chapter in an amount
114	114	equal to the amount of tax paid during that period on hydrocarbons
115	115	produced from the qualifying well. To receive the credit, the
116	116	person responsible for paying the tax must apply to the comptroller
117	117	before the expiration of the applicable period for filing a tax
118	118	refund claim under Section 111.104.
119	119	(m) A person who makes or submits an application, report, or
120	120	other document or item of information to the commission or the
121	121	comptroller under this section that the person knows is false or
122	122	untrue in a material fact is subject to the penalties imposed by
123	123	Chapters 85 and 91, Natural Resources Code.
124	124	(n) A person who applies or attempts to apply for an
125	125	exemption under this section for hydrocarbons produced from a well
126	126	the person knows is not a qualifying well is liable to the state for
127	127	a civil penalty. The amount of the penalty may not exceed the sum
128	128	of:
129	129	(1) $10,000; and
130	130	(2) the difference between the amount of taxes paid or
131	131	attempted to be paid and the amount of taxes due.
132	132	(o) The attorney general may recover a penalty under
133	133	Subsection (n) in a suit brought on behalf of the state. Venue for
134	134	the suit is in Travis County.
135	135	(p) The commission may adopt rules necessary to administer
136	136	this section.
137	137	SECTION 2. Section 202.062, Tax Code, as added by this Act,
138	138	applies only to hydrocarbons produced on or after January 1, 2026.
139	139	SECTION 3. The change in law made by this Act does not
140	140	affect tax liability accruing before the effective date of this
141	141	Act. That liability continues in effect as if this Act had not been
142	142	enacted, and the former law is continued in effect for the
143	143	collection of taxes due and for civil and criminal enforcement of
144	144	the liability for those taxes.
145	145	SECTION 4. This Act takes effect January 1, 2026.