BILL ANALYSIS Senate Research Center S.B. 1211 89R9680 JBD-F By: Perry Finance 3/11/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT S.B. 1211 amends Section 151.355, Subsection (7) of the Tax Code to include tangible personal property used, specifically, to process, reuse, or recycle water, other than freshwater, which will be used in fracking work performed at an oil or gas well. In Section (b) of the bill, "freshwater" is defined as water containing less than 1,000 mg/L of total dissolved solids. This definition is limited to this specific subsection. S.B. 1211, if passed, would exempt the property where the non-freshwater is processed, reused, or recycled, from sales and use taxes. This would incentivize oil and gas companies to entirely avoid freshwater. Since the original exemption was passed, about one trillion gallons of freshwater has been saved. Passage of S.B. 1211 would only grow that number. S.B. 1211 is proposed, primarily, to include to usage of brine water in incentivized fracturing processes, but would allow all types of non-freshwater processing, reuse or recycling to qualify for exemption under this statute. S.B. 1211 clarifies the original intent of this exemption, which was to incentivize the oil and gas industry to stay away from freshwater in its totality. S.B. 1211 ends the necessity of companies of having to draw brine water and produced water from the same pits, then blending the water together to complete a fracture, without having to use freshwater. A committee substitute will provide a clear method for both the agency and taxpayers on how to determine divergent use in this specific water scenario, chiefly based on gallons used or processed in an exempt vs. non-exempt manner. The Officer of Comptroller of Public Accounts of the State of Texas does anticipate a fiscal note associated with this bill, due to the broadening of the current exemption. However, this bill should make the cost of oil and gas production decrease, which would help control prices for the industry. As proposed, S.B. 1211 amends current law relating to an exemption from sales and use taxes for certain tangible personal property used in hydraulic fracturing. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 151.355, Tax Code, as follows: Sec. 151.355. WATER-RELATED EXEMPTIONS. (a) Creates this subsection from existing text. Provides that certain equipment, services, and supplies, are exempted from taxes imposed by Chapter 151 (Limited Sales, Excise, and Use Tax), including tangible personal property specifically used to process, reuse, or recycle water, other than freshwater, rather than used to process, reuse, or recycle wastewater, that will be used in fracturing work performed at an oil or gas well. (b) Provides that for the purposes of this section, "freshwater" means water containing less than 1,000 milligrams per liter of total dissolved solids. SECTION 2. Provides that Section 151.355, Tax Code, as amended by this Act, does not affect tax liability accruing before the effective date of this Act. Provides that 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. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 1211
89R9680 JBD-F By: Perry
Finance
3/11/2025
As Filed
Senate Research Center
S.B. 1211
89R9680 JBD-F
By: Perry
Finance
3/11/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
S.B. 1211 amends Section 151.355, Subsection (7) of the Tax Code to include tangible personal property used, specifically, to process, reuse, or recycle water, other than freshwater, which will be used in fracking work performed at an oil or gas well. In Section (b) of the bill, "freshwater" is defined as water containing less than 1,000 mg/L of total dissolved solids. This definition is limited to this specific subsection.
S.B. 1211, if passed, would exempt the property where the non-freshwater is processed, reused, or recycled, from sales and use taxes. This would incentivize oil and gas companies to entirely avoid freshwater.
Since the original exemption was passed, about one trillion gallons of freshwater has been saved. Passage of S.B. 1211 would only grow that number.
S.B. 1211 is proposed, primarily, to include to usage of brine water in incentivized fracturing processes, but would allow all types of non-freshwater processing, reuse or recycling to qualify for exemption under this statute.
S.B. 1211 clarifies the original intent of this exemption, which was to incentivize the oil and gas industry to stay away from freshwater in its totality.
S.B. 1211 ends the necessity of companies of having to draw brine water and produced water from the same pits, then blending the water together to complete a fracture, without having to use freshwater.
A committee substitute will provide a clear method for both the agency and taxpayers on how to determine divergent use in this specific water scenario, chiefly based on gallons used or processed in an exempt vs. non-exempt manner.
The Officer of Comptroller of Public Accounts of the State of Texas does anticipate a fiscal note associated with this bill, due to the broadening of the current exemption. However, this bill should make the cost of oil and gas production decrease, which would help control prices for the industry.
As proposed, S.B. 1211 amends current law relating to an exemption from sales and use taxes for certain tangible personal property used in hydraulic fracturing.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 151.355, Tax Code, as follows:
Sec. 151.355. WATER-RELATED EXEMPTIONS. (a) Creates this subsection from existing text. Provides that certain equipment, services, and supplies, are exempted from taxes imposed by Chapter 151 (Limited Sales, Excise, and Use Tax), including tangible personal property specifically used to process, reuse, or recycle water, other than freshwater, rather than used to process, reuse, or recycle wastewater, that will be used in fracturing work performed at an oil or gas well.
(b) Provides that for the purposes of this section, "freshwater" means water containing less than 1,000 milligrams per liter of total dissolved solids.
SECTION 2. Provides that Section 151.355, Tax Code, as amended by this Act, does not affect tax liability accruing before the effective date of this Act. Provides that 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. Effective date: September 1, 2025.