Bill Text: TX HB3067 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to an oil and gas production tax credit for oil and gas producers that provide produced water for recycling.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-04-17 - Left pending in committee [HB3067 Detail]
Download: Texas-2019-HB3067-Introduced.html
86R5507 CBH/JXC-F | ||
By: Ashby | H.B. No. 3067 |
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relating to an oil and gas production tax credit for oil and gas | ||
producers that provide produced water for recycling. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle I, Title 2, Tax Code, is amended by | ||
adding Chapter 207 to read as follows: | ||
CHAPTER 207. TAX CREDIT FOR PROVIDING PRODUCED WATER TO BE RECYCLED | ||
Sec. 207.0001. DEFINITIONS. In this chapter: | ||
(1) "Permit holder" means a person who holds all | ||
federal and state permits required to recycle produced water so | ||
that the water may be discharged into or adjacent to water in the | ||
state. | ||
(2) "Produced water" means water produced in oil or | ||
gas drilling, completion, flowback, or production. | ||
(3) "Producer" has the meaning assigned by Section | ||
201.001 or 202.001, as appropriate. | ||
(4) "Railroad commission" means the Railroad | ||
Commission of Texas. | ||
(5) "Water in the state" has the meaning assigned by | ||
Section 26.001, Water Code. | ||
Sec. 207.0002. TAX CREDIT. (a) A producer is entitled to a | ||
credit against the tax imposed under Chapter 201 or 202, as | ||
applicable, in the amount and under the conditions and limitations | ||
provided by this chapter if: | ||
(1) the producer provides to a permit holder produced | ||
water that has a total dissolved solids concentration of more than | ||
90,000 milligrams per liter; | ||
(2) the permit holder recycles the produced water so | ||
that the water may be discharged into or adjacent to water in the | ||
state or sold, regardless of whether the water is actually | ||
discharged or is sold, and complies with any federal and state | ||
permit requirements for recycling the produced water; and | ||
(3) the resulting fresh water meets standards for | ||
discharge into water in the state under the federal National | ||
Pollutant Discharge Elimination System program and the permit | ||
holder complies with any state or federal requirements for testing | ||
and reporting the quality of the water before discharge. | ||
(b) Except as provided by Section 207.0003, the total amount | ||
of the credit under this chapter for a reporting period is computed | ||
by: | ||
(1) determining the total number of barrels of | ||
produced water described by Subsection (a) provided to a permit | ||
holder during the reporting period that is subsequently recycled | ||
during that period; | ||
(2) multiplying the number of barrels determined under | ||
Subdivision (1) by the monthly average closing price of a barrel of | ||
West Texas Intermediate crude oil as recorded on the New York | ||
Mercantile Exchange (NYMEX); and | ||
(3) multiplying the amount determined under | ||
Subdivision (2) by: | ||
(A) 3.75 percent if the credit is claimed under | ||
Chapter 201; or | ||
(B) 2.3 percent if the credit is claimed under | ||
Chapter 202. | ||
(c) Produced water provided to a permit holder may be | ||
counted only once in determining the amount of a credit. Only one | ||
producer may claim a credit for the same produced water. | ||
Sec. 207.0003. LIMITATION ON CREDIT AMOUNT. (a) Except as | ||
provided by Subsection (b), the total amount of credits that may be | ||
claimed under this chapter each state fiscal year may not exceed $25 | ||
million. | ||
(b) If in the first year of a state fiscal biennium the | ||
amount claimed under this chapter is less than $25 million, the | ||
amount of credits that may be claimed in the second year of the | ||
state fiscal biennium is equal to the sum of: | ||
(1) $25 million; and | ||
(2) the difference between $25 million and the amount | ||
of credits claimed in the first state fiscal year. | ||
(c) Each month, the comptroller shall post on the | ||
comptroller's Internet website the amount of unclaimed credit | ||
remaining for the state fiscal year. | ||
(d) The comptroller by rule shall prescribe procedures by | ||
which the comptroller may allocate credits if the limit prescribed | ||
by Subsection (a) is reached before the end of the state fiscal | ||
year. | ||
Sec. 207.0004. PERMIT HOLDER REQUIREMENTS; MONTHLY REPORT. | ||
The railroad commission shall adopt a registration process for | ||
permit holders who participate in the program established by this | ||
chapter. Each registered permit holder shall submit to the | ||
railroad commission a monthly report that includes, for the | ||
preceding month: | ||
(1) the metered volume in gallons of produced water | ||
the permit holder received from each producer and recycled; | ||
(2) the total dissolved solids concentration of the | ||
produced water received from each producer before recycling; and | ||
(3) the volume of recycled water discharged into water | ||
in the state or sold. | ||
Sec. 207.0005. CERTIFICATION. (a) To be eligible for the | ||
credit under this chapter, the producer must apply to the railroad | ||
commission for certification that: | ||
(1) the producer has, during the reporting period, | ||
provided to a permit holder produced water that has a total | ||
dissolved solids concentration of more than 90,000 milligrams per | ||
liter; and | ||
(2) the permit holder recycled the water during the | ||
reporting period. | ||
(b) The producer shall include with the certificate | ||
application any information the railroad commission determines is | ||
necessary to certify eligibility for the credit and the amount of | ||
the credit, including information sufficient for the railroad | ||
commission to identify: | ||
(1) the metered volume in gallons of produced water | ||
provided to a permit holder for which the producer intends to claim | ||
a credit; and | ||
(2) the total dissolved solids concentration of that | ||
metered volume of produced water. | ||
(c) The railroad commission shall consider the information | ||
provided by the permit holder under Section 207.0004 in determining | ||
whether to certify eligibility for the credit and the amount of the | ||
credit. | ||
(d) If the producer and permit holder provide sufficient | ||
information under this section and Section 207.0004, the railroad | ||
commission shall issue a certificate of eligibility to the | ||
producer. The certificate must include: | ||
(1) the information the permit holder is required to | ||
provide under Section 207.0004; and | ||
(2) the information the producer is required to | ||
provide under Subsection (b) of this section. | ||
(e) The railroad commission shall immediately notify the | ||
comptroller in writing if the railroad commission: | ||
(1) determines that a producer that previously | ||
received a certificate under this section was not eligible for the | ||
certified credit or is no longer eligible to receive the certified | ||
credit; or | ||
(2) takes any action or discovers any information that | ||
affects the eligibility of the producer for a credit. | ||
Sec. 207.0006. APPLICATION. (a) To claim the credit under | ||
this chapter, the person responsible for paying the tax imposed | ||
under Chapter 201 or 202, as appropriate, must apply to the | ||
comptroller. | ||
(b) The application must include a copy of the certificate | ||
issued by the railroad commission under Section 207.0005 for the | ||
reporting period and any other information required by the | ||
comptroller to sufficiently demonstrate that the producer is | ||
eligible for the credit and the amount of the credit. | ||
(c) In addition to the information required by Subsection | ||
(b), the comptroller may require additional information on a report | ||
required under Subchapter E, Chapter 201, or Subchapter E, Chapter | ||
202. | ||
(d) The comptroller shall approve the application of a | ||
person who demonstrates that the recycled water is eligible for the | ||
credit. | ||
Sec. 207.0007. RULES. The comptroller and the railroad | ||
commission shall adopt rules necessary to implement this chapter. | ||
SECTION 2. Chapter 207, Tax Code, as added by this Act, | ||
applies only to produced water provided to a permit holder, as | ||
described by Chapter 207, Tax Code, as added by this Act, on or | ||
after the effective date of this Act. Produced water provided | ||
before the effective date of this Act is subject to the law in | ||
effect when the produced water was provided, and that law is | ||
continued in effect for that purpose. | ||
SECTION 3. 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 4. This Act takes effect September 1, 2019. |