HBA-SEB, JRA C.S.H.B. 2615 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2615
By: Counts
Ways & Means
4/13/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The legislature enacted the high-cost gas severance tax incentive program
in 1989 and reenacted it in 1995.  The program is designed to encourage
natural gas producers to drill expensive and technically difficult gas
wells.  It has significantly increased natural gas production in Texas.
The legislature enacted the two-year inactive well severance tax incentive
program in 1993 and reenacted it in 1997.  This program is designed to
encourage producers not to plug inactive wells.  Extension of these
programs may encourage Texas oil and gas producers to invest in Texas
during the current downturn in the oil and gas industry. 

C.S.H.B. 2615 extends the high-cost gas severance tax incentive program by
eight years and extends the two-year inactive well severance tax incentive
program by ten years. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 201.057(c), Tax Code, to entitle high-cost gas
produced from a well that is spudded or completed after August 31, 1996,
and before September 1, 2010, rather than 2002, to a tax reduction. 

SECTION 2.  Amends Section 202.056(c) and (d), Tax Code, as follows:

(c)  Prohibits the Railroad Commission of Texas from designating a two-year
inactive well under this section (Exemption for Oil and Gas From Wells
Previously Inactive) after February 28, 2010, rather than February 29,
2000. 

(d)  Requires an application for two-year inactive well certification to be
made during the period September 1, 1997, through August 31, 2009, rather
than 1999, to qualify for the tax exemption under this section. 

SECTION 3.Emergency clause.
  Effective date: upon passage.

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original in SECTION 2 by amending Section
202.056(c), Tax Code, to make a technical correction to the date.  C.S.H.B.
2615 prohibits the Railroad Commission of Texas from designating a two-year
inactive well under this section (Exemption for Oil and Gas From Wells
Previously Inactive) after February 28, 2010, rather than February 29,
2010, as stated in the original.