16 TAC §3.101
The Railroad Commission of Texas proposes amendments to §3.101,
relating to certification for severance tax exemption or reduction for gas
produced from high-cost gas wells. The proposed amendments will incorporate
the Texas Legislature's amendment of Texas Tax Code §201.057 (Acts 1999,
76th Leg., ch. 365, §1), extending the available severance tax exemption
or reduction to September 1, 2010. Additionally, the proposed amendments will
remove the definition of the first day of production from the rule. The determination
of the first day of production for the severance tax exemption or reduction
for gas produced from high-cost gas wells is made by the Comptroller of Public
Accounts of the State of Texas. The deletion of the unnecessary definition
in the Commission's rule will avoid potential conflicting or inconsistent
definitions of first day of production and will promote administrative and
regulatory efficiency by allowing the Comptroller of Public Accounts to revise
its definition of first day of production without engaging in a coordinated
rulemaking with the Commission.
The Commission simultaneously proposes the review and readoption of §3.101
in accordance with Texas Government Code, §2001.039 (
as added by Acts 1999, 76th Leg., ch. 1499, §1.11(a)
). The agency's
reasons for adopting this rule continue to exist. The notice of proposed review
will be filed with the
Texas Register
concurrently
with this proposal.
Leslie Savage, Planning and Administration, Oil and Gas Division, has determined
that for the initial year of the first five years the rule as amended will
be in effect and for each year thereafter, there will be no fiscal implications
for state government as a result of enforcing or administering the amended
rule. The Commission's role in certifying particular gas wells for severance
tax exemption or reduction for gas produced from high cost gas wells does
not include a determination of the first day of production. The Comptroller
of Public Accounts determines the first day of production for purposes of
this severance tax exemption or reduction. There will be no effect on local
government. There will be no cost of compliance with the proposed amendments
for the small business, micro-business, or individual producer.
Mark Helmueller, Hearings Examiner, Oil and Gas Section, Office of General
Counsel, has determined that for each year of the first five years that the
amended section will be in effect the public benefit will be clarification
that the Commission's role in certifying particular gas wells for severance
tax exemption or reduction for gas produced from high-cost gas wells does
not include a determination of the first day of production. Administrative
and regulatory efficiency will also be promoted by eliminating potential conflicting
or inconsistent definitions of first day of production between the two agencies.
This clarification will also promote administrative efficiency by no longer
requiring the Commission to make a determination of first day of production
that is not required as part of the Commission's regulatory duties and by
allowing the Comptroller of Public Accounts to revise its definition of first
day of production without engaging in a coordinated rulemaking with the Commission.
Comments may be submitted to Mark Helmueller, Hearings Examiner, Oil and
Gas Section, Office of General Counsel, Railroad Commission of Texas, P. O.
Box 12967, Austin, Texas 78711-2967 or via electronic mail to mark.helmueller@rrc.state.tx.us.
Comments will be accepted for 30 days after publication in the
Texas Register
and should refer to the docket number of this rulemaking
proceeding: 20-0228137. For further information, call Mr. Helmueller at (512)
463-6802.
The Commission proposes the amendments to §3.101 pursuant
to Texas Natural Resources Code, §§81.051 and 81.052, which provide
the Commission with jurisdiction over all persons owning or engaged in drilling
or operating oil or gas wells in Texas and the authority to adopt all necessary
rules for governing and regulating persons and their operations under the
jurisdiction of the Commission.
The Texas Natural Resources Code, §§81.051, 81.052, 85.202, 88.011,
91.101, and Texas Tax Code, §201.057 are affected by the proposed amendment.
Issued in Austin, Texas on May 22, 2001.
§3.101.Certification for Severance Tax Exemption or Reduction for Gas Produced From High-Cost Gas Wells.
(a)
(No change.)
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Commission--The Railroad Commission of Texas.
(2)
Completion--The act of making a well capable of producing
gas from a particular commission designated or new field.
(3)
Completion date--The date on which a well is first made
capable of producing oil or gas from a particular commission-designated or
new field, as shown on the completion report filed by the operator with the
commission.
(4)
Comptroller--The Comptroller of Public Accounts of the
State of Texas.
(5)
Data-point well--A well that has been tested and/or produced
in the proposed tight gas formation; and, from the test results or other data,
applicant provides a measured or calculated in situ permeability and/or a
measured or calculated pre-stimulation stabilized flow rate against atmospheric
pressure.
(6)
Director--The director of the Oil and Gas Division or the
director's delegate. Any authority given to the director in this section is
also retained by the commission. Any action taken by the director pursuant
to this section is subject to review by the commission.
[(7)
First day of production--The first day
of the month following the earlier of the month of the deliverability test
as reported on the commission designated form or the production month as indicated
on the first production report filed showing a gas disposition code other
than "lease or field fuel use" or "vented or flared."]
(7)
[
(8)
] High-cost gas--Natural gas
which the commission finds to be:
(A)
produced from any gas well, if production is from a completion
which is located at a depth of more than 15,000 feet;
(B)
produced from geopressured brine;
(C)
occluded natural gas produced from coal seams;
(D)
produced from Devonian shale; or
(E)
produced from designated tight formations or produced as
a result of production enhancement work.
(8)
[
(9)
] Operator--The person responsible
for the actual physical operation of a gas well.
(9)
[
(10)
] Spud date--The date of commencement
of drilling operations, as shown on commission records.
(c)
Applicability.
(1)
(No change.)
(2)
A severance tax reduction is available for high-cost gas
produced from a well that is spudded or completed after August 31, 1996, and
before September 1,
2010
[
2002
]. Eligible high-cost
gas will be entitled to a reduction of the tax imposed by the Texas Tax Code,
Chapter 201, for the first 120 consecutive calendar months beginning on the
first day of production or until the cumulative value of the tax reduction
equals 50% of the drilling and completion costs incurred for the well, whichever
occurs first. The amount of tax reduction is determined pursuant to the Texas
Tax Code, [
Chapter 201, Subchapter B
] §201.057(c).
(3) - (5)
(No change.)
(d) - (h)
(No change.)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on May 24, 2001.
TRD-200102914
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Earliest possible date of adoption: July 8, 2001
For further information, please call: (512) 475-1295