By: Darby H.B. No. 3201       A BILL TO BE ENTITLED   AN ACT   relating to the designation of a well as a two-year inactive well or   three-year inactive well for purposes of the oil and gas severance   tax exemption.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 202.056, Tax Code, is amended to read as   follows:          (a)  In this section:                (1)  "Commission" means the Railroad Commission of   Texas.                (2)  "Hydrocarbons" means any oil or gas produced from   a well, including hydrocarbon production.                (3)  "Three-year inactive well" means any well that has   not produced in more than one month in the three years prior to the   date of application for severance tax exemption under this section.                (4)  "Two-year inactive well" means a well that has not   produced oil or gas in more than one month in the two years   preceding the date of application for severance tax exemption under   this section.          (b)  Hydrocarbons produced from a well qualify for a 10-year   severance tax exemption if the commission designates the well as a   three-year inactive well or a two-year inactive well. The   commission may require an applicant to provide the commission with   any relevant information required to administer this section. The   commission may require additional well tests to determine well   capability as it deems necessary. The commission shall notify the   comptroller in writing immediately if it determines that the   operation of the three-year inactive well or two-year inactive well   has been terminated or if it discovers any information that affects   the taxation of the production from the designated well.          (c)  If the commission designates a three-year inactive well   under this section, it shall issue a certificate designating the   well as a three-year inactive well as defined by Subsection (a)(3)   of this section. The commission may not designate a three-year   inactive well under this section after February 29, 1996. If the   commission designates a two-year inactive well under this section,   it shall issue a certificate designating the well as a two-year   inactive well as defined by Subsection (a)(4)(3) of this section.   The commission may not designate a two-year inactive well under   this section after February 28, 2010.          (d)  An application for three-year inactive well   certification shall be made during the period of September 1, 1993,   through August 31, 1995, to qualify for the tax exemption under this   section. An application for two-year inactive well certification   shall be made during the period September 1, 1997, through August   31, 2009, to qualify for the tax exemption under this section.   Hydrocarbons sold after the date of certification are eligible for   the tax exemption.          (e)  The commission may revoke a certificate if information   indicates that a certified well was not a three-year inactive well   or a two-year inactive well, as appropriate, or if other lease   production is credited to the certified well. Upon notice to the   operator from the commission that the certificate for tax exemption   under this section has been revoked, the tax exemption may not be   applied to hydrocarbons sold from that well from the date of   revocation.          (f)  The commission shall adopt all necessary rules to   administer this section.          (g)  To qualify for the tax exemption provided by this   section, the person responsible for paying the tax must apply to the   comptroller. The comptroller shall approve the application of a   person who demonstrates that the hydrocarbon production is eligible   for a tax exemption. The comptroller may require a person applying   for the tax exemption to provide any relevant information necessary   to administer this section. The comptroller shall have the power to   establish procedures in order to comply with this section.          (h)  If the tax is paid at the full rate provided by Section   201.052(a), 201.052(b), 202.052(a), or 202.052(b) before the   comptroller approves an application for an exemption provided for   in this chapter, the operator is entitled to a credit against taxes   imposed by this chapter in an amount equal to the tax paid. To   receive a credit, the operator must apply to the comptroller for the   credit before the expiration of the applicable period for filing a   tax refund claim under Section 111.104.          (i)  Penalties                (1)  Any person who makes or subscribes any   application, report, or other document and submits it to the   commission to form the basis for an application for a tax exemption   under this section, knowing that the application, report, or other   document is false or untrue in a material fact, may be subject to   the penalties imposed by Chapters 85 and 91, Natural Resources   Code.                (2)  Upon notice from the commission that the   certification for a three-year inactive well or a two-year inactive   well has been revoked, the tax exemption shall not apply to oil or   gas production sold after the date of notification. Any person who   violates this subsection is liable to the state for a civil penalty   if the person applies or attempts to apply the tax exemption allowed   by this chapter after the certification for a three-year inactive   well or a two-year   inactive well is revoked. The amount of the   penalty may not exceed the sum of:                      (A)  $10,000; and                      (B)  the difference between the amount of taxes   paid or attempted to be paid and the amount of taxes due.                (3)  The attorney general may recover a penalty under   Subdivision (2) of this subsection in a suit brought on behalf of   the state. Venue for the suit is in Travis County.          SECTION 2.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution. If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect on the 91st day after the last day of the   legislative session.