S.B. No. 533

	AN ACT
	relating to the severance tax exemption for oil and gas produced
	from certain inactive wells.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 202.056(a)(4), Tax Code, is amended to
	read as follows:
	(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. The term does not include a well that is:
	(A)  part of an enhanced oil recovery project, as
	defined by Section 89.002, Natural Resources Code; or
	(B)  drilled but not completed and that does not
	have a record of hydrocarbon production reported to the commission.
	SECTION 2.  Section 202.056, Tax Code, is amended by
	amending Subsections (b), (c), (d), (e), (h), and (i) and adding
	Subsections (j) and (k) to read as follows:
	(b)  Hydrocarbons produced from a well qualify for a
	five-year [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 the commission [it] deems necessary.
	The commission shall notify the comptroller in writing immediately
	if the commission [it] determines that the operation of the
	[three-year inactive well or] two-year inactive well has been
	terminated or if the commission [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, the commission [it] shall issue a certificate
	designating the well as a two-year inactive well [as defined by
	Subsection (a)(4) 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
	must be made to the commission [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.
	(h)  If the tax is paid at the full rate provided by Section
	201.052(a) or[, 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)  A [Penalties
	[(1)  Any] person who makes or subscribes any
	application, report, or other document and submits the application,
	report, or other document [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.
	(j)  On [(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. A [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:
	(1) [(A)]  $10,000; and
	(2) [(B)]  the difference between the amount of taxes
	paid or attempted to be paid and the amount of taxes due.
	(k) [(3)]  The attorney general may recover a penalty under
	Subsection (j) [Subdivision (2) of this subsection] in a suit
	brought on behalf of the state. Venue for the suit is in Travis
	County.
	SECTION 3.  Section 202.056(a)(3), Tax Code, is repealed.
	SECTION 4.  The changes in law made by this Act apply only to
	an oil or gas well designated by the Railroad Commission of Texas as
	a two-year inactive well on or after the effective date of this Act.
	An oil or gas well designated by the Railroad Commission of Texas as
	a two-year inactive well, or as a three-year inactive well, before
	the effective date of this Act is governed by the law in effect
	immediately before that date, and the former law is continued in
	effect for that purpose.
	SECTION 5.  This Act takes effect September 1, 2019.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 533 passed the Senate on
	March 27, 2019, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 533 passed the House on
	April 24, 2019, by the following vote:  Yeas 134, Nays 0, two
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor