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.