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H.B. No. 2982

H.B. No. 2982

AN ACT

relating to the ad valorem tax appraisal of oil or gas interests.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. (a) Section 21.02(e), Tax Code, is amended to
read as follows:
(e) In this subsection, “portable drilling rig” includes
equipment associated with the drilling rig. A portable drilling
rig designed for land-based oil or gas drilling or exploration
operations is taxable by each [the] taxing unit in which the rig is
located on January 1 if the rig was located in the appraisal
district that appraises property for the unit for the preceding 365
consecutive days. If the drilling rig was not located in the
appraisal district where it is located on January 1 for the
preceding 365 days, it is taxable by each [the] taxing unit in which
the owner’s principal place of business in this state is located on
January 1, unless the owner renders the rig under Chapter 22 to the
appraisal district in which the rig is located on January 1, in
which event the rig is taxable by each taxing unit in which the rig
is located on January 1. If an owner elects to render any portable
drilling rig to the appraisal district in which the rig is located
on January 1 when the rig otherwise would be taxable at the owner’s
principal place of business in this state, all the owner’s portable
drilling rigs are taxable by the taxing units in which each rig is
located on January 1. Notwithstanding any other provision of this
subsection, if the owner of a portable drilling rig does not have a
place of business in this state, the rig is taxable by each taxing
unit in which the rig is located on January 1.
(b) Subsection (a) of this section applies only to a tax
year that begins on or after the effective date of this section.
(c) This section takes effect January 1, 2008.
SECTION 2. Section 23.175(a), Tax Code, is amended to read
as follows:
(a) If a real property interest in oil or gas in place is
appraised by a method that takes into account the future income from
the sale of oil or gas to be produced from the interest, the method
must use the average price of the oil or gas from the interest for
the preceding calendar year multiplied by a market condition factor
as the price at which the oil or gas produced from the interest is
projected to be sold in the current year of the appraisal. The
average price for the preceding calendar year is calculated by
dividing the sum of the monthly average prices for which oil and gas
from the interest was selling during [on] each month [day] of the
preceding calendar year[, excluding February 29,] by 12 [365]. If
there was no production of oil or gas from the interest [on any day]
during any month of the preceding calendar year, the average price
for which similar oil and gas from comparable interests was selling
during that month [on that day] is to be used. The comptroller
shall calculate the market condition factor by dividing the
comptroller’s current calendar year statewide average price for oil
or gas, as applicable, forecasted for revenue estimating purposes
by the preceding calendar year actual statewide average price for
oil or gas, as applicable. For purposes of calculating the market
condition factor, “price” means the market value of oil or gas as
determined under Subchapter C, Chapter 201, or Section 202.053, as
applicable. The comptroller shall calculate the preceding calendar
year actual statewide average prices for oil and gas and the market
condition factors for oil and gas and publish that information to be
used for ad valorem tax appraisal purposes concurrently with the
current calendar year statewide average prices for oil and gas
forecasted for revenue estimating purposes. The price for the
interest used in the second or a subsequent calendar year of the
appraisal shall reflect the same percentage rate increase or
decrease in the price for oil or gas, as applicable, as projected
for that calendar year by the comptroller for revenue estimating
purposes. [If market conditions warrant, the average price from the
preceding year may be increased or decreased in the second and/or
succeeding years of an appraisal that takes into account the future
income from the sale of oil or gas to be produced from the interest.
If the average price from the preceding year is increased in the
second or any succeeding year of an appraisal that takes into
account the future income from the sale of oil or gas from the
interest, the annual percentage rate of increase may be no greater
than the annual percentage rate increase projected for that year by
the comptroller for revenue estimating purposes; however, in no
event may the price used in the second or any succeeding year of an
appraisal exceed 150 percent of the price used in the current year
of the appraisal. The price used in the current year may be
decreased by any amount in the second and succeeding year of an
appraisal.]
SECTION 3. (a) Section 162.227, Tax Code, is amended by
adding Subsection (c-1) to read as follows:
(c-1) A license holder may take a credit on a return for the
period in which the purchase occurred, and a person who does not
hold a license may file a refund claim with the comptroller, if:
(1) the license holder or person paid tax on diesel
fuel;
(2) the diesel fuel is used in this state by movable
specialized equipment used in oil field well servicing; and
(3) the person who purchased the diesel fuel has
received or is eligible to receive a federal diesel fuel tax refund
under the Internal Revenue Code of 1986 for the diesel fuel used by
movable specialized equipment used in oil field well servicing.
(b) This section takes effect September 1, 2007.
SECTION 4. Sections 201.059(g) and 202.058(h), Tax Code,
are repealed.
SECTION 5. This Act applies only to the appraisal of
property for ad valorem tax purposes for a tax year beginning on or
after the effective date of this Act.
SECTION 6. Except as otherwise provided by this Act, this
Act takes effect January 1, 2008.

______________________________ ______________________________
President of the Senate Speaker of the House

I certify that H.B. No. 2982 was passed by the House on May
10, 2007, by the following vote: Yeas 143, Nays 0, 1 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 2982 on May 25, 2007, by the following vote: Yeas 141, Nays 0,
1 present, not voting.

______________________________
Chief Clerk of the House

I certify that H.B. No. 2982 was passed by the Senate, with
amendments, on May 23, 2007, by the following vote: Yeas 30, Nays
0, 1 present, not voting.

______________________________
Secretary of the Senate
APPROVED: __________________
Date

__________________
Governor

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