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A BILL TO BE ENTITLED
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AN ACT
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relating to the appraisal for ad valorem tax purposes of a real |
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property interest in oil or gas in place. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 23.175, Tax Code, is amended to read as |
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follows: |
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Sec. 23.175. OIL OR GAS INTEREST. (a) If a real property |
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interest in oil or gas in place is appraised by a method that takes |
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into account the future income from the sale of oil or gas to be |
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produced from the interest, the method must use the average price of |
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the oil or gas from the interest for the preceding calendar year |
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multiplied by a price adjustment [market condition] factor as the |
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price at which the oil or gas produced from the interest is |
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projected to be sold in the current year of the appraisal. The |
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average price for the preceding calendar year is calculated by |
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dividing the sum of the monthly average prices for which oil and gas |
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from the interest was selling during each month of the preceding |
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calendar year by 12. If there was no production of oil or gas from |
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the interest during any month of the preceding calendar year, the |
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average price for which similar oil and gas from comparable |
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interests was selling during that month is to be used. The chief |
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appraiser [comptroller] shall calculate the price adjustment |
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[market condition] factor by dividing the price of imported |
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low-sulfur light crude oil in nominal dollars or the spot price of |
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natural gas at the Henry Hub in nominal dollars, as applicable, as |
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projected for the current calendar year by the United States Energy |
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Information Administration in the most recently published Early |
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Release Overview of the Annual Energy Outlook [comptroller's
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current calendar year statewide average price for oil or gas, as
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applicable, forecasted for revenue estimating purposes] by the |
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price of imported low-sulfur light crude oil in nominal dollars or |
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the spot price of natural gas at the Henry Hub in nominal dollars, |
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as applicable, for the preceding calendar year as stated in the same |
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report [preceding calendar year actual statewide average price for
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oil or gas, as applicable.
For purposes of calculating the market
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condition factor, "price" means the market value of oil or gas as
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determined under Subchapter C, Chapter 201, or Section 202.053, as
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applicable.
The comptroller shall calculate the preceding calendar
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year actual statewide average prices for oil and gas and the market
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condition factors for oil and gas and publish that information to be
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used for ad valorem tax appraisal purposes concurrently with the
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current calendar year statewide average prices for oil and gas
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forecasted for revenue estimating purposes]. The price for the |
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interest used in the second through the sixth [or a subsequent] |
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calendar year of the appraisal may not reflect an annual escalation |
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or de-escalation rate that exceeds the average annual percentage |
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change from 1982 to the most recent year for which the information |
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is available in the producer price index for domestically produced |
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petroleum or for natural gas, as applicable, as published by the |
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Bureau of Labor Statistics of the United States Department of |
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Labor. The price for the interest used in the sixth calendar year |
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of the appraisal must be used in each subsequent year of the |
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appraisal [shall reflect the same percentage rate increase or
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decrease in the price for oil or gas, as applicable, as projected
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for that calendar year by the comptroller for revenue estimating
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purposes]. |
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(b) The comptroller by rule shall develop and distribute to |
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each appraisal office appraisal manuals that specify the formula to |
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be used in computing the limit on the price for an interest used in |
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the second through the sixth year of an appraisal and the methods |
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and procedures to discount future income from the sale of oil or gas |
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from the interest to present value. |
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(c) Each appraisal office shall use the formula, methods, |
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and procedures specified by the appraisal manuals developed under |
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Subsection (b) [of this section]. |
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SECTION 2. This Act applies only to the appraisal for ad |
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valorem tax purposes of a real property interest in oil or gas in |
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place for a tax year beginning on or after the effective date of |
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this Act. |
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SECTION 3. This Act takes effect January 1, 2012. |
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