SECTION 3.103. Certification for Severance Tax Exemption for Casinghead Gas Previously Vented or Flared

(a) Purpose. The purpose of this section is to provide a procedure by which an operator may obtain commission certification that the operator markets gas that was previously released into the air for 12 months or more pursuant to §3.32 of this title (relating to Gas Well Gas and Casinghead Gas Shall Be Used for Legal Purposes). Certification under this section is voluntary.

(b) Definitions. The following terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Oil lease--A commission-designated oil lease to which the commission has assigned an identifying number as listed on the monthly oil proration schedule at the time an application is filed under this rule.

(2) Oil well--A wellbore completed in a commission-designated field and assigned to an oil lease as listed on the monthly oil proration schedule at the time an application for certification is filed under this rule.

(c) Eligibility. An operator shall be eligible to receive the tax exemption on marketed casinghead gas for the life of an oil well or oil lease as listed on the oil proration schedule at the time an application for certification is filed under this rule if:

(1) the operator previously released the casinghead gas from an oil well or oil lease into the air for 12 months or more pursuant to §3.32 of this title; and

(2) the operator marketed the gas no earlier than June 1, 1997, in accordance with §3.32 of this title.

(d) Certification.

(1) An operator may apply for commission certification on the appropriate form. The completed form shall be accompanied by information necessary to establish:

(A) prior release into the air of casinghead gas for 12 months or more during a period of 13 consecutive months pursuant to §3.32 of this title; and

(B) such gas has generated taxable proceeds subject to the severance tax as a result of being marketed on or after September 1, 1997.

(2) The director of the commissions's Oil and Gas Division, or the director's delegate, may administratively approve or deny a request for certification.

(3) If the director of the commission's Oil and Gas Division or the director's delegate denies the request, the operator may request a hearing by filing such a request in writing within 15 days after the postmarked date of the notice of the administrative denial.

(4) If the operator fails to appear at the hearing without good cause, the request for certification shall be dismissed.

(5) Filings and correspondence concerning the application for certification shall be addressed to the Railroad Commission, P.O. Box 12967, Austin, Texas 78711-2967, Attention: Permitting/Production Services Section.

(e) Application to the Comptroller. After the commission issues the certification provided for in subsection (d) of this section, the operator may apply to the Comptroller of Public Accounts to receive the tax exemption.

(f) Termination of Authorization to Release Gas. On the date the commission issues the certification provided for in subsection (d) of this section, either by administrative action or by commission order, the volume of casinghead gas authorized to be released into the air as an exception obtained pursuant to §3.32(h) of this title shall be reduced to the volume of casinghead gas not subject to the certification. If all of the volume of casinghead gas authorized to be released under an exception is certified for purposes of the tax exemption, the exception shall no longer apply, and shall automatically terminate as of the date of certification.

Source Note: The provisions of this §3.103 adopted to be effective August 4, 1998, 23 TexReg 7770.