| (F) any other relevant information requested by the Oil and Gas Division. (i) Reduced or enlarged areas. The operator may apply for reduced or enlarged project area certification if the application for reduction or enlargement is received prior to the filing of an application for positive production response certification of the original enhanced oil recovery project. (j) Termination and penalty. Upon approval by the Commission and the comptroller, the recovered oil tax rate shall continue for a maximum of 10 years, unless the project is sooner terminated. If the project is terminated prior to the 10-year period, the operator shall notify the Commission and the comptroller in writing within 30 days after the last day of active operations. Failure to so notify may result in civil penalties, interest, and the tax due. If the Commission determines a project has been terminated or there is action that affects the tax rate, it shall notify the comptroller immediately in writing. (k) Additional tax rate reduction for enhanced recovery projects using anthropogenic carbon dioxide. (1) Subject to the limitations provided by Texas Tax Code, §202.0545, until the later of the seventh anniversary of the date that the Comptroller of Public Accounts first approves an application for a tax rate reduction under this subsection or the effective date of a final rule adopted by the United States Environmental Protection Agency regulating carbon dioxide as a pollutant, the producer of oil recovered through an EOR project that qualifies under Texas Tax Code, §202.054, for the recovered oil tax rate provided by Texas Tax Code, §202.052(b), is entitled to an additional 50 percent reduction in that tax rate if in the recovery of the oil the EOR project uses carbon dioxide that: (A) is captured from an anthropogenic source in this state; (B) would otherwise be released into the atmosphere as industrial emissions; (C) is measurable at the source of capture; and (D) is sequestered in one or more geological formations in this state following the EOR process. (2) In the event that a portion of the carbon dioxide used in the EOR project is anthropogenic carbon dioxide that satisfies the criteria of paragraph (1) of this subsection and a portion of the carbon dioxide used in the project fails to satisfy the criteria of paragraph (1) of this subsection because it is not anthropogenic, the tax reduction provided by paragraph (1) of this subsection shall be reduced to reflect the proportion of the carbon dioxide used in the project that satisfies the criteria of paragraph (1) of this subsection. (3) To qualify for the tax rate reduction under this subsection, the operator shall: (A) apply for a certification from the Commission if carbon dioxide used in the project is to be sequestered in an oil or natural gas reservoir; and (B) apply to the Comptroller of Public Accounts for the reduction and include with the application any information and documentation that the comptroller may require. (4) To qualify for the additional reduced recovered oil tax rate under this subsection the operator shall: (A) submit an application for certification to the Commission's Austin Office for approval on the appropriate form that is executed and certified as provided for on the form; and (B) provide the Commission with: (i) plats showing the proposed project area and all wells within the area; (ii) production and injection history; (iii) planned enhanced oil recovery procedures; (iv) information to demonstrate that the carbon dioxide to be injected is anthropogenic and a description of the method(s) of capturing and measuring the captured carbon dioxide at the source; (v) a description of the planned sequestration program reasonably expected to ensure that at least 99% of the sequestered carbon dioxide will remain sequestered for at least 1,000 years; (vi) planned monitoring and verification measures, including the planned duration of such measures, that will be employed to demonstrate that the sequestration program is performing as expected; and (vii) any other pertinent information requested by the Commission. (5) The Commission may issue the certification for the reduced tax rate under this subsection only if the Commission finds that, based on substantial evidence, there is a reasonable expectation that: (A) the operator's planned sequestration program will ensure that at least 99 percent of the anthropogenic carbon dioxide sequestered will remain sequestered for at least 1,000 years; and (B) the operator's planned sequestration program includes appropriately designed monitoring and verification measures that will be employed for a period sufficient to demonstrate whether the sequestration program is performing as expected. (6) The operator is responsible for making application to the Comptroller of Public Accounts for the additional tax rate reduction. (7) The additional tax rate reduction under this subsection does not apply and the operator will be required to repay the amount of tax that would have been imposed in the absence of this subsection if the operator's sequestration program or the operator's monitoring and verification measures differ substantially from the planned program approved by the Commission. (8) In conjunction with the Annual Report required to be filed under subsection (h) of this section, an operator shall submit information concerning the operator's monitoring and verification measures results as proposed in the application for certification to demonstrate whether the sequestration program is performing as expected. In the event that the operator's sequestration program, including monitoring and verification measures, differs substantially from the program certified by the Commission under subsection (k)(5) of this section, the operator shall include with the Annual Report a written description of any material changes in the sequestration program. (9) A Commission representative may administratively approve or deny an application for certification. If the Commission representative administratively denies an application, the applicant shall have the right to a hearing upon request. After hearing, the examiner shall recommend final action by the Commission.
|Source Note: The provisions of this §3.50 adopted to be effective February 20, 1990, 15 TexReg 652; amended to be effective March 18, 1992, 17 TexReg 1615; amended to be effective November 17, 1993, 18 TexReg 7922; amended to be effective April 6, 1998, 23 TexReg 3435; amended to be effective October 12, 2003, 28 TexReg 8585; amended to be effective January 7, 2008, 33 TexReg 114