AUSTIN—The Attorney General of Texas has issued an opinion clarifying that the state no longer taxes crude oil petroleum produced in Texas.
Ken Paxton, the state's attorney general, issued the opinion on May 10 in answer to a question by the Railroad Commission of Texas. The commission's question arose because while the State Senate, in S.B. 757, repealed the tax of three-sixteenths of one cent per 42-gallon barrel during the 2015 legislative session, a later bill from the same session, H.B. 7, mentioned the tax and directed its proceeds toward the oil and gas cleanup fund.
Attorney General Ken Paxton
| Photo via Office of the Texas Attorney General
Former Texas Railroad Commission Executive Director Milton Rister questioned the attorney general's office about whether the tax was still in effect, given the reference to it in the later legislation. The opinion noted that Rister asked: "(W)hen the legislature, in the same session, first repeals the tax on the production of crude oil but later, in separate legislation, directs the dedication of that tax to a specific fund, (whether) the tax remain(s) in effect."
The opinion said that Rister thought that S.B. 757 and H.B. 7 conflicted in a way that couldn’t be reconciled; and, since H.B. 7 was passed later, the tax should still be in effect. In the opinion, the attorney general’s office wrote that the legislation merely mentioned the tax and didn't re-enact it. The opinion also cited case law that a legislative act can’t modify an already repealed law—the law would have to be re-instated first.
In particular, the opinion quoted a 1985 case that decided, “a reference in an amendment to a repealed statute ‘does not revive an otherwise repealed statute, but is merely read disregarding the now erroneous reference.’”
Because the tax wasn’t specifically re-enacted, it is no longer in effect as of the effective date of S.B. 757, which was Sept. 1, the opinion said.
The opinion was signed by Paxton and worked on by Jeffrey C. Mateer, first assistant attorney general; Brantley Starr, deputy attorney general for legal counsel; Virginia K. Hoelscher, chairwoman of the Opinion Committee; and William A. Hill, assistant attorney general serving on the Opinion Committee.
Texas Attorney General Opinion No. KP-0085