Is the Texas crude oil production tax still in effect after SB 757 and HB 7?

Plain-English summary

The Railroad Commission asked whether the small state tax on crude oil petroleum produced in Texas survived two bills the same Legislature passed in 2015. Senate Bill 757, titled "Repeal of the Production Taxes on Crude Petroleum and Sulfur," expressly repealed Natural Resources Code sections 81.111 through 81.114 (section 81.111 had levied the tax at three-sixteenths of one cent per 42-gallon barrel) and amended section 81.116 to drop its reference to the tax. A week later, House Bill 7, an omnibus fiscal bill, amended section 81.112 to read that "the tax shall be deposited in the oil and gas regulation and cleanup fund." The Commission asked whether the later bill's reference to "the tax" kept the repealed levy alive.

The AG concluded it did not. The starting point was that Senate Bill 757 repealed the levy outright. House Bill 7 did not purport to levy the tax; it only addressed where "the tax" would be deposited, amending a section the same Legislature had just repealed. The AG explained that courts do not give an attempted amendment of a repealed statute the effect of reviving it; the erroneous reference is simply read out. The Texas Constitution reinforces the point: to revive a law, the Legislature must re-enact and publish it at length, which did not happen here.

The AG also addressed two arguments the Commission's predecessor had raised. One was that the legislative history of other bills proposed that session (House Bill 6 and House Bill 4034) showed an intent for the tax to continue. The AG responded that courts are reluctant to treat proposed legislation that was not enacted as evidence of the intent behind legislation that was. The other was that House Bill 7 and Senate Bill 757 irreconcilably conflict, so the later-enacted House Bill 7 should prevail. The AG found no conflict, because House Bill 7 never tried to levy the tax that Senate Bill 757 repealed. So, because the Legislature repealed section 81.111 and did not reenact or revive the levy, the crude oil tax did not remain in effect after the effective date of its repeal.

Currency note

This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Natural Resources Code provisions discussed here were repealed or amended in 2015, and the law may have changed further since 2016, so confirm the current statutes before relying on these specifics.

What the opinion meant for those who asked

The Railroad Commission (as the opinion described it): The opinion answered the Commission's question that the crude oil production tax formerly levied by section 81.111 did not remain in effect after Senate Bill 757's repeal, and that House Bill 7's reference to "the tax" did not revive it.

The oil and gas industry (as the opinion described it): The opinion described the levy on crude oil petroleum as repealed and not revived, while noting that Senate Bill 757 preserved tax liability that had accrued before the repeal's effective date.

Anyone reading the two bills together (as the opinion described it): The opinion explained the statutory-construction rule it applied: an amendment that refers to an already-repealed statute does not bring the repealed law back, and reviving a law requires re-enacting and publishing it at length under the Texas Constitution.

Common questions

Is the Texas crude oil production tax still collected?
The AG concluded it was not. Senate Bill 757 repealed the section that levied it, and nothing reenacted or revived the levy.

Didn't House Bill 7 mention "the tax"?
Yes, but only to say where it would be deposited. The AG explained that amending a section referring to an already-repealed tax does not revive the tax.

Why doesn't amending a repealed statute bring it back?
Texas courts read the reference to the repealed statute out as an erroneous reference, and the Texas Constitution requires that to revive a law it be re-enacted and published at length.

What about the legislative history of other 2015 bills?
The AG noted courts are reluctant to use proposed legislation that was never enacted as evidence of the intent behind the bills that were enacted.

Did the repeal erase taxes already owed?
No. The opinion pointed to Senate Bill 757's provision that tax liability accruing before the repeal's effective date continued in effect for collection and enforcement.

Background and statutory framework

Before the 2015 session, subchapter E of chapter 81 of the Natural Resources Code levied a tax on crude petroleum produced in Texas at three-sixteenths of one cent per 42-gallon barrel (section 81.111), directed its deposit (section 81.112) and use (section 81.113), and imposed a separate oil-field cleanup regulatory fee "in addition to" the section 81.111 tax (section 81.116) (Tex. Nat. Res. Code §§ 81.111, 81.112, 81.113, 81.116). Senate Bill 757 expressly repealed sections 81.111 through 81.114 and amended section 81.116 to remove the reference to the tax (Tex. Nat. Res. Code §§ 81.111 through 81.114; Act of May 22, 2015, 84th Leg., R.S., ch. 470). House Bill 7, enacted a week later, amended section 81.112 to provide that "the tax shall be deposited in the oil and gas regulation and cleanup fund," without otherwise referring to the repealed levy (Act of May 29, 2015, 84th Leg., R.S., ch. 448).

The AG rejected reliance on the legislative history of unenacted bills, because courts are reluctant to treat proposed legislation that was not enacted as evidence of legislative intent and do "not look to extraneous matters for an intent the statute does not state" (Dutcher v. Owens, 647 S.W.2d 948 (Tex. 1983); Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525 (Tex. 2000)). The AG also found no irreconcilable conflict between the two bills that would make the later-enacted House Bill 7 control, because House Bill 7 did not purport to levy the repealed tax (Tex. Gov't Code § 311.025(a)).

Finally, the AG applied the rule that courts do not give an attempted amendment of a repealed statute the effect of reviving it; such a reference is "merely read disregarding the now erroneous reference," and the Texas Constitution requires that to revive a law it "be re-enacted and published at length" (Willaby v. State, 698 S.W.2d 473 (Tex. App.-Fort Worth 1985, no writ); Tex. Const. art. III, § 36). Because the levy in section 81.111 was repealed and not reenacted or revived, the tax did not remain in effect after the effective date of its repeal.

Citations

Constitutional and statutory provisions:

• Tex. Const. art. III, § 36 (reviving a law requires re-enactment and publication at length)
• Tex. Nat. Res. Code § 81.111 (crude petroleum tax levy, repealed)
• Tex. Nat. Res. Code §§ 81.111 through 81.114 (repealed by S.B. 757)
• Tex. Nat. Res. Code § 81.112 (disposition of tax proceeds)
• Tex. Nat. Res. Code § 81.113 (use of tax proceeds)
• Tex. Nat. Res. Code § 81.116 (oil-field cleanup regulatory fee)
• Tex. Gov't Code § 311.025(a) (later-enacted statute prevails on irreconcilable conflict)

Legislation:

• S.B. 757, Act of May 22, 2015, 84th Leg., R.S., ch. 470 (repeal of crude petroleum and sulfur production taxes)
• H.B. 7, Act of May 29, 2015, 84th Leg., R.S., ch. 448 (omnibus fiscal-matters bill)

Cases:

• Dutcher v. Owens, 647 S.W.2d 948 (Tex. 1983)
• Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525 (Tex. 2000)
• Willaby v. State, 698 S.W.2d 473 (Tex. App.-Fort Worth 1985, no writ)

Secondary source:

• IA Norman J. Singer & J.D. Shambie Singer, Sutherland Statutory Construction § 22.3 (7th ed. 2009)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0085
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2016/kp0085.pdf

Original opinion text

Best-effort transcription from the official PDF. Minor extraction artifacts were corrected; the linked PDF is authoritative.

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

May 10, 2016

Ms. Kimberly Corley Opinion No. KP-0085
Executive Director
Railroad Commission of Texas Re: Whether the tax on crude oil petroleum
Post Office Box 12967 produced in this State remains in effect in light of
Austin, Texas 78711-2967 the Eighty-fourth Legislature's passage of Senate
Bill 757 and House Bill 7 (RQ-0072-KP)

Dear Ms. Corley:

On behalf of the Railroad Commission ("Commission"), your predecessor asked whether the tax on crude oil petroleum produced in this State remains in effect in light of the Eighty-fourth Legislature's passage of Senate Bill 757 and House Bill 7. [1] Senate Bill 757 repealed sections 81.111 through 81.114 of the Natural Resources Code, which previously provided for levy of the tax. See Act of May 22, 2015, 84th Leg., R.S., ch. 470, § 1(1), 2015 Tex. Gen. Laws 1791, 1791 ("S.B. 757"). House Bill 7 amended section 81.112 of the Natural Resources Code to provide that "the tax shall be deposited in the oil and gas regulation and cleanup fund." See Act of May 29, 2015, 84th Leg., R.S., ch. 448, § 29, 2015 Tex. Gen. Laws 1740, 1752 ("H.B. 7"). Your predecessor 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." Request Letter at 1.

Prior to the 2015 legislative session, pertinent parts of chapter 81, subchapter E of the Natural Resources Code provided:

    § 81.111. Tax Levy
    A tax is levied on crude petroleum produced in this state in the amount of three-sixteenths of one cent on each barrel of 42 standard gallons. [2]

    § 81.112. Disposition of Tax Proceeds
    The tax shall be deposited in the General Revenue Fund. [3]

    § 81.113. Use of Tax Proceeds
    Proceeds from the tax shall be used for the administration of the state's oil and gas conservation laws. [4]

    § 81.116. Oil-Field Cleanup Regulatory Fee on Oil
    [Imposing a fee.]
    The fee is in addition to, and independent of any liability for, the taxes imposed under Section 81.111 of this code .... [5]

S.B. 757, titled "Repeal of the Production Taxes on Crude Petroleum and Sulfur," expressly repealed sections 81.111 to 81.114 and amended section 81.116 to eliminate the reference to the tax imposed in section 81.111. See Act of May 22, 2015, 84th Leg., R.S., ch. 470, §§ 1, 5, 2015 Tex. Gen. Laws 1791, 1791-92. S.B. 757 was enacted on May 22, 2015. See S.B. 757, § 10, 2015 Tex. Gen. Laws at 1792.

H.B. 7 was enacted on May 29, 2015. See Act of May 29, 2015, 84th Leg., R.S., ch. 448, § 59, 2015 Tex. Gen. Laws 1740, 1759-60. H.B. 7 is an omnibus bill concerning fiscal matters affecting various governmental entities and makes miscellaneous changes to multiple codes. Section 29 of H.B. 7 amends section 81.112 of the Natural Resources Code to read: "The tax shall be deposited in the oil and gas regulation and cleanup fund" pursuant to another provision governing the fund. H.B. 7, § 29, 2015 Tex. Gen. Laws at 1752. H.B. 7 does not otherwise refer to the tax formerly levied in subsection 81.111(a).

Your predecessor noted that early versions of other bills proposed in the same session once contained language referring to the disposition of the tax on crude petroleum, although such language concerning the tax was ultimately moved to H.B. 7. Request Letter at 2-4 (referring to House Bill 6 and House Bill 4034). He suggested that the legislative history of these other bills reveals a general legislative intent that the tax continue and be placed into the oil and gas regulation and cleanup fund. Id. However, courts are reluctant to consider proposed legislation that was not enacted as evidence of legislative intent for legislation that is enacted into law. See Dutcher v. Owens, 647 S.W.2d 948, 950 (Tex. 1983); see also Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000) (stating that courts do "not look to extraneous matters for an intent the statute does not state").

Your predecessor also asserted that H.B. 7 and S.B. 757 irreconcilably conflict and, as H.B. 7 was enacted last, it must prevail. Request Letter at 4-5 (citing TEX. GOV'T CODE § 311.025(a)). The two bills do not conflict, however, because H.B. 7 does not purport to levy the tax on crude oil petroleum that was repealed in S.B. 757. [6] Courts do not give an attempted amendment of a repealed statute the effect of reviving the repealed statute. See Willaby v. State, 698 S.W.2d 473, 478 (Tex. App.-Fort Worth 1985, no writ) (holding that 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"); see also TEX. CONST. art. III, § 36 (providing that to revive a law it must "be re-enacted and published at length"); see generally IA Norman J. Singer & J.D. Shambie Singer, Sutherland Statutory Construction § 22.3 (7th ed. 2009) at 253 (stating that "[s]ince an amendatory act alters, modifies, or adds to a prior statute, all courts hold that a repealed act cannot be amended. No court will give the attempted amendment effect to revive a repealed act." (footnote omitted)). Accordingly, because the Legislature repealed section 81.111 of the Natural Resources Code and the authority to levy a tax was not reenacted or revived by other legislation, the tax on crude oil petroleum formerly levied by section 81.111 does not remain in effect after the effective date of its repeal.

SUMMARY

Because the Legislature repealed section 81.111 of the Natural Resources Code and the authority to levy a tax was not reenacted or revived by other legislation, the tax on crude oil petroleum formerly levied by section 81.111 does not remain in effect after the effective date of its repeal.

Very truly yours,

KEN PAXTON
Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy Attorney General for Legal Counsel

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

WILLIAM A. HILL
Assistant Attorney General, Opinion Committee

[1] See Letter from Mr. Lindil C. Fowler, Jr., Interim Exec. Dir., Tex. R.R. Comm'n, to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Nov. 12, 2015), https://www.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter"); Email from Ms. Kimberly Corley, Exec. Dir., Tex. R.R. Comm'n, to Op. Comm. (Feb. 10, 2016) (on file with the Op. Comm.) (confirming desire to proceed with request).

[2] Act of May 24, 1977, 65th Leg., R.S., ch. 871, § 81.111, 1977 Tex. Gen. Laws 2345, 2510, repealed by S.B. 757, § 1, 2015 Tex. Gen. Laws at 1791.

[3] Act of Apr. 9, 1981, 67th Leg., R.S., ch. 65, § 1, 1981 Tex. Gen. Laws 144, 144, repealed by S.B. 757, § 1, 2015 Tex. Gen. Laws at 1791.

[4] Act of May 24, 1977, 65th Leg., R.S., ch. 871, § 81.112, 1977 Tex. Gen. Laws 2343, 2511, repealed by S.B. 757, § 1, 2015 Tex. Gen. Laws at 1791.

[5] TEX. NAT. RES. CODE § 81.116, as amended by S.B. 757, § 5, 2015 Tex. Gen. Laws at 1792 (emphasis added).

[6] S.B. 757, section 9 provides for tax liability accrued before September 1, 2015:

    The change in law made by this Act does not affect tax liability accruing before the effective date of this act. That liability continues in effect as if this Act had not been enacted, and the former law is continued in effect for the collection of taxes due and for civil and criminal enforcement of the liability for those taxes.

Act of May 22, 2015, 84th Leg., R.S., ch. 470, § 9, 2015 Tex. Gen. Laws 1791, 1792.