According to the Legislative Budget Board (LBB), HB 3159 would not result in a significant fiscal impact to the State. The bill creates a severance tax exemption for hydrocarbons produced from restimulation wells—wells that have been inactive but are returned to production through re-fracturing treatments. The exemption would apply for up to 36 consecutive months following treatment, or until the cumulative exemption equals the lesser of either actual restimulation costs or $750,000 per well. Importantly, the bill disallows the concurrent application of other severance tax benefits, such as the high-cost gas reduction under Section 201.057 of the Tax Code, during the exemption period.

While the bill does forgo tax revenue for qualifying production, the volume of production expected from these revived wells is considered to be marginal or limited. Therefore, the Texas Comptroller’s Office and the Legislative Budget Board estimate that the number of wells likely to qualify, and the resulting tax revenue impact, will be small enough to be considered negligible at the state level.

Additionally, the bill authorizes civil penalties for fraudulent exemption claims, which may help deter misuse and mitigate enforcement costs. The Railroad Commission and the Comptroller of Public Accounts are tasked with implementing administrative procedures, including well certification and tax application review, but the bill does not anticipate requiring significant new expenditures or staffing.

In sum, although the bill introduces a tax exemption that could reduce severance tax revenue from specific sources, the overall fiscal effect is expected to be minimal. No fiscal impact is anticipated for local governments.

HB 3159 proposes a narrowly scoped severance tax exemption for hydrocarbons produced from restimulated wells that were previously inactive. The policy encourages the recovery of stranded oil and gas from existing wells using current infrastructure, reducing the need for new drilling. The exemption is limited in both duration (36 months) and amount (up to $750,000 or actual restimulation costs), and is only available to operators that meet strict eligibility standards. It is not available for currently producing wells or those already receiving other tax incentives, such as high-cost gas tax reductions. Enforcement provisions, including penalties for fraudulent claims, add appropriate safeguards.

The bill aligns with the principles of limited government and free enterprise by reducing targeted tax burdens to encourage reinvestment, while maintaining fiscal discipline. It does not grow the size or regulatory scope of government, nor does it impose any new burden on taxpayers. The LBB has determined the fiscal impact will be negligible due to the limited number of qualifying wells.

However, the bill does bring a concern: the continued use of targeted tax exemptions as economic incentives risks narrowing the overall tax base and creating unequal treatment among businesses. While the intent here is to encourage the activation of non-producing assets, such incentives can, over time, shift the tax burden onto others and distort market competition. These dynamics merit caution. Policymakers should remain mindful that long-term tax fairness is best achieved through broad-based reform rather than sector-specific carve-outs.

In light of the bill’s limited scope, measurable performance criteria, and lack of significant fiscal or regulatory downside, HB 3159 represents a pragmatic and restrained use of tax policy. Nonetheless, this recommendation is made with the expectation that exemptions like this remain rare, temporary, and subject to future review within a broader commitment to equitable and simplified tax policy. Texas Policy Research recommends that lawmakers vote YES on HB 3159.

• Individual Liberty: The bill supports individual liberty by reducing a specific tax burden for those choosing to reinvest in dormant oil and gas wells. By freeing up capital for voluntary economic activity, it enhances operators' ability to pursue productive use of private property and extract value from otherwise unutilized assets. The exemption does not impose mandates or coercive requirements, and participation is fully voluntary.
• Personal Responsibility: The bill upholds personal responsibility by requiring operators to apply for certification, report actual restimulation costs, and adhere to clear qualifying criteria. The inclusion of penalties for fraudulent filings reinforces accountability. Operators are rewarded only if they take on the financial risk of restimulating inactive wells and comply with the law’s provisions.
• Free Enterprise: The bill encourages free enterprise by promoting resource development through a market-based incentive rather than government subsidy. It lowers a cost barrier that may prevent economically viable activity. However, as a targeted tax exemption, it does introduce a degree of preferential treatment for one type of investment within a competitive sector. While this is more restrained than many incentive programs, overuse of such exemptions can distort markets and reduce neutrality—potentially undermining long-term free-market fairness.
• Private Property Rights: By allowing operators and mineral rights owners to reactivate and profit from previously idle assets, the bill strengthens private property rights. It facilitates the lawful and economically beneficial use of subsurface property without regulatory expansion or state intervention in ownership or use.
• Limited Government: The bill does not expand the regulatory power or size of government. The administrative duties it assigns to the Railroad Commission and Comptroller are consistent with their existing roles. However, because it creates a new carve-out in the tax code, it does introduce a new layer of administrative complexity. From a limited government standpoint, this is acceptable in the short term due to the bill's clear boundaries and minimal fiscal impact, but it reinforces the need for restraint in proliferating special exemptions.

• SB 782 (Same As)