HOUSE BILL 276

46th legislature - STATE OF NEW MEXICO - second session, 2004

INTRODUCED BY

Brian K. Moore

AN ACT

RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR DELIVERY OF PRODUCED WATER TO THE CANADIAN RIVER OR THE CIMARRON RIVER.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

     "[NEW MATERIAL] CREDIT--DELIVERY OF PRODUCED WATER.--

          A. A taxpayer may claim a credit in an amount equal to one thousand dollars ($1,000) per acre-foot of produced water delivered to the Canadian river or to the Cimarron river if:

                (1) the delivery of the water is in compliance with rules promulgated by the oil and conservation division of the energy, minerals and natural resources department pursuant to Subsection B of Section 70-2-12 NMSA 1978;

                (2) the state engineer determines that diversion of the water will not impair existing water rights, is not contrary to the conservation of water within the state and is not detrimental to the public welfare of the state; and

                (3) after delivery, the water remains public water of the state.

          B. A taxpayer may apply for certification of eligibility for the tax credit provided in this section from the state engineer and the energy, minerals and natural resources department, which shall determine if the applicant's delivery of produced water is in accordance with Subsection A of this section.

          C. To claim the tax credit provided in this section, a taxpayer shall submit to the taxation and revenue department a certification of eligibility issued by the state engineer and the energy, minerals and natural resources department pursuant to Subsection B of this section, along with any other information the taxation and revenue department may require to determine the amount of the tax credit due the taxpayer.

          D. The tax credit provided in this section may be deducted from the taxpayer's corporate income tax liability for the taxable year. If the amount of the tax credit claimed exceeds the taxpayer's corporate income tax liability, the credit may be carried forward for up to three consecutive years.

          E. As used in this section, "produced water" means water that is an incidental byproduct for drilling for or production of oil or gas."

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