Texas – Exemption for Offshore Spill Response Containment Property

SALT Report 2586 – Recently enacted legislation in Texas amends the exemption for property used in connection with an offshore spill response containment system. Under the provisions of House Bill 1712, the purchase, sale, lease, rental, storage, use, or other consumption of offshore spill response containment property is exempt from sales and use tax if it is constructed, acquired, stored, or installed as part of an offshore spill response containment system. The exemption also applies to qualified property, if it is used solely for the development, improvement, storage, deployment, repair, maintenance, or testing of such a system as well as to services performed on the property.

For purposes of the exemption, a qualified “offshore spill response containment system” is:

  • A marine or mobile containment system that is designed and used to implement a federal or state response plan for the control, reduction, or monitoring of air, water, or land pollution in the event of a blowout or loss of control of an offshore well drilled or used for the exploration for or production of oil or gas, and
  • Must have the capability to respond to a blowout or loss of control of an offshore well drilled or used in more than 5,000 feet of water, and
  • Must be used solely to respond to a blowout or loss of control of an offshore well, and
  • Is used as a temporary measure to address fugitive oil, gas, sulfur, or other minerals after a leak has occurred

To qualify for the exemption, the offshore spill response containment system must be stored, while not in use, in a county bordering the Gulf of Mexico, or on a bay or other body of water immediately adjacent to the Gulf of Mexico. Additionally, the equipment cannot be used to explore for, or produce, oil, natural gas, sulfur or other minerals.

The exemption is effective June 14, 2013 and is available to those entities that are formed primarily for the purpose of designing, developing, modifying, enhancing, assembling, operating, deploying, and maintaining an offshore spill response containment system.

For Further Information

Texas State Legislature – House Bill 1712, Laws 2013