March 4, 2001

Mr. President:

Your JUDICIARY COMMITTEE, to whom has been referred

has had it under consideration and reports same with recommendation that it DO PASS, amended as follows:

1. On page 27, strike lines 6 through 13 and insert in lieu thereof the following item:

"(3) If an amount is received from a working interest, royalty payment, shut-in well payment, take-or-pay payment, bonus or delay rental or any other interest not provided for in Paragraph (1) or (2) of this subsection, the amount that is allowed as a deduction from gross income for depletion purposes under the federal income tax law in effect at the time of severance shall be allocated to principal and the balance to income. If the amount that is allowed as a deduction is less than fifteen percent of gross income for depletion purposes, or if depletion is not allowed, then the amount to be allocated to principal and the amount to be allocated to income shall be determined in accordance with Section 104.".,

and thence referred to the FINANCE COMMITTEE.

Respectfully submitted,

__________________________________

Michael S. Sanchez, Chairman

Adopted_______________________ Not Adopted_______________________

(Chief Clerk) (Chief Clerk)

Date ________________________

The roll call vote was 6 For 0 Against

Yes: 6

No: 0

Excused: Ingle, Komadina, Martinez, Payne

Absent: None

H0109JU1 .137737.1