OK
Oklahoma House Bill HB3568

Oklahoma 2022 Regular Session

Oklahoma House Bill HB3568 Compare Versions

OldNewDifferences
1-An Act
2-ENROLLED HOUSE
1+
2+
3+Req. No. 11603 Page 1 1
4+2
5+3
6+4
7+5
8+6
9+7
10+8
11+9
12+10
13+11
14+12
15+13
16+14
17+15
18+16
19+17
20+18
21+19
22+20
23+21
24+22
25+23
26+24
27+
28+STATE OF OKLAHOMA
29+
30+2nd Session of the 58th Legislature (2022)
31+
32+CONFERENCE COMMITTEE
33+SUBSTITUTE FOR
34+ENGROSSED HOUSE
335 BILL NO. 3568 By: McBride and Fetgatter of
436 the House
537
638 and
739
840 Allen of the Senate
941
1042
1143
1244
1345
46+CONFERENCE COMMITTEE SUBSTITUTE
1447
1548 An Act relating to revenue and taxation; creating
1649 the Oklahoma Emission Reduction Technology
1750 Incentive Act; stating legislative findings ;
1851 defining term; creating the Oklahoma Emission
1952 Reduction Technology Rebate Program; providing
2053 rebate for certain documented expe nditures;
2154 requiring administration by the Department of
2255 Environmental Quality and the Oklahoma Tax
2356 Commission; providing for eligibility; requiring
2457 the Department to approve or disapprove claims;
2558 limiting amount of rebate payments; prescribing
2659 procedures if certain limit or balance is
2760 exceeded; creating the Oklahoma Emission
2861 Reduction Technology Incentive Revolving Fund;
2962 stating sources of fund ; providing for
3063 expenditures from fund; providing for transfer of
3164 funds under certain circumstance; requiring the
3265 promulgation of rules; providing sunset of rebate
3366 program; amending 68 O.S. 2021, Section 1001,
3467 which relates to gross production tax; creating
3568 exemption for certain secondary recovery
3669 projects; limiting exemption under certain
3770 circumstances; defining terms ; providing
3871 procedure to qualify for exemption; creating
3972 exemption for certain projects; allowing a refund
4073 for certain projects; prescribing refund
4174 procedure; limiting eligibility for exemptions;
75+
76+Req. No. 11603 Page 2 1
77+2
78+3
79+4
80+5
81+6
82+7
83+8
84+9
85+10
86+11
87+12
88+13
89+14
90+15
91+16
92+17
93+18
94+19
95+20
96+21
97+22
98+23
99+24
100+
42101 amending 68 O.S. 2021, Section 1001.3a, which
43102 relates to exemptions from gross production tax;
44103 modifying definitions; modifying exemption
45104 amounts; decreasing total amount of refunds;
46-clarifying refund procedure; providing for ENR. H. B. NO. 3568 Page 2
105+clarifying refund procedure; providing for
47106 codification; providing an effective date; and
48107 declaring an emergency.
49108
50109
51110
52111
53-SUBJECT: Revenue and taxation
54112
55113 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
56-
57114 SECTION 1. NEW LAW A new section of law to be codified
58115 in the Oklahoma Statutes as Secti on 55006 of Title 68, unless there
59116 is created a duplication in numbering, reads as follows:
60-
61117 Sections 1 through 7 of this act shall be known and may be cited
62118 as the "Oklahoma Emission Reduction Technology Incentive Act ".
63-
64119 SECTION 2. NEW LAW A new section of law to be codified
65120 in the Oklahoma Statutes as Section 55007 of Title 68, unless there
66121 is created a duplication in numberi ng, reads as follows:
67-
68122 The Legislature hereby finds that the reduction of emissions
69123 from upstream and midstream oil and gas production, exploration,
70124 completions, gatherings, storage, processing, and transmission
71125 activities serves the interests of the citize ns of Oklahoma and such
72126 emission reduction activities with new and innovative technologies
73127 should be encouraged and incentivized.
74-
75128 SECTION 3. NEW LAW A new section of law to be codified
76129 in the Oklahoma Statutes as Section 55008 of Title 68, unless there
77130 is created a duplication in numbering, reads as follows:
78131
132+Req. No. 11603 Page 3 1
133+2
134+3
135+4
136+5
137+6
138+7
139+8
140+9
141+10
142+11
143+12
144+13
145+14
146+15
147+16
148+17
149+18
150+19
151+20
152+21
153+22
154+23
155+24
156+
79157 As used in the Oklahoma Emission Reduction Technology Incentive
80158 Act, "Emission Reduction Project" means and includes, but is not
81159 limited to:
82-
83160 1. Existing and new technology projects that reduce emissions
84161 of regulated pollutants from stationary sources; and
85-
86162 2. Existing and new technology projects that reduce emissions
87163 from upstream and mi dstream oil and gas exploration, production,
88164 completions, gathering, storage, processing, and transmission
89165 activities through the following:
90- ENR. H. B. NO. 3568 Page 3
91166 a. the replacement, repair, or retrofit of stationary
92167 compressor engines,
93-
94168 b. the installation of systems and /or equipment to reduce
95169 or eliminate the loss of gas, venti ng of gas, flaring
96170 of gas, or burning of gas using other combustion
97171 control devices, or
98-
99172 c. the installation of emissions monitoring equipment or
100173 devices.
101-
102174 SECTION 4. NEW LAW A new s ection of law to be codified
103175 in the Oklahoma Statute s as Section 55009 of Title 68, unless there
104176 is created a duplication in numbering, reads as follows:
105-
106177 A. Upon the effective date of t his act, there is hereby created
107178 the Oklahoma Emission Reduction Techn ology Rebate Program. There is
108179 hereby created a rebate in the amount of up to twenty -five percent
109180 (25%) of documented expenditures made in this state directly
181+
182+Req. No. 11603 Page 4 1
183+2
184+3
185+4
186+5
187+6
188+7
189+8
190+9
191+10
192+11
193+12
194+13
195+14
196+15
197+16
198+17
199+18
200+19
201+20
202+21
203+22
204+23
205+24
206+
110207 attributable to the implementation of a qual ified Emission Reduction
111208 Project.
112-
113209 B. The rebate program shall be administer ed by the Department
114210 of Environmental Quality and the Oklahoma Tax Commission, as
115211 provided in the Oklahoma Emission Reduction Technology Incentive
116212 Act.
117-
118213 C. To be eligible for a rebate payment:
119-
120214 1. The applicant responsible for the implementation o f a
121215 qualified Emission Re duction Project in this state shall submit
122216 documentation to the Department of Environmental Quality no later
123217 than six (6) months after the end of the fisca l year in which the
124218 expenditures were made stating the amount of expen ditures made in
125219 this state directly related to the implementation of the qualified
126220 Emission Reduction Project;
127-
128221 2. The applicant has filed all Oklahoma tax returns and tax
129222 documents which are required by the laws of this state; and
130-
131223 3. The applicant shall provide evidence of a cer tificate of
132224 general liability insurance with a minimum coverage of One Million
133225 Dollars ($1,000,000.00) and a workers ' compensation policy pursuant
134226 to the laws of this state which shall include coverage of employer 's
135-liability. ENR. H. B. NO. 3568 Page 4
136-
227+liability.
137228 D. The Department of Enviro nmental Quality shall approve or
138229 disapprove all claims for a rebate payment and shall notify the
139230 Oklahoma Tax Commission. The Tax Commission shall, upon
231+
232+Req. No. 11603 Page 5 1
233+2
234+3
235+4
236+5
237+6
238+7
239+8
240+9
241+10
242+11
243+12
244+13
245+14
246+15
247+16
248+17
249+18
250+19
251+20
252+21
253+22
254+23
255+24
256+
140257 notification of approval from the Department of Environmental
141258 Quality, issue a rebate payment for all approved claims fro m funds
142259 in the Oklahoma Emission Reduction Technology Incentive Revolving
143260 Fund created in Section 5 of this act. Rebate payments from the
144261 fund shall not exceed Ten Million Dollars ($10,000,000 .00) in any
145262 fiscal year. If the amount of approved claims exce eds the amount
146263 specified in this subsection in a fiscal year, payments shall be
147264 made proportionately to all of the parties making a claim prior to
148265 the deadline which is approved by the Department of Environmental
149266 Quality with the amount to be paid to each approved party being
150267 product of the individual claim amount times the percentage
151268 resulting from Ten Million Dollars ($10,000,000.00) divided by the
152269 total amount of approved claims for the period. If an approved
153270 claim is not paid in whole or in part, the u npaid claim or unpaid
154271 portion shall be paid in the following fiscal years in the order in
155272 which the claims are approved by the Department.
156-
157273 E. Approved claims for rebate that exceed the balance of the
158274 Oklahoma Emission Red uction Technology Incentive Revolv ing Fund
159275 created in Section 5 of this act may be paid in part and the unpaid
160276 portion shall be paid upon the fund reaching a sufficient balance in
161277 the order in which the claims are approved by the Department.
162-
163278 SECTION 5. NEW LAW A new section of law to be codified
164279 in the Oklahoma Statutes as Section 55010 of Title 68, unless there
165280 is created a duplication in numbering, reads as follo ws:
281+
282+Req. No. 11603 Page 6 1
283+2
284+3
285+4
286+5
287+6
288+7
289+8
290+9
291+10
292+11
293+12
294+13
295+14
296+15
297+16
298+17
299+18
300+19
301+20
302+21
303+22
304+23
305+24
166306
167307 There is hereby created in the State Treasury a revolving fund
168308 for the Oklahoma Tax Commission to be designated the "Oklahoma
169309 Emission Reduction Technology Incentive Revo lving Fund". The fund
170310 shall be a continuing fund, not subject to fiscal year limi tations,
171311 and shall consist of all monies received by the Tax Commissio n from
172312 any public or private donat ions, contributions, and gifts received
173313 for the benefit of the fund an d any amounts appropriated by the
174314 Oklahoma Legislature designated for deposit in t he fund. All monies
175315 accruing to the credit of the fund are hereby appr opriated and may
176316 be budgeted and expended by the Tax Commission for the purpose of
177317 paying rebates as pro vided in this act. Expenditures from the fund
178318 shall be made upon warrants issued by the State Treasurer against
179319 claims filed as prescribed by law with t he Director of the Office of
180-Management and Enterprise Services for approval and payment. Any ENR. H. B. NO. 3568 Page 5
320+Management and Enterprise Services for approval and payment. Any
181321 remaining unencumbered balance upon the cessation of the Oklahoma
182322 Emission Reduction Tech nology Rebate Program, as provided in Section
183323 7 of this act, shall be tr ansferred to the General Revenue Fund of
184324 the State of Oklahoma.
185-
186325 SECTION 6. NEW LAW A new section of law to be codified
187326 in the Oklahoma Statutes as Section 55011 of Title 68, unless there
188327 is created a duplication in numbering, reads as follows:
189-
190328 The Department of Environmental Quality and the Oklahoma Tax
191329 Commission shall promulgate rules necessary to implement the
192330 provisions of this act.
193331
332+Req. No. 11603 Page 7 1
333+2
334+3
335+4
336+5
337+6
338+7
339+8
340+9
341+10
342+11
343+12
344+13
345+14
346+15
347+16
348+17
349+18
350+19
351+20
352+21
353+22
354+23
355+24
356+
194357 SECTION 7. NEW LAW A new section of law to be codified
195358 in the Oklahoma Statutes as Section 55012 of Title 68, unless there
196359 is created a duplication in numbering, reads as follows:
197-
198360 The Oklahoma Emission Reduction Technology Rebate Program shall
199361 cease on July 1, 2027.
200-
201362 SECTION 8. AMENDATORY 68 O.S. 2021, S ection 1001, is
202363 amended to read as follows:
203-
204364 Section 1001. A. There is hereby levied upon the production of
205365 asphalt, ores bearing lead, zinc, jack and copper a tax equal to
206366 three-fourths of one percent (3/4 of 1%) on the gross value thereof.
207-
208367 B. On or after the effective date of this ac t and except as
209368 provided by paragraph 4 of this subsection, there shall be levied a
210369 tax on the gross value of the production of oil and gas as follows:
211-
212370 1. Upon the production of oil a tax equal to seven percent (7%)
213371 of the gross value of the production of oil based on a per barrel
214372 measurement of forty -two (42) U.S. gallons of two hundred thirty -one
215373 (231) cubic inches per gallon, computed at a temperature of sixty
216374 (60) degrees Fahrenheit;
217-
218375 2. Upon the production of gas a tax equal to seven percent (7%)
219376 of the gross value of the production of gas;
220-
221377 3. Notwithstanding the levies in paragraphs 1 and 2 of this
222378 subsection, the production of oil, gas, or oil and gas from wells
223379 spudded prior to the effective date of this act, and on or after the
224380 effective date of this act, shall be taxed at a rate of five percent
225-(5%) commencing with the month of first production for a period of ENR. H. B. NO. 3568 Page 6
381+
382+Req. No. 11603 Page 8 1
383+2
384+3
385+4
386+5
387+6
388+7
389+8
390+9
391+10
392+11
393+12
394+13
395+14
396+15
397+16
398+17
399+18
400+19
401+20
402+21
403+22
404+23
405+24
406+
407+(5%) commencing with the month of first production for a period of
226408 thirty-six (36) months. Thereafter , the production shall be taxed
227409 as provided in paragraphs 1 and 2 of thi s subsection; and
228-
229410 4. If the provisions of Article XIII -C of the Oklahoma
230411 Constitution are approved by the people pursuant to adoption of
231412 State Question No. 795, the rate of gross prod uction tax imposed by
232413 paragraph 3 of this subsection shall be reduced to two percent (2%)
233414 for the first thirty-six (36) months of production and thereafter
234415 the rate of taxation shall be seven percent (7%).
235-
236416 C. The taxes hereby levied shall also attach to, and are levied
237417 on, what is known as the royalty interest, and the amount of such
238418 tax shall be a lien on such interest.
239-
240419 D. 1. Except as otherwise provided in this section, for
241420 secondary and tertiary recovery projects approved or having an
242421 initial project start date on or after July 1, 2022, all production
243422 which results from s uch secondary and tertiary recovery projects
244423 shall be exempt from the gross production tax levied pursuant to
245424 this section for a period not to exceed five (5) years from the
246425 initial project start date or for a period ending upon the
247426 termination of the seco ndary and tertiary recovery process,
248427 whichever occurs first .
249-
250428 2. For purposes of this subsection , "project start date" means
251429 the date on which the injection of liquids, gases, or other matter
252430 begins on an enhanced recovery project .
253431
432+Req. No. 11603 Page 9 1
433+2
434+3
435+4
436+5
437+6
438+7
439+8
440+9
441+10
442+11
443+12
444+13
445+14
446+15
447+16
448+17
449+18
450+19
451+20
452+21
453+22
454+23
455+24
456+
254457 3. For new secondary and tertiary recovery projects approved by
255458 the Oklahoma Corporation Commission on or after July 1, 2022, such
256459 approval shall constitute qualification for an exemption .
257-
258460 4. For all production exempted pursuant to this subsection, a
259461 refund against gross production taxes sha ll be issued as provided in
260462 subsection F of this section .
261-
262463 E. Except as otherwise provided by this section, the production
263464 of oil, gas, or oil and gas from wells drilled but not completed as
264465 of July 1, 2021, which are completed w ith the use of recycled wat er
265466 on or after July 1, 2022, shall earn an exemption from the gross
266467 production tax levied from the date of first sales for a period of
267468 twenty-four (24) months. The exemption provided in this subsection
268469 shall be proportional to th e percentage of the total amount of water
269470 used to complete the well that is recycled water. For all
270-production exempted pursuant to this subsection, a refund against ENR. H. B. NO. 3568 Page 7
471+production exempted pursuant to this subsection, a refund against
271472 gross production taxes shall be issued as provided in subsection F
272473 of this section. For purposes of this subsectio n, "recycled water"
273474 means oil and gas produced water and waste that has been
274475 reconditioned or treated by mechanical or chemical processes into a
275476 reusable form.
276-
277477 F. On or after July 1, 2022, for all oil and gas production
278478 exempt from gross production taxes pursuant to subsections D and E
279479 of this section during a given fiscal year, a refund of gross
280480 production taxes shall be issued to the well operator or a designee
481+
482+Req. No. 11603 Page 10 1
483+2
484+3
485+4
486+5
487+6
488+7
489+8
490+9
491+10
492+11
493+12
494+13
495+14
496+15
497+16
498+17
499+18
500+19
501+20
502+21
503+22
504+23
505+24
506+
281507 in the amount of such exempted gross production taxes paid during
282508 such period, subject to the following provisions:
283-
284509 1. A refund shall not be claimed until after the end of the
285510 fiscal year. As used in this subsection, a fiscal year shall be
286511 deemed to begin on Jul y 1 of one calendar year and shall end on June
287512 30 of the subsequent calendar year;
288-
289513 2. Unless otherwise specified, no claims for refunds pursuant
290514 to the provisions of this subsection shall be filed more than
291515 eighteen (18) months after the first day of the fiscal year in which
292516 the refund is first available;
293-
294517 3. Any person claiming a refund pursuant to the exemption
295518 provided in subsections D and E of this section shall file an
296519 application with the Tax Commission which, upon determination of
297520 qualification by the Corporation Commission, shall approve the
298521 application for such exemption;
299-
300522 4. The Tax Commission may require any person claiming a refund
301523 pursuant to the exemption s provided in subsections D and E of this
302524 section to furnish information or records concer ning the exemption
303525 as is deemed necessary by the Tax Commission ;
304-
305526 5. No claims for refu nds pursuant to the provisions of this
306527 subsection shall be filed by or on behalf of persons other than the
307528 operator or a working interest owner of record at the time of
308529 production;
530+
531+Req. No. 11603 Page 11 1
532+2
533+3
534+4
535+5
536+6
537+7
538+8
539+9
540+10
541+11
542+12
543+13
544+14
545+15
546+16
547+17
548+18
549+19
550+20
551+21
552+22
553+23
554+24
309555
310556 6. No entity, including subsidiaries of the enti ty, shall be
311557 authorized to receive refunds claimed pursuant to the exemption
312558 provided in subsection D of this section that exceed twenty percent
313559 (20%) of the limitation provided in paragraph 7 of this subsection;
314560 and
315- ENR. H. B. NO. 3568 Page 8
316561 7. The total amount of refunds authorized shall not exceed
317562 Fifteen Million Dollars ($15,000,000.00) pursuant to the exemption
318563 provided in subsection D of this section and Ten Million Dollars
319564 ($10,000,000.00) pursuant to the exemption provided in subsection E
320565 of this section for any fiscal year. I f the amount of claims for
321566 refunds exceed the limits provided in this paragraph, the Tax
322567 Commission shall determine the percentage of the refund which
323568 establishes the proportionate share of t he refund which may be
324569 claimed by any taxpayer so that the maximum amounts authorized by
325570 this paragraph are not exceeded.
326-
327571 G. On or after July 1, 2022, all persons shall only be entitled
328572 to either the exemption granted pursuant to subsection D or E of
329573 this section for each oil, gas, or oil and gas well drilled or
330574 recompleted in this state. H owever, any person who qualifies for
331575 the exemption granted pursuant to subsection E of this section shall
332576 not be prohibited from qualification for the exemption granted
333577 pursuant to subsection D of this section if the exemption granted
334578 pursuant to subsectio n E of this section has expired.
579+
580+Req. No. 11603 Page 12 1
581+2
582+3
583+4
584+5
585+6
586+7
587+8
588+9
589+10
590+11
591+12
592+13
593+14
594+15
595+16
596+17
597+18
598+19
599+20
600+21
601+22
602+23
603+24
335604
336605 H. The Tax Commission shall have the power to require any such
337606 person engaged in mining or the production or the purchase of such
338607 asphalt, mineral ores aforesaid, oil, or gas, or the owner of any
339608 royalty interest therein t o furnish any additional information by it
340609 deemed to be necessary for the purpose of correctly computing the
341610 amount of the tax; and to examine the books, records and fi les of
342611 such person; and shall have power to conduct hearings and c ompel the
343612 attendance of witnesses, and the production of books, records and
344613 papers of any person.
345-
346614 E. I. Any person or any member of any firm or association, or
347615 any officer, official, agent or employee of any corporation who
348616 shall fail or refuse to testify ; or who shall fail or refuse to
349617 produce any books, records or papers which the Tax Commission shall
350618 require; or who shall fail or refuse to furnish any other evidence
351619 or information which t he Tax Commission may require; or who shall
352620 fail or refuse to answ er any competent quest ions which may be put to
353621 him or her by the Tax Commission, touching the business, property,
354622 assets or effects of any such person relating to the gross
355623 production tax imposed by this article or exemption authorized
356624 pursuant to this sec tion or other laws, sh all be guilty of a
357625 misdemeanor, and, upon conviction thereof, shall be punished by a
358626 fine of not more than Five Hundred Dollars ($500.00), or
359627 imprisonment in the jail o f the county where such offense shall have
360-been committed, for not more than one (1) yea r, or by both such fine ENR. H. B. NO. 3568 Page 9
628+been committed, for not more than one (1) yea r, or by both such fine
629+
630+Req. No. 11603 Page 13 1
631+2
632+3
633+4
634+5
635+6
636+7
637+8
638+9
639+10
640+11
641+12
642+13
643+14
644+15
645+16
646+17
647+18
648+19
649+20
650+21
651+22
652+23
653+24
654+
361655 and imprisonment; and each day of such refusal on the part of such
362656 person shall constitute a separate and distinct offense.
363-
364657 F. J. The Tax Commission shall have the power and authority to
365658 ascertain and determin e whether or not any r eport herein required to
366659 be filed with it is a true and correct report of the gross products,
367660 and of the value thereof, of such person engaged in the mining or
368661 production or purchase of asphalt and ores bearing minerals
369662 aforesaid and of oil and gas. If an y person has made an untrue or
370663 incorrect report of the gross production or value or volume thereof,
371664 or shall have failed or refused to make such report, the Tax
372665 Commission shall, under the rules prescribed by it, ascertain the
373666 correct amount of either, and compute the tax.
374-
375667 G. K. The payment of the taxes herein levied shall be in full,
376668 and in lieu of all taxes by the state, counties, cities, towns,
377669 school districts and o ther municipalities upon any property rights
378670 attached to or inhere nt in the right to the minerals, upon producing
379671 leases for the mining of asphalt and ores bearing lead, zinc, jack
380672 or copper, or for oil, or for gas, upon the mineral rights and
381673 privileges for the minerals aforesaid belonging or appertaining to
382674 land, upon the machinery, applian ces and equipment used in and
383675 around any well producing oil, or gas, or any mine producing asphalt
384676 or any of the mineral ores aforesaid and actually used in the
385677 operation of such well or mine. The payment of gross production tax
386678 shall also be in lieu of a ll taxes upon the oil, gas, asphalt or
679+
680+Req. No. 11603 Page 14 1
681+2
682+3
683+4
684+5
685+6
686+7
687+8
688+9
689+10
690+11
691+12
692+13
693+14
694+15
695+16
696+17
697+18
698+19
699+20
700+21
701+22
702+23
703+24
704+
387705 ores bearing minerals hereinbefore mentioned during the tax year in
388706 which the same is produced, and upon any investment in any of the
389707 leases, rights, privileges, minerals or other property descri bed
390708 herein. Any interest in the land, other than that herein
391709 enumerated, and oil in storage, asphalt and ores bearing minerals
392710 hereinbefore named, mined, produced and on hand at the date as of
393711 which property is assessed for general and ad valorem taxation for
394712 any subsequent tax year, shall be assessed and taxed as other
395713 property within the taxing district in which such property is
396714 situated at the time.
397-
398715 H. L. No equipment, material or proper ty shall be exempt from
399716 the payment of ad valorem tax by reason of the payment of the gr oss
400717 production tax except such equipment, machinery, tools, material or
401718 property as is actually necessary and being used and in use in the
402719 production of asphalt or of o res bearing lead, zinc, jack or copper
403720 or of oil or gas. Provided , the exemption shall include the
404721 wellbore and non-recoverable down-hole material, including casing,
405-actually used in the disposal of waste materials produced with such ENR. H. B. NO. 3568 Page 10
722+actually used in the disposal of waste materials produced with such
406723 oil or gas. It is ex pressly declared that no ice plants, hospitals,
407724 office buildings, garages, residences, g asoline extraction or
408725 absorption plants, water systems, fuel systems, rooming houses and
409726 other buildings, nor any equipment or material used in connection
410727 therewith, shall be exempt from ad valorem tax.
411728
729+Req. No. 11603 Page 15 1
730+2
731+3
732+4
733+5
734+6
735+7
736+8
737+9
738+10
739+11
740+12
741+13
742+14
743+15
744+16
745+17
746+18
747+19
748+20
749+21
750+22
751+23
752+24
753+
412754 SECTION 9. AMENDATORY 68 O. S. 2021, Section 1001.3a, is
413755 amended to read as follows:
414-
415756 Section 1001.3a A. As used in this section:
416-
417757 1. Prior to January 1, 2015, "economically at-risk oil or gas
418758 lease" means any oil or gas lease operated at a net loss or at a net
419759 profit which is less than the total gross production tax remitted
420760 for such lease during the previous calendar year;
421-
422761 2. On or after January 1, 2015 , and before January 1, 2022 ,
423762 "economically at-risk oil or gas lease" means any oil or gas lease
424763 with one or more producing wells with an average production volume
425764 per well of ten (10) barrels of oil or sixty (60) MCF of natural gas
426765 per day or less operated at a net loss or at a net profit which i s
427766 less than the total gross production tax remitted for such lease
428767 during the previous c alendar year; and
429-
430768 3. For calendar year 2022 and subsequent calendar years,
431769 "economically at-risk oil or gas lease " means any oil or gas lease
432770 with one or more producin g wells with an average production volume
433771 per well of ten (10) barr els of oil or sixty ( 60) MCF or less of
434772 natural gas per day operated at a net loss or at a net profit which
435773 is less than the total gross production tax remitted for such lease
436774 during the previous calendar year, and any oil lease operating while
437775 the gross value of the productio n of oil is less than Fifty Dollars
438776 ($50.00), on an average monthly basis, based on a per-barrel
439777 measurement of forty -two (42) U.S. gallons of two hundred thirty -one
778+
779+Req. No. 11603 Page 16 1
780+2
781+3
782+4
783+5
784+6
785+7
786+8
787+9
788+10
789+11
790+12
791+13
792+14
793+15
794+16
795+17
796+18
797+19
798+20
799+21
800+22
801+23
802+24
803+
440804 (231) cubic inches per gallon, computed at a temperature of sixty
441805 (60) degrees Fahrenheit or gas lease operating while the gross value
442806 of the production of gas is less than Three Dollars and fifty cents
443807 ($3.50), on an average monthly basis, based on a measur ement of one
444808 million (1,000,000) British thermal units (MMBtu); and
445-
446809 4. "Lease" shall be defined as in Section 1001.2 of this title.
447-
448810 B. When certified as such pursuant to the provisions of this
449811 section, production from an economically at -risk oil or gas lease
450-shall be eligible for an exemption from the gross production t ax ENR. H. B. NO. 3568 Page 11
812+shall be eligible for an exemption from the gross production t ax
451813 levied pursuant to subsection B of Section 1001 of this title for
452814 production on such lease during the previous calendar year in the
453815 following amounts:
454-
455816 1. If the gross production tax rat e levied pursuant to
456817 subsection B of Section 1001 of this title was seven percent (7%),
457818 then the exemption shall equal six-sevenths (6/7) of the gross
458819 production tax levied; and
459-
460820 2. If the gross production tax rate levied pursuant to
461821 subsection B of Sectio n 1001 of this title was four percent (4%)
462822 five percent (5%), then the exemption shall e qual three-fourths
463823 (3/4) four-fifths (4/5) of the gross production tax levied ; and
464-
465824 3. If the gross production tax rate levied pursuant to
466825 subsection B of Section 1001 of this title was one percent (1%) or
467826 two percent (2%), no exemptio n shall apply.
827+
828+Req. No. 11603 Page 17 1
829+2
830+3
831+4
832+5
833+6
834+7
835+8
836+9
837+10
838+11
839+12
840+13
841+14
842+15
843+16
844+17
845+18
846+19
847+20
848+21
849+22
850+23
851+24
468852
469853 C. For all production exempt from gross production taxes
470854 pursuant to this section, a refund of gross production taxes paid
471855 for production in the previous calendar year in th e amounts
472856 specified in subsection B of this section, subject to the
473857 limitations and prov isions specified in subsections D and J of this
474858 section, shall be issued to the well operator or a designee. For
475859 production in calendar years ending on or before Decem ber 31, 2015,
476860 the refund shall not be claimed until after July 1 of the year
477861 following the year of production. For production in the calendar
478862 year ending December 31, 2016, the refund shall be claimed before
479863 July 1, 2017. The Tax Commission shall not acc ept or pay any claim
480864 for refund filed on or after July 1, 2017.
481-
482865 D. For oil and natural gas produced from qualifying leases in
483866 calendar years 2015 and 2016, the total amount of refunds authorized
484867 in this section for each calendar year shall not exceed Twel ve
485868 Million Five Hundred Thousand Dollars ($12,500,000.00) for all
486869 products combined. For oil and natural gas produced from qualifying
487870 leases in calendar year 2022 and subsequent calendar years , the
488871 total amount of refunds authorized in this section for ea ch calendar
489872 year shall not exceed Ten Million Dollars ($10,000,000.00) for all
490873 products combined. If the amount of claims exceeds Twelve Million
491874 Five Hundred Thousand Dollars ($12,500,000.00) the limits provided
492875 in this subsection, the Tax Commission shal l determine the
493876 percentage of the refund which establishes the propo rtionate share
877+
878+Req. No. 11603 Page 18 1
879+2
880+3
881+4
882+5
883+6
884+7
885+8
886+9
887+10
888+11
889+12
890+13
891+14
892+15
893+16
894+17
895+18
896+19
897+20
898+21
899+22
900+23
901+24
902+
494903 of the refund which may be claimed by any taxpayer so that the
495-maximum amount authorized by this subsection is not exceeded. ENR. H. B. NO. 3568 Page 12
496-
904+maximum amount authorized by this subsection is not exceeded.
497905 E. Any operator making application for an econo mically at-risk
498906 oil or gas lease status under the provisions of this section shall
499907 submit documentation to the Tax Commission, as determined by the Tax
500908 Commission to be appropriate and necessary.
501-
502909 F. For the purposes of this section, determination of the
503910 economically at-risk oil or gas lease status shall be made by
504911 subtracting from the gross revenue of that lease for the previous
505912 calendar year severance taxes, if any, royalty, operating expenses
506913 of the lease to include expendable workover and recompletion c osts
507914 for the previous calendar year, and including overhead costs up to
508915 the maximum overhead percentage allowed by the Council of Petroleum
509916 Accountants Societies (COPAS) guidelines. For the purposes of this
510917 calculation, depreciation, depletion or intangib le drilling costs
511918 shall not be included as lease operating expenses.
512-
513919 G. The Tax Commission shall have sole authority to determine if
514920 an oil or gas lease qualifies for certification as an economically
515921 at-risk oil or gas lease. The Tax Commission shall pro mulgate rules
516922 governing the certification process.
517-
518923 H. Except as provided in subsection I of this section, gross
519924 production tax exemptions under the provisions of this section shall
520925 be limited to production from calendar years 2005, 2006, 2007, 2008,
521926 2009, 2010, 2011, 2012 and 2013 2005 through 2013 and 2022 and
927+
928+Req. No. 11603 Page 19 1
929+2
930+3
931+4
932+5
933+6
934+7
935+8
936+9
937+10
938+11
939+12
940+13
941+14
942+15
943+16
944+17
945+18
946+19
947+20
948+21
949+22
950+23
951+24
952+
522953 subsequent calendar years; provided, no claims for refunds for
523954 calendar years provided in this subsection 2013 and before shall be
524955 paid on or after December 31, 2015.
525-
526956 I. Gross production tax exempt ions claimed under the provisions
527957 of this section shall be limited t o production from calendar years
528958 2014, 2015 and 2016; provided, no claims for refunds for the
529959 calendar years 2014 and 2015 shall be claimed or paid more than
530960 eighteen (18) months after the first day of the fiscal year during
531961 which the refund is first avail able. For production in calendar
532962 year 2016, no claim for refund filed on or after July 1, 2017, shall
533963 be claimed or paid.
534-
535964 J. Claims for refunds pursuant to the provisions of this
536965 section for production periods ending on or before December 31,
537966 2016, shall be paid pursuant to the provisions of this subsection.
538967 The claims for refunds referenced herein shall be paid in equal
539968 payments over a period of thirty -six (36) months. The first paymen t
540-shall be made after July 1, 2018, but prior to August 1, 2018. Th e ENR. H. B. NO. 3568 Page 13
969+shall be made after July 1, 2018, but prior to August 1, 2018. Th e
541970 Tax Commission shall provide, not later than June 30, 2018, to the
542971 operator or designated interest owner, a schedule of rebates to be
543972 paid out over the thirty -six-month period.
544-
545973 K. Claims for refunds pursuant to the provisions of this
546974 section for production periods beginning and ending on or after
547975 calendar year 2022 shall be paid in the form of a one -time payment.
976+SECTION 10. This act shall become effective July 1, 2022.
548977
549-SECTION 10. This act shall become effective July 1, 2022.
978+Req. No. 11603 Page 20 1
979+2
980+3
981+4
982+5
983+6
984+7
985+8
986+9
987+10
988+11
989+12
990+13
991+14
992+15
993+16
994+17
995+18
996+19
997+20
998+21
999+22
1000+23
1001+24
5501002
5511003 SECTION 11. It being immediately necessary for the pr eservation
5521004 of the public peace, health or safety, an emergency is hereby
5531005 declared to exist, by reason whereof this act shall take effect and
5541006 be in full force from and after its passage and approval.
5551007
556- ENR. H. B. NO. 3568 Page 14
1008+58-2-11603 AQH 05/18/22
5571009
558-Passed the House of Representatives the 19th day of May, 2022.
559-
560-
561-
562-
563- Presiding Officer of the House
564- of Representatives
565-
566-
567-Passed the Senate the 20th day of May, 2022.
568-
569-
570-
571-
572- Presiding Officer of the Senate
573-
574-
575-
576-OFFICE OF THE GOVERNOR
577-Received by the Office of the Governor this ____________________
578-day of ___________________, 20_______, at _______ o'clock _______ M.
579-By: _________________________________
580-Approved by the Governor of the State of Oklahoma this _____ ____
581-day of ___________________, 20_______, at _______ o'clock _______ M.
582-
583-
584- _________________________________
585- Governor of the State of Oklahoma
586-
587-OFFICE OF THE SECRETARY OF STATE
588-Received by the Office of the Secretary of State this __________
589-day of ___________________, 20_______, at _______ o'clock _______ M.
590-By: _________________________________