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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 4455 By: Wallace and Martinez of the
House
and
Thompson and Hall of the
Senate
COMMITTEE SUBSTITUTE
An Act relating to economic development; creating the
Large-scale Economic Activity and Development Act of
2022; declaring legisla tive findings; defining terms;
providing scenario where con dition is deemed to
exist; creating investment rebate program until a
certain date; providing qualifying criteria;
providing new job creation thresholds for
qualification; providing for reduction of thresholds
under certain conditions; providing calculatio n
methodology for reduction; authorizing the
aggregation of certain new jobs of subsidiaries
toward threshold; assigning administrat ion
responsibilities for rebate program; providing annual
reporting requirements; authorizing the promulgation
of rules; establishing eligibility criteria;
establishing different participation at different
capital expenditure tiers; limiting conditions where
participation may occur at certain tier; requiring
certain application submissions and evaluation;
disqualifying particip ation in certain program if
participating in rebate program; limiting
disqualification; limiting the calculation and
application of certain expenditures; requiring
certain notifications to certain agency; authorizing
issuances of payments under certain con ditions;
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limiting source of payments; limiting auth orization
to award payments; providing calculation methodology
for certain limitation; providing for ongoing review
of eligibility; providing calculation methodology;
authorizing payments in multiple years ; authorizing
pre-qualification and specific account ing procedures;
prohibiting allocations, reallocations, payments,
encumbrances, pre-encumbrances, and pre-
qualifications under certain conditions; creating the
Large-scale Economic Activity and Developmen t Fund;
establishing fund characteristics; deeming f unds
appropriated; providing budgeting and expenditure
authority, limitations, and procedure s; limiting use
of funds; providing for transfer of unencumbered
funds after certain date; and providing for
codification.
BE IT ENACTED BY THE PEOPLE OF THE S TATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Se ction 3645.1 of Title 68, unless there
is created a duplication in numbering, reads as follows:
This act shall be known and may b e cited as the "Large-scale
Economic Activity and Development Act of 2022" and shall be known
and may be cited as the "LEAD Act".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3645.2 of Title 68, unless there
is created a duplication in numbering, reads as follows:
The Legislature hereby finds that it is beneficial to the state
and its citizens to provide large-scale enhanced economic
development incentives to certain establishment s, including, but not
limited to, those associated with an industry that creates a
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substantial number of jobs, as such economic activity results in a
greater benefit to the state .
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Sec tion 3645.3 of Title 68, unless there
is created a duplication in numbering, reads as follows:
As used in the Large-scale Economic Activity and Development Act
of 2022:
1. "Application" means a submission of detailed information by
an establishment that complies with all procedures established by
the Department of Commerce related to the format, content, means,
and timing of submission. Such submissions shall include, but not
be limited to, a capital expenditure plan outlin ing anticipated
annual placements-in-service of qualified property and a job
creation plan outlining anticipated annual total s of new direct jobs
created;
2. "Available funds" means the total amount of monies
identified for deposit in the Large-scale Economic Activity and
Development Fund by law, less the cumulative total of all rebate
payments, pre-qualified rebate payments, encumbrances, and pre-
encumbrances of the Large-scale Economic Activity and Development
Fund;
3. "Establishment" means any business, no matter what legal
form, including, but not limited to, a sole proprietorship,
partnership, corporation, or limited liabili ty corporation;
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4. "New direct job" means full-time employment, employed by the
establishment, which did not exist in this state prior to the date
of approval, by the Oklahoma Department of Commerce, of an
application made pur suant to this act. A job shall be deemed to
exist in this state prior to approval of an application if the
activities and functions for which the particular job exists have
been ongoing at any time within six (6) months prior to such
approval; and
5. "Qualified capital expenditure" means an expenditure on
property in this state after May 1, 2022, depreciable under Internal
Revenue Code, 26 U.S.C., Section 168 , that has been verified by the
Department of Commerce. The cost of property placed in service and
expenditures made on behalf of or for t he benefit of an
establishment by a separate business entity shall be co nsidered an
"expenditure" of the establishm ent for purposes of this definitio n.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3645.4 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. 1. There is hereby created until July 1, 2032, an
investment rebate program for the cost of qualified capital
expenditures by establishments which cre ate not less than a
threshold number of new direct jobs as provided in this section.
2. a. The threshold number o f new direct jobs required for
establishments to qualify and remain qualified for
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investment rebate payments created in paragraph 1 of
this subsection shall be as follows :
(1) five hundred (500) new direct jobs in y ear one of
the rebate payment period,
(2) one thousand (1,000) cumulative new direct jobs
in year two of the rebate payment period,
(3) two thousand five hundred (2,500) cumulative new
direct jobs in year three of the rebate payment
period,
(4) four thousand (4,000) cumulative new direct jobs
in year four of the rebate payment period, and
(5) four thousand (4,000) cumulative new direct jobs
in year five of the rebate payment period.
b. For establishments qualifying for investment rebate
payments pursuant to division (2) of subparagraph a of
paragraph 1 of subsection E of this section, the
threshold numbers provided in this paragraph shall be
reduced proportionally to reflect the lesser capital
expenditure of such establishment. Such reduction
shall be achieved by multiplying the thresholds in
paragraph 2 of this subsection by a fractional
equivalent equal to the following: the capital
expenditure plan amount of the establishment
qualifying pursuant to division (2) of subparagraph a
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of paragraph 1 of subsec tion E of this section,
divided by the capital expenditure plan amount of the
establishment qualifying pursuant to division (1) of
subparagraph a of paragraph 1 of subsec tion E of this
section.
3. New direct jobs in this state of a subsidiary of a primary
establishment, if such subsidiary is defin ed or classified in the
NAICS Manual under Industry Group No. 5132, 5222, or 5413, shall be
aggregated with the number of new direct jobs in the state of the
primary establishment for the purpose of determining if the
thresholds provided in paragraph 2 of this subsection are met.
B. The investment rebate program shall be administered by the
Oklahoma Department of Commerce and the Oklahoma Tax Commission.
C. By October 1 of each year, the Oklahoma Department of
Commerce shall submit electronically an annual report to the Speaker
of the Oklahoma House of Representatives, the President Pro Tempore
of the Oklahoma State Senate, the Chair of the Appropriations and
Budget Committee of the Oklahoma House of Representatives, the Chair
of the Appropriations Committee of the Oklahoma State Senate, and
the Executive Director of the Legislative Office of Fiscal
Transparency detailing the program and investment rebate payments.
D. The Oklahoma Department of Commerce an d the Oklahoma Tax
Commission may promulga te rules to implement the provisions of this
act.
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E. To be eligible for consideration for an investment rebate
payment awarded under the provisions of this act , a primary
establishment shall:
1. a. (1) Submit an application and documentation to the
Oklahoma Department of Commerce, as required by
the Department, outlining a capital expenditure
plan in this state associated with qualified
capital expenditures totaling no less than Three
Billion Six Hundred Six Million Dollars
($3,606,000,000.00), or
(2) Submit an application and documentation to the
Oklahoma Department of Commerce, as required by
the Department, outlining a capital expenditure
plan in this state associated with qualified
capital expenditures totaling no less than Five
Hundred Million Dollars ($500,000,000.00),
provided a separate establishment has been
approved by the Oklahoma Department of Commerce
to participate in the investment rebate program
pursuant to division (1) of this subparagraph ,
and such establishment participating pursuant to
division (1) of this subparagraph remains in
compliance with such approved application, and
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b. Have made qualified capital expe nditures of no less
than twenty percent (20%) of the capital expenditure
plan outlined in the appli cation submitted by the
primary establishment and approved by the Oklahoma
Department of Commerce, pursuant to the provisions of
this act.
New investment in this state of a subsidiar y of a primary
establishment, if su ch subsidiary is defined or classified in the
NAICS Manual under Industry Group No. 5132, 5222, or 5413, shall be
aggregated with the investment in this state of the primary
establishment for the purpose of determining if the thresholds
provided in this paragraph are met;
2. Be qualified to receive payments pursuant to the provisions
of the Oklahoma Quality Jobs Pr ogram Act created pursuant to Section
3601 of Title 68 of the Oklahoma Statu tes; and
3. Have filed all Oklahoma tax returns and tax documents
required by law.
F. 1. Notwithstanding any other provision of law, if a primary
establishment receives an investment rebate payment pursuant to the
provisions of this act, neither the qualified establishment nor its
subsidiaries shall be eligible to receive the credits provided for
in Section 2357.4 of Title 68 of the Oklahoma Statutes, in
connection with the project or development for which the investment
rebate payment was based; provided, however, the limitation provided
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in this paragraph, on claiming credits, shall not apply to the
amount of qualifying capital expend iture in excess of Four Billion
Five Hundred Million Dollars ($4,500,000,000.00) made by an
establishment on a project or development in this state.
2. Notwithstanding any other provision of law, no investment
expenditure shall be utilized for calculation purposes in a way that
results in the qualification of more than one establishment under
the provisions of this act, for investment rebate payments based on
the same expenditure.
3. Notwithstanding any other provision of law, no investment
rebate payment amount prequalified or pre-encumbered by the
Department of Commerce for an establishment qualifying for payment
under the provisions of division (1) of subparagraph a o f paragraph
1 of subsection E of this section, shall be rea llocated to an
establishment that at such time is participating under an approved
application pursuant to division (2) of subparagraph a of paragraph
1 of subsection E of this sectio n.
G. 1. Except as limited by paragraph 2 of this subsection, the
Oklahoma Department of Commerce shall approve or disapprove claims
for rebates and shall notify the Tax Commission subject to the
limitations set forth in Section 5 of this act. Upon notification
of approval from the Department, the Commission shall issue payment
for all approved claims from funds held in the Large-scale Economic
Activity and Development Fund created pursuant to Section 6 of this
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act and subject to t he limitations set forth in Section 5 of this
act.
2. The Department shall disapprove all applications and claims,
as well as portions of applications and claims, for rebates that
would exceed the balance of available funds in the Large-scale
Economic Activity and Development Fund.
H. The total amount of applications approved and investment
rebate payments awarded under the provisions of this act shall not
exceed the total amount of monies designated by law for deposit to
the Large-scale Economic Activity and Development Fund.
SECTION 5. NEW LAW A new sec tion of law to be codified
in the Oklahoma Statutes as Section 3645.5 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. Subject to the approval and ongoing review of the
eligibility application by the Oklahoma Department of Commerce, the
investment rebate payment authorized by this act shall be equal to
three and four-tenths percent (3.4%) of the cost of the qualified
capital expenditure in the year of expenditure; investment rebate
payments in the same amount shall be allowed in each of the four (4)
subsequent years, provided the Department has verified that the
establishment remains eligible for such payment in each successive
year based on the eligibility criteria of this act.
B. For the purpose of calculating the investment rebate payment
authorized in subsection A of this section, the "cost of the
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qualified capital expenditure" shall include the cost of such
capital expenditure by the primary establishment and also the cost
of such capital expenditure by subsidiaries of the primary
establishment, provided such subsidiary is defi ned or classified in
the NAICS Manual under Industry Group No. 5132, 5222, or 5413.
C. The Oklahoma Department of Commerce is authorized to
conditionally pre-qualify and account for anticipated future
investment rebate payments. The Oklahoma Department of Commerce
shall not pre-qualify investment rebate payments, encumber funds,
pre-encumber funds, or otherwise allocate resources in any way that
would result in the allocation of investment rebate payments in
excess of the balance of available funds in the Large-scale Economic
Activity and Development Fund.
SECTION 6. NEW LAW A new section of law t o be codified
in the Oklahoma Statutes as Section 3645.6 of Title 68, unless there
is created a duplication in numbering, reads as follows :
A. There is hereby created in the State Treasury a fund for the
Oklahoma Tax Commission to be designated the "Large-scale Economic
Activity and Development Fund", also known as the "LEAD Fund". The
fund shall be a continuing fund, not subject to fiscal year
limitations, and shall consist of all monies designated for deposit
to the fund by law. All monies accruing to the credit of the fund
are hereby appropriated and may be budgeted and expended by t he Tax
Commission for the purpose of paying rebates as provided in the
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Large-scale Economic Activity and Development Act of 2022.
Expenditures from said fund shal l be made upon warrants issued by
the State Treasurer against claims filed as prescribed by law with
the Director of the Office of Management and Enterprise Services for
approval and payment.
B. All unencumbered funds remaining in the Large-scale Economic
Activity and Development Fund upon the expiration of the Large-scale
Economic Activity and Development A ct of 2022 shall be transferred
to the State Treasurer for deposit in the General Revenue Fund.
58-2-11408 JM 04/18/22