| 39 | 48 | | |
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| 40 | 49 | | An Act relating to revenue and taxation; amending 68 |
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| 41 | 50 | | O.S. 2021, Section 1001, as amended by Section 8, |
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| 42 | 51 | | Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024, Section |
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| 43 | 52 | | 1001), which relates to gross production tax; |
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| 44 | 53 | | providing a temporary dis counted tax rate for certain |
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| 45 | 54 | | oil and gas recovery projects; requiring certain |
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| 46 | 55 | | surety; providing surety amount; providing an |
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| 47 | 56 | | effective date; and declaring an emergency. |
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| 53 | 62 | | |
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| 54 | 63 | | BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA: |
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| 55 | 64 | | SECTION 1. AMENDATORY 68 O.S. 2021, Section 1001, as |
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| 56 | 65 | | amended by Section 8, Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024, |
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| 57 | 66 | | Section 1001), is amended to read as follows: |
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| 58 | 67 | | Section 1001. A. There is hereby levied upon the production of |
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| 59 | 68 | | asphalt, ores bearing lead, zinc, jack and copper a tax equal to |
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| 60 | 69 | | three-fourths of one percent (3/4 of 1%) on the gross value thereof. |
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| 90 | 100 | | 1. Upon the production of oil a tax equal to seven percent (7%) |
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| 91 | 101 | | of the gross value of the production of oil based on a per barrel |
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| 92 | 102 | | measurement of forty -two (42) U.S. gallons of two hundred thirty -one |
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| 93 | 103 | | (231) cubic inches per gallon, computed at a temperature of sixty |
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| 94 | 104 | | (60) degrees Fahrenheit; |
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| 95 | 105 | | 2. Upon the production of gas a tax equal to seven percent (7%) |
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| 96 | 106 | | of the gross value of the production of gas; |
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| 97 | 107 | | 3. Notwithstanding the levies in paragraphs 1 and 2 of this |
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| 98 | 108 | | subsection, the production of oil, gas, or oil and gas from wells |
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| 99 | 109 | | spudded prior to the effective date of this act, and on or after the |
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| 100 | 110 | | effective date of this act, shall be taxed at a rate of five percent |
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| 101 | 111 | | (5%) commencing with the month of first produc tion for a period of |
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| 102 | 112 | | thirty-six (36) months. Thereafter, the production shall be taxed |
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| 103 | 113 | | as provided in paragraphs 1 and 2 of this subsection; and |
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| 104 | 114 | | 4. If the provisions of Article XIII -C of the Oklahoma |
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| 105 | 115 | | Constitution are approved by the people pursua nt to adoption of |
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| 106 | 116 | | State Question No. 795, the rate of gross production tax imposed by |
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| 107 | 117 | | paragraph 3 of this subsection shall be reduced to two percent (2%) |
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| 108 | 118 | | for the first thirty -six (36) months of production and thereafter |
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| 109 | 119 | | the rate of taxation shall be seven percent (7%). |
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| 139 | 150 | | D. 1. Except as otherwise provided in this section, for |
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| 140 | 151 | | secondary and tertiary recovery projects approved or having an |
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| 141 | 152 | | initial project start date on or after July 1, 2022, all production |
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| 142 | 153 | | which results from such secondary and tertiary recovery projects |
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| 143 | 154 | | shall be exempt from the gross production tax levied pursuant to |
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| 144 | 155 | | this section for a period not to exceed five (5) years from the |
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| 145 | 156 | | initial project start date or for a period ending upon the |
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| 146 | 157 | | termination of the secondary and tertiary recovery process, |
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| 147 | 158 | | whichever occurs first. |
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| 148 | 159 | | 2. For purposes of this subsection, "project start date" m eans |
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| 149 | 160 | | the date on which the injection of liquids, gases, or other matter |
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| 150 | 161 | | begins on an enhanced recovery project. |
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| 151 | 162 | | 3. For new secondary and tertiary recovery projects approved by |
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| 152 | 163 | | the Oklahoma Corporation Commission on or after July 1, 2022, such |
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| 153 | 164 | | approval shall const itute qualification for an exemption. |
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| 154 | 165 | | 4. For all production exempted pursuant to this subsection, a |
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| 155 | 166 | | refund against gross production taxes shall be issued as provided in |
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| 156 | 167 | | subsection F of this section. |
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| 157 | 168 | | 5. Except as otherwise provided in this section , any production |
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| 158 | 169 | | which results from a recovery project from a well on the Corporation |
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| 159 | 170 | | Commission's orphaned well list shall receive a fifty -percent |
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| 189 | 201 | | increase to the full rate of tax prescribed by paragraph 3 of |
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| 190 | 202 | | subsection B of this section. Furthermore, before any production |
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| 191 | 203 | | from a recovery project under this paragraph occurs the producer |
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| 192 | 204 | | overseeing the project shall file a corporate surety bond, letter of |
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| 193 | 205 | | credit from a banking institution, cash, or a certificate of deposit |
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| 194 | 206 | | with the Secretary of State in the sum of Twenty -five Thousand |
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| 195 | 207 | | Dollars ($25,000.00), per well t ransferred from the Corporation |
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| 196 | 208 | | Commission's orphaned well list, conditioned upon recovery under |
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| 197 | 209 | | this project for thirty -six (36) months. The Secretary of State |
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| 198 | 210 | | shall hold such corporate surety bond, letter of credit from a |
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| 202 | 214 | | Commission's orphaned well list. |
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| 203 | 215 | | E. Except as otherwise provided by this section, the production |
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| 204 | 216 | | of oil, gas, or oil and gas from wells drilled but not completed as |
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| 205 | 217 | | of July 1, 2021, which are completed with the use of recycled water |
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| 206 | 218 | | on or after July 1, 2022, shall earn an exemption from the gross |
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| 207 | 219 | | production tax levied from the date of first sales for a period of |
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| 208 | 220 | | twenty-four (24) months. The exemption provided in this subsection |
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| 209 | 221 | | shall be proportional to the percentage of the total amount of water |
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| 239 | 252 | | of this section. For purposes of this subsection, "recycled water" |
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| 240 | 253 | | means oil and gas produced water and waste that has been |
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| 241 | 254 | | reconditioned or treated b y mechanical or chemical processes into a |
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| 242 | 255 | | reusable form. |
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| 243 | 256 | | F. On or after July 1, 2022, for all oil and gas production |
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| 244 | 257 | | exempt from gross production taxes pursuant to subsections D and E |
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| 245 | 258 | | of this section during a given fiscal year, a refund of gross |
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| 246 | 259 | | production taxes shall be issued to the well operator or a designee |
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| 247 | 260 | | in the amount of such exempted gross production taxes paid during |
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| 248 | 261 | | such period, subject to the following provisions: |
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| 249 | 262 | | 1. A refund shall not be claimed until after the end of the |
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| 250 | 263 | | fiscal year. As use d in this subsection, a fiscal year shall be |
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| 251 | 264 | | deemed to begin on July 1 of one calendar year and shall end on June |
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| 252 | 265 | | 30 of the subsequent calendar year; |
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| 253 | 266 | | 2. Unless otherwise specified, no claims for refunds pursuant |
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| 254 | 267 | | to the provisions of this subsection shall be filed more than |
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| 255 | 268 | | eighteen (18) months after the first day of the fiscal year in which |
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| 256 | 269 | | the refund is first available; |
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| 257 | 270 | | 3. Any person claiming a refund pursuant to the exemption |
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| 258 | 271 | | provided in subsections D and E of this section shall file an |
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| 259 | 272 | | application with the Tax Commission which, upon determination of |
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| 288 | 302 | | 4. The Tax Commission may require any person claiming a refund |
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| 289 | 303 | | pursuant to the exemptions provided in subsections D and E of this |
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| 290 | 304 | | section to furnish information or records concerning the exemption |
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| 291 | 305 | | as is deemed necessary by the Tax Commission; |
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| 292 | 306 | | 5. No claims for refunds pursuant to the provisions of this |
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| 293 | 307 | | subsection shall be filed by or on behalf of persons other than the |
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| 294 | 308 | | operator or a working interest owner of record at the time of |
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| 295 | 309 | | production; |
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| 296 | 310 | | 6. No entity, including subsidiaries of the entity, shall be |
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| 297 | 311 | | authorized to receive refunds claimed pursuant to the exemption |
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| 298 | 312 | | provided in subsection D of this section that exceed twenty percent |
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| 299 | 313 | | (20%) of the limitation provided in paragraph 7 of this subsection; |
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| 300 | 314 | | and |
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| 301 | 315 | | 7. The total amount of refunds authorized shall not exceed |
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| 302 | 316 | | Fifteen Million Dollars ($15,000,000.00) pursuant to the exemption |
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| 303 | 317 | | provided in subsection D of this section and Ten Million Dollars |
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| 304 | 318 | | ($10,000,000.00) pursuant to the exemption provided in subsection E |
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| 305 | 319 | | of this section for any fiscal year. If the amount of claims for |
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| 306 | 320 | | refunds exceed the limits provided in this paragraph, the Tax |
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| 307 | 321 | | Commission shall determine the percentage o f the refund which |
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| 308 | 322 | | establishes the proportionate share of the refund which may be |
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| 337 | 352 | | G. On or after July 1, 2022, all persons shall only be entitled |
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| 338 | 353 | | to either the exemption granted pursuant to subsection D or E of |
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| 339 | 354 | | this section for each oil, gas, or oil and gas well drilled or |
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| 340 | 355 | | recompleted in this state. However, any person who qualifies for |
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| 341 | 356 | | the exemption granted pursuant to subsection E of this section shall |
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| 342 | 357 | | not be prohibited from qualification for the exemption granted |
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| 343 | 358 | | pursuant to subsection D of this section if the exemption granted |
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| 344 | 359 | | pursuant to subsection E of this section has expired. |
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| 345 | 360 | | H. The Tax Commission shall have the power to require any such |
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| 346 | 361 | | person engaged in mining or the production or the purchase of such |
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| 347 | 362 | | asphalt, mineral ores aforesaid, oil, or gas, or the owner of any |
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| 348 | 363 | | royalty interest therein to furnish any additional information by it |
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| 349 | 364 | | deemed to be necessary for the purpose of correctly computing the |
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| 350 | 365 | | amount of the tax; and to examine the books, records and files of |
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| 351 | 366 | | such person; and shall have power to conduct hearings and compel the |
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| 352 | 367 | | attendance of witnesses, and the production of books, records and |
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| 353 | 368 | | papers of any person. |
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| 354 | 369 | | I. Any person or any mem ber of any firm or association, or any |
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| 355 | 370 | | officer, official, agent or employee of any corporation who shall |
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| 356 | 371 | | fail or refuse to testify; or who shall fail or refuse to produce |
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| 357 | 372 | | any books, records or papers which the Tax Commission shall require; |
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| 358 | 373 | | or who shall fail or ref use to furnish any other evidence or |
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| 387 | 403 | | or her by the Tax Commission, touching the business, property, |
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| 388 | 404 | | assets or effects of any such person relating to the gross |
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| 389 | 405 | | production tax imposed by this article or exemption authorized |
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| 390 | 406 | | pursuant to this section or other laws, shall be guilty of a |
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| 391 | 407 | | misdemeanor, and, upon conviction thereof, shall be punished by a |
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| 392 | 408 | | fine of not more than Five Hundred Dollars ($500.00), or |
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| 393 | 409 | | imprisonment in the jail of the county where such offense shall have |
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| 394 | 410 | | been committed, for not more than one (1) year, or by both such fine |
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| 395 | 411 | | and imprisonment; and each day of such refusal on the part of such |
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| 396 | 412 | | person shall constitute a separate and distinct offense. |
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| 397 | 413 | | J. The Tax Commission shall have the power and authority to |
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| 398 | 414 | | ascertain and determine whether or not any report herein required to |
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| 399 | 415 | | be filed with it is a true and correct report of the gross products, |
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| 400 | 416 | | and of the value ther eof, of such person engaged in the mining or |
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| 401 | 417 | | production or purchase of asphalt and ores bearing minerals |
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| 402 | 418 | | aforesaid and of oil and gas. If any person has made an untrue or |
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| 403 | 419 | | incorrect report of the gross production or value or volume thereof, |
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| 404 | 420 | | or shall have failed or refused to make such report, the Tax |
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| 405 | 421 | | Commission shall, under the rules prescribed by it, ascertain the |
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| 406 | 422 | | correct amount of either, and compute the tax. |
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| 407 | 423 | | K. The payment of the taxes herein levied shall be in full, and |
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| 408 | 424 | | in lieu of all taxes by the stat e, counties, cities, towns, school |
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| 437 | 454 | | for the mining of asphalt and ores bearing lead, zinc, jack or |
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| 438 | 455 | | copper, or for oil, or for gas, upon the mineral rights and |
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| 439 | 456 | | privileges for the minerals aforesaid belonging or appertaining to |
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| 440 | 457 | | land, upon the machinery, appliances and equipment used in and |
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| 441 | 458 | | around any well producing oil, or gas, or any mine producing asphalt |
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| 442 | 459 | | or any of the mineral ores aforesaid and actually used in the |
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| 443 | 460 | | operation of such well or mine. The payment of gross production tax |
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| 444 | 461 | | shall also be in lieu of all taxes upon the oil, gas, asphalt or |
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| 445 | 462 | | ores bearing minerals hereinbefore mentioned during the tax year in |
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| 446 | 463 | | which the same is produced, and upon any investment in any of the |
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| 447 | 464 | | leases, rights, privileges, minerals or other property described |
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| 448 | 465 | | herein. Any interest in the land, other than that herein |
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| 449 | 466 | | enumerated, and oil in storage, asphalt and ores bearing minerals |
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| 450 | 467 | | hereinbefore named, mined, produced and on hand at the date as of |
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| 451 | 468 | | which property is assessed for general and ad valorem taxation for |
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| 452 | 469 | | any subsequent tax year, shall be assessed and taxed as other |
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| 453 | 470 | | property within the taxing district in which such property is |
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| 454 | 471 | | situated at the time. |
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| 455 | 472 | | L. No equipment, material or property shall be exempt from the |
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| 456 | 473 | | payment of ad valorem tax by reason of the payment of the gross |
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| 457 | 474 | | production tax except such equipment, machinery, tools, material or |
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| 458 | 475 | | property as is actually necessary and being used and in use in the |
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| 487 | 505 | | wellbore and non-recoverable down-hole material, including casing, |
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| 488 | 506 | | actually used in the disposal of w aste materials produced with such |
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| 489 | 507 | | oil or gas. It is expressly declared that no ice plants, hospitals, |
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| 490 | 508 | | office buildings, garages, residences, gasoline extraction or |
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| 491 | 509 | | absorption plants, water systems, fuel systems, rooming houses and |
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| 492 | 510 | | other buildings, nor any equipme nt or material used in connection |
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| 493 | 511 | | therewith, shall be exempt from ad valorem tax. |
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| 494 | 512 | | SECTION 2. This act shall become effective July 1, 2025. |
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| 495 | 513 | | SECTION 3. It being immediately necessary for the preservation |
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| 496 | 514 | | of the public peace, health or safety, an emergency is hereby |
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| 497 | 515 | | declared to exist, by reason whereof this act shall take effect and |
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| 498 | 516 | | be in full force from and after its passage and approval. |
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