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ENGROSSED HOUSE
BILL NO. 1372 By: Boles of the House
and
Green of the Senate
An Act relating to revenue and taxation; amending 68
O.S. 2021, Section 1001, as amended by Section 8,
Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024, Section
1001), which relates to gross production tax;
providing a temporary discounted tax rate for certain
oil and gas recovery projects; requiring certain
surety; providing surety amount; providing an
effective date; and declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 1001, as
amended by Section 8, Chapter 346, O.S.L. 2022 (68 O.S. Supp. 2024,
Section 1001), is amended to read as follows:
Section 1001. A. There is hereby levied upon the production of
asphalt, ores bearing lead, zinc, jack and copper a tax equal to
three-fourths of one percent (3/4 of 1%) on the gross value thereof.
B. On or after the effective date of this act and except a s
provided by paragraph 4 of this subsection, there shall be levied a
tax on the gross value of the production of oil and gas as follows:
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1. Upon the production of oil a tax equal to seven percent (7%)
of the gross value of the production of oil based on a per barrel
measurement of forty-two (42) U.S. gallons of two hundred thirty -one
(231) cubic inches per gallon, computed at a temperature of sixty
(60) degrees Fahrenheit;
2. Upon the production of gas a tax equal to seven percent (7%)
of the gross value of the production of gas;
3. Notwithstanding the levies in paragraphs 1 and 2 of this
subsection, the production of oil, gas, or oil and gas from wells
spudded prior to the effective date of this act, and on or after the
effective date of this act, shall be taxed at a rate of fiv e percent
(5%) commencing with the month of first production for a period of
thirty-six (36) months. Thereafter, the production shall be taxed
as provided in paragraphs 1 and 2 of this subsection; and
4. If the provisions of Art icle XIII-C of the Oklahoma
Constitution are approved by the people pursuant to adoption of
State Question No. 795, the rate of gross production tax imposed by
paragraph 3 of this subsection shall be reduced to two percent (2%)
for the first thirty -six (36) months of production and thereafter
the rate of taxation shall be seven percent (7%).
C. The taxes hereby levied shall also attach to, and are levied
on, what is known as the royalty interest, and the amount of such
tax shall be a lien on such interest.
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D. 1. Except as otherwi se provided in this section, for
secondary and tertiary recovery projects approved or having an
initial project start date on or after July 1, 2022, all production
which results from such secondary and tertiary recovery projects
shall be exempt from the gr oss production tax levied pursuant to
this section for a period not to exceed five (5) years from the
initial project start date or for a period ending upon the
termination of the secondary and tertiary recovery process,
whichever occurs first.
2. For purposes of this subsection, "project start date" means
the date on which the injection of liquids, gases, or other matter
begins on an enhanced recovery project.
3. For new secondary and tertiary recovery projects approved by
the Oklahoma Corporation Commis sion on or after July 1, 2022, such
approval shall constitute qualification for an exemption.
4. For all production exempted pursuant to this subsection, a
refund against gross production taxes shall be issued as provided in
subsection F of this section.
5. Except as otherwise provided in this section, any production
which results from a recovery project from a well on the Corporation
Commission's orphaned well list shall receive a fifty -percent
reduction from the gross production tax levied pursuant to p aragraph
3 of subsection B of this section from the project beginning date
for a period of thirty -six (36) months, after which the rate shall
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increase to the full rate of tax prescribed by paragraph 3 of
subsection B of this secti on. Furthermore, before a ny production
from a recovery project under this paragraph occurs the producer
overseeing the project shall file a corporate surety bond, letter of
credit from a banking institution, cash, or a certificate of deposit
with the Secretary of State in the sum of Twenty-five Thousand
Dollars ($25,000.00), per well transferred from the Corporation
Commission's orphaned well list, conditioned upon recovery under
this project for thirty -six (36) months. The Secretary of State
shall hold such corporate surety bond, letter of credit from a
banking institution, cash , or certificate of deposit for the benefit
of the Corporation Commission Plugging Fund if such well is
abandoned by the producer and returns to the Corporation
Commission's orphaned well list.
E. Except as otherwise provided by this section, the production
of oil, gas, or oil and gas from wells drilled but not completed as
of July 1, 2021, which are completed with the use of recycled water
on or after July 1, 2022, shall earn an e xemption from the gross
production tax levied from the date of first sales for a period of
twenty-four (24) months. The exemption provided in this subsection
shall be proportional to the percentage of the total amount of water
used to complete the well that is recycled water. For all
production exempted pursuant to this subsection, a refund against
gross production taxes shall be issued as provided in subsection F
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of this section. For purposes of this subsection, "recycled water"
means oil and gas produc ed water and waste that ha s been
reconditioned or treated by mechanical or chemical processes into a
reusable form.
F. On or after July 1, 2022, for all oil and gas production
exempt from gross production taxes pursuant to subsections D and E
of this section during a given fiscal year, a refund of gross
production taxes shall be issued to the well operator or a designee
in the amount of such exempted gross production taxes paid during
such period, subject to the following provisions:
1. A refund shall not be claimed until after th e end of the
fiscal year. As used in this subsection, a fiscal year shall be
deemed to begin on July 1 of one calendar year and shall end on June
30 of the subsequent calendar year;
2. Unless otherwise specified, no claims for refunds pursuant
to the provisions of this subsection shall be filed more than
eighteen (18) months after the first day of the fiscal year in which
the refund is first available;
3. Any person claiming a refund pursuant to the exemption
provided in subsections D and E of this secti on shall file an
application with the Tax Commission which, upon determination of
qualification by the Corporation Commission, shall approve the
application for such exemption;
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4. The Tax Commission may require any person claiming a refund
pursuant to the exemptions provided in subsections D and E of this
section to furnish information or records concerning the exemption
as is deemed necessary by the Tax Commission;
5. No claims for refunds pursuant to the provisions of this
subsection shall be filed by o r on behalf of persons other than the
operator or a working interest owner of record at the time of
production;
6. No entity, including subsidiaries of the entity, shall be
authorized to receive refunds claimed pursuant to the exemption
provided in subsection D of this section that exceed twenty percent
(20%) of the limitation provided in paragraph 7 of this subsection;
and
7. The total amount of refunds authorized shall not exceed
Fifteen Million Dollars ($15,000,000.00) pursuan t to the exemption
provided in subsection D of this section and Ten Million Dollars
($10,000,000.00) pursuant to the exemption provided in subsection E
of this section for any fiscal year. If the amount of claims for
refunds exceed the limits provided in this paragraph, the Tax
Commission shall determine the percentage of the refund which
establishes the proportionate share of the refund which may be
claimed by any taxpayer so that the maximum amounts authorized by
this paragraph are not exceeded.
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G. On or after July 1, 2022, all persons shall only be entitled
to either the exemption granted pursuant to subsection D or E of
this section for each oil, gas, or oil and gas well drilled or
recompleted in this state. However, any person who qualifies for
the exemption granted pursuant to subsection E of this section shall
not be prohibited from qualification for the exemption granted
pursuant to subsection D of this section if the exemption granted
pursuant to subsection E of this section has expired.
H. The Tax Commission shall have t he power to require any such
person engaged in mining or the production or the purchase of such
asphalt, mineral ores aforesaid, oil, or gas, or the owner of any
royalty interest therein to furnish any additional information by it
deemed to be necessary fo r the purpose of correctly computing the
amount of the tax; and to examine the books, records and files of
such person; and shall have power to conduct hearings and compel the
attendance of witnesses, and the production of books, records and
papers of any person.
I. Any person or any member of any firm or association, or any
officer, official, agent or employee of any corporation who shall
fail or refuse to testify; or who shall fail or refuse to produce
any books, records or papers which the Tax Commissio n shall require;
or who shall fail or refuse to furnish any other evidence or
information which the Tax Commission may require; or who shall fail
or refuse to answer any competent questions which may be put to him
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or her by the Tax Commission, touching the business, property,
assets or effects of any such person relating to the gross
production tax imposed by this article or exemption authorized
pursuant to this section or other laws, shall be guilty of a
misdemeanor, and, upon conviction thereof, shall be punished by a
fine of not more than Five Hundred Dollars ($500.00), or
imprisonment in the jail of the county where such offense shall have
been committed, for not more than one (1) year, or by both such fine
and imprisonment; and each day of such refusal on the part of such
person shall constitute a separate and distinct offense.
J. The Tax Commission shall have the power and authority to
ascertain and determine whether or not any report herein required to
be filed with it is a true and correct report of the gross products,
and of the value thereof, of such person engaged in the mining or
production or purchase of asphalt and ores bearing minerals
aforesaid and of oil and gas. If any person has made an untrue or
incorrect report of the gross production or value or volume thereof,
or shall have failed or refused to make such report, the Tax
Commission shall, under the rules prescribed by it, ascertain the
correct amount of either, and compute the tax.
K. The payment of the taxes herein levied shall be in f ull, and
in lieu of all taxes by the state, counties, cities, towns, school
districts and other municipalities upon any property rights attached
to or inherent in the right to the minerals, upon producing leases
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for the mining of asphalt and ores bearing l ead, zinc, jack or
copper, or for oil, or for gas, upon the mineral rights and
privileges for the minerals aforesaid belonging or appertaining to
land, upon the machinery, appliances and equipment used in and
around any well producing oil, or gas, or any m ine producing asphalt
or any of the mineral ores aforesaid and actually used in the
operation of such well or mine. The payment of gross production tax
shall also be in lieu of all taxes upon the oil, gas, asphalt or
ores bearing minerals hereinbefore men tioned during the tax year in
which the same is produced, and upon any investment in any of the
leases, rights, privileges, minerals or other property described
herein. Any interest in the land, other than that herein
enumerated, and oil in storage, aspha lt and ores bearing minerals
hereinbefore named, mined, produced and on hand at the date as of
which property is assessed for general and ad valorem taxation for
any subsequent tax year, shall be assessed and taxed as other
property within the taxing distr ict in which such property is
situated at the time.
L. No equipment, material or property shall be exempt from the
payment of ad valorem tax by reason of the payment of the gross
production tax except such equipment, machinery, tools, material or
property as is actually necessary and being used and in use in the
production of asphalt or of ores bearing lead, zinc, jack or copper
or of oil or gas. Provided, the exemption shall include the
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wellbore and non-recoverable down-hole material, including casing,
actually used in the disposal of waste materials produced with such
oil or gas. It is expressly declared that no ice plants, hospitals,
office buildings, garages, residences, gasoline extraction or
absorption plants, water systems, fuel systems, rooming ho uses and
other buildings, nor any equipment or material used in connection
therewith, shall be exempt from ad valorem tax.
SECTION 2. This act shall become effective July 1, 2025.
SECTION 3. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
Passed the House of Representatives the 11th day of March, 2025.
Presiding Officer of the House
of Representatives
Passed the Senate the _____ day of ______, 2025.
Presiding Officer of the Senate