H.B. 170 Enrolled

OIL AND GAS CONSERVATION ACCOUNT
2000 GENERAL SESSION
STATE OF UTAH
Sponsor: Jack A. Seitz
Bradley T. Johnson
Gordon E. Snow
Keele Johnson
Brad King

AN ACT RELATING TO OIL AND GAS; CREATING THE OIL AND GAS CONSERVATION
ACCOUNT; SPECIFYING THE CONTENTS OF THE ACCOUNT AND USES OF ACCOUNT
MONIES; AND PROVIDING AN EFFECTIVE DATE.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
40-6-14, as last amended by Chapter 330, Laws of Utah 1997
40-6-14.5, as enacted by Chapter 135, Laws of Utah 1992
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 40-6-14 is amended to read:
40-6-14. Fee on oil and gas at well -- Collection -- Penalty and interest on
delinquencies -- Payment when product taken in-kind -- Interests exempt.
(1) There is levied a fee of .002 of the value at the well of oil and gas:
(a) produced and saved;
(b) sold; or
(c) transported from the premises in Utah where the oil or gas is produced.
(2) (a) The State Tax Commission shall administer the collection of the fee, including any
penalties and interest.
(b) The monies collected shall be deposited [as fixed collections to be used by the Division
of Oil, Gas and Mining for the purposes specified] in the Oil and Gas Conservation Account created
in Section 40-6-14.5 .
(c) Time periods for the State Tax Commission to allow a refund or assess the fee shall be
determined in accordance with Section 59-5-114 .
(3) (a) Each person having an ownership interest in oil or gas at the time of production shall

be liable for a proportionate share of the fee equivalent to his ownership interest.
(b) As used in this section "ownership interest" means any:
(i) working interest;
(ii) royalty interest;
(iii) interest in payments out of production; or
(iv) any other interest in the oil or gas, or in the proceeds of the oil or gas, subject to the fee.
(4) The operator, on behalf of himself and any person having an ownership interest in the oil
or gas, shall pay the assessed fee quarterly to the State Tax Commission on or before the 45th day
following the quarter in which the fee accrued.
(5) (a) Any fee not paid within the time specified shall:
(i) carry a penalty as provided in Section 59-1-401 ; and
(ii) bear interest at the rate and in the manner prescribed in Section 59-1-402 .
(b) The fee, together with the interest, shall be a lien upon the oil or gas against which it is
levied. The operator shall deduct from any amounts due to the persons owning an interest in the oil
or gas, or in the proceeds at the time of production, a proportionate amount of the charge before
making payment to the persons.
(6) (a) When product is taken in-kind by an interest owner who is not the operator and the
operator cannot determine the value of the in-kind product, the operator shall:
(i) report 100% of the production;
(ii) deduct the product taken in-kind; and
(iii) pay the levy on the difference.
(b) The interest owner who takes the product in-kind shall file a report and pay the levy on
his share of production excluded from the operator's report.
(7) This section shall apply to any interest in oil or gas produced in the state except:
(a) any interest of the United States;
(b) any interest of the state or its political subdivisions in any oil or gas or in the proceeds;
(c) any interest of any Indian or Indian tribe in any oil or gas or in the proceeds produced
from land subject to the supervision of the United States; or

- 2 -

(d) oil or gas used in producing or drilling operations or for repressuring or recycling
purposes.
Section 2. Section 40-6-14.5 is amended to read:
40-6-14.5. Oil and Gas Conservation Account created -- Contents -- Use of account
monies.
[(1) Monies collected pursuant to Subsection 40-6-14 (2), up to the amount appropriated,]
(1) There is created within the General Fund a restricted account known as the Oil and Gas
Conservation Account.
(2) The contents of the account shall consist of:
(a) revenues from the fee levied under Section 40-6-14 , including any penalties or interest
charged for delinquent payments; and
(b) interest and earnings on account monies.
(3) Account monies shall be used to pay for the:
(a) administration of this chapter; and
(b) plugging and reclamation of abandoned oil or gas wells or bore, core, or exploratory holes
for which:
(i) there is no reclamation surety; or
(ii) the forfeited surety is insufficient for plugging and reclamation.
[(2)] (4) Priority in the use of the monies shall be given to paying for the administration of
this chapter.
[(3)] (5) Appropriations for plugging and reclamation of abandoned oil or gas wells or bore,
core, or exploratory holes shall be nonlapsing.
(6) The balance of the Oil and Gas Conservation Account at the end of a fiscal year may not
exceed $750,000. Any excess monies shall be transferred to the General Fund.
(7) (a) As used in this Subsection (7), "excess fee revenue" means revenue collected in fiscal
year 1999-2000 from the fee levied under Section 40-6-14 that exceeds the fee revenue appropriated
to the Division of Oil, Gas, and Mining in fiscal year 1999-2000.
(b) If there is a General Fund surplus for fiscal year 1999-2000, the Division of Finance shall

- 3 -

transfer General Fund surplus monies to the Oil and Gas Conservation Account in an amount up to
the excess fee revenue.
(c) The transfer provided in Subsection (7)(b) shall be made after General Fund surplus
monies are transferred to the Budget Reserve Account pursuant to Section 63-38-2.5 .
Section 3. Effective date.
This act takes effect on July 1, 2000.

- 4 -