S.B. 73

1

LOCAL OPTION OIL AND GAS SEVERANCE
2 TAX AND RELATED AMENDMENTS
3 2001 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Beverly Ann Evans
6 This act modifies the Oil and Gas Severance Tax to allow a county legislative body to impose
7 a local option oil and gas severance tax beginning on January 1, 2002. This act provides for
8 the tax rate, computation, administration, and distribution of the local option severance tax,
9 and makes technical changes. The act authorizes a nonrefundable credit against the state
10 oil and gas severance tax in the amount of the local option oil and gas severance tax a
11 taxpayer pays.
12 This act affects sections of Utah Code Annotated 1953 as follows:
13 AMENDS:
14 59-5-102, as last amended by Chapter 414, Laws of Utah 1998
15 59-5-103, as last amended by Chapter 247, Laws of Utah 1990
16 59-5-105, as last amended by Chapter 4, Laws of Utah 1988
17 59-5-106, as last amended by Chapter 1, Laws of Utah 1993, Second Special Session
18 59-5-107, as last amended by Chapter 228, Laws of Utah 1995
19 59-5-108, as last amended by Chapter 4, Laws of Utah 1988
20 59-5-109, as repealed and reenacted by Chapter 4, Laws of Utah 1988
21 59-5-110, as repealed and reenacted by Chapter 4, Laws of Utah 1988
22 59-5-112, as repealed and reenacted by Chapter 4, Laws of Utah 1988
23 59-5-114, as last amended by Chapter 299, Laws of Utah 1998
24 59-5-116, as last amended by Chapter 414, Laws of Utah 1998
25 59-5-119, as enacted by Chapter 135, Laws of Utah 1996
26 ENACTS:
27 59-5-102.1, Utah Code Annotated 1953

28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 59-5-102 is amended to read:
30 59-5-102. State severance tax -- Rate -- Computation -- Annual exemption -- Study
31 by Tax Review Commission.
32 (1) (a) Each person owning an interest, working interest, royalty interest, payments out of
33 production, or any other interest, in oil or gas produced from a well in the state, or in the proceeds
34 of the production, shall pay to the state a state severance tax [equal to 4%] on the basis of the
35 value, at the well, of the oil or gas produced, saved, and sold or transported from the field where
36 the substance was produced as provided in this section.
37 (b) Beginning January 1, 1992, the state severance tax rate for oil is as follows:
38 (i) 3% of the value up to and including the first $13 per barrel for oil; and
39 (ii) 5% of the value from $13.01 and above per barrel for oil.
40 (c) Beginning January 1, 1992, the state severance tax rate for natural gas is as follows:
41 (i) 3% of the value up to and including the first $1.50 per MCF for gas; and
42 (ii) 5% of the value from $1.51 and above per MCF for gas.
43 (d) Beginning January 1, 1992, the state severance tax rate for natural gas liquids is 4%
44 of the taxable value for natural gas liquids.
45 (e) If the oil or gas is shipped outside the state, this constitutes a sale, and the oil or gas
46 is subject to the severance tax.
47 (f) (i) [If] Except as provided in Subsection (1)(f)(ii), if the oil or gas is stockpiled, the tax
48 is not applicable until it is sold, transported, or delivered. [However,]
49 (ii) Notwithstanding Subsection (1)(f)(i), oil or gas that is stockpiled for more than two
50 years is subject to the state severance tax.
51 (2) [No] A tax is not imposed [upon] on:
52 (a) the first $50,000 annually in gross value of each well or wells as defined in this part,
53 to be prorated among the owners in proportion to [their] the owners' respective interests in:
54 (i) the production; or [in]
55 (ii) the proceeds of the production;
56 (b) stripper wells, unless the exemption prevents the severance tax from being treated as
57 a deduction for federal tax purposes;
58 (c) the first six months of production for wells started after January 1, 1984, but before

59 January 1, 1990;
60 (d) the first 12 months of production for wildcat wells started after January 1, 1990; or
61 (e) the first six months of production for development wells started after January 1, 1990.
62 (3) (a) (i) Through December 31, 2004, a working interest owner who pays for all or part
63 of the expenses of a recompletion or workover is entitled to a tax credit equal to 20% of the
64 amount paid.
65 [(b)] (ii) The tax credit for each recompletion or workover may not exceed $30,000 per
66 well during each calendar year. The tax credit shall apply to the taxable year in which the
67 recompletion or workover is completed and shall be claimed quarterly beginning on the third
68 quarter after recompletion or workover is completed under rules made by the commission.
69 (b) (i) A person who pays a tax under Section 59-5-102.1 may claim a nonrefundable
70 credit against the tax imposed by this section in an amount equal to the amount of tax the person
71 pays under Section 59-5-102.1 .
72 (ii) A person may not carry forward or carry back a credit claimed under Subsection
73 (3)(b)(i).
74 (iii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
75 commission may make rules to provide procedures for administering the credit provided for in this
76 Subsection (3)(b).
77 (iv) The commission may prescribe tax forms for administering the credit provided for in
78 this Subsection (3)(b).
79 (4) A 50% reduction in the tax rate is imposed upon the incremental production achieved
80 from an enhanced recovery project.
81 (5) These taxes are in addition to all other taxes provided by law and are delinquent, unless
82 otherwise deferred, on June 1 next succeeding the calendar year when the oil or gas is produced,
83 saved, and sold or transported from the premises.
84 (6) With respect to the tax imposed by this [chapter] part on each owner of oil or gas or
85 in the proceeds of the production of those substances produced in the state, each owner is liable
86 for the tax in proportion to the owner's interest in the production or in the proceeds of the
87 production.
88 (7) The tax shall be reported and paid by each producer who takes oil or gas in kind
89 pursuant to agreement on behalf of the producer and on behalf of each owner entitled to participate

90 in the oil or gas sold by the producer or transported by the producer from the field where the oil
91 or gas is produced.
92 (8) Each producer shall deduct the tax from the amounts due to other owners for the
93 production or the proceeds of the production.
94 (9) (a) The Tax Review Commission shall review the tax provided for in this part on or
95 before the October 2002 interim meeting.
96 (b) The Tax Review Commission shall address in its review the following statutory
97 provisions:
98 (i) the severance tax rate structure provided for in this section;
99 (ii) the exemptions provided for in Subsection (2);
100 (iii) the credit provided for in Subsection (3)(a), including:
101 (A) the cost of the credit;
102 (B) the purpose and effectiveness of the credit; and
103 (C) whether the credit benefits the state;
104 (iv) the tax rate reduction provided for in Subsection (4);
105 (v) other statutory provisions or issues as determined by the Tax Review Commission; and
106 (vi) whether the statutory provisions the Tax Review Commission reviews under this
107 Subsection (9) should be:
108 (A) continued;
109 (B) modified; or
110 (C) repealed.
111 (c) The Tax Review Commission shall report its findings and recommendations regarding
112 the tax provided for in this part to the Revenue and Taxation Interim Committee on or before the
113 November 2002 interim meeting.
114 Section 2. Section 59-5-102.1 is enacted to read:
115 59-5-102.1. Local option oil and gas severance tax -- Rate -- Computation --
116 Administration -- Distribution of tax.
117 (1) Beginning on January 1, 2002, a county legislative body may by ordinance impose a
118 local option severance tax as provided in this section:
119 (a) on each person owning one or more of the following in oil or gas produced from a well
120 in the state:

121 (i) an interest;
122 (ii) a working interest;
123 (iii) a royalty interest;
124 (iv) a payment out of production; or
125 (v) an interest in the proceeds of the production of oil or gas; and
126 (b) on the basis of the value of the oil or gas:
127 (i) at the well; and
128 (ii) (A) produced, saved, and sold from the field where the oil or gas was produced; or
129 (B) transported from the field where the oil or gas was produced.
130 (2) (a) Except as provided in Subsection (2)(c), the rate of the tax authorized by this
131 section is a percentage of state severance tax liability determined by the commission by:
132 (i) calculating an amount equal to the county oil and gas gross production amount divided
133 by the state oil and gas gross production amount as provided in Subsection (2)(b); and
134 (ii) converting the amount calculated under Subsection (2)(a)(i) into a percentage.
135 (b) For purposes of Subsection (2)(a):
136 (i) the state oil and gas gross production amount is the oil and gas gross production amount
137 for the state for the current taxable year; and
138 (ii) the county oil and gas gross production amount is the oil and gas gross production
139 amount for all of the counties:
140 (A) imposing the tax authorized by this section; and
141 (B) for the current taxable year.
142 (c) (i) Notwithstanding Subsection (2)(a), the total amount of the tax authorized by this
143 section:
144 (A) beginning on January 1, 2002, through December 31, 2002, may not exceed 15% of
145 the adjusted state severance tax as provided in Subsection (2)(c)(ii) for the taxable year beginning
146 on or after January 1, 2002, but beginning on or before December 31, 2002;
147 (B) beginning on January 1, 2003, through December 31, 2003, may not exceed 30% of
148 the adjusted state severance tax as provided in Subsection (2)(c)(ii) for the taxable year beginning
149 on or after January 1, 2003, but beginning on or before December 31, 2003; and
150 (C) beginning on January 1, 2004, may not exceed 50% of the adjusted state severance tax
151 as provided in Subsection (2)(c)(ii) for the current taxable year.

152 (ii) For purposes of Subsection (2)(c)(i) the adjusted state severance tax is equal to the
153 difference between:
154 (A) the state severance tax collected under Section 59-5-102 before subtracting the credit
155 allowed under Subsection (3)(b); and
156 (B) the sum of:
157 (I) the amounts deposited into the Uintah Basin Revitalization Fund in accordance with
158 Section 59-5-116 and the Navajo Revitalization Fund in accordance with Section 59-5-119 ; and
159 (II) the adjustments to state severance tax collections described in Subsection (2)(c)(iii).
160 (iii) The following adjustments to state severance tax collections made by the commission
161 apply to Subsection (2)(c)(ii)(B)(II):
162 (A) an adjustment as a result of a taxpayer filing an amended return;
163 (B) an adjustment as a result of an appeal;
164 (C) an adjustment as a result of a refund;
165 (D) an adjustment as a result of an audit; or
166 (E) an adjustment similar to an adjustment described in Subsections (2)(c)(iii)(A) through
167 (D).
168 (3) (a) If a county legislative body enacts or repeals a tax under this section, the enactment
169 or repeal shall take effect:
170 (i) on the first day of a calendar year; and
171 (ii) after a 90-day period beginning on the date the commission receives notice meeting
172 the requirements of Subsection (3)(b).
173 (b) The notice described in Subsection (3)(a) shall state:
174 (i) that the county legislative body will enact or repeal a tax authorized by this section;
175 (ii) the statutory authority for the tax; and
176 (iii) the effective date of the tax.
177 (4) The commission shall:
178 (a) provide notice to a county legislative body imposing a tax under this section:
179 (i) stating the rate of the tax under this section; and
180 (ii) no later than 90 days after the last day of the calendar year during which the county
181 legislative body provided notice in accordance with Subsection (3);
182 (b) except as provided in Subsection (4)(d), distribute the revenues generated by the tax

183 authorized by this section to the counties imposing the tax as provided in Subsection (5);
184 (c) administer, collect, and enforce the tax authorized by this section in the same manner
185 as the commission administers, collects, and enforces the state severance tax under this part; and
186 (d) notwithstanding Subsection (4)(b), deduct from the distribution required by this section
187 an administrative charge for collecting the tax not to exceed 1-1/2 % of the total amount of the tax
188 imposed in accordance with this section.
189 (5) (a) On or before August 31 of each year, the commission shall distribute to a county
190 imposing a tax authorized by this section a percentage of the revenues generated by the tax
191 determined by the commission by:
192 (i) calculating an amount equal to the individual county oil and gas gross production
193 amount divided by the total county oil and gas gross production amount as provided in Subsection
194 (5)(b); and
195 (ii) converting the amount calculated under Subsection (5)(a)(i) into a percentage.
196 (b) For purposes of Subsection (5)(a):
197 (i) the total county oil and gas gross production amount is the oil and gas gross production
198 amount for all of the counties:
199 (A) imposing the tax authorized by this section; and
200 (B) for the current taxable year; and
201 (ii) the individual county oil and gas gross production amount is the oil and gas gross
202 production amount for the county:
203 (A) receiving a distribution in accordance with Subsection (5)(a); and
204 (B) for the current taxable year.
205 (6) Revenues generated by the tax authorized by this section shall be used as determined
206 by the county legislative body.
207 (7) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
208 commission may make rules defining the terms:
209 (a) "oil and gas gross production amount"; and
210 (b) "taxable year."
211 Section 3. Section 59-5-103 is amended to read:
212 59-5-103. Valuation of oil or gas -- Alternatives -- Exceptions -- Controversies on
213 value to be determined by commission.

214 (1) For purposes of computing the state severance tax under Section 59-5-102 , the value
215 of oil or gas at the well is the value established under an arm's-length contract for the purchase of
216 production at the well, or in the absence of such a contract, by the value established in accordance
217 with the first applicable of the following methods:
218 (a) the value at the well established under a non-arm's-length contract for the purchase of
219 production at the well, provided that the value is equivalent to the value received under comparable
220 arm's-length contracts for purchases or sales of like-quality oil or gas in the same field;
221 (b) the value at the well determined by consideration of information relevant in valuing
222 like-quality oil or gas at the well in the same field or nearby fields or areas such as:
223 (i) posted prices[,];
224 (ii) prices received in arm's-length spot sales[,]; or
225 (iii) other reliable public sources of price or market information;
226 (c) the value established using the net-back method as defined in Section 59-5-101 .
227 (2) Oil or gas used in drilling operations in the same oil or gas field and in producing
228 operations in this field or for repressuring or recycling purposes may not be included with the other
229 products in arriving at the gross value for tax purposes.
230 (3) (a) Any contract between a parent and a subsidiary company, or between companies
231 wholly or partially owned by a common parent, or between companies otherwise affiliated that
232 specifies the value of oil or gas is not arm's-length unless the value of oil or gas specified is
233 comparable to its fair market value as defined under Section 59-2-102 .
234 (b) If there is a controversy regarding the value of oil or gas, the commission shall
235 determine the value of the oil or gas.
236 Section 4. Section 59-5-105 is amended to read:
237 59-5-105. Failure to file statement -- Ascertaining correct tax due.
238 (1) If any person required to file the statement or report with the commission refuses or
239 neglects to make or deliver to the commission the statement under Section 59-5-104 , the
240 commission shall determine the amount of [the] severance tax under this part from the best
241 information or knowledge [it] the commission can obtain.
242 (2) The commission, for the purpose of ascertaining the correctness of any return or for
243 the purpose of ascertaining the amount of severance tax under this part when a return has not been
244 filed, may:

245 [(1)] (a) examine or cause to be examined by any agent or representative designated by [it]
246 the commission for that purpose any books, papers, records, or memoranda bearing upon the
247 matter required to be included in the return;
248 [(2)] (b) require the attendance of any officer or employee of any corporation or person
249 required by this [chapter] part to make a return or the attendance of any other person having
250 knowledge of any pertinent fact; and
251 [(3)] (c) take testimony and require any other necessary information.
252 Section 5. Section 59-5-106 is amended to read:
253 59-5-106. Interest and penalty -- Overpayments.
254 (1) (a) In case of any failure to make or file a return required by this [chapter] part, the
255 penalty provided in Section 59-1-401 and interest at the rate and in the manner prescribed in
256 Section 59-1-402 shall be charged and added to the tax.
257 (b) The amount [so] added to any tax under Subsection (1)(a), whether as a penalty,
258 interest, or both, shall be collected at the same time and in the same manner and as a part of the
259 tax.
260 (2) An overpayment of a tax imposed by this [chapter] part shall accrue interest at the rate
261 and in the manner prescribed in Section 59-1-402 .
262 Section 6. Section 59-5-107 is amended to read:
263 59-5-107. Date tax due -- Extensions -- Installment payments -- Penalty on
264 delinquencies -- Audit.
265 (1) [The] A tax imposed by this [chapter] part is due and payable on or before June 1 of
266 the year next succeeding the calendar year when the oil or gas is produced, saved, and sold or
267 transported from the field where produced.
268 (2) (a) The commission may, for good cause shown upon a written application by the
269 taxpayer, extend the time of payment of the whole or any part of the tax for a period not to exceed
270 six months.
271 (b) If the commission grants an extension [is granted] in accordance with Subsection
272 (2)(a), interest at the rate and in the manner prescribed in Section 59-1-402 shall be charged and
273 added to the amount of the deferred payment of the tax.
274 (3) (a) Every taxpayer subject to this [chapter] part whose total tax obligation under this
275 part for the preceding calendar year was $3,000 or more shall pay the taxes assessed under this

276 [chapter] part in quarterly installments.
277 (b) Each installment required by Subsection (3)(a) shall be based on the estimated gross
278 value received by the taxpayer during the quarter preceding the date on which the installment is
279 due.
280 (4) The quarterly installments are due as follows:
281 (a) for January 1 through March 31, on or before June 1;
282 (b) for April 1 through June 30, on or before September 1;
283 (c) for July 1 through September 30, on or before December 1; and
284 (d) for October 1 through December 31, on or before March 1 of the next year.
285 (5) (a) If the tax is not paid when due or is underpaid, the taxpayer is subject to the penalty
286 provided under Section 59-1-401 , unless otherwise provided in Subsection (6).
287 (b) An underpayment exists if less than 80% of the tax due for a quarter is paid.
288 (6) The penalty for failure to pay the tax due or underpayment of tax may not be assessed
289 if the taxpayer's quarterly tax installment payment equals 25% of the tax reported and paid by the
290 taxpayer for the preceding taxable year.
291 (7) [There shall be no interest added] The commission may not add interest to any
292 estimated tax payments subject to a penalty under this section.
293 (8) The commission may conduct audits to determine whether any tax is owed under this
294 section.
295 Section 7. Section 59-5-108 is amended to read:
296 59-5-108. Tax as lien on property or oil and gas production interests.
297 (1) [The] A severance tax imposed by this [chapter] part, together with penalties and
298 interest, is and shall remain a lien upon the owner's interest in the oil or gas well or rights in the
299 well from which the oil or gas is extracted, until the tax is paid.
300 (2) In the case of an owner who has no interest in the oil or gas well, but only in the
301 proceeds of production from it, the lien is upon the oil or gas production rights or royalty interests
302 in the well.
303 Section 8. Section 59-5-109 is amended to read:
304 59-5-109. Adjudicative proceedings for correction of amount of tax.
305 If [any] a person [feels aggrieved because of] disputes the amount of [the] a severance tax
306 imposed under this part as determined by the commission, the person may file a request for agency

307 action with the commission within 30 days after notice is mailed to the person, requesting an
308 adjudicative proceeding and the correction of the assessed tax.
309 Section 9. Section 59-5-110 is amended to read:
310 59-5-110. Decisions of commission.
311 [Every] (1) A decision of the commission shall be in writing [and].
312 (2) The commission shall mail notice of [the] a commission decision [shall be mailed] to
313 the taxpayer within ten days after the day on which the commission issues the decision. [All
314 decisions become]
315 (3) A commission decision under this section becomes final upon the expiration of 30 days
316 after notice has been mailed to the taxpayer, unless proceedings are taken within such time for a
317 review in accordance with Title 63, Chapter 46b, [the] Administrative Procedures Act, in which
318 case [it] the decision becomes final as specified in the Administrative Procedures Act.
319 Section 10. Section 59-5-112 is amended to read:
320 59-5-112. Failure to pay tax -- Warrant.
321 (1) If [the] a tax or any part of [it] a tax imposed by this [chapter] part is not paid when
322 due, the commission may issue a warrant, in duplicate under [its] the commission's official seal,
323 directed to the sheriff of [any] the county of the state[, commanding] in which the taxpayer's real
324 or personal property is located.
325 (2) The warrant described in Subsection (1) shall direct the sheriff to:
326 (a) levy upon and sell the real and personal property of the taxpayer found within the
327 county for the payment of the sum of:
328 (i) the amount of tax due[, with the added]; and
329 (ii) any of the following amounts added to the tax:
330 (A) penalties[,];
331 (B) interest[, and]; or
332 (C) the cost of executing the warrant[, and to];
333 (b) return the warrant to the commission; and
334 (c) pay to [it] the commission the money collected from selling the taxpayer's real or
335 personal property within a specified time[, but not more than] that does not exceed 60 days [from]
336 after the date of the warrant.
337 Section 11. Section 59-5-114 is amended to read:

338 59-5-114. Limitation of actions.
339 (1) (a) Except as provided in Subsections (1)(c) through (f), the commission shall assess
340 the amount of taxes imposed under this part, and any penalties and interest, within six years after
341 a taxpayer files a return.
342 (b) Except as provided in Subsections (1)(c) through (f), if the commission does not make
343 an assessment under Subsection (1)(a) within six years, the commission may not commence a
344 proceeding for the collection of the taxes after the expiration of the six-year period.
345 (c) Notwithstanding Subsections (1)(a) and (b), the commission may make an assessment
346 or commence a proceeding to collect a tax at any time if a deficiency is due to:
347 (i) fraud; or
348 (ii) failure to file a return.
349 (d) Notwithstanding Subsections (1)(a) and (b), beginning on July 1, 1998, the commission
350 may extend the period to make an assessment or to commence a proceeding to collect the tax under
351 this part if:
352 (i) the six-year period under this Subsection (1) has not expired; and
353 (ii) the commission and the taxpayer sign a written agreement:
354 (A) authorizing the extension; and
355 (B) providing for the length of the extension.
356 (e) If the commission delays an audit at the request of a taxpayer, the commission may
357 make an assessment as provided in Subsection (1)(f) if:
358 (i) the taxpayer subsequently refuses to agree to an extension request by the commission;
359 and
360 (ii) the six-year period under this Subsection (1) expires before the commission completes
361 the audit.
362 (f) An assessment under Subsection (1)(e) shall be:
363 (i) for the time period for which the commission could not make an assessment because
364 of the expiration of the six-year period; and
365 (ii) in an amount equal to the difference between:
366 (A) the commission's estimate of the amount of taxes the taxpayer would have been
367 assessed for the time period described in Subsection (1)(f)(i); and
368 (B) the amount of taxes the taxpayer actually paid for the time period described in

369 Subsection (1)(f)(i).
370 (2)(a) Except as provided in Subsection (2)(b), the commission may not make a credit or
371 refund for an overpayment of a tax imposed by this part unless the taxpayer files a claim with the
372 commission within six years of the date of overpayment.
373 (b) Notwithstanding Subsection (2)(a), beginning on July 1, 1998, the commission shall
374 extend the period for a taxpayer to file a claim under Subsection (2)(a) if:
375 (i) the six-year period under Subsection (2)(a) has not expired; and
376 (ii) the commission and the taxpayer sign a written agreement:
377 (A) authorizing the extension; and
378 (B) providing for the length of the extension.
379 Section 12. Section 59-5-116 is amended to read:
380 59-5-116. Disposition of certain taxes collected on Ute Indian land.
381 (1) Except as provided in Subsection (2), [commencing July 1, 1996,] there shall be
382 deposited into the Uintah Basin Revitalization Fund established in Section 9-10-102 :
383 (a) for taxes imposed under this part beginning on or after July 1, 1996, 33% of the taxes
384 [imposed and] collected [under Section 59-5-102 from all wells existing on or before June 30,
385 1995, producing from] on oil [and], gas, or other hydrocarbon substances produced from a well:
386 (i) for which production began on or before June 30, 1995; and
387 (ii) attributable to interests:
388 [(i)] (A) held in trust by the United States for the Tribe and its members; [and] or
389 [(ii)] (B) [until] for taxes imposed under this part beginning on or after July 1, 1996, and
390 ending on December 31, 2004, on lands identified in Pub. L. No. 440, 62 Stat. 72 (1948); and
391 (b) for taxes imposed under this part beginning on or after July 1, 1996, 80% of the taxes
392 [imposed and] collected [under Section 59-5-102 from new wells beginning production on or after
393 July 1, 1995, producing from] on oil [and], gas, or other hydrocarbon substances produced from
394 a well:
395 (i) for which production began on or after July 1, 1995; and
396 (ii) attributable to interests:
397 [(i)] (A) held in trust by the United States for the Tribe and its members; [and] or
398 [(ii)] (B) [until] for taxes imposed under this part beginning on or after July 1, 1996, and
399 ending on December 31, 2004, on lands identified in Pub. L. No. 440, 62 Stat. 72 (1948).

400 (2) (a) The maximum amount deposited in the Uintah Basin Revitalization Fund may not
401 exceed $2,000,000 in [a given] any state fiscal year.
402 (b) Any amounts in excess of the maximum described in Subsection (2)(a) shall be
403 deposited into the General Fund.
404 Section 13. Section 59-5-119 is amended to read:
405 59-5-119. Disposition of certain taxes collected on Navajo Nation Land located in
406 Utah.
407 (1) Except as provided in Subsection (2), [commencing July 1, 1997,] there shall be
408 deposited into the Navajo Revitalization Fund established in Section 9-11-104 for taxes imposed
409 under this part beginning on or after July 1, 1997:
410 (a) 33% of the taxes [imposed and] collected [under Section 59-5-102 from all wells
411 existing on or before June 30, 1996, producing from] on oil [and], gas, or other hydrocarbon
412 substances produced from a well:
413 (i) for which production began on or before June 30, 1996; and
414 (ii) attributable to interests in Utah held in trust by the United States for the Navajo Nation
415 and its members; and
416 (b) 80% of the taxes [imposed and] collected [under Section 59-5-102 from new wells
417 beginning production on or after July 1, 1996, producing from] on oil [and], gas, or other
418 hydrocarbon substances produced from a well:
419 (i) for which production began on or after July 1, 1996; and
420 (ii) attributable to interests in Utah held in trust by the United States for the Navajo Nation
421 and its members.
422 (2) (a) The maximum amount deposited in the Navajo Revitalization Fund may not exceed
423 $2,000,000 in [one] any state fiscal year.
424 (b) Any amounts in excess of the maximum described in Subsection (2)(a) shall be
425 deposited into the General Fund.

Legislative Review Note
as of 2-6-01 6:28 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel