BILL NUMBER: AB 1604 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 12, 2010
AMENDED IN ASSEMBLY FEBRUARY 17, 2010
INTRODUCED BY Assembly Member Nava
(Coauthors: Assembly Members Ammiano, Blumenfield, Chesbro, Hill,
Huffman, Jones, Monning, Salas, Saldana, and Torlakson)
JANUARY 5, 2010
An act to add Part 21 (commencing with Section 42001) to Division
2 of the Revenue and Taxation Code, relating to taxation, to take
effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 1604, as amended, Nava. Taxation: Oil Industry Fair Share Act.
Existing law imposes various taxes, including taxes on the
privilege of engaging in certain activities. The Fee Collection
Procedures Law, the violation of which is a crime, provides
procedures for the collection of certain fees and surcharges.
This bill would impose a tax on and after January 1,
2011, upon any producer for the privilege of severing oil
from the earth or water in this state for sale, transport,
consumption, storage, profit, or use, as provided, at the rate of 10%
of the gross value of each barrel of oil severed. The tax would be
administered by the State Board of Equalization and would be
collected pursuant to the procedures set forth in the Fee Collection
Procedures Law. This bill would require the Division of Oil,
Gas, and Geothermal Resources in the Department of
Conservation to make specified certifications and determinations
regarding certain oil wells, and to notify the board of the
certification or determination. The bill would require the
board to deposit all revenues collected pursuant to these provisions
, less refunds and reimbursement to the board for expenses
incurred in the administration and collection of the tax, into
the General Fund.
Because this bill would expand the scope of the Fee Collection
Procedures Law, the violation of which is a crime, it would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature.
This bill would take effect immediately as a tax levy.
This bill would take effect immediately as a tax levy, but its
operative date would depend on its effective date.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Part 21 (commencing with Section 42001) is added to
Division 2 of the Revenue and Taxation Code, to read:
PART 21. OIL INDUSTRY FAIR SHARE ACT
42001. This part shall be known and may be cited as the Oil
Industry Fair Share Act.
42002. For purposes of this part, the following definitions shall
apply:
(a) "Barrel of oil" means 42 United States gallons of 231 cubic
inches per gallon computed at a temperature of 60 degrees Fahrenheit.
(b) "Board" means the State Board of Equalization.
(c) "Gross value" means the sale price at the mouth of the well
in the case of oil , including any bonus, premium,
or other thing of value paid for the oil. If there is no sale at the
time of severance, "gross value" means the sale price when the oil
is sold, including any bonus, premium, or other thing of value paid
for the oil. If oil is exchanged for something other than cash, or if
the relation between the buyer and the seller is such that the
consideration paid, if any, is not indicative of the true value or
market price, then the board shall determine the value of the oil
subject to the tax based on the cash price paid to producers for like
quality oil in the vicinity of the well.
(d) "Oil" means petroleum, or other crude oil, condensate, casing
head gasoline, or other mineral oil that is mined, produced, or
withdrawn from below the surface of the soil or water in this state.
(e) "Producer" means any person or entity that takes oil from the
earth or water in this state in any manner; any person that owns,
controls, manages, or leases any oil well in the earth or water of
this state; any person that produces or extracts in any manner any
oil by taking it from the earth or water in this state; any person
that acquires the severed oil from a person or agency exempt from
property taxation under the United States Constitution or other laws
of the United States or under the California Constitution or other
laws of the State of California; and any person that owns an
interest, including a royalty interest, in oil or its value, whether
the oil is produced by the person owning the interest or by another
on the person's behalf by lease, contract, or other arrangement.
(f) "Production" means the total gross amount of oil produced,
including the gross amount attributable to a royalty or other
interest.
(g) "Severed" or "severing" means the extraction or withdrawing
from below the surface of the earth or water of any oil, regardless
of whether the extraction or withdrawal shall be by natural flow,
mechanical flow, forced flow, pumping, or any other means employed to
get the oil from below the surface of the earth or water, and shall
include the extraction or withdrawal by any means whatsoever of oil
upon which the tax has not been paid, from any surface reservoir,
natural or artificial, or from a water surface.
(h) "Stripper well" means a well that has been certified by the
board Division of Oil, Gas, and Geothermal
Resources in the Department of Conservation as an oil well
incapable of producing an average of more than 10 barrels of oil per
day during the entire taxable month. Once a well has been certified
as a stripper well, that stripper well shall remain certified as a
stripper well until the well produces an average of more than 10
barrels of oil per day during an entire taxable month.
42003. On and after January 1, 2011, for the privilege of
severing oil from the earth or water in this state for sale,
transport, consumption, storage, profit, or use, a tax is hereby
imposed upon all producers at the rate of 10 percent of the gross
value of each barrel of oil severed. The tax shall be applied equally
to all portions of the gross value of each barrel of oil severed.
42003. There is hereby imposed an oil severance tax upon any
producer for the privilege of severing oil from the earth or water in
this state for sale, transport, consumption, storage, profit, or
use, at the rate of 10 percent of the gross value of the product.
42004. Except as otherwise provided in this part, the tax shall
be upon the entire production in this state, regardless of the place
of sale or to whom sold or by whom used, or the fact that the
delivery may be made to points outside the state.
42005. The tax imposed by this part shall be in addition to any
ad valorem taxes imposed by the state, or any of its political
subdivisions, or any local business license taxes that may be
incurred as a for the privilege of
severing oil from the earth or water or doing business in that
locality. There shall be no exemption from the payment of an ad
valorem tax related to equipment, material, or property by reason of
the payment of the gross severance tax pursuant to this part.
42006. (a) The tax imposed by this part shall not be passed
through to consumers by way of higher prices for oil, natural gas,
gasoline, diesel, or other oil or gas consumable byproducts, such as
propane and heating oil. The board may monitor and investigate any
instance where producers or purchasers of the oil or gas have
attempted to gouge consumers by using the tax as a pretext to
materially raise the price of oil, natural gas, gasoline, diesel, or
other oil or gas consumable byproducts, such as propane and heating
oil.
(b) This section applies when not superceded by federal law.
42007. Two or more producers that are corporations and are owned
or controlled directly or indirectly, as defined in Section 25105, by
the same interests shall be considered as a single producer for
purposes of application of the tax prescribed in this part.
42008. (a) There shall be exempted from the imposition of the tax
imposed pursuant to this part oil produced by a stripper well in
which the average value of oil as of January 1 of the prior year is
less than thirty dollars ($30) per barrel price of California
oil. The Divisio n of Oil, Gas, and Geothermal Resources
in the Department of Conservation shall notify the board of all wells
that have been certified as a stripper well .
(b) For oil produced in this state from a well that qualifies
under Section 3251 of the Public Resources Code or which has been
inactive for a period of at least the preceding five consecutive
years, the imposition of the tax imposed pursuant to this part shall
be reduced to zero for a period of 10 years. The Division of
Oil, Gas, and Geothermal Resources in the Department of Conservation
shall determine which wells qualify under Section 3251 of the Public
Resources Code or which have been inactive for a period of at least
the preceding five consecutive years, and shall notify the board of
its determinations.
(c) There shall be exempted from the imposition of the tax imposed
pursuant to this part all oil owned or produced by the state and any
political subdivision's (including any local public entity (as
defined by Section 900.4 of the Government Code)) proprietary share
of oil produced under any unit, cooperative, or other pooling
agreement.
42009. The tax imposed by this part is due and payable to the
board quarterly on or before the last day of the month next
succeeding each calendar quarter.
42010. (a) Any person that fails to pay any tax within the time
required shall pay, in addition to the amount of tax owed, interest
at the rate of 11/2 percent per month, or fraction thereof, from the
date on which the tax became due and payable to and including the
date of payment.
(b) Every payment on a delinquent tax owed pursuant to this part
shall be applied as follows:
(1) First, to any interest due on the tax.
(2) Second, to any penalty imposed by this part.
(3) Third, the balance, if any, to the tax due.
42010. Every payment on a delinquent tax owed pursuant to this
part shall be applied as follows:
(a) First, the tax due.
(b) Second, to any penalty imposed by this part.
(c) Third, the balance, if any, to any interest due on the tax.
42011. Each producer shall prepare and file with the board a
return in the form prescribed by the board containing information as
the board deems necessary or appropriate for the proper
administration of this part. The return shall be filed on or before
the last day of the calendar month following the calendar quarter to
which it relates, together with a remittance payable to the board for
the amount of tax due for that period.
42012. The board may prescribe those forms and reporting
requirements as necessary to implement the tax, including, but not
limited to, information regarding the location of the well by county,
the gross amount of oil produced, the quantity sold and the selling
price, the prevailing market price of oil, and the amount of tax due.
42013. The board shall administer and collect the tax imposed by
this part pursuant to the Fee Collection Procedures Law (Part 30
(commencing with Section 55001) of Division 2). For purposes of this
part, the references in the Fee Collection Procedures Law to "fee"
shall include the tax imposed by this part, and to
"feepayer" shall include a person producer
required to pay the tax imposed by this part.
42014. The board may prescribe, adopt, and enforce emergency
regulations relating to the administration and enforcement of this
part. Any emergency regulations prescribed, adopted, or enforced
pursuant to this section shall be adopted in accordance with Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code, and for purposes of that chapter, including
Section 11349.6 of the Government Code, the adoption of these
regulations is an emergency and shall be considered by the Office of
Administrative Law as necessary for the immediate preservation of the
public peace, health and safety, and general welfare.
Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code, including
subdivision (e) of Section 11346.1 of the Government Code, any
emergency regulations adopted pursuant to this section shall be filed
with, but not be repealed by, the Office of Administrative Law, and
shall remain in effect until revised by the director.
42015. The board shall deposit all taxes, penalties, and interest
collected pursuant to this part , less refunds and
reimbursement to the board for expenses incurred in the
administration and collection of the tax, in the General Fund.
42016. The provisions of this part are severable. If any
provision of this part or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
SEC. 2. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
SEC. 3. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SEC. 3. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect. However, the provisions of this act shall become
operative on the first day of the first calendar quarter commencing
more than 90 days after the effective date of this act.