SB 207: Local Impact Mitigation Amendments - Utah

Substitute #3 → Enrolled · 1 edit · Mar 26, 2025

MINOR

The bill text was updated from a draft version to the final enrolled version, primarily involving the correction of a timestamp at the end of the document. The substantive policy content, including tax rates, definitions, exemptions, and reporting requirements, remains unchanged.

Scope change

No change in scope or applicability; the legislative provisions are identical to the previous version.

TECHNICAL

The timestamp at the end of the document was updated from March 3, 2025, to March 11, 2025, indicating the final approval date.

Introduced → Substitute #1 · 8 edits

MODERATE

The bill was amended to add specific exemptions for stripper, wildcat, and development wells, clarify tax triggers for stockpiled oil and gas, and adjust the gas tax rate. The definition of 'gas' was simplified, and a new section was added to require counties to report their spending plans to the Legislature by September 2029.

Scope change

The tax now applies to oil and gas that is saved, sold, or transported from the field, not just produced. Exemptions were added for specific types of wells (stripper, wildcat, and development) and for gas used in processing.

ELIGIBILITY

Added exemptions for oil or gas produced from stripper wells, wildcat wells during their first 12 months, and development wells during their first six months.

Added an exemption for gas produced and consumed to process oil or gas into a marketable state.

REQUIREMENT

Added a requirement for recipient counties to submit a written report to the Legislature by September 1, 2029, detailing how tax revenue was used for transportation projects.

Added a rule that if oil or gas is stockpiled for more than two years, it becomes subject to the tax.

SCOPE

Expanded the tax trigger to include oil and gas that is saved, sold, or transported from the field, rather than just produced.

DEFINITION

Added definitions for 'Development well', 'Stripper well', and 'Wildcat well' to clarify which wells are exempt from the tax.

TECHNICAL

Simplified the definition of 'Gas' by removing the sub-clauses regarding natural gas liquids and mixtures.

FISCAL

Adjusted the tax rate for gas from 1 cent per MCF to 0.0024 cent per MCF.

Substitute #2 → Substitute #3 · 8 edits

MODERATE

This bill introduces a new local impact mitigation tax on oil and gas production in Utah, replacing previous local mitigation fees with a state-administered tax. The tax applies to oil and gas produced between January 1, 2026 and January 1, 2029, with revenue distributed to counties for transportation projects that mitigate impacts on local roads. The bill also creates an administrative charge account for the State Tax Commission to fund its operations.

Scope change

The bill shifts from allowing counties to impose their own oil and gas mitigation fees to a state-administered tax system where counties receive revenue for specific transportation mitigation projects.

TAX

New 5-cent per barrel tax on oil and 1/4 cent per MCF tax on gas for production between 2026-2029

EXEMPTIONS

Exemptions for federal/state/tribal production, stripper wells, wildcat wells (first 12 months), and development wells (first 6 months)

COUNTY_AUTHORITY

Prohibits counties from imposing their own oil or gas mitigation fees

FISCAL

Tax revenue must be used only for transportation projects mitigating impacts on qualifying roads within recipient counties

REPORTING

Requires recipient counties to submit annual reports to the Legislature by September 1, 2029

DEFINITION

Added specific definitions for barrel, condensate, crude oil, gas, MCF, natural gas, natural gas liquids, and related terms

TIMELINE

Tax applies to production on or after January 1, 2026 through January 1, 2029

ADMINISTRATIVE

Creates State Tax Commission Administrative Charge Account to fund commission operations from collected taxes

Substitute #1 → Substitute #2 · 9 edits

MAJOR

This bill adds a new local impact mitigation tax on oil and gas production in Utah, effective January 1, 2026. The tax applies to oil and gas produced within the state during a specific period and saved, sold, or transported. Revenue from the tax must be used for transportation projects that mitigate impacts on county roads.

Scope change

The bill expands Utah's tax framework by creating a new local impact mitigation tax that operates alongside existing severance taxes, with revenue flowing directly to counties for road infrastructure improvements.

SCOPE

New local impact mitigation tax imposed on oil and gas produced between January 1, 2026 and January 1, 2029

FISCAL

Tax rates set at 5 cents per barrel of oil and 0.0024 cents per MCF of gas

County revenue restricted to transportation projects mitigating impacts on qualifying roads

ELIGIBILITY

Exemptions for federal/state/tribal production, stripper wells, wildcat wells in first 12 months, and development wells in first 6 months

REQUIREMENT

Quarterly tax payments required from producers to the State Tax Commission

Tax revenue must be distributed to recipient counties within 60 days of payment

Recipient counties must report annual use of tax revenue to the Legislature by September 1, 2029

ENFORCEMENT

Prohibition on counties from imposing their own oil or gas mitigation fees

TECHNICAL

Amendment to Section 59-1-306 to include the new Local Impact Mitigation Tax Act in the list of qualifying taxes for administrative charges

Local Impact Mitigation Amendments

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