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Lawsuit challenges Oklahoma drilling tax cut plan

Published on NewsOK Modified: June 26, 2014 at 5:52 pm •  Published: June 26, 2014

OKLAHOMA CITY (AP) — A bill approved by the Legislature to adjust Oklahoma's tax on oil and gas production is unconstitutional because it passed in the final days of the session and didn't receive a three-fourths vote in the House and Senate, according to a lawsuit filed Thursday with the state Supreme Court.

The lawsuit, filed by Oklahoma City attorney Jerry Fent, asks the state's highest court to throw out the bill, which was supported by the state's oil and gas industry.

"I do not take a position on whether it's a good tax or not a good tax," said Fent, who has successfully challenged numerous bills passed by the Legislature. "I go to the constitutional procedure: Is it constitutional and lawful?"

Fent maintains the bill also has an unconstitutional effective date of July 1.

Under the bill, all oil and natural gas wells would be taxed at a standard 2 percent rate for the first three years of production. After that, the rate would return to the standard production tax rate of 7 percent.

A decision in the case likely will hinge on whether the measure is a revenue bill, which the Oklahoma Constitution states cannot be passed during the last five days of the session and must receive a three-fourths vote in both chambers, among other things.

Oral arguments before a Supreme Court referee are scheduled for July 29.

Oklahoma Oil & Gas Association President Chad Warmington said the premise of Fent's lawsuit is "wholly misguided."

"The purpose of HB 2562 was not to raise revenue, it was to provide certainty surrounding Oklahoma's incentives to drill new wells and increase production," Warmington said in a statement. "The measure was thoroughly vetted, and we believe it will withstand any challenges."

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