By OGJ editors
HOUSTON, Dec. 20 -- A new tax on revenue from California oil production to fund an alternative-energy program has been proposed for consideration in the November 2006 election.
The California attorney general received an initiative for the new levy last week.
"The initiative is reportedly being sponsored by the Natural Resources Defenses Council (NRDC), which has significant financial resources available as an organization," said the California Independent Petroleum Association.
CIPA hired a law firm to analyze the proposal and identify points that may be open to legal or constitutional challenge.
The proposed "California Energy Independence Fund Assessment" would apply at rates as high as 6% on gross revenue from Californian oil production. Proceeds would finance the "Clean Alternative Energy Program." The initiative, which emphasizes ethanol and biodiesel projects, targets $4 billion over 10 years.
Producers and royalty owners would be taxed separately.
The tax rate would vary with the price of crude oil, reaching the maximum rate when the price exceeded $60/bbl. The rate would be lower for stripper production, which would be exempt when the crude price was below $50/bbl.
The initiative would prohibit producers from passing the tax through to consumers.
