State legislatures were busy this year tweaking the rules on severance taxes, shaking up how states cash in on their natural resources. From new tax breaks to updates on storage facilities to approved communication methods, lawmakers rolled out changes that could ripple through industries. Whether you’re in oil, gas, or mining—or just curious about how states are keeping their budgets afloat—this recap breaks down what’s new and why it matters.
Alabama: Updates to pore space and carbon dioxide storage
On May 9, Governor Kay Ivey signed HB327, a new bill that provides some additional clarifying language. First, it states that pore space is owned by the surface owner unless ownership is explicitly severed. It also requires operators of CO2 storage facilities to make a good faith effort to get consent from all pore space owners, securing at least 60% of the facility’s space and storage rights to move forward. Operators hold title to all injected CO2, but once the project wraps up, ownership of the equipment, facilities, and stored CO2 shifts to the state—with no compensation required.
Colorado: Changes to forced pooling, orphaned wells, and new production fees
Signed into law on May 22, SB185 updates how forced pooling works for unleased lands in Colorado. Now, anyone applying for a pooling order has to include an affidavit proving they own more than 45% of the mineral interest. Unleased mineral owners also get a bigger say—they can file a protest with the commission at least 60 days before the first hearing to challenge the applicant’s claim. Plus, there are new restrictions on pooling local government-owned unleased interests, adding another layer to the process.
In addition, on May 17, Governor Jared Polis signed SB229, broadening the definition of orphaned wells to include “marginal wells,” those at high risk of becoming orphaned. Meanwhile, SB230 is setting the stage for cleaner transit by requiring oil and gas producers to pay a new production fee. Starting July 1, 2025, this fee will apply to all oil and gas produced in the state and must be paid quarterly.
Indiana: Reclassifying petroleum severance tax and changing deadlines
Governor Eric J. Holcomb signed SB228 into law, taking effect on July 1. The bill reclassifies the petroleum severance tax as a “periodic tax” and pushes the deadline for filing returns or refund claims to January 31—giving everyone an extra month to get their paperwork in order.
Louisiana: New tax breaks for reviving old wells
Effective October 1, HB418 brings big tax breaks for reviving idle or orphaned oil and gas wells. It lowers the special tax rate for wells inactive for two years or with minimal production—from 50% to 25% of the general severance tax if they’re back in action before October 1, 2028. For wells classified as orphaned for over five years, the rate goes even lower—from 25% to 12.5%, as long as production restarts by the same deadline.
Oklahoma: Making email a sanctioned communication method
On June 14, Governor J. Kevin Stitt signed SB1534, tweaking the Oklahoma Uniform Unclaimed Property Act. The most notable update here is adding email as an official way for owners to communicate about their unclaimed property—making it easier to stay in the loop.
Pennsylvania: New legislation for carbon dioxide storage
Governor Josh Shapiro signed SB831 into law on July 17, setting the ground rules for carbon dioxide injection and storage facilities. The bill outlines requirements for working with surface and subsurface owners and introduces a per-ton fee paid to the state for stored CO2. After 50 years and meeting additional conditions, the state will issue a completion certificate and take over responsibility for the stored carbon dioxide.
Wyoming: Updated protocols for land lease bidding
HB141 passed and took effect immediately, making some key changes to how state and school land leases are handled. Now, when reviewing the highest bid, the director must check if the bidder meets the qualifications for an oil and gas lease. If not, the board will consider the second-highest bid. Plus, if a bid is rejected for not meeting the qualifications, the bidder faces a civil penalty equal to their highest offer—and the attorney general can take legal action to recover it.
Heading into 2025 with some significant adjustments to the world of severance tax in key states
Looking back at 2024, it’s clear that states didn’t shy away from rethinking severance taxes. Whether the changes end up boosting local economies, stirring industry pushback, or reshaping budgets, one thing’s for sure—natural resources remain a hot topic. As these updates start to play out, all eyes will be on how they impact businesses, communities, and the bottom line. The conversation around severance taxes is far from over, so stay tuned for the next chapter to make sure you’re taking advantage of every opportunity for a full refund.