Pledger v. Ethyl Corp.

Steele Hays Justice.

Arkansas levies a severance tax on each producer of natural resources. The rate of tax on oil is 5 % of the market value at the time and place of severance, unless the average monthly production of oil is ten barrels or less per day per well. In the latter event the rate is 4 %. The lower rate is intended to maximize the recovery of oil, including the stimulation of secondary recovery efforts where oil production is only marginally economical.

The appellant, after auditing the appellee’s records for July 1984 through June 1986, determined that an additional tax of…