Senate Bill No. 417
(By Senator Fanning, Oliverio and Helmick)
[Introduced February 7, 2000; referred to the Committee
A BILL to amend article thirteen-a, chapter eleven of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
three-d, relating to exemptions of coalbed methane
production from imposition of the severance tax.
Be it enacted By the Legislature of West Virginia:
That article thirteen-a, chapter eleven of the code of West
Virginia, one thousand nine hundred thirty-one, as amended, be
amended by adding thereto a new section, designated section
three-d, to read as follows:
ARTICLE 13A. SEVERANCE TAXES.
§11-13A-3d. Imposition of tax on privilege of severing coalbed
(a) The Legislature hereby finds and declares the following:
(1) That coalbed methane is underdeveloped and an
under-utilized resource within this state which, where
practicable, should be captured and not be vented or wasted;
(2) The health and safety of persons engaged in coal mining
is a paramount concern to the state. The Legislature intends to
preserve coal seams for future safe mining, to facilitate the
expeditious, safe evacuation of coalbed methane from the coalbeds
of this state, and to ensure the safety of miners by encouraging
the advance removal of coalbed methane;
(3) The United States environmental protection agency's
coalbed methane outreach program encourages United States coal
mines in the United States to remove and use methane that is
otherwise wasted during mining. These projects have important
economic benefits for the mines and their local economies while
they also reduce emissions of methane; and
(4) The initial costs of development of coalbed methane
wells can be large in comparison to conventional wells and
deoxygenation and water removal increase development
The Legislature, therefore, concludes that an incentive to
coalbed methane development should be implemented to encourage
capture of methane gas that would otherwise be vented to the atmosphere.
(b) Imposition of tax. -- In lieu of the annual privilege
tax imposed on the severance of natural gas or oil pursuant to
section three-a of this article thirteen-a, for the privilege of
engaging or continuing within this state in the business of
severing coalbed methane for sale, profit or commercial use,
there is hereby levied and shall be collected from every person
exercising such privilege an annual privilege tax: Provided,
That effective for taxable years beginning on or after the first
day of January, two thousand one, there is an exemption from the
imposition of the tax provided for in this article for a maximum
period of five years for all coalbed methane produced from any
coalbed methane well placed in service after the first day of
January, two thousand. For purposes of this section, the terms
"coalbed methane" and "coalbed methane well" have the meaning
ascribed to them in section two, article twenty-one, chapter
twenty-two of this code. The exemption from tax provided by this
section is applicable to any coalbed methane well placed in
service before the first day of January, two thousand eleven.
(c) Rate and measure of tax. -- The tax imposed on
subsection (b) of the section is five percent of the gross value of the coalbed methane produced, as shown by the gross proceeds
derived from the sale thereof by the producer, except as
otherwise provided in this article.
(d) Tax in addition to other taxes. -- The tax imposed by
this section applies to all persons severing coalbed methane in
this state, and is in addition to all other taxes imposed by law.
(e) Except as specifically provided in this section,
application of the provisions of this article apply to coalbed
methane in the same manner and with like effect as the provisions
apply to natural gas.
NOTE: The purpose of this legislation is to encourage the
development of coalbed methane and to encourage the removal of
methane from mines which will substantially improve mine safety.
This section is new; therefore, strike-throughs and
underscoring have been omitted.