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Introduced Version Senate Bill 216 History

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sb216 intr
Senate Bill No. 216

(By Senators Tomblin, Mr. President, and Caruth,

By Request of the Executive)

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[Introduced January 14, 2008; referred to the Committee on Energy, Industry and Mining; and then to the Committee on Finance.]

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A BILL to amend and reenact §11-13A-3d and §11-13A-20a of the Code of West Virginia, 1931, as amended; to amend said code by adding thereto a new section, designated §11-13A-3f; and to amend said code by adding thereto a new section, designated §11-13V-4a, all relating to natural gas and coalbed methane production; Severance and Business Privilege Tax Act and Workers' Compensation Debt Reduction Act; specifying termination of the severance and business privilege tax exemption for production of coalbed methane and specifying that coalbed methane is taxed as natural gas for purposes of the Severance and Business Privilege Tax Act and for purposes of the taxes imposed by the Workers' Compensation Debt Reduction Act; specifying dedication of tax; providing effective dates; and specifying application of exemption with relation to existing exemption entitlements.

Be it enacted by the Legislature of West Virginia:
That §11-13A-3d and §11-13A-20a of the Code of West Virginia, 1931, as amended, be amended and reenacted; that said code be amended by adding thereto a new section, designated §11-13A-3f; and that said code be amended by adding thereto a new section, designated §11-13V-4a, all to read as follows:
ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.
§11-13A-3d. Imposition of tax on privilege of severing coalbed methane.

(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 expenditures.
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, 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 this 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.
(f) Notwithstanding any other provision of this code to the contrary, on and after the first day of January, two thousand eight, the provisions of this section are null and void and of no force or effect: Provided, That all coalbed methane produced from any coalbed methane well placed in service before the first day of January, two thousand eight shall be entitled to the exemption set forth in this section for the remainder of the five year original exemption period applicable to the coalbed methane produced from that well.
§11-13A-3f. Imposition of tax on privilege of severing coalbed methane on and after January 1, 2008.

(a) Subject to the exceptions set forth in this article and article thirteen-v of this chapter, on and after the first day of January, two-thousand eight, coalbed methane and methane produced from or by a coalbed methane well is taxable as natural gas for purposes of the taxes imposed by this article and the taxes imposed by article thirteen-v of this chapter.
(b) 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.
§11-13A-20a. Dedication of tax.
(a) The amount of taxes collected under this article from providers of health care items or services, including any interest, additions to tax and penalties collected under article ten of this chapter, less the amount of allowable refunds and any interest payable with respect to such refunds, shall be deposited into the Special Revenue Fund created in the State Treasurer's Office and known as the Medicaid State Share Fund. Said fund shall have separate accounting for those health care providers as set forth in articles four-b and four-c, chapter nine of this code.
(b) Notwithstanding the provisions of subsection (a) of this section, for the remainder of fiscal year one thousand nine hundred ninety-three and for each succeeding fiscal year, no expenditures from taxes collected from providers of health care items or services are authorized except in accordance with appropriations by the Legislature.
(c) The amount of taxes on the privilege of severing timber collected under section three-b of this article, including any interest, additions to tax and penalties collected under article ten of this chapter, less the amount of allowable refunds and any interest payable with respect to such refunds, shall be paid into a special revenue account in the State Treasury to be appropriated by the Legislature for purposes of the Division of Forestry.
(d) Notwithstanding any other provision of this code to the contrary, beginning the first day of January, two thousand nine, there is hereby dedicated an annual amount of up to four million dollars from annual collections of the tax imposed by this article to be deposited into the West Virginia Infrastructure Fund, created in section nine, article fifteen-a, chapter thirty-one of this code.
(1) For purposes of administering the deposits required by this subdivision, after the thirty-first day of December, two thousand eight from the taxes imposed by this article and paid to the Tax Commissioner in the year, after deducting the amount of any refunds lawfully paid and any administrative costs authorized by this code, the Tax Commissioner shall pay into the West Virginia Infrastructure Fund an amount equal to up to four million dollars per fiscal year.
(2) The annual payment to the West Virginia Infrastructure Fund shall be made in January of each year, beginning in January, two thousand nine.
(3) Notwithstanding any provision of this section to the contrary, the total amount to be deposited in January, two thousand nine, into the West Virginia Infrastructure Fund as provided in this subsection for the fiscal year ending on the thirtieth day of June, two thousand nine shall not exceed one million dollars.
(4) Notwithstanding any provision of this section to the contrary, the total amount to be deposited in January, two thousand ten, into the West Virginia Infrastructure Fund as provided in this subsection for the fiscal year ending on the thirtieth day of June, two thousand ten shall not exceed two million dollars.
(5) Notwithstanding any provision of this section to the contrary, the total amount to be deposited in January, two thousand eleven, into the West Virginia Infrastructure Fund as provided in this subsection for the fiscal year ending on the thirtieth day of June, two thousand eleven, and each January of each year thereafter, shall not exceed four million dollars.
(d) (e) The amount of taxes collected under this article from all other persons, including any interest, additions to tax and penalties collected under article ten of this chapter, less the amount of allowable refunds and any interest payable with respect to such refunds, shall be deposited into the General Revenue Fund.
ARTICLE 13V. WORKERS' COMPENSATION DEBT REDUCTION ACT.
§11-13V-4a. Coalbed methane.

(a) Subject to the exceptions set forth in this section, on and after the first day of January, two thousand eight, coalbed methane and methane produced from or by a coalbed methane well is taxable as natural gas for purposes of the taxes imposed by this article:
Provided, That all coalbed methane produced from any coalbed methane well placed in service before the first day of January, two thousand eight shall be exempt from the taxes imposed by this article for the remainder of the five year original exemption period set forth in section three-d, article thirteen-a of this chapter and applicable to the coalbed methane produced from that well.
(b) 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.




NOTE: The purpose of this bill is to make the taxation of natural gas and coalbed methane equal and uniform, to dedicate certain amounts of tax revenue to the West Virginia Infrastructure Fund, and to grandfather certain entitlements to the exemption previously applicable to coalbed methane production.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
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