HB2673 S FIN AM#1
Nichols 7949
The Committee on Finance moved to amend the bill by striking out everything after the enacting clause, and inserting in lieu thereof the following:
CHAPTER 11. TAXATION.
ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.
§11-13A-3a.
Imposition of tax on privilege of severing natural gas or oil; Tax
Commissioner to develop a uniform reporting form.
(a) Imposition
of tax. -- For the privilege of engaging or continuing within this
state in the business of severing natural gas or oil for sale, profit or
commercial use, there is hereby levied and shall be collected
from every person exercising such the privilege an
annual privilege tax at the rate and measure provided in subsection (b)
of this section: Provided, That effective for all taxable
periods beginning on or after January 1, 2000, there is an exemption from the
imposition of the tax provided in this article on the following: (1) Free
natural gas provided to any surface owner; (2) natural gas produced from any
well which produced an average of less than 5,000 cubic feet of natural gas per
day during the calendar year immediately preceding a given taxable period;
(3) oil produced from any oil well which produced an average of less than
one-half barrel of oil per day during the calendar year immediately preceding a
given taxable period; and (4) for a maximum period of 10 years, all
natural gas or oil produced from any well which has not produced marketable
quantities of natural gas or oil for five consecutive years immediately
preceding the year in which a well is placed back into production and
thereafter produces marketable quantities of natural gas or oil.
(b) Rate
and measure of tax. -- The tax imposed in subsection (a) of this
section shall be is five percent of the gross
value of the natural gas or oil produced by the producer as shown by the gross
proceeds derived from the sale thereof by the producer, except as otherwise
provided in this article: Provided, That effective for taxable
periods beginning on or after January 1, 2019:
(1) For all natural gas produced from any well which produced an average in excess of 60,000 cubic feet of natural gas per day during the calendar year immediately preceding a given taxable year, and for oil produced from any well which produced an average in excess of 10 barrels of oil per day, during the calendar year immediately preceding the beginning date of a given taxable year, the rate of tax is 5% of the gross value of the natural gas or oil produced as shown by the gross proceeds derived from the sale thereof by the producer; and
(2) For all natural gas produced from any well which produced an average between 5,000 cubic feet of natural gas per day and 60,000 cubic feet of natural gas per day during the calendar year immediately preceding the beginning date of a given taxable year, and for oil produced from any well which produced an average between ½ barrel per day and 10 barrels per day, during the calendar year immediately preceding the beginning date of a given taxable year, the rate of tax is 2.5% of the gross value of the natural gas or oil produced as shown by the gross proceeds derived from the sale thereof by the producer.
(c) Tax
in addition to other taxes. -- The tax imposed by this section shall
apply applies to all persons severing gas or oil in this
state, and shall be is in addition to all other
taxes imposed by law.
(d)(1)
The Legislature finds that in addition to the production reports and financial
records which must be filed by oil and gas producers with the State Tax
Commissioner in order to comply with this section, oil and gas producers are
required to file other production reports with other agencies, including, but
not limited to, the office of oil and gas, the Public Service Commission and
county assessors. The reports required to be filed are largely duplicative, the
compiling of the information in different formats is unnecessarily time
consuming and costly, and the filing of one report or the sharing of
information by agencies of government would reduce the cost of compliance for
oil and gas producers.
(2)
On or before July 1, 2003, the Tax Commissioner shall design a common form that
may be used for each of the reports regarding production that are required to
be filed by oil and gas producers, which form shall readily permit a filing
without financial information when such information is unnecessary. The
commissioner shall also design such forms so as to permit filings in different
formats, including, but not limited to, electronic formats.
(3)
Effective July 1, 2006, this subsection shall have no force or effect
(d) For purposes of this section, in determining the average amount of production of gas and oil in any given calendar year, a taxpayer must calculate the actual production of such well in the calendar year and divide the same by the number of days the well was in operation and producing gas or oil in such calendar year.
(e) The proceeds of the tax imposed at the rate prescribed under subdivision (2), subsection (b) of this section are dedicated to the Oil and Gas Abandoned Well Plugging Fund created under §22-6-29a of this code: Provided, That if on June 1, 2021, or on June 1 of any year thereafter there exists in the Oil and Gas Abandoned Well Plugging Fund an amount equal to or exceeding the sum of $4 million then the special rate of tax imposed under subdivision (2), subsection (b) of this section is reduced to zero for the taxable year beginning on and after the next succeeding January 1. The Tax Commissioner shall issue an Administrative Notice by July 1 of each year indicating the balance in the fund as of the immediately preceding June 1 and the rate of tax on wells pursuant to this subsection.
CHAPTER 22. ENVIRONMENTAL RESOURCES.
ARTICLE 6. OFFICE OF OIL AND GAS; OIL AND GAS WELLS.
§22-6-29a. Oil and Gas Abandoned Well Plugging Fund.
(a)(1) This section may be referred to as the Oil and Gas Abandoned Well Plugging Fund Act. There is established within the Treasury of the State of West Virginia the special use fund known as the Oil and Gas Abandoned Well Plugging Fund.
(2) The Oil and Gas Abandoned Well Plugging Fund shall be administered by the secretary solely for the purposes of carrying out the provisions of this section.
(3) Any balance remaining in the Oil and Gas Abandoned Well Plugging Fund at the end of any state fiscal year does not revert to the General Revenue Fund but shall remain in the special revenue account and may be used only as provided in this section. The revenues deposited in the Oil and Gas Abandoned Well Plugging Fund may not be designated as nonaligned state special revenue funds under §11B-2-32 of this code.
(b)(1) Using funds from the Oil and Gas Reclamation Fund and the Oil and Gas Abandoned Well Plugging Fund, the secretary shall plug and reclaim abandoned oil and gas wells without a responsible operator all in accordance with plans and specifications developed pursuant to the provisions of this article relating to the plugging and reclamation of wells, and the rules establishing well plugging standards adopted thereunder.
(2) Funds from the Oil and Gas Abandoned Well Plugging Fund may only be used to plug abandoned oil and gas wells without a responsible operator and to reclaim the property disturbed from the plugging.
(3) On or before July 1 of each year, the secretary shall make an annual report to the Governor and the Legislature as to the use of the Oil and Gas Abandoned Well Plugging Fund and the Oil and Gas Reclamation Fund. The report shall include the balance in both funds on June 1 of each year. The secretary’s annual report shall set forth the number of wells reclaimed or plugged through the use of the Oil and Gas Reclamation Fund and the Oil and Gas Abandoned Well Plugging Fund in the previous year. The report shall identify each reclamation and plugging project, state the number of wells plugged thereby, show the county in which the wells are located, and make a detailed accounting of all expenditures from the Oil and Gas Reclamation Fund and from the Oil and Gas Abandoned Well Plugging Fund. The annual report shall also include a 5-year plan detailing current and future projects and activities to plug and reclaim wells.
(4) Wells shall be plugged, and plugged wells reclaimed by contract entered into by the secretary on a competitive bid basis as provided for under the provisions of §5A-3-1 et seq. of this code and the rules promulgated thereunder.