H. B. 3358
(By Delegates Michael, Cann, Kominar, Williams, Stalnaker,
Palumbo, Boggs, Houston, Proudfoot, Anderson and Evans)
(Originating in the Committee on Finance)
[March 25, 2005]
H. B. 3358- "A Bill to amend and reenact §11-13A-3a, §11-13A-3b and
§11-13A-3d of the Code of West Virginia, 1931, as amended, all
relating to the reduction from five percent to four percent in
the severance tax imposed on natural gas produced from wells
placed in service on or after the first day of July, two
thousand five; the reduction from three and twenty-two
hundredths percent to one and twenty-two hundredths percent in
the severance tax imposed on timber produced on or after the
first day of December, two thousand five; reducing the period
of availability of a certain five-year severance tax exemption
for coalbed methane production; and reducing from five percent
to four percent the severance tax on gas produced from coalbed
methane wells on or after the first day of July, two thousand
five.
Be it enacted by the Legislature of West Virginia:
That §11-13A-3a, §11-13A-3b and §11-13A-3d of the Code of West
Virginia, 1931, as amended, be amended and reenacted, all to read as follows:
ARTICLE 13A. SEVERANCE TAXES.
§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
privilege an annual privilege tax:
Provided, That effective for
all taxable periods beginning on or after the first day of January,
two thousand, there is an exemption from the imposition of the tax
provided
for 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 five thousand 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 ten 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. --
(1) The tax imposed in subsection (a) of this section shall be
five percent 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, except as otherwise provided in this article.
(2) With respect to natural gas produced from wells placed in
service on or before the thirtieth day of June, two thousand five,
the tax imposed in subsection (a) of this section shall be five
percent of the gross value of the natural gas produced, as shown by
the gross proceeds derived from the sale thereof by the producer,
except as otherwise provided in this article.
(3) With respect to natural gas produced from wells placed in
service on or after the first day of July, two thousand five, the
tax imposed in subsection (a) of this section shall be four percent
of the gross value of the natural gas produced, as shown by the
gross proceeds derived from the sale thereof by the producer,
except as otherwise provided in this article.
(c)
Tax in addition to other taxes. -- The tax imposed by this
section shall apply to all persons severing gas or oil in this
state, and shall be 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 the first day of July, two thousand three,
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.
§11-13A-3b. Imposition of tax on privilege of severing timber.
(a)
Imposition of tax. -- For the privilege of engaging or
continuing within this state in the business of severing timber for
sale, profit or commercial use, there is hereby levied and shall be
collected from every person exercising such privilege an annual
privilege tax.
(b)
Rate and measure of tax. -- The tax imposed in subsection
(a) of this section shall be three and twenty-two hundredths
percent of the gross value of the timber produced, as shown by the
gross proceeds derived from the sale thereof by the producer,
except as otherwise provided in this article
: Provided, That the
tax imposed in subsection (a) of this section on timber produced on or after the first day of December, two thousand five, shall be one
and twenty-two hundredths percent of the gross value of the timber
produced, as shown by the gross proceeds derived from the sale
thereof by the producer, except as otherwise provided in this
article.
(c)
Tax in addition to other taxes. -- The tax imposed by
this section shall apply to all persons severing timber in this
state, and shall be in addition to all other taxes imposed by law.
(d)
Effective date. -- This section, as amended in the year
one thousand nine hundred ninety-three, shall apply to gross
proceeds derived after the thirty-first day of May of such year.
The language of section three of this article, as in effect on the
first day of January of such year, shall apply to gross proceeds
derived prior to the first day of June of such year and, with
respect to such gross income, shall be fully and completely
preserved.
§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 July, two thousand five.
(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:
Provided, That for tax years beginning on or
after the first day of January, two thousand five, the tax imposed
in subsection (b) of this section is four percent of the gross
value of the coalbed methane gas produced on or after the first day
of July, two thousand five, 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 bill is to reduce the
severance tax rate on natural gas from five percent to four percent
for wells drilled on or after July 1, 2005; to reduce the severance
tax rate on timber from three and twenty-two hundredths percent to
one and twenty-two hundredths percent on December 1, 2005; to
remove the five-year severance tax exemption for coalbed methane
wells drilled on or after July 1, 2005; and to reduce the severance
tax rate on gas produced from coalbed methane wells on or after
July 1, 2005, from five to four percent.
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