H. B. 2946
(By Delegates Burdiss, Klempa, Kessler,
Hrutkay, Rodighiero, Ellis, Moye, Shook, Staggers,
D. Poling and M. Poling)
[Introduced January 9, 2008; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-13A-3d of the Code of West
Virginia, 1931, as amended, relating to removing the five year
coalbed methane severance tax exemption for businesses,
severing coalbed methane for sale, profit or commercial use.
Be it enacted by the Legislature of West Virginia:
That §11-13A-3d of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 13A. SEVERANCE TAXES.
§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 the
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.
NOTE: The purpose of this bill is to remove the five year
coalbed methane severance tax exemption for businesses, severing
coalbed methane for sale, profit or commercial use.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.