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Senate Bill 746 History
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ENROLLED
Senate Bill No. 746
(By Senators Helmick, Sharpe, Chafin, Plymale, Prezioso,
Edgell, Love, Bailey, Bowman, McCabe, Unger, Minear,
Boley, Facemyer, Yoder, Guills and Sprouse)
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[Passed April 9, 2005; in effect ninety days from passage.]
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AN ACT to
amend and reenact §11-13A-3a, §11-13A-3b and §11-13A-3d
of the Code of West Virginia, 1931, as amended; and to amend
said code by adding thereto a new section, designated §11-13A-
5b, 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
December, 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; reducing from
five percent to four percent the severance tax on gas produced
from coalbed methane wells on or after the first day of
December, two thousand five; and dedicating and distributing
ten percent of coalbed methane severance tax for benefit of
counties and municipalities.
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; and that said
code be amended by adding thereto a new section, designated §11-
13A-5b, 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 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 November, 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 December, 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 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 of this article, 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
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 December, 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 December, 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.
§11-13A-5b. Dedication of ten percent of coalbed methane
severance tax for benefit of counties and
municipalities; distribution of major portion of
such dedicated tax to coalbed methane producing
counties; distribution of minor portion of such
dedicated tax to all counties and municipalities;
reports; rules; special funds in the Office of
State Treasurer; methods and formulae for
distribution of such dedicated tax; expenditure of
funds by counties and municipalities for public purposes; and requiring special county and
municipal budgets and reports thereon.
(a) Effective the first day of December, two thousand five,
ten percent of the tax attributable to the severance of coalbed
methane imposed by section three-d of this article is hereby
dedicated for the use and benefit of counties and municipalities
within this state and shall be distributed to the counties and
municipalities as provided in this section.
(b) Seventy-five percent of this dedicated tax shall be
distributed by the State Treasurer in the manner specified in this
section to the various counties of this state in which the coalbed
methane upon which this additional tax is imposed was located at
the time it was removed from the ground. Those counties are
referred to in this section as the "coalbed methane producing
counties". The remaining twenty-five percent of the net proceeds
of this additional tax on coalbed methane shall be distributed
among all the counties and municipalities of this state in the
manner specified in this section.
(c) The Tax Commissioner is hereby granted plenary power and
authority to promulgate reasonable rules requiring the furnishing
by coalbed methane producers of such additional information as may
be necessary to compute the allocation required under the
provisions of subsection (f) of this section. The Tax Commissioner
is also hereby granted plenary power and authority to promulgate
such other reasonable rules as may be necessary to implement the
provisions of this section.
(d) In order to provide a procedure for the distribution of
seventy-five percent of the dedicated tax on coalbed methane to the coalbed methane producing counties, a special fund known as the
Coalbed Methane County Revenue Fund is hereby established in the
State Treasurer's Office. In order to provide a procedure for the
distribution of the remaining twenty-five percent of the dedicated
tax on coalbed methane to all counties and municipalities of the
state, without regard to coalbed methane having been produced in
those counties or municipalities, a special fund known as the All
Counties and Municipalities Coalbed Methane Revenue Fund is hereby
established in the State Treasurer's Office. Seventy-five percent
of the dedicated tax on coalbed methane shall be deposited in the
Coalbed Methane County Revenue Fund and twenty-five percent of the
dedicated tax on coalbed methane shall be deposited in the All
Counties and Municipalities Coalbed Methane Revenue Fund, from time
to time, as the proceeds are received by the Tax Commissioner. The
moneys in the funds shall be distributed to the respective counties
and municipalities entitled to the moneys in the manner set forth
in subsection (e) of this section.
(e) The moneys in the Coalbed Methane County Revenue Fund and
the moneys in the All Counties and Municipalities Coalbed Methane
Revenue Fund shall be allocated among and distributed annually to
the counties and municipalities entitled to the moneys by the State
Treasurer in the manner specified in this section. On or before
each distribution date, the State Treasurer shall determine the
total amount of moneys in each fund which will be available for
distribution to the respective counties and municipalities entitled
to the moneys on that distribution date. The amount to which a
coalbed methane producing county is entitled from the Coalbed
Methane County Revenue Fund shall be determined in accordance with subsection (f) of this section, and the amount to which every
county and municipality shall be entitled from the All Counties and
Municipalities Coalbed Methane Revenue Fund shall be determined in
accordance with subsection (g) of this section. After determining,
as set forth in subsections (f) and (g) of this section, the amount
each county and municipality is entitled to receive from the
respective fund or funds, a warrant of the State Auditor for the
sum due to the county or municipality shall issue and a check drawn
thereon making payment of the sum shall thereafter be distributed
to the county or municipality.
(f) The amount to which a coalbed methane producing county is
entitled from the Coalbed Methane County Revenue Fund shall be
determined by dividing the total amount of moneys in the fund
derived from tax on the severance of coalbed methane then available
for distribution by the total volume of cubic feet of coalbed
methane extracted in this state during the preceding year and
multiplying the quotient thus obtained by the number of cubic feet
of coalbed methane taken from the ground in the county during the
preceding year.
(g) The amount to which each county and municipality is
entitled from the All Counties and Municipalities Coalbed Methane
Revenue Fund shall be determined in accordance with the provisions
of this subsection. For purposes of this subsection "population"
means the population as determined by the most recent decennial
census taken under the authority of the United States:
(1) The Treasurer shall first apportion the total amount of
moneys available in the All Counties and Municipalities Coalbed
Methane Revenue Fund by multiplying the total amount in the fund by the percentage which the population of each county bears to the
total population of the state. The amount thus apportioned for
each county is the county`s "base share".
(2) Each county`s "base share" shall then be subdivided into
two portions. One portion is determined by multiplying the "base
share" by that percentage which the total population of all
unincorporated areas within the county bears to the total
population of the county, and the other portion is determined by
multiplying the "base share" by that percentage which the total
population of all municipalities within the county bears to the
total population of the county. The former portion shall be paid
to the county and the latter portion shall be the "municipalities`
portion" of the county`s "base share". The percentage of the
latter portion to which each municipality in the county is entitled
shall be determined by multiplying the total of the latter portion
by the percentage which the population of each municipality within
the county bears to the total population of all municipalities
within the county.
(h) Moneys distributed to any county or municipality under the
provisions of this section, from either or both special funds,
shall be deposited in the county or municipal general fund and may
be expended by the county commission or governing body of the
municipality for such purposes as the county commission or
governing body shall determine to be in the best interest of its
respective county or municipality: Provided, That in counties with
population in excess of two hundred thousand, at least seventy-five
percent of the funds received from the Coalbed Methane County
Revenue Fund shall be apportioned to and expended within the coalbed methane producing area or areas of the county, the coalbed
methane producing areas of each county to be determined generally
by the state Tax Commissioner: Provided, however, That the moneys
distributed to any county or municipality under the provisions of
this section shall not be budgeted for personal services in an
amount to exceed one fourth of the total amount of the moneys.
(i) On or before the first day of November, two thousand five,
and each first day of November thereafter, each county commission
or governing body of a municipality receiving any such moneys shall
submit to the Tax Commissioner on forms provided by the tax
commissioner a special budget, detailing how the moneys are to be
spent during the subsequent fiscal year. The budget shall be
followed in expending the moneys unless a subsequent budget is
approved by the state Tax Commissioner. All unexpended balances
remaining in the county or municipality general fund at the close
of a fiscal year shall remain in the general fund and may be
expended by the county or municipality without restriction.
(j) On or before the fifteenth day of December, two thousand
five, and each fifteenth day of December thereafter, the Tax
Commissioner shall deliver to the Clerk of the Senate and the Clerk
of the House of Delegates a consolidated report of the budgets,
created by subsection (i) of this section, for all county
commissions and municipalities as of the fifteenth day of July of
the current year.
(k) The state Tax Commissioner shall retain for the benefit of
the state from the dedicated tax attributable to the severance of
coalbed methane the amount of thirty-five thousand dollars annually
as a fee for the administration of the additional tax by the Tax Commissioner.