Senate Bill No. 435

(By Senators Manchin, Wooton, Yoder, Wagner,

White, Miller, Craigo, Wiedebusch, Chafin, Anderson,

Blatnik, Grubb, Tomblin, Mr. President, Sharpe, Ross,

Schoonover, Bowman, Whitlow, Bailey and Kimble)

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[Introduced February 20, 1995;

referred to the Committee on Finance.]

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A BILL to amend chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding there a new article, designated article thirteen-i, relating to the provision of tax credits for coal producers, transporters, public utilities or other persons; relating to the purchase of allowances for the utilization of coal consistent with the limitations imposed by title IV of the clean air act amendments of one thousand nine hundred ninety; definitions; the calculation and administration of the tax credits; and savings clause.

Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new article, designated article thirteen-i, to read as follows:
ARTICLE 13I. ECONOMIC STIMULUS ALLOWANCE TAX CREDIT ACT.
§11-13I-1. Short title.
This article may be cited as the "Economic Stimulus Allowance Tax Credit Act".
§11-13I-2. Legislative findings and purpose.
The Legislature finds that the encouragement of economic activity by the state's businesses relating to the mining, transport and utilization of West Virginia coal; the resultant enhancement of revenues accruing to the state; the promotion and preservation of jobs in the coal industry and in industries supplying and otherwise related to the coal industry and the general economic activity resulting therefrom; and the amelioration of the effects of the production, transportation and utilization of West Virginia coal on the environment are all in the public interest and promote the general welfare of the people of this state consistent with prudent development of the state's natural resources.
The Legislature further finds that most coals produced in West Virginia for electric utility steam generation are unable to meet the sulfur dioxide emission requirements that will result due to implementation of Title IV of the Clean Air Act Amendments of 1990, without the use of emission control technologies or the acquisition of sulfur dioxide emission allowances to enable such coals to be utilized consistent with the national program of sulfur dioxide emission reductions created by that Title; that the national emission allowance market has not developed sufficiently to permit the economic efficiencies it promises to be adequately realized, resulting in actual and potential detriment to coals produced in West Virginia as well as to the ultimate electric consumers of West Virginia coals used in the electric utility industry; that promotion of a more active and vital market for emission allowances is consistent with the broad interests of the state of West Virginia stated herein; and that encouragement of emission allowance purchases and sales related to the use of West Virginia coals will benefit the economy of the state and the well-being of its citizens and industries.
Further, the Legislature finds that the present appropriation of funds to treat water resources in West Virginia that have been degraded as a result of acid mine drainage is insufficient to meet the need for adequate treatment of said water resources; that the continuation of mining in coal seams that contain or disturb acid producing materials is adverse to the protection of the environment in West Virginia; and that the cost of restoring said water resources is to be borne largely by the mining industry.
In order to encourage economic activity relating to the production, transportation and utilization of coal within the state, to enhance the economic vitality of the national emission allowance market, thereby to increase employment and general economic development and to restore water resources that have been damaged by acid mine drainage, there is hereby provided a tax credit for coal allowance purchases relating to the limitations imposed by Title IV of the Clean Air Act Amendments of 1990.
§11-13I-3. Definitions.
(a) General. -- When used in this article, or in the administration of this article, the terms defined in subsection (b) of this section shall have the meanings ascribed to them by this section, unless a different meaning is clearly required by either the context in which the term is used or by specific definition.
(b) Terms defined. --
(1) "Coal" means and includes any material composed predominantly of hydrocarbons and carbon in a solid state and includes, but is not limited to, all materials commonly known as coal, bituminous coal, anthracite coal, lignite, brown coal, peat or jet.
(2) "Eligible taxpayer" means any company, partnership or person engaged in the production, transfer or utilization of coal and specifically includes coal operators, coal transporters, public utilities and any other person or entity engaged in the production, transfer or utilization of coal.
(3) "Partnership" includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which coal is produced, transferred or utilized for commercial use. "Partner" includes a member of such a syndicate, group, pool or joint venture organization.
(4) "Person" or "company" are herein used interchangeably and include any individual, firm, partnership, mining partnership, joint venture, association, corporation, trust or any other group or combination acting as a unit and the plural as well as the singular number, unless the intention to give a more limited meaning is declared by the context.
(5) "Production" for the purpose of this article means and includes the initial severance and extraction of coal in place, from a seam within this state or from the waste or residue of prior mining located within this state.
(6) This "state" means the state of West Virginia.
§11-13I-4. Qualification for credit; amount of credit.
(a) Qualification for credit. -- An eligible taxpayer qualifies for tax credits pursuant to this article upon demonstrating that it:
(1) Has purchased or otherwise has obtained rights to emission allowances created pursuant to the Clean Air Act Amendments of 1990, §42 U.S.C. et seq., to enable it to produce, market or transport coal produced in West Virginia, to enable such coal to be utilized in accordance with the emission limitations imposed by Title IV of the Clean Air Act Amendments of 1990; and
(2) Has sold, transferred or otherwise relinquished its legal title to the allowance or allowances for the purpose of enabling such coal to be utilized in accordance with the emission limitations imposed by Title IV of the Clean Air Act Amendments of 1990; and,
(3) The original acquisition and the subsequent sale or transfer of said allowances have been reported to the environmental protection agency of the United States government; and
(4) Such coal purchases have been reported to the federal energy regulatory commission for recordation on FERC form 423 by the utility recipient of said coal.
(b) Allowance of credit. -- There shall be allowed to eligible taxpayers a credit against the taxes imposed by article thirteen, twenty-three or twenty-four of this chapter. The amount of credit shall be determined as hereinafter provided in this section.
(c) Calculation of credit. -- For purchases during the period beginning the first day of January, 1990-five, of allowances required to meet the limitations imposed by Title IV of the Clean Air Act Amendments of 1990, the amount of the tax credit shall be equal to the tons of coal produced in West Virginia which are sold and shipped multiplied by a factor of .015, with the resulting product multiplied by .95 of the actual average price paid per ton for allowances required to meet the limitations imposed by Title IV of the Clean Air Act Amendments of 1990, or two hundred dollars per allowance, whichever is less: Provided, That the total credit available under this article may not exceed the actual total cost of the allowances obtained by the eligible taxpayer: Provided, however, That no credit shall be given for the purchase or transfer of emission allowances where the coal which is related to the purchase or transfer is utilized at an electric generating unit equipped with flue gas desulfurization technology or other forms of combustion or postcombustion technologies designed to reduce sulfur dioxide emissions.
(d) Severance tax not reduced. -- The amount of the annual credit allowed does not reduce the severance tax imposed on coal by section three, article thirteen-a of this chapter.
(e) No carryover. -- No carryover to a subsequent taxable year or carryback to a prior taxable year shall be allowed for the amount of any unused portion of any annual tax credit allowance. Such unused credit shall be forfeited.
§11-13I-5. Accounting periods and methods of accounting.
(a) General rule. -- For purposes of this article, the taxpayer's taxable year shall be the same as the taxpayer's taxable year for federal income tax purposes.
(b) Change of taxable year. -- If a taxpayer's taxable year is changed for federal income tax purposes, the taxpayer's taxable year for purposes of this article shall be similarly changed. The taxpayer shall provide a copy of the authorization for such change from the internal revenue service, which its annual return for the taxable year filed under this article.
(c) Methods of accounting. --
(1) Same as federal. -- A taxpayer's method of accounting under this article shall be the same as the taxpayer's method of accounting for federal income tax purposes. In the absence of any method of accounting for federal income tax purposes, the accrual method of accounting shall be used unless the tax commissioner, in writing, consents to or requires use of another method.
(2) Change of accounting methods. -- If a taxpayer's method of accounting is changed for federal income tax purposes, his method of accounting for purposes of this article shall similarly be changed. The taxpayer shall provide a copy of the authorization for such a change from the internal revenue service with its annual return for the taxable year filed under this article.
§11-13I-6. Acid mine drainage water treatment fund.
(a) There shall be created in the state treasury a fund known as the "Acid Mine Drainage Water Treatment Fund". The tax commissioner shall, at least quarterly, deposit into the fund a sum of money equal to one eighteenth of the emission credit granted pursuant to this article.
(b) The moneys in this special fund shall be expended solely for the treatment of water resources adversely affected by acid mine drainage. The expenditure of money from this fund is intended as an additional sum of money for treatment of water resources affected by acid mine drainage and is not to be considered as part of any other obligation of the state of West Virginia to collect, allocate or expend money for the treatment of water or any other obligations of the state, including those pursuant to the surface coal mining and reclamation act, article three, chapter twenty-two of this code, or of the water pollution control act, article eleven of said chapter.
(c) The expenditure of moneys from this special fund shall be made annually by the division of environmental protection and shall be expended on projects selected by the chief of the office of water resources in consultation with the environmental advocate of the division of environmental protection. They
shall solicit public comment on the expenditure of moneys from this special fund and shall consider the comments in the selection of projects for the expenditure of moneys from the special fund. The highest priority for projects from this fund is for sites where there is not, or does not appear to be, any other monetary source for treatment of the water.
§11-13I-7. Severability.
(a) If any provision of this article or the application thereof shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder of said article, but shall be confined in its operation to the provision thereof directly involved in the controversy in which such judgment shall have been rendered, and the applicability of such provision to other persons or circumstances shall not be affected thereby.
(b) If any provision of this article or the application thereof shall be made invalid or inapplicable by reason of the failure of the Legislature to enact any statute therein addressed or referred to, or by reason of the repeal or any other invalidation of any statute therein addressed or referred to, such failure to reenact on such repeal or invalidation of any such statute shall not effect, impair or invalidate the remainder of the said article, but shall be confined in the operation to the provision thereof directly involved with, pertaining to, addressing or referring to the said statute, and the application of such provision with regard to other statutes or in other instances not affected by any such invalid or repealed statute shall not be abrogated or diminished in any way.


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(NOTE: The purpose of this bill is to provide a tax credit for the purchase and use of emission allowances pursuant to the federal Clean Air Act.)

FINANCE COMMITTEE AMENDMENTS


On page ___, section two, after line ___, by striking out all of lines eight through sixteen;
On page ___, section four, line ___, after the word "transferred" by adding a comma and the following words "used for compliance";
On page ___, section four, line ___, after the word "chapter." by adding the following: The maximum credit allowed pursuant to this article shall be five million dollars until further modified by the Legislature.;
On page ___, section four, line ___, by striking out the word "an" and inserting in lieu thereof the words "a utility- owned";
On page ___, after line eight, by striking out all of section six;
And,
By renumbering the remaining sections.