H. B. 3136
(By Mr. Speaker, Mr. Thompson)
[Introduced February 20, 2007; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-13A-3d of the code of West
Virginia, 1931, as amended, and to amend said code by adding
thereto a new section designated §11-13V-4a, all relating to
the Severance and Business Privilege Tax Act and the Workers'
Compensation Debt Reduction Act; specifying termination of the
severance tax exemption for production of coalbed methane and
specifying that coalbed methane is taxed as natural gas for
purposes of the Severance and Business Privilege Tax Act and
for purposes of the taxes imposed by the Workers' Compensation
Debt Reduction Act.
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 and that said code be amended by
adding thereto a new section, designated §11-13V-4a, to read as
follows:
ARTICLE 13A. SEVERANCE AND BUSINESS PRIVILEGE TAX ACT.
§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.
(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.
(a) For tax years beginning on and after the first day of
January, two-thousand eight, coalbed methane and methane produced
from or by a coalbed methane well is taxable as natural gas for
purposes of the taxes imposed by this article and the taxes imposed
by article thirteen-v of this chapter.
(b) 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.
ARTICLE 13V. WORKERS' COMPENSATION DEBT REDUCTION ACT.
§11-13V-4a. Coalbed Methane.
(a) For tax years beginning on and after the first day of
January two-thousand eight, coalbed methane and methane produced
from or by a coalbed methane well is taxable as natural gas for
purposes of the taxes imposed by this article and the taxes imposed
by article thirteen-a of this chapter.
(b) 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.
NOTE: The purpose of this bill is to eliminate the exemption
from regular severance tax for production and severance of coalbed
methane, and to impose the regular severance tax and the Workers'
Compensation Debt Reduction severance tax on coalbed methane as
natural gas.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
Section 11-13V-4a is new; therefore, strike-throughs and
underscoring have been omitted.