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Introduced Version House Bill 3136 History

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Key: Green = existing Code. Red = new code to be enacted
hb3136 intr
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.


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