HB5398 SFA Rose 3-12
Kraus 7502
Senator Rose moved to amend the bill by striking out everything after the enacting clause and inserting in lieu thereof the following:
(a) General. — Notwithstanding any provision of this article to the contrary, for the taxable year beginning January 1, 2021, the tax on the privilege of generating electricity from coal-fired generating units in operation before January 1, 1995, shall be computed as provided in §11-13-2o of this code and the tax attributable to the months of January through June of 2021 shall be remitted before July 31, 2021, as provided in §11-13-4 of this code. beginning July 1, 2021, the owner or operator of a coal-fired generating unit in operation before January 1, 1995, may elect to recompute the taxable generating capacity of those coal-fired generating units determined under §11-13-2o of this code so that the tax attributable to the second half of 2021 is computed and paid on 45 percent of the official capability of those generating units, as defined in §11-13-2o of this code: Provided, That this election is an irrevocable election and the owner or operator of the coal-fired generating units for which this election is made shall agree to keep them in operation until at least July 1, 2025. The tax attributable to the months of July through December of 2021, as recomputed under this section, shall be remitted before January 31, 2022, as provided in §11-13-4 of this code. When this election is made, then for taxable years beginning on and after January 1, 2022, the taxable generating capacity of coal-fired generating units in operation before January 1, 1995, shall be 45 percent of the official capability of the generating unit as defined in §11-13-2o of this code.
(b) Notwithstanding the provisions of subsection (a) of this section, for any coal-fired generating unit that is regulated entirely by another state, beginning July 1, 2026, the tax on the privilege of generating electricity from coal-fired generating units in operation before January 1, 1995, shall be computed as provided in §11-13-2o of this code and the tax attributable to the second half of 2026 and thereafter shall be 100 percent of the official capability of the generating unit as defined in §11-13-2o of this code. The tax attributable to the months of January through June of 2026 shall be remitted before July 31, 2026, as provided in §11-13-4 of this code.
(c) Recapture tax. — Beginning on and after July 1, 2021, but before July 1, 2025, should the coal-fired generating units impacted by this tax cease to operate, the owner or operator of said plants shall remit back to the West Virginia State Tax Department all of the business and occupation tax savings incurred during the time period between July 1, 2021, and the date the coal-fired generating units ceased operation. A recapture tax is imposed by this subsection, which tax is an amount equal to the business and occupation tax savings the owner or operator of the plant realized, or would have realized, due to enactment of this section, on or after July 1, 2021, but before July 1, 2025. The recapture tax shall be due and payable on the date the annual business and occupation tax return is due under this article for the taxable period for which the recapture tax applies. In the event federal law or regulation requires the closing of coal-fired generating units before July 1, 2025, the recapture tax shall does not apply to taxable periods beginning subsequent to the closure date.
(c)(d) Transfer of generating unit. — If at any time after the effective date of this section but before July 1, 2025, a coal-fired generating unit whose taxable generating capacity was recomputed under this section is transferred to another entity, the amount of the business and occupation tax benefit the transferor received, or would have received, under this section had the owner continued to own and operated the generating unit shall be recaptured under subsection (b) of this section.
(d)(e) Definitions. — Terms “taxable generating capacity” and “official capability” used in this section are defined as provided in §11-13-2o of this code except to the extent those definitions are modified by language in this section for taxable periods beginning on and after July 1, 2021.
§11-13A-3a. Imposition of tax on privilege of severing natural gas or oil.
(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 levied and shall be collected from every person exercising the privilege an annual privilege tax at the rate and measure provided in subsection (b) of this section: Provided, That effective for all taxable periods beginning on or after January 1, 2000, 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 5,000 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 10 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. — The tax imposed in subsection (a) of this section is five percent of the gross value of the natural gas or oil produced by the producer as shown by the gross proceeds derived from the sale thereof by the producer, except as otherwise provided in this article: Provided, That effective for taxable periods beginning on or after January 1, 2020:
(1) For all natural gas produced from any well which produced an average in excess of 60,000 cubic feet of natural gas per day during the calendar year immediately preceding a given taxable year, and for oil produced from any well which produced an average in excess of 10 barrels of oil per day, during the calendar year immediately preceding the beginning date of a given taxable year, the rate of tax is 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;
(2) For all natural gas produced from any well, excluding wells utilizing horizontal drilling techniques targeting shale formations, which produced an average between 5,000 cubic feet of natural gas per day and 60,000 cubic feet of natural gas per day during the calendar year immediately preceding the beginning date of a given taxable year, and for oil produced from any well, excluding wells utilizing horizontal drilling techniques targeting shale formations, which produced an average between one-half barrel per day and 10 barrels per day, during the calendar year immediately preceding the beginning date of a given taxable year, the rate of tax is two and five tenths 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; and
(3) For all natural gas produced from wells utilizing horizontal drilling techniques targeting shale formations, which produced an average between 5,000 cubic feet of natural gas per day and 60,000 cubic feet of natural gas per day during the calendar year immediately preceding the beginning date of a given taxable year, and for oil produced from wells utilizing horizontal drilling techniques targeting shale formations, which produced an average between one-half barrel per day and 10 barrels per day, during the calendar year immediately preceding the beginning date of a given taxable year, the rate of tax is 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.
(c) Tax in addition to other taxes. — The tax imposed by this section applies to all persons severing gas or oil in this state, and is in addition to all other taxes imposed by law.
(d) For purposes of this section, in determining the average amount of production of gas and oil in any given calendar year, a taxpayer must calculate the actual production of such well in the calendar year and divide the same by the number of days the well was in operation and producing gas or oil in such calendar year.
(e) After the dedication in §11-13A-5a is made, the remaining proceeds collected from the tax imposed at the rate prescribed under subdivision (2), subsection (b) of this section are dedicated to the Oil and Gas Abandoned Well Plugging Fund created under §22-6-29a of this code: Provided, That if on June 1, 2023, or on June 1 of any year thereafter, June 1, 2024, or June 1, 2025, there exists in the Oil and Gas Abandoned Well Plugging Fund an amount equal to or exceeding the sum of $6 million; or if on September 30, 2026, or on September 30 of any year thereafter, there exists in the Oil and Gas Abandoned Well Plugging Fund an amount equal to or exceeding the sum of $6 million that has not been encumbered by the Office of Oil and Gas in accordance with the provisions of this article, then the special rate of tax imposed under subdivision (2), subsection (b) of this section is reduced to zero for the taxable year beginning on and after the next succeeding January 1. The Starting in 2026, the Tax Commissioner shall issue an Administrative Notice by July 1 of each year indicating within 30 days of determining the amount of the balance in the fund as of the immediately preceding June 1 September 30 and the rate of tax on wells pursuant to this subsection. In no event may the total fund balance exceed $9 million (150 percent of the baseline).
(f) Notwithstanding any provision of this code to the contrary, the Oil and Gas Abandoned Well Plugging Fund may exceed $6 million only if every dollar above $6 million is encumbered pursuant to a binding, executed contract to plug specific wells with a term not exceeding 12 months.
(g) The Department of Environmental Protection shall publish on its publicly accessible website an annual report that details: (1) revenue into the Oil and Gas Abandoned Well Plugging Fund for the year; (2) the fund balance at the end of the year; (3) the wells plugged by the fund in the year; (4) the average cost to plug wells during the year; and (5) the dollar amount of binding funds under contract but not yet paid at the end of the year.
Unless the context clearly requires a different meaning, as used in this article:
(1) “Carbon dioxide” means carbon dioxide produced by anthropogenic sources which is of such purity and quality that it will not compromise the safety of geologic storage and will not compromise those properties of a storage reservoir which allow the reservoir to effectively enclose and contain a stored gas;
(2) “Carbon dioxide sequestration” or “carbon dioxide storage” means the injection of carbon dioxide and associated constituents into subsurface geologic reservoirs intended to provide for the long-term containment of a gaseous, liquid, or supercritical carbon dioxide stream in subsurface geologic formations and thereby prevent its release into the atmosphere;
(3) “Class VI underground injection control” or “Class VI UIC” refers to the classification by the US EPA of wells for injection of substances or materials into deep rock formations and, specifically, to the class of wells that are used to inject carbon dioxide into underground rock formations to reduce carbon dioxide emissions to the atmosphere and mitigate climate change;
(4) “Class VI underground injection control permit,” “Class VI UIC permit,” or “Class VI permit” means a permit to drill injection wells and to conduct carbon dioxide sequestration at a specified site;
(5) “Commission” means the Oil and Gas Conservation Commission established pursuant to §22C-9-1 et seq. of this code.
(6) “Completion certificate” means a Certificate of Underground Carbon Dioxide Storage Project Completion;
(7) “Excursion” means the migration of carbon dioxide at or beyond the designated boundary of a carbon dioxide sequestration site;
(8) “Permit” means a Class VI underground injection control permit issued by the secretary or by the US EPA, authorizing a person or business entity to drill an injection well and to construct and operate a carbon dioxide sequestration facility;
(9) “Pore space” means a cavity or void, whether naturally or artificially created, in a subsurface stratum and is also known as container space or storage rights;
(10) “Reservoir” means a subsurface stratum, formation, aquifer, cavity, or void, whether naturally or artificially created, including oil and gas reservoirs, saline formations, and coal seams suitable for, or capable of being made suitable for, injecting and storing carbon dioxide;
(11) “Secretary” means the Secretary of the Department of Environmental Protection;
(12) “Carbon dioxide storage facility”, or “sequestration facility”, or “storage site” means the reservoir, underground equipment, and surface facilities and equipment used or proposed to be used in a carbon dioxide sequestration project, but does not include an industrial or commercial facility or equipment that separates carbon dioxide from the atmosphere, heat or electric power production facilities, exhaust or process streams of commercial and industrial facilities, or any pipelines used to transport captured carbon dioxide to the storage facility;
(13) “Storage operator” means a person applying for or holding a permit until the issuance of a completion certificate for the relevant storage facility;
(14) “Storage reservoir” means a reservoir proposed, authorized, or used for storing carbon dioxide;
(15) “UIC” means underground injection control;
(16) “Unknown or unlocatable owner” means a person vested with a present ownership interest in the pore space whose present identity or location cannot be determined from:
(A) A reasonable review of the records of the clerk of the county commission, the sheriff, the assessor, and the clerk of the circuit court in the county or counties in which the property is located, and includes unknown heirs, successors and assigns known to be alive;
(B) A reasonable inquiry in the vicinity of the owner’s last known place of residence;
(C) A diligent inquiry into known interest owners in the same tract; and
(D) A reasonable review of available Internet resources commonly utilized by the industry; and
(17) “US EPA” means United States Environmental Protection Agency.
(a) Every permit application filed under this article shall be on a form as may be prescribed by the secretary, shall be verified, and shall contain all information specified by legislative rule.
(b) Upon filing an application for a permit, an applicant shall:
(1) Pay a fee in an amount set by the secretary. The amount of the fee shall be set by rule and shall be based on the secretary’s anticipated cost of processing applications for permits, orders, or determinations under this article. The fee shall be deposited in the Carbon Dioxide Storage Facility Administrative Fund; and
(2) Pay to the secretary the costs the secretary incurs in publishing notices of applications and notices for hearings on applications submitted under this article.
(c) Before a permit application may be approved, the secretary shall determine whether the proposed storage facility contains commercially valuable minerals and, if it does, a permit may be issued only if the secretary is satisfied that the interests of the mineral owners or mineral lessees will not be adversely affected or have been addressed in an written agreement entered into by the mineral owners, mineral lessees, and the storage operator require the applicant to design a carbon sequestration or storage facility that:
(1) Isolates the contiguous commercially valuable mineral, including the coal or oil and gas estate and oil and gas storage operations, from the facility’s carbon dioxide plume; and
(2) Ensures existing or future development or storage of the commercially valuable mineral will not be adversely affected.
(d) The carbon sequestration or storage facility permit application shall:
(1) Indicate whether the area within the proposed boundaries of the storage facility and the contiguous area to the proposed boundaries of the storage facility, including the other subsurface horizons above and below the storage facility, contains any commercially valuable mineral, including any coal or oil and gas estate or oil and gas storage field. If it does, a permit may be issued only if the department is satisfied that the interests of the mineral owners, mineral lessees, and storage operators of the commercially valuable mineral estate will not be adversely affected; and
(2) Include evidence that the applicant has provided notice of the proposed carbon sequestration or storage facility to the other pore space owners and pore space lessees within the storage facility, and to the mineral owners, mineral lessees, and operators of any commercially valuable mineral, including storage operators of any oil and gas, within any strata within the storage facility’s proposed boundaries and contiguous to the boundaries of the storage facility.
(e) The notice provided in subsection (d) of this section shall be in writing, include information regarding the application, boundaries, and storage horizons for the facility, and include a copy of the notice of the hearing.
(1) The pore space owners and lessees, other than the applicant, mineral owners, mineral lessees, and operators of a commercially valuable mineral, including storage operators of any oil and gas, may submit an objection to the department regarding the design of a carbon sequestration or storage facility based on the potential adverse effect to the commercially valuable mineral.
(2) The applicant shall address any objection to the department’s satisfaction before proceeding with the application process.
(d) No permit shall
(f) A permit may not be issued under this article unless the secretary finds that:
(1) That The application and the proposed operations comply with all requirements established by the secretary, including any applicable underground injection rules, and with all applicable provisions of state and federal law;
(2) That The storage facility is suitable and feasible for carbon dioxide injection and sequestration;
(3) That the storage operator The applicant has made a good-faith effort to obtain the consent of all persons who own or lease the storage reservoir’s pore space and
(4) That The storage operator has obtained the written consent of persons who own at least 75 percent of the storage reservoir’s pore space; and have at least begun the process
(4) The applicant has attempted in good faith to obtain the remaining nonconsenting interests through the commission;
(5) That The proposed storage facility will not adversely affect surface waters or formations containing fresh water;
(6) That The storage facility will not unduly endanger human health or the environment;
(7) That Adequate horizontal and vertical boundaries of the storage reservoir are defined, including buffer areas, to ensure that the storage facility is operated safely and prudently;
(8) That The storage operator will establish monitoring facilities and protocols to assess the location and migration of carbon dioxide injected for storage and to ensure compliance with all permit, statutory, and administrative requirements;
(9) That All nonconsenting pore space owners and lessees are or will be justly and reasonably compensated in accordance with the rules and procedures set forth in or promulgated under this article by the secretary and the commission; and
(10) That The storage facility is in the public interest; and
(11) Adequate notice has been provided, other than to the applicant, to the pore space owners and lessees, mineral owners, mineral lessees, and operators of any commercially valuable mineral, including storage operators of any oil and gas, within the proposed boundaries of the storage facility and the contiguous area to the proposed boundaries of the storage facility, including the other subsurface horizons above and below the storage facility.
(e)(g) To the extent not inconsistent with state and federal regulations, the secretary shall render a decision on a permit application within one year after submission of a complete application.
(f)(h) The secretary shall propose rules for legislative approval, pursuant to the provisions of §29A-3-1 et seq. of this code, detailing additional requirements for inclusion in a permit application, such as:
(1) Site characterization requirements;
(2) Injection well construction requirements for materials that are compatible with and can withstand contact with carbon dioxide over the life of a carbon dioxide sequestration project facility;
(3) Well operation requirements;
(4) Comprehensive monitoring requirements that address all aspects of well integrity, carbon dioxide injection and storage, as well as and air and ground water quality during the injection operation and the post-injection site care period;
(5) Financial responsibility requirements assuring the availability of funds for the life of a carbon dioxide sequestration project or storage facility, including post-injection site care and emergency response; and
(6) Reporting and recordkeeping requirements that provide project-specific facility-specific information to continually evaluate the site operations and confirm environmental protection.
(a) Public notice of an application for a permit required under this article shall allow at least 30 days for public comment. The secretary shall specify the required contents of the public notice.
(b) The secretary shall send the public notice to the applicant, who shall be responsible for publication of publish a Class 1 legal advertisement of the notice by a date and in a paper specified by the secretary. Upon publication, the applicant shall send the secretary a copy of the certificate of publication. The costs of publication shall be borne by the applicant.
(c) Notice of an application for a permit shall be served to each mineral lessee, mineral owner, and pore space owner with a legal interest that involves recorded in any county in which the storage reservoir lies and at their last known address.
(d) Notice of an application for a permit shall be served to each surface owner of land overlying the storage reservoir with an interest entered for taxation in any county in which the storage reservoir lies and at the address shown upon any tax ticket.
(e) Notice of an application for a permit shall be served to any additional persons that the secretary requires.
(f) Service of individual notices required by this section shall be through personal service, by registered mail, or by any method of delivery that requires a receipt or signature confirmation.
(g) The secretary, and/or the commission, or both, shall hold a public hearing whenever he or she the secretary or commission finds, on the basis of requests, a significant degree of public interest of issues relevant to the draft permit. The secretary, and/or the commission, or both, may also hold a public hearing at his or her discretion if either determines that a hearing may assist in clarifying one or more issues involved in the permit decision. Should If a public hearing be is held, notice of the hearing shall be provided in the same manner as set forth above with respect to in this section regarding public notice of the preparation of a draft permit.
Adopted
Rejected