THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY MURT, DiGIROLAMO, GERBER, BARBIN, K. BOYLE, BRENNAN, CALTAGIRONE, CARROLL, COHEN, D. COSTA, CREIGHTON, CURRY, DALEY, DAVIDSON, DAVIS, DePASQUALE, J. EVANS, FLECK, FREEMAN, GIBBONS, GOODMAN, HARPER, HENNESSEY, HESS, HORNAMAN, JOSEPHS, W. KELLER, KILLION, KIRKLAND, KORTZ, KULA, MAHONEY, MICOZZIE, MIRABITO, MURPHY, D. O'BRIEN, M. O'BRIEN, O'NEILL, PASHINSKI, PAYTON, PETRI, READSHAW, REICHLEY, SANTARSIERO, SANTONI, SCAVELLO, K. SMITH, STURLA, TAYLOR, VITALI, WAGNER, WATERS, WATSON AND WILLIAMS, NOVEMBER 9, 2011

REFERRED TO COMMITTEE ON FINANCE, NOVEMBER 9, 2011  

AN ACT

Amending Title 72 (Taxation and Fiscal Affairs) of the

Pennsylvania Consolidated Statutes, providing for a natural

gas severance tax; establishing accounts and funds; and

providing for use of revenue.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 72 of the Pennsylvania Consolidated

Statutes is amended by adding a chapter to read:

CHAPTER 15

NATURAL GAS DRILLING TAX AND INVESTMENT

Subchapter

A.  Preliminary Provisions

B.  Tax

C.  Accounts and Fund

D.  Transfer, Distribution and Allocation

SUBCHAPTER A

PRELIMINARY PROVISIONS

Sec.

1501.  Scope of chapter.

1502.  Definitions.

§ 1501.  Scope of chapter.

This chapter relates to a natural gas drilling tax and

investment.

§ 1502.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Account."  The Natural Gas Severance Tax Account.

"Accredited laboratory."  A facility engaged in the testing

and calibration of scientific measurement devices and certified

by the Department of Environmental Protection as having met the

Department of Revenue's standards for accreditation.

"Association."  A partnership, limited partnership or any

other form of unincorporated enterprise owned or conducted by

two or more persons.

"Bi-fuel vehicle."  A vehicle that operates on compressed

natural gas and gasoline or compressed natural gas and diesel

fuel and has a minimum fueling capacity of five gasoline gallon

equivalents of compressed natural gas. The term includes

original equipment manufacturer and retrofitted vehicles.

"Coal bed methane."  Gas that can be produced from coal beds,

coal seams, mined-out areas or gob wells.

"Community integration."  Living in a home or setting of an

individual's own choice where:

(1)  a similarly situated individual without a disability

would live;

(2)  the individual is afforded opportunities to develop

relationships with other individuals who are not paid staff

and experience inclusion in the economic, political, social,

cultural and educational mainstream of society;

(3)  the individual can exercise rights freely; and

(4)  the individual can make decisions to live an

everyday life.

The term does not include an institution or other large

congregate setting.

"Compressed natural gas vehicle."  A self-propelled,

dedicated vehicle operating on compressed natural gas designed

for transporting persons or property.

"Corporation."  A corporation, joint stock association,

limited liability company, business trust or any other

incorporated enterprise organized under the laws of the United

States, this Commonwealth or any other state, territory or

foreign country or dependency.

"Critical waiting list."  A waiting list for individuals who

will need community services from the Department of Public

Welfare in:

(1)  more than six months; but

(2)  less than two years.

"Dedicated compressed natural gas vehicle."  A vehicle that

is produced by an original equipment manufacturer or a small

volume manufacturer that operates on 90% or more compressed

natural gas fuel and 10% or less on gasoline or 90% or more on

compressed natural gas fuel and 10% or less on diesel fuel.

"Department."  The Department of Revenue of the Commonwealth.

"Emergency waiting list."  A waiting list for individuals who

will need community services from the Department of Public

Welfare within the next six months.

"Intellectual disability."  A disability as defined by the

American Association of Intellectual and Developmental

Disabilities.

"Large mass transit authority."  A mass transit authority

located in this Commonwealth that exceeds 245,000 revenue

vehicle hours for two consecutive years.

"Mass transit authority."  An operator of regularly scheduled

transportation that is available to the general public and is

provided according to published schedules along designated

published routes with specified stopping points for the taking

on and discharging of passengers. The term does not include

exclusive ride taxi services, charter or sightseeing services,

nonpublic transportation or school bus or limousine services.

"Meter."  A device to measure the passage of volumes of gases

or liquids past a certain point.

"Municipality."  A city, borough, incorporated town or

township.

"Natural gas."  A fossil fuel consisting of a mixture of

hydrocarbon gases, primarily methane, possibly including ethane,

propane, butane, pentane, carbon dioxide, oxygen, nitrogen and

hydrogen sulfide and other gas species. The term includes

natural gas from oil fields known as associated gas or casing

head gas, natural gas fields known as nonassociated gas, coal

beds, shale beds and other formations. The term does not include

coal bed methane.

"Natural gas well."  A bore hole drilled or being drilled for

the purpose of or to be used for producing natural gas from

subsurface geological formations.

"Nonproducing well."  A natural gas well that does not

produce natural gas in excess of 60,000 cubic feet per day.

"Operator."  A person who engages or continues within this

Commonwealth in the business of severing natural gas for sale,

profit or commercial use. The term does not include a person who

severs natural gas from a storage field.

"Person."  A natural person or a corporation, fiduciary,

association or other entity, including the Commonwealth, its

political subdivisions, instrumentalities and authorities. If

the term is used in a provision prescribing and imposing a

penalty or imposing a fine or imprisonment, or both, the term

shall include a member of an association and an officer of a

corporation.

"Prioritization of Urgency of Need for Services."  A system

administered by the Office of Developmental Disabilities which

employs a standardized survey, using consistent definitions and

data collection methods, to determine the number and

characteristics of individuals on the critical waiting list and

the emergency waiting list.

"Producing well."  An unconventional natural gas well that

produces natural gas in excess of 60,000 cubic feet of natural

gas per day.

"Rate."  The rate under section 1511(c) (relating to

imposition of tax).

"Reporting period."  A calendar month in which natural gas is

severed.

"Secretary."  The Secretary of Revenue of the Commonwealth.

"Sever."  To extract or otherwise remove natural gas from the

soil or water of this Commonwealth.

"Severance."  The extraction or other removal of natural gas

from the soil or water of this Commonwealth.

"Severing."  Extracting or otherwise removing natural gas

from the soil or water of this Commonwealth.

"Small mass transit authority."  A mass transit authority

located in this Commonwealth that does not exceed 245,000

revenue vehicle hours for two consecutive years.

"Storage field."  A natural formation or other site that is

used to store natural gas that did not originate from and has

been injected into the formation or site.

"Tax."  The natural gas severance tax imposed under this

chapter.

"Tax rate adjustment index."  The amount calculated under

section 1511(c) (relating to imposition of tax) by which the

rate of the tax imposed under section 1511(c) is adjusted

annually.

"Tax Reform Code."  The act of March 4, 1971 (P.L.6, No.2),

known as the Tax Reform Code of 1971.

"Taxpayer."  A person, including a well operator who is

subject to the tax imposed by this chapter.

"Unconventional gas well."  A bore hole drilled or being

drilled for the purpose of or to be used for producing oil or

gas from a geologic formation existing below the base of the Elk

Sandstone or its geologic equivalent stratigraphic interval

where oil or gas generally cannot be produced at economic flow

rates or in economic volumes except by wells stimulated by

hydraulic fracture treatments, a horizontal well bore or by

using multilateral well bores or other techniques to expose more

of the formation of the well bore.

"Unit."  A thousand cubic feet of natural gas measured at a

wellhead at a temperature of 60 degrees Fahrenheit and an

absolute pressure of 14.73 pounds per square inch in accordance

with American Gas Association Standards and according to Boyle's

Law for the measurement of gas under varying pressures with

deviations as follows:

(1)  The average absolute atmospheric pressure shall be

assumed to be 14.4 pounds to the square inch, regardless of

elevation or location of point of delivery above sea level or

variations in atmospheric pressure from time to time.

(2)  The temperature of the gas passing a wellhead meter

shall be determined by the continuous use of a recording

thermometer installed to properly record the temperature of

gas flowing through the wellhead meter. The arithmetic

average of the temperature recorded each 24-hour day shall be

used in computing gas volumes. If a recording thermometer is

not installed or is installed and not operating properly, an

average flowing temperature of 60 degrees Fahrenheit shall be

used in computing gas volume.

(3)  The specific gravity of the gas shall be determined

by annual tests made by the use of an Edwards or Acme gravity

balance, or at intervals as found necessary in practice.

Specific gravity determinations shall be used in computing

gas volumes.

(4)  The deviation of the natural gas from Boyle's Law

shall be determined by annual tests or at other shorter

intervals as found necessary in practice. The apparatus and

method used in making the test shall be in accordance with

recommendations of the National Bureau of Standards or Report

No. 3 of the Gas Measurement Committee of the American Gas

Association, or amendments to the recommendations or report.

The results of the tests shall be used in computing the

volume of gas delivered under this chapter.

"Wellhead meter."  A meter placed at a producing or

nonproducing site to measure the volume of natural gas severed

for which a wellhead meter certification has been issued.

"Wellhead meter certification."  A report issued by an

accredited laboratory certifying the accuracy of a wellhead

meter.

SUBCHAPTER B

TAX

Sec.

1511.  Imposition of tax.

1512.  Return and payment.

1513.  Natural gas severance tax registration.

1514.  Assessments.

1515.  Time for assessment.

1516.  Extension of assessment period.

1517.  Reassessments.

1518.  Interest.

1519.  Penalties.

1520.  Criminal acts.

1521.  Abatement of additions or penalties.

1522.  Bulk and auction sales.

1523.  Collection upon failure to request reassessment, review

or appeal.

1524.  Tax liens.

1525.  Tax suit reciprocity.

1526.  Service.

1527.  Refunds.

1528.  Refund petition.

1529.  Rules and regulations.

1530.  Recordkeeping and meters.

1531.  Examinations.

1532.  Unauthorized disclosure.

1533.  Cooperation with other governments.

1534.  Bonds.

§ 1511.  Imposition of tax.

(a)  Establishment.--Except as provided under subsection (b),

a natural gas severance tax shall be levied on every operator

that severs natural gas from a producing unconventional gas well

in this Commonwealth.

(b)  Exemptions.--The tax shall not be imposed on the

following:

(1)  Units severed, sold and delivered by an operator at

or within five miles of the producing unconventional gas well

for the processing or manufacture of tangible personal

property, as defined under section 201 of the Tax Reform

Code, within this Commonwealth.

(2)  Units provided free of charge to the owner of the

surface under which the gas is severed, if the surface owner

is the end user of the gas.

(c)  Rate.--The tax imposed under subsection (a) shall be

4.9% of the gross value of units severed at the wellhead during

a reporting period thereafter for each producing well.

(d)  Application of rate determinations.--This section shall

affect only the determination of the rate of the tax on the

severance units of natural gas imposed under this section. This

section is not intended, nor shall be construed, to affect any

other determination including the determination of royalty due

under mineral leases. Notwithstanding any other provision of

law, the tax imposed under this chapter shall not reduce any

royalty payments due under mineral leases and the producer may

not recover any portion of the tax paid from the royalty owner

through other means of deduction or reallocation,

notwithstanding any provision in the lease, contract or

agreement.

§ 1512.  Return and payment.

(a)  Requirement.--An operator shall file a return with the

department, on a form prescribed by the department, which shall

include the number of natural gas units severed by the operator

for the reporting period and the amount of tax due.

(b)  Filing.--The return required under subsection (a) shall

be filed with the department within 30 days following the end of

a reporting period.

(c)  Deadline.--The tax shall be due on the day the return is

required to be filed and becomes delinquent if not remitted to

the department by that date.

§ 1513.  Natural gas severance tax registration.

(a)  Application.--Before an operator severs natural gas in

this Commonwealth, the operator shall apply to the department

for a natural gas severance tax registration certificate.

(b)  Application fee.--The department may charge an

application fee to cover the administrative costs associated

with the application and registration process. If the department

charges a fee, it may not issue a registration certificate until

the operator has paid the application fee.

(c)  Declaration.--

(1)  The operator shall include in its application a

declaration of all producing wells and nonproducing wells

used by the operator for the severance of natural gas. The

declaration shall include copies of wellhead meter

certifications for each site.

(2)  The operator shall update the declaration when:

(i)  the operator adds or removes a producing well or

nonproducing well in this Commonwealth;

(ii)  there is a change in the status of a producing

well or nonproducing well; or

(iii)  the operator uses a different accredited

laboratory to issue a wellhead meter certification.

(3)  The operator shall update the declaration within 30

days after a calendar month in which a change to the

declaration occurs.

(d)  Issuance.--

(1)  Except as provided under subsection (e), after the

receipt of an application, the department shall issue a

registration certificate under subsection (a). The

registration certificate shall be nonassignable.

(2)  All registrants shall renew their registration

certificates and wellhead meter certifications on a staggered

renewal system established by the department.

(3)  After the initial staggered renewal period, a

registration certificate or a wellhead meter certification

issued shall be valid for a period of five years.

(e)  Refusal, suspension or revocation.--

(1)  The department may refuse to issue, suspend or

revoke a registration certificate if the applicant or

registrant has not filed required State tax reports and paid

State taxes not subject to a timely perfected administrative

or judicial appeal or subject to a duly authorized deferred

payment plan.

(2)  The department shall notify the applicant or

registrant of any refusal, suspension or revocation. The

notice shall contain a statement that the refusal, suspension

or revocation may be made public. The notice shall be made by

first class mail.

(3)  An applicant or registrant aggrieved by the

determination of the department may file an appeal under the

provisions for administrative appeals provided under the Tax

Reform Code.

(4)  If a suspension or revocation is appealed, the

registration certificate shall remain valid pending a final

outcome of the appeals process.

(5)  Notwithstanding sections 274, 353(f), 408(b), 603,

702, 802, 904 and 1102 of the Tax Reform Code or any other

provision of law, if no appeal is taken or if an appeal is

taken and denied at the conclusion of the appeal process, the

department may disclose, by publication or otherwise, the

identity of an operator and the fact that the operator's

registration certificate has been refused, suspended or

revoked under this subsection. Disclosure may include the

basis for refusal, suspension or revocation.

(f)  Violation.--

(1)  A person severing natural gas in this Commonwealth

without holding a valid registration certificate under

subsection (d) commits a summary offense and shall, upon

conviction, be sentenced to pay a fine of not less than $300

nor more than $1,500. Each day in which a person commits a

summary offense under this section shall be deemed to be a

separate violation.

(2)  If the person convicted defaults in the payment of

the fine, the person shall be sentenced to a term of

imprisonment of not less than five days nor more than 30

days.

(3)  The penalties imposed under this subsection shall be

in addition to any other penalties imposed under this

chapter.

(4)  For purposes of this subsection, the severing of

natural gas during any calendar day shall constitute a

separate violation.

(5)  The secretary may designate employees of the

department to enforce this subsection. The employees shall

exhibit proof of and be within the scope of the designation

when instituting proceedings as provided by the Pennsylvania

Rules of Criminal Procedure.

(g)  Failure to obtain registration certificate.--Failure to

obtain or hold a valid registration certificate shall not

relieve a person from liability for the tax.

§ 1514.  Assessments.

(a)  Authorization and requirement.--The department shall

make the inquiries, determinations and assessments of the tax,

including interest, additions and penalties imposed under this

chapter.

(b)  Notice.--The notice of assessment and demand for payment

shall be mailed to the taxpayer. The notice shall state the

basis of the assessment. The department shall send the notice of

assessment to the taxpayer by regular mail or, if the assessment

increases the taxpayer's tax liability by at least $300, to its

registered address by certified mail.

§ 1515.  Time for assessment.

(a)  Requirement.--

(1)  An assessment provided under section 1514 (relating

to assessments) shall be made within three years after the

date when the return provided for under section 1512

(relating to return and payment) is filed or the end of the

year in which the tax liability arises, whichever shall occur

last.

(2)  For the purposes of this subsection and subsection

(b), a return filed before the last day prescribed for the

filing period shall be considered as filed on the last day.

(b)  Exception.--If the taxpayer underpays the correct amount

of the tax due by 25% or more, the tax may be assessed within

six years after the date the return was filed.

(c)  Intent to evade.--If no return is filed or if the

taxpayer files a false or fraudulent return with intent to evade

the tax, the assessment may be made at any time.

(d)  Erroneous credit or refund.--Within three years of the

granting of a refund or credit or within the period in which an

assessment or reassessment may have been issued by the

department for the taxable period for which the refund was

granted, whichever period shall last occur, the department may

issue an assessment to recover a refund or credit made or

allowed erroneously.

§ 1516.  Extension of assessment period.

Notwithstanding any other provision of this chapter, the

assessment period may be extended if a taxpayer has provided

written consent before the expiration of the period provided

under section 1515 (relating to time for assessment) for a tax

assessment. The amount of tax due may be assessed at any time

within the extended period. The period may be extended further

by subsequent written consents made before the expiration of the

extended period.

§ 1517.  Reassessments.

A taxpayer against whom an assessment is made may petition

the department for a reassessment under Article XXVII of the Tax

Reform Code.

§ 1518.  Interest.

The department shall assess interest on any delinquent tax at

the rate prescribed under section 806 of the act of April 9,

1929 (P.L.343, No.176), known as The Fiscal Code.

§ 1519.  Penalties.

The department shall enforce the following penalties:

(1)  The penalty against an operator for severing natural

gas without a natural gas severance tax registration

certificate shall be $1 for every unit severed without a

valid registration certificate. The department may assess the

penalty separately from or in conjunction with any assessment

of the natural gas tax.

(2)  The penalty against an operator for failure to

timely file a return as required under section 1512 (relating

to return and payment) or for failure to timely pay the tax

as required by section 1512(c) shall be 5% of the tax

liability to be reported on the return for each day beyond

the due date that the return is not filed or tax is not paid.

(3)  In addition to the penalty prescribed under

paragraph (2), the penalty against an operator for a willful

failure to file a timely return shall be 200% of the tax

liability required to be reported on the return.

§ 1520.  Criminal acts.

(a)  Fraudulent return.--Any person, with intent to defraud

the Commonwealth, who willfully makes or causes to be made a

return required under this chapter which is false commits a

misdemeanor of the third degree and shall, upon conviction, be

sentenced to pay a fine of not more than $2,000 or to

imprisonment for not more than three years, or both.

(b)  Other crimes.--

(1)  Except as provided under subsection (a), a person

commits a misdemeanor of the third degree and shall, upon

conviction, be sentenced to pay a fine of not more than

$1,000 and costs of prosecution or to imprisonment for not

more than one year, or both, for any of the following:

(i)  Willfully failing to timely remit the tax to the

department.

(ii)  Willfully failing or neglecting to timely file

a return or report required under this chapter.

(iii)  Refusing to timely pay a tax, penalty or

interest imposed or provided for under this chapter.

(iv)  Willfully failing to preserve its books, papers

and records as directed by the department.

(v)  Refusing to permit the department or its

authorized agents to examine its books, records or

papers.

(vi)  Knowingly making any incomplete, false or

fraudulent return or report.

(vii)  Preventing or attempting to prevent the full

disclosure of the amount of tax due.

(viii)  Providing any person with a false statement

as to the payment of the tax with respect to any

pertinent facts.

(ix)  Making, uttering or issuing a false or

fraudulent statement.

(2)  The penalties imposed under this section shall be in

addition to other penalties imposed under this chapter.

§ 1521.  Abatement of additions or penalties.

Upon the filing of a petition for reassessment or a petition

for refund by a taxpayer as provided under this chapter,

additions or penalties imposed upon the taxpayer under this

chapter may be waived or abated in whole or in part if the

petitioner establishes that the petitioner acted in good faith,

without negligence and with no intent to defraud.

§ 1522.  Bulk and auction sales.

A person who sells or causes to be sold at auction or sells

or transfers in bulk 51% or more of a stock of goods, wares or

merchandise of any kind, fixtures, machinery, equipment,

buildings or real estate involved in a business for which the

person holds a registration certificate or is required to obtain

a registration certificate under this chapter shall be subject

to section 1403 of the act of April 9, 1929 (P.L.343, No.176),

known as The Fiscal Code.

§ 1523.  Collection upon failure to request reassessment, review

or appeal.

(a)  Power of department.--The department may collect the

tax:

(1)  If an assessment of the tax is not paid within 30

days and no petition for reassessment has been filed, after

notice to the taxpayer.

(2)  Within 60 days of a reassessment, if no petition for

review has been filed.

(3)  If no appeal has been made, within 30 days of:

(i)  the Board of Finance and Revenue's decision of a

petition for review; or

(ii)  the expiration of the Board of Finance and

Revenue's time for acting upon a petition for review.

(4)  In all cases of judicial sales, receiverships,

assignments or bankruptcies.

(b)  Limitation of defenses.--In a case for the collection of

taxes under subsection (a), the taxpayer against whom the taxes

were assessed may not set up a ground of defense that might have

been determined by the department, the Board of Finance and

Revenue or the courts, except that the defense of failure of the

department to mail notice of assessment or reassessment to the

taxpayer and the defense of payment of assessment or

reassessment may be raised in proceedings for collection by a

motion to stay the proceedings.

§ 1524.  Tax liens.

(a)  Lien imposed.--

(1)  If a taxpayer neglects or refuses to pay the tax for

which the taxpayer is liable under this chapter after demand,

the amount, including interest, addition or penalty, together

with additional costs that may accrue, shall be a lien in

favor of the Commonwealth upon the real and personal property

of the taxpayer but only after the lien has been entered and

docketed of record by the prothonotary of the county where

the property is situated.

(2)  The department may, at any time, transmit to the

prothonotaries of the respective counties certified copies of

all liens imposed by this section.

(3)  The following shall apply:

(i)  The prothonotary who receives the lien shall

enter and docket the same of record to the office of the

prothonotary. The lien shall be indexed as judgments are

indexed.

(ii)  No prothonotary shall require as a condition

precedent to the entry of the lien the payment of costs

incidental to its entry.

(b)  Priority of lien and effect on judicial sale.--Except

for the costs of the sale and the writ upon which the sale was

made and real estate taxes and municipal claims against the

property, a lien imposed under this section shall:

(1)  Have priority from the date of its recording and

shall be fully paid and satisfied out of the proceeds of any

judicial sale of property subject to the lien before any

other obligation, judgment, claim, lien or estate to which

the property may subsequently become subject.

(2)  Be subordinate to mortgages and other liens existing

and duly recorded or entered of record prior to the recording

of the lien.

(c)  No discharge by sale on junior lien.--

(1)  In the case of a judicial sale of property subject

to a lien imposed under this section, upon a lien or claim

over which the lien imposed under this section has priority,

the sale shall discharge the lien imposed under this section

to the extent only that the proceeds are applied to its

payment, and the lien shall continue in full force and effect

as to the balance remaining unpaid.

(2)  There shall be no inquisition or condemnation upon

any judicial sale of real estate made by the Commonwealth

under this chapter. The lien shall continue as provided under

the act of April 9, 1929 (P.L.343, No.176), known as The

Fiscal Code, and a writ of execution may directly issue upon

the lien without the issuance and prosecution to judgment of

a writ of scire facias, subject to the following:

(i)  Not less than ten days before issuance of any

execution on the lien, notice of the filing and the

effect of the lien shall be sent by registered mail to

the taxpayer at its last known post office address.

(ii)  The lien shall have no effect upon any stock of

goods, wares or merchandise regularly sold or leased in

the ordinary course of business by the taxpayer against

whom the lien has been entered, unless and until a writ

of execution has been issued and a levy made upon the

stock of goods, wares and merchandise.

(d)  Violation by prothonotary.--A willful failure of a

prothonotary to carry out any duty imposed on the prothonotary

under this section shall be a misdemeanor of the third degree

and, upon conviction, the prothonotary shall be sentenced to pay

a fine of not more than $1,000 and costs of prosecution or to

imprisonment for not more than one year, or both.

(e)  Priority.--

(1)  Except as provided under this chapter, the

distribution, voluntary or compulsory, in receivership,

bankruptcy or otherwise of the property or estate of any

person, all taxes which are due and unpaid and are not

collectible under section 225 of the Tax Reform Code shall be

paid from the first money available for distribution in

priority to all other claims and liens, except as the laws of

the United States may give priority to a claim to the Federal

Government.

(2)  A person required to administer or distribute the

property or estate who violates this section shall be

personally liable for the taxes which are accrued and unpaid

and chargeable against the person whose property or estate is

being administered or distributed.

(f)  Construction.--Subject to the limitations contained

under this chapter as to the assessment of taxes, nothing

contained under this section shall be construed to restrict,

prohibit or limit the use by the department in collecting taxes

due and payable of another remedy or procedure available at law

or equity for the collection of debts.

§ 1525.  Tax suit reciprocity.

The courts of this Commonwealth shall recognize and enforce

liabilities for natural gas severance or extraction taxes

lawfully imposed by any other state, if the other state

recognizes and enforces the tax imposed under this chapter.

§ 1526.  Service.

(a)  Rule.--

(1)  Service shall be made upon the operator.

(2)  If service cannot be made upon the operator as

provided under law, service may be made upon the Secretary of

the Commonwealth.

(3)  If service is made under paragraph (2), a copy of

the process or notice shall be personally served upon any

agent or representative of the operator who may be found

within this Commonwealth or, if no agent or representative

may be found, a copy of the process or notice shall be sent

by registered mail to the operator at the last known address

of its principal place of business, home office or residence.

(b)  Appointment of Secretary of the Commonwealth.--An

operator shall be deemed to have appointed the Secretary of the

Commonwealth its agent for the acceptance of service of process

or notice in a proceeding for the enforcement of the civil

provisions of this chapter and service made upon the Secretary

of the Commonwealth as agent shall be of the same legal force

and validity as if the service had been personally made upon the

operator.

§ 1527.  Refunds.

(a)  Duty.--Under Article XXVII of the Tax Reform Code, the

department shall refund all taxes, interest and penalties paid

to the Commonwealth under this chapter to which the Commonwealth

is not rightfully entitled.

(b)  Payment of refunds.--

(1)  Except as provided under paragraph (2), the refunds

under subsection (a) shall be paid to the person or the

person's heirs, successors, assigns or other personal

representatives who paid the tax.

(2)  No refund shall be made under this section regarding

a payment made by reason of an assessment if a taxpayer has

filed a petition for reassessment under section 2702 of the

Tax Reform Code to the extent the petition is adverse to the

taxpayer by a decision which is no longer subject to further

review or appeal.

(c)  Construction.--Nothing under this chapter shall be

construed to prohibit a taxpayer who has filed a timely petition

for reassessment from amending it to a petition for refund where

the petitioner paid the tax assessed.

§ 1528.  Refund petition.

(a)  General rule.--Except as provided under subsection (b),

the refund or credit of tax, interest or penalty provided for

under section 1527 (relating to refunds) shall be made if the

person who has paid the tax files a petition for refund with the

department under Article XXVII of the Tax Reform Code within the

time limits of section 3003.1 of the Tax Reform Code.

(b)  Natural gas severance tax.--

(1)  A refund or credit of tax, interest or penalty paid

as a result of an assessment made by the department under

section 1513 (relating to natural gas severance tax

registration) shall be made if the person who has paid the

tax files with the department a petition for a refund under

Article XXVII of the Tax Reform Code within the time limits

of section 3003.1 of the Tax Reform Code.

(2)  The filing of a petition for a refund under this

subsection shall not affect the abatement of interest,

additions or penalties to which the person may be entitled by

reason of the person's payment of the assessment.

§ 1529.  Rules and regulations.

The department shall enforce this chapter and may prescribe,

adopt, promulgate and enforce rules and regulations not

inconsistent with this chapter relating to the administration

and enforcement of this chapter and the collection of taxes,

penalties and interest imposed under this chapter. The

department may prescribe the extent to which any of the rules

and regulations shall be applied without retroactive effect.

§ 1530.  Recordkeeping and meters.

(a)  Duty to maintain records.--

(1)  Every person liable for the tax or for the

collection of the tax shall keep records, including those

enumerated under subsection (b), render statements, make

returns and comply with the rules and regulations as the

department may prescribe regarding matters pertinent to the

person's business.

(2)  Whenever it is necessary, the department may require

a person, by notice served upon the person or by regulations,

to make returns, render statements or keep records as the

department deems sufficient to show whether or not the person

is liable to pay the tax.

(b)  Records.--Every person liable for the tax shall maintain

the following records:

(1)  Wellhead meter charts for each reporting period and

the meter calibration and maintenance records. If turbine

meters are in use, the maintenance records shall be made

available to the department upon request.

(2)  Records, statements and other instruments furnished

to an operator by a person to whom the operator delivers for

sale, transport or delivery of natural gas.

(3)  Records, statements and other instruments as the

department may prescribe by regulation.

(c)  Records of nonresidents.--

(1)  A nonresident who does business in this Commonwealth

as an operator shall keep adequate records of the business

and of the tax due as a result. The records shall be retained

within this Commonwealth unless retention outside this

Commonwealth is authorized by the department.

(2)  The department may require a taxpayer who desires to

retain records outside this Commonwealth to assume reasonable

out-of-State audit expenses.

(d)  Keeping of separate records.--

(1)  An operator who is engaged in another business which

does not involve the severing of natural gas taxable under

this chapter shall keep separate books and records of the

businesses showing the taxable severing of natural gas under

this chapter separately from other business activities not

taxable under this chapter.

(2)  If any person fails to keep separate books and

records under paragraph (1), the person shall be liable for a

penalty equaling 100% of tax due for the period when separate

records were not maintained.

(e)  Type of meters required.--An operator shall provide for

and maintain, according to industry standards, a discrete

wellhead meter where natural gas is severed. Any wellhead meter

installed after the effective date of this section must be a

digital meter.

§ 1531.  Examinations.

(a)  Powers of department.--The department or any of its

authorized agents may:

(1)  Examine the books, papers and records of any

taxpayer in order to verify the accuracy and completeness of

any return made or, if no return was made, to ascertain and

assess the tax.

(2)  Require the preservation of all books, papers and

records for any period deemed proper by it but not to exceed

three years from the end of the calendar year to which the

records relate.

(3)  Examine any person, under oath, concerning the

taxable severing of natural gas by any taxpayer or concerning

any other matter relating to the enforcement or

administration of this chapter. The department may compel the

production of books, papers and records and the attendance of

all persons whether as parties or witnesses whom it believes

to have knowledge of relevant matters to accomplish its

powers under this paragraph. The procedure for the hearings

or examinations shall be the same as provided under the act

of April 9, 1929 (P.L.343, No. 176), known as The Fiscal

Code.

(b)  Duties of taxpayers.--Every taxpayer shall provide the

department or its agent with the means, facilities and

opportunity for examinations and investigations under this

section.

§ 1532.  Unauthorized disclosure.

(a)  General rule.--Any information gained by the department

as a result of any return, examination, investigation, hearing

or verification required or authorized under this chapter shall

be confidential except for official purposes and except in

accordance with proper judicial order or as otherwise provided

by law.

(b)  Penalty for violation.--Any person unlawfully divulging

the information commits a misdemeanor of the third degree and

shall, upon conviction, be sentenced to pay a fine of not more

than $1,000 and costs of prosecution or to a term of

imprisonment for not more than one year, or both.

§ 1533.  Cooperation with other governments.

(a)  General rule.--Notwithstanding section 1525 (relating to

tax suit reciprocity), the department may do any of the

following with regard to the Commissioner's Office of the

Internal Revenue Service, the proper officer of any state or the

authorized representative of either of them:

(1)  Permit the inspection of the tax returns of any

taxpayer.

(2)  Furnish an abstract of the return of a taxpayer.

(3)  Supply information concerning any item contained in

a return or disclosed by the report of an examination or

investigation of the return of a taxpayer.

(b)  Applicability.--Subsection (a) shall apply if the laws

of the United States or another state grant substantially

similar privileges to the proper officer of the Commonwealth

charged with the administration of this chapter.

§ 1534.  Bonds.

(a)  Taxpayer to file bond.--

(1)  The department may require the following entities

subject to the tax to file a bond issued by a surety company

authorized to do business in this Commonwealth and approved

by the Insurance Commissioner as to solvency and

responsibility, in amounts the department may fix, to secure

the payment of any tax or penalties due or which may become

due if the department deems it necessary to protect the

revenues obtained under this chapter:

(i)   A nonresident natural person.

(ii)  A foreign corporation, association, fiduciary

or other entity not authorized to do business within this

Commonwealth or not having an established place of

business in this Commonwealth.

(2)  The department may require a bond of a person

petitioning the department for reassessment in the case of an

assessment over $500 or if, in the department's opinion, the

ultimate collection is in jeopardy.

(3)  For a period of three years, the department may

require a bond of any person who has, on three or more

occasions within a 12-month period, either filed a return or

made payment to the department more than 30 days late.

(4)  The following apply:

(i)  If the department determines a taxpayer must

file a bond, the department shall give notice to the

taxpayer specifying the amount of the bond required.

(ii)  The taxpayer shall file the bond within five

days after notice is given by the department unless,

within five days of receiving the notice, the taxpayer

requests in writing a hearing before the secretary or the

secretary's representative.

(iii)  At the hearing under subparagraph (ii), the

necessity, propriety and amount of the bond shall be

determined by the secretary or the secretary's

representative.

(iv)  The determination under subparagraph (iii)

shall be final and the taxpayer shall comply with the

determination within 15 days after notice is mailed to

the taxpayer.

(b)  Securities in lieu of bond.--

(1)  In lieu of the bond required under this section,

securities approved by the department or cash in a prescribed

amount may be deposited.

(2)  The securities or cash shall be kept in the custody

of the department. The department may apply the securities or

cash to the tax and interest or penalties due without notice

to the depositor. The securities may be sold by the

department to pay the tax, interest or penalties, or any

combination of tax, interest or penalties, due at public or

private sale upon five days' written notice to the depositor.

(c)  Failure to file bond.--

(1)  The department may file a lien under section 1524

(relating to tax liens) against a taxpayer who fails to file

a bond when required to do so under this section.

(2)  All funds received upon execution of the judgment on

the lien shall be refunded to the taxpayer with 3% interest,

if the department makes a final determination that the

taxpayer does not owe any payment to the department.

SUBCHAPTER C

ACCOUNTS AND FUNDS

Sec.

1541.  Natural Gas Severance Tax Account.

1542.  Local Government Services Account.

1543.  Keystone Strategic Economic Development Fund.

1544.  Community Services Integration Fund.

1545.  Emergency Addiction Treatment Fund.

1546.  Keystone Transit Program.

1547.  Clean Transit Program.

1548.  Shale Alliance for Energy Research.

§ 1541.  Natural Gas Severance Tax Account.

(a)  Establishment.--The Natural Gas Severance Tax Account is

established as a restricted account within the General Fund.

(b)  Source of funds.--The proceeds of the tax and penalties

and interest imposed under this chapter, less the amounts

appropriated under Subchapter D (relating to transfer,

distribution and allocation), shall be deposited into the

account.

(c)  Use.--The money in the account may only be used in

accordance with Subchapter D.

(d)  Nonlapse.--The money in the fund is continuously

appropriated into the fund. This appropriation shall not lapse

at the end of any fiscal year.

§ 1542.  Local Government Services Account.

The Local Government Services Account is established as a

restricted account within the General Fund.

§ 1543.  Keystone Strategic Economic Development Fund.

(a)  Establishment.--The Keystone Strategic Economic

Development Fund is established as a restricted fund within the

General Fund.

(b)  Purposes.--The Department of Community and Economic

Development shall use the fund for the following purposes:

(1)  Create and develop an Industry Partnerships for High

Performance and Innovation Program that parallels the

Industry Partnerships Program in the Department of Labor and

Industry. The program shall award grants on a competitive

basis and create a public-private advisory board that shall

provide criteria for the awarding of grants and general

guidance. Eligible applicants for funds shall include

industry associations, economic development organizations,

chambers of commerce, industry supply chain organizations and

labor-management groups. Priority for awards shall be given

to proposed projects which demonstrate the greatest potential

to create jobs, economic output, productivity and income in

this Commonwealth. A portion of the funding shall be provided

to initiatives which increase the spin-off benefits of

unconventional gas well drilling, including assisting

manufacturers and other businesses switch to natural gas and

assisting groups of manufacturers that want to jointly

develop new industrial or other uses for natural gas by-

products.

(2)  To be used by the Partnership for Regional Economic

Performance Program in the Department of Community and

Economic Development to provide all of the following:

(i)  Grants to consortia of economic development

service providers.

(ii)  Funding for cost-effective infrastructure

improvement.

(3)  To target assistance to the Marcellus Shale and

other unconventional gas producing regions for economic

diversification. This funding shall be used to promote

economic diversification in the regions of this Commonwealth

which produce natural gas from the Marcellus Shale and other

unconventional gas formations.

(c)  Sources.--The following are the sources of the fund:

(1)  Money transferred under section 1560(b) (relating to

Keystone Strategic Economic Development Fund deposit).

(2)  Appropriations.

(3)  Return on the money in the fund.

(d)  Nonlapse.--The money in the fund is continuously

appropriated into the fund. This appropriation shall not lapse

at the end of any fiscal year.

§ 1544.  Community Services Integration Fund.

(a)  Establishment.--The Community Services Integration Fund

is established as a restricted fund within the General Fund.

(b)  Purposes.--

(1)  The Department of Public Welfare shall use money in

the fund for the following purposes:

(i)  To provide community services for adults with

intellectual disabilities who are considered to have

either an emergency need or critical need according to

the Prioritization of Urgency of Need for Service.

(ii)  To supplant existing Commonwealth funds when:

(A)  there are no adults with an emergency need

or critical need waiting for community services; and

(B)  there are no adults living in an

intermediate care facility which is licensed to serve

more than four individuals who have not

affirmatively, in an informed manner, decided to

remain in such a facility.

(iii)  To assist individuals living in the facilities

transition from the facility into a home with community

services.

(2)  The fund shall not be used to support an individual

in a Commonwealth-operated or privately operated intermediate

care facility which is licensed to serve more than four

individuals.

(3)  No more than 1.5% of the money under this subsection

shall be used for administration.

(c)  Sources.--The following are the sources of the fund:

(1)  Money deposited under section 1564(b) (relating to

Community Services Integration Fund).

(2)  Appropriations.

(3)  Return on money in the fund.

§ 1545.  Emergency Addiction Treatment Fund.

(a)  Establishment.--The Emergency Addiction Treatment Fund

is established as a separate fund.

(b)  Purposes and priorities.--

(1)  The Department of Drug and Alcohol Programs shall

use the fund to assist individuals in need of:

(i)  nonhospital, residential detoxification

addiction treatment;

(ii)  short-term and long-term residential addiction

treatment; and

(iii)  halfway houses for individuals who:

(A)  are on waiting lists for treatment under

subparagraph (i) or (ii); or

(B)  have no other coverage for treatment under

subparagraph (i) or (ii) for these services.

(2)  Priorities are in the following order:

(i)  Individuals under 18 years of age.

(ii)  Pregnant women.

(iii)  Postpartum women.

(iv)  Mothers.

(v)  Senior citizens.

(vi)  Individuals addicted to prescription

medications.

(vii)  Criminal justice offenders who are eligible

for diversion programs or involved in drug courts.

(c)  Sources.--The following are the sources of the fund:

(1)  Money deposited under section 1565(b) (relating to

Emergency Addiction Treatment Fund deposit).

(2)  Appropriations.

(3)  Return on the money in the fund.

§ 1546.  Keystone Transit Program.

(a)  Establishment.--The Department of Environmental

Protection shall develop a program to fund competitive grants

and loans available to small mass transit authorities for all of

the following:

(1)  Conversion of buses to run solely on compressed

natural gas as a fuel source.

(2)  Purchase of buses which solely use natural gas as a

fuel source.

(b)  Funding.--The program shall be funded under section

1562(c)(3) (relating to natural gas transportation and natural

gas refueling infrastructure investment).

§ 1547.  Clean Transit Program.

(a)  Establishment.--The Department of Environmental

Protection shall develop a program to fund competitive grants

and loans available to large mass transit authorities for all of

the following:

(1)  Conversion of buses to run solely on compressed

natural gas as a fuel source.

(2)  Purchase of buses which solely use natural gas as a

fuel source.

(b)  Funding.--

(1)  The program shall be funded under section 1562

(c)(4) (relating to natural gas transportation and natural

gas refueling infrastructure investment).

(2)  No more than 1.5% of the money under this subsection

shall be used for administration.

§ 1548.  Shale Alliance for Energy Research.

(a)  Establishment.--The Shale Alliance for Energy Research

is comprised of The Pennsylvania State University, the

University of Pittsburgh and the Gas Technology Institute.

(b)  Purposes.--The following are the purposes of the

alliance:

(1)  Facilitate research to assist with the development,

demonstration and commercialization of technologies to

improve the environmental footprint and production

performance of Marcellus Shale and other unconventional gas

wells in this Commonwealth.

(2)  Provide analysis, testing and education in a

collaborative and supporting format with:

(i)  the academic community;

(ii)  industry;

(iii)  nonprofit organizations; and

(iv)  Federal, State and local governments.

(c)  Funding.--The alliance shall be funded under section

1563(b) (relating to Shale Alliance for Energy Research

deposit).

(d)  Administration.--The Pennsylvania State University has

the following powers and duties to administer the alliance:

(1)  Serve as the fiscal agent.

(2)  Have ultimate accounting and financial reporting

duties.

(3)  Have sole legal authority related to the

contracting, administering and expending of funds.

(4)  Manage and support the daily operations of the

alliance.

SUBCHAPTER D

TRANSFER, DISTRIBUTION AND ALLOCATION

Sec.

1551.  Transfers and distributions.

1552.  Local Government Services Account transfers and

distributions.

1553.  Affordable homes.

1554.  Conservation districts.

1555.  Environmental Stewardship Fund.

1556.  Chesapeake Bay watershed programs in Department of

Environmental Protection.

1557.  Hazardous Sites Cleanup Fund.

1558.  Pennsylvania Fish and Boat Commission.

1559.  Accountability Block Grants.

1560.  Keystone Strategic Economic Development Fund deposit.

1561.  Industry Partnerships Program.

1562.  Natural gas transportation and natural gas refueling

infrastructure investment.

1563.  Shale Alliance for Energy Research deposit.

1564.  Community Services Integration Fund.

1565.  Emergency Addiction Treatment Fund deposit.

1566.  Human Services Development Fund.

1567.  Behavioral Services Initiative.

1568.  Homeowners Emergency Mortgage Assistance Program.

1569.  Rape and domestic violence programs.

§ 1551.  Transfers and distributions.

On the last business day of each calendar month, the State

Treasurer shall make the transfers and distributions of the

money in the account as specified under this subchapter.

§ 1552.  Local Government Services Account transfers and

distributions.

(a)  Transfer.--Twenty-five percent of the money in the

account shall be transferred to the Local Government Services