Regular Session 2015-2016 Senate Bill 0395 P.N. 0330

PRINTER'S NO. 330

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

395

Session of

2015

INTRODUCED BY BREWSTER, TARTAGLIONE, FONTANA, HUGHES, BLAKE,

COSTA, TEPLITZ AND FARNESE, FEBRUARY 5, 2015

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, FEBRUARY 5, 2015

AN ACT

Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated

Statutes, in unconventional gas well fee, repealing

provisions relating to expiration; providing for the

Extraction for Education Tax; and establishing the Extraction

for Education Fund.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 2318 of Title 58 of the Pennsylvania

Consolidated Statutes is repealed:

[§ 2318. Expiration.

(a) Notice.--The Secretary of the Commonwealth shall, upon

the imposition of a severance tax on unconventional gas wells in

this Commonwealth, submit for publication in the Pennsylvania

Bulletin notice of the imposition.

(b) Date.--This chapter shall expire on the date of the

publication of the notice under subsection (a).]

Section 2. Title 58 is amended by adding a part to read:

PART V

TAXATION

Chapter

51. Extraction for Education

CHAPTER 51

EXTRACTION FOR EDUCATION

Sec.

5101. Definitions.

5102. Imposition and adjustment of tax.

5103. Return and payment.

5104. Fund established, deposit and use.

§ 5101. 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:

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

"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.

"Producer." 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.

"Producing site." A point of severance capable of producing

natural gas in paying quantities.

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

severed.

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"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.

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

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 the meters shall

be determined by the continuous use of a recording

thermometer installed to properly record the temperature of

gas flowing through the meters. 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

annually by 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

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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

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

American Gas Association or recommendations of the National

Bureau of Standards or amendments to the report or

recommendations. The results of the tests shall be used in

computing the volume of gas delivered.

§ 5102. Imposition and adjustment of tax.

(a) Establishment.--Beginning July 1, 2015, an Extraction

for Education Tax shall be levied on every producer for the

severance of natural gas.

(b) Rate.--The tax shall be imposed at the rate of 5% of the

gross value of the units severed at the wellhead during a

reporting period.

(1) Each producer shall receive a credit equal to the

producer's total payment of the unconventional gas well fee

imposed under Chapter 23 (relating to unconventional gas well

fee) for the reporting period.

(2) Each producer may apply the credit received under

paragraph (1) to offset the tax liability levied under

subsection (b) for the reporting period.

§ 5103. Return and payment.

(a) Requirement.--Every producer shall file a return with

the department on a form prescribed by the department. The

return shall include all of the following:

(1) The number of natural gas units severed by the

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producer for the reporting period.

(2) The number of producing sites used by the producer

for the severance of natural gas in each county and

municipality.

(3) The amount of tax due under section 5102 (relating

to imposition and adjustment of tax).

(4) The amount of the producer's total payment of the

unconventional gas well fee imposed under Chapter 23

(relating to unconventional gas well fee).

(5) The amount of the producer's payment of the

unconventional gas well fee for each producing site for that

reporting period.

(b) Filing.--The producer shall file the return required by

subsection (a) within 15 days after the end of the reporting

period. The first return shall be due August 15, 2015.

due on the day the return is required to be filed and shall

become delinquent if not remitted to the department by the due

date.

§ 5104. Fund established, deposit and use.

(a) Fund established.--The Extraction for Education Fund is

established in the State Treasury.

(b) Deposits.--The tax collected under section 5102

(relating to imposition and adjustment of tax) shall be

deposited into the Extraction for Education Fund.

shall be annually distributed to each school district in

accordance with the following:

(1) The basic education formula under section 123 of the

act of March 10, 1949 (P.L.30, No.14), known as the Public

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School Code of 1949.

(2) If the basic education formula under section 123 of

the Public School Code of 1949 is not enacted, the amount

distributed to each school district shall be determined by:

(i) Dividing the sum of the amount of basic

education funding that the school district received in

school year 2009-2010 under section 1722-L of the act of

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

Code, by the total amount of basic education funding for

school year 2009-2010; and

(ii) Multiplying the quotient from subparagraph (i)

by the total amount of money in the Extraction for

Education Fund.

Section 3. This act shall take effect immediately.

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