1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," providing for a natural gas severance tax; and
11making a related repeal.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15the Tax Reform Code of 1971, is amended by adding an article to
16read:

17ARTICLE X-A

18NATURAL GAS SEVERANCE TAX

19Section 1001-A. Definitions.

20The following words and phrases when used in this article
21shall have the meanings given to them in this section unless the
22context clearly indicates otherwise:

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

2"Natural gas." A fossil fuel consisting of a mixture of
3hydrocarbon gases, primarily methane, possibly including ethane,
4propane, butane, pentane, carbon dioxide, oxygen, nitrogen and
5hydrogen sulfide and other gas species. The term includes
6natural gas from oil fields known as associated gas or casing
7head gas, natural gas fields known as nonassociated gas, coal
8beds, shale beds and other formations. The term does not include
9coal bed methane.

10"Producer." A person who engages or continues within this
11Commonwealth in the business of severing natural gas for sale,
12profit or commercial use. The term does not include a person who
13severs natural gas from a storage field.

14"Producing site." A point of severance capable of producing
15natural gas in paying quantities.

16"Reporting period." A calendar month in which natural gas is
17severed.

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

19"Sever." To extract or otherwise remove natural gas from the
20soil or water of this Commonwealth.

21"Severance." The extraction or other removal of natural gas
22from the soil or water of this Commonwealth.

23"Severing." Extracting or otherwise removing natural gas
24from the soil or water of this Commonwealth.

25"Unit." A thousand cubic feet of natural gas measured at the
26wellhead at a temperature of 60 degrees Fahrenheit and an
27absolute pressure of 14.73 pounds per square inch in accordance
28with American Gas Association standards and according to Boyle's
29Law for the measurement of gas under varying pressures with
30deviations as follows:

1(1) The average absolute atmospheric pressure shall be
2assumed to be 14.4 pounds to the square inch, regardless of
3elevation or location of point of delivery above sea level or
4variations in atmospheric pressure from time to time.

5(2) The temperature of the gas passing the meters shall
6be determined by the continuous use of a recording
7thermometer installed to properly record the temperature of
8gas flowing through the meters. The arithmetic average of the
9temperature recorded each 24-hour day shall be used in
10computing gas volumes. If a recording thermometer is not
11installed, or is installed and not operating properly, an
12average flowing temperature of 60 degrees Fahrenheit shall be
13used in computing gas volume.

14(3) The specific gravity of the gas shall be determined
15annually by tests made by the use of an Edwards or Acme
16gravity balance or at intervals as found necessary in
17practice. Specific gravity determinations shall be used in
18computing gas volumes.

19(4) The deviation of the natural gas from Boyle's Law
20shall be determined by annual tests or at other shorter
21intervals as found necessary in practice. The apparatus and
22method used in making the test shall be in accordance with
23the Report No. 3 of the Gas Measurement Committee of the
24American Gas Association or recommendations of the National
25Bureau of Standards or amendments to the report or
26recommendations. The results of the tests shall be used in
27computing the volume of gas delivered.

28Section 1002-A. Imposition of tax.

29(a) Establishment.--Beginning January 1, 2015, a natural gas
30severance tax shall be levied on every producer.

1(b) Rate.--For the 2015 calendar year and each calendar year
2thereafter, the tax shall be imposed on the gross value of the
3units severed at the wellhead during a reporting period at a
4rate of 5%.

5Section 1003-A. Return and payment.

6(a) Requirement.--Every producer shall file a return with
7the department, on a form prescribed by the department. The
8return shall include all of the following:

9(1) The number of natural gas units severed by the
10producer for the reporting period.

11(2) The number of producing sites used by the producer
12for the severance of natural gas in each county and
13municipality.

14(3) The amount of tax due under section 1002-A.

15(b) Filing.--The return required by subsection (a) shall be
16filed with the department within 15 days following the end of a
17reporting period. The first return shall be due February 15,
182015.

19(c) Deadline.--The tax imposed under section 1002-A shall be
20due on the day the return is required to be filed and shall
21become delinquent if not remitted to the department by that
22date.

23(d) Restricted receipts account.--The tax revenues collected
24under this article shall be deposited into a restricted receipts
25account in the General Fund. Funds in the account shall be
26appropriated solely to offset the unfunded liability of the
27State Employees' Retirement System and the Public School
28Employees' Retirement System. The money in the account may be
29used to secure bonds to accomplish the offset under this
30subsection.

1Section 2. Repeals are as follows:

2(1) The General Assembly declares that the repeal under
3paragraph (2) is necessary to effectuate the addition of
4Article X-A of the act.

5(2) The provisions of 58 Pa.C.S. § 2318 are repealed.

6Section 3. This act shall take effect immediately.