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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session


Posted: June 7, 2019 12:08 PM
From: Senator John T. Yudichak and Sen. John P. Blake
To: All Senate members
Subject: Energy and Fertilizer Manufacturing Tax Credit
I, along with Senator John Blake, am planning to introduce legislation to create an Energy and Fertilizer Manufacturing Tax credit to incentivize petrochemical development of Northeastern Pennsylvania’s “dry” natural gas resources.

This legislation would mirror the PA Resource Manufacturing Tax Credit that as enacted to attract Shell and other future petrochemical companies to locate manufacturing sites in PA. As the PA Resource Manufacturing Tax credit targets manufacturers that purchase and use ethane which is abundant in the “wet” natural gas found in the southwestern region of PA.

Conversely, natural gas in NEPA is ‘dry’ and primarily methane. Methane has its own value in manufacturing petrochemicals and fertilizers.

The bill would provide a tax credit for petrochemical and fertilizer manufacturers of 5 cents per gallon of methane purchased for use in creating ammonia, methanol, or urea.

The credit is available only to new manufacturers that construct and bring a facility into service after the effective date of the proposed legislation, and in doing so:
  • Expends at least $1 billion in capital investments and
  • Creates at least 1000 full time equivalent jobs.

Qualified manufacturers may apply the tax credit against up to 20 percent of the qualified tax liabilities within the year of approval.
Qualified Tax Liabilities:
  • Personal Income Tax (Note: Not available to be used against withheld taxes)
  • Corporate Net Income Tax
  • Capital Stock and Foreign Franchise Tax
  • Bank and Trust Company Shares Tax
  • Title Insurance Companies Shares Tax
  • Insurance Premiums Tax
  • Gross Receipts Tax
  • Mutual Thrift Institutions Tax

Unused credits can be sold, but only after being applied to the qualified tax liability and must be exclusively offered to companies consuming ammonia, methanol or urea (downstream companies) for 30 days, and to both downstream companies and those supplying the natural gas (upstream companies) for an additional 30 days before they can be offered to other companies.

Once the credits are sold, the purchaser can offset their liability by up to 50% within the year of purchase, and the purchaser may not resell the credit.

The legislation also requires reporting on the use and effectiveness of the credit.

The credit has no cap and is available until 2050.

I hope you’ll join me in sponsoring this legislation. Should have any questions, please contact my office at (717) 787-7105.

Introduced as SB866