1Amending Title 58 (Oil and Gas) of the Pennsylvania Consolidated
2Statutes, in unconventional gas well fee, further providing
3for expiration of provisions; providing for the taxation of
4natural gas extraction; and establishing the Severance Tax
5for Education Fund.

6The General Assembly of the Commonwealth of Pennsylvania
7hereby enacts as follows:

8Section 1. Section 2318 of Title 58 of the Pennsylvania
9Consolidated Statutes is repealed:

10[§ 2318. Expiration.

11(a) Notice.--The Secretary of the Commonwealth shall, upon
12the imposition of a severance tax on unconventional gas wells in
13this Commonwealth, submit for publication in the Pennsylvania
14Bulletin notice of the imposition.

15(b) Date.--This chapter shall expire on the date of the
16publication of the notice under subsection (a).]

17Section 2. Title 58 is amended by adding a part to read:

18PART IV

19TAXATION

1Chapter

251. Natural Gas Severance Tax

3CHAPTER 51

4NATURAL GAS SEVERENCE TAX

5Sec.

65101. Definitions.

75102. Imposition of tax.

85103. Return and payment.

9§ 5101. Definitions.

10The following words and phrases when used in this chapter
11shall have the meanings given to them in this section unless the
12context clearly indicates otherwise:

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

14"Natural gas." A fossil fuel consisting of a mixture of
15hydrocarbon gases, primarily methane, possibly including ethane,
16propane, butane, pentane, carbon dioxide, oxygen, nitrogen and
17hydrogen sulfide and other gas species. The term includes
18natural gas from oil fields known as associated gas or casing
19head gas, natural gas fields known as nonassociated gas, coal
20beds, shale beds and other formations. The term does not include
21coal bed methane.

22"Producer." A person who engages or continues within this
23Commonwealth in the business of severing natural gas for sale,
24profit or commercial use. The term does not include a person who
25severs natural gas from a storage field.

26"Producing site." A point of severance capable of producing
27natural gas in paying quantities.

28"Reporting period." A calendar month in which natural gas is
29severed.

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

1"Sever." To extract or otherwise remove natural gas from the
2soil or water of this Commonwealth.

3"Severance." The extraction or other removal of natural gas
4from the soil or water of this Commonwealth.

5"Severing." Extracting or otherwise removing natural gas
6from the soil or water of this Commonwealth.

7"Unit." A thousand cubic feet of natural gas measured at the
8wellhead at a temperature of 60 degrees Fahrenheit and an
9absolute pressure of 14.73 pounds per square inch in accordance
10with American Gas Association standards and according to Boyle's
11Law for the measurement of gas under varying pressures with
12deviations as follows:

13(1) The average absolute atmospheric pressure shall be
14assumed to be 14.4 pounds to the square inch, regardless of
15elevation or location of point of delivery above sea level or
16variations in atmospheric pressure from time to time.

17(2) The temperature of the gas passing the meters shall
18be determined by the continuous use of a recording
19thermometer installed to properly record the temperature of
20gas flowing through the meters. The arithmetic average of the
21temperature recorded each 24-hour day shall be used in
22computing gas volumes. If a recording thermometer is not
23installed, or is installed and not operating properly, an
24average flowing temperature of 60 degrees Fahrenheit shall be
25used in computing gas volume.

26(3) The specific gravity of the gas shall be determined
27annually by tests made by the use of an Edwards or Acme
28gravity balance or at intervals as found necessary in
29practice. Specific gravity determinations shall be used in
30computing gas volumes.

1(4) The deviation of the natural gas from Boyle's Law
2shall be determined by annual tests or at other shorter
3intervals as found necessary in practice. The apparatus and
4method used in making the test shall be in accordance with
5the Report No. 3 of the Gas Measurement Committee of the
6American Gas Association or recommendations of the National
7Bureau of Standards or amendments to the report or
8recommendations. The results of the tests shall be used in
9computing the volume of gas delivered.

10§ 5102. Imposition of tax.

11(a) Establishment.--Beginning July 1, 2014, a natural gas
12severance tax shall be levied on every producer.

13(b) Rate.--The tax shall be imposed at the rate of 4% of the
14gross value of the units severed at the wellhead during a
15reporting period.

16§ 5103. Return and payment.

17(a) Requirement.--Every producer shall file a return with
18the department, on a form prescribed by the department. The
19return shall include all of the following:

20(1) The number of natural gas units severed by the
21producer for the reporting period.

22(2) The number of producing sites used by the producer
23for the severance of natural gas in each county and
24municipality.

25(3) The amount of tax due under section 5102 (relating
26to imposition of tax).

27(b) Filing.--The return required by subsection (a) shall be
28filed with the department within 15 days following the end of a
29reporting period. The first return shall be due August 15, 2014.

30(c) Deadline.--The tax imposed under section 5102 shall be

1due on the day the return is required to be filed and shall
2become delinquent if not remitted to the department by that
3date.

4(d)  Deposit into Severance Tax for Education Fund.--The tax
5collected under section 5102 shall be deposited into the
6Severance Tax for Education Fund, which is established in the
7State Treasury.

8Section 3. This act shall take effect immediately.