Regular Session 2019-2020 Senate Bill 0457 P.N. 0452

PRINTER'S NO. 452

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

457

Session of

2019

INTRODUCED BY BREWSTER, FARNESE AND HAYWOOD, MARCH 19, 2019

REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, MARCH 19, 2019

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 and Environmental Protection Tax;

and establishing the Extraction for Education and

Environmental Protection 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Consolidated Statutes is repealed: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 and Environmental Protection

CHAPTER 51

EXTRACTION FOR EDUCATION AND

ENVIRONMENTAL PROTECTION

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:

"Commission." The Pennsylvania Public Utility Commission.

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

"Department of Environmental Protection" or "DEP." The

Department of Environmental Protection of the Commonwealth.

"Federal pipeline safety laws." The provisions of 49 U.S.C.

Ch. 601 (relating to safety), the Hazardous Liquid Pipeline

Safety Act of 1979 (Public Law 96-129, 93 Stat. 989) and the

Pipeline Safety Improvement Act of 2002 (Public Law 107-355, 116

Stat. 2985) and the regulations promulgated under those acts.

"Gas." Natural gas, liquefied natural gas, landfill gas,

synthetic natural gas and other gas as defined under the Federal

pipeline safety laws.

"Hazardous liquids." Petroleum, a petroleum product,

anhydrous ammonia and other hazardous liquids as defined under

the Federal pipeline safety laws.

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

20190SB0457PN0452 - 2 -

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.

"Pipeline." A part of the physical facilities through which

gas or hazardous liquids move in transportation, including a

pipe valve and other appurtenance attached to the pipe,

compressor unit, metering station, regulator station, delivery

station, holder and fabricated assembly. The term only includes

pipeline regulated by Federal pipeline safety laws. The term

does not include a pipeline subject to the exclusive

jurisdiction of the Federal Energy Regulatory Commission.

"Pipeline facility." A new or existing pipeline, right-of-

way and any equipment, facility or building used in the

transportation of gas or hazardous liquids or in the treatment

of gas or hazardous liquids during the course of transportation.

The term does not include a pipeline facility subject to the

exclusive jurisdiction of the Federal Energy Regulatory

Commission.

"Pipeline safety inspectors." Individuals employed or

contracted by the commission who are certified, qualified and

experienced in safety inspections of and all safety protocols

for pipelines and pipeline facilities as established under the

Federal pipeline safety laws.

"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

20190SB0457PN0452 - 3 -

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.

"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.

"Transportation of gas." The gathering, transmission or

distribution of gas by pipeline or the storage of gas.

"Transportation of hazardous liquids." The gathering,

transmission or distribution of hazardous liquids by pipeline.

"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

20190SB0457PN0452 - 4 -

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

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, 2019, an Extraction

for Education and Environmental Protection 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 measured 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

20190SB0457PN0452 - 5 -

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

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, 2019.

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 and

20190SB0457PN0452 - 6 -

Environmental Protection 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 and Environmental

Protection Fund.

shall be annually distributed as follows:

(1) Fifty percent shall be distributed as follows:

(i) Fifty percent shall be distributed to each

school district in accordance with the student-weighted

basic education funding formula under section 2502.53 of

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

Public School Code of 1949.

(ii) Fifty percent shall be deposited into the

School Safety and Security Fund for the purpose of

providing school safety and security grants under section

1306-B of the Public School Code of 1949. If the money

deposited into the School Safety and Security Fund for

the year exceeds the total amount of grants awarded under

section 1306-B of the Public School Code of 1949 for the

year when the funds are deposited, the excess money shall

be distributed to each school district in accordance with

the student-weighted basic education funding formula

under section 2502.53 of the Public School Code of 1949.

(2) Fifty percent shall be distributed as follows:

(i) Ten percent to the commission for the employment

or contracting of additional pipeline safety inspectors.

(ii) Ten percent to the DEP for the employment or

contracting of additional inspectors and other personnel

20190SB0457PN0452 - 7 -

for the administration of Chapter 32 (relating to

development).

(iii) Eighty percent shall be distributed as

follows:

(A) Sixty-six and two-thirds percent to the

Commonwealth Financing Authority for grants to

eligible applicants for the following:

(I) Orphan or abandoned oil and gas well

plugging.

(II) Acid mine damage, abatement and cleanup

and mine reclamation.

(III) Complying with the act of January 24,

1966 (1965 P.L.1535, No.537), known as the

Pennsylvania Sewage Facilities Act.

(IV) Programs to establish baseline water

quality data on private water supplies.

(B) The balance of the amount in subparagraph

(iii) to the Environmental Stewardship Fund.

Section 3. This act shall take effect immediately.

20190SB0457PN0452 - 8 -