Bill Text: PA HB1870 | 2011-2012 | Regular Session | Introduced

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Bill Title: Imposing a natural gas well operational fee; providing for the powers and duties of the Department of Revenue and the Department of Community and Economic Development; and establishing the Marcellus Revenue Sharing Account and the Local Government Services Account.

Spectrum: Moderate Partisan Bill (Republican 4-1)

Status: (Introduced - Dead) 2011-09-26 - Referred to FINANCE [HB1870 Detail]

Download: Pennsylvania-2011-HB1870-Introduced.html

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PRINTER'S NO. 2407
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1870 Session of2011
INTRODUCED BY BOBACK, CARROLL, HENNESSEY AND MURT, SEPTEMBER 26, 2011
REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 26, 2011
AN ACT
Imposing a natural gas well operational fee; providing for the
powers and duties of the Department of Revenue and the
Department of Community and Economic Development; and
establishing the Marcellus Revenue Sharing Account and the
Local Government Services Account.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Marcellus
Revenue Sharing Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Accredited laboratory." A facility engaged in the testing
and calibration of scientific measurement devices and certified
by the Department of Environmental Protection as having met the
department's standards for accreditation.
"Association." A partnership, limited partnership or any
other form of unincorporated enterprise owned or conducted by
two or more persons.
"Coal bed methane." Gas which can be produced from coal
beds, coal seams, mined-out areas or gob wells.
"Corporation." A corporation, joint stock association,
limited liability company, business trust or any other
incorporated enterprise organized under the laws of this
Commonwealth, the United States or any other state, territory or
foreign country or dependency.
"County." A county of the second class A, third, fourth,
fifth, sixth, seventh or eighth class, including any county of
these classes which has adopted or may adopt a home rule charter
under 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and
optional plan government).
"Department." The Department of Revenue of the Commonwealth.
"Fee." The natural gas well operational fee.
"Meter." A device to measure the passage of volumes of gases
or liquids past a certain point.
"Municipality." A city, borough, incorporated town or
township.
"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.
"Natural gas well." A bore hole drilled or being drilled for
the purpose of or to be used for producing natural gas from
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subsurface geological formations.
"Operator." 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.
"Person." A natural person or a corporation, fiduciary,
association or other entity, including the Commonwealth and any
of its political subdivisions, instrumentalities and
authorities. When the term is used in a clause prescribing and
imposing a penalty or imposing a fine or imprisonment, or both,
the term shall include a member, as applied to an association,
and an officer, as applied to a corporation.
"Producing well." A natural gas well that produces natural
gas in excess of 90,000 cubic feet of natural gas per day.
"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.
"Storage field." A natural formation or other site that is
used to store natural gas that did not originate from and has
been injected into the formation or site.
"Unit." A thousand cubic feet of natural gas measured at a
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
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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
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
recommendations of the National Bureau of Standards or Report
No. 3 of the Gas Measurement Committee of the American Gas
Association, or amendments thereto. The results of the tests
shall be used in computing the volume of gas delivered under
this act.
"Wellhead meter." A meter placed at a producing or
nonproducing site to measure the volume of natural gas severed
for which a wellhead meter certification has been issued.
"Wellhead meter certification." A report issued by an
accredited laboratory certifying the accuracy of a wellhead
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meter.
Section 3. Natural gas well operational fee.
(a) Establishment.--Beginning January 30, 2012, and each
year thereafter, an operator shall pay a natural gas well
operational fee on each producing well owned or operated in this
Commonwealth.
(b) Calculation of fee.--The fee shall be 1.5% of the gross
value of units severed at a wellhead during a reporting period
for the first 60 months of production and 5% of the gross value
of units severed at the wellhead during a reporting period
thereafter for each producing well.
(c) Exemptions.--The fee shall not be imposed on the
following:
(1) Units severed, sold and delivered by an operator at
or within five miles of the producing well for the processing
or manufacture of tangible personal property, as defined
under section 201 of the act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971, within this
Commonwealth.
(2) Units provided free of charge to the owner of the
surface under which the natural gas is severed if the surface
owner is the end user of the natural gas.
(3) Owners of the surface real property where natural
gas wells are drilled or operated and who have leased the
rights to recover natural gas from beneath the surface to an
operator.
Section 4. Return and payment.
(a) Requirement.--An operator shall file a return with the
department, on a form prescribed by the department, which shall
include the number of units in excess of 90,000 cubic feet per
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day severed by the operator for the reporting period and the
amount of fee due under section 3.
(b) Filing.--The return required by subsection (a) shall be
filed with the department within 30 days following the end of a
reporting period.
(c) Deadline.--The fee is due on the day the return is
required to be filed and becomes delinquent if not remitted to
the department by that date.
Section 5. Penalties.
(a) Failure to file a timely certificate.--An operator who
willfully fails to file a timely certificate required under this
act shall be assessed an administrative fine equal to 100% of
the fee liability required to be reported on the certificate.
The department shall enforce this penalty.
(b) Fraudulent certificate.--An operator, with intent to
defraud the Commonwealth, who willfully makes or causes to be
made a certificate required by this act which is false, shall,
upon finding by the department, be ordered to pay an
administrative fine of not more than 100% of the liability.
(c) Penalties or other acts.--
(1) Except as otherwise provided by subsection (a), an
operator shall be ordered to pay a fine of not more than
$50,000 and costs of prosecution for any of the following:
(i) Willfully failing to timely remit the fee to the
department.
(ii) Willfully failing or neglecting to timely file
a certificate or report required by this act.
(iii) Refusing to timely pay a penalty or interest
imposed or provided for by this act.
(iv) Willfully failing to preserve its books, papers
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and records as directed by the department.
(v) Refusing to permit the department or its
authorized agents to examine its books, records or
papers.
(vi) Knowingly making any incomplete, false or
fraudulent certificate or report required by this act.
(vii) Preventing or attempting to prevent the full
disclosure of the amount of the fee due.
(viii) Providing any person with a false statement
as to the payment of the fee with respect to any
pertinent facts.
(ix) Making, uttering or issuing a false or
fraudulent statement required by this act.
(2) The penalties imposed by this section shall be in
addition to other penalties imposed by law.
Section 6. Recordkeeping.
(a) Duty to maintain records.--An operator required to pay
the fee shall keep records, including those enumerated in this
subsection, render statements, file certificates and comply with
the rules and regulations as the department may prescribe
regarding matters pertinent to the operator's business.
(b) Power of department.--Whenever it is necessary, the
department may require an operator, by notice served upon the
operator, to file certificates, render statements or keep
records as the department deems sufficient to show whether the
operator is liable to pay the fee.
(c) Records.--An operator required to pay the fee shall
maintain records, statements and other instruments as the
department may prescribe by regulation.
(d) Examinations.--The department or any of its authorized
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agents may:
(1) Examine the books, papers and records of an operator
in order to verify the accuracy and completeness of the fee
paid.
(2) Require the preservation of all books, papers and
records for any period deemed proper by it, but not to exceed
five years from the end of the calendar year to which the
records relate.
(3) Examine an operator, under oath, concerning any
matter relating to the enforcement or administration of this
act and, to this end, may compel the production of books,
papers and records and the attendance of all persons whether
as parties or witnesses whom it believes to have knowledge of
relevant matters.
(e) Duties of operators.--An operator shall provide the
department or its agent with the means, facilities and
opportunity for examinations and investigations under this act.
(f) Unauthorized disclosure.--
(1) Information gained by the department as a result of
a certificate, examination, investigation, hearing or
verification required or authorized by this act shall be
confidential, except for official purposes, or in accordance
with proper judicial order or as otherwise provided by law.
(2) A person who unlawfully divulges information
required to be kept confidential under this act shall, upon
conviction thereof, be sentenced to pay a fine of not more
than $1,000 and costs of prosecution.
Section 7. Wellhead meters.
An operator shall provide for and maintain, according to
industry standards, a discrete wellhead meter where natural gas
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is severed. A wellhead meter installed after the effective date
of this section shall be a digital meter.
Section 8. Accounts established.
(a) Marcellus Revenue Sharing Account.--
(1) The Marcellus Revenue Sharing Account is established
as a restricted account within the General Fund.
(2) The proceeds of the fee and penalties and interest
imposed under this act shall be deposited into the account.
(3) The money in the account shall only be used in
accordance with section 9.
(b) Local Government Services Account.--
(1) The Local Government Impact Account is established
as a restricted account within the General Fund. The moneys
of the account are hereby appropriated on a continuing basis
to the Department of Community and Economic Development.
(2) The allocation under section 9(a)(3) shall be
deposited into the account.
Section 9. Transfers and distributions.
On the last business day of each calendar month, the State
Treasurer shall make the following transfers and distributions
of the money in the Marcellus Revenue Sharing Account:
(1) Thirty-five percent to the Property Tax Relief Fund.
(2) Twenty-five percent to the Local Government Impact
Account, to be further distributed by the Department of
Community and Economic Development under section 10.
(3) Twenty-four percent to the Environmental Stewardship
Fund.
(4) Ten percent to the Motor License Fund to provide for
road and bridge repairs in this Commonwealth.
(5) Two percent to the Conservation District Fund for
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distribution to county conservation districts pursuant to
guidelines established by the State Conservation Commission.
(6) Two percent to the Department of Education to fund
grants available to institutions of higher education in this
Commonwealth to research energy, environmental, safety,
community education, economic and other issues related to the
development of natural gas in this Commonwealth.
(7) One percent to the Hazardous Sites Cleanup Fund.
(8) One percent to the Pennsylvania Fish and Boat
Commission.
Section 10. Local government impact grants.
(a) Program to be established.--The Department of Community
and Economic Development shall establish a competitive grant
program using funds in the Local Government Impact Account to
assist counties and municipalities in this Commonwealth with the
remediation of impacts to the environment or transportation
infrastructure directly associated with natural gas development.
(b) Priority.--Priority for grants under subsection (a)
shall be given to municipalities hosting producing wells within
their jurisdictions.
Section 11. Annual reports.
(a) Department of Revenue.--
(1) On February 1 of each year, the department shall
submit to the Governor and the General Assembly an annual
report of funds collected and distributed under this act for
the prior year.
(2) The department shall publish and maintain the annual
report on its publicly accessible Internet website. The
annual report required under this section may be submitted to
the Governor and the General Assembly by electronic mail.
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(b) Department of Community and Economic Development.--
(1) On February 1 of each year, the Department of
Community and Economic Development, in conjunction with the
Department of Revenue, shall submit to the Governor and the
General Assembly an annual report of funds collected and
distributed under this act for the prior year.
(2) The annual report shall, at a minimum, include the
following:
(i) The total amount expended from the fund on
grants and total number of projects completed.
(ii) The location of each project.
(iii) A description of each project funded and the
total project cost.
(3) The department shall publish and maintain the annual
report on its publicly accessible Internet website. The
annual report required under this section may be submitted to
the Governor and the General Assembly by electronic mail.
Section 12. Regulations.
The department and the Department of Community and Economic
Development may promulgate regulations to effectuate the
provisions of this act.
Section 13. Expiration.
(a) Notice.--The Secretary of the Commonwealth shall, upon
the effective date of an act authorizing a severance tax on each
unconventional well producing gas in this Commonwealth, submit
for publication in the Pennsylvania Bulletin notice of that
fact.
(b) Date.--This act shall expire on the date of the
publication of the notice under subsection (a).
Section 14. Effective date.
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This act shall take effect in 60 days.
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