Marcellus Shale Economic Development Act Passes

The Marcellus Shale, and the economic benefits/environmental concerns it presents, was front and center this year at the Legislature.  While legislation to increase drilling permit fees and impose additional restrictions on operations did not pass, a bill to encourage economic development of the resources associated with the shale did pass.  This report is from the West Virginia Manufacturers Association: 

 

MARCELLUS SHALE ECONOMIC DEVELOPMENT ACT:  For those of you who have been around the legislative process, it will not surprise you that this bill, SB 465, passed at seven minutes till midnight on the last day of session.  It seems that it is always like that with bills that are of interest to many diverse groups.  But this bill was a must for manufacturing, as it opens the door for the next generation of manufacturing in the state.  A quick synopsis of the bill follows:

·      The State Tax Commissioner is to annually compile a schedule of oil and natural gas drilling rig values and furnish this schedule to each assessor to be used as a guide to place assessed values on all oil and natural gas drilling rigs in their county.  

·      A credit for alternative fuel motor vehicles and qualified alternative fuel vehicle refueling infrastructure.  The credit is taken against the personal, business franchise and or corporate net income taxes.

·      A credit for the construction or purchase and installation of qualified alternative fuel vehicle refueling infrastructure.

·      The definition of “manufacturing” was amended to include the NAICS code of 211112, which is the code for a natural gas cracker.  A cracker is needed to obtain the derivatives from the Marcellus Shale that will provide the raw materials for new and expanded manufacturing opportunities.

·      The bill also changed the investment amounts for qualified capital investment made in the Chemical, Polymer or Steel Alliance Zones.  The amount of investment was reduced from $100 million in the ground and $50 million new investment to $20 million in the ground and $10 million in new investment when the facility uses product produced at a cracking facility.  The new investment will be valued at salvage value (5% of the qualified capital investment) for 10 years.  Land values do not qualify for salvage value treatment.

·      Amended the definition of “Qualified capital addition to a manufacturing facility to include: (1) facilities used to store, handle, process or produce raw materials for the manufacturing facility, (2) consists of a facility used to store, handle or process natural gas to produce fuel for the generation of steam or electricity for the manufacturing facility or (3) consists of a facility that generates steam or electricity for the manufacturing facility, including a facility that converts coal to a gas or liquid for the manufacturing facility’s use in hearing, manufacturing or generation of electricity.  

·      There are new reporting requirements to the Governor, and the President of the Senate and Speaker of the House regarding investments, jobs, etc., created as a result of this new program.

·      The Strategic Research and Development Tax Credit was expanded to include equipment or the design of manufacturing processes.

·      The definition of “manufacturing” in the Manufacturing Investment Tax Credit was amended to include a cracker and further provided that construction on the cracker must adhere to the WV Jobs Act.

·      There was also a provision on consumer sales and service tax for the Macy’s warehouse to be built in the eastern panhandle.

·      There is also an exemption on the purchase of services, machinery, supplies or materials, (except gasoline and special fuel) to be used or consumed in the construction, alteration, repair or improvement of a new or existing natural gas compressor station or gas transmission line of a certain size.