Bill Summary for S 127 (2013-2014)

Summary date: 

Jul 25 2013

Bill Information:

View NCGA Bill Details2013-2014 Session
Senate Bill 127 (Public) Filed Thursday, February 21, 2013
AN ACT TO (1) PERMIT THE DEPARTMENT OF COMMERCE TO CONTRACT WITH A NORTH CAROLINA NONPROFIT CORPORATION FOR THE PERFORMANCE OF CERTAIN ECONOMIC DEVELOPMENT FUNCTIONS; (2) MODIFY THE NORTH CAROLINA BOARD OF SCIENCE AND TECHNOLOGY; (3) CREATE COLLABORATION FOR PROSPERITY ZONES; (4) REQUIRE CERTAIN LIAISONS IN EACH COLLABORATION FOR PROSPERITY ZONE; (5) STUDY COMMISSION ON INTERAGENCY COLLABORATION FOR PROSPERITY; (6) MODIFY REPEAL OF CERTAIN REGIONAL ECONOMIC DEVELOPMENT COMMISSIONS; (7) AUTHORIZE THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES TO ISSUE PERMITS ON OR AFTER JULY 1, 2015, FOR OIL AND GAS EXPLORATION AND DEVELOPMENT ACTIVITIES IN THE STATE, INCLUDING THE USE OF HORIZONTAL DRILLING AND HYDRAULIC FRACTURING TREATMENTS FOR THAT PURPOSE; AND (8) PROVIDE A TAX FOR THE SEVERANCE OF ENERGY MINERALS FROM THE SOIL OR WATER OF THE STATE, REPEAL OUTDATED OIL AND GAS TAX STATUTES, AND AUTHORIZE THE SUSPENSION OF PERMITS FOR FAILURE TO FILE A RETURN FOR SEVERANCE TAXES.
Intro. by Brown.

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Bill summary

Conference report makes the following changes to the 5th edition.

Amends both the long and short titles of this bill.

Amends new GS 143B-431A to clarify that it is the General Assembly's intent that the Department of Commerce (Department) develop a plan to work cooperatively with nonprofit corporations (was, that the Department be given flexibility and discretion in developing a plan to work cooperatively with nonprofit corporations) in the development of a comprehensive, long-range strategic plan for economic development through public and private means. Also states that it is the General Assembly's intent that the Department work to develop the plan while safeguarding programmatic transparency and accountability as well as the fiscal integrity of economic development programs of the state.

Amends subsection (c) of this section, which establishes the Economic Development Oversight Committee (Committee). Provides that the Committee is to have seven members (was, seven ex officio members). Removes the Director of the Office of State Budget and Management as a member of the Committee. Adds to the Committee one member appointed jointly by the Speaker of the House ofRepresentatives (Speaker of the House)and the President ProTempore of the Senate (President Pro Tem).

Amends the conditions that the North Carolina nonprofit corporation with which the Department contracts must meet. Requires that the board of the contracting nonprofit corporation must be composed of 17 voting members (was, 15), with four members appointed by the Speaker of the House (was, three) and four members appointed by the President Pro Tem (was, three). Specifies that the Governor, the Speaker of the House, and the President Pro Tem must each select members to reflect the diversity of the state's geography (was, only specified that there was to be geographic diversity represented among the Governor's appointees). Deletes additional requirements that specified that the Speaker of the House and the President Pro Tem appoint no more than onemember each from a metropolitan area. Also deletes requirement that one of the Speaker's appointmentsbeon the recommendation of the North Carolina Chamber of Commerce and thatone of the President Pro Tem's appointments be on the recommendation of the NC Federation of Independent Businesses.

Amends GS 126-5 to include liaisons to the Collaboration for Prosperity Zones set out in GS 143B-28.1 for the Departments of Commerce, Environment and Natural Resources, and Transportation as exempt from the State Personnel Act, GS Chapter 126.

Amends GS 143B-472.81 to delete as a membership requirementfor the North Carolina Board of Science, Technology, and Innovation that one of the six members from private industry is also a member of a state or federally recognized North Carolina Indian Tribe.

Amends new GS 143B-28.1, which creates collaboration for prosperity zones, and divides the state into eight zones to make changes in assigning counties to one of the eight zones.

Modifies the repeal of the statutes creating regional economic development commissions. Provides that if Senate Bill 402 (Appropriations Act of 2013), 2013 Regular Session of the General Assembly, becomes law and appropriates money to the Department for allocation to the regional economic development commissions, then the Department is to retain disbursements to the commissions occurring on or after January 1, 2014, and those funds will be available to the Department to use or allocate to a North Carolina nonprofit corporation for costs incurred on or after that date that are associated with state marketing and rebranding functions. Provides that if Senate Bill 402 becomes law, Section 15.28(g) of that act is amended to provide that the section becomes effective December 31, 2013 (was, June 30, 2014). Makes a conforming change to the title of Section 15.28.

Mandates that all rules required to be adopted by the Mining and Energy Commission, the Environmental Management Commission, and the Commission for Public Health to create a modern regulatory program for managing oil and gas exploration and development activities in the state, including the use of horizontal drilling and hydraulic fracturing, be adopted no later than October 1, 2014, as provided in Section 2(m) of SL 2012-143. Effective July 1, 2015, authorizes the Department of Environment and Natural Resources (DENR) and the Mining and Energy Commission to issue permits for using horizontal drilling and hydraulic fracturing for oil and gas explorations and development in the state; however, prohibits DENR and the Mining and Energy Commission from issuing permits until all the rules required to be adopted under Section 2(m) of SL 2012-143 have become effective.Makes conforming changes, repealingSection 3(d) of SL 2012-143 and providing that if Senate Bill 76, 2013Regular Session, becomes law, Section 1(c) of that act is repealed.

Effective July 1, 2015, and applying to energy minerals severed on or after that date, addsnew Article 5I, Severance Tax, to GS Chapter 105.

Defines 28 terms as they are used in this Article.

Provides that there is an excise tax, to be known as a "severance tax," levied on the privilege of engaging in the severance of energy minerals from the soil or water of this state. Defines severance as the extraction or other removal of an energy mineral from the soil or water of this state. Provides that the severance tax is levied on all energy minerals severed from the soil or water, when the minerals are sold or consumed, whichever comes first. States that the purpose of this act is to provide revenue to administer and enforce the provisions of this Article; to administer the state's natural gas and oil reclamation regulatory program; to meet the environmental and resource management needs of this state; and to reclaim land affected by exploration, drilling and production of natural gas and oil.

Provides criteria for calculating the amount of the severance tax. Calculations includeuse of the applicable market percentage rate as a multiplier, and the section defines the term applicable market percentage rate. Includes additional information regarding the use of the market percentage rate in calculations for determining the amount of the severance tax for gas, oil, and condensates (defines condensates as liquid hydrocarbon that is or can be recovered from gas by a separator or other means). Exempts on-site use from the tax imposed under this Article. Defines on-site use as the severance of energy minerals from land or water owned legally or beneficially by the producer, used by the producer on the producer's homestead, and having a yearly cumulative market value that is not greater than $1,200. Provides that if the amount exceeds a value of $1,200 during any year, any further severance of energy minerals on-site will be subject to the tax imposed by this article.

Provides that severance taxes are payable when a return is due anddeclares that returns are due on a quarterly or monthly basis. Requires that returns be filed by the producer of the energy mineral with the Secretary of Revenue (Secretary) on a form and in a manneras prescribed by the Secretary. Provides additional specifications regarding the filing of returns, the payment of the tax, and claiming the exemption for on-site use.

Requires a producer who fails to file a return as required under this Article to file a bond or an irrevocable letter of credit with the Secretary.

Specifies how the Secretary is to allocate the tax levied in this Article. Prohibits expending the allocated funds until they have been appropriated by the General Assembly.

Provides that if any entity does not report a return or pay any tax or fee required by this Article for 90 days after it is due, the Secretary will inform the Secretary of Environment and NaturalResources. Directs the Secretary of Environment and NaturalResources to suspend the entities' permits and to immediately notify an entity by mail of a suspension under this section.

Prohibits a city or county from imposing any tax on any activities involved with the production, business, or ownershipof energy minerals in the state. However, this provision does not prevent the taxation of the property in accordance with Article 11 of GS Chapter 105 (listing, appraisal, and assessment of property collection of taxes on property).

Amends GS 105-259 to authorize the disclosure of information identifying an entity that is liable for the severance tax to DENR, to enable DENR to notify the entity regarding its severance tax liability.

Repeals GS 113-387 (regarding tax assessments on the production of crude oil and gas) and GS 113-388 (collecting the assessments on crude oil and gas).

Repeals GS105-130.5(a)(11) (regarding the percentage depletion allowance under the tax code formines, oil and gas wells, and other natural deposits). Effective for taxable years that begin on or after July 1, 2015.

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