HB 1100 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, providing for energy and fertilizer manufacturing tax credit.

SENATE AMENDED PRIOR PRINTER'S NO.

1593 PRINTER'STHE NO.GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL Session of No.

32591100 THE2019 GENERALINTRODUCED ASSEMBLYBY OFKAUFER, PENNSYLVANIATURZAI, HOUSEMIHALEK, BILLKAIL, SessionFRITZ, TOOHIL, BERNSTINE, PYLE, STRUZZI, MOUL, KAUFFMAN, CAUSER, GREGORY, ZIMMERMAN, OWLETT AND SCHMITT, APRIL 29, 2019 REFERRED TO COMMITTEE ON FINANCE, APRIL 29, 2019 AN ACT Amending the act of No.March 4, 1971 (P.L.6, No.2), entitled "An act relating to tax reform and State taxation by codifying and enumerating certain subjects of taxation and imposing taxes thereon;

1100providing 2019procedures INTNELSON,for PUSKARIC, O'NEAL, GILLESPIE, GREINER, ROTHMAN,L, BERNSTINE, PYLE, STRUZZI, MOUL, KAUFFMAN, CAUSER, GREGORY, ZIMMERMAN, OWLETT, SCHMITT, MILLARD, GLEIM, HERSHEY, GILLEN, EVERETT, RADER, SANKEY, WARNER, RYAN, BOBACK, DIAMOND, MARSHALL, PICKETT, COOK, MASSER, HEFFLEY, DOWLING, REESE, GABLER, TOBASH AND DUSH, APRIL 29, 2019 AS AMENDED ON THIRD CONSIDERATION, IN SENATE, FEBRUARY 3, 2020 AN ACT Amending the actpayment, of March 4, 1971 (P.L.6, No.2), entitled "An act relating to tax reform and State taxation by codifying and enumerating certain subjects of taxation and imposing collection, administration and enforcement thereof;

conferring powers and imposing duties upon the Department of Revenue, certain employers, fiduciaries, individuals, persons, corporations and other entities;

prescribing crimes, offenses andandations penalties," providing for energy and fertilizer manufacturing tax credit.

"Ammonia." A compound of nitrogen and hydrogen, NH3, that is <-- a colorless gas with a characteristic pungent smell that dissolves in water and gives a strongly alkaline solution.

"Gallon." A United States liquid gallon equal to a volume of <-- 231 cubic inches and equal to 3.785411784 liters or 0.13368 cubic feet, where volumetric measurements made at ambient flowing conditions are typically adjusted for composition and to standard conditions using established industry standard practices.

"FERTILIZER." A CHEMICAL PRODUCT DERIVED FROM PETROCHEMICALS <-- WHICH IS ADDED TO SOIL OR LAND TO INCREASE FERTILITY.

20190HB1100PN3259 - 2 - "NATURAL GAS." AS DEFINED IN 58 PA.C.S.

§ 2301 (RELATING TO DEFINITIONS).

20190HB1100PN1593 - 2 - (3) An unincorporated entity subject to section 307.21.

"Qualified product." Methane used in creation of ammonia, <-- methanol and urea.

"PETROCHEMICAL." CHEMICAL PRODUCTS OBTAINED FROM REFINING <-- AND PROCESSING NATURAL GAS.

The term <-- does not include tax withheld under section 316.1.

(1) Purchases and uses Pennsylvania methane NATURAL GAS <-- in the manufacture of petrochemicals or fertilizers at a facility in this Commonwealth that has been placed in service on or after the effective date of this article.

(2) Had HAS made a capital investment of at least <-- $1,000,000,000 $450,000,000 in order to construct the <-- facility and place the facility into service in this Commonwealth.

(3) Has created at least 1,000 A COMBINED 800 full-time <-- equivalent jobs during the construction phase AND PERMANENT <-- JOBS in order to construct the facility and place it into service AND OPERATE in this Commonwealth.

<-- (4) HAS MADE GOOD FAITH EFFORTS TO RECRUIT AND EMPLOY, <-- AND TO ENCOURAGE ANY CONTRACTORS OR SUBCONTRACTORS TO RECRUIT 20190HB1100PN3259 - 3 - AND EMPLOY, WORKERS FROM THE LOCAL LABOR MARKET FOR EMPLOYMENT DURING THE CONSTRUCTION PHASE.

(5) HAS DEMONSTRATED THAT INDIVIDUALS EMPLOYED BY THE TAXPAYER OR ANY CONTRACTOR OR SUBCONTRACTOR FOR THE CONSTRUCTION, RECONSTRUCTION, DEMOLITION, ALTERATION OR REPAIR OF THE FACILITY HAVE BEEN PAID THE PREVAILING MINIMUM WAGE RATE FOR EACH CRAFT OR CLASSIFICATION AS DETERMINED BY THE DEPARTMENT OF LABOR AND INDUSTRY UNDER THE ACT OF AUGUST 15, 1961 (P.L.987, NO.442), KNOWN AS THE PENNSYLVANIA PREVAILING WAGE ACT.

"UNIT." ONE THOUSAND CUBIC FEET OF NATURAL GAS 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 THEREFROM AS FOLLOWS:

(1) THE AVERAGE ABSOLUTE ATMOSPHERIC PRESSURE SHALL BE ASSUMED TO BE 14.4 POUNDS TO THE SQUARE INCH, NOTWITHSTANDING THE ACTUAL ELEVATION OR LOCATION OF POINT OF DELIVERY ABOVE SEA LEVEL OR VARIATIONS IN THE ATMOSPHERIC PRESSURE.

(2) THE TEMPERATURE OF THE GAS PASSING THE METERS SHALL BE DETERMINED BY THE CONTINUOUS USE OF A RECORDING THERMOMETER INSTALLED SO THAT THE THERMOMETER MAY PROPERLY RECORD THE TEMPERATURE OF THE 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 IF INSTALLED AND NOT OPERATING PROPERLY, AN AVERAGE FLOWING TEMPERATURE OF 60 20190HB1100PN3259 - 4 - DEGREES FAHRENHEIT SHALL BE USED IN COMPUTING GAS VOLUME.

(3) THE SPECIFIC GRAVITY OF THE GAS SHALL BE DETERMINED BY TESTS MADE BY THE USE OF AN EDWARDS OR ACME GRAVITY BALANCE ANNUALLY OR AT INTERVALS AS ARE FOUND NECESSARY IN PRACTICE.

SPECIFIC GRAVITY SHALL BE USED IN COMPUTING GAS VOLUMES.

(4) THE DEVIATION OF THE NATURAL GAS FROM BOYLE'S LAW SHALL BE DETERMINED BY TESTS ANNUALLY OR AT OTHER SHORTER INTERVALS AS ARE FOUND NECESSARY IN PRACTICE.

THE APPARATUS AND THE METHOD TO BE USED IN MAKING THE TESTS SHALL BE IN ACCORDANCE WITH RECOMMENDATIONS OF THE NATIONAL BUREAU OF STANDARDS OF THE DEPARTMENT OF COMMERCE OR REPORT NO.

3 OF THE GAS MEASUREMENT COMMITTEE OF THE AMERICAN GAS ASSOCIATION, OR ANY AMENDMENTS THEREOF.

THE RESULTS OF THE TESTS SHALL BE USED IN COMPUTING THE VOLUME OF GAS DELIVERED.

"Urea." A colorless crystalline compound, H2NCONH2, that is <-- the main nitrogenous breakdown product of protein metabolism in mammals and is excreted in urine.

(a) Rate.--The tax credit shall be equal to $0.05 per gallon <-- of qualified product $0.47 PER UNIT OF NATURAL GAS that is <-- purchased and used in the 20190HB1100PN1593 - 3 - manufacturing of petrochemicals or fertilizers in this Commonwealth by a qualified taxpayer.

20190HB1100PN3259 - 5 - (2) The application must be submitted to the department by March 1 for the tax credit claimed for qualified products <-- NATURAL GAS purchased and used in manufacturing of <-- petrochemicals or fertilizers by the qualified taxpayer during the prior calendar year.

(3) The department may require information necessary to document the amount of qualified products NATURAL GAS <-- purchased and used in the manufacture of petrochemicals or fertilizers.

(2) Upon approval, the department shall issue a certificate stating the amount of tax credit granted for qualified products NATURAL GAS purchased and used in the <-- manufacture of petrochemicals or fertilizers in the prior calendar year.

20190HB1100PN1593 - 4 - (c) Application.--The tax credit shall be applied against the qualified taxpayer's liability only after all other statutory tax credits and deductions available to the qualified 20190HB1100PN3259 - 6 - taxpayer have been used.

and 20190HB1100PN1593 - 5 - (ii) in the case of a sale or assignment to a company that is not an upstream company or downstream company, a certification from the qualified taxpayer that 20190HB1100PN3259 - 7 - the qualified taxpayer has offered to sell or assign the tax credit:

(d) Notice.--The purchaser or assignee under section 1706-L shall notify the department of the seller or assignor of the tax credit in compliance with procedures specified by the 20190HB1100PN1593 - 6 - department.

(a) Election.--If a pass-through entity has an unused tax 20190HB1100PN3259 - 8 - credit, the pass-through entity may elect, in writing, according to procedures established by the department, to transfer all or a portion of the credit to shareholders, members or partners in proportion to the share of the entity's distributive income to which the shareholders, members or partners are entitled.