HB 2301 — An Act amending the act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971, in Pennsylvania Economic Development for a Growing Economy (PA EDGE) tax credits, further providing for definitions and providing for tax credits for critical minerals extraction.

PRINTER'S NO.   3024

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 2301
                                                Session of
                                                  2026

     INTRODUCED BY FRITZ, PICKETT, OLSOMMER, RAPP AND STENDER,
        MARCH 18, 2026

     REFERRED TO COMMITTEE ON FINANCE, MARCH 19, 2026


                                       AN ACT
 1   Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
 2      act relating to tax reform and State taxation by codifying
 3      and enumerating certain subjects of taxation and imposing
 4      taxes thereon; providing procedures for the payment,
 5      collection, administration and enforcement thereof; providing
 6      for tax credits in certain cases; conferring powers and
 7      imposing duties upon the Department of Revenue, certain
 8      employers, fiduciaries, individuals, persons, corporations
 9      and other entities; prescribing crimes, offenses and
10      penalties," in Pennsylvania Economic Development for a
11      Growing Economy (PA EDGE) tax credits, further providing for
12      definitions and providing for tax credits for critical
13      minerals extraction.
14      The General Assembly of the Commonwealth of Pennsylvania
15   hereby enacts as follows:
16      Section 1.     The definition of "upstream company" in section
17   1702-L of the act of March 4, 1971 (P.L.6, No.2), known as the
18   Tax Reform Code of 1971, is amended to read:
19   Section 1702-L.    Definitions.
20      The following words and phrases when used in this article
21   shall have the meanings given to them in this section unless the
22   context clearly indicates otherwise:
23      * * *
 1      "Upstream company."    The term includes a company that is
 2   engaged in the exploration, development, manufacturing,
 3   production, processing, refining or transportation of natural
 4   gas, clean hydrogen, critical minerals, milk or products used in
 5   semiconductor manufacturing, biomedical manufacturing or
 6   biomedical research in this Commonwealth.
 7      Section 2.     Section 1791-L of the act is amended to read:
 8   Section 1791-L.    Definitions.
 9      The following words and phrases when used in this subarticle
10   shall have the meanings given to them in this section unless the
11   context clearly indicates otherwise:
12      "Qualified project facility."          Any of the following:
13          (1)   A project facility as defined in section 1711-L.
14          (2)   A project facility as defined in section 1731-L.
15          (3)   A project facility as defined in section 1751-L.
16          (4)   A project facility as defined in section 1771-L.
17          (5)   A project facility as defined in section 1793.1-L.
18      "Qualified tax credit recipient."          Any of the following who
19   have been awarded a tax credit:
20          (1)   A qualified taxpayer as defined in section 1711-L.
21          (2)   A qualified taxpayer as defined in section 1731-L.
22          (3)   A qualified taxpayer as defined in section 1751-L.
23          (4)   A qualified taxpayer as defined in section 1771-L.
24          (5)   A qualified taxpayer as defined in section 1793.1-L.
25      Section 3.     Article XVII-L of the act is amended by adding a
26   subarticle to read:
27                                SUBARTICLE G
28                        CRITICAL MINERALS EXTRACTION
29   Section 1793.1-L.    Definitions.
30      The following words and phrases when used in this subarticle

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 1   shall have the meanings given to them in this section unless the
 2   context clearly indicates otherwise:
 3      "Critical mineral."     A mineral, element, substance or
 4   material identified by the United States Department of the
 5   Interior, the United States Department of Energy or the United
 6   States Geological Survey in accordance with 30 U.S.C. § 1606
 7   (relating to mineral security), which is essential to the
 8   economic or national security of the United States, has a supply
 9   chain vulnerable to disruption and serves an essential function
10   in the production, storage or transmission of energy, defense
11   systems or advanced technologies.
12      "Produced water."     Water, brine or wastewater of any kind
13   generated at a conventional or unconventional oil or gas well
14   site.
15      "Project facility."    A facility located in this Commonwealth
16   that extracts a critical mineral from produced water and meets
17   any of the following criteria:
18           (1)   Required a capital investment of at least $1,000,000
19      to construct and place into service.
20           (2)   Required a capital investment of at least $1,000,000
21      to expand or renovate an existing facility in this
22      Commonwealth for the purpose of enabling the extraction of a
23      critical mineral from produced water.
24      "Qualified taxpayer."     A company that satisfies all of the
25   following requirements:
26           (1)   Obtains and uses produced water generated in this
27      Commonwealth to extract a critical mineral at a project
28      facility located in this Commonwealth that is placed in
29      service on or after the effective date of this section.
30           (2)   Has made a capital investment of at least $1,000,000

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 1      to construct and place the project facility into service in
 2      this Commonwealth.
 3            (3)   Has made good faith efforts to recruit and employ,
 4      and to encourage contractors and subcontractors to recruit
 5      and employ, workers from the local labor market for
 6      employment during the construction or expansion of the
 7      project facility.
 8            (4)   Ensures that construction work to place the project
 9      facility into service is performed in compliance with the act
10      of March 3, 1978 (P.L.6, No.3), known as the Steel Products
11      Procurement Act.
12   Section 1793.2-L.    Eligibility.
13      To be eligible to receive a tax credit under this subarticle,
14   a company shall demonstrate all of the following to the
15   department:
16            (1)   The company meets the requirements of a qualified
17      taxpayer.
18            (2)   The company has filed all required State tax reports
19      and returns for all applicable taxable years and has paid any
20      balance of State tax due as determined by assessment or
21      determination of the department and not subject to a timely
22      appeal.
23   Section 1793.3-L.    Application and approval of tax credit.
24      (a)   Application.--
25            (1)   A qualified taxpayer may apply to the department for
26      a tax credit under this subarticle.
27            (2)   The application must be submitted to the department
28      by March 1 for a tax credit based on the use of produced
29      water for the extraction of a critical mineral at a project
30      facility during the prior calendar year.

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 1          (3)   The application shall be submitted on a form
 2    determined by the department and shall include all of the
 3    following:
 4                (i)    Documentation sufficient to demonstrate the
 5          extraction of a critical mineral from produced water at
 6          the project facility.
 7                (ii)    Information necessary to verify that the
 8          applicant is a qualified taxpayer.
 9                (iii)    Any other information the department deems
10          necessary to administer the tax credit.
11    (b)   Review and approval.--
12          (1)   The department shall review each application
13    submitted under this section and issue a written notice of
14    approval or disapproval no later than May 1.
15          (2)   If the application is approved, the department shall
16    issue a certificate to the qualified taxpayer stating the
17    amount of the tax credit granted for the prior calendar year.
18    (c)   Availability of tax credits.--
19          (1)   The total amount of tax credits available under this
20    subarticle shall not exceed $25,000,000 in a fiscal year.
21          (2)   A qualified taxpayer may not receive more than
22    $5,000,000 in tax credits in any fiscal year.
23    (d)   Rate of tax credit.--
24          (1)   A qualified taxpayer approved under this subarticle
25    shall be eligible to receive a tax credit equal to $20 for
26    each kilogram of the aggregate total of qualifying critical
27    minerals extracted from produced water at a project facility
28    located in this Commonwealth during the prior calendar year,
29    subject to the limitation in subsection (c)(2).
30          (2)   The aggregate total shall include the combined

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 1      weight, in kilograms, of all qualifying critical minerals
 2      extracted from produced water, as verified through production
 3      documentation submitted with the application.
 4            (3)   The tax credit shall be calculated based on the
 5      total combined weight of all qualifying critical minerals
 6      extracted at the project facility, and not on a per-element
 7      basis.
 8   Section 1793.4-L.    Use of tax credits.
 9      (a)   Initial use.--Before selling or assigning a tax credit
10   under section 1793.6-L, a qualified taxpayer shall first apply
11   the tax credit against the qualified tax liability incurred in
12   the taxable year for which the credit was approved or in any of
13   the four taxable years immediately following that year.
14      (b)   Application to liability.--A tax credit under this
15   subarticle may be applied against up to 20% of the qualified
16   taxpayer's qualified tax liability incurred in the taxable year
17   for which the credit was approved or in any of the four
18   succeeding taxable years.
19      (c)   Limitation.--A qualified taxpayer that receives a tax
20   credit under this subarticle shall not be eligible to receive
21   any other tax credit provided under this act.
22   Section 1793.5-L.    Carryback and refund.
23      A tax credit awarded under this subarticle may not be carried
24   back or applied for the purpose of obtaining a refund.
25   Section 1793.6-L.    Sale or assignment.
26      (a)   Authorization.--A qualified taxpayer that retains a tax
27   credit through the end of the calendar year in which the credit
28   was approved may sell or assign the tax credit, in whole or in
29   part, if the sale or assignment is completed no later than the
30   end of the fifth calendar year following the year in which the

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 1   credit was approved.
 2      (b)   Application.--
 3            (1)   To sell or assign a tax credit under this section, a
 4      qualified taxpayer shall file an application with the
 5      department on a form specified by the department.
 6            (2)   The department shall approve the application if the
 7      department receives all of the following:
 8                  (i)    A determination by the department that the
 9            applicant has:
10                         (A)    filed all required State tax reports and
11                  returns for all applicable taxable years; and
12                         (B)    paid all outstanding State tax liabilities
13                  not subject to a timely appeal, as determined by
14                  assessment or other determination of the department.
15                  (ii)    If the proposed sale or assignment is to a
16            company that is not an upstream company or downstream
17            company, a certification from the qualified taxpayer that
18            the taxpayer has offered to sell or assign the tax
19            credit:
20                         (A)    exclusively to a downstream company for a
21                  period of 30 days following the approval of the
22                  credit under section 1793.3-L; and
23                         (B)    to an upstream company or downstream company
24                  for a period of 30 days following the expiration of
25                  the period under clause (A).
26      (c)   Approval.--Upon approval of the application under
27   subsection (b), the qualified taxpayer may sell or assign the
28   tax credit, in whole or in part.
29   Section 1793.7-L.           Purchasers and assignees.
30      (a)   Time for use.--A purchaser or assignee of a tax credit

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 1   under section 1793.6-L shall claim the credit in the calendar
 2   year in which the purchase or assignment occurs.
 3      (b)   Limitation on use.--The amount of the credit a purchaser
 4   or assignee may apply against qualified tax liabilities in a
 5   taxable year shall not exceed 50% of the purchaser's or
 6   assignee's total qualified tax liability for that year.
 7      (c)   Restriction on resale or reassignment.--
 8            (1)   A purchaser of a tax credit under section 1793.6-L
 9      may not sell or assign the purchased credit.
10            (2)   An assignee of a tax credit under section 1793.6-L
11      may not sell or assign the assigned credit.
12      (d)   Notice requirement.--A purchaser or assignee shall
13   notify the department of the identity of the seller or assignor
14   in accordance with procedures established by the department.
15   Section 1793.8-L.    Pass-through entity.
16      (a)   Election.--A pass-through entity with an unused tax
17   credit under this subarticle may elect, in writing and in
18   accordance with procedures established by the department, to
19   transfer all or a portion of the credit to the pass-through
20   entity's shareholders, members or partners in proportion to the
21   share of the entity's distributive income to which each is
22   entitled.
23      (b)   Double use prohibited.--A tax credit transferred under
24   subsection (a) may not be claimed by both:
25            (1)   the pass-through entity; and
26            (2)   a shareholder, member or partner of the pass-through
27      entity.
28      (c)   Limitation on use.--A transferee under subsection (a)
29   may not apply more than 20% of the credit against the
30   transferee's qualified tax liability for any taxable year.

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 1      (d)     Time for use.--A transferee under subsection (a) shall
 2   claim the tax credit in the calendar year in which the transfer
 3   is made.
 4      (e)     Resale and assignment prohibited.--A transferee under
 5   subsection (a) may not sell or assign the tax credit.
 6   Section 1793.9-L.    Administration.
 7      (a)     Audits and assessments.--
 8            (1)   The department may conduct an audit of any taxpayer
 9      awarded a tax credit under this subarticle to verify the
10      validity of the credit awarded.
11            (2)   If the department determines that a tax credit was
12      improperly issued, the department may issue an assessment
13      against the taxpayer. The procedures for issuance,
14      collection, enforcement and appeal of an assessment under
15      this section shall be governed by Article II.
16      (b)     Guidelines and regulations.--The department shall
17   develop written guidelines for the implementation of this
18   subarticle. The guidelines shall remain in effect until the
19   department promulgates regulations to implement the provisions
20   of this subarticle.
21   Section 1794.1-L.    Reports to the General Assembly.
22      (a)     Annual report.--Beginning in the year following the
23   first award of tax credits under this subarticle, and by October
24   1 of each year thereafter, the department shall submit a report
25   on the tax credit under this subarticle to all of the following:
26            (1)   The chairperson and minority chairperson of the
27      Appropriations Committee of the Senate.
28            (2)   The chairperson and minority chairperson of the
29      Appropriations Committee of the House of Representatives.
30            (3)   The chairperson and minority chairperson of the

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 1      Finance Committee of the Senate.
 2            (4)   The chairperson and minority chairperson of the
 3      Finance Committee of the House of Representatives.
 4      (b)   Contents.--The report shall include the following
 5   information as of the date of the report:
 6            (1)   The names of all qualified taxpayers utilizing tax
 7      credits under this subarticle.
 8            (2)   The amount of tax credits approved for, utilized by
 9      or sold or assigned by each qualified taxpayer.
10      (c)   Reconciliation report.--By May 1 of the year that is 10
11   years after the year in which tax credits are first awarded
12   under this subarticle, the department shall submit a
13   reconciliation report on the effectiveness of the tax credit
14   program to the Secretary of the Senate and the Chief Clerk of
15   the House of Representatives. The report shall include, to the
16   extent available, the following information covering the
17   preceding 10 years:
18            (1)   The name and business address of each qualified
19      taxpayer granted tax credits under this subarticle.
20            (2)   The total amount of tax credits granted to each
21      qualified taxpayer.
22            (3)   The total number of jobs created by qualified
23      taxpayers, upstream companies, downstream companies and any
24      other companies providing goods, utilities or services
25      supporting their business operations, including average
26      annual salary and hourly wage information.
27            (4)   The amount of tax paid under Article II by the
28      entities listed under paragraph (3).
29            (5)   The amount of tax withheld from employees or paid by
30      members, partners or shareholders under Article III of the

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 1      entities listed under paragraph (3).
 2            (6)   The amount of tax paid under Article IV by the
 3      entities listed under paragraph (3).
 4            (7)   The amount of tax paid under Article XI by the
 5      entities listed under paragraph (3).
 6            (8)   The amount of any other State or local taxes paid by
 7      the entities listed under paragraph (3).
 8            (9)   Any other information relevant to the economic
 9      impact of this subarticle on this Commonwealth.
10      (d)   Recommendation for changes.--If the reconciliation
11   report required under subsection (c) shows that the total amount
12   of tax credits granted under this subarticle exceeds the total
13   amount of tax revenue reported under subsection (c)(4), (5),
14   (6), (7), (8) and (9), the department shall include in the
15   report any recommendations for changes to the calculation or
16   administration of the tax credit.
17      (e)   Public access.--The reports required under this section
18   shall be public records as defined in section 102 of the act of
19   February 14, 2008 (P.L.6, No.3), known as the Right-to-Know Law,
20   and shall be posted on the department's publicly accessible
21   Internet website. The reports may not include confidential
22   proprietary information as defined in section 102 of the Right-
23   to-Know Law.
24   Section 1794.2-L.    Applicability.
25      This subarticle shall apply to the use of produced water from
26   within this Commonwealth during the period beginning January 1,
27   2027, and ending December 31, 2039.
28   Section 1794.3-L.    Expiration.
29      The authority of the department to accept applications for
30   tax credits under this article shall expire December 31, 2040.

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1     Section 4.    This act shall take effect in 60 days.




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