Coal Tattoo

Coal industry avoiding major share of taxes?

Gazette photo by Chip Ellis

Well, Coal Tattoo is back up and running … and let’s start the week off by pointing to a fascinating op-ed commentary in this morning’s Gazette, in which former Gazette reporter Tom White and Ted Boettner, executive director of the West Virginia Center on Budget and Policy, report:

The state Tax Department’s Property Valuation Training and Procedures Commission has declined to act on a request by the Assessors Association to develop a plan to appraise and tax coal under lease by coal producers.

Citing information from Nick Casey, lawyer for the state Assessors Association, White and Boettner explain:

Appalachian coal often has two owners, the landholder and the coal producer or operator. The landholder has a real estate interest and can collect a royalty (on average about 6 percent of revenue from clean tons mined). Under the current system, the landholder pays taxes on coal reserves based upon a formula centered around that royalty interest. This process is called the Reserve Coal Valuation Model, and it was developed after lengthy litigation over reserve coal taxation in the 1990s. Active coal currently being mined also is valued based upon the royalty rate to the landowner under a different rule.

But Casey said the lease-holder, or coal producer of active coal, also has a personal property interest in coal the company is mining. This is called chattel real interest. The term refers to personal property associated with leased land. It is supposed to reflect the value associated with that property interest over a period of time.

Casey said that if the royalty rate for coal averages about 6 percent, then logically the state is failing to appraise, assess and tax on the remaining 94 percent of the revenue from production of that coal — the chattel real. He said that the current tax structure for producing oil and gas currently appraises and assesses taxes on both the royalty land-owner and the chattel real gas producer. Two property owners, two tax bills. But under the current system, where there are two owners of producing coal property, there is only one tax bill to the landowner.

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Revised report: Coal still costs W.Va. government

Gazette photo by Chip Ellis

Following up on critics from the coal industry and from industry boosters at Marshall University, the folks at the West Virginia Center on Budget and Policy and Downstream Strategies have revised their major report, The Impact of Coal on the West Virginia State Budget.

The result?

Their analysis shows that, overall, coal still costs the state budget — but not nearly as much as the initial report issued in June had estimated. The new figure is an annual cost to West Virginia’s government budget of more than $42 million. That’s compared to the $97.5 million estimate in the original report.

Downstream Strategies and the West Virginia Center on Budget and Policy revised their findings based on a review of criticism leveled at the original report by Cal Kent and Kent Sowards of Marshall University. You can read that criticism here and the original report here.

Ted Boettner, executive director of the Center, said:

We agreed with a number of their suggestions, however, several are simply mistaken and fail to acknowledge many of the costs associated with coal mining. After incorporating their suggestions that were valid, we found that the net impact of the coal industry for the state budget in fiscal year 2009 remains negative, meaning that the industry imposed an overall cost on the state and its taxpayers.

Among the changes made in the analysis:

— Local property taxes that impact the state budget — and not just state property tax revenues from coal — were added to the report. That added $31.5 million to the estimate of direct coal industry revenues.

— The “purchase for resale” tax exemption should not have been included in the report, as most other states do not tax these intermediate inputs and the exemption is uniform across all industries. This $85.5 million was deducted from the original report’s estimates of expenditures by the state for coal.

— The costs of thin-seam coal tax credits — $61.7 million — was added to the expenditures supporting the coal industry.

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Gazette photo by Chip Ellis

Yesterday, anti-coal activists were busy with their latest publicity stunt, dumping 1,000 pounds of rock and dirt from West Virginia in front of  EPA headquarters in Washington, D.C.  And today, the folks from the industry front group FACES of Coal continued their own PR diversion campaign as they departed Charleston for a big pro-coal rally in the nation’s capital tomorrow.

But deep in the bowels of the West Virginia Capitol, there was some major good news out of legislative interim meetings here in West Virginia this week: Finally, a discussion at the statehouse about the costs and benefits of the state’s coal industry.

My buddy Larry Messina at The Associated Press has a report on the meeting in today’s Gazette:

State lawmakers were asked Monday to consider increasing not only the state’s main tax on coal but also the fees and fines paid on the trucks that haul that natural resource.

The recommendations were among a half-dozen from the authors of a recent report that concluded that the coal industry is costing the state budget more than it provides.

The West Virginia Center for Budget and Policy and the firm Downstream Strategies presented their findings to a House-Senate legislative interim subcommittee. Their June report estimated that while revenues from the industry topped $600 million during the 2009 budget year, it cost the state $97.4 million more.

The costs included $93 million spent repairing roads damaged by heavy coal trucks, and $173 million worth of tax credits and exemptions.

The story continued:

The report drew some of its revenue-related data from a February study of the state’s coal economy by researchers at Marshall and West Virginia universities. The lead Marshall contributor to that study warned lawmakers Monday of flaws in the subsequent report.

Cal Kent, Marshall’s vice president of business and economic research, said the June report omits property tax revenues and discounts the overall impact of severance-tax proceeds. Kent also took issue with the way it counted tax exemptions as costs to the state budget.

All told, Kent estimated that the industry provides $490 million more in revenues than costs.

Kent and Marshall researcher Elizabeth Eastham also provided figures showing that West Virginia levies the heaviest tax burden on its coal industry when compared to a dozen other coal-producing states, including all five of its neighbors.

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The AP’s Vicki Smith has the jump this morning on the results of the final portion of the legislatively mandated study of coal-slurry injection practices in West Virginia.

I’ve posted Vicki’s story on our Mining the Mountains site, and you can read the final report from West Virginia University researchers here.

Here’s the bottom line:

The process for development of analyses of what is known about water contamination from coal slurry injection and known, probable, or potential effects upon human health involves a comparison of the known toxicity of coal slurry components “downstream” (either riverine or underground) water contamination, compared to known or suspected human toxicities from the peer-reviewed literature. There are innumerable considerations in this process, and no effort can be complete. For example, the current state of science measures inorganic compounds and elements better than organics, and provides a much richer data base on their health consequences. This is one of many immutable “data gaps” that we identified in this investigation. The absence of sufficient data implies a need to learn; it does not necessarily imply the absence or presence of a problem or a means to do assessments in the absence of data.

Vicki put it this way in her story:

Legislators have waited 31/2 years and spent more than $220,000 to learn whether coal slurry pumped into abandoned underground mines is dangerous to people who live nearby. The answer? No one knows.

A new 418-page report by researchers at West Virginia University concludes that while the wastewater from cleaning coal could potentially affect water supplies, wells and public health, there’s no proof it has or will.

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Update: The race to stand up for coal


Well, the race to stand up for coal continues at the West Virginia Legislature …

Yesterday, the Coal Association lobbyists gave their pitch about mining permits to the special committee set up by House Speaker Rick Thompson.

There are reports out from Larry Messina at The Associated Press and Ry Rivard at the Daily Mail. Both stories included a comment from coal lobby Vice President Jason Bostic that the industry believes EPA’s review of Clean Water Act permits is an:

… Intent to rob the state of its sovereignty …

What does that even mean? Does Bostic want West Virginia to secede from the union?

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speakerpic.jpgWest Virginia’s House of Delegates Speaker, Rick Thompson, just issued a press release announcing the House had formed a new committee to “closely examine all issues surrounding the coal mine permitting process.”

Thompson said:

For the past several months, I have been discussing my concern regarding the delays in the mine permitting process. This committee will work to monitor the status of pending mining permits, seek timetables for the issuance of permits and strive to better understand what issues need to be resolved to achieve consistency and uniformity throughout the permitting process.

Take a look at that language — Speaker Thompson isn’t calling for timetables for decisions to be made on whether permits will or won’t be issued. He wants timetables for the issuance of permits.

This committee was created by the House with the passage on Friday of House Resolution 14,  which said the panel would work on:

… Ascertaining the status of all coal mining permits that are pending issuance in West Virginia and the role each agency has in the issuance of those permits, obtaining specific timetables for the issuance of coal mining permits in West Virginia, achieving consistency and uniformity throughout the permitting process, recommending those projects and sectors that provide the best opportunity for long term job creation and economic growth with obtaining these coal mining permits  …

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W.Va. Legislature: The race to stand up more for coal


I guess West Virginia Gov. Joe Manchin is going to have to try a little bit harder … his statement in last night’s State of the State address just wasn’t enough:

We must continue to stand up for our coal miners and their families! We are not asking for a handout. All we’re asking for is the permission to work!

chafin.JPGIt seemed like Senate Majority Leader Truman Chafin, D-Mingo, was going to win the award for standing up the tallest to defend the coal industry, with his statements, blasting the Obama administration, before the session even started:

They have a whole new attitude about the coal industry. We just have to stand united.

But, judging from this report today in the Beckley Register-Herald,  Chafin has fallen behind to Delegate Steve Kominar, D-Mingo, and Sen. Ron Stollings, D-Boone.

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Gov. Manchin urges W.Va. to ’stand up for coal’


We must continue to stand up for our coal miners and their families! We are not asking for a handout. All we’re asking for is the permission to work!

That’s the take-home message as far as coal is concerned from West Virginia Gov. Joe Manchin’s 2010 State of the State address, which wrapped up just a little while ago down the street at the Capitol.

(The exclamation marks were actually in the prepared text distributed by the governor’s office.)

It’s obviously not especially surprising, given the strongand sometimes over the top — stance Gov. Manchin has taken as the state’s mining operators try to fend off any effort by the Obama administration to more closely police mountaintop removal.

But I wonder why Manchin didn’t make even a tiny step toward the environmental community (and the growing scientific consensus about mountaintop removal’s negative effects) …  He could have easily done so by talking a little bit about the new effort over at his Department of Environmental Protection to step in and come up with some new limits on the downstream water quality damage strip-mining is allowed to do. A mention by the governor might have emphasized to the Obama administration and EPA that WVDEP Secretary Randy Huffman is serious about embracing the future.

Instead, the governor stuck to his previous themes, with statements like this:

Despite the fact that half of our nation’s electricity is generated by coal, and that our national economy depends on this abundant, reliable and affordable energy, some want to villainize this resource that helped us win two world wars and built the greatest country in the world.

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West Virginia Gov. Joe Manchin is still delivering his 2010 State of the State address … but here’s part of it where he touts the state’s efforts to improve mine safety:

Four years ago, I made a pledge to the Sago and Aracoma families that their loved ones would not have died in vain.  Just days after those accidents, we passed our mine safety act that mandated crucial safety upgrades.

We demanded rapid response, tracking and communication with our miners, and additional oxygen supplies. West Virginia had a record-low number of mine fatalities last year, but even one death is far too many.

We are reporting and responding to accidents more rapidly; we have installed more than 300 emergency rescue chambers; we have positioned additional breathing devices, and we are better equipped to communicate with and track those working underground.

No other state has met similar requirements.

As Coal Tattoo previously pointed out, West Virginia in 2009 actually tied  the record low in coal-mining deaths — with 3, the same number as died in on-the-job accidents in 2005.

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Manchin on Coal: Updated for 2010


Last year, Coal Tattoo was less than a week old when West Virginia Gov. Joe Manchin delivered his State of the State address for 2009.  I was just beginning to learn how to fit blogging in with my daily print duties for the Gazette. But I managed to do a couple of posts that focused on coal portions of the governor’s speech. See them here, here, here and here.

Well, here we are, awaiting Gov. Manchin’s speech tomorrow night, his 2010 State of the State address. It starts at 7 p.m. and will be broadcast live on the Web. I hope to do some blogging about it, as well as writing something for our print edition about whatever the governor has to say about coal, energy and other environmental and workplace safety issues. And maybe I’ll find time to tweet about it too, so if you use Twitter, follow me.

Anyway, I thought I would update the post below, which was one that I did in 2009 to remind myself of what Gov. Manchin had previously said about coal in his earlier State of the State addresses. I’ve added his comments from last year to this … anybody care to guess or predict what he’ll say this year?

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Manchin seeking to tighten his new energy law


As a special session of West Virginia’s Legislature continues, lawmakers have passed two resolutions expressing their support for the coal industry, saying that:

… Recent events at the federal level, most notably the debate over “cap and trade” legislation in Congress and obscure regulatory actions by the Environmental Protection Agency, are casting a shadow of doubt and uncertainty over the future of the coal industry in West Virginia…

But lawmakers are also examining a little-noticed bill sent to them by Gov. Joe Manchin to make several changes in the Manchin energy bill passed earlier this year. The change are in HB 408 and the companion SB 4008.

Recall that Manchin’s bill was intended to require utilities in West Virginia to get a share of their power from alternative energy sources. But, some critics noted that the governor’s definition of alternative energy was so broad as to include just about anything.

The new bill is aimed at narrowing this definition a little bit, according to Manchin communications director Matt Turner. “We want people to use newer technology,” Turner said.

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Coalfield citizens got their say about the West Virginia Department of Environmental Protection’s study of coal-slurry injection, and they didn’t hide their feelings about the agency’s efforts.

Joe Stanley, one of the representatives of the Sludge Safety Project , told members of the Legislature’s joint committee on water resources:

DEP has shown they are incompetent to regulate the injection of coal slurry.

DEP Secretary Randy Huffman, of course, has admitted that his agency’s study lacked adequate information to figure out if coal-slurry injection is polluting water supplies. Of course, agency officials permitted this practice for years without requiring the sort of information from coal operators that might be needed to answer such questions.

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Well, the special session of West Virginia’s Legislature is over. And Gov. Joe Manchin managed to get lawmakers to fix technical problems with his big energy bill — and he convinced the House leadership to go ahead and pass his post-mining land use legislation, despite serious questions about both bills.

The energy bill  phases in a requirement that electric utilities get part of their power from alternative energy sources … But, of course, the definition used in the bill is so broad that critics say it’s practically meaningless.

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A couple of readers have asked about a few unusual looking coal-related items in the new state budget approved by the West Virginia Legislature. So I thought I’d check on those items and pass on what I found out.

First,  there’s the $15,000 listed under the Board of Coal Mine Health & Safety’s Technical Review Committee for the “Coal Forum.”

There’s an e-mail circulating around that blasts this appropriation to “a non-existent thing called Coal Forum.” Well, there is such a thing as the Coal Forum. But as you might guess, it’s pretty much an arm of the mining industry, an organization set up to promote coal. And, it’s annual appropriation of tax dollars is actually being cut, from $25,000 in the current year.

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It’s official (at least for now) — West Virginia Gov. Joe Manchin has not included his proposed power line tax on the call for the upcoming special legislative session.

The official list of bills to be considered during the special session is posted here.

Word of this also came in from The Power Line blog, which cited a comment from West Virginia Blue:

Yes, indeed, it appears that the bill is not going to be on the special session agenda. Here’s an update via FB (last night) from Delegate Tim Miley:

“Tim Miley at 8:40pm May 28
The energy transmission tax bill will NOT be on the call for the special session, at least as of 400 pm today-based upon a meeting that I attended in Speaker Thompson’s office.”

So, at some point yesterday the Speaker must have let the Gov. know there still isn’t enough support for this bill to pass and then they agreed it was pointless to put on the agenda.

Gov. Manchin’s continued enthusiasm for this bill shows the need for vigilance in educating our legislators about opposition to this bill and on other energy policy issues.

Thanks also to Gazette statehouse reporter Alison Knezevich, who alerted me to the fact that the power line bill was missing from the special session agenda dropped off at the Capitol press room earlier this evening.

It’s back — Manchin’s power line tax bill


Gazette statehouse reporter Alison Knezevich revealed today that Gov. Joe Manchin’s power line tax is among the bills that are likely to be considered during the upcoming special session.

This bill, HB 3000, died during the regular session, as I reported previously.

Manchin argues that his legislation is a way to ensure that West Virginians benefit from construction of high-voltage transmission lines like TrAIL and PATH.

But Bill Howley, who writes The Power Line blog,  thinks the bill is a scam, and he’s offered some interesting reasons why here and here. Read his most recent post, about Manchin including this bill in the special session, here.

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Manchin’s post-mining land use bill is back


Hey folks … I’ve been pretty busy with Bayer CropScience explosion stuff the last two days, but wanted to make sure everybody was aware that West Virginia Gov. Joe Manchin’s post-mining land use legislation is back.

As the Gazette’s Phil Kabler reported, the bill is one of three that Manchin put on the call for a special session in May.

As I reported last week:

SB 375, Governor’s Post-Mining Land use bill, died in the House on Saturday night. I’ve never understood the need for this legislation in the first place. Maybe Manchin will reconsider now, and simply tell the Department of Environmental Protection to actually enforce the post-mining land use requirements of current law.  I’m told that the governor’s task force on post-mining land use issues scheduled its next meeting for 1:30 p.m. April 28 in the 6th Floor Conference Room of Building 6 at the state Capitol.

Read more here and here.

WVDEP’s Huffman goes off on Obama EPA

secretary-randy-huffman-portrait_small.jpgEriki Peterson over at West Virginia Public Broadcasting had an interesting piece today in which Gov. Joe Manchin’s Department of Environmental Protection Secretary, Randy Huffman, went off on the Obama administration’s move to take a closer look at mountaintop removal permits being issued by the Army Corps of Engineers.

Among other things, Huffman said:

“We are the environmental regulators here in West Virginia. We are the ones on the front line here. We are the ones responsible for protecting the environment. We have a very rigorous and robust regulatory program that is basically being challenged.”

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speakerpic.jpgW.Va. House of Delegates Speaker Rick Thompson and other House leaders apparently don’t want to even talk about real alternative energy sources.

Coal River Mountain Watch folks report this morning that the House Rules Committee — a small panel that controls the body’s agenda — refused to bring to the floor a resolution in support of the Coal River Wind Project.  As Coal Tattoo readers well know, this proposal would avoid blowing up some Raleigh County mountains and instead put a wind energy facility at the site.

House Concurrent Resolution 52  had 6 original cosponsors and 35 cosponsors. But House leaders sent it to committee, and then bottled it up without allowing the public to see where their elected representatives stood whether West Virginia should try to move toward a greener energy future.

Here on Coal Tattoo, we’ve had a pretty interesting discussion about the “Wind vs. Coal” debate (See posts and reader comments here, here and here). Both environmentalists who support the Coal River Wind Project and coal industry folks who either oppose or question its worth have taken part … too bad the West Virginia Legislature doesn’t want to have the same debate on the floor of the House of Delegates.

Meanwhile, though, Gov. Joe Manchin’s alleged alternative energy bill — a piece of legislation tailored to meet the needs of the coal industry — continues to move ahead. It’s up on 2nd reading in the House today.

Friends of Coal license plate bill passes Senate

foc_logo_download.jpgThis just in from The Associated Press:

 CHARLESTON, W.Va. (AP) — West Virginia motorists will be able to proclaim their trust in God every time they go for a drive under a bill passed by the state Senate.

The Senate voted unanimously Wednesday to allow a new range of specialty license plates, including one bearing the words “In God We Trust.”

Other new plates highlight nurses, volunteer firefighters, real estate agents, the Friends of Coal and the Charleston Area Medical Center Women’s and Children’s Hospital. The bill also authorizes a motorcycle license plate for the Patriot Guard Riders, an organization that attends funerals of U.S. military personnel.

The specialty plates require a $10 fee during the application process, and a $15 annual fee after that. The bill now goes before the House of Delegates.