HB 3142 AND HB 3144
THE COAL INDUSTRY
By Jason Bostic
Two of the House bills passed during the 2019 legislative session will have a direct impact on West Virginia’s coal industry.
HB 3142 creates a severance tax reduction on thermal and steam coal, and HB 3144 provides a coal tax rebate program that
assists companies with purchasing new equipment and making real property improvements.
HB 3142 HB 3144
SENATE: 19-12 HOUSE: 82-17 SENATE: 24-9 HOUSE: 84-13
HB 3142 reduces the coal severance tax rate on thermal and
steam coal from 5 percent to 3 percent over a period of three
years. The first reduction of 0.35 percent takes effect on July
1, 2019; the second reduction of an additional 0.30 percent
will occur in 2020; and the final reduction of 0.35 percent
will be effective in 2021.
Lowering the severance tax rate on steam coal will allow West
Virginia mines to compete with coal mined in other states that
have no severance tax. Reducing the severance tax on steam coal
will also help power plants that use West Virginia coal dispatch
more often, as the cost of fuel impacts the ability of a power
plant to sell its electricity production in regional power markets.
The reduction in severance tax rates applies only to the state
and general revenue portion of the severance assessment. The
county and local portion of the collections will stay the same.
HB 3142 went into effect on June 7, 2019. HB 3144 establishes a process where a qualified company can
request a rebate on already paid severance taxes based on 35
percent of the new investment, which includes new machinery
and infrastructure improvements. The rebate can be up to 80
percent of the amount of the severance taxes collected on the
increased coal production that is attributable to the new in-
vestment. The rebate on the severance tax applies only to the
state and general revenue share of the severance.
This legislation, which was widely supported by the Legis-
lature, will allow the coal industry in West Virginia to re-tool
and upgrade after a decade of stymied investment and lost
production. This new investment is critical to maintaining
production, employment and tax revenues from the industry
because currently developed reserves are being depleted and
existing preparation plant and transportation infrastructure
is aging.
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SPRING 2019
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