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Introduced Version Senate Bill 359 History

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Key: Green = existing Code. Red = new code to be enacted

FISCAL NOTEWEST virginia Legislature

2016 regular session

Introduced

Senate Bill 359

By Senators Boso, Gaunch, Blair, Palumbo, Stollings, Kirkendoll, Carmichael, Ferns, Takubo, Prezioso, Plymale, Williams, Trump, Hall and Mullins

[Introduced January 21, 2016;
Referred to the Committee on Energy, Industry and Mining; then to the Committee on the Judiciary; and then to the Committee on Finance.
]

A BILL to amend and reenact §22-3-11 of the Code of West Virginia, 1931, as amended, relating to requirements for performance bonds by operators; providing amount and method of bonding; establishing that issuance of bonds be limited to Mining Mutual Insurance Company beginning one year after it is funded; establishing purpose for bonds; requiring secretary to submit plan to allow additional entities to issue bonds; allowing secretary to issue bond without additional surety under certain circumstances; prohibiting owner from interfering with operator obligations; continuing Special Reclamation Fund; creating and administering Special Reclamation Water Trust Fund; creating requirements for tax credits for operators reclaiming or remediating sites; allowing Tax Commissioner to promulgate rules regarding tax credits; establishing special reclamation tax rates; establishing review by Legislature of special reclamation tax; establishing secretary’s duties for special reclamation program; establishing Tax Commissioner’s duties for special reclamation tax; prohibited acts; establishing liability for special reclamation tax; and requiring approval from federal agency before implementation of section if necessary.

Be it enacted by the Legislature of West Virginia:


That §22-3-11 of the Code of West Virginia, 1931, as amended, be amended and reenacted  to read as follows; 


ARTICLE 3. SURFACE COAL MINING AND RECLAMATION ACT.


§22-3-11.   Performance Bonds; amount and method of bonding; bonding requirements; continuation of special reclamation tax and fund; prohibited acts; bond liability.

(a) Upon the funding of Mining Mutual Insurance Company, as provided in section eight, article twenty-g, chapter thirty-three of this code, each operator shall furnish a bond for performance payable to the State of West Virginia and conditioned upon faithful performance of all the requirements of this chapter and the permit. The bond shall cover that area of land within the permit area upon which the operator will initiate and conduct surface coal mining and reclamation operations within the initial term of the permit. As succeeding increments of surface coal mining and reclamation operations are to be initiated and conducted within the permit area, the permittee shall file an additional bond or bonds to cover such increments in accordance with this section. The amount of the bond required for each bonded area shall depend upon the reclamation requirements of the approved permit; shall reflect the probable difficulty of reclamation giving consideration to such factors as topography, geology of the site, hydrology, and revegetation potential, and shall be determined by the regulatory authority. The amount of the bond shall be sufficient to assure the completion of the reclamation plan if the work had to be performed by the State of West Virginia in the event of forfeiture and in no case shall the bond for the entire area under one permit be less than $10,000.

(b) Bonds meeting the requirements of this section may only be issued by the Mining Mutual Insurance Company; provided, however, that for a period of no more than one year following the funding of Mining Mutual Insurance Company, as provided in subsection (a), operators may meet the bonding requirements of this section through a combination of performance bonds issued by the Mining Mutual Insurance Company and penal bonds previously furnished by the operator.

(c) Bonds issued by the Mining Mutual Insurance Company shall be used for the purpose of reclaiming mine sites forfeited by operators.  Bonds for each forfeited site shall be administered by the Mining Mutual Insurance Company to achieve reclamation at such site consistent with the reclamation plan, which may be revised by the secretary as necessary to reflect the status of mine sites at the time of forfeiture.  The secretary shall consult with state and local development authorities when revising reclamation plans in order to ensure that reclamation is conducted in a manner consistent with state and local development plans. The Mining Mutual Insurance Company shall consult with the secretary in the development of a long- range planning process for selection and prioritization of sites to be reclaimed so as to avoid inordinate short-term obligations that might jeopardize the solvency of the Mining Mutual Insurance Company. The Mining Mutual Insurance Company may use bond funds for the purpose of designing, constructing and maintaining water treatment systems when they are required for a complete reclamation of the affected lands described in this subsection. The Mining Mutual Insurance Company may also expend an amount not to exceed ten percent of the total annual assets to implement and administer the provisions of this section.

(d) The secretary shall, by January 1, 2021, submit a plan to the Legislature that allows for entities other than Mining Mutual Insurance Company to issue bonds pursuant to the provisions of this section.

(e) The secretary may accept the bond of the applicant itself without separate surety when the applicant demonstrates to the satisfaction of the secretary the existence of a suitable agent to receive service of process and a history of financial solvency and continuous operation sufficient for authorization to self-insure.

(f) It is unlawful for the owner of surface or mineral rights to interfere with persons discharging the operator's obligations to the state for the reclamation of lands disturbed by the operator.

(g) All bond releases shall be accomplished in accordance with the provisions of section twenty-three of this article.

(h)(1) The Special Reclamation Fund previously created is continued for the purpose of reclaiming sites forfeited prior to the establishment and funding of the Mining Mutual Insurance Company.  The Special Reclamation Water Trust Fund is created within the State Treasury into and from which moneys shall be paid for the purpose of assuring a reliable source of capital to reclaim and restore water treatment systems on sites forfeited prior to the establishment and funding of the Mining Mutual Insurance Company. The moneys accrued in both funds, any interest earned thereon and yield from investments by the State Treasurer or West Virginia Investment Management Board are reserved solely and exclusively for the purposes set forth in this section and section seventeen, article one of this chapter. The funds shall be administered by the secretary who is authorized to expend the moneys in both funds for the reclamation and rehabilitation of lands which were subjected to permitted surface mining operations and abandoned between August 3, 1977, and the establishment and funding of Mining Mutual Insurance Company, but where the amount of the bond posted and forfeited on the land is less than the actual cost of reclamation, and where the land is not eligible for abandoned mine land reclamation funds under article two of this chapter. The secretary shall develop a long- range planning process for selection and prioritization of sites to be reclaimed so as to avoid inordinate short-term obligations of the assets in both funds of such magnitude that the solvency of either is jeopardized. The secretary may use both funds for the purpose of designing, constructing and maintaining water treatment systems when they are required for a complete reclamation of the affected lands described in this subsection. The secretary may also expend an amount not to exceed ten percent of the total annual assets in both funds to implement and administer the provisions of this article and, as they apply to the Surface Mine Board, articles one and four, chapter twenty-two-b of this code.

(2) (A) A tax credit shall be granted against the tax imposed by subsection (i) of this section to any mine operator who performs reclamation or remediation at a bond forfeiture site which otherwise would have been reclaimed using funds from the Special Reclamation Fund or Special Reclamation Water Trust Fund. The credit authorized pursuant to this subdivision is retroactive and may be claimed for reclamation or remediation performed on or after January 1, 2012: Provided, That for reclamation or remediation performed prior to July 13, 2013, no tax credit may be granted unless a written application for the tax credit was submitted to the Tax Commissioner prior to September 1, 2014. The amount of credit shall be determined as provided in this section.

(B) The amount of a reclamation tax credit granted under this subsection shall be equal to the amount that the Tax Commissioner determines, based on the project costs, as shown in the records of the secretary, that would have been spent from the Special Reclamation Fund or Special Reclamation Water Trust Fund to accomplish the reclamation or remediation performed by the mine operator, including expenditures for water treatment.

(C) To claim the credit, the mine operator shall, from time to time, file with the Tax Commissioner a written application seeking the amount of the credit earned. Within thirty days of receipt of the application, the Tax Commissioner shall issue a certification of the amount of tax credit, if any, to be allocated to the eligible taxpayer. Should the amount of the credit certified be less than the amount applied for, the Tax Commissioner shall set forth in writing the reason for the difference. Should no certification be issued within the thirty-day period, the application will be deemed certified. Any decision by the Tax Commissioner is appealable pursuant to the provisions of the West Virginia Tax Procedure and Administration Act set forth in article ten, chapter eleven of the code. Applications for certification of the proposed tax credit shall contain the information and be in the detail and form as required by the Tax Commissioner.

(i) The Tax Commissioner may promulgate rules for legislative approval pursuant to the provisions of article three, chapter twenty-nine-a of this code to carry out the purposes of this subdivision (2), subsection (h) of this section.

(j) (1) Rate, deposits and review.

(A) For tax periods commencing on and after July 1, 2009, every person conducting coal surface mining shall remit a special reclamation tax of 14.4¢ per ton of clean coal mined, the proceeds of which shall be allocated by the secretary for deposit in the Special Reclamation Fund and the Special Reclamation Water Trust Fund.

(B) For tax periods commencing on and after July 1, 2012, the rate of tax specified in paragraph (A) of this subdivision is discontinued and is replaced by the rate of tax specified in this paragraph. For tax periods commencing on and after July 1, 2012, every person conducting coal surface mining shall remit a special reclamation tax of 27.9¢ per ton of clean coal mined, the proceeds of which shall be allocated by the secretary for deposit in the Special Reclamation Fund and the Special Reclamation Water Trust Fund. Of that amount, 15¢ per ton of clean coal mined shall be deposited into the Special Reclamation Water Trust Fund.

(C) For tax periods commencing on or after the funding of Mining Mutual Insurance Company as provided in section eight, article twenty-g, chapter thirty-three of this code, the rate of tax specified in paragraph (B) of this subdivision is discontinued and replaced by the rate of tax specified in this paragraph.  For tax periods commencing on and after the funding of Mining Mutual Insurance Company as provided section eight, article twenty-g, chapter thirty-three of this code, every person conducting coal surface mining shall remit a special reclamation tax of 15¢ per ton of clean coal mined, the proceeds of which shall be allocated by the secretary for deposit in the Special Reclamation Fund and the Special Reclamation Water Trust Fund.

(D) The tax shall be levied upon each ton of clean coal severed or clean coal obtained from refuse pile and slurry pond recovery or clean coal from other mining methods extracting a combination of coal and waste material as part of a fuel supply.

(E) Beginning with the tax period commencing on July 1, 2009, and every two years thereafter, the special reclamation tax shall be reviewed by the Legislature to determine whether the tax should be continued: Provided, That the tax may not be reduced until the Special Reclamation Fund and Special Reclamation Water Trust Fund have sufficient moneys to meet the reclamation responsibilities of the state as established in this section.

(2) In managing the special reclamation program, the secretary shall:

(A) Pursue cost-effective alternative water treatment strategies; and

(B) Conduct formal actuarial studies every two years and conduct informal reviews annually on the Special Reclamation Fund and Special Reclamation Water Trust Fund.

(k) This special reclamation tax shall be collected by the Tax Commissioner in the same manner, at the same time and upon the same tonnage as the minimum severance tax imposed by article twelve-b, chapter eleven of this code is collected: Provided, That under no circumstance shall the special reclamation tax be construed to be an increase in either the minimum severance tax imposed by said article or the severance tax imposed by article thirteen of said chapter.

(l) Every person liable for payment of the special reclamation tax shall pay the amount due without notice or demand for payment.

(m) The Tax Commissioner shall provide to the secretary a quarterly listing of all persons known to be delinquent in payment of the special reclamation tax. The secretary may take the delinquencies into account in making determinations on the issuance, renewal or revision of any permit.

(n) The Tax Commissioner shall deposit the moneys collected with the Treasurer of the State of West Virginia to the credit of the Special Reclamation Fund and Special Reclamation Water Trust Fund.

(o) At the beginning of each quarter, the secretary shall advise the Tax Commissioner and the Governor of the assets, excluding payments, expenditures and liabilities, in both funds.

(p) To the extent that this section modifies any powers, duties, functions and responsibilities of the department that may require approval of one or more federal agencies or officials in order to avoid disruption of the federal-state relationship involved in the implementation of the federal Surface Mining Control and Reclamation Act, 30 U. S. C. §1270 by the state, the modifications will become effective upon the approval of the modifications by the appropriate federal agency or official.

NOTE: The purpose of this bill is to establish requirements for performance bonds by operators; providing the amount and method of bonding; establishing that issuance of bonds be limited to Mining Mutual Insurance Company beginning one year after it is funded; establishing purpose for bonds; requiring the secretary to submit plan to allow additional entities to issue bonds; allowing secretary to issue bond without additional surety under certain circumstances; prohibiting owner from interfering with operator obligations; continuing the Special Reclamation Fund; creating and administering the Special Reclamation Water Trust Fund; creating requirements for tax credits for operators reclaiming or remediating sites; allowing Tax Commissioner to promulgate rules regarding tax credits; establishing special reclamation tax rates; establishing review by Legislature of special reclamation tax; establishing secretary’s duties for special reclamation program; establishing Tax Commissioner’s duties for special reclamation tax; prohibited acts; establishing liability for special reclamation tax; and requiring approval from federal agency before implementation of section if necessary.

This section has been completely rewritten.

Strike-throughs indicate language that would be stricken from a heading or the present law, and underscoring indicates new language that would be added.

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