HOUSE concurrent RESOLUTION 110

(By Delegates Nelson, Anderson, Zatezalo, Pethtel, Ferro, Kelly, Caputo, Shott, Harshbarger, Boggs, Miley, Criss, Gearheart, and Storch)

[Introduced March 7, 2018]

Requesting that the Joint Committee on Government and Finance comprehensively study mineral severance taxes and associated fees in West Virginia derived from the extraction of coal, oil and natural gas compared to other energy and mineral producing states throughout the country.

Whereas, West Virginia ranked fourth among the states in total energy production in 2015, producing 4.7% of the domestic energy in the United States; and

Whereas, In 2016, West Virginia was the largest producer of coal east of the Mississippi River and the second largest coal producing state after Wyoming, producing 11% of the coal in the United States; and

Whereas, In 2016, West Virginia was the ninth-largest producer of natural gas in the United States, producing almost 1.4 trillion cubic feet of natural gas; and

Whereas, Due to the abundance and value of coal, oil, and natural gas within its boundaries, many West Virginians will continue to rely in many important ways upon extraction industries for their jobs, for tangential growth, and development of this State’s economy, as well as for their contribution of the tax revenues necessary to provide good government; and

Whereas, During its current session, the Legislature has been asked to consider many proposals for law offered by and in behalf of those industries to provide support to their efforts to remain viable; and

Whereas, It is in the best interests of the citizens of this State that the Legislature consider each of these proposals carefully in order to ensure that its actions provide those industries the best opportunity to remain viable and therefore continue to provide as many jobs, economic growth and development, and tax revenues as may be possible for the citizens of this State, therefore, be it

Resolved by the House of Delegates:

That the Joint Committee on Government and Finance is hereby requested to study the economic effects of severance taxes on markets for minerals; to compare West Virginia’s severance taxes to those in other mineral producing states; and to analyze the potential benefits of altering the current severance tax structure.  The study should separately examine severance taxes on oil, natural gas, coalbed methane, and coal.  The study should examine the effect of varying the rate of severance tax on natural gas based on various factors, including, but not limited to, whether the natural gas produced is “wet” or “dry”; whether the natural gas was produced by a vertical or horizontal well; the annual output of the well from which the natural gas is produced; and the prevailing market price of natural gas.  The study should examine the effect of varying the rate of severance tax on coal based on various factors, including, but not limited to, whether the coal produced is “thermal” or “metallurgical”; whether the coal produced is consumed in West Virginia, in the United States, or is exported to a foreign country; and the prevailing market price of coal. 

Further Resolved, That the Joint Committee on Government and Finance report to the regular session of the Legislature, 2019, on its findings, conclusions, and recommendations, together with drafts of any legislation necessary to effectuate its recommendations; and, be it

Further Resolved, That the expenses necessary to conduct this study, to prepare a report, and to draft necessary legislation, be paid from legislative appropriations to the Joint Committee on Government and Finance.