H. B. 2602
(By Mr. Speaker, Mr. Chambers, and Delegates Kiss,
Fragale, Gallagher, Collins, Fleischauer and Rowe)
[Introduced February 21, 1995; referred to the
Committee on Finance.]
A BILL to amend chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, by adding
there a new article, designated article thirteen-i, relating
to the provision of tax credits for coal producers,
transporters, public utilities or other persons; relating to
the purchase of allowances for the utilization of coal
consistent with the limitations imposed by Title IV of the
Clean Air Act amendments of one thousand nine hundred
ninety; definitions; the calculation and administration of
the tax credits; and savings clause.
Be it enacted by the Legislature of West Virginia:
That chapter eleven of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article thirteen-i, to
read as follows:
ARTICLE 13I. ECONOMIC STIMULUS ALLOWANCE TAX CREDIT ACT.
§11-13I-1. Short title.
This article may be cited as the "Economic Stimulus
Allowance Tax Credit Act."
§11-13I-2. Legislative findings and purpose.
The Legislature finds that the encouragement of economic
activity by the state's businesses relating to the mining,
transport and utilization of West Virginia coal; the resultant
enhancement of revenues accruing to the state; the promotion and
preservation of jobs in the coal industry and in industries
supplying and otherwise related to the coal industry and the
general economic activity resulting therefrom; and the
amelioration of the effects of the production, transportation and
utilization of West Virginia coal on the environment are all in
the public interest and promote the general welfare of the people
of this state consistent with prudent development of the state's
The Legislature further finds that most coals produced in
West Virginia for electric utility steam generation are unable to
meet the sulfur dioxide emission requirements that will result
due to implementation of Title IV of the Clean Air Act Amendments
of 1990, without the use of emission control technologies or the
acquisition of sulfur dioxide emission allowances to enable such
coals to be utilized consistent with the national program of
sulfur dioxide emission reductions created by that Title; that the national emission allowance market has not developed
sufficiently to permit the economic efficiencies it promises to
be adequately realized, resulting in actual and potential
detriment to coals produced in West Virginia as well as to the
ultimate electric consumers of West Virginia coals used in the
electric utility industry; that promotion of a more active and
vital market for emission allowances is consistent with the broad
interests of the state of West Virginia stated herein; and that
encouragement of emission allowance purchases and sales related
to the use of West Virginia coals will benefit the economy of the
state and the well-being of its citizens and industries.
Further, the Legislature finds that the present
appropriation of funds to treat water resources in West Virginia
that have been degraded as a result of acid mine drainage is
insufficient to meet the need for adequate treatment of said
water resources; that the continuation of mining in coal seams
that contain or disturb acid producing materials is adverse to
the protection of the environment in West Virginia; and that the
cost of restoring said water resources is to be borne largely by
the mining industry.
In order to encourage economic activity relating to the
production, transportation and utilization of coal within the
state, to enhance the economic vitality of the national emission
allowance market, thereby to increase employment and general economic development and to restore water resources that have
been damaged by acid mine drainage, there is hereby provided a
tax credit for coal allowance purchases relating to the
limitations imposed by Title IV of the Clean Air At Amendments of
(a) General. -- When used in this article, or in the
administration of this article, the terms defined in subsection
(b) shall have the meanings ascribed to them by this section,
unless a different meaning is clearly required by either the
context in which the term is used or by specific definition.
(b) Terms defined. --
(1) "Coal" means and includes any material composed
predominantly of hydrocarbons and carbon in a solid state and
includes, but is not limited to, all materials commonly known as
coal, bituminous coal, anthracite coal, lignite, brown coal, peat
(2) "Eligible taxpayer" means any company, partnership or
person engaged in the production, transfer or utilization of coal
and specifically includes coal operators, coal transporters,
public utilities and any other person or entity engaged in the
production, transfer or utilization of coal.
(3) "Partnership" includes a syndicate, group, pool, joint
venture or other unincorporated organization, through or by means of which coal is produced, transferred or utilized for commercial
use. "Partner" includes a member of such a syndicate, group,
pool or joint venture organization.
(4) "Person" or "company" are herein used interchangeably
and include any individual, firm, partnership, mining
partnership, joint venture, association, corporation, trust or
any other group or combination acting as a unit and the plural as
well as the singular number, unless the intention to give a more
limited meaning is declared by the context.
(5) "Production" for the purpose of this article means and
includes the initial severance and extraction of coal in place,
from a seam within this state or from the waste or residue of
prior mining located within this state.
(6) This "state" means the state of West Virginia.
§11-13I-4. Qualification for credit; amount of credit.
(a) Qualification for credit. -- An eligible taxpayer
qualifies for tax credits pursuant to this article upon
demonstrating that it:
(1) Has purchased or otherwise has obtained rights to
emission allowances created pursuant to the Clean Air Act
Amendments of one thousand nine hundred ninety, §42 U.S.C. et
seq., to enable it to produce, market or transport coal produced
in West Virginia, to enable such coal to be utilized in
accordance with the emission limitations imposed by Title IV of the Clean Air Act Amendments of one thousand nine hundred ninety;
(2) Has sold, transferred or otherwise relinquished its
legal title to the allowance or allowances for the purpose of
enabling such coal to be utilized in accordance with the emission
limitations imposed by Title IV of the Clean Air Act Amendments
of one thousand nine hundred ninety; and,
(3) The original acquisition and the subsequent sale or
transfer of said allowances have been reported to the
environmental protection agency of the United States government;
(4) Such coal purchases have been reported to the Federal
Energy Regulatory Commission for recordation on FERC Form 423 by
the utility recipient of said coal.
(b) Allowance of credit. -- There shall be allowed to
eligible taxpayers a credit against the taxes imposed by article
thirteen, twenty-three or twenty-four of this chapter. The
amount of credit shall be determined as hereinafter provided in
(c) Calculation of credit. -- For purchases during the
period beginning the first day of January, one thousand nine
hundred ninety-five, of allowances required to meet the
limitations imposed by Title IV of the Clean Air Act Amendments
of one thousand nine hundred ninety, the amount of the tax credit shall be equal to the tons of coal produced in West Virginia
which are sold and shipped multiplied by a factor of .015, with
the resulting product multiplied by .95 of the actual average
price paid per ton for allowances required to meet the
limitations imposed by Title IV of the Clean Air Act Amendments
of one thousand nine hundred ninety, or two hundred dollars per
allowance, whichever is less: Provided, That the total credit
available under this article may not exceed the actual total cost
of the allowances obtained by the eligible taxpayer: Provided,
however, That no credit shall be given for the purchase or
transfer of emission allowances where the coal which is related
to the purchase or transfer is utilized at an electric generating
unit equipped with flue gas desulfurization technology or other
forms of combustion or postcombustion technologies designed to
reduce sulfur dioxide emissions.
(d) Severance tax not reduced. -- The amount of the annual
credit allowed does not reduce the severance tax imposed on coal
by section three, article thirteen-a of this chapter.
(e) No carryover. -- No carryover to a subsequent taxable
year or carryback to a prior taxable year shall be allowed for
the amount of any unused portion of any annual tax credit
allowance. Such unused credit shall be forfeited.
§11-13I-5. Accounting periods and methods of accounting.
(a) General rule. -- For purposes of this article, the taxpayer's taxable year shall be the same as the taxpayer's
taxable year for federal income tax purposes.
(b) Change of taxable year. -- If a taxpayer's taxable year
is changed for federal income tax purposes, the taxpayer's
taxable year for purposes of this article shall be similarly
changed. The taxpayer shall provide a copy of the authorization
for such change from the Internal Revenue Service, which its
annual return for the taxable year filed under this article.
(c) Methods of accounting. -- (1) Same as federal.-- A
taxpayer's method of accounting under this article shall be the
same as the taxpayer's method of accounting for federal income
tax purposes. In the absence of any method of accounting for
federal income tax purposes, the accrual method of accounting
shall be used unless the tax commissioner, in writing, consents
to or requires use of another method.
(2) Change of accounting methods. -- If a taxpayer's method
of accounting is changed for federal income tax purposes, his
method of accounting for purposes of this article shall similarly
be changed. The taxpayer shall provide a copy of the
authorization for such a change from the Internal Revenue
Service, with its annual return for the taxable year filed under
§11-13I-6. Acid mine drainage water treatment fund.
(a) There shall be created in the state treasury a fund known as the "Acid Mine Drainage Water Treatment Fund." The tax
commissioner shall, at least quarterly, deposit into the fund a
sum of money equal to one-eighteenth of the emission credit
granted pursuant to this article.
(b) The moneys in this special fund shall be expended solely
for the treatment of water resources adversely affected by acid
mine drainage. The expenditure of money from this fund is
intended as an additional sum of money for treatment of water
resources affected by acid mine drainage and is not to be
considered as part of any other obligation of the state of West
Virginia to collect, allocate or expend money for the treatment
of water or any other obligations of the state, including those
pursuant to the surface coal mining and reclamation act, article
three, chapter twenty-two of this code, or of the water pollution
control act, article eleven, chapter twenty-two of this code.
(c) The expenditure of moneys from this special fund shall
be made annually by the division of environmental protection and
shall be expended on projects selected by the chief of the office
of water resources in consultation with the environmental
advocate of the division of environmental protection. They
shall solicit public comment on the expenditure of moneys from
this special fund and shall consider the comments in the
selection of projects for the expenditure of moneys from the
special fund. The highest priority for projects from this fund is for sites where there is not, or does not appear to be, any
other monetary source for treatment of the water.
(a) If any provision of this article or the application
thereof shall for any reason be adjudged by any court of
competent jurisdiction to be invalid, such judgment shall not
affect, impair or invalidate the remainder of said article, but
shall be confined in its operation to the provision thereof
directly involved in the controversy in which such judgment shall
have been rendered, and the applicability of such provision to
other persons or circumstances shall not be affected thereby.
(b) if any provision of this article or the application
thereof shall be made invalid or inapplicable by reason of the
failure of the Legislature to enact any statute therein addressed
or referred to, or by reason of the repeal or any other
invalidation of any statute therein addressed or referred to,
such failure to reenact on such repeal or invalidation of any
such statute shall not effect, impair or invalidate the remainder
of the said article, but shall be confined in the operation to
the provision thereof directly involved with, pertaining to,
addressing or referring to the said statute, and the application
of such provision with regard to other statutes or in other
instances not affected by any such invalid or repealed statute
shall not be abrogated or diminished in any way.
NOTE: The purpose of this bill is to provide a tax credit
for the purchase and use of emission allowances pursuant to the
federal Clean Air Act.
This article is new; therefore, strike-throughs and
underscoring have been omitted.