Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

Calculation of hard numbers for the fiscal impact of this bill is very difficult, so the DEP is endeavoring to provide the best information possible in the time allowed. There are at least 2 aspects of this bill as to which the DEP can make some estimates of its fiscal impact: termination of jurisdiction and the tax credit against special reclamation taxes. In terms of termination of jurisdiction, the legislation would reduce potential State/DEP liability by declaring that the State’s regulatory jurisdiction has ended as to a class of sites where reclamation bonds were forfeited in the past and that the State’s obligation to conduct further reclamation activities for this class of sites has ended. The DEP believes this class includes 1364 bond forfeiture sites. Land reclamation was concluded and any water draining from the sites was capable of meeting the technology–based effluent limitations that had applied to the sites as of January, 2002. The DEP has been threatened with legal action by environmental activists at a handful of these sites where they allege selenium has been found. The DEP believes it finished its job of reclaiming these sites years ago and has not assessed any of these 1364 sites for their potential to discharge selenium. The DEP is aware that mining companies have spent amounts ranging from hundreds of thousands of dollars to millions of dollars per outlet, with multiple outlets at any given site, to comply with selenium limits, with inconsistent compliance results. Should the DEP be required to treat water for compliance with selenium limits, its costs would likely be in the same range at each outlet across the 1364 sites where selenium treatment might be required. The second aspect of the legislation with potential fiscal impacts is the tax credit against the Special Reclamation Tax for companies which reclaim bond forfeiture sites or provide water treatment at them, thereby, reducing or eliminating the state’s liabilities at such sites. Because the amount of the credit the bill would grant is equal to the DEP’s own liability estimate for the work it is obligated to perform at the site, the DEP believes the tax credit should, on an overall basis, be revenue neutral. Another concern is that, if a large amount of work that would qualify for the credit would be performed in any particular period of time, there could be a short term interruption of cash flow from the special reclamation tax that could negatively impact this DEP program in the short term. We believe that this potential short term adverse effect can be mitigated in regulations the DEP is authorized by the bill to draft as well as in the DEP’s ability to control the timing of granting applications for bond release which will give rise to claims for the tax credits the bill grants.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2013 Increase/Decrease (use"-")	2014 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	0	0
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	0	0
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

There is nothing in this bill that would increase DEP costs. Passage could result in decreased liability for previously reclaimed sites. Any estimate of cost would at best be a guess because many of the 1364 sites that could lead to DEP additional liability should litigants be successful are from the 1970's and 1980's and records to determine how many outlets are involved at each site do not exist for some sites. Nor has the DEP undertaken to determine which sites might have selenium on site. However it is clear that the costs could be substantial given the costs industry is currently incurring to treat for selenium.

Memorandum

Person submitting Fiscal Note: Melinda Campbell
Email Address: melinda.s.campbell@wv.gov