West Virginia’s New Mining Bills

Potential five-year tax exemption for West Virginia mine water treatment and critical mineral development

17th March 2022

 

 

 

The West Virginia Senate passed two bills of interest to miners on Mar 10, 2022.  House Bill 4003 had the purpose of fulfilling the State's duty to maintain reasonable standards for the cleanliness and quality of the State's waters by encouraging investment in the management of mine water.  The other bill, House Bill 4025, aimed to encourage the extraction of rare earth elements and critical minerals in the state.

West Virginia State Capitol.
Photo by Billy Asbury (Unsplash)

HB 4003

This bill is consistent with the protection of public health and life, aiming for the reduction of environmental harms such as toxic substances and pollution in the waters of West Virginia.  The point of the bill is to encourage the treatment of mine drainage, addressing one of West Virginia's known environmental problems, while also clarifying which parties can enjoy the economic gains from what is increasingly looking like a profitable enterprise.

HB 4003 specifies that all funds received by the state Department of Environmental Protection from commercial benefits from mine drainage treatment must go into the agency’s Special Reclamation Water Trust Fund or be set aside into a fund for dealing with acid mine drainage.

The text of the law includes the following directions:

  • All chemical compounds, elements, and other potentially toxic materials which are found within the waters of this state and which are derived from the treatment of mine drainage, and which have economic value, can be used, sold, or transferred by the Department of Environmental Protection, or by its designee.
  • All funds received by Department of Environmental Protection shall be deposited (at the discretion of the secretary) either into the Special Reclamation Water Trust Fund (3312) or the Acid Mine Drainage Set-Aside Fund (8796) and used by said department to fulfill its obligations under this code.
    A report released in June by the state Legislative Auditor’s Office Post Audit Division warned state mine cleanup funds are nearing insolvency.
  • After a successful removal any party, other than the department, may keep the benefit, from all chemical compounds, elements, and other potentially toxic materials, which are found within the waters of this state and which are derived from the treatment of mine drainage, and which may have economic value according to the law.
Both houses in West Virginia voted in favour of HB 4003.
Figure from House Bill 4003 History

The Legislature found that:

  • The treatment of mine drainage reduces environmental harm by reducing toxic substances and pollution in the waters of the state.
  • The necessary and expensive treatment of mine drainage to remove pollution from the waters of the state and disposal of the same may produce materials that contain valuable concentrations of rare earth elements, critical materials, and other substances which may be utilized for commercial gain.
  • These materials found within the waters of the state are part of the water and can only be separated from the water with expensive and continuing investments of resources, which may last for decades.

That is why Jason Wandling, the General Counsel Director of the Office of Legal Services of the West Virginia Department of Environmental Protection, has noted that a state-issued National Pollutant Discharge Elimination System permit for discharging wastewater is required in order to treat water from mine drainage. Permit holders are responsible for ensuring that water meets quality standards before it is discharged back into the receiving streams. Prevention of contamination is always mandatory.

According the public policy of West Virginia and pursuant to the Water Pollution Control Act, the state is compelled to maintain reasonable standards of purity and quality of the waters in the state, which are consistent with public health and the protection of all forms of life. It is also the long-standing public policy of the state, pursuant to the same code, that wildlife resources should be held as a public trust by the state and protected for the use and enjoyment of its citizens.  HB 4003 intends to provide an economic incentive to drive companies towards alignment with those goals to a greater extent than current regulations demand.

HB 4025

The Senate Finance Committee on Wednesday, February 10, 2022 approved another bill aimed at encouraging the extraction of rare earth elements and critical minerals in West Virginia.  These efforts could be a long-term economic boon for the state, which is why the committee deemed that entities investing time and resources into typically-expensive treatment processes should reap the financial benefit.

REEs are used as components in high-tech devices, including smart phones, digital cameras, computer hard disks, fluorescent and light-emitting-diode (LED) lights, flat screen televisions, computer monitors, and electronic displays. Large quantities of some REEs are used in clean energy and defense technologies. Since the late 1990s, China has provided 85-95% of the world’s REEs, but in 2010, China announced their intention to reduce exports. During this time, REE use increased substantially, alongside new discoveries.

Critical minerals are necessary for the growth of, for example, green industries. A critical commodity is one that is important for specialized applications yet is at risk of supply disruption.  Former President Donald Trump issued an executive order in 2017 defining the critical minerals essential to U.S. economic and national security.

HB 4025 aims to encourage the development of rare earth element and critical mineral resources in West Virgina by providing temporary severance tax relief.  The text of the bill describes the mechanism as follows:

‘Providing for an exemption from the imposition of the severance tax for a period of 5 years beginning on July 1, 2022, for severing extracting, reducing to possession and producing for sale, profit or commercial use rare earth elements and critical minerals.’

The bill also divides the relevant elements into two groups, as below:

‘“Rare earth elements” (REE, also known as rare earth metals or rare earth oxides) are only yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, and scandium, and
 “Critical minerals” are only aluminum, antimony, arsenic, barite, beryllium, bismuth, cesium, chromium, cobalt, fluorspar, gallium, germanium, graphite, hafnium, indium, iridium, lithium, magnesium, manganese, nickel, niobium, palladium, platinum, rhodium, rubidium, ruthenium, tantalum, tellurium, tin, titanium, tungsten, vanadium, zinc, zirconium, uranium, osmium, strontium, rhenium, potash, and bauxite.
Photo of a titan-crystal bar.
Image via pse-mendelejew.de

Further information and visual guides to mining in West Virginia:

https://thediggings.com/usa/west-virginia

 

References:

 

 

Jane Lockwood

View posts by Jane Lockwood
Jane Lockwood is an Australian geoscientist living and working in Germany. She holds a Master's of Earth Science (Advanced) from the Australian National University and has spent several years reporting on the junior mining industry for Spotlight Mining, as well as conducting social media management for junior mining companies.