West Virginia lawmakers listened.
Now it’s up to them to put taxpayers’ money where their mouths were.
Last fall, members of the House of Delegates went on a cross-state listening tour. They made stops in Logan, Beckley, Pursglove, Moundsville and Welch, gathering feedback in small groups from some 200 people.
They said they wanted to hear how West Virginians wanted them to tackle revitalizing communities whose population figures, tax bases and reasons for hope diminished following devastating coal mine and plant closures.
“We’ve suffered,” Delegate Ed Evans, D-McDowell, told an engaged crowd of more than six dozen in the Word of Life gymnasium during the first tour stop in Logan in October. “You know good and well that we have suffered monetarily, we’ve suffered from businesses [leaving], we’ve suffered from loss of population. I can just go on and on and on.”
Evans is one of 11 members of a new committee created by a House resolution Monday that met a few hours later.
At its first meeting, the new committee tasked with developing policy recommendations to aid coal communities voted to deliver a 13-page report to the full House compiling the most common community needs identified by West Virginians.
Page after page put into words what West Virginians said they felt: Environmental protection should be a top priority for the Mountain State.
Clean drinking water and wastewater treatment are lacking in many communities contending with expanding floodplains due to climate change, with few steps taken at the state or local levels to make coal communities more resistant to the impacts of flooding, the report said.
And that’s just the first full page of issues identified in the document.
The report highlights the importance of cleanup efforts to turn previously mined land into ripe space for other energy jobs.
“Expanded recreation and tourism goes hand-in-hand with environmental restoration to ensure that people have clean streams to fish, boat, and swim in and beautiful land to hike, ride, and camp on,” the report observed.
Many of the legislative suggestions rely on the state Department of Environmental Protection doing its job.
They include preparing to effectively use the unprecedented influx of money coming to West Virginia through the federal infrastructure law passed in November to reclaim abandoned mine lands, namechecking the DEP as the lead agency in that effort.
Other legislative suggestions include promoting the creative reuse of vacant buildings for new businesses through DEP environmental remediation programs, increasing resources to address dilapidated buildings and establishing policies that improve water quality.
But the DEP needs money.
In a budget presentation before the Senate Finance Committee earlier this month, DEP Secretary Harold Ward noted his agency has 874 allotted full-time equivalent positions — 749 filled and 125 vacant. The overall number of full-time equivalent positions is down 8% from its 2017 total.
The number of inspectors in the DEP’s Office of Oil and Gas responsible for monitoring oil and natural gas drilling, storage and production statewide has fallen from 17 to nine, DEP officials told the Finance Committee.
The office needs $1.3 million more annually just to get back to previous staffing levels that well safety proponents say were already inadequate, a shortfall driven by its main revenue pipeline, permit fees, drying up amid oil and gas industry struggles.
There are 70,000 to 75,000 orphaned, abandoned and active wells in West Virginia, DEP Deputy Secretary Scott Mandirola told the Finance Committee.
“This is a tragedy that we’ve got wells and things that we know that are leaking,” Sen. Charles H. Clements, R-Wetzel, told DEP officials following the agency’s budget presentation before the Finance Committee. “And something’s gotta be done.”
The Legislature failed to address the inspector shortage during the 2021 legislative session despite environmental advocates lobbying lawmakers and holding a press briefing before the session calling attention to the issue.
Full-time equivalent positions in the DEP’s Division of Mining and Reclamation have decreased from roughly 300 in the early 2010s to about 190 amid a decline in fee revenues.
Senate President Craig Blair has acknowledged the DEP faces multibillion-dollar mine reclamation liabilities as the coal industry declines further, portending a spike in bankruptcies that could leave the fund — and state taxpayers — on the hook for coal companies’ unfulfilled mine reclamation obligations.
Blair’s proposed solution, Senate Bill 1 establishing a mining mutual insurance company, calls for $50 million in DEP-specified funds for company seed money that Ward told the Finance Committee his agency doesn’t have.
The Legislature has otherwise ignored the recommendations of a legislative audit report released in June finding that lawmakers and environmental regulators risk letting the state’s mining reclamation program slip into insolvency through gaping holes in statutory and permitting oversight.
State lawmakers opted not to provide funding for a blighted and abandoned properties program they created and charged the DEP with developing last year. The agency is searching for funding to set the program into motion.
The state’s air regulatory department also faces a long-term decline in revenue after the Legislature failed to pass a bill last session designed to stabilize its funding.
“We’re troubled by these trends that signal declining capacity for DEP to meet its responsibilities,” West Virginia Rivers Coalition Executive Director Angie Rosser said in an email. “We can have good environmental laws on the books, but if there’s not enough resources allotted to administer and enforce them, they’re meaningless.”
Staff and funding shortage concerns have led to worries that the DEP may be poorly positioned to make the most of what Ward told the Senate Finance Committee is five to six times more federal money than the agency has seen, resulting from the federal infrastructure law adopted in November.
“[P]olicymakers need to provide more funding for the agency so it can support the proper amount of staffing to protect our rivers and streams so we have access to safe, clean drinking water,” West Virginia Environmental Council President Linda Frame said in an email.
Well oversight dries upOffice of Oil and Gas staff fell to 25 from 40 last year after the agency addressed its shortfall by slashing its ranks of inspectors and permit writers. Revenue losses brought on by a plunge in the number of horizontal-well applications triggered the cuts.
The Office of Oil and Gas has relied on one-time permitting fees to generate revenue.
Last year, Gov. Jim Justice signed into law Senate Bill 404, which established a $2,500 fee for modifications of well-work permits. But DEP officials estimated that bill would provide only an additional $500,000 for the Office of Oil and Gas, not enough to erase its shortfall.
The DEP supports Senate Bill 480, which has been estimated to restore the office’s inspector-to-well ratio to roughly 4,000-to-1 by imposing a $100 annual oversight fee for unplugged wells that produce 10,000 cubic feet of gas or more per day.
SB 480 was initially on the agenda for a Senate Energy, Industry and Mining Committee meeting Thursday but ultimately went unconsidered. Sen. Randy E. Smith, R-Tucker, the committee chairman, could not be reached for comment.
James Martin, chief of the Office of Oil and Gas, told the Finance Committee that the 4,000-to-1 inspector-to-well ratio is “a pretty good place to be.” Martin noted most of the required oversight comes on the “front end” of drilling and construction rather than leak response.
But West Virginia Surface Owners’ Rights Organization cofounder David McMahon said Oil and Gas needs far more inspectors than SB 480 would fund.
“That bill just isn’t good enough,” McMahon said, suggesting the office needs about 40 inspectors, double what SB 480 would cover.
“That wouldn’t get the Office of Oil and Gas where it needs to be,” Delegate Evan Hansen, D-Monongalia, said of SB 480. “But $1.3 million is a whole lot better than nothing.”
McMahon has called on the Legislature to approve an annual $100 fee for operators of all wells — or essentially anything that will increase the Office of Oil and Gas’ number of inspectors above what it was before downsizing.
“Any well that’s still operating can afford $100, or it’s time to start plugging it so it doesn’t become an orphan,” McMahon said.
For the second straight year, Hansen is the sole sponsor of House Bill 2725, which would institute a $100 annual oversight fee for all wells.
Removing SB 480’s limit on fees to wells producing 10,000 cubic feet of gas or more per day would open up a substantially greater revenue flow for Oil and Gas.
As of the 2020 production year, the state’s 13,500 wells producing at least 10,000 cubic feet of gas per day represented just 18% of the unplugged wells in DEP records, according to agency acting spokesman Terry Fletcher.
A 2018 study of West Virginia well sites published in the peer-reviewed journal Science of the Total Environment found active conventional wells are a significant source of methane emitted to the atmosphere in the state.
The study estimated that each active conventional well loses roughly 9% of production.
“We obviously need a lot more [inspectors] than we have now,” McMahon said.
Rosser said it was troubling that the DEP was asking to staff fewer than 20 oil and gas inspectors.
“We need more from the agency than just the minimum number inspectors to handle incident reports,” Rosser said. “We need a shift in mentality that supports an oversight system designed to prevent environmental emergencies from happening in the first place.”
The understaffed Office of Oil and Gas manages the state’s abandoned well plugging and remediation program.
Ward told the Finance Committee the cost of reclaiming all 6,309 wells in the state’s orphaned wells program would be $991 million.
The federal infrastructure law focuses on orphaned oil and gas wells, providing $4.7 billion nationwide for well site plugging and restoration to guard against groundwater contamination and gas emissions.
The infrastructure law allows states to receive up to $25 million in initial grants with an application deadline of May 15.
Initial grants require states to move fast. They must use at least 90% of requested funding to issue new contracts, amend existing contracts or issue grants for plugging and reclamation work within 90 days of receiving funds. After a year, states must pay back whatever funds they have failed to obligate.
“My personal goal is for West Virginia to be the state that gives back the least percentage of all these funds,” Ward said.
Mandirola said the DEP will apply for a separate formula grant for plugging orphaned wells under the infrastructure law. Fletcher said preliminary estimates indicate the state will receive $145 million in formula grant money.
The DEP also is pursuing what it expects to be roughly $70 million available in other grants under the infrastructure law.
Mine reclamation funding concernsBudget projections show the Division of Mining and Reclamation would run a deficit in fiscal year 2026 without increased funding. Coal tonnage fees deposited into the agency’s operations fund fell by more than a fourth from fiscal year 2019 to slightly less than $1.4 million.
Senate Bill 462 would provide the division a significant boost by increasing fees associated with surface coal mine permits. It would update state water pollution control permits for surface coal mining operations. The DEP estimates the bill would generate total annual revenue of $4.3 million.
“The bill is intended to be a long-term fix,” Fletcher said.
But state lawmakers have neither met nor acknowledged a long list of recommendations in the state legislative audit report from June that found they and the DEP risk the state’s mining reclamation program slipping into insolvency because of lapses in statutory and permitting oversight.
The audit report recommended the DEP adjust bonding rates so reclamation costs don’t become a “greater financial liability to the state.”
The agency noted in a response to the audit’s findings that only the Legislature has the statutory authority to change bonding rates.
The report recommended the Legislature impose maximum thresholds on the face value of reclamation bonds permitted to be underwritten by a single surety company. Such limits should include both single bond issuances plus the company’s aggregate issuances of reclamation bonds, the report suggested.
Those recommendations have gone unmentioned during budget and legislation meetings this session.
Instead, the Senate has passed SB 1, which would create a private, nonstock mining mutual insurance company funded by $50 million from DEP-specified funds. The deposit would be considered a noninterest loan and would be paid back as credits as mine reclamation activities are completed.
SB 1 sailed through the upper chamber in a 32-0 vote with little discussion Wednesday.
Blair said coal companies would not be required to participate in the mining insurance company, sparking concerns about low participation levels.
Five companies hold 91% of the state’s coal mining reclamation bonds, according to the June legislative audit report. Indemnity National Insurance Company holds 67% of the total at $620 million.
Blair acknowledged that if one company owning a large share of the mine reclamation bond market were to “go belly up,” it could devastate the state.
“This isn’t a bailout,” Blair told the Finance Committee. “Think of it as an insurance policy.”
Ward warns the DEP lacks the funding required to seed the company. That is a major hurdle over which lawmakers must guide the bill.
“Where we loan it from would depend on whether it comes from the insurance commissioner or if it’s in the back of the budget off surplus,” Senate Finance Committee Chairman Eric Tarr, R-Putnam, said. “Those are most likely the options.”
A longer-term hurdle would be ensuring a return on investing taxpayer money given the coal industry’s decline.
“It’s hard for me to see that as anything other than a way to lose $50 million of West Virginia’s money because given what’s happening with the coal mining industry, anyone who issues those sorts of bonds is going to have to pay out the full value of those bonds,” Sierra Club senior attorney Peter Morgan said. “And that’s going to quickly deplete the $50 million and any additional money the state might put into that.”
Not investing in air qualityThe House Finance Committee has yet to take up a bill designed to shore up funding for the state’s air regulatory department as it faces a long-term decline in revenue.
House Bill 3082 would allow the Division of Air Quality to invest money held in two funds to make up for a loss in revenue caused by decreasing permit fee collections while prohibiting moving money in the funds to other accounts.
An 80% decline in industrial air emissions in West Virginia has resulted in a drop in revenue for the division, since fees for large industrial sources are based on their emissions rates, according to the bill.
DEP officials said last year the Division of Air Quality’s funding level was adequate. But the U.S. Environmental Protection Agency recommended the division consider asking state legislators to increase the state’s emission fee in fiscal year 2021 or charge additional fees for applications, operating permit maintenance or an hourly fee based on the complexity of the permit being issued.
HB 3082 covers the Air Pollution Control and Air Pollution Education and Environment funds. At the end of 2018, the former had a cash balance of $5.7 million and the latter, $1 million, according to the bill. Based on a review of the interest rates paid for other DEP funds during the 2018 fiscal year, interest from investing those two funds could range from $84,000 to $160,800 annually, per the bill.
HB 3082 does not address the fee structure of the Division of Air Quality Title V fee program, which is a dollars-per-ton fee on pollutant emissions adjusted by the Consumer Price Index, with a cap of 4,000 tons per pollutant.
Rosser said the closure of coal-fired power plants could push the Division of Air Quality into financial peril and ultimately risk the EPA taking over enforcement of air quality standards in the state.
Rosser and other water quality advocates also have criticized the DEP and state lawmakers for signing off on a weakening of some water quality standards.
The agency backed changes to a rule pending in the Legislature that would strengthen many standards but weaken them for possible carcinogens found in coal tar and coal and oil combustion emissions, insecticides banned in the 1970s and a highly toxic fumigant and pesticide.
Mandirola has defended the water quality standard updates before lawmakers, saying they would ensure the same estimated risk level of one additional cancer case per 1 million people.
The Senate Judiciary Committee approved the rules changes Tuesday, advancing them to the full Senate.
Coveting a compliance cultureHansen acknowledged that declining permit fee revenues are reflecting less of a burden on state regulators. But he stressed the importance of ensuring adequate staff to process and oversee permits.
“The worst thing is to have regulations in place that can’t be properly administered,” Hansen said. “Then the government just doesn’t work.”
West Virginia’s government will have to work if legislative suggestions in the coal communities listening tour are to be implemented.
“Our citizens deserve a DEP that is resourced to foster a culture of compliance among the companies doing business in our state,” Rosser said.
