By Mike Tony
For HDMedia
Tax relief legislation for the fossil fuel industry — generated quickly in recent days by West Virginia lawmakers — was on the verge of passing as of press time Thursday. If approved, the law is projected to decrease state revenue by more than $350 million through 2031 via sweeping new severance tax cuts for companies producing coal, oil and gas.
The measures comprise House Bill 5687 as approved without discussion by the Senate Finance Committee Wednesday.
The committee amended HB 5687, which had been solely a metallurgical coal tax severance break bill developed late in the state’s 60-day legislative session that draws to a close Saturday night, to include language from stalled legislation that also would lower severance tax for new gas and oil wells.
As of Thursday afternoon, HB 5687 was slated for passage in the Senate Friday. If passed by the Senate, it would require House of Delegates concurrence before advancing to the vocally fossil fuel-friendly Gov. Patrick Morrisey for him to consider signing into law.
HB 5687 incorporates provisions from Senate Bill 706, which stalled in the Senate Finance Committee since it was referred there by the Energy, Industry and Mining Committee four weeks ago. So HB 5687 in its updated form would cut the state’s severance tax from 5% to 3.25% for gas and oil produced from any new well drilled and completed after June 30, 2027, as shown by gross proceeds from the sale of the gas and oil by the producer, for two years after the first sale of gas or oil from each such well.
The bill indicates the reduced rate would revert back to 5% after the two-year period and that counties’ and municipalities’ share of the gas and oil severance tax on new wells would increase from 10% to 15.5%.
SB 706 would have set a June 30, 2026, date for the severance tax reduction, unlike the June 30, 2027, date in HB 5687.
In a fiscal note for HB 5687’s virtually identical bill language in SB 706, the Department of Revenue estimated SB 706 would reduce General Revenue Fund collections by up to $25 million in fiscal year 2027, $40 million in fiscal year 2028 and $42 million in fiscal year 2029 and each following year at current prices.
That would result in General Revenue Fund collection losses totaling nearly $200 million through fiscal year 2031.
HB 5627 also would lower the state severance tax on the gross value of metallurgical coal produced from 5% via annual 0.5% decreases starting July 1, 2027, hitting and staying at 3.5% beginning July 1, 2029.
West Virginia Coal Association president Chris Hamilton, a proponent of the bill, acknowledged at a March 2 House Finance Committee meeting the severance tax cut measure could amount to an approximately $15 million tax cut in its first year for metallurgical coal producers based on current severance tax revenue totaling some $150 million annually, while adding up to $180 million over what had been a tax step-down period in the bill.
The bill as initially proposed would have returned the rate to 5% after fiscal year 2031, but the House Finance Committee approved an amendment from Majority Whip Marty Gearheart, R-Mercer, that would leave the rate at 3.5% unless state lawmakers change it in the future.
The House approved HB 5687 in a 92-1 vote on March 4, just two days after it was introduced, to prop up a coal industry whose struggles have been deepened by President Donald Trump’s aggressive tariff policy, attempting to tilt in the industry’s favor a free market that has favored cheaper, more sustainable energy sources for years.
The House Finance Committee advanced the bill to the full House after Hamilton testified that the state’s metallurgical coal industry has been facing “tremendous headwinds,” although Hamilton was effusive in praise for Trump and did not criticize him for his policy triggering retaliatory tariffs targeting United States metallurgical coal exports driven by West Virginia.
In a similar move, the Legislature in 2019 approved a steam coal production severance tax rate reduction the Department of Revenue estimated then would cost $64.1 million annually.
The Legislature’s moves to approve state severance tax cuts after years of “flat” budgets leaning on one-time federal funds and not investing more in public services has drawn criticism from advocates of strengthening poverty-embattled West Virginia’s social safety net, especially since the severance tax has helped support services like critical infrastructure, education and health care.
“Cutting the tax in a misguided attempt to incentivize production will only hurt the state’s ability to make those investments in our state and its people,” Sean O’Leary, senior policy analyst at the West Virginia Center on Budget and Policy, a progressive policy research group, said in an analysis of SB 706.
HB 5687’s advancement comes as the House in a 58-34 vote Wednesday approved another industry-backed bill in SB 641, which would roll back state regulations of many aboveground storage tanks.
W.Va. gas firm agreed to pay millions over air pollution suit
The favorable legislation for West Virginia’s gas and oil industry comes from a Legislature for which the industry has employed a significant number of lobbyists.
Nineteen gas and oil companies and other industry groups — including Pittsburgh-based large-scale gas producer EQT and Alabama-headquartered Diversified Energy Company PLC, long one of the nation’s largest gas and oil well owners — had lobbyists registered with the state as of last week, according to state Ethics Commission records.
Industry-representing groups had 47 lobbyist allotments among them, including eight for the Gas and Oil Association of West Virginia alone.
Antero Resources Corp., which has a Denver-headquartered oil and gas exploration and production company with heavy production operations in West Virginia and a state field office in Bridgeport, could be a prime beneficiary of HB 5687 if it becomes law.
Antero had three state-registered lobbyists, per Ethics Commission data.
The U.S. Department of Justice and West Virginia Department of Environmental Protection on Feb. 13 announced a proposed multimillion-dollar settlement with Antero to resolve a multigovernmental lawsuit against the company contending a string of federal and state air pollution violations.
The federal government and DEP lawsuit alleged Antero violations at 29 well pads in Doddridge, Ritchie, and Tyler counties in West Virginia and Noble County, Ohio, from 2017 through 2020.
Antero agreed to pay a $3.8 million civil penalty to be divided between the federal government and the state of West Virginia, within 30 days, in addition to investing at least $1.5 million on a project to close orphan wells to prioritize reduction of emissions of volatile organic compounds, which may contribute to ground-level ozone and cause cancer.
Antero, which did not respond to a request for comment, agreed to work with the DEP to identify priority orphan or abandoned wells in Doddridge, Harrison, Ritchie, Tyler and Wetzel counties.
“This settlement demonstrates how coordinated enforcement among state and federal partners promotes accountability, reduces harmful emissions, and delivers meaningful environmental results,” DEP Secretary Harold Ward said in a statement released by the Department of Justice.
But the seven-figure sum Antero agreed to pay to settle the lawsuit is just a drop from a plentiful financial bucket.
In a U.S. Securities and Exchange Commission filing for fiscal year 2025, Antero reported a 2026 capital budget of $1.1 billion to $1.3 billion and a plan to prepare 70 to 80 horizontal wells in the Appalachian Basin for production in 2026.
Read more from HDMedia, here.