Senate committee advances severance-tax credit to spur coal-related road and processing investment

The Senate Energy, Industry and Mining Committee voted to report committee substitute for Senate Bill 131 to the full Senate with a recommendation that it pass and a first referral to the Committee on Finance.

The substitute creates the "Road and Highway Infrastructure Improvement and Coal and Natural Gas Processing Facilities Tax Credit," a severance-tax credit designed to encourage private companies that pay severance tax to invest in road and highway infrastructure and coal or natural-gas processing facilities. The Department of Transportation secretary would certify eligible infrastructure projects; the substitute limits the credit to $100,000 per project and, according to testimony, allows a credit against severance liability that can equal up to 50% of the taxpayer's liability for qualifying expenditures.

Why it matters: Supporters said the credit would lower operating costs for mines, speed worker access to work faces and help sustain capital-intensive operations. Opponents and some members sought clarity on fiscal impacts and overlap with prior programs.

What witnesses said: Chris Hamilton of the West Virginia Coal Association, sworn in to testify, described concrete examples of how the credit could be used. "It just provides a credit against severance up to 50% of the total severance liability," Hamilton told the committee while explaining projects such as new portals, road widenings and bridge work that can shorten haul times and reduce per-ton costs.

Hamilton also described market headwinds: supply-chain delays for heavy equipment and a drop in demand for metallurgical coal. "The price on that has dropped 40% here, over, you know, the last nine months following first quarter 2025," he said, citing competition and below-cost foreign steel production as drivers of price declines.

PJM and dispatch concerns: Hamilton told senators that changes to the PJM dispatch/auction timing have disadvantaged West Virginia coal-fired generators in his view. "PJM decided to extend that 24 hour bid period to 6 to 8 days," he said, and the extended window, he argued, favored Pennsylvania natural-gas resources and prevented some West Virginia coal plants—such as Harrison and Fort Martin—from entering the market, leaving plants idle and costing members "tens of millions." He said the governor's energy team is reviewing the issue.

Fiscal-note questions: The Vice Chair read fiscal-note language during questioning, saying estimates indicate General Revenue Fund losses of roughly $43 million to $56 million in fiscal year 2028 and citing a $317 million figure tied to an earlier coal rebate program. Hamilton replied that he had not seen that fiscal note and said he was surprised by the $317 million number; he described the earlier rebate as limited in scope and eligibility and said SB131 would apply to both metallurgical and thermal coal.

Procedure and next steps: After extended discussion, the Vice Chair moved to report the committee substitute for SB131 to the full Senate with a recommendation that it pass and, under the bill's original double committee reference, first be referred to the Committee on Finance. The committee voted in favor and declared the motion adopted. The bill will go to the full Senate with the committee recommendation.

The committee did not adopt any amendments to the substitute during the session. Additional fiscal analysis and clarifications about overlap with existing rebate programs were requested by members.

The committee adjourned after completing remaining agenda items.