GOD knows that economic diversification is needed in West Virginia ASAP

WEST VIRGINIA: It’s Not Too Late to Fix Our Future

From the WV Center on Budget & Policy, July 15, 2019

A recent article in Vox by David Roberts highlights how a coal mining bust in Wyoming is resulting in “vulture capitalism” as investors buy up bankrupt coal mines while coal executives receive large bonuses and the communities in Wyoming struggle with thousands of laid off workers, lost pensions, environmental degradation, and an undiversified economy. This is a story all too familiar to West Virginians, especially those living in coal mining areas.

While Wyoming is beginning to see the decline of their coal industry, they are much better prepared to deal with their coal bust than West Virginia. Since the late 1970s, Wyoming, similar to other western states, created various trust funds to ensure that they would benefit from mining production long after it was gone. All together, Wyoming as about $13 billion in mineral wealth assets that are held in four trust funds that they use to fund education and general revenue expenditures. While Wyoming needs to use these assets more strategically and diversify their tax system, West Virginia has no permanent mineral assets held in long-term trust funds.

Back in early 2012 – and even before then – the West Virginia Center on Budget and Policy proposed the creation of an economic diversification trust fund that would use a small portion (1 percent) of our state’s non-renewable natural resource wealth to create a permanent source of wealth that could be invested back into the state’s economy. This proposal was modeled after Wyoming’s Permanent Mineral Trust Fund. In fact, the former Governor of Wyoming, Mike Sullivan, testified to the West Virginia Senate in 2012 about West Virginia creating its own “Future Fund.” While the West Virginia legislature eventually passed a “Future Fund” in 2014, it has not – and probably won’t for the foreseeable future – receive any deposits mostly because of the restrictions in place.

While it is not too late to plan for West Virginia’s future by funding the WV Future Fund, West Virginia would be in a much more fiscally sound place had it done so in 2012. If West Virginia would have enacted a mineral trust fund in 2012 based on our proposal – which included a 1 percent additional severance tax on oil, natural gas, and coal – it would have a balance of over $800 million today, which is larger than both of our state’s Rainy Day Funds combined.

According to our proposal, withdrawals from the fund would begin five years after its creation and the assets would be invested similar to our state pensions, which include a 7.5% average annual rate of investment return. After five years of receiving deposits, the state would use five percent of the average annual balance of the five previous years to invest in economic diversification, including education, infrastructure, etc. As the chart indicates, the fund would have been able to disburse an estimated $21 million last year and about $28 million this year toward economic diversification efforts.

As policymakers continue to look for ways to diversify our state’s economy, it is imperative that they use the state’s rich non-renewable depleting natural resources to help make this happen since they are at the heart of our state’s boom and bust economy. Policymakers also need to keep in mind that addressing climate change – such as achieving net-zero emissions by 2050 to avoid global environmental catastrophe – will mean significant reductions in coal and natural gas production in West Virginia, leaving the state even more vulnerable to economic busts in the future.

While time is running short, the path toward a sustainable economic future is still possible if policymakers take the necessary steps to adequately tax our fossil fuels to invest in our communities and people. Otherwise, our state will be on collision course with efforts to combat climate change and will most likely continue to decline. By fixing the WV Future Fund we can start turning our non-renewable natural resource assets into a permanent source of wealth that can provide a source of funding to not only diversify our economy but also provide a bridge to a more prosperous future.



Manchin, environmental activists seek details on China Energy deal

From an Article by Steven Adams, Parkersburg News & Sentinel, July 14, 2019

CHARLESTON — Normally butting heads, environmental activists and U.S. Sen. Joe Manchin, D-W.Va., are both on the same page when it comes to asking for more details on the multi-billion dollar “deal” with a Chinese company to further develop West Virginia’s natural gas infrastructure.

During a hearing Thursday of the U.S. Senate Energy and Natural Resources Committee regarding liquified natural gas exports, Manchin, the ranking minority member of the committee, raised concerns about the memorandum of understanding between the state Commerce Department and the China Energy Investment Group.

“What would be their interest? We cannot find out one iota of what the MOU is,” Manchin said. “I have asked them directly and cannot get a direct answer about their investments.”

Manchin isn’t the only one wanting to see what’s in the memorandum of understanding between the state and China Energy. Appalachian Mountain Advocates on June 24 filed an appeal with the state Supreme Court of Appeals of a lower court decision denying a Freedom of Information Act request to the West Virginia University Energy Institute, one of the partners with the commerce department, for the memorandum.

On Nov. 9, 2017, Gov. Jim Justice announced the state had entered into an agreement with China Energy valued at $83.7 billion. China Energy committed to investments in Marcellus Shale natural gas production, infrastructure, and downstream industries, such as chemical manufacturing interests.

The deal was part of a $250 billion trade deal negotiated between China and the U.S. Department of Commerce, with former state commerce secretary Woody Thrasher traveling to China twice to secure a memorandum of understanding with China Energy officials.

“Do you all know about this deal they want to make with West Virginia, my state? They’ve said they’re going to invest $83 billion over 20 years,” Manchin said during Thursday’s committee meeting. “You can imagine that kind of carrot being swung out there, it’s tremendous for a small state. Our budget is only $4 billion a year and they’re going to invest $83 billion.”

That deal has gone silent over the last 17 months due in part to the trade war going on between China and President Donald Trump. According to the Associated Press, U.S. exports to China fell by 31.4 percent over the last 12 months, while exports from China fell by 7.8 percent. Negotiations between the two countries are ongoing.

West Virginia did $8.1 billion in exports in 2018, according to data from the U.S. Census Bureau. China was West Virginia’s sixth largest recipient of exports at a value of $484 million in 2018.

“My gut tells me (China) want(s) the (liquidized natural gas), they want the propane, ethane and butane which we do not have (Committee on Foreign Investment in the United States) review on,” Manchin said. “It could take away our building stock for manufacturing. And I can’t believe that (the Trump) administration would allow in any way, shape or form, for this project to go on.”

Shortly after the China Energy deal was announced in 2017, Appalachian Mountain Advocates filed a FOIA request seeking a copy of the memorandum of understanding between the state and China Energy from the WVU Energy Institute. Attorneys for WVU denied the request as it was not the original custodian that they were not required to turn the document over. The lawyers also said the documents being sought had proprietary trade secrets exempting them from FOIA.

“Although the university claims those records are exempt from disclosure under the (Freedom of Information Act), it consistently refused to specify how the records fit within any of the act’s narrow statutory exemptions or why responding to Appalachian’s request as written would paralyze necessary governmental functions,” according to the filing.

Appalachian Mountain Advocates took WVU to Monongalia County Circuit Court, where university attorneys argued that the memorandum was exempt from FOIA by state code protecting certain economic development documents from disclosure. After the circuit court ruled in favor of WVU, Appalachian Mountain Advocates appealed to the state Supreme Court, arguing that the circuit court didn’t follow the law.

“West Virginia’s Freedom of Information Act … reflects the ‘fundamental philosophy’ that citizens should not be resigned merely to take their government at its word,” wrote Evan Johns, attorney for Appalachian Mountain Advocates. “To ensure access to ‘full and complete information regarding the affairs of government,’ the Act enlists the courts to conduct a rigorous, (new) review of any efforts to screen public records from scrutiny.”

Manchin heard testimony Thursday from Department of Energy Assistant Secretary Steven Winberg, Sempra Energy Vice President Dennis Arriola, and Center for American Progress Senior Fellow Melanie Hart. Manchin asked whether U.S. companies would be allowed to invest in energy infrastructure projects in China simply to the West Virginia-China Energy deal.

“Are we as Americans allowed to go into China and buy their resources, develop their resources and control the flow of their resources back to the U.S.?” Manchin said.

“We are certainly not allowed to do so in China,” Hart said in response. “In fact, China’s information about their shale gas resources is classified. So, our companies are also not even allowed to fully assess what they have in the ground to understand how they might weigh in as a potential exporter over time.”

Manchin doesn’t want the China Energy deal, if it ever becomes a reality, to resemble efforts by the Russian company American Ethane, which is already the largest ethane producer in the U.S.

“American Ethane is run by a Russian oligarch,” Manchin said. “What they’re doing here in America to take out our building stock … I don’t know why we haven’t stepped up and slapped a stop and desist order on this.”



Appalachian Mountain Advocates is a non-profit law and policy center dedicated to fighting for clean water and a clean energy future.

The current scale of the fossil fuel industry harms the people, land, water and air in our region — and across the world. >>> Whether it’s coal, oil or gas, extracting and burning fossil fuels poisons the water we drink. It pollutes the air we breathe. It decimates the natural areas we and countless other animals and plants depend upon. And unquestionably, it intensifies the devastating impacts of global climate change. >>> Only a dramatic shift to clean energy can avert the worst of this mounting crisis.


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