Article written by Mike Tony for the Charleston Gazette-Mail
March 8, 2022
The West Virginia Senate has passed without opposition a bill designed to clarify who can profit from the extraction of rare earth elements and critical minerals essential to technology products and national security.
The Senate in a 33-0 vote Tuesday approved House Bill 4003, which would establish that any party that treats any mine drainage may derive “commercial benefit” from any elements or other byproducts of the treated material. The House of Delegates concurred with minor changes to the bill made in its path through the Senate Wednesday in a 91-7 vote.
The idea behind HB 4003 is to encourage treatment of acid mine drainage, addressing one of West Virginia’s environmental problems while clearing up what party can enjoy the profits of what is increasingly looking like a lucrative endeavor due to acid mine drainage’s high concentration of rare earth elements and critical materials.
HB 4003 applies to all mine drainage, not just acid mine drainage.
The bill passed the House in a 94-1 vote last month, with only Minority Whip Shawn Fluharty, D-Ohio, voting against the measure.
Rare earth elements are a group of 17 metallic elements whose magnetic, electrochemical and other properties make them key components of cellphones, televisions, computer hard drives and other electronic devices as well as defense applications, including lasers and radar and sonar systems.
Rare earth elements are relatively abundant in the Earth’s crust, but minable concentrations are less common than for most other mineral commodities, according to the U.S. Geological Survey.
Former President Donald Trump issued an executive order in 2017 defining critical minerals as essential to U.S. economic and national security.
The United States had 1.5 million metric tons of rare earth elements in reserve as of January 2021 — 3% of China’s total reserves, according to U.S. Geological Survey data.
West Virginia Water Research Institute Director Paul Ziemkiewicz argued in committee meetings last year before state lawmakers that rare earth recovery efforts could be a long term economic solution for the state.
The institute has been assessing the feasibility of scaling up acid mine drainage treatment technology to support a nationwide supply chain of valuable rare earth elements and critical minerals.
HB 4003 would follow through on Ziemkiewicz’s suggestion to state lawmakers that they clarify who owns the resources resulting from treated acid mine drainage.
Ziemkiewicz has also said rare earth element recovery could supply financial support for state mine cleanup funding.
HB 4003 specifies that all funds received by the state Department of Environmental Protection from commercial benefit from mine drainage treatment would go into the agency’s Special Reclamation Water Trust Fund or a set-aside fund for acid mine drainage.
A report released in June by the state Legislative Auditor’s Office Post Audit Division warned state mine cleanup funds are nearing insolvency.
West Virginia lawmakers and environmental regulators risk letting the state’s mining reclamation program slip into insolvency through gaping holes in statutory and permitting oversight, the report found.
The Department of Environmental Protection has failed to comply with state and federal law in its reclamation program oversight, the report said, resulting in missed opportunities to financially shore up a program that will need hundreds of millions of dollars to reclaim permit sites under federal regulations.
West Virginia Land & Mineral Owners Association President Phil Montague expressed concern during committee consideration of HB 4003 about it potentially rewarding third parties who treat mine drainage rather than landowners on whose properties the mine drainage is located.
DEP general counsel Jason Wandling has noted before state lawmakers that a state-issued National Pollutant Discharge Elimination System permit for discharging wastewater is required to treat water for mine drainage. Permit holders are responsible for ensuring that water meets water quality standards before it is discharged back into receiving streams.
Wandling has denied that the bill constitutes an unlawful government taking, arguing that entities that invest time and resources into what is typically an expensive treatment process should reap the financial benefit. The Senate Finance Committee on Wednesday approved another bill aimed at encouraging extraction of rare earth elements and critical minerals.
The committee advanced to the full Senate House Bill 4025, which would provide a five-year exemption from severance tax starting July 1 for extracting rare earth elements and critical minerals.
The severance tax exemption provided for in HB 4025 would apply to all extraction of rare earth elements from any mining process, not just mine drainage.
The state code in which HB 4025 would carve out the severance tax exemption imposes a 4% tax on the gross value of natural resource production.
A state Department of Revenue fiscal note for HB 4025 predicts that a proposed exemption applying only to “rare earth minerals” would not negatively impact state General Revenue Fund collections.
HB 4025 defines rare earth elements as
only yttrium, lanthanum, cerium, praseodymium, neodymium, promethium, samarium,
europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium
and scandium. HB 4025 defines critical minerals as only aluminum, antimony,
arsenic, barite, bauxite, beryllium, bismuth, cesium, chromium, cobalt,
fluorspar, gallium, germanium, graphite, hafnium, indium, iridium, lithium,
magnesium, manganese, nickel, niobium, osmium, palladium, platinum, potash,
rhenium, rhodium, rubidium, ruthenium, strontium, tantalum, tin, titanium,
tungsten, uranium, vanadium, zinc and zirconium.