West Virginia Pols Don’t Shy from the Facts of Life — The Hard Talk about Gas and Coal

West Virginia politicians are beginning some tough, but essential, conversations about extraction in the Mountain State and the need to plan for the long-term economy after the coal (or gas, or any other such resource) rush is over.  It is this same kind of hard, but vital conversation we wish Kentucky politicians were having with our citizens too!

This article was originally published in the Charleston (WV) Daily Mail on Thursday May 12.

Gubernatorial candidates cast doubt on coal: Some Democratic hopefuls claim state has missed industry's opportunities

by Ry Rivard

CHARLESTON, W.Va. – During the campaign leading to Saturday's special gubernatorial primary, a few Democratic candidates have suggested the once unutterable: coal hasn't been all that great for West Virginia.

Acting Senate President Jeff Kessler has said while the coal industry created jobs, it has not created true wealth for many West Virginians because out-of-state companies own large tracts of coal land.

"It's been an excellent job creator for the people of this state, but it's not been a wealth creator for the people of this state, and it's a distinction," Kessler said.

Now his top campaign issue is creating a state trust fund by taxing the natural gas that comes from the expected Marcellus shale boom. He said the same thing should have been done long ago for coal.

"What I am proposing with the Marcellus is that we not let that happen again, and not be blinded by the jobs, which are passing or fleeting," Kessler.

Kessler hasn't been alone in suggesting coal may leave the state bereft.

Treasurer John Perdue, a native of the coalfields, made a baseball analogy at a recent forum at the University of Charleston: If the gas industry doesn't help West Virginia have a diversified economy, the state has struck out.

"If we don't do this one right, that's strike three," Perdue said. "We've struck out on timber. We've struck out on coal. Let's not strike out on natural gas."

West Virginia sits amid a 95,000-square-mile Marcellus shale gas field stretching from central New York into northern Georgia and Alabama.

Experts believe it could be the largest natural gas field discovered anywhere in the world. An industry-backed study by West Virginia University found the development of the field could create 20,000 new jobs and inject billions of dollars into the state's economy over the next few years

Kessler worries about what happens when the gas is gone.

"Once the gas is gone, what will we be left with?" he said. "Will we be like southern West Virginia, once the goal is gone, we're left with nothing to sustain the economy?

"We have another bite at the apple," he said.

Kessler took the idea from the liberal West Virginia Center on Budget and Policy to set up a trust fund using tax revenue from gas to help diversify the economy.

Kessler's "Future Fund" would be an endowment fund on the severance tax collected from gas. After 20 years of collecting interest, earnings from the fund would go to  "economic development, education system enhancement and even tax relief," according to his proposal.

The fund would resemble similar funds in Alaska and North Dakota that either direct money to state residents or are put aside for research.

But the distinction Kessler makes between "wealth" and "jobs" from the coal industry may be a hard one for him to make given West Virginia's long history with the industry.

The West Virginia Coal Association, for instance, has backed acting Gov. Earl Ray Tomblin, D-Logan, in Saturday's Democratic primary.

West Virginia miners are the backbone of our state and our country," Tomblin said in a statement accepting the endorsement. "I'm proud to have the support of the association that contributes so much to our economy and quality of life."

A joint study in 2008 by economists at Marshall and West Virginia universities found that the coal industry was directly responsible for 20,454 jobs, $1.5 million in wages and nearly $700 million a year in state taxes.

The study also found mining activity made up about 6 percent of the state's total economic output between 1997 and 2007, even while the contribution from manufacturing fell from about 16 percent to about 11 percent.

The report concluded there was "not another industry more vital" to the state than the coal industry.

"Reduction in the use of coal would worsen an already bad situation particularly in those areas which are most in need of jobs and income," the report found. "At the same time the demands placed on state government would accelerate for public assistance, support of schools and medical services. But the reduced income received by the state would leave it without the fiscal resources to respond."

In reply to an interview request about Perdue's "struck out" remarks, campaign spokesman George Manahan suggested Perdue wasn't broadly criticizing the coal and timber industries.

"I don't think he was saying these businesses are bad for West Virginia. I think he was trying to make a point that we have to be sure that we have the proper regulations in place prior to allowing Marcellus Shale drilling to continue," Manahan said in an email.

"That's why he has called on Tomblin to bring the Legislature into special session during interims in May. He doesn't think this can wait until next year. I think he believes that years ago, the coal industry and timber industries took advantage of lenient regulations, and he doesn't want to see that happen again."

But Kessler and others eye federal estimates that coal production in Central Appalachia, which includes southern West Virginia, will drop by nearly half by 2020 even without further government regulations.

That, in turn, could force job losses in the coal industry.

Kessler and others with similar criticisms point to the significant share of land and profits that is owned by or ends up in the hands of out-of-state interests.

The late Sen. Robert Byrd, in the opening of his autobiography, took time to describe West Virginia as "a state whose rich resources have been largely owned and exploited by outside interests."

In 1981, the Appalachian Land Ownership Task Force surveyed 20 million acres of land held by 30,000 owners in six states, including West Virginia.

It found 50 private owners and 10 government agencies held 41 percent of the 20 million acres. The government was the largest single owner, but the others were large companies that owned coal reserves.

The 1981 study has not been updated, but some who study the industry think its basic findings have changed little.

"I don't think it's changed much," said Ted Boettner, the head of West Virginia Center on Budget and Policy, a liberal think tank that has unsuccessfully applied for grants to update the three-decade-old study.

Kristin Tracz

About Kristin Tracz

Kristin Tracz served MACED’s Research and Policy team from 2009-2012 working on clean energy policy, energy efficiency programs and the Appalachian Transition Initiative. She joined MACED after finishing her Master of Environmental Management degree at the Yale School of Forestry & Environmental Studies. She now lives and works in Washington, DC.