West Virginia Gov. Jim Justice has signed into legislation a invoice that creates a mutual insurance coverage firm devoted to coal mine reclamation prices. Critics have known as it an ill-fated coal business bailout, however supporters stated it might shield taxpayers towards rising reclamation prices.
The governor, himself a coal firm proprietor, signed the invoice final week, establishing a non-public, nonstock mining mutual insurance coverage firm, utilizing $50 million in state funds. Senate Invoice 1, backed by Senate President Craig Blair, would assist the state keep away from what Blair has known as a “monetary tsunami” from the reclamation of huge areas which were spoiled by years of mining.
A latest state audit discovered that West Virginia may very well be chargeable for lots of of hundreds of thousands of {dollars} in mine reclamation prices if corporations that maintain bonds grow to be bancrupt, in line with information reviews.
West Virginia for years has had a Particular Reclamation Fund, funded via a tax on coal, however the concern is that it may very well be overwhelmed in coming years. The state additionally permits mining corporations to publish bonds of as a lot as $5,000 per acre, however a state environmental company has stated that may cowl solely a fraction of the reclamation prices, and numerous coal corporations have gone bankrupt lately, information retailers have reported.
Federal legislation requires states to maintain sufficient funding accessible to reclaim areas the place allow holders have defaulted, and a latest research projected that prices might attain virtually $500 million over the following 20 years. The Sierra Membership environmental group final yr filed a lawsuit geared toward pressuring the federal authorities to intervene in the price of the mine cleanup.
Research have proven that, as reclamation prices have elevated, reclamation bonds could cowl as little as 10% of the prices, and many of the bonds are held by one agency, Indemnity Nationwide Insurance coverage Co, the Charleston Gazette-Mail reported.
Supporters of the West Virginia invoice acknowledged that the complete liabilities of such a mutual insurance coverage firm usually are not but recognized, however the invoice requires an preliminary funding of $50 million from the state. That might come from the state Division of Environmental Safety however could be repaid, with out curiosity, to the division as soon as the reclamation work is completed, the invoice explains.
The invoice additionally would authorize the mutual firm to subject efficiency bonds to mine operators.
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