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Senate head: Company would help cover mine reclamation costs

January 26, 2022 GMT

CHARLESTON, W.Va. (AP) — West Virginia lawmakers are thinking about creating an insurance program to cover the costs of cleaning up abandoned coal mines.

Senate Bill 1 establishes a new private company that would issue performance bonds to help West Virginia’s coal companies pay for reclamation.

The bill’s lead sponsor, Senate President Craig Blair, said Wednesday that the company would help protect West Virginia by acting as “an insurance policy on our mining industry.”

“If we wouldn’t do this — it’s like a roulette wheel,” Blair, a Republican, said on the Senate floor before the body passed the bill unanimously. “We have no idea what’s going to happen.”

The legislation suggests that the state provide an initial $50 million non-interest-bearing loan to the company to establish the program. Lawmakers are still crafting the state’s budget proposal, and have not yet determined where the money would come from.

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The bill will now move on to the state’s House of Delegates for consideration.

Facing a downturn in the coal mining industry, a growing number of mining companies have closed down operations in West Virginia and nationwide in recent decades.

Mining companies are required by law to pay for reclamation of shuttered coal mine sites, a process crucial to preventing environmental pollution and returning the land to its habitat. Contaminants can seep into waterways and harm wildlife if not properly handled after a mine closes.

However, if companies fail to foot the bill for the reclamation process — if they declare bankruptcy, for example — the state is on the hook for covering the cost.

The state’s Department of Environmental Protection runs a coal mine cleanup fund for this purpose. The underfunded Special Reclamation Fund is financed by taxes on coal production and bonds.

A legislative audit released last year found that the mine reclamation program is at risk of insolvency due to the risk of bond revenues not raising enough to guarantee the fund’s future.

If the state does not take proactive action now, it could be on the line for billions later, Blair said.

Blair said there is one company that provides the majority of mine reclamation bonds for 13 states, including West Virginia. If that company were to go belly-up, he said, the state would be in trouble.

The mining mutual insurance company would not be state-run and would therefore be required to pay premium taxes. It would be overseen by a board of directors appointed by the West Virginia governor, Senate president, House speaker, the Department of Environmental Protection secretary and insurance commissioner.

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Participation would be voluntary for coal companies. Blair said the proposal is one of his priorities this legislative session.

The federal infrastructure bill signed into law by President Joe Biden provides $11.3 billion over the next 15 years to help clean up abandoned coal mine sites. However, those funds can only be used to clean up sites abandoned prior to 1977. Any mines abandoned since then are not covered in the bill.