Senate President Craig Blair was a particular visitor star within the Home Finance Committee on Saturday, testifying about an insurance coverage program to cowl mine reclamation and an avalanche of potential legal responsibility.
Blair has felt strongly about Senate Invoice 1 and has publicly endorsed it on earlier events. On Saturday, he took one other alternative to talk earlier than Home Finance. Blair, a former member of the Home of Delegates, stated he felt again at residence.
“Right here’s the headline: Uncovered,” Blair informed delegates, exhibiting an article about mine reclamation legal responsibility. “West Virginia and different states are counting on a home of playing cards to pay for coal mining cleanup.”
The Home Finance Committee superior the invoice on Saturday afternoon after discussing it for about an hour and a half. The total Home of Delegates will now think about the invoice.
“It’s clear that we’ve some severe publicity in our markets and that we’re taking clear measures to guard our coal business and the state,” stated Delegate John Hardy, R-Berkeley. “I feel it is a proactive solution to defend our publicity.”
The invoice would set up a mining mutual insurance coverage firm on the power of$50 million in seed cash from the state.
Blair assured delegates that the $50 million, a mortgage, can be safe. “I imagine with all my being that we’re not going to lose the $50 million. That’s not going to be the case,” he stated.
The insurer can be a bulwark in opposition to the likelihood that the monetary troubles of coal firms might render them unable to fulfill their obligations to reclaim the land they’ve mined.
Delegates on the Finance Committee requested quite a lot of questions, together with what monetary danger the state faces, how the mutual would work and whether or not this strategy would really be the perfect answer.
“As you’ve created this, what’s it that leads you to imagine the insurance coverage, the bonding market, won’t fill the necessity just like the market usually does when there’s a value downside or an availability downside,” requested Delegate Marty Geartheart, R-Mercer, basically asking why the state would put up cash for an insurance coverage mutual when personal firms might accomplish that as a substitute.
Blair’s reply was that financial markets are selecting in opposition to coal proper now, injecting uncertainty about long-term debt and the form of capital crucial to scrub up mine websites. “The business has been taking a beating,” Blair stated.
Delegate Larry Rowe, D-Kanawha, requested whether or not different options is likely to be extra applicable.
“My concern is, I don’t see the way it insulates us from the last word accountability on reclamation,” Rowe stated, later voting no.
“And if we use a non-public bond market, what we’re actually doing is we’re getting into a non-public bond market that has been teetering. However we’re stepping in with a brand new firm which will assist available in the market and it might not. As a result of $50 million received’t cowl the legal responsibility, as you’ve described it, within the billions.”
Blair’s response to that was this sort of mutual must be created now as a substitute of later when it’s a real disaster.
Proper now, the state’s Particular Reclamation Fund is ready as much as cowl any shortfall, however the fear is that would turn into overwhelmed by obligations.
The invoice establishing the insurance coverage mutual specifies that it could not be thought-about a division or company of the state — however as a substitute can be an organization ruled by 5 administrators. The chairman, although, can be appointed by the governor, and the remaining members would even be named by state officers.
A way of urgency started final summer time after lawmakers heard the abstract of a 52-page report laying out the chance of mine reclamation as a funds bomb.
In brief, West Virginia is topic to federal necessities to manage to pay for out there to finish reclamation for any areas the place allow holders default.
West Virginia permits mining firms to submit bonds of $1,000 to $5,000 an acre, quantities that the Division of Environmental Safety estimates would cowl solely about 10 p.c of reclamation prices. West Virginia fills the hole with Particular Reclamation Funds, that are are funded primarily by a 27.9 cent tax levied on each brief ton of coal produced.
Elevated reclamation prices mixed with financial pressure on the coal business has highlighted the potential of a monetary disaster.
“There’s publicity. There’s financial publicity. There’s publicity to the final income fund of the state of West Virginia,” stated Delegate Daniel Linville, R-Cabell.