Proposal for a COUNCIL REGULATION on State aid to facilitate the closure of uncompetitive coal mines {SEC(2010) 850} {SEC(2010) 851}
Date: 2010-07-20
Institutions: European Commission
Subjects: State aid, cessation of trading, coal industry, coal mining, coalmining policy, control of State aid, exploitation of resources, miner, mining operation, safety standard

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EUROPEAN COMMISSION 

Brussels, 20.7.2010 
COM(2010) 372 final 

2010/0220 (NLE) 

Proposal for a 

COUNCIL REGULATION 

on State aid to facilitate the closure of uncompetitive coal mines  

{SEC(2010) 850} 
{SEC(2010) 851} 

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EXPLANATORY MEMORANDUM 

1. Context of the proposal 

Aid to the EU hard  coal  industry  is  regulated by a  sector-specific  legal  instrument: Council 
Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry1 (the "Coal 
Regulation").  

The Coal Regulation expires on 31 December 2010. In the absence of a new legal framework 
allowing for certain specific types of State aid to the coal industry, Member States could grant 
aid only within the limits foreseen by general State aid rules applicable to all sectors. 

Compared  to  the  Coal  Regulation,  the  general  State  aid  rules  significantly  reduce  the 
possibilities  for  State  aid  to  the  coal  industry,  especially  but  not  only  with  regard  to 
production  aid.  However,  some  Member  States  are  facing  very  high  production  costs 
compared  to  current  and  projected  world  market  prices  and  therefore  have  an  economically 
uncompetitive production of hard coal today and most likely in the future. 

Subsidised coal has only a marginal impact on the security of energy supply on the EU level. 
(although at the level of individual Member states the situation varies) The small contribution 
of  subsidised  hard  coal  to  the  overall  EU  energy  mix  strongly  limits  the  capacity  of  such 
subsidies  to  compensate  for  supply  disruptions,  be  it  in  coal  or  in  other  energy  sources. 
Subsidised coal serves for only 5.1% of the electricity production in the EU. When taking into 
account only the aid to cover production losses, this figure is reduced to 1.4% (even if it may 
be higher for individual Member States). 

But as the expiry of the Coal Regulation will force some Member States to close their hard 
coal  mines,  they  will  have  to  cope  with  the  social  and  regional  consequences.  Given  the 
regional  concentration  of  coal  mines  (e.g.  Ruhrgebiet  in  Germany,  the  north-west  of  Spain, 
the Jiu Valley in Romania), the social impact of the simultaneous closure of the mines could 
be significant. When taking into account jobs in related industries, up to 100000 jobs may be 
at  stake.  The  immediate  closure  of  the  mines  that  could  take  place  after  a  sudden  end  of 
subsidies  would  overburden  the  regional  labour  markets  with  a  flood  of  redundant  mine 
workers, which cannot rapidly enough be re-employed in other industries and therefore risk 
becoming long-term unemployed. 

With  regard  to  the  environment,  it  must  also  be  considered  that  the  closure  of  a  mine 
necessitates a series of measures to rehabilitate the mining site, such as removing the mining 
equipment  from  the  mine,  cleaning-up  the  site,  underground  safety  work,  removal  of  waste 
water, etc. In case the undertaking continues mining or non-mining economic activities, State 
financing could constitute State aid and the other activities of the undertaking may be at risk if 
the undertaking had to bear these costs on its own.  

The  present  proposal  aims  to  offer  Member  States  a  legal  framework  that  allows  them  to 
address  more  effectively  the  possible  adverse  effects  of  mine  closures  that  may  follow  a 
phasing-out  of  subsidies,  especially  with  regard  to  their  social  and  environmental  aspects, 
while minimising distortions of competition on the internal market. 

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OJ L205, 2.8.2002, p.1 

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2. Public consultation 

The Commission carried out an open internet consultation between 13 May and 15 July 2009. 
To this effect, the Commission services published a consultation paper on its Internet website 
which  described  the  problem  at  hand,  the  policy  objectives  and  the  various  policy  options 
which  stakeholders  were  invited  to  comment  on.  In  addition,  the  Sectoral  Social  Dialogue 
Committee "Extractive Industries" was consulted in a plenary meeting on 4 June 2009. 

The Commission received 60 contributions. 

The social partners of the coal industry and of the mining equipment industry generally argue 
in  favour  of  the  continuation  of  the  State  aid  categories  currently  allowed  under  the  Coal 
Regulation. They call for at least a new EU regime on State aid for the reduction of activity as 
well as aid for mine closures and inherited liabilities. 

Inversely,  the  environmental  organisations  do  not  favour  a  new  sector-specific  State  aid 
regime for the coal sector. They argue that State aid to coal mining has a negative impact on 
the energy production from clean, sustainable and renewable sources and it does not provide 
incentives for the energy efficiency and savings. They argue that more jobs could be created 
in the renewable energy sector than would be lost in the coal sector. 

The governments of most coal-producing Member States favour either a prolongation of the 
current  Coal  Regulation  or  a  new  Regulation  allowing  at  least  part  of  the  aids  which  are 
currently covered. A few coal-producing Member States showed less concern, either because 
they already today do not grant State aid, or because they believe that general State aid rules 
would be sufficient to provide support to their coal industry. 

3. Impact Assessment 

The  European  Commission  has  assessed  various  policy  options  that  address  the  possible 
adverse effects of mine closures that may follow a phasing-out of subsidies, especially with 
regard to their social and environmental aspects. 

Option 1: the baseline scenario 

Under the baseline scenario, the Commission would not propose a new sector-specific legal 
instrument  applicable  after  the  expiry  of  the  Coal  Regulation.  Only  general  State  aid  rules 
would apply to the hard coal sector from 2011. 

Option 2: Commission Guidelines 

Under  option  2,  the  Commission  would  adopt  guidelines  based  on  Article  107(3)(c)  of  the 
Treaty on the Functioning of the European Union ("TFEU"), which would be similar to those 
adopted  in  the  shipbuilding  and  steel  sectors  and  would  allow  Member  States  to  grant  aid 
limited to cover payments by coal mine undertakings to workers made redundant or accepting 
early retirement due to mine closures, the costs of counselling such workers and the costs of 
vocational retraining. It may also cover costs to finish ongoing contracts (for a maximum of 6 
months) or the costs related to cancelling such contracts, whatever of both is lower. Moreover, 
it  may  cover  expenditure  incurred  for  the  immediate  cleaning  and  rehabilitation  of  the 
production  sites,  but  could  not  cover  the  sometimes  significant  amounts  involved  in  the 
rehabilitation of the underground as their scope and duration (sometimes even eternal) would 
exceed what can be authorised under Article 107(3)(c) TFEU. 

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Option 3: Council Regulation allowing time-limited operating aid (closure aid) 

Under option 3, the Commission would propose a Council Regulation on the basis of Article 
107(3)(e)  TFEU.  The  Regulation  would  allow  Member  States  to  grant  clearly  degressive 
operating aid aimed at covering current production losses as long as it accompanies an orderly 
winding-down  of  activities  in  the  context  of  a  well-defined  mine  closure  plan  (concerning 
only mines already existing today). This would be a gradual phasing-out of operating aid over 
a maximum period of 10 years. 

Option  4:  Council  Regulation  allowing  aid  to  cover  exceptional  costs  (inherited  social  and 
environmental liabilities) 

Under option 4, the Commission would propose a Council Regulation on the basis of Article 
107(3)(e) TFEU. This Regulation would allow Member States to grant aid for the social and 
environmental costs linked to the closure of coal mines, such as social welfare benefits and 
costs related to the rehabilitation of the former coal mining sites, as defined in the Annex of 
the current Coal Regulation. 

Option 5: the combination of options 3 and 4 

Under option 5, the Commission would propose a Council Regulation on the basis of Article 
107(3)(e) TFEU that allows Member States to grant both, closure aid (as in option 3) and aid 
to cover exceptional costs (as in option 4). 

Option 6: prolongation by 10 years of the current Coal Regulation 

Under option 6, the Commission would propose to the Council to prolong Council Regulation 
1407/2002  -  as  it  stands  today  -  by  a  further  10  years,  i.e.  till  the  end  of  2020.  This  would 
differ  from  option  5  by  removing  the  conditionality  with  regard  to  the  closure  of  the  mines 
and the possibility to grant investment aid. 

The  various  options  have  been  compared  under  the  assumption  that  the  concerned  Member 
States  would  indeed  grant  aid as  allowed  under  the  respective  options.  Sector-specific  State 
aid rules only provide the possibility - not an obligation - for State aid; the impact assessment 
cannot prejudge on the decisions that Member States will take with regard to State aid. 

From an economic point of view, option 2 seems to be preferable to the baseline scenario in 
terms of mitigating the direct economic impact on the most concerned regions and industries. 
At  the  same  time,  it  is  preferable  to  options  3  to  5  in  terms  of  minimizing  the  impact  on 
competition. 

From the social point of view, option 5 gives the most favourable result when compared to the 
baseline  scenario.  The  combination  of  a  gradual  closure  of  mines,  allowing  maximizing 
(early)  retirement  possibilities,  with  complementary  support  in  terms  of  counseling  and 
retraining  effectively  reduces  the  negative  social  impact  of  the  mine  closures  in  the  regions 
concerned. Although it does not promote the creation of permanent jobs, it directly addresses 
the  problem  that  the  social  impact  of  mine  closures is geographically concentrated in a few 
regions. 

From an environmental point  of view,  there  is a lot of uncertainty. Although the  immediate 
environment  of  the  mines  would  certainly  benefit  from  an  immediate  or  almost  immediate 
stop  of  production  (options  1,  2  and  4),  the  picture  is  uncertain  with  regard  to  global 

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greenhouse  gas  emissions  when  the  emissions  from  the  burning  of  coal  by  electricity 
producers  are  taken  into  account.  This  uncertainty  results  from  the  high  substitution  rate  of 
domestic  coal  by  imported  coal.  Although  this  would  not  be  a  100%  substitution,  the 
difference  between  the  policy  options  would  depend  upon  the  modalities  of  the  national 
policies with regard to favouring the switch to other energy sources. Finally, with regard to 
the local impact, we need to consider that option 5 ensures the financing of the rehabilitation 
of  the  mining  sites  and  the  gradual  closure  of  mines  allows  to  better  taking  account  of 
preparations that need to be done well in advance of the closure. 

The  impact  assessment  concludes  that  there  is  no  clear-cut  objective  preference  for  one 
particular policy option. Options 2 and 5 stand out as the most adequate options to attain the 
policy  objective  of  cushioning  the  impact  of  the  mine  closures,  but  taking  account  of  the 
different legal constraints imposed by Article 107(3) (c) and Article 107 (3) (e), namely that 
no operating aid can be granted under the former. 

As for a simple prolongation of the current Coal Regulation (option 6), past experience with 
that  Regulation  has  shown  that  its  degressivity  and  the  conditions  attached  are  too  weak  to 
ensure an effective restructuring of the coal industry. On the contrary, Member States could 
deviate  from  the  policy  objective  by  simply  continuing  to  provide  production  aid  to 
uncompetitive mines without a clear commitment for closure. It follows that the same mining 
undertakings could still be uncompetitive at the new expiry date of the Regulation in 10 years. 
The underlying problem of non-competitiveness would not be solved, but just delayed. 

Based on the results of the impact assessment, the Commission has decided to propose a new 
Council Regulation based on option 5. Indeed, mine closures will have a strong social impact 
concentrated  on  a  few  regions  in  the  EU  which  requires  an  adequate  transitional  period. 
During this transitional period, operating aid will be necessary to ensure an appropriate and 
progressive  phasing  out.  For  the  legal  reasons  developed  below,  this  objective  can  only  be 
achieved with a Council regulation based on Article 107(3)(e). In the context of the aftermath 
of  the  economic  and  financial  crisis  and  taking  into  account  the  Commission's  declared 
stronger focus on the social dimension of European policy making, an additional instrument 
for Member States to soften the social and regional impact of mine closures will contribute to 
enhance the social cohesion of Europe's regions. 

4. Legal elements of the proposal 

According  to  Article  107(1)  TFEU,  any  aid  granted  by  a  Member  State  or  through  State 
resources  in  any  form  whatsoever  which  distorts  or  threatens  to  distort  competition  by 
favouring  certain  undertakings  or  the  provision  of  certain  goods  shall  be  incompatible  with 
the  internal  market,  in  so  far  as  it  affects  trade  between  Member  States,  save  as  otherwise 
provided for in the Treaty. 

Article  107(2)  TFEU  provides  that  certain  aid  is  automatically  compatible  with  the  internal 
market. Article 107(3) TFEU lists the aid that the Commission may declare to be compatible 
with  the  internal  market.  Of  particular  interest  is  Article  107(3)(c)  which  provides  for 
derogations  for  aid  granted  to  facilitate  the  development  of  certain  economic  areas,  where 
such aid does not adversely affect trading conditions to an extent contrary to the EU interest. 

Article  107(3)(e)  provides  that  other  categories  of  aid  compatible  with  the  internal  market 
may be specified by decision of the Council acting by a qualified majority on a proposal from 
the Commission. 

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The  Commission  estimates  that  the  type  of  State  aid  foreseen  in  the  present  proposal  - 
especially when it comes to operating aid of a significant amount and for a long duration – 
goes beyond the possibilities offered by Article 107(3)(c) TFEU. Therefore, the Commission 
proposes to the Council to make use of Article 107(3)(e) in order to define the categories of 
State aid in the hard coal sector that the Commission may declare compatible with the internal 
market. 

5. Budgetary implications 

The proposal has no implications for the Community budget. 

6. Detailed explanation of the proposal 

The  Commission  proposes  a  sector-specific  State  aid  regime  that  is  to  be  considered  as  a 
transitory  regime  towards  the  full  application  of  general  State  aid  rules  in  the  (hard)  coal 
sector. 

In addition to the possibilities offered by the general State aid rules, the  proposal offers the 
possibility to declare two types of aid to the hard coal industry as compatible with the internal 
market: closure aid and aid to cover exceptional costs. 

Closure aid 

Closure  aid  is  operating  aid  designed  to  cover  the  current  production  losses  of  production 
units that are planned for closure. It allows a gradual closure process of uncompetitive coal 
mines. 

This type of aid may only be granted to coal mines in the context of a definitive closure plan. 
Therefore, aid is degressive and must be recovered in case the concerned mine is not closed. 
Such  aid  can  only  be  granted  to  production  units  that  were  already  active  before  the 
Commission made its proposal. 

Early discussions with the concerned Member States have shown that unexpected events may 
necessitate  a  temporary  stabilisation  or  increase  of  subsidies  between  successive  years  in 
order to allow a coal mine to pursue its activity until the planned closure date. Therefore, the 
Commission decided to slightly  deviate  from one of the modalities described  in  option  5 of 
the  impact  assessment  report:  while  maintaining  the  overall  obligation  of  significant 
degressivity, it proposes a rate of degressivity defined between successive periods of fifteen 
months  (rather  than  yearly).  It  proposes  a  rate  of  degressivity  of  minimum  33%  between 
successive periods of fifteen months and a maximum duration of the closure plan of 4  years. 

The  proposal  also  contains  safeguards  to  avoid  overcompensation  and  to  limit  possible 
distortions of competition in the energy markets. 

Aid to cover exceptional costs 

Such aid aims to cover costs which are not related to current production and which arise in the 
context of mine closures, such as so-called social and environmental inherited liabilities. The 
annex  of  the  proposed  Regulation  includes  an  exhaustive  list  of  cost  categories  that  can  be 
covered. 

Procedures 

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The  proposal  contains  procedural  provisions  which  are  very  similar  to  those  of  Council 
Regulation (EC) No 1407/2002 and which mainly clarify how such aid is to be notified to the 
Commission  in  order  to  allow  the  Commission  a  thorough  assessment  before  considering 
authorisation.

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2010/0220 (NLE) 

Proposal for a 

COUNCIL REGULATION (EU) No .../… 

on State aid to facilitate the closure of uncompetitive coal mines 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 107(3)(e) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Parliament2, 

Having regard to the opinion of the European Economic and Social Committee3, 

Having regard to the opinion of the Committee of the Regions4, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Council  Regulation  (EC)  No  1407/20025  of  23  July  2002  on  State  aid  to  the  coal 
industry expires on 31 December 2010.  

The small contribution of subsidised coal to the overall energy mix no longer justifies 
the maintenance of such subsidies with a view of securing the supply of energy on a 
Union level. 

The Union's policies of encouraging renewable and lower carbon fossil fuels for power 
generation  do  not  justify  the  indefinite  support  for  uncompetitive  coal  mines.  The 
categories of aid permitted by Regulation (EC) No 1407/2002 should therefore not be 
continued indefinitely. 

However, in the absence of sector-specific State aid rules, only the general State aid 
rules will apply to coal. In this context, uncompetitive coal mines, currently benefiting 
from aid under Regulation (EC) No 1407/2002, may no longer be eligible for aid and 
may be forced to close.  

(5)  Without prejudice to the general State aid rules, Member States should be able to take 
measures  to  alleviate  the  social  and  regional  consequences  of  the  closure  of  those 

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OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 205, 2.8.2002, p.1 

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mines,  that  is  to  say  the  orderly  winding  down  of  activities  in  the  context  of  an 
irrevocable closure plan and/or the financing of exceptional costs, inherited liabilities 
in particular. 

(6) 

(7) 

(8) 

(9) 

This Regulation marks the transition of the coal sector from sector-specific rules to the 
general State aid rules applicable to all sectors. 

In order to minimise the distortion of competition in the internal market resulting from 
aid,  such  aid  should  be  degressive  and  strictly  limited  to  production  units  that  are 
irrevocably planned for closure. 

In  order  to  mitigate  the  negative  environmental  impact  of  aid  to  coal,  the  Member 
State should provide a plan of appropriate measures, for example in the field of energy 
efficiency, renewable energy or carbon capture and storage.  

Undertakings should also be eligible for aid to cover costs which, in accordance with 
normal accounting practice, do not directly affect the cost of production. Such aid is 
intended  to  cover  exceptional  costs  that  arise  from  the  closure  of  their  production 
units. In order to avoid such aid unduly benefiting undertakings that close only some 
of their production sites, the undertakings concerned should keep separate accounts for 
each of their production units. 

(10) 

In  accomplishing  its  task,  the  European  Commission  should  ensure  that  normal 
conditions of competition are established, maintained and complied with. With regard 
to more especially the electricity market, aid to the coal industry should not be such as 
to  affect  electricity  producers'  choice  of  sources  of  primary  energy  supply. 
Consequently,  the  prices  and  quantities  of  coal  should  be  freely  agreed  between  the 
contracting parties in the light of prevailing conditions on the world market. 

(11)  The application of this Regulation does not exclude that aid to the coal industry may 

be found compatible with the internal market on other grounds; 

(12)  The Commission should assess the measures notified on the basis  of this Regulation 
and  take  decisions  in  accordance  with  the  requirements  of  Council  Regulation  (EC) 
No  659/1999  of  22  March  1999  laying  down  detailed  rules  for  the  application  of 
Article 93 of the EC Treaty6. 

HAS ADOPTED THIS REGULATION: 

SECTION I 
INTRODUCTORY PROVISIONS 

Article 1 
Definitions 

For the purposes of this Regulation, the following definitions shall apply: 

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OJ L83, 27.3.1999, p.1 

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(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

"coal" means high-grade, medium-grade and low-grade category A and B coal within 
the meaning of the international codification system for coal laid down by the United 
Nations Economic Commission for Europe7; 

"closure" means the permanent cessation of production and sales of coal; 

"closure  plan"  means  a  plan  drawn  up  by  a  Member  State  providing  for  measures 
culminating in the definitive closure of coal production units; 

"coal  production  unit"  means  underground  or  opencast  coal  workings  and  related 
infrastructure  capable  of  producing  raw  coal  independently  of  other  parts  of  the 
undertaking; 

"coal year" means calendar year or another 12-month period used as a reference for 
contracts in the coal industry; 

"production costs" means total costs related to current production, including mining 
operations,  operations  for  the  dressing  of  coal,  in  particular  washing,  sizing  and 
sorting,  and  transport  to  the  delivery  point,  normal  depreciation  and  market-based 
interest charges on borrowed capital. 

"current  production  losses"  means  the  positive  difference  between  the  coal 
production  cost  and  the  selling  price  at  delivery  point  freely  agreed  between  the 
contracting parties in the light of the conditions prevailing on the world market; 

"coal imports" mean any consignment of coal products originating in a third country 
and entering the customs territory of the Community for purposes other than transit, 
which is intended for the production of electricity or to supply the coke ovens of a 
Member State. 

SECTION II 
COMPATIBILITY OF AID 

Article 2 
Principle 

1. In the context of definite closure of uncompetitive mines, aid to the coal industry may be 
considered compatible with the proper functioning of the internal market if it complies with 
the provisions of this Regulation. 

2.  Aid  shall  cover  only  costs  in  connection  with  coal  for  the  production  of  electricity,  the 
combined production of heat and electricity, the production of coke and the fuelling of blast 
furnaces in the steel industry, where such use takes place in the Union. 

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International  system  for  the  codification  of  medium-grade  and  high-grade  coal  (1998).  International 
classification of coal in seam (1998) and International system of codification for low-grade coal (1999). 

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Article 3 
Closure aid 

1. Aid to an undertaking intended specifically to cover the current production losses of coal 
production units may be considered compatible with the internal market only if it satisfies the 
following conditions: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

the operation of the production units concerned must form part of a closure plan the 
deadline of which does not extend beyond 1 October 2014 ; 

the  production  units  concerned  must  be  closed  definitively  in  accordance  with  the 
closure plan; 

the  aid  notified  must  not  exceed  the  difference  between  the  foreseeable  production 
costs  and  the  foreseeable  revenue  for  a  coal  year;  the  aid  actually  paid  must  be 
subject to annual correction, based on the actual costs and revenue, at the latest by 
the end of the coal production year following the year for which the aid was granted; 

the amount of aid per tonne coal equivalent must not cause prices for Union coal at 
delivery  point  to  be  lower  than  those  for  coal  of  a  similar  quality  from  third 
countries; 

the production units concerned must have been in activity on 31 December 2009; 

the  overall  amount  of  closure  aid  granted  by  a  Member  State  for  any  particular 
undertaking must follow a downward trend, where the reduction between successive 
periods of  fifteen months must not be less than 33 percent of the aid provided in the 
initial fifteen month period of the closure plan; 

the  overall  amount  of  closure  aid  to  the  coal  industry  of  a  Member  State  must  not 
exceed, for any year after 2010, the amount of aid granted by that Member State and 
authorised  by  the  Commission  in  accordance  with  Articles  4  and  5  of  Regulation 
(EC) No 1407/2002 for the year 2010. 

the  Member  State  must  provide  a  plan  to  take  measures  aimed  at  mitigating  the 
environmental  impact  of  the  use  of  coal,  for  example  in  the  field  of  energy 
efficiency,  renewable  energy  or  carbon  capture  and  storage.  The  inclusion  of 
measures constituting State aid within the meaning of Article 107 (1) in such a plan 
is  without  prejudice  to  the  notification  and  standstill  obligations  imposed  on  the 
Member  State  with  respect  to  these  measures  by  Article  108  (3)  TFEU,  and  to  the 
compatibility of these measures with the internal market." 

2. If the production units to which aid is granted pursuant to paragraph 1 are not closed at the 
date fixed in the closure plan as authorised by the Commission, the Member State concerned 
shall recover all aid granted in respect of the whole period covered by the closure plan. 

Article 4 
Aid to cover exceptional costs 

1.  State  aid  granted  to  undertakings  which  carry  out  or  have  carried  out  an  activity  in 
connection  with  coal  production  to  enable  them  to  cover  the  costs  arising  from  or  having 

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arisen  from  the  closure  of  coal  production  units  and  which  are  not  related  to  current 
production, may be considered compatible with the internal market provided that the amount 
paid does not exceed such costs. Such aid may be used to cover: 

(a) 

the  costs  incurred  only  by  undertakings  which  are  carrying  out  closure  of  or  have 
closed production units, including undertakings benefiting from closure aid; 

(b) 

the costs incurred by several undertakings. 

2. The categories of costs covered by paragraph 1 are defined in the Annex. Paragraph 1 shall 
not apply to costs resulting from non-compliance with environmental regulations. 

Article 5 
Cumulation 

1.  The  maximum  amount  of  aid  authorised  under  this  Regulation  shall  apply  regardless  of 
whether the aid is financed entirely from State resources or is partly financed by the Union. 

2. Aid authorised under this Regulation shall not be combined with other State aid within the 
meaning of Article 107(1) TFEU or with other forms of Community financing for the same 
eligible costs if such overlapping results in an aid amount higher than that authorised under 
the provisions of this Regulation. 

Article 6 
Separation of accounts 

All aid received by undertakings shall be shown in the profit-and-loss accounts as a separate 
item  of  revenue  distinct  from  turnover.  Undertakings  benefiting  from  aid  under  this 
Regulation shall keep precise and separate accounts for each of their production units and for 
other economic activities which are not related to coal mining. The funds shall be managed in 
such  a  way  that  there  is  no  possibility  of  them  being  transferred  to  other  production  units 
which are not part of the closure plan or to other economic activities of the same undertaking. 

SECTION III 
PROCEDURES 

Article 7 
Information to be provided by Member States 

1. In addition to the provisions of Council Regulation (EC) No 659/1999 of 22 March 1999 
laying down detailed rules for the application of Article 93 of the EC Treaty8, aid as referred 
to in this Regulation shall be subject to the special rules laid down in paragraphs 2 to 6. 

2. Member States which intend to grant closure aid as referred to in Article 4 shall notify a 
closure plan for the production units concerned to the Commission. The plan shall contain at 
least the following: 

8 

OJ L 83, 27.3.1999, p.1 

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(a) 

(b) 

identification of the production units; 

the real or estimated production costs for each production unit per coal year; 

estimated coal production, per coal year, of production units forming the subject of a 

(c) 
closure plan; 

(d) 

the estimated amount of closure aid per coal year. 

3. Member States shall notify any amendments to the closure plan to the Commission. 

4. Member States shall notify all the aid which they intend to grant to the coal industry under 
this Regulation during a coal year. They shall submit to the Commission all details relevant to 
the calculation of the foreseeable production costs and their relationship to the closure plans 
notified to the Commission pursuant to paragraph 2. 

5. Member States shall inform the Commission of the amount and of the calculation of the aid 
actually paid during a coal year no later than six months after the end of that year. Where any 
corrections are made to the amounts originally paid during a given coal year, Member States 
shall inform the Commission before the end of the following coal year. 

6. When notifying aid as referred to in Articles 4 and 5 and when informing the Commission 
on  aid  actually  paid,  Member  States  shall  supply  all  the  information  necessary  for  the 
Commission to verify that the provisions of this Regulation are complied with. 

SECTION IV 
FINAL PROVISIONS 

Article 8 
Implementing measures 

The Commission shall take all necessary measures for the implementation of this Regulation. 
It may establish a joint framework for communication of the information referred to in Article 
7. 

Article 9 
Entry into force 

1.  This  Regulation  shall  enter  into  force  on  the  20th  day  following  its  publication  in  the 
Official Journal of the European Union. It shall apply from 1 January 2011. 

2. This Regulation shall expire on 31 December 2026. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

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Done at Brussels, […] 

For the Council 
The President 
[…] 

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ANNEX 

Definition of costs referred to in Article 4 

1.  Costs  incurred  and  cost  provisions  made  only  by  undertakings  which  are  closing 
production units 

Exclusively  the  following  cost  categories  and  only  if  they  result  from  the  closure  of  coal 
production units: 

(a)  the  cost  of  paying  social  welfare  benefits  resulting  from  the  pensioning-off  of  workers 
before they reach statutory retirement age; 

(b) other exceptional expenditure on workers who lose their jobs; 

(c) the payment of pensions and allowances outside the statutory system to workers who lose 
their jobs and to workers entitled to such payments before the closure; 

(d) the cost covered by the undertakings for the readaptation of workers in order to help them 
find new jobs outside the coal industry, especially training costs; 

(e)  the  supply  of  free  coal  to  workers  who  lose  their  jobs  and  to  workers  entitled  to  such 
supply before the closure, or the monetary equivalent; 

(f) residual costs resulting from administrative, legal or tax provisions which are specific to 
the coal industry; 

(g) additional underground safety work resulting from the closure of production units; 

(h) mining damage provided that it has been caused by the production units subject to closure; 

(i) costs related to the rehabilitation of former coal mining sites, notably: 

- residual costs resulting from contributions to bodies responsible for water supplies and for 
the removal of waste water, 

- other residual costs resulting from water supplies and the removal of waste water; 

(j) residual costs to cover former miners' health insurance; 

(k) costs related to the cancelling or modification of ongoing contracts (for a maximum value 
of 6 months of production); 

(l)  exceptional  intrinsic  depreciation  provided  that  it  results  from  the  closure  of  production 
units. 

The increase in the value of the land shall be deducted from the eligible costs for categories 
(g), (h) and (i). 

2. Costs incurred and cost provisions made by several undertakings 

(a) increase in the contributions, outside the statutory system, to cover social security costs as 
a result of the drop, following closure of production units, in the number of contributors; 

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(b) expenditure, resulting from the closure of production units, on the supply of water and the 
removal of waste water; 

(c)  increase  in  contributions  to  bodies  responsible  for  supplying  water  and  removing  waste 
water,  provided  that  this  increase  is  the  result  of  a  reduction,  following  the  closure  of 
production units, in the coal production subject to levy. 

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