The paper outlines the current conditions on granting of state aid to hard coal industry with respect to aid categories being applied in accordance with binding Council Regulation ( EC ) 1407/2002 of 23 July 2002. The state aid applied by coal producing countries of European Union has been particularly discussed considering the amount the aid paid by member countries. Additionally, the major problems encountered in the application of the given Coal Regulation since its entry into force, have been also specified. It also discuses the proposals of European Commission with respect to state aid rules after 2010 covering the three options i.e.: (I) Prolongation of existing Coal Regulation, (II) Investment aid option (allowing the continuation of investment aid and of aid for inherited liabilities, but phasing out operating aid), (III) and the do nothing option thus the binding Coal Regulation will expire (in this case, normal State aid rules would apply to the Coal industry as of 2011).