New labor rule will prevent coal operators from putting black lung liabilities on taxpayers’ backs • West Virginia Watch

A new final rule was issued by the federal Department of Labor last week that will require coal operators who self-insure to post adequate security bonds that cover all of their black lung benefit liabilities.

The rule comes as a protection for coal miners who currently or could in the future receive black lung benefits, which are supposed to be paid by the operators who employed them and who, through that employment, exposed them to dangerous silica dust that causes black lung disease. 

“This is a long-overdue rule that will have a significant impact in helping to ensure benefits to miners who have contracted black lung will be paid, and be paid by those responsible — the coal companies,” said Cecil Roberts, president of the United Mine Workers of America, in an emailed news release earlier this week.

The finalized rule requires self-insured coal companies to post collateral — through surety bonds or other forms — that is equal to 100% of their black lung benefit liabilities.

With the new rule, coal companies that merge or file for bankruptcy will not be able to buck their responsibility for paying out benefits. Roberts said coal companies often use the bankruptcy process to shift these expenses to taxpayers by transferring the responsibility to the federal Black Lung Disability Trust Fund. 

“That means taxpayers are now picking up the tab for coal companies that did not adequately protect their workers from dangerous levels of respirable coal dust,” Roberts said in his statement.

The trust fund exists to cover benefits for miners when no specific coal operator can be held responsible for their illness or when the operators fail to pay their share. Self-insured coal operators, however, are obligated to pay their own expenses. 

Between 2014 and 2016, bankruptcies at just three coal companies resulted in an estimated $865 million in benefit payments being transferred to the taxpayer-funded trust, according to a 2020 report from the U.S. Government Accountability Office. The new rule came partially in response to that report, Muckian-Bates said.

The finalized rule is especially timely as two of the country’s largest coal producers — Arch Resources and CONSOL Energy — are in the middle of a merger that, once complete, will create a new, $5 billion coal company based in Pennsylvania. 

Those companies combined, Muckian-Bates said, report at least $300 million in black lung liability that — without the rule — could potentially be passed on to the trust fund.

Nationwide, Muckian-Bates said, it’s known that black lung benefit liabilities at self-insured coal companies total at least $615 million, but Milliman — a risk analysis consulting group — estimates that amount could actually be much higher, totaling between $9 billion and $14 billion.

Despite the high liability, Roberts said that only $119 million in security has been posted by self-insured coal companies to cover the costs of benefits.

If bankruptcies or mergers occur — which is likely given the ongoing decline in the coal market — the difference between what is posted and what is owed would be passed on to the trust fund, threatening its solvency and the access of benefits for coal miners who rely on it, Muckian-Bates said.

“This is a powerful rule to ensure that as the coal market becomes a bit more unstable — knowing that large companies have used these bankruptcies to shed their liabilities — this ensures that they can’t do that now,” Muckian-Bates said. “They can’t transfer that [liability] to a trust fund that’s … been a target sometimes of certain administrations.”

The rule is scheduled to go into effect on Jan. 11.