On July 1, Blackjewel Energy filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of West Virginia. Numerous coal companies have filed for bankruptcy in recent years, but none in quite such a dramatic fashion as Blackjewel. And while the case has gained notoriety for the company’s affronts to working miners, its impact on the imperiled black lung benefit fund is also troublesome.
Among the bizarre and unsavory incidents in the days and weeks after Blackjewel’s bankruptcy filing, the company withdrew direct deposits of paychecks that had already shown up in workers’ bank accounts, and now-ousted CEO Jeff Hoops wrote an open letter to his employees soliciting their sympathies for having had to pay out-of-pocket to charter a private plane from Florida to West Virginia for court. Mr. Hoops’ pleas notwithstanding, the apparent wage theft prompted a group of coal miners to occupy a railroad track in Harlan County, Ky., preventing the sale of a stockpile of coal they themselves had mined until they are paid for their work.
According to court documents filed in July, Blackjewel has also failed to pay $9.7 million in taxes to a federal fund that provides healthcare and disability benefits to miners with black lung whose employers have gone bankrupt.
Did you get that? Blackjewel’s workers cannot depend on Blackjewel to provide black lung benefits as the company has gone bankrupt, and Blackjewel has not paid nearly $10 million in taxes that provides a safety net for workers in exactly that situation.
A motion to resolve this and other outstanding tax debts will be heard in court on September 4.
Under the Black Lung Benefits Act of 1973, any coal company found by the Department of Labor to be the “responsible operator” for a given miner’s black lung affliction is required to provide healthcare and disability benefits for that miner. The law also requires that companies pay a small tax on each ton of coal mined to maintain the Black Lung Disability Trust Fund. (This is the tax that Blackjewel has failed to pay.) Historically, this tax was set at a rate of $1.10 per ton for coal mined underground, and $.55 per ton for surface-mined coal. On January 1 of 2019, that rate was cut in half. The trust fund is now projected to be $15 million in debt to the general treasury (a.k.a. taxpayers) within 30 years.
As with nearly every other aspect of Blackjewel’s bankruptcy, the company’s failure to honor commitments to miners with black lung is sloppy and shameful, but not necessarily unique.
In 2007, Peabody Energy spun off a number of operations that carried substantial obligations for black lung benefits, retiree healthcare and pensions into a new company called Patriot Coal, which was underfunded and shaky from its very inception as a direct result of being saddled with obligations and liabilities Peabody sought to evade. Patriot subsequently acquired additional mines with large obligations to retirees from Arch Coal before filing for bankruptcy in 2015, leaving over $1 million in black lung benefits, healthcare costs and pension payments hanging in the balance.
Ultimately, the DOL compelled Arch and Peabody to resume payments to black lung beneficiaries they had attempted to shove off onto Patriot, but who had never actually worked at a Patriot mine. Arch Coal cried foul, and unsuccessfully sued the DOL in federal court, attempting to continue dodging obligations to employees suffering from the fatal disease.
Benefits owed to miners for whom Patriot was found to be the responsible operator were offloaded onto the Black Lung Disability Trust Fund after the company’s liquidation.
While Arch and Peabody attempted to pass black lung benefits obligations onto Patriot, Westmoreland Coal was granted permission by a Texas bankruptcy court to outright default on $21.8 million in payments owed to black lung beneficiaries earlier this year. These payments have now been added to the already-strained Black Lung Disability Trust Fund.
Appalachian coal markets have been in decline for decades now, and waves of company bankruptcies have come crashing down one after the other over the past few years. Despite bombastic rhetoric and regulatory rollbacks by the Trump administration, analysts agree that this trend will continue and the coal industry will never rebound to a position of economic prominence.
A transition to cleaner energy sources is essential, but what will become of the working people who sacrificed their health in order to power our communities up to this point? Where are the supposedly benevolent bosses who claim to so deeply love the American coal miner? Using bankruptcy as an escape hatch, they are simply walking away from their obligations to sick and disabled miners.
The ongoing barrage of bankruptcies will continue to jeopardize the payment of black lung benefits directly by coal companies, and rapidly push the federal Black Lung Disability Trust Fund into deep debt.
The Black Lung Association is responding with a surge of grassroots activism pressing Congress to shore up the trust fund, a movement that parallels efforts by the United Mine Workers of America urging lawmakers to save imperiled pensions. Coal-state Democrats have presented a handful of bills designed to address both federal black lung benefits and miners’ pensions, but these measures are unlikely to come up for a vote in Majority Leader Mitch McConnell’s Senate. But McConnell’s obstructionism has only fueled the organizing of miners and their allies.
Look for more on that in an upcoming article in The Appalachian Voice exploring the roots and recent resurgence of the Black Lung Association.
Read about the miners’ July trip to Washington, D.C., to ask lawmakers to support black lung benefits.