Advocates respond to new rule cracking down on coal industry’s abandonment of black lung liabilities

Amid new coal mergers, new Department of Labor safeguard closes “self-insurance” loopholes that currently allow industry to dump liabilities on Black Lung Trust Fund

For Immediate Release

December 11, 2024

Contact:

Trey Pollard, trey@pollardcommunications.com, 202-904-9187

COAL COUNTRY – Today, the Biden Administration’s Department of Labor released a new rule to address a long-abused loophole that allows coal companies to walk away from their legal duty to pay benefits to miners who worked for them and contracted black lung. The new safeguard takes aim at the so-called self-insurance loophole, under which coal companies have dumped nearly a billion dollars in black lung liabilities onto the Black Lung Disability Trust Fund – a safety net already riddled with debt and backed up by taxpayer dollars.

“Coal CEOs owe a living to the men and women who sacrificed their health in the mines to make them millions in profits – but they’ve regularly abandoned these ailing miners through financial tricks and the self-insurance loophole. It’s about time the federal government cracked down by hammering this loophole closed and holding coal companies accountable. This new rule is a great start at getting miners what they have earned and stopping the abuse of the Black Lung Disability Trust Fund,” said Quenton King, Government Affairs Specialist at Appalachian Voices.

Coal companies are legally required to cover the costs of small disability benefits and health insurance to miners that worked for them and contracted deadly black lung disease. However, prior to this rule being finalized, coal companies could self-insure through instruments such as surety bonds or collateral – and the Department of Labor’s inadequate oversight allowed companies to put down only a fraction of what they owed. As a result, self-insuring coal companies are liable for over $600 million in black lung benefits but have backed this up with only $120 million in surety or collateral – meaning just 19% of their obligations covered.

Many coal operators have then shovelled their liabilities – already inadequately self-insured – into subsidiary companies that subsequently declare bankruptcy while the operators continue business as usual. The liabilities of companies that file for bankruptcy then fall onto the Black Lung Disability Trust Fund – a resource that supports sick miners who worked for bankrupt companies, funded through the black lung excise tax on coal companies. Deeply in debt, the Black Lung Disability Trust Fund is able to meet its obligations to miners through borrowing. Through declaring bankruptcy, coal operators have been able to shift nearly $1 billion in black lung liability to the Trust Fund since 2014.

Already, concerns are arising about how black lung liabilities will be secured and covered amid the massive merger of coal giants Arch and Consol. Both heavily rely on self-insurance, and Arch has a long history of spinning off liabilities through the bankruptcy process. 

The new Department of Labor rule dramatically raises the standard for companies, requiring them to put down 100% of their liabilities as collateral, addressing the dramatic shortfalls of the past head-on and tackling the abuse of the Black Lung Disability Trust Fund through bankruptcy. In addition, the new rule requires an annual review process of self-insurers to help guarantee adequate resources are put in place.

“This is a huge step forward to stop coal executives from ripping off the Black Lung Disability Trust Fund and ensure they are accountable to their miners. Miners with black lung are losing their lives after working for coal companies that regularly turn their back on them and turn their responsibilities over to taxpayers. This rule ensures accountability and protects the public from having to pay the coal industry’s bills,” said Brendan Muckian-Bates, Policy and Advocacy Associate for Appalachian Citizens’ Law Center.

More information about the rule and the 2023 comment period under which advocates weighed in on the draft rule is available here. 

One recommended change from advocates not included in the final rule was a recommendation that the Department of Labor create a publicly-accessible data portal to help build confidence in the efficacy of changes to the regulations. 

As the rule goes into effect, it remains to be seen if its implementation will be targeted by allies of coal CEOs via the use of the Congressional Review Act, defunding or other attacks, similar to other measures designed to support miners with black lung. In 2023, Representative Scott Perry (R-PA) attempted to strip funding for the enforcement of the new law curbing silica exposure, the leading cause of the deadly resurgence of black lung throughout coal country.

“This is a common sense safeguard that will save taxpayers money and hold coal CEOs accountable. If we don’t hold companies accountable for their black lung liability, they have no incentive to prevent the disease. Anyone in Washington who takes aim at this policy will clearly show they aren’t on the side of the miners they so eagerly claim to support,” said Rebecca Shelton, Director of Policy ,for Appalachian Citizens’ Law Center.