Department of Labor wraps up comment period on proposed rule for the authorization of black lung self-insurance
Rates of black lung disease are on the rise across coal country, and miners are getting sicker at younger ages than ever before. This crisis demands action but many of the systems put into place to protect miners and their families are falling behind or altogether broken.
The challenges are numerous. Miners are still awaiting a silica dust standard from the Mine Safety and Health Administration to curb their exposure to the dust responsible for the increase in black lung. Amid rising inflation, new research shows benefit payments to miners with black lung and their dependents have fallen far behind the cost of living. Meanwhile, coal companies are abusing outdated laws to shovel their black lung obligations to the Black Lung Disability Trust Fund – a federally administered fund for which the public provides a safety net. But these challenges are not without solutions, one of which is under consideration this month in Washington. To tackle at least part of this problem, a new rule has been proposed by the Department of Labor to fix the long-standing and problematic black lung self-insurance loophole.
The self-insurance loophole has allowed coal companies to walk away from their obligation to pay for black lung benefits. Coal operators are responsible for covering the costs of the benefits and health insurance they owe to miners with black lung. They are required to purchase commercial insurance or can self-insure through instruments such as surety bonds or collateral. However, inadequate oversight from the Department of Labor has allowed self-insuring coal companies to put up a profoundly insufficient amount of insurance.
The legal requirements for a coal operator to qualify as a self-insurer are simply not sufficient to guarantee the resources are there when miners need them. According to the Department of Labor’s own data, coal companies that self-insure are liable for $700 million in black lung benefits. Yet, they’ve backed this up with only $120 million in surety/collateral. That works out to just 17% of their obligations covered.
Coal miners who are disabled from black lung, as well as their surviving dependents, are entitled by law to modest living and medical benefits, typically paid by the coal company that the miner worked for when they got sick. The Black Lung Disability Trust Fund pays for these benefits in cases where the employer responsible for the miners’ disease cannot pay these benefits, including in cases when the employer has gone bankrupt. Through declaring bankruptcy, coal operators have been able to shift nearly $1 billion in black lung liability on to the Trust Fund in recent years. Some of these coal operators posted as little as 3% of the collateral needed to cover their current and future black lung liabilities.
We’ve seen this tactic all too often from coal CEOs: bankruptcy is used as a tool to shed their legal obligations – from black lung benefits to pensions to mine reclamation – while they find new ways to keep their own pockets stuffed with profits. In the case of the self-insurance loophole, coal CEOs raking in huge paychecks can use bankruptcy to shovel their black lung obligations onto the Trust Fund. The Trust Fund is then plunged further into debt and closer to insolvency as more and more miners get sick and fewer and fewer coal companies pay what they owe. And when the coal companies don’t pay, taxpayers pick up the tab.
Thankfully, the Biden Administration’s Department of Labor has issued a new proposal to help close the self-insurance loophole, and advocates for miners with black lung are fighting to ensure it is as strong as possible and enacted quickly.
This new law would raise the bar for coal operators who seek to self-insure. Among the changes proposed is a new requirement that coal companies set aside what they actually owe sick miners. Under the new rule, coal operators who want to qualify as self-insurers must set aside an amount equal to 120% of their current and future obligations to miners with black lung. This higher standard will help ensure that self-insured operators do not shift black lung liabilities to the Trust Fund during bankruptcy. Moreover, the rule’s requirement of an annual review and application process will help ensure that sufficient surety/collateral coverage is maintained.
Today, as the public comment period on the rule closed, Appalachian Citizens’ Law Center, Appalachian Voices, the National Black Lung Association and others submitted comments on the proposed rule. There is a lot to support. However, given past inadequacies in secured surety/collateral and enforcement, going forward we recommend the Department of Labor create a publicly-accessible data portal to help build confidence in the efficacy of changes to the regulations. You can view our comments here and see a few other questions we’re asking about the intent and impact of the proposal.
We won’t be surprised to see opposition to the rule from coal companies, but, as the Department of Labor concluded in the rulemaking, these changes are hardly burdensome to operators. If they don’t like the new requirements for self-insurance, they always have the option of purchasing a private policy.
All told, this is a significant step forward. Along with the extension of funding for the Trust Fund secured in the Inflation Reduction Act last year, the last twelve months have featured some important progress in the fight to guarantee that miners with black lung get what they are owed. We’re eager to continue to engage in the process to ensure the rule to close the self-insurance loophole is as strong as possible and implemented successfully.