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Coal bankruptcies shifted $865M in disability liabilities to taxpayers, report shows

racer254

By racer254
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racer254

racer254

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A new report from the U.S. Government Accountability Office revealed that shoddy government enforcement has allowed coal companies to transfer $865 million of disability liabilities to taxpayers during bankruptcies in recent years.

With several more-recent coal company bankruptcies looming in Eastern Kentucky, West Virginia and elsewhere, it is unclear how many millions of dollars of liabilities those companies may soon transfer to taxpayers.

The issue revolves around the Black Lung Disability Trust Fund, which exists to ensure that black lung victims receive workers’ compensation payments if their employer becomes insolvent or otherwise fails to provide those payments.

While some companies buy insurance to cover those claims, others are self-insured, and post collateral with the federal government to ensure that the companies’ black lung claims do not transfer to the trust fund.

The GAO’s report, however, showed that the collateral posted by self-insured companies is sometimes woefully inadequate.

 

Coal companies pay into the fund via a tax on the coal they produce, but the fund also borrows billions of dollars from the U.S. Treasury. In fiscal year 2019, it borrowed about $1.9 billion, according to the GAO report.

Alpha Natural Resources, James River Coal and Patriot Coal posted a combined $27.4 million of collateral before each declared bankruptcy between 2014 and 2016. The companies had hundreds of millions of dollars of liabilities, though, and shifted $865 million of those liabilities to the trust fund.

Findings from the GAO report showed that the Department of Labor has, for years, failed to take steps to prevent this liability shift to taxpayers.

“This is a failure on multiple fronts across multiple administrations,” said U.S. Rep. Alma Adams, D-N.C., during a congressional subcommittee hearing Wednesday. “What we’re seeing here is nothing less than a gaming of the system. The winners are the coal operators and their Wall Street creditors, the losers are the American taxpayers.”

“In other words, the costs of black lung disease have been socialized, and the gains from DOL’s failed oversight have been privatized,” Adams said.

 

The department declined to use enforcement tools to force the company to post adequate collateral, failed to regularly review the financial condition of the coal companies, and did not factor in the companies’ future benefit liability amounts, according to the report.

Several other self-insured coal operators have since declared bankruptcy, including Murray Energy, Westmoreland Coal and Cambrian Coal, which was previously operated by Jim Booth, a coal baron from Martin County who previously served as a University of Kentucky board trustee.

Department of Labor officials estimated that Westmoreland will transfer $17.4 million to the fund as a result of its bankruptcy. The amount of other transfers has not yet been determined.

The department responded to these findings Wednesday during a hearing of the U.S. House Subcommittee on Workforce Protections. Officials said the department has strengthened its policies and will now take strict action against companies that fail to post adequate collateral.

 

“It was a broken process that had been in place for at least 20 years, and I agree, the process was woefully inadequate,” said Julia Hearthway, director of the Office of Workers’ Compensation Programs for the Department of Labor.

Hearthway assured the subcommittee that the department has accepted all recommendations from the GAO report.

Self-insured coal operators will be required to submit regular financial audits, and the department will use its power to impose fines against companies that do not post adequate collateral.

Miners’ black lung benefits are not at risk of lapsing, Hearthway said.

U.S. Rep. Pramila Jayapal, D-Wa., encouraged the department to hold individual CEOs accountable when their companies fail to post collateral or comply with DOL requests.

“It’s only logical that mine operators are responsible for paying for these costs since their mines caused the miners’ lung disease and their companies profited from the miners’ labor,” Jayapal said. “But too often, as we’re seeing, these mining companies are forcing taxpayers to foot the bill for their failures.”

Black lung disease is incurable. It often leads to difficulty breathing and an early death. Recent reports from the National Institute for Occupational Safety and Health showed that black lung is becoming more common, particularly among miners in Central Appalachia, which includes Eastern Kentucky.

As many as one in five miners in Central Appalachia show evidence of black lung — the highest rate of disease in 25 years.

During fiscal year 2019, about 25,700 coal miners or their dependents received black lung benefits, which can include health care costs and monthly stipends.

According to the Department of Labor, the average annual health care cost per miner was $8,225 in fiscal year 2019.

The GAO warned in a previous report that the tax funding the Black Lung Disability Trust Fund was scheduled to be cut in half at the beginning of 2019, which would force the fund to borrow even more from the U.S. Treasury to remain solvent.

Following months of protests from afflicted coal miners and their widows, Congress included, in its fiscal year 2020 spending bill, a one-year extension of the tax at its former rate.

The recent GAO report again cautioned lawmakers against lowering the tax.

“With less revenue from the coal tax, the Trust Fund will likely need to borrow more from Treasury’s general fund, and taxpayers will ultimately be responsible for repaying this accumulating debt,” the report said.

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Ez ryder

Ez ryder

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5 hours ago, Zambroski said:

Just goes to show...the government being in charge of healthcare is really a bad idea.  But hay!  Free!!!!!

no this is not govenments fault . govenment heathcare will be more like the VA oops or more like the DMV oh wait no no more like airport security . no no not like that more like they run the GSA yeah like that 

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spin_dry

spin_dry

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20 minutes ago, Ez ryder said:

that fuels your kids house in maple grove.  you should call her and tell them to turn off all the lights 

What does that have to do with the fact that coal is a disgusting, dirty, and inefficient source of energy. You’re weird. 

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Anler

Anler

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Just now, Ez ryder said:

not really that ineffective it powers massive swaths of this countery . if you shut it off today we would be fucked

Compared to other sources it is. That's why power companies are shutting down coal plants. 

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