A failing coal industry can no longer afford keep its promises to pay health and pension benefits to retired coal miners, who have toiled underground for 20 years or more and who may have emerged with significant health ailments. What now? Part of the solution depends on how blame is assigned for coal’s woes.
Whether the problems have been caused by excessive regulations, intense competition or diminished demand, the likely outcome will require some federal assistance — just as the government has done for other beaten down industries, such as automotive and banking businesses in 2008.
A bipartisan bill is thus in the hopper to reallocate some funds set aside for mine cleanups so that retirees could get the health and pension benefits that they have earned — a fix that doesn’t exactly win the hearts of the green movement. Last December, the measure had strong support but it got blocked by conservatives. Proponents are trying again and will rally in Washington on September 8.
“Our miners worked their entire lives underground to put food on the table and send their kids to college. They deserve the full pension and health benefits they were promised,” said Senator Sherrod Brown, D-Ohio.
The United Mine Workers of America’s pension fund, established in 1974, is now severely underfunded, given the bankruptcies of 50 coal companies. As such, only 10,000 active workers are supporting 120,000 retirees. Insolvency isn’t far off. At that point, the Pension Benefit Guaranty Corp. covers the losses — except that it, too, would face extinction given the sheer number of claims to be made against it.
The bipartisan bill that is in both the House and Senate would do two things: It would amend the Surface Mining Control and Reclamation Act to allow for certain funds that would otherwise go to clean up abandoned mines to be directed instead to miners’ pensions. And, it would permit those retirees who lose their health care benefits to be a part of another multi-employer plan.
It’s not academic. Consider that Patriot Coal filed for bankruptcy in 2012 and again, in 2015, which at the time, allowed it to eliminate health care promises. But the United Mine Workers stepped in and found $400 million to keep those plans going for a while, but not forever. Alpha Natural Resources did the same, saying that it was necessary to keep the enterprise afloat and their survivors employed.
“Bankruptcy courts often let insolvent companies curtail expenses by shredding labor contracts and slashing retiree benefits,” says Clark Williams-Derry, director of energy finance for the Sightline Institute.
“That’s exactly what’s happened in the Alpha bankruptcy, where executives asked the court for permission to cut health and life insurance benefits for 4,500 retirees, while making 6,670 current employees ineligible for those benefits in the future.”
Not all coal companies are bailing on their commitments. Murray Energy just reached an agreement with the United Mine Workers to continue paying health benefits, albeit the retired miners will have to fork over more of their own money. Murray will also remain in the mine workers’ pension plan. It’s a deal that last for five years and that won by a 60-0 margin.
While both the coal companies and the coal unions would like to see coal return to the prominence it had held until about 2008, that scenario is unlikely. Cecil Roberts, the head of the United Mine Workers, has thus said that the ultimate solution rests with a legislative remedy that allows current retirees to get the health and pension benefits that they have been promised.
He has said that it could happen this year, although he is sure that it will happen in the next two years or so. That’s because it will be easier to find existing federal funds to keep the pension plans alive, as opposed to request a bailout after the fact. That is the logical conclusion no matter which party is in power.
But don’t underestimate politics, and egos. Senate Majority Leader McConnell, R-KY, doesn’t want to take the heat off the Obama administration and what he has termed as its “war on coal.” Some also say he is blocking legislation because he dislikes the United Mine Workers, which tried to defeat him in his 2014 senate race.
McConnell is also opposed to the current bipartisan measure on philosophical grounds: He considers it not just a taxpayer bailout but also a plan that makes non-union guys chip in to ensure that the union members are made whole. [As Sen. McConnell must surely know, non-union miners get whatever pay and benefits they receive today only because the UMWA set the table for them, negotiating the level of compensation that miners deserve in return for working in hazardous conditions. It is entirely reasonable to chip in to support the retirement of union miners who led the way to safer and healthier working conditions as well as more adequate industry-wide pay scales. — The Eagle]
“Many public and private pensions funds have over-promised benefits and underfunded contributions,” writes Rachel Greszler, senior policy analyst for the conservative Heritage Foundation. “Forcing taxpayers and these companies’ competitors to bail out the irresponsible choices of pension administrators would be unfair and could set the expectation for a multi-trillion dollar bailout of private and public pensions across America.” [Despite what Greszler says, pension administrators did not cause the UMWA Fund’s problems. Benefits were negotiated between the union and the mine owners, who pledged to deliver on their commitments based on actuaries’ projections of their ability to pay. Unfortunately the actuaries did not anticipate the stunning collapse of the coal industry. Neither did anyone else. — The Eagle]
Most retired coal miners aren’t living the good life. While they may be sleeping a little later and fishing a lot more, many are still nursing the injuries that they had gotten while on the job and deep inside the mines. If the companies for which they had worked can’t keep their promises, other solutions must be found. The bipartisan bill now pending deserves careful consideration and it shouldn’t become mired in dirty politics.