Coal Industry Loses its First Fight for Federal Coronavirus Relief Funds
By Emma Dumain and Will Wright
March 27, 2020 - A $2 trillion bill to bring economic relief to individuals and industries affected by the coronavirus pandemic will not provide direct assistance to the coal industry.
The already-flailing industry was requesting cuts to fees imposed on production that help fund the Black Lung Disability Trust Fund, which provides financial relief to miners inflicted with black lung disease, and the Abandoned Mine Lands Fund, which aids states in reclaiming abandoned mine sites.
The National Mining Association, the primary lobbying arm of the coal industry, also requested a temporary reduction or elimination of the industry’s royalty payments to the Treasury Department.
“In a perilous time, the essential work of our coal miners to produce the fuel to keep the lights on and homes warm and the certainty and security provided by coal power is just what we need to keep the country moving forward,” Rich Nolan, the NMA’s president and CEO, wrote in a letter to legislators.
During negotiations on the larger coronavirus response package — which the Senate passed late Wednesday night with the House poised to act quickly — House Natural Resources Committee Chairman Raul Grijalva, D-Ariz., had been leading the charge against a so-called “bailout” for the coal industry.
Last week, he and Rep. Matt Cartwright, D-Calif., sent a letter to congressional leaders urging them to reject the request, arguing the industry’s woes were “completely unrelated to the current crisis” and accusing coal executives of advocating for “policies that would in fact set back efforts to improve the health and lives of people across the country.”
“At a time when the country is facing a pandemic due to a respiratory illness, it is particularly egregious for the coal industry to advocate reducing the Black Lung Excise Tax, which is essential for providing medical services for approximately 25,000 sick miners,” Grijalva and Cartwright added.
Though the industry’s request did not make it into the final agreement, congressional leaders and the White House are prepared to pass additional economic relief packages in the weeks and months ahead as elected officials continue to assess fallout from the global pandemic.
“The real fight is going to be with the next bill,” said a congressional staffer familiar with legislative plans. “It sounds like that’s where industry-specific policy measures could pop up.”
Ashley Burke, senior vice president of communications for the National Mining Association, said in a statement that the industry was still evaluating on-the-ground realities of the crisis and how individual coal companies would cope with coronavirus and the changes that it will bring to coal production.
“Many specific industry requests — from our industry and many others — were not included in this package, but we will keep making the case for more specific action as the government continues to look for ways to support critical industries and lift the economy,” Burke said.
The coal industry, particularly in Eastern Kentucky, is already in the midst of a downtown that has sharpened in the past year, with coal employment down more than 20 percent in late 2019 from what it was a year earlier, according to the latest figures from the Kentucky Energy and Environment Cabinet.
Jobs in the hardest-hit Kentucky counties — Harlan and Perry — dropped by more than 40 percent over the past year.
But while environmentalist lawmakers are prepared to fight any “pro-coal” provisions in upcoming relief bills, it’s not clear if the industry’s major supporters on Capitol Hill are now actively engaged in fighting on its behalf.
Senate Majority Leader Mitch McConnell, R-Ky., played a pivotal role last December in securing a one-year extension for a tax to fund the beleaguered Black Lung Disability Trust Fund, along with passing legislation to shore up the miners’ pensions fund on the verge of insolvency.
Robert Steurer, a McConnell spokesman, told McClatchy the majority leader “is working hard to help get resources to families and employers quickly and has been proud to partner with President Trump to support our dedicated coal workers.”
McConnell, however, has been playing the role of lead negotiator on the entire legislative package, balancing his own priorities with those of his colleagues on a spending bill of historically massive proportions. It’s not clear what his focus is now or will be going forward to advocate for specific niche industries that are not among the most harmed by the spread of the virus, such as airlines.
The same goes for Sens. Joe Manchin, a Democrat, and Shelley Moore Capito, a Republican, whose state of West Virginia, like Kentucky, has a major coal production economy.
Manchin and Capito were all but threatening to vote against a year-end spending bill in 2019 if protections for coal miners were not included, but their offices did not respond to multiple requests for comment from McClatchy regarding what they were doing to help secure pro-coal provisions in this particular spending package.
It is also unclear how McConnell, Manchin and Capito would square their support for the coal mining industry with the fact that the United Mine Workers of America, the country’s largest union of coal miners, opposed the National Mining Association’s most recent request.
Phil Smith, the UMWA spokesman, said the requested relief could further jeopardize the Black Lung Disability Trust Fund, which is already owes the U.S. Treasury more than $4 billion and is operating on a tax-level that is set to be cut in half at the end of 2020.
The fund’s financial turmoil comes amid the largest surge of black lung disease in decades, particularly in the coal mines of Central Appalachia, which includes Eastern Kentucky and southern West Virginia.
“It seems reasonable that the coal industry should be responsible for making those benefit payments, not the taxpayers,” Smith said.
The letter from the National Mining Association that requested relief from lawmakers cited the black lung tax as a compounding factor in a series of public policies that have hurt the industry.
While coal industry officials often point to public policy as a leading contributor of coal’s decline — “the war on coal,” as it is often referred to — several studies, including one from the Trump administration, have identified competition from cheap natural gas to be far more consequential.
Wind and solar power have also contributed, as well as a flat demand for electricity, according to several studies.
The NMA’s letter argues that a recent $220 million increase of the black lung excise tax has burdened the industry further, and said the U.S. Department of Labor testified that the increase was unnecessary “as the lower tax rate is sufficient to cover beneficiary payments and program administration costs.”
That tax was slashed by more than half at the beginning of 2019, and only restored to its former level on a temporary basis in the government’s fiscal year 2020 spending bill. It is set to be cut again at the end of 2020.
A report last month from the U.S. Government Accountability Office showed poor management of the Black Lung Disability Trust Fund has allowed coal companies to transfer $865 million of liabilities to the taxpayer-assisted fund.
While coal companies do pay into the fund via a tax on the coal they produce, it also borrows billions of dollars from the U.S. Treasury in order to pay off debt. In fiscal year 2019, it borrowed about $1.9 billion, according to the GAO report.
“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.
Julia Hearthway, director of the Office of Workers’ Compensation Programs for the Department of Labor, called the process “broken” and “woefully inadequate” during a Congressional hearing following the release of the report.
The Abandoned Mine Lands Fund is similarly funded through a per-ton tax on the coal that companies produce. The money from those taxes are delivered to states to help restore and clean up abandoned mines that can often cause severe environmental concerns to people who live nearby.
The AML tax is also on a deadline, set to expire in fiscal year 2021.
“You don’t have to go very far in Eastern Kentucky or southern West Virginia to see a lot of abandoned mine lands that are leeching toxic chemicals into the water systems,” Smith said. “Those are pretty dangerous places so they need to be cleaned up.”
Rebecca Shelton, the coordinator of policy and organizing for the Appalachian Citizens’ Law Center, a Whitesburg-based law firm that advocates for victims of black lung disease and specializes in other coal-related issues, said she was relieved that the coal industry’s requests were not fulfilled in the current coronavirus response package.
“Going forward, we are just going to have to remain really tuned in to ensure that things that are critical for our workers and our communities are not taken away for the sake of an industry’s profits,” Shelton said.