The Labor Department Wants to Cut What Coal Companies Must Post Against Black Lung Claims. Fifteen Companies Save Up to $28 Million. A Fund $6.6 Billion in Deficit Absorbs the Risk.

Start with the fund, because it is the thing absorbing the risk.

The Black Lung Disability Trust Fund pays benefits to miners with pneumoconiosis when the responsible coal operator cannot. As of September 30, 2024 it carried a $6.6 billion deficit. In fiscal 2024 it paid roughly $140 million to 12,911 beneficiaries [1].

Now the rule.

In 2024 the Labor Department required self-insured coal operators to post security covering 100 percent of their black lung liabilities. The proposal published July 30 replaces that with a seven-tier system keyed to a 'Composite Solvency Score' assembled from a company's credit rating, its Altman Z-score and its Ohlson O-score [1].

New operators post a $400,000 minimum for three years. Established operators post a percentage, phased in over three years at 34, 33 and 33 [1].

Those are credit-risk models. They are respectable tools for pricing the probability that a firm fails - and the same class of instrument that rated mortgage securities before 2008.

What they are being asked to do here is predict whether a coal company will still exist decades from now, when a miner breathing coal dust today files a claim.

The numbers are small enough to hold in your head.

Fifteen self-insured operators are currently active - about 2 percent of responsible mine operators - plus four with legacy liabilities. Their unsecured exposure is $572 million: $688 million in total liability against $116 million in posted securities [1].

DOL estimates the rule saves them $7 million to $28 million a year [1].

There is a precedent in the rule's own file, and it is the reason the 2024 requirement existed.

Three operator insolvencies between 2014 and 2016 transferred an estimated $865 million in liabilities to the Trust Fund [1].

That is one and a half times the entire current unsecured exposure. From three companies. In three years.

The argument for the change is real and worth stating. Requiring a solvent company to post 100 percent collateral ties up capital against a risk that may never materialise, and a tiered system that asks more of shakier firms is, in principle, better-targeted regulation.

Whether the models can see a decade out is the question. The fund carrying the answer is already $6.6 billion short.

Comments close September 28.