On Friday, April 8, 2016, Arch Coal filed a suit against the U.S. Department of Labor for issues related to black lung benefits and the Patriot Coal bankruptcy. The complaint is embedded and downloadable below or by clicking here.
The issues have arisen due to a series of corporate mergers and spinoffs in the coal industry that resulted in miners who worked for Arch Coal subsidiaries being covered by Patriot Coal’s black lung self-insurance. Because Patriot Coal’s bankruptcy was finalized in October of 2015, the Department of Labor is now seeking to hold Arch Coal (or its insurance providers) responsible for the cost of these benefits. (For the Department of Labor’s Black Lung Bulletin on this issue, see here.) The alternative is that the benefits would be the responsibility of a former company that the miner worked for or if no solvent companies can be located, the Department of Labor’s Black Lung Disability Trust Fund—and because the Trust Fund is ultimately the responsibility of the federal government, U.S. taxpayers could in the end be left holding the bag.
Arch Coal alleges that the Department of Labor’s action in these former Patriot Coal cases could cost Arch Coal $10 million and violates the agency’s authority. Details of its argument can be found in the 26-page complaint.
This is a complex case—especially considering that Arch Coal itself filed for bankruptcy in January 2016—and I haven’t taken the time to think through all of the related issues to form a complete opinion of how this should come out in the end.
My initial reaction though is that Arch Coal will have a difficult time proving that the U.S. District Court for the District of Columbia should consider the case at this stage without allowing the Department of Labor to first consider Arch Coal’s arguments through the agency’s typical process for determining what company will be named as the “responsible operator” that would be liable for benefits if the claim is approved.
In the end, this issue should not directly affect coal miners and their families—the question of who pays is a distinct consideration from whether the claimant is entitled to benefits. However, as bankruptcies in the coal industry spread (Peabody Energy filed bankruptcy earlier today), this case could have indirect impacts. For example, when multiple responsible operators need to be named by the Department of Labor in a case, claimants often have multiple companies that they have to deal with in the early stages of a case, resulting in additional difficulties and delays. Further, as Trust Fund liability grows, this raises another set of thorny issues about who should bear the costs of black lung disease when coal companies go bankrupt.
For additional coverage, see this post from Courthouse News Service.
The complaint in Arch Coal, Inc. v. Perez, No. 16-cv-00669 (D.D.C.) is embedded below.