A miner pension fund covering roughly 90,000 coal-industry retirees, along with tens of thousands of dependents, is hurtling towards insolvency. But Senate Majority Leader Mitch McConnell, who represents coal-rich Kentucky, is conspicuously silent.
Lawmakers are rallying around a suite of bills to replenish the fund, which was set up as part of a 1974 pact struck between the United Mine Workers of America and the Bituminous Coal Operators' Association.
Now, coal-country representatives and other advocates of a legislative fix are publicly calling out McConnell, the most influential Republican on Capitol Hill.
“Our problem is Mitch has got to let it go. He’s got to find something he really wants, I guess,” Democratic Sen. Joe Manchin of West Virginia told National Journal. “We need support from McConnell. With leadership coming from Kentucky, we need his help.”
The pension fund is expected to run out of money in 2022. But that specter could come much sooner.
Coal-plant closures continue to plague the fund's primary contributor, Murray Energy Corp., led by Bob Murray, an ally of President Trump. That’s threatening to halt pension contributions and expedite insolvency.
The fund is just one multiemployer pension beset by severe financial woes. Recessions over the past two decades and lax bankruptcy laws are among the contributors to that distress.
Currently, the miner pension has a roughly $6.35 billion deficit, recent tax filings show. Meanwhile, multiemployer pensions across the country face hundreds of billions of dollars in unfunded liability, according to the Pension Benefit Guaranty Corporation, a government agency that serves as a pension backstop.
Miner pension-fund insolvency could trigger a tumble that could tank the PBGC, according to lawmakers and analysts.
“Now, you take an issue that’s relatively small—we can fix it now—to one that’s going to take a massive influx of money that affects not only coal miners, but steelworkers, chemical workers, iron workers, everyone else that’s in the federal guaranteed pension fund,” GOP Rep. David McKinley of West Virginia told National Journal. “Part of the problem I have here with my Republican colleagues … they think we’re bailing out. It’s not a bailout.”
A spokesperson for the junior senator from Kentucky, Republican Rand Paul, didn’t respond to multiple requests for comment. But Republican Sen. Shelley Moore Capito of West Virginia said a 1946 pact struck between UMWA and the Truman administration to ensure retirement funds and break a miners' strike distinguishes the miners' pension from other beleaguered funds.
“We consider the miners' pension different because it was a promise that was made in the ‘40s along with their health benefits. And so we’re pushing really hard for it,” Capito told National Journal.
A spokesperson for McConnell, David Popp, declined to comment. But retired miners are speaking freely.
“We’ve got to go now and get this thing fixed. The urgency is what really needs to be clear here,” said Phil Smith, a UMWA spokesman. “Speaker [Nancy] Pelosi understands that certainly. You’d have to ask Senator McConnell why he doesn’t.”
The union and grassroots activist groups often dispatch members to Capitol Hill. Smith and other UMWA members met with McKinley and other lawmakers last week.
Larry Miller, a UMWA pensioner and member of Kentuckians For The Commonwealth, pointed to McConnell’s role in establishing an ultimately unsuccessful joint select committee on multiemployer pensions last Congress as an indication he’s interested in action. But McConnell simply hasn’t delivered, according to Miller.
“He’s enigma on this issue. He genuinely seems like he wants to help,” said Miller, who turns 68 next month and spent 23 years in Appalachian coal mines. “Perhaps he believes congressional action will be a bailout and could lead to more requests from other wobbling pension plans.”
UMWA backed McConnell’s 2014 Democratic challenger, Alison Lundergan Grimes. McConnell is gearing up for a reelection fight in 2020 to win a sixth term.
A Senate bill sponsored by Manchin authorizes transfers of interest generated on a fund designed to clean up abandoned coal mines to the miner pension fund. But experts say that interest is already diverted elsewhere and the money will ultimately draw from the Treasury’s general fund, meaning taxpayers will foot the bill.
The legislation would also extend a black-lung tax. The Reclaim Act, a separate bill, would direct investment in areas adversely affected by coal-mine closures.
Republicans traditionally champion fiscal restraint, and conservative advocates are warning McConnell against signing off on cash rescues for pensions. “Large-scale, if they just do this for the UMWA, then you’re picking winners and losers,” said Rachel Greszler, a pension expert at the Heritage Foundation. “They’re one out of 1,400 plans that are underfunded. Next up will be the Central State Teamsters that have between $30-40 billion in unfunded liability.”
Greszler has proposed a dozen measures, such as a PBGC-mandated minimum retirement age for pensions, to address the crisis. Those proposals could play a role in another joint select committee.
Over past decades, coal companies paid into the fund based on employment hours. Roughly 50 percent of shuttered power plants since 2007 burned coal, according to the Energy Department’s chief statistics arm. That’s caused a spate of coal bankruptcies.
Westmoreland Coal Company, which launched operations in 1854, filed for Chapter 11 bankruptcy protection last year, and this month a judge absolved the firm of pension and health care liabilities in order to keep it afloat. Cloud Peak, another coal company which largely operates in the western Powder River Basin, is verging on collapse.
The fracking revolution continues to supply plentiful, and comparatively cheap, natural gas to U.S. utilities. That new phenomenon, coupled with increasingly competitive renewable-energy rates, is rapidly displacing U.S. coal consumption.
Just last week, Trump urged the Tennessee Valley Authority, a semiautonomous federal utility, to keep a Kentucky coal plant running. Trump appointed four of the seven TVA board members, but the panel still voted to close the Paradise 3 plant at the end of 2020, along with the Tennessee Bull Run plant three years later.
Murray Energy provides the lion’s share of coal to Paradise 3. FirstEnergy Corp., a utility that purchases coal from Murray, announced plans to shutter plants in Ohio and Pennsylvania last year, sparking a renewed debate on fossil-fuel subsidies for struggling coal and nuclear facilities. Several other coal plants face potentially imminent closure.
Murray spokesman Jason Witt declined to comment. But analysts are signaling a bleak future for the industry.
“Murray has taken a big hit. They say they’re OK. But this is symptomatic of the sort of structural decline of what’s happening among coal producers,” said Seth Feaster, a coal expert with the Institute for Energy Economics and Financial Analysis.
“There are not a lot of options for them,” he added. “They’re trying to export, but export markets are fickle. And export markets cannot make up for the vast amount of coal that has traditionally been sold in the United States.”