Coal industry asks Congress, White House for bailout

By Dylan Brown | 03/20/2020 07:17 AM EDT

Coal has joined the list of industries asking for a federal bailout as the coronavirus pandemic batters a sector already in crisis.

The coal industry is asking the government for assistance during the new coronavirus outbreak.

The coal industry is asking the government for assistance during the new coronavirus outbreak. CSIRO/Wikipedia (coal); PxHere (coal plant)

Coal has joined the list of industries asking for a federal bailout as the coronavirus pandemic batters a sector already in crisis.

In a letter obtained by E&E News, the National Mining Association pitched a coal aid package Wednesday to President Trump, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.).

Most of the requested actions would achieve long-standing goals for coal’s top lobbying shop on Capitol Hill, as competition from natural gas and renewable energy resources continues to drive a wave of coal plant retirements nationwide.


"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," NMA President and CEO Rich Nolan wrote.

NMA has publicly asked for the entire coal supply chain — mines, barges, railroads and power plants — to be designated as "critical infrastructure" under a 2013 presidential policy directive.

Trump has not made that designation but instead promised this week to deploy the Defense Production Act, which gives him the power to guarantee supplies of resources necessary to national security, in the fight against COVID-19 (Greenwire, March 18). Whether through that law or "other means," NMA said it wants Trump to stop coal-fired power plants from shutting down.

Industry advocates, including top Trump donors, have spent years urging the White House to invoke the obscure, Korean War-era law to save both coal and nuclear plants (Energywire, March 20, 2019).

Grid operators and utilities have widely rejected claims that coal offers resilience and reliability to the electricity system that other fuels cannot provide.

Black lung

NMA wants federal help fixing a cash flow problem that the group says threatens 81,000 coal mining jobs.

"Even before the recent crisis, the coal industry was struggling to stabilize after years of disabling public policies impairing coal demand and production," NMA spokeswoman Ashley Burke said in an email.

NMA said in its letter that it wants Congress to slash rates of the tax covering black lung benefits for sick miners whose former companies have gone bankrupt.

Congress recently restored the black lung excise tax to levels that expired in 2018, despite opposition from NMA, which said coal companies can no longer afford to pay $1.10 per ton produced at underground mines and 55 cents per ton at surface mines.

Democrats have proposed legislation — S. 3172 and H.R. 3876 — to extend those rates for 10 more years. But NMA is seeking to cut back to the original 1977 levels of 50 cents per underground ton and 25 cents per surface ton. Last year’s tax increase, the group said, cost the industry $220 million.

The Department of Labor recently told Congress that no one will lose benefits regardless of the rate because benefits are guaranteed by the Treasury (E&E Daily, Feb. 27).

According to a Government Accountability Office report, a 25% increase in the black lung tax rate would avoid leaving taxpayers with a multibillion-dollar financial burden by 2050.

AML, tax credits and royalties

NMA also said it wants to temporarily halve the Abandoned Mine Land (AML) fee. In 2019, coal companies paid $142 million in fees to fund abandoned mine cleanup nationwide. If cut in half, rates would be 14 cents per surface ton, 6 cents per underground ton and 4 cents per ton of lignite, a low-quality coal variety.

Since the AML fund was created in 1977, industry has paid about $10 billion in fees, but federal regulators estimate another $10 billion in cleanup work remains nationwide (Greenwire, Aug. 19, 2019).

NMA is also urging Congress to ensure that any tax credits designed to help companies through the pandemic be available "without prejudice or discrimination."

"Under pressure from environment groups, financial institutions have divested from carbon-intensive industries, specifically coal, over the last decade, leaving very limited options available to the coal industry," Nolan wrote.

In February, JPMorgan Chase & Co. became the latest financial giant to cut back or eliminate coal investments (Greenwire, Feb. 25).

Lastly, NMA asked Congress to suspend or reduce federal royalty payments. According to the group, the 12.5% per ton paid on public land — the same rate as for oil and gas production — is generally much higher than on private land.

"This relief, well in line with other industries, would help companies operating on federal lands to mitigate the economic impacts of COVID-19 while maintaining operational capacity and ensuring access to in-demand energy resources," Nolan wrote.

The Senate Republican stimulus bill released last night does not appear to include any specific provisions for coal, but negotiations are underway (see related story).

Dire forecasts for coal

The U.S. Energy Information Administration had already predicted 2020 would be a rough year for coal before the coronavirus outbreak became a pandemic.

Coal production and consumption were both expected to plummet this year, with the decline hitting hardest in Appalachia and the Powder River Basin spanning Wyoming and Montana. EIA said it expects the U.S. to mine 573 million tons of coal, down from 690 million tons in 2019, and burn 505 million tons, compared with 590 million tons last year.

Exports, a saving grace for coal in past years, were also expected to fall by nearly 20% — not accounting for the effects of COVID-19.

"We expected mine closures as a result of weakened industry fundamentals before the Coronavirus outbreaks around the world," Moody’s Investors Service analyst Benjamin Nelson said.

Overall, a Moody’s report found mining has only a "moderate" exposure to the pandemic but that coal, specifically, will fare worse than metals and the rest of the sector.

Globally, coal prices have held up better than other fuel-related commodities thanks to weather challenges in Australia, a top coal exporter, and the newfound demand as China implements economic stimulus measures to rebound from its coronavirus outbreak.

But the benefits will not reach the U.S., Nelson said.

"While Coronavirus has not taken a mine out of service in the United States and coal mines are typically located in areas with lower caseloads and low population density, we would not be surprised to see mining-related issues driven by Coronavirus in the coming weeks," Nelson said.

Last week, Foresight Energy LP, an affiliate of Murray Energy Corp. operating in the Illinois Basin, cited COVID-19 as a contributor in its recent bankruptcy filing (E&E News PM, March 10).

This story also appears in Energywire.