06.28.16

Mine Workers’ Pensions Possible Hurdle for Puerto Rico Debt Bill

(Bloomberg) -- Coal-state senators led by West Virginia Democrat Joe Manchin plan to use tomorrow’s cloture vote on Puerto Rico debt restructuring legislation to try to force action on rescuing unionized miners’ financially troubled pension and health-care funds. That effort -- supported by Republicans Shelley Moore Capito of West Virginia and Rob Portman of Ohio -- complicates the leadership’s strategy to get the House-passed version of the Puerto Rico bill quickly to the White House ahead of a crucial deadline.

Manchin said he’s demanding action now because “I’ve tried everything” to get the Senate to act on legislation to prevent miners from losing the benefits they worked for. He and other coal-state senators had been unsuccessful last year in an effort to attach it to the omnibus spending bill, Public Law 114-113. Unless Congress intervenes, 2,800 retired mine workers or their dependents will be notified by July 15 that they are 90 days away from losing health-care benefits due to a wave of bankruptcies among some of the largest coal companies that has also pushed the 1974 United Mine Workers of America pension fund closer to the brink of insolvency.

If Senate alters the Puerto Rico legislation, S. 2328, in any way, it would have to go back to the House for concurrence, delaying final passage the measure intended to create a mechanism to restructure Puerto Rico’s $70 billion worth of debt. Treasury Secretary Jack Lew plans to meet this afternoon with Democratic senators to make the case for acting swiftly, before $2 billion worth of debt payments come due on Friday.

Just Promise a Vote

Manchin said he’s asking fellow Democrats to block the Puerto Rico debt-restructuring bill until there is a commitment for a vote on his mine pension-rescue bill, S. 1714. Lawmakers are “worried about the July 1 deadline for Puerto Rico but nobody seems to care about the July 15th” deadline for the miners, he told reporters. Portman said he’s backing Manchin’s effort because “it’s our only chance, we believe in the short term, to deal with a crisis facing miners because of their pension cuts.” “We think we would get over 60 votes easily” for the Manchin bill, Portman told reporters.

Portman is being challenged for re-election by former Ohio Governor Ted Strickland, who earlier in his career represented Ohio’s coal counties in the House. Manchin’s measure would expand the permissible use of as much as $490 million Congress made available each year from an abandoned-mine environmental cleanup fund to shore up the health care and pension benefits. The UMWA pension fund pays benefits, which average about $530 a month, to 90,000 retired miners or their dependents, according to UMW testimony to the Senate Finance Committee.

Another 16,000 miners or former miners will also be able to claim benefits in the future, according to the testimony UMW President Cecil Roberts gave on March 1. If the union pension fund becomes insolvent, the cost to the government’s pension-fund backstop, the Pension Benefit Guaranty Corp., would be $4.6 billion, Roberts said. In addition, almost 15,000 retired miners or their widows would lose health-care benefits by year’s end, he said. Bankruptcy courts allowed Patriot Coal Corp. and Walter Energy Inc. to end payments to retiree health care funds by year’s end, according to the testimony. Another 3,000 are likely to lose their health-care benefits in the Alpha Natural Resources Inc.’s pending bankruptcy case, Roberts said. The cost of insolvency is twice as much as the $2.3 billion that Manchin’s bill is estimated to cost, Roberts said. Portman, in a floor colloquy with Manchin, said “there is no guarantee that the PBGC is going to be there, because that agency is in trouble.”

--With assistance from Steven T. Dennis.


By:  James Rowley
Source: Bloomberg