Regulator sounds alarm over deaths at coal mines

Already in severe economic distress from tumbling demand and plunging energy prices, the nation's beleaguered coal industry started the new year on a tragic note: Three miners died on the job in the first three weeks of 2016.

While it would be a mistake to draw too much from the spate of fatalities, the man in charge of keeping miners safe found the death toll troubling, particularly given the fatal accidents in January follow the two back-to-back safest years in U.S. mining history.

"When those three fatalities happened, we weren't waiting to let folks know that this needs to get turned around here," Assistant Secretary of Labor for Mine Safety and Health Joseph Main told CBS MoneyWatch. "Understanding the economic difficulties here, we cannot lose ground, which can happen if they start pulling back on investments in mine safety in these tough times."

Battered by falling demand and bankruptcies of energy companies up and down the supply chain, coal mines are laying off workers and closing on a regular basis, with no end in sight to the market's deterioration. As companies hemorrhaging cash look to cut costs, it stands to reason that worker protections could get short shrift.

One of 2016's fatalities occurred at a mine owned by Alliance Resource Partners (ARLP). In an investor call last week, Joseph Craft, ARLP's president and CEO, detailed cutbacks in production and cited an oversupplied coal market, weak power demand, "persistently low natural gas prices" and government regulations for the ongoing softening in market conditions.

Coal miner fatalities "demonstrate the fragility of what we do, and the environment in which these miners work," said Bruce Watzman, senior vice president for regulatory affairs at the National Mining Association (NMA).

The NMA in 2011 approved a risk-management protocol called CoreSafety, "recognizing you can't always take the risks down to zero," said Watzman. Two-thirds of the association's producer members, which account for as much as 60 percent of coal produced in the U.S., participate in the voluntary program.

Main at the Mine Safety Heath Administration (MSHA) said he applauded voluntary steps by the industry to safeguard workers, but he says those actions should not replace regulations. "Think twice about taking the 65 mile-per-hour speed limit off the highway, so to speak, and instead put on an honor system. That's not the right way to manage mine safety in this country."

Mike Wright, director of health, safety and environment for the United Steelworkers (USW), said cutbacks in production and employees can undermine safety. "[A]ssigning two to do the work that three did before is always a risk," he said. "We've fought very hard to try to ensure safety isn't compromised in bad economic times, but it's a struggle."

The United Mine Workers (UMW), which represents about a third of the nation's coal miners and about 40 percent of those working underground, said its labor contracts include provisions that let members refuse to work in areas they view as unsafe, with inspectors called in when questionable circumstances arise.

Of the 11 coal miners killed on the job in 2015, none were UMW members, said Phil Smith, the union's communications director. The same holds true for the three fatalities in January. The UMW's membership has declined sharply from the 1950s, when 90 percent of underground miners were in the union.

"Frequently, safety issues are one of the first things to go, no question," Smith said. "You have a workforce that is scared, they could get laid off at any time, and management is saying, 'Produce as much as you can today, because tomorrow you may not be here.' That can lead to cutting corners. Not on purpose, maybe, but it happens."

"Safety is always an issue in the mines, and as costs become more important, it is something that can be skimped on," said Robert Godby, director of the Center For Energy Economics and Public Policy at the University of Wyoming. "People hate to shut down a mine, and when times get really tight and you see unemployment above 10 percent in a lot of those counties, how do you keep a mine operating? Safety becomes a trade-off to keep your job."

In 2008, coal generated 50 percent of electricity in the U.S., a share that had declined to under 32 percent by the end of 2015. Driving much of that trend is the falling price of natural gas. Last year, for the first time, it cost the same for coal and gas to produce a megawatt hour of electricity, Godby noted.

"Suddenly, coal is the poster child of the trade-off you face when you're regulating carbon (emissions into the atmosphere)," Godby said. "People point at coal's decline and say this is what regulation does, but the story of the recent past is more what competition does. The war on coal was originally declared by natural gas in 2008."

Other factors working against a coal revival include low demand, renewable energy such as wind and solar coming down in price and regulations that took effect in 2015. Rather than install costly technology to clear the "more stringent rules on mercury and air toxins," Godby said, companies instead opted to just shut existing facilities down. "It wasn't worth it to spend millions on capital costs on 40-year-old plants."

Future uncertainty over global efforts to curb greenhouse gases leaves even less of a business case for investing in coal-fired power plants. And demand is declining for U.S. coal used to make steel in China, a major market.

As coal-fired plants age out, they'll be replaced with gas-fired or renewable-energy versions. "All suggest coal is really challenged," Godby said. "Coal production doesn't end tomorrow, but we'll see coal becoming a much smaller part of our energy mix, with the (Energy Information Administration) projecting 10 percent by 2050."

Smaller, more labor-intensive underground mines in West Virginia and Kentucky are getting hit first, but the same challenges will eventually spread to newer mines in the Western U.S., Godby said.

The USW's Wright makes the case that focusing on worker safety isn't only the right thing to do, it's also good for business. "I've never seen a company close because it was too safe, but I've seen a bunch close because they're too dangerous," he said. "You look at the Upper Big Branch disaster -- that company is not there anymore."

He's referring to Massey Energy, which owned and operated the Upper Big Branch mine in West Virginia where an underground explosion killed 29 miners in 2010. The company had a culture of flagrant safety violations, according to the MSHA, which fined it nearly $11 million. Within a year, Massey Energy was purchased for $7.1 billion by Alpha Natural Resources (ANRZQ). It, in turn, filed for bankruptcy protection in August and has since laid off hundreds of workers in Kentucky, Virginia and West Virginia.

In December, former Massey Energy CEO Don Blankenship was convicted of a misdemeanor count related to the fatal blast. A federal jury in West Virginia found he conspired to willfully violate mine safety standards. Blankenship faces up a year in prison.