`[Federal Register Volume 89, Number 239 (Thursday, December 12, 2024)]
[Rules and Regulations]
[Pages 100304-100321]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28848]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Office of Workers' Compensation Programs

20 CFR Part 726

RIN 1240-AA16


Black Lung Benefits Act: Authorization of Self-Insurers

AGENCY: Office of Workers' Compensation Programs, Labor.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule revises the regulations under the Black Lung 
Benefits Act (BLBA) governing authorization of self-insurers. The 
updated regulations determine the process for coal mine operators to 
apply for authorization to self-insure, the requirements operators must 
meet to qualify to self-insure, the amount of security self-insured 
operators must provide, and the process for operators to appeal 
determinations made by the Office of Workers' Compensation Programs 
(OWCP).

DATES: This rule is effective January 13, 2025.

ADDRESSES: For access to the rulemaking docket and to read background 
documents or comments received, go to https://www.regulations.gov. 
Although some information (e.g., copyrighted material) may not be 
available through the website, the entire rulemaking record, including 
any copyrighted material, will be available for inspection at OWCP. 
Please contact the individual named below if you would like to inspect 
the record.

FOR FURTHER INFORMATION CONTACT: Michael Chance, Director, Division of 
Coal Mine Workers' Compensation, Office of Workers' Compensation 
Programs, U.S. Department of Labor, 200 Constitution Avenue NW, Suite 
C-3520-DCWMC, Washington, DC 20210. Telephone: 1-800-347-2502. This is 
a toll-free number. TTY/TDD callers may dial toll-free 1-877-889-5627 
for further information.

SUPPLEMENTARY INFORMATION:

I. Background of This Rulemaking

    The BLBA, 30 U.S.C. 901-944, provides for the payment of benefits 
to coal miners and certain of their dependent survivors for total 
disability or death due to pneumoconiosis, commonly known as black lung 
disease. 30 U.S.C. 901(a); Usery v. Turner Elkhorn Mining Co., 428 U.S. 
1, 5 (1976). The BLBA places the primary responsibility for paying 
benefits on coal mine operators. 30 U.S.C. 932(b). When a coal miner is 
determined to be eligible for benefits, the operator responsible for 
paying benefits (the responsible operator) is generally the one that 
most recently employed the miner for a period of at least one year and 
is financially capable of paying benefits. 20 CFR 725.495(a)(1). If a 
responsible operator cannot be determined, is unable to pay, or 
defaults on its obligation to pay, the responsibility for paying 
benefits falls to the Black Lung Disability Trust Fund (the Trust 
Fund), which is financed by an excise tax on coal mined for domestic 
use and, as necessary, borrowing from the U.S. Treasury's general fund. 
30 U.S.C. 932(j), 934(b); 26 U.S.C. 4121, 9501.
    Because coal mine operators are principally responsible for paying 
benefits, the BLBA requires every operator to secure the payment of 
benefits for which it may be found liable. 30 U.S.C. 932(b). Each 
operator must secure the payment of benefits either by purchasing 
commercial insurance or by qualifying as a self-insurer ``in accordance 
with regulations prescribed by the Secretary.'' 30 U.S.C. 933(a); see 
also 20 CFR 726.1.
    The current regulations--part 726, subpart B--establish the 
standards for a coal mine operator to qualify as a self-insurer. They 
provide that, to qualify as a self-insurer, an operator must meet 
certain minimum requirements, including ``obtain[ing] security . . . in 
a form approved by [OWCP] and . . . in an amount to be determined by 
[OWCP].'' 20 CFR 726.101(b)(4). The regulations identify four forms of 
security that OWCP may allow an operator to provide: (1) indemnity 
bonds; (2) deposits of negotiable securities; (3) letters of credit; or 
(4) trust funds under section 501(c)(21) of the Internal Revenue Code. 
20 CFR 726.104(b). The regulations further provide that ``[OWCP] shall 
require the amount of security which it deems necessary and sufficient 
to secure the performance by the applicant of all obligations imposed 
upon him as an operator by the Act.'' 20 CFR 726.105. The regulations 
also set forth a non-exhaustive list of factors that OWCP will consider 
in setting the amount of security an operator must provide, including 
the operator's net worth, the existence of a guarantee by a parent 
corporation, and the operator's existing liability for benefits. Id.
    OWCP historically has not required self-insured operators to post 
security with a face value that would cover all of the operator's 
expected black lung liability. See 62 FR 3338, 3370 (Jan. 22, 1997). 
Instead, OWCP has relied in part on a company's size as evidence of its 
ability to make future benefits payments. Id. Depending on the 
operator's assets, OWCP usually required security sufficient to cover 
from three to fifteen years of the operator's payments on claims 
currently in award status, rather than the operator's total liability 
for current and future claims. Id. Under this model, most large 
operators therefore posted fewer years of payment relative to smaller 
operators.
    A number of bankruptcies in the mining industry revealed weaknesses 
in that process and demonstrated that a more substantial security 
amount would be required to adequately protect the Trust Fund. 
Specifically, beginning in 2014, three large self- insured operators 
filed for bankruptcy. Because these operators had insufficient 
securities to cover the full amount of expected benefits, an estimated 
$865 million in liabilities will ultimately transfer to the Trust Fund. 
See U.S. Government Accountability Office, Federal Black Lung Benefits 
Program: Improved Oversight of Coal Mine Operator Insurance is Needed, 
at 13 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21.
    In response, OWCP developed revised guidelines and procedures for 
authorizing coal mine operators to self-insure, which it began to 
implement in 2019. These guidelines were intended to standardize the 
process by which applicants provide financial and actuarial information 
to OWCP. OWCP required each company to calculate and report its 
projected black lung liabilities through actuarial reports using a set 
of standardized assumptions, including discount rate, claim cost 
trends, and the probability of awards. OWCP also developed a set of 
financial metrics and a methodology to assess each operator's solvency, 
profitability, and risk of default. This assessment would determine the 
proportion of the operator's projected liabilities it would be required 
to post as security. Operators determined to be at less risk of not 
meeting their obligations would be required to provide smaller amounts 
of security, while operators at higher risk would be required to 
provide larger amounts of security. These guidelines were summarized in 
a December 2020

[[Page 100305]]

bulletin, see BLBA Bulletin No. 21-01 (Dec. 7, 2020).\1\
---------------------------------------------------------------------------

    \1\ OWCP published a notice in the Federal Register seeking 
comment on the Bulletin in January 2021, pursuant to then-operative 
Executive Order 13891 and the Department's implementing regulation. 
86 FR 1529 (Jan. 8, 2021). OWCP later withdrew the notice after the 
Executive order and the Department's regulation were rescinded and 
the new Administration imposed a temporary regulatory freeze. 86 FR 
8806 (Feb. 9, 2021).
---------------------------------------------------------------------------

    Although the revised guidelines were intended to allow OWCP to 
better identify and account for self-insured operators that presented 
significant bankruptcy risk, they proved problematic in several 
respects. The financial metrics were not able to consistently predict 
which operators were at risk of experiencing financial difficulties. 
The process contemplated by the guidelines also imposed significant 
burdens on OWCP in continuously monitoring the financial health of 
individual operators on a quarterly basis. In addition, although the 
guidelines were shared with the public in various ways while they were 
being developed, stakeholders raised procedural concerns about how the 
guidelines were developed.
    Based on its experience administering the self-insurance program 
over the years and in response to stakeholder concerns, the Department 
issued a notice of proposed rulemaking (NPRM) on January 19, 2023, 
proposing a revised subpart B. 88 FR 3349-3366 (Jan. 19, 2023). The 
proposed rule would codify the practice of basing a self- insured 
operator's security requirement on an actuarial assessment of its total 
present and future black lung liability. The Department also proposed 
eliminating the financial scoring process. Instead, under the proposed 
rule, OWCP would require all self-insured operators to post security 
equal to 120 percent of their projected black lung liabilities, 
ensuring adequate coverage regardless of an operator's financial 
health.\2\ The Department had determined that 120 percent was an 
appropriate level of security because, among other things, it would 
protect the Trust Fund in the event an operator's actual liabilities 
exceed its projected liabilities. In addition, the proposal removed the 
requirement that an operator's average current assets over the 
preceding three years must exceed its current liabilities, which would 
not be necessary to protect the Trust Fund under the proposed security 
scheme. The proposed rule also prospectively removed section 501(c)(21) 
trust funds, which have proven to be less reliable, as an acceptable 
form of security. Furthermore, the proposed rule clarified the process 
for operators to apply for authorization to self-insure, how long the 
authorization remains effective, the conditions under which OWCP will 
deny or revoke authorization to self-insure, and the process for 
operators to appeal OWCP's determinations.
---------------------------------------------------------------------------

    \2\ This proposal meant the applicant would have to purchase an 
instrument that would pay out up to 120 percent of the projected 
liability, not that the applicant would have to actually spend that 
amount on collateral.
---------------------------------------------------------------------------

    The Department proposed these changes to better protect the Trust 
Fund when a self-insured operator becomes insolvent. Moreover, by 
eliminating the need to continuously monitor each individual operator's 
financial situation, the proposed rule lessens the administrative 
burden on OWCP to gather, review, and analyze operators' financial 
information, and lessens the burden on operators to collect and provide 
such information. The procedural changes clarify and add certainty with 
respect to OWCP's and operators' respective obligations in the self-
insurance authorization process.
    The public comment period closed on April 19, 2023, after an 
extension of the original March 20, 2023, deadline. 88 FR 14094-14095 
(Mar. 7, 2023). The Department has fully evaluated the received 
comments and has determined that, with some changes in response to 
comments, proceeding with a final rule is in the best interests of the 
Trust Fund, stakeholders, and the program's administration.

II. Statutory Authority

    Section 426(a) of the BLBA, 30 U.S.C. 936(a), authorizes the 
Secretary of Labor to prescribe rules and regulations necessary for the 
administration and enforcement of the statute.

III. Discussion of Significant Comments

    The Department received 18 comments on the proposed regulations. In 
addition to comments received on specific sections of the proposed 
rule, discussed below in the Section-by-Section Explanation, a few 
commenters offered more general comments. A number of commenters 
supported the Department's promulgation of a proposed rule to clarify 
and reform the self-insurance program. Several commenters applauded 
some of the proposed rule's most significant changes, including the 
requirement for increased security from self-insured operators. They 
noted that Congress intended coal-mine operators to bear the cost of 
black lung disease, and that they should provide enough security to 
protect the Trust Fund, and ultimately, taxpayers, from any operator 
bankruptcy.
    Other commenters argued the changes will negatively impact self-
insured operators. Most of these negative comments asserted that self-
insured operators would face too high a financial burden if required to 
post security equal to 120 percent of their projected liabilities. They 
also stated that the cost of surety bonds is much higher than the 
Department estimated. The commenters did not present any evidence of 
the true cost of surety bonds, however, such as actual quotes from 
surety bond companies.
    Operators that deem surety bonds too expensive may use another 
form--or multiple forms--of security, see Sec.  726.104(b), or obtain 
commercial insurance, see 30 U.S.C. 933(a); 20 CFR 726.1, 726.201.
    Several commenters argued that in the proposed rule, the Department 
failed to consider operators' reliance on OWCP's historical practices 
in the self-insurance program. They stated that operators made business 
decisions based on OWCP's previous collateral requirements, and it 
would be arbitrary and capricious for the Department not to weigh that 
reliance against competing policy considerations. In addition, these 
commenters say, the Department neglected to offer accommodations for 
the operators' reliance interests, such as by grandfathering in 
existing self-insurance arrangements and phasing in the requirement for 
increased security over time.
    The Department appreciates the commenters' concerns and has given 
them serious consideration in preparing this rule. The Department has 
also weighed operators' reliance interests against competing policy 
considerations--most importantly, the financial security of the Trust 
Fund. As many commenters acknowledged, OWCP's historical practices left 
vulnerabilities in the self-insurance program and contributed to the 
Trust Fund's current debt. That is why, as explained in the proposed 
rule's economic analysis, the Department considered but declined to 
maintain existing security levels. 88 FR 3356-3360 (Jan. 19, 2023). 
That is also why it is not a viable option to grandfather in all 
existing self-insurance arrangements, which would fail to adequately 
protect the Trust Fund.
    To better balance the Department's obligation to protect the Trust 
Fund with the burden on self-insured operators to properly secure their 
liabilities, the Department has decided to revise the proposed rule in 
several ways. As explained more fully in the Section-by-Section 
Explanation, the Department is lowering the security

[[Page 100306]]

requirement from 120 percent to 100 percent of self-insured operators' 
projected liabilities. Reducing the required security will lessen the 
financial burden on self-insured operators, while upholding the 
operators' obligation under the BLBA to adequately secure their 
liabilities in case they can no longer pay benefits directly. See 30 
U.S.C. 932(b) (operators ``shall be liable for and shall secure the 
payment of benefits''). The requirement for 100 percent security also 
preserves congressional intent that ``individual coal operators rather 
than the trust fund bear the liability for claims arising out of such 
operators' mines to the maximum extent feasible.'' Old Ben Coal Co. v. 
Luker, 826 F.2d 688, 693 (7th Cir. 1987) (quoting S. Rep. No. 209, 95th 
Cong., 1st Sess. 9 (1977), reprinted in House Comm. on Educ. and Labor, 
96th Cong., Black Lung Benefits Reform Act and Black Lung Benefits 
Revenue Act of 1977, 612 (Comm. Print 1979); see also Arkansas Coals, 
Inc. v. Lawson, 739 F.3d 309, 313 (6th Cir. 2014); C & K Coal Co. v. 
Taylor, 165 F.3d 254, 258 (3d Cir. 1999); 20 CFR 725.1(e) (``The 
purpose of the [Black Lung Disability Trust Fund] and the Black Lung 
Benefits Revenue Act of 1977 was to insure that coal mine operators, or 
the coal industry, will fully bear the cost of black lung disease for 
the present time and in the future.''). In addition, OWCP will also 
allow operators that currently use section 501(c)(21) trusts as 
security instruments to continue doing so, see Sec.  726.104(b), and 
will allow operators to phase in any increased security over the course 
of one year, see Sec.  726.104(c).
    One commenter argued that the Department's concern about the 
financial security of the Trust Fund is not a valid reason for the 
proposed rule, stating that self-insured operator bankruptcies are not 
a major threat to the Trust Fund. The commenter cited a report by the 
Government Accountability Office (GAO) for this conclusion. The 
Department believes the commenter misunderstood the report. GAO 
concluded the Trust Fund ``faces financial challenges, and DOL's 
limited oversight of coal mine operator insurance has further strained 
Trust Fund finances by allowing operator liabilities to transfer to the 
federal government;'' it opined that ``the looming unsecured black lung 
benefit liabilities . . . still threaten the Trust Fund.'' See GAO, 
Federal Black Lung Benefits Program: Improved Oversight of Coal Mine 
Operator Insurance is Needed, at 27, 29 (Feb. 2020), available at 
https://www.gao.gov/products/gao-20-21. GAO also noted that the Trust 
Fund faced particular risk in the self-insurance context, because ``in 
the past, DOL did not estimate future benefit liability when setting 
the amount of collateral required to self-insure.'' Id. at 2. The 
report recommended the Department change this practice. Id.\3\
---------------------------------------------------------------------------

    \3\ The Department now includes estimates of future liability in 
security calculations and requires that applicants submit those 
estimates in their actuarial reports. That requirement is reflected 
in OWCP's self-insurance application form, CM-2017, which requests 
``[a] current, certified actuarial report on [the applicant's] 
existing and future BLBA liabilities.'' See CM-2017, available at 
https://www.dol.gov/agencies/owcp/dcmwc/regs/compliance/blforms; see 
also section 20.
---------------------------------------------------------------------------

    Two commenters argued that the proposed rule would give OWCP such 
broad discretion to set collateral, without sufficient guidelines, that 
the rule would violate the Administrative Procedure Act. The Department 
disagrees with these comments. The rule provides clear guidelines and 
uniform requirements for self-insurance applications and 
determinations, and, as a result, limits the discretion OWCP has to set 
security amounts. For example, the rule requires the same documents 
from all applicants; provides that all operators must use the same 
OWCP-mandated actuarial assumptions in their actuarial reports; 
explains that OWCP will require the same percentage of security from 
all operators; and clarifies the timelines by which OWCP will process 
all applications and appeals.\4\ Where the Department agreed with 
commenters that the rule should be clarified, it revised this final 
rule accordingly.
---------------------------------------------------------------------------

    \4\ 20 CFR 726.102(b)(2) in this rule (applicants must submit an 
actuarial report using OWCP-mandated actuarial assumptions). In 
addition, the rule provides that self-insurers will be required to 
``submit security equal to 100 percent of the actuarially estimated 
liabilities (all present and future liabilities).'' See 20 CFR 
726.105.
---------------------------------------------------------------------------

    Several supporters of the proposed rule suggested that OWCP create 
a public database including information about all self-insurance 
applications, OWCP's estimates of operators' liability amounts, the 
amount and type of security that operators provide, the status of any 
operator appeals, and OWCP's decisions on self-insurance applications. 
While the Department understands the value of increased transparency in 
the self- insurance program, it declines to create such a public 
database out of concern for operators' confidential business interests. 
The Department believes this final rule will provide greater clarity, 
transparency, and efficacy in the self-insurance program.
    No negative comments were received on the following revised or new 
regulations: sections 20 CFR 726.101(c) and (d); 726.102(a) and (c); 
726.107; 726.108; 726.110 through 726.113, and 726.115. Thus, the 
Department is promulgating these regulations as proposed.
    The following regulatory provisions were not revised in the 
proposed rule and thus were not open to comment: 20 CFR 726.101(a), 
726.103, and 726.106.
    Severability. If upon judicial review any provision of this rule is 
deemed invalid, the Department intends that such provision(s) will be 
severable and the rest of the provisions will remain intact. For 
example, the following provisions of the rule can operate independently 
and are mutually severable from the other provisions of the rule: (1) 
the minimum requirements for self-insurance authorization under Sec.  
726.101(b); (2) the requirement that applicants submit actuarial 
reports using OWCP-mandated actuarial assumptions under Sec.  
726.102(b)(2); (3) the updated process that OWCP will follow in issuing 
written determinations on self-insurance applications under Sec.  
726.104(a); (4) the limitation of section 501(c)(21) trusts to those 
established before publication of the rule, and the requirement for the 
submission of quarterly financial statements for such trusts under 
Sec.  726.104(b)(4); (5) the option for operators to phase in their 
initial or increased security deposits over the course of one year 
under Sec.  726.104(c); (6) the requirement that operators submit 
security equal to 100 percent of their actuarially estimated 
liabilities under Sec.  726.105; (7) the timeframes for authorization 
and reauthorization to self-insure under Sec.  726.114; and (8) the 
appeals process set forth under Sec.  726.116. This list is not 
exhaustive. Generally, the Department believes that the provisions of 
the rule can operate independently and will improve the effectiveness 
of the self-insurance program, even if other provisions are deemed 
invalid.

Section-by-Section Explanation

20 CFR 726.101 Who May Be Authorized To Self-Insure
    (1) The Department is substantially revising Sec.  726.101 to 
update the minimum requirements an operator must meet to qualify for 
authorization to self-insure and to remove the provisions requiring 
OWCP to continuously monitor each applicant's financial situation.
    Current paragraph (b) establishes the minimum requirements that an 
operator must meet to qualify for authorization to self-insure. At 
present, paragraphs (b)(1), (3), and (5) respectively provide that an 
operator must have been in the

[[Page 100307]]

business of coal mining for at least three consecutive years prior to 
applying, the operator's average current assets over the prior three 
years must exceed its current liabilities by a specified amount, and 
the operator must have five or more employee-miners. Paragraphs (b)(2) 
and (4) respectively provide that an operator must demonstrate the 
administrative capacity to fully service claims and that an operator 
must obtain security in a form approved by OWCP and in an amount 
determined by OWCP. The Department proposed removing paragraphs (b)(1), 
(3), and (5) because they would no longer be necessary when all self-
insurers are required to post security that fully covers their 
projected black lung liabilities.
    (2) Three commenters expressed concern that by no longer evaluating 
companies' financial health, OWCP is applying a ``one-size-fits-all'' 
approach that will harm financially sound companies. In their view, 
more profitable companies will present less risk to the Trust Fund and 
OWCP should therefore require less security (or no security) to cover 
their liabilities. Another commenter suggested OWCP maintain at least 
enough financial review to ensure companies could fulfill their self-
insurance obligations. Other commenters questioned whether the 
financial review process would truly burden OWCP, and suggested that 
OWCP ought to be able to conduct a financial review because other 
federal agencies do so.
    (3) The Department declines to revise the regulation in response to 
these comments. As explained in the proposed rule, the Department is 
eliminating the financial review process to reduce administrative 
burdens and avoid the ever-present challenge of predicting which 
operators are at risk of experiencing financial difficulties. 
Importantly, the requirement that self-insured operators post security 
equal to their projected black lung liabilities will adequately cover 
the Trust Fund regardless of an operator's continuously changing 
financial status, making the financial review process unnecessary. The 
commenters have not shown that these changes will cause any particular 
harm to companies that are financially stronger than others. In fact, 
those companies will arguably be able to meet a higher security 
requirement more easily than less financially secure companies. 
Similarly, the requirement to post 100 percent security addresses a 
commenter's concern that operators will not be able to fulfill their 
self-insurance obligations; if they default, the Trust Fund will have 
enough security to cover the operators' projected liabilities.
    (4) For these reasons, as proposed in the NPRM, the Department is 
removing paragraphs (b)(1), (3), and (5). The Department is renumbering 
current paragraph (b)(2) as paragraph (b)(1), and paragraph (b)(4) as 
paragraph (b)(2).
20 CFR 726.102 Application for Authority To Become a Self-Insurer; How 
Filed; Information To Be Submitted
    (1) The Department is revising paragraph (b) to change and update 
the information that must be submitted with an application for 
authorization to self-insure or to renew authorization to self-insure.
    (2) The Department is adding a new paragraph (b)(2) to require an 
applicant to include with its application an actuarial report using 
OWCP-mandated actuarial assumptions. OWCP has previously required such 
an actuarial report from applicants, as indicated on OWCP's self-
insurance application form CM-2017 (Application or Renewal of Self-
Insurance Authority), available on OWCP's website at https://www.dol.gov/agencies/owcp/dcmwc/regs/compliance/blforms. In that form, 
OWCP requires ``[a] current, certified actuarial report on [the 
applicant's] existing and future BLBA liabilities,'' unless renewal 
applicants have provided one in the previous three years. The proposed 
rule explained that form CM-2017 would still be required under the new 
regulations, and it requests much of the information required in 
current paragraphs (b)(1), (2), (3), and (5). In this new paragraph 
(b)(2), the Department is adding the actuarial report requirement to 
the regulatory text, including that an operator must submit a new 
actuarial report every three years. The new paragraph (b)(2) also 
allows an operator to submit an additional actuarial report using 
alternative assumptions.
    (3) Several commenters objected to the requirement to use OWCP 
actuarial assumptions in their reports. They argued that OWCP's 
actuarial assumptions differ from the operators' assumptions, which are 
based on the operators' experiences in paying benefits. The Department 
declines to revise the regulation in response to these comments, but 
provides the following clarification. Requiring operators to use OWCP's 
actuarial assumptions, rather than their own, more accurately projects 
the Trust Fund's potential liability and promotes fairness and 
uniformity across operators. As noted in the proposed rule and again 
above, OWCP has previously required companies to provide actuarial 
reports that include data for different elements of actuarial analysis, 
such as the discount rate, claim cost trends, and the probability of 
awards. See 88 FR 3350 (Jan. 19, 2023). A numerical value is assigned 
to each element. This numerical value is called an actuarial 
assumption. Operators then apply those values in determining their 
liability. OWCP sets actuarial assumptions for the various elements of 
actuarial analysis every year, accounting for changing interest rates, 
medical costs, and other relevant fluctuations. Commenters have not 
challenged the elements of actuarial analysis that are to be included 
in their reports. Instead, commenters have argued that the numerical 
values that OWCP assigns to these elements--the actuarial assumptions 
themselves--differ from the values that operators would use based on 
their individual experiences, and are therefore improper. OWCP bases 
its actuarial assumptions on data from claims in which the Trust Fund 
is responsible for paying benefits. If a self-insured operator goes 
bankrupt and the Trust Fund absorbs its responsibility for paying 
benefits, it will cost the Trust Fund a different amount to pay those 
benefits than it would have cost the operator. For example, medical 
costs differ for the Trust Fund and operators because operators may use 
different payment formulas than the Trust Fund and may have 
arrangements with providers that result in lower medical costs that the 
Trust Fund does not have. For these reasons, OWCP must estimate how 
much it will cost the Trust Fund to bear responsibility for benefits 
that were formerly the responsibility of the operator. Further, using 
one set of actuarial assumptions, rather than different assumptions for 
each operator, promotes consistency and fairness.
    Still, the Department acknowledges an operator could, under unusual 
circumstances, have a compelling reason to use different actuarial 
assumptions than those required by OWCP. Therefore, the rule permits 
operators, as part of the application process, to submit reports using 
their own actuarial assumptions and explain why they should be used 
instead, and OWCP will consider each submission. See Section-by-Section 
Explanation for 20 CFR 726.104.
    (4) Commenters raised concerns that while the proposed rule allows 
operators to submit an additional actuarial report and explain why 
alternate assumptions are appropriate, it does not specify that OWCP 
will consider that report or how OWCP would choose between or reconcile 
the two reports. The Department agrees the regulation should state that 
OWCP will review and consider an operator's

[[Page 100308]]

additional report and, as stated below, is amending Sec.  726.104(a) to 
clarify this. The Department is also clarifying the circumstances in 
which OWCP might use the actuarial assumptions an operator submits. For 
any alternative actuarial report OWCP receives, it will evaluate each 
of the operator's arguments about why alternative actuarial assumptions 
should apply. Some, but not all, of OWCP's considerations may include 
whether the operator's circumstances would persist if the Trust Fund 
took over benefit payments and whether sufficient and reliable data 
support the operator's arguments. For instance, if an operator's 
claimant population differs markedly from that of the Trust Fund, it 
may be reasonable to use one or more of an operator's actuarial 
assumptions. However, the Department expects this situation will be 
rare. In most cases it will be more appropriate to apply OWCP's 
assumptions based on the Trust Fund's experience. Again, using OWCP's 
assumptions in most cases will help ensure fairness and uniformity 
across operators.
    (5) Commenters also claimed the proposed rule did not identify 
OWCP's actuarial assumptions (the numerical values), or explain how 
they were derived and whether they comply with generally accepted 
actuarial standards. OWCP provides its actuarial assumptions to the 
public on its website.\5\ OWCP uses the same assumptions in reporting 
on the Trust Fund for the Department's Agency Financial Report and the 
U.S. Government's tracking of significant social insurance programs, 
which are also publicly available and prepared in accordance with 
Generally Accepted Accounting Principles (GAAP) and the financial 
reporting requirements of Office of Management and Budget (OMB) 
Circular A-136.\6\ OWCP's actuaries review the assumptions annually, 
including peer review by other actuaries. OWCP determines the value for 
each assumption using actuarial judgment, by considering historical 
experience adjusted to current conditions, expected future trends, and 
the reliability of the available historical data as a predictor of 
future experience. Each of the assumptions represents values that, in 
the actuaries' professional judgment, are internally consistent and 
have no known significant bias to underestimation or overestimation. 
OWCP's assumptions comply with the Actuarial Standards of Practice as 
promulgated by the Actuarial Standards Board (ASB), available at http://www.actuarialstandardsboard.org.
---------------------------------------------------------------------------

    \5\ OWCP provides information on the black lung program to 
operators and insurance carriers, available at https://www.dol.gov/agencies/owcp/dcmwc/operators-insurers.
    \6\ See Treasury's reporting on financial statements for 
significant social insurance programs, available at https://www.fiscal.treasury.gov/reports-statements/financial-report/statements-of-social-insurance.html. The Department's most recent 
Agency Financial Report is also available on that website. OMB 
Circular A-136, on Financial Reporting Requirements, is available at 
https://www.whitehouse.gov/omb/information-for-agencies/circulars/.
---------------------------------------------------------------------------

    (6) Some commenters asserted that OWCP's actuarial assumptions 
should have been included in the proposed rule and subject to notice 
and comment. The Department disagrees for several reasons. As the 
commenters made clear, one of their major objections was to the 
requirement to use OWCP's actuarial assumptions at all. This 
requirement was open for comment in the proposed rule, and the 
Department received and responded to related comments above. The 
actuarial assumptions themselves, though, were not included in the rule 
because, as explained above, the numerical values will vary from year 
to year as needed to adapt to new data and circumstances.
20 CFR 726.104 Action by OWCP Upon Application of Operator
    (1) The Department proposed deleting and replacing paragraph (a) to 
clarify what action OWCP must take with respect to an application and 
the timeframe within which OWCP will take such action. New paragraph 
(a) provides that OWCP will issue a written determination, either 
denying the application or determining the amount of security, within 
30 days after determining that an application is complete. New 
paragraph (a) also allows OWCP to extend the 30-day deadline if it 
determines that additional evidence is needed or that the applicant's 
evidence is not in compliance with OWCP's requirements.
    Commenters noted that while the proposed regulatory text allows 
operators to submit a report using actuarial assumptions other than 
those mandated by OWCP, it did not require OWCP to consider such 
reports. The Department agrees the regulation should state that OWCP 
will review and consider any relevant evidence the operator submits. To 
clarify this, the Department is amending section 104(a) to explain that 
OWCP will consider all relevant evidence and include its reasoning when 
issuing a written determination denying an application.
    (2) The Department proposed removing current paragraph (b)(4), 
which allows a self-insurer to give security by funding a trust 
pursuant to section 501(c)(21) of the Internal Revenue Code. As 
explained in the proposed rule, few self-insured operators use section 
501(c)(21) trusts as security and most of those operators use them in 
combination with other forms of security. Also, OWCP has determined 
that section 501(c)(21) trusts are a less reliable form of security and 
more burdensome for OWCP to monitor because, unlike other forms of 
security which generally guarantee a fixed dollar amount, the amounts 
kept in the trusts can fluctuate and significantly decrease as self-
insurers use such trusts to pay claims and the costs of administration 
and for other allowed purposes.
    One commenter asserted that the Department cannot remove section 
501(c)(21) trusts as an optional form of security. The commenter states 
the Department does not have the authority to disallow section 
501(c)(21) trusts, arguing Congress intended such trusts would be 
available for black lung self-insurance security deposits. It also 
argues that even if the Department has the authority to disallow the 
use of section 501(c)(21) trusts, it has no valid reason to do so, 
because such trusts pose no greater risk than other forms of security. 
Finally, the commenter urges the Department to accept any existing 
section 501(c)(21) trusts, because they are irrevocable and cannot be 
repurposed; operators would be prejudiced if no longer allowed to use 
the funds in such trusts toward their self-insurance security deposits.
    The Department disagrees that it must offer section 501(c)(21) 
trusts as a form of security for self-insurance. The BLBA does not 
specify the form in which an operator must ``secure the payment of 
benefits for which he is liable.'' 30 U.S.C. 933(a). Moreover, the 
Internal Revenue Code does not require that OWCP accept section 
501(c)(21) trusts as security for self-insurance. Section 501(c)(21) 
specifies the circumstances under which an entity may establish such 
trusts, but does not direct OWCP to allow them for self-insurance 
security.
    The Department also disagrees that section 501(c)(21) trusts are no 
riskier than other forms of security. In arguing this, the commenter 
noted that such trusts can only hold qualified investments such as 
U.S., state, and municipal bonds. However, the Department is not 
concerned about the riskiness of the investments in the trust, but 
about the risk that the money in the trust may fall below the necessary 
security amount, given that the trust can also be used for paying 
claims and other expenses. 26 U.S.C. 501(c)(21)(A).

[[Page 100309]]

Because trust assets can be (and are) used for a number of purposes 
other than security for a self-insurance arrangement, the trust assets 
are subject to continual erosion. As a result, use of the trusts as 
self-insurance security would place the Trust Fund at greater risk than 
the use of other forms of security. And unlike other forms of security, 
the Trust Fund does not have direct access to 501(c)(21) trust assets 
or even have ready access to the trusts' financial reports.
    Nevertheless, the Department has determined that existing section 
501(c)(21) trusts should be permitted to continue as self-insurance 
security, even though new trusts will not be allowed. As the commenter 
noted, 501(c)(21) trusts are irrevocable, and the Department agrees 
that it would prejudice those operators currently using this form of 
security if they are no longer allowed to do so. Rather than remove the 
option entirely, then, the Department is revising paragraph (b)(4) to 
provide that section 501(c)(21) trusts established before the 
publication of this rule can continue to be used as self-insurance 
security. However, to protect the Trust Fund, operators continuing to 
use existing section 501(c)(21) trusts must submit quarterly financial 
statements to OWCP documenting the value of the trust. This will allow 
OWCP to monitor the financial status of a trust, the value of which may 
decrease in the period between annual reviews. If, for any reason, the 
trust value decreases below the amount of the operator's required 
security, OWCP may require an increase in the operator's security under 
Sec.  726.109. The Department is adding the requirement for quarterly 
financial reports to paragraph (b)(4).
    (3) Several commenters expressed concern that a greatly increased 
security requirement would be difficult to fulfill immediately. These 
commenters suggested that OWCP collect the increased security over a 
period of years instead of all at once.
    The Department agrees the burden on operators could be lessened by 
staggering the collection of security over a reasonable period of time. 
While commenters suggested phasing in the collection over a period of 
years, the Department believes this would leave the Trust Fund 
inadequately secured for too long. However, the Department will allow 
operators to post security in phases over the course of one year, which 
the Department has determined will properly balance the interests in 
providing operators more time while limiting the Trust Fund's risk of 
inadequate security. To further limit the Trust Fund's risk of delay in 
receiving adequate security, the Department is requiring that operators 
phase in their payments in quarterly installments. Thus, the Department 
is adding a new paragraph (c) to provide that operators may submit 
their increased security requirements in equal portions quarterly, to 
be complete in one year: operators opting for phased posting must 
deposit at least 25 percent of the increased security amount within 30 
days of OWCP issuing the notification provided in newly redesignated 
paragraphs (d) and (e), followed by at least 50 percent of their 
increased security amount within four months of that notification, at 
least 75 percent within eight months, and 100 percent within one year. 
If an operator fails to timely pay any of one of these installments, it 
will be deemed non- compliant with its self-insurance authorization, 
and OWCP will revoke that authorization. The civil money penalty 
provisions of 20 CFR part 726, subpart D, will apply to any operator 
that fails to timely secure its benefits under this regulation. 
Accordingly, any operator that disagrees with the penalties imposed 
must follow the procedures at 20 CFR 726.307 for contesting penalties, 
and not the self-insurance authorization appeals process outlined below 
in the new 20 CFR 726.116.
    In light of these changes, the Department is redesignating new 
paragraphs (c), (d), and (e) to paragraphs (d), (e), and (f), 
respectively. The Department is also revising paragraphs (d) and (e) to 
provide that self-insurance authorization or reauthorization will be 
effective upon OWCP's receipt of a completed agreement and undertaking, 
along with either the applicant's full security amount or its first 
quarterly installment.
20 CFR 726.105 Fixing the Amount of Security
    (1) Current Sec.  726.105 requires OWCP to set the amount of 
security each applicant is required to post by determining the amount 
``necessary and sufficient to secure the performance by the applicant 
of all obligations imposed upon him as an operator by the Act.''
    The Department proposed replacing current Sec.  726.105 with the 
requirement that any operator approved to self-insure must submit 
security equal to 120 percent of its actuarially estimated liabilities 
(all present and future liabilities) as determined by OWCP based on the 
actuarial report or reports submitted by the applicant with their 
application (or on file with OWCP), other information submitted with 
the operator's application, or any other materials or information that 
OWCP deems relevant. As noted in the proposed rule, this meant 
applicants would have to purchase an instrument that would pay out up 
to 120 percent of the projected liability, not that the applicant would 
have to actually spend that amount on collateral. The Department 
estimated that premiums on surety bonds would cost anywhere from 2 
percent to 12 percent of the security amount and solicited comments on 
this estimation.
    (2) Some commenters supported this proposed change. They stated 
that in keeping with congressional intent, the increased security 
amount would help avoid shifting liability from bankrupt operators to 
the Trust Fund and, ultimately, to taxpayers. One commenter noted that 
the requirement for increased security is all the more important now 
that severe forms of black lung disease are on the rise, meaning that 
operators' future liabilities would rise too. The commenters also 
believed the requirement would not unduly burden operators, who could 
secure their liability for benefits through other instruments or 
purchase commercial insurance instead of self-insuring.
    (3) By contrast, several coal-mine operators and their associations 
commented that requiring security at 120 percent of projected liability 
would be too great an expense. As explained above, the Department has 
decided to lower the required security amount from 120 to 100 percent 
of an operator's projected liability. The Department has weighed the 
interests of protecting the Trust Fund and of reducing the burden on 
operators, and determined that 100 percent security is the proper 
balance. The new Sec.  726.105 will provide that operators approved to 
self-insure must submit 100 percent of the actuarially estimated 
liabilities. This requirement comports with the BLBA's requirement that 
operators secure their liability (30 U.S.C. 932(b), 933(a)). The 
natural reading of this requirement is that operators must secure their 
full liability, not merely a portion of it. The requirement also 
harmonizes the treatment of self-insured operators with that of 
commercially insured operators, as an insurance policy for Federal 
black lung claims must cover all of an operator's liability--present 
and future. 20 CFR 726.202 and 726.203(c)(1)(ii).
    (4) Some commenters asserted that the Department erred in expecting 
that operators could obtain surety bonds for an annual premium of 2 to 
12 percent of the covered bond amount. These commenters highlighted 
that this range was based on general surety bonds, not

[[Page 100310]]

those specific to the coal industry. Instead, they posited that in 
addition to premiums, operators would need to post collateral for the 
surety bonds, up to and including 100 percent of the bond amount.
    In the proposed rule, the Department invited comment on the cost of 
surety bonds. The Department explained that the range of 2 to 12 
percent of security was based on a review of public data from surety 
companies. While commenters alleged the cost would be far greater, they 
did not submit any direct evidence of the asserted cost, such as actual 
surety bond quotes. Notably, no surety company submitted comment on the 
proposed rule. Therefore, the Department has no basis on which to 
change its estimation.
    (5) Some commenters complained that surety bonds are also harder 
for coal companies to obtain in today's market but did not submit 
evidence of this assertion. These commenters stated that they are aware 
of only three surety bonds used as security for self-insurance since 
1980, and only one that is still active. These numbers are inaccurate. 
Over ten currently active self-insured operators have security in the 
form of surety bonds, and some of them have more than one; these 
operators have submitted proof of their surety bonds to OWCP as part of 
their participation in the self-insurance program. As the Department 
noted in the proposed rule, surety bonds are the most common form of 
security that current self-insured operators use. The Department 
recognizes, as these commenters noted, that coal companies and coverage 
of black lung benefits might be considered high risk in the surety 
industry. That is one reason the Department is acting to better protect 
the Trust Fund and ensure that self-insured operators are properly 
secured. The Trust Fund should not be subject to enhanced risk so that 
operators may self-insure. Rather, Congress intended that coal 
operators, and not taxpayers, bear responsibility for paying black lung 
benefits to the miners who worked for them. Furthermore, as stated 
above, operators have security options other than surety bonds. They 
may use other forms--or multiple forms--of security for self-insurance 
(negotiable securities and letters of credit) or purchase commercial 
insurance to satisfy their obligations under the BLBA.
    (6) Several commenters argued that the Department could not require 
an operator to secure its future liabilities, and instead could only 
require security for current claims in award status. The Department 
finds no merit in this argument. The BLBA requires every operator to 
secure the payment of benefits for which it may be found liable. See 30 
U.S.C. 932(b) (``each such operator shall be liable for and shall 
secure the payment of benefits''), 933(a) (``each operator of a coal 
mine . . . shall secure the payment of benefits for which he is liable 
under section 932 of this title by (1) qualifying as a self-insurer in 
accordance with regulations prescribed by the Secretary, or (2) 
[purchasing commercial insurance]''); 20 CFR 726.1 (``[the BLBA] 
requires each coal mine operator who is operating or has operated a 
coal mine . . . to secure the payment of benefits for which he may be 
found liable'').
    Further, the BLBA and its implementing regulations \7\ provide that 
liability extends to claims filed in the future. See 30 U.S.C. 932(i) 
(operators that acquire a mine or its assets ``shall be liable for and 
shall . . . secure the payment of all benefits which would have been 
payable by the prior operator.''); 20 CFR 725.494(a) (``[a]n operator 
may be considered a `potentially liable operator' . . . if . . . [t]he 
miner's disability or death arose at least in part out of employment in 
or around a mine or other facility during a period when the mine or 
facility was operated by such operator, or by a person with respect to 
which the operator may be considered a successor operator.''); 20 CFR 
724.494(e)(2) (an operator that ``qualified as a self-insurer . . . 
during the period in which the miner was last employed by the 
operator'' is ``deemed capable of assuming its liability for a 
claim[.]'').
---------------------------------------------------------------------------

    \7\ The Secretary has authority to promulgate regulations 
directing the payment of benefits by operators and apportioning 
liability among them. 30 U.S.C. 932(a) (``the Secretary is 
authorized to prescribe in the Federal Register such additional 
provisions . . . as he deems necessary to provide for the payment of 
benefits by such operator to persons entitled thereto[.]''); 30 
U.S.C. 932(h) (``The Secretary may also, by regulation, establish 
standards for apportioning liability for benefits under this 
subsection among more than one operator, where such apportionment is 
appropriate.'').
---------------------------------------------------------------------------

    By necessity, an operator's liability extends to future claims. As 
various commenters noted, black lung claims may be filed long after 
miners stopped working, due to the progressive nature of black lung 
disease; it may disable miners even years after their exposure to coal-
mine dust ends. See 20 CFR 718.201(c) (black lung disease is ``a latent 
and progressive disease which may first become detectable only after 
the cessation of coal mine dust exposure.''). As a result, a 
significant portion of operators' liability involves claims that are 
incurred but not reported (IBNR). In other words, these claims involve 
situations in which the miner has suffered or will suffer an injury 
(exposure to coal-mine dust), but has not yet filed a claim or received 
an award. The only accurate way of securing an operator's black lung 
liability, then, is to account for future claims.
    Further, reading the BLBA as the commenters proposed would lead to 
untenable results, such as OWCP being unable to require a new operator 
to secure the payment of benefits at all, as it would have no claims 
currently in award status.
    To support their arguments against securing future liability, 
several commenters asserted that state workers' compensation programs 
only require security for present claims in award status. This is not 
accurate. Although states vary in how they determine an employer's 
estimated liability, some states require actuarial reports estimating 
the total liability from all present and future claims. See, e.g., 
Minn. Stat. sec. 79A.04, subd. 2 (``The minimum deposit is 110 percent 
of the private self-insurer's estimated future liability . . . as 
determined by an Associate or Fellow of the Casualty Actuarial 
Society[.]''). Even the commenters acknowledge that a high percentage 
of black lung liability consists of IBNR claims. Thus, the Department 
believes that it must take IBNR claims into account when setting 
security amounts.
    In its study of insurance in the black lung program, the GAO 
concluded that future liabilities should be factored into security 
amounts, and explained that not doing so in the past contributed to 
inadequate protection of the Trust Fund. See GAO, Federal Black Lung 
Benefits Program: Improved Oversight of Coal Mine Operator Insurance is 
Needed, at 18, 19 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21. The GAO reported that ``[e]stimating future costs 
based on sound actuarial practice is essential to the integrity of the 
insurance and the risk financing system and is key to fulfilling the 
promises embodied in insurance contracts, according to Actuarial 
Standards Board standards.'' Id. at 19 (internal citation omitted)). 
Providing for future liability also serves Congress's intent that 
operators bear the burden of paying benefits to the ``maximum extent 
feasible. Luker, 826 F.2d at 693 (quoting S. Rep. No. 209, 95th Cong., 
1st Sess. 9 (1977), reprinted in House Comm. on Educ. and Labor, 96th 
Cong., Black Lung Benefits Reform Act and Black Lung Benefits Revenue 
Act of 1977, 612 (Comm. Print 1979).

[[Page 100311]]

    (7) The Department will not lower the required amount of security 
below 100 percent of an operator's liability. As noted above, the BLBA 
requires that operators secure their full liability. Moreover, as 
explained in the proposed rule, the Department decided to require 120 
percent security in part because of the challenges in accurately 
estimating liabilities, and the possibility that an insolvent 
operator's actual liabilities could be greater than OWCP expected. Some 
of the factors that could increase an operator's actual liabilities 
over their estimated liabilities could include pneumoconiosis becoming 
more prevalent, or the costs of medical treatment increasing faster 
than expected. However, for the reasons discussed above, the Department 
is modifying the final rule to require only 100 percent security rather 
than the proposed 120 percent security.
    (8) One commenter argued that the proposed rule would allow OWCP to 
disregard an operator's actuarial report(s) and rely instead on any 
other information it deems relevant. This was not the Department's 
intent. OWCP will review and consider all relevant information that 
operators submit with their application, including any information not 
identified in Sec.  726.105 that would be pertinent. To clarify that 
OWCP will not disregard any submissions, the Department is revising the 
regulation to exchange the word ``and'' for ``or'' in the following: 
``Any operator approved to self-insure must submit 100 percent of the 
actuarial estimated liabilities (all present and future liabilities), 
as determined by OWCP based on the actuarial report or reports 
submitted with the operator's application or on file with OWCP, other 
information submitted with the operator's application, and any other 
materials or information that OWCP deems relevant'' (emphasis added).
20 CFR 726.109 Increase in the Amount of Security
    (1) The Department proposed deleting and replacing current Sec.  
726.109. New Sec.  726.109 provides that OWCP may, at its discretion, 
increase the amount of security a self-insurer is required to post 
whenever OWCP determines that the amount of security on deposit is 
insufficient to secure the payment of benefits and medical expenses 
under the BLBA. This allows OWCP to require a correction in security 
if, between annual renewals, a self-insured operator's security has 
fallen below the requirement for 100 percent of their liability.
    (2) Several commenters expressed concern that OWCP would increase 
an operator's security without a known reason or prescribed grounds, 
and could increase an operator's security beyond the percentage of 
collateral initially required.
    (3) As stated in the proposed rule, OWCP could decide that the 
amount of an operator's security on deposit is insufficient if, for 
example, it learns that the data on which an operator's liability 
estimate were based have significantly changed or an operator acquires 
new mines or employees. The Department believes the ability to increase 
security for reasons like this is necessary to protect the Trust Fund, 
consistent with Congress's intent that the coal operators who expose 
coal miners to coal dust be responsible for paying black lung benefits, 
not taxpayers. Further, if an operator disagrees with OWCP's 
determination to increase its security amount, it would be free to 
appeal that determination using the appeals process set forth in Sec.  
726.116.
    However, the Department agrees with the commenters that the 
regulation should clarify that OWCP will provide a written explanation 
of the reasons and grounds for increasing an operator's security. The 
Department, however, will not increase the required liability beyond 
100 percent of the operator's actuarially estimated liability. The 
regulation has been revised to make this clear.
20 CFR 726.114 Authorization and Reauthorization Timeframes
    (1) The Department proposed deleting and replacing current Sec.  
726.114 to substantially revise the timeframe for authorizations and 
reauthorizations.
    (2) Several commenters noted that legacy operators (those who have 
ceased mining operations but remain liable for black lung claims) 
should continue to be authorized for self-insurance. In revising Sec.  
726.114(a) and (b), the Department inadvertently omitted paragraph (c). 
Section 726.114(c) provides that self-insured operators must continue 
to reapply for self-insurance reauthorization after ceasing their 
mining operations. This regulation is consistent with other parts of 
the black lung regulations dealing with the requirement for operators 
to secure the payment of benefits after they cease coal-mining 
operations. See, e.g., 20 CFR 726.1, 726.4, and 726.302(c)(2)(ii). The 
Department intends to keep the current paragraph (c) as part of the new 
regulation.
    (3) Therefore, the Department is clarifying that current Sec.  
726.114(c) is retained in its entirety. The Department is making 
stylistic changes to Sec.  726.114(c). No alteration in meaning either 
results from or is intended by these changes.
20 CFR 726.116 Appeal Process
    (1) Section 726.116 is new. It establishes and clarifies the 
process for an operator to appeal a self-insurance determination made 
by the Division of Coal Mine Workers' Compensation (DCMWC). The 
proposed rule provided that a self-insurance applicant would submit a 
request for review of the initial determination within 30 days to 
DCMWC. Within 30 days of submitting the request, the applicant would 
have to submit any evidence and/or briefing on which they intended to 
rely. In its briefing, the applicant could request an informal 
conference with DCMWC. The conference would be limited to the issues 
identified in the applicant's written materials. Upon review, the 
Director of DCMWC would issue a supplemental decision. The proposed 
rule then provided that an applicant aggrieved by a supplemental 
decision could request further review by the Director of OWCP, who 
would review the evidence of record and not accept any new evidence or 
arguments. The Director of OWCP would then issue a final agency 
decision.
    (2) Several commenters expressed concern about operators remaining 
under-secured during a potentially lengthy appeals process. One 
commenter requested that OWCP include timeframes for its decision-
making, to ensure appeals do not drag on while the Trust Fund lacks 
sufficient security. Several commenters asserted that operators should 
post the required security during the pendency of their appeals, to 
protect the Trust Fund from inadequate funding if operators declare 
bankruptcy while contesting their security requirements. Expressing the 
opposite view, some commenters requested that the security requirement 
be stayed pending appeals and argued that operators would be 
irreparably harmed if forced to provide the security before their 
appeals were decided.
    (3) The Department agrees that the timeline of the appeals process 
needs to be clear and limited, to ensure operators do not remain under-
secured for too long, increasing the risk to the Trust Fund in case of 
bankruptcy. However, the Department is concerned that, as some 
commenters indicated, operators would be harmed if forced to post the 
required security during the pendency of their appeals. Therefore, the 
Department has decided to address the risk to the Trust Fund by 
streamlining the appeals process and setting clear deadlines for OWCP 
decision-making.

[[Page 100312]]

    (4) The new regulation will provide a one-step--rather than two-
step--appeals process. Instead of appealing to the Director of DCMWC 
first and, if unsatisfied, to the Director of OWCP, applicants will be 
able to appeal DCMWC's initial determination directly to the Director 
of OWCP. The Director of OWCP will not accept any new evidence, and 
instead review only the applicants' arguments about an error in the 
initial DCMWC determination. This is consistent with general appellate 
practices and provides an applicant with an adequate opportunity to be 
heard on its appeal.
    The Director of OWCP will have 60 days to take up the appeal and 
issue a final agency decision. At this time, if the applicant had been 
authorized to self-insure and was seeking a renewal that OWCP denied, 
their self-insurance will end and they will need to secure commercial 
insurance or face civil penalties for failure to secure benefits. 30 
U.S.C. 933(d)(1), 20 CFR 726.300. These changes are reflected in new 
paragraphs (a) through (d).
    (5) Paragraph (a) sets forth the process to file an appeal. It 
provides that any applicant who wishes to appeal a determination made 
by DCMWC must submit an appeal to the Director of OWCP within 30 days 
after DCMWC issues such determination. It also provides that the 30-day 
deadline to appeal may not be extended. This method is consistent with 
general appellate practices and 30 days provides operators with 
sufficient time to determine whether to appeal a determination.
    (6) Paragraph (b) sets forth the process for submitting briefs 
containing any arguments that DCMWC erred in its initial determination. 
It provides that, within 30 days of submitting an appeal, the applicant 
must submit any briefing on which the applicant intends to rely. It 
also provides that the Director of OWCP may, at their discretion, 
extend this deadline for up to 30 days upon a showing of good cause by 
the applicant. No more than two extensions will be granted. Examples of 
good cause may include the applicant representative's personal illness 
or an unusual circumstance prohibiting their access to necessary 
documents. The applicant must document an inability to comply or 
extreme hardship in complying on a timely basis.
    (7) Paragraph (c) sets forth the process for requesting an informal 
conference on an appeal. Paragraph (c)(1) provides that an applicant 
may request an informal conference and that such requests must be made 
when the applicant submits briefing in support of its appeal. Paragraph 
(c)(2) provides that, if an applicant requests a conference, the 
Director of OWCP will hold a conference with OWCP, the Office of the 
Solicitor, and the applicant's representatives. Paragraph (c)(3) 
provides that, if the applicant does not request a conference, the 
Director of OWCP may either decide the appeal on the record or schedule 
a conference on their own initiative. Paragraph (c)(4) provides that 
the conference will be limited to the issues identified in the 
applicant's written materials. Again, this method is consistent with 
general appellate practices and provides an applicant with an adequate 
opportunity to be heard on its appeal.
    (8) Paragraph (d) sets forth the Director of OWCP's obligations in 
the appeal process. Paragraph (d)(1) provides that the Director of OWCP 
will review the initial determination, evidence of record, and 
arguments submitted on appeal, and that the applicant may not submit 
any new evidence to the Director of OWCP. Paragraph (d)(2) provides 
that the Director of OWCP will have 60 days from receipt of the appeal 
to take up the appeal and issue a final agency decision. This 
requirement will ensure that there is a final agency action that is 
reviewable in the Federal courts as provided in the Administrative 
Procedure Act, 5 U.S.C. 701 et seq. See also 5 U.S.C. 704. Paragraph 
(d)(3) explains that if the Director of OWCP issues a final agency 
decision denying self- insurance, and the operator's self-insurance 
application is one for renewal (they have previously been approved for 
self-insurance), their self-insurance authorization will end and they 
must secure commercial insurance or face civil penalties for their 
failure to secure benefits.

IV. Administrative Law Considerations

A. Information Collection Requirements

    The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., 
and its implementing regulations, 5 CFR part 1320, require that the 
Department consider the impact of paperwork and other information 
collection burdens imposed on the public. A Federal agency generally 
cannot conduct or sponsor a collection of information, and the public 
is generally not required to respond to an information collection, 
unless it is approved by OMB under the PRA and displays a currently 
valid OMB Control Number. In addition, notwithstanding any other 
provisions of law, no person may generally be subject to penalty for 
failing to comply with a collection of information that does not 
display a valid Control Number. See 5 CFR 1320.5(a) and 1320.6.
    Although the proposed rules contained information collections 
within the meaning of the PRA (see proposed Sec.  726.102), these 
collections related to the self- insurance application forms are not 
new. They are currently approved for use in the black lung program by 
OMB under Control Number 1240-0057 (CM-2017 Application or Renewal of 
Self-Insurance Authority; and CM-2017b Report of Claims Information for 
Self-Insured Operators). Aside from the removal of the collection 
associated with form CM-2017a, the requirements for completion of the 
forms and the information collected on the forms are not changed in 
this final rule; therefore, the overall burdens imposed by the 
information collections are reduced.
    One commenter argued that an operator's information collection 
burden would increase under the new regulation's requirement to submit 
actuarial reports with OWCP- mandated actuarial assumptions. The 
Department disagrees with this contention. OWCP has required applicants 
to submit actuarial reports with OWCP-mandated actuarial assumptions 
since 2019. Further, OWCP already considered and requested public 
comment on the information collection burden of producing these 
actuarial reports. Along with the self-insurance application forms, 
OWCP explained in the notice to the public that applicants would need 
to submit actuarial reports, and estimated that twenty operators would 
have to submit actuarial reports they did not otherwise prepare in the 
course of business.\8\ The main application form, CM-2017, approved 
under OMB Control Number 1240-0057, provides that applicants' actuarial 
reports ``must comply with the standards specified by OWCP, which are 
posted on the black lung program's website: https://www.dol.gov/agencies/owcp/dcmwc/operators-insurers.'' The website, in turn, 
provides OWCP's current actuarial assumptions. Because applicants' 
information collection burden with respect to forms CM-2017 and CM-
2017b will not increase under this regulation, OWCP will proceed with 
the burden estimates contained in the NPRM for these forms.
---------------------------------------------------------------------------

    \8\ The Supporting Statement is available on OMB's website at 
https://omb.report/icr/202201-1240-003/doc/122887700.
---------------------------------------------------------------------------

    This final rule provides a minimal burden in requiring quarterly 
financial statements for section 501(c)(21) trusts. See Sec.  
726.104(b)(4). OWCP estimates this will add a minimal burden to the

[[Page 100313]]

public, totaling under two hours per year for all statement 
submissions. Similarly, OWCP estimates this requirement will add a 
minimal burden to OWCP in reviewing the statements, amounting to 1.67 
---------------------------------------------------------------------------
hours of review time and $85.47 in wages.

    OMB Control Number: 1240-0057.
    Affected Public: Business or other for-profit.
    Number of Respondents: 61.
    Frequency: Annually for Forms CM-2017 and CM-2017b, and 
quarterly for Section 501(c)(21) trust statements.
    Number of Responses: 142.
    Annual Burden Hours: 246.
    Annual Respondent or Recordkeeper Cost: $34,000.
    Federal Government Cost: $15,695.
    OWCP Collections: OWCP Forms CM-2017 (Application or Renewal of 
Self- Insurance Authority) and CM-2017b (Report of Claims 
Information for Self- Insured Operators); Quarterly Financial 
Reports on Section 501(c)(21) Trusts.

B. Executive Order 12866: Regulatory Planning and Review; Executive 
Order 13563: Improving Regulation and Regulatory Review; and Executive 
Order 14094: Modernizing Regulatory Review

    Under Executive Order (E.O.) 12866, as amended by E.O. 14904, the 
Office of Information and Regulatory Affairs (OIRA) of OMB determines 
whether a regulatory action is significant and, therefore, subject to 
the requirements of the E.O. and review by OMB. Section 3(f) of E.O. 
12866 defines a ``significant regulatory action'' as an action that is 
likely to result in a rule that may (1) have an annual effect on the 
economy of $200 million or more, or adversely affect in a material way 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (2) create a serious inconsistency 
or otherwise interfere with an action taken or planned by another 
agency; (3) materially alter the budgetary impacts of entitlements, 
grants, user fees, or loan programs, or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues ``for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order.'' See 
E.O. 12866, 58 FR 51735 (Oct. 4, 1993), as amended by E.O. 14094, 88 FR 
21879 (Apr. 11, 2023).
    Executive Order 13563 emphasizes the importance of quantifying both 
costs and benefits, reducing costs, harmonizing rules, and promoting 
flexibility. It also instructs agencies to review ``rules that may be 
outmoded, ineffective, insufficient, or excessively burdensome, and to 
modify, streamline, expand, or repeal them.'' See E.O. 13563, 76 FR 
3821 (Jan. 21, 2011).
    OIRA has determined that this rule is a significant regulatory 
action. See E.O. 12866, 58 FR 51735, as amended by E.O. 14094, 88 FR 
21879.
Economic Considerations
    This final rule will have an economic impact on coal mine operators 
that currently participate in the self-insurance program, as well as 
any new applicants. This final rule nevertheless is necessary to better 
protect the Trust Fund, reduce the administrative burdens on OWCP and 
operators, and bring clarity to the self-insurance process.
    As explained in the preamble, prior security requirements have 
proven inadequate to protect the Trust Fund when a self-insured 
operator becomes insolvent. From 2014 to 2016, three self-insured coal 
operators entered bankruptcy with combined collateral of $27.4 million; 
the resulting transfer of black lung liabilities to the Trust Fund was 
eventually estimated to be $865 million. See GAO, Federal Black Lung 
Benefits Program: Improved Oversight of Coal Mine Operator Insurance is 
Needed, at 13 (Feb. 2020), available at https://www.gao.gov/products/gao-20-21. Had this final rule been in effect at the time, the three 
operators would have had far more in collateral, producing dollar-for-
dollar savings for the Trust Fund. Of note, the amount of the coal 
operators' black lung liability was originally estimated in 2019 to be 
around $313 million to $325 million. This was revised to $865 million 
in 2020 due to a variety of factors, including increases in black lung 
benefit award rates and higher medical treatment costs.
    This final rule eliminates the financial scoring process and 
requires all self- insured operators to post security equal to 100 
percent of their projected black lung liabilities. By requiring 
sufficient security based simply on projected liabilities, the Trust 
Fund will be better protected and the financial scoring process is no 
longer needed. This final rule also removes certain minimum 
requirements that are now unnecessary, including the requirement that 
an operator's average current assets over the preceding three years 
exceed its current liabilities.
    This analysis provides the Department's estimate of the economic 
impact of this final rule, both on the economy as a whole and on 
individual operators.
a. Data Considered
    To determine the rule's general economic impact, the Department 
calculated how the rule will affect several stakeholder groups, 
including: (i) OWCP, (ii) taxpayers, (iii) commercially insured 
operators, and (iv) self-insured operators.
 i. OWCP
    This final rule does not impose additional demands on OWCP 
resources and in fact will result in a reduction in administration 
costs.\9\ It eliminates the need for OWCP to repeatedly perform annual 
financial health assessments on each self-insured operator.
---------------------------------------------------------------------------

    \9\ In the 2017 Information Collection Request, when the form 
CM-2017a was first approved, OWCP estimated that analyzing the 
information collected in that form would cost the agency $3,279.94 
annually. No longer requiring this form is expected to save the 
agency this cost.
---------------------------------------------------------------------------

    This produces a short-term savings in the administrative costs to 
perform the analysis, including both costs associated with OWCP time 
and contractors hired to assist OWCP in this analysis. This final rule 
will require OWCP to review actuarial liability estimates every three 
years and monitor authorized self-insureds for compliance with 
eligibility requirements, but these are not new costs because OWCP is 
already performing those functions under the current guidelines. The 
savings in administrative expenses is estimated to be, at a minimum, 
equivalent to the annual cost of one full-time financial analyst.
ii. Taxpayers
    This final rule provides taxpayers with both short- and long-term 
benefits. In the short term, taxpayers will benefit from lower 
administration expenses, because savings can be used elsewhere in the 
government without requiring additional tax revenues. In the long term, 
this final rule reduces taxpayers' financial exposure by reducing the 
risk that the Trust Fund--which has borrowed from the U.S. Treasury's 
general fund nearly every year since 1979 to make needed expenditures--
will need to assume liabilities of self-insured operators that become 
insolvent. This final rule will require security deposits that are 100 
percent of the operators' actuarial liability, instead of only partial 
security deposits as is currently the case for most self-insured 
operators. Under the current guidelines, the Trust Fund remains 
partially exposed to the risk of coal operator bankruptcies for 
operators that do not secure 100 percent of their black lung 
liabilities under existing guidelines. Moreover, a number of operators 
have

[[Page 100314]]

securities on deposit with OWCP that are substantially less than those 
required even under the existing guidelines.
    Requiring a 100 percent liability security deposit transfers the 
risk of insufficient securities to commercial security bond 
underwriters and banks that specialize in financial risk assessments 
and are better equipped than OWCP to assess the financial stability of 
coal mine operators (and who are compensated for assuming that risk via 
operators' purchase of surety bonds or other forms of security). This 
final rule requires self-insured operators to post additional security 
in the aggregate, which would cover the claims for which they are 
responsible if they were to default on their claim payments (based on 
the operators' current estimates of their actuarial liabilities). This 
means the burden for self- insured operators' liabilities would remain 
with them instead of transferring to the Trust Fund and, indirectly, to 
taxpayers.
iii. Commercially Insured Operators
    This final rule will not impose additional costs on operators that 
secure their BLBA liabilities through commercial insurance. This final 
rule affects only the eligibility criteria, security requirements, and 
other procedures for operators that secure their liabilities by 
qualifying to self-insure. At most, commercially insured operators 
might choose to reassess whether, in light of these changes, commercial 
insurance remains the most cost-effective option for securing their 
liabilities or, instead, whether to switch to self-insurance. The cost 
of any such assessment would be de minimis.
 iv. Self-Insured Operators
    This final rule could increase costs for current operators that are 
self-insured. In 2019, OWCP identified a total of 20 operators that 
were, or recently had been, actively mining coal and participating in 
the self-insurance program. Four of these operators have since gone 
bankrupt and are not included in this impact analysis. Of the remaining 
16 self-insured operators, seven have commercial insurance for their 
current operations, but self-insure their legacy liabilities. Nine 
secure both their current and legacy liabilities through self-
insurance.
    This final rule will apply to the 16 operators noted above. Table 1 
lists the 16 operators' actuarially estimated liabilities, securities 
currently on deposit, the present security requirement under existing 
guidelines, and future security requirements under this final rule.

                                  Table 1--Self-Insured Coal Mine Operators Actuarial Liabilities and Security Deposits
                                                        [All dollar amounts in thousands (,000)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Coal mine operator                                       Present--on deposit       Existing guidelines           Final rule
--------------------------------------------------------------             -----------------------------------------------------------------------------
                                                                 Operator                  Ratio of                  Ratio of                  Ratio of
                                                                 reported                 securities                securities                securities
                                                                black lung    Operator   to reported    Operator   to reported    Operator   to reported
            ID No.                  Name           Status       actuarial    securities   actuarial    securities   actuarial    securities   actuarial
                                                                liability    on deposit   liability   requirement   liability   requirement   liability
                                                                                             (%)                       (%)                       (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................  Company 1.....  Active........     $162,939      $24,400           15     $114,057           70     $162,939          100
2............................  Company 2.....  Active........      111,518        6,900            6       78,063           70      111,518          100
3............................  Company 3.....  Active........       93,826        2,500            3       65,678           70       93,826          100
4............................  Company 4.....  Legacy........       57,730        8,400           15       40,411           70       57,730          100
5............................  Company 5.....  Legacy........       56,802       21,000           37       39,761           70       56,802          100
6............................  Company 6.....  Active........       49,382        1,500            3       34,567           70       49,382          100
7............................  Company 7.....  Active........       29,581       20,330           69       20,707           70       29,581          100
8............................  Company 8.....  Legacy........       23,935       12,412           52       16,755           70       23,935          100
9............................  Company 9.....  Active........       21,400       14,079           66       14,980           70       21,400          100
10...........................  Company 10....  Legacy........        3,297        3,301          100        3,297          100        3,297          100
11...........................  Company 11....  Legacy........        1,364        1,364          100        1,159           85        1,364          100
12...........................  Company 12....  Legacy........        1,333        1,133           85        1,133           85        1,333          100
13...........................  Company 13....  Legacy........        1,230        1,046           85        1,046           85        1,230          100
14...........................  Company 14....  Active........          746          634           85          634           85          746          100
15...........................  Company 15....  Active........          656          558           85          558           85          656          100
16...........................  Company 16....  Active........          205          400          195          174           85          205          100
                                                              ------------------------------------------------------------------------------------------
  Self-Insured Operators       ..............  ..............      615,944      119,957           19      432,980           70      615,944          100
   Total
--------------------------------------------------------------------------------------------------------------------------------------------------------

    This final rule does not impose additional reporting or filing 
requirements on the coal operators currently in the self-insurance 
program beyond notifying OWCP of any business structure changes that 
could affect the operator's liability for benefits under the BLBA. If 
anything, this final rule decreases administrative burdens. Operators 
are required to continue updating their actuarial liability estimates 
on a three-year cycle but are no longer required to file quarterly 
financial reports. There will be a cost to the operators for the time 
required to review and understand the rule. Because of the small number 
of affected establishments, this rule familiarization cost is de 
minimis in aggregate and is not included in the rule's total cost 
estimate.
    This final rule requires self-insured operators to adjust the 
amount of their security deposits to reach 100 percent of their 
reported actuarial black lung liability. Table 1 reflects that 13 of 
the 16 current self-insured operators will be required to increase 
their security deposits as a result. For each operator, the cost of the 
increase in security deposits depends on which security deposit option 
the operator employs (since different security options have different 
costs) and the amount of the required increase.
    Operators with security deposits in the form of indemnity bonds 
will incur a cost determined by the commercial bond underwriters. OWCP 
does not have direct information on the cost of these bonds, as pricing 
is a function of multiple qualitative and quantitative attributes of 
each operator and is determined by underwriters on a case-by-case 
basis. Each underwriter has their own pricing formula and offers 
various payment options. To estimate the cost impacts of the final 
rule, an annual premium ranging from 2 percent to 12 percent of the 
additional security was used as an estimate. This range is based on a 
review of public data from several different surety companies;

[[Page 100315]]

however, actual costs could be higher or lower.\10\ As noted above, 
commenters did not provide alternative data on the cost of bonds. 
Additionally, this analysis focuses solely on surety bonds because that 
is both the most widely used option among currently self-insured 
operators and the most cost-effective option. If operators do not wish 
to use surety bonds, however, they may obtain a different form--or 
multiple forms--of security, or commercial insurance. See 20 CFR 
726.104(b), 30 U.S.C. 933(a), and 20 CFR 726.1 and 726.201.
---------------------------------------------------------------------------

    \10\ In reaching this estimate, OWCP reviewed publicly available 
estimates of surety bond premiums from BondExchange; Bryant Surety 
Bonds; Insureon; JW Surety Bonds; Lance Surety Bond Associates, 
Inc.; NNA Surety Bonds; Surety Bonds Direct; Surety Solutions; and 
Value Penguin. Note that these are for surety bonds generally, not 
surety bonds for coal companies specifically. The 2 to 12 percent 
range was then developed based on this public data.
---------------------------------------------------------------------------

    For operators with security deposits in the form of negotiable 
securities, the additional costs would consist of the opportunity costs 
of the additional deposits (i.e., the difference in return between 
funds held in such accounts and funds invested elsewhere, such as in 
higher-performing investments or reinvested into the operations of the 
business itself). One common convention to estimate hypothetical 
returns on forgone investments is to use a company or industry-level 
Weighted Average Cost of Capital (WACC); the median WACC for the metals 
and mining industry is currently around 7.7 percent, although the WACC 
for coal mining companies specifically, and in particular for 
individual coal mining companies, may be higher or lower. The 
opportunity costs for these operators could be estimated by calculating 
the difference between their WACC and the annual return earned on their 
security deposit and multiplying that figure by the dollar increase in 
their security. OWCP has not quantified these costs for two principal 
reasons. First, as noted above, most self-insured operators use 
indemnity bonds as security. OWCP does not anticipate that these 
operators will begin using negotiable securities. Second, annual 
indemnity bond costs are likely to be lower than the one-time payment 
of negotiable securities and associated opportunity costs, making 
indemnity bonds the more cost-effective option. Furthermore, any 
operators that currently use negotiable securities to secure some or 
all of their liabilities can continue using those securities in 
combination with indemnity bonds to comply with any increased security 
requirement (i.e., some portion of the operator's liabilities could be 
secured with negotiable securities and the remainder could be secured 
with indemnity bonds).
    Table 2 calculates the estimated increased costs of a larger 
indemnity bond for each operator and compares this figure to each 
operator's annual revenues. Annual revenues are represented by the most 
recent revenue available to OWCP, as reported by S&P or operator-
provided financial statements. Annual costs are estimated as the 
average of the maximum and minimum annual premium (i.e., the midpoint 
of the 2 percent to 12 percent range). As shown in table 2, the 
estimated annual impact for operators as a percentage of annual revenue 
ranges from a high of 0.422 percent to less than one thousandth of a 
percent (including one negative value).\11\
---------------------------------------------------------------------------

    \11\ Surety bonds are generally paid for annually, and the 
premium is paid up front at the beginning of the year or charged a 
finance fee for a payment plan. Discounting is not presented in 
table 2 because the average estimated cost represents one annual 
premium payment, rather than the total net present value of all 
future payments.

                               Table 2--Estimated Annual Cost of Increased Security Deposit in the Form of Indemnity Bonds
                                                        [All dollar amounts in thousands (,000)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
       Coal mine operator                Required security deposit = 100%
---------------------------------------------------------------------------------   Minimum     Maximum     Average                           Estimated
                                   Operator                            Change in   estimated   estimated   estimated                Year of    operator
                                   reported    Operator    Operator    required     cost of     cost of     cost of      Annual     annual   impact as a
    ID No.            Name        black lung  securities  securities    secured    change in   change in   change in    revenue     revenue   percent of
                                   actuarial  on deposit   required:   position   securities  securities  securities                           revenue
                                   liability              final rule      \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............  Company 1........    $162,939     $24,400    $162,939    $138,539      $2,771     $16,625      $9,698   $2,296,100      2022        0.422
2............  Company 2........     111,518       6,900     111,518     104,618       2,092      12,554       7,323    3,703,100      2022        0.198
3............  Company 3........      93,826       2,500      93,826      91,326       1,827      10,959       6,393    4,101,600      2022        0.156
4............  Company 4........      57,730       8,400      57,730      49,330         987       5,920       3,453    1,972,500      2022        0.175
5............  Company 5........      56,802      21,000      56,802      35,802         716       4,296       2,506    1,738,700      2022        0.144
6............  Company 6........      49,382       1,500      49,382      47,882         958       5,746       3,352    2,406,500      2022        0.139
7............  Company 7........      29,581      20,330      29,581       9,251         185       1,110         648    4,981,900      2022        0.013
8............  Company 8........      23,935      12,412      23,935      11,523         230       1,383         807    1,603,500      2018        0.050
9............  Company 9........      21,400      14,079      21,400       7,321         146         879         512   14,918,500      2022        0.003
10...........  Company 10.......       3,297       3,301       3,297         (4)         (0)         (1)         (0)      241,700      2022        0.000
11...........  Company 11.......       1,364       1,364       1,364         (0)         (0)         (0)         (0)      636,657      2018        0.000
12...........  Company 12.......       1,333       1,133       1,333         200           4          24          14   11,080,000      2018        0.000
13...........  Company 13.......       1,230       1,046       1,230         184           4          22          13   22,989,000      2022        0.000
14...........  Company 14.......         746         634         746         112           2          13           8       68,545      2018        0.011
15...........  Company 15.......         656         558         656          98           2          12           7       70,826      2018        0.010
16...........  Company 16.......         205         400         205       (195)         (4)        (23)        (14)    2,551,800      2022       -0.001
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Self-Insured Operators Total     615,944     119,957     615,944     495,987       9,920      59,518      34,719   75,360,928  ........        0.046
              ------------------------------------------------------------------------------------------------------------------------------------------
    Commercially Insured          ..........  ..........  ..........  ..........  ..........  ..........  ..........  ...........  ........        0.000
     Operators Total \2\.
              ------------------------------------------------------------------------------------------------------------------------------------------
    Coal Mine Industry Total      ..........  ..........  ..........  ..........  ..........  ..........  ..........  ...........  ........        0.024
     (Self-Insured +
     Commercially Insured).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The change represents the difference between the final rule and the securities currently on deposit.
\2\ Commercially Insured Operators includes all other coal mine operators other than the self-insured operators listed.


[[Page 100316]]

b. Economic Impact Summary
    Operator securities on deposit are estimated to change by nearly 
$500 million. This, however, represents an estimate of the projected 
liabilities over the lifetime of all claims for all self-insured 
companies. Even if they were all to go bankrupt simultaneously--which 
is extremely unlikely--the estimated liabilities represent benefits 
payments over the lifetime of the impacted miners and survivors. As an 
illustration, consider the annual payout in recent years from the 
estimated $865 million transfer of black lung liabilities to the Trust 
Fund as a result of the three bankruptcies from 2014 to 2016. From 
fiscal years 2015 through 2022, the Trust Fund paid out between $8 
million and $30 million per year to active beneficiaries as a direct 
result of those three bankruptcies. OWCP does not have the ability to 
predict bankruptcies with certainty, as explained elsewhere in this 
preamble as a rationale for proposing to eliminate the financial 
scoring process. Nevertheless, given the fact that $865 million in 
projected liabilities has thus far not resulted in more than $30 
million in disbursements to active beneficiaries per year, OWCP 
predicts that the share of benefits paid from this additional $500 
million in securities on deposit will not exceed $30 million in any 
given year.
    Furthermore, OWCP estimates ranges from approximately $10 million 
to $60 million on an annual basis, with a mid-range estimate of $35 
million. In table 2 above, the minimum and maximum estimated costs of 
change in securities are based on 2 percent and 12 percent, 
respectively, of the total change in secured position for each 
operator. OWCP used an annual premium ranging from 2 percent to 12 
percent of the additional security based on a review of public data 
from several different surety companies. OWCP used estimates for surety 
bonds because that is both the most widely used option among currently 
self-insured operators and likely to be the most cost-effective option.
    The combined opportunity cost on the current self-insurance 
operators is less than 0.1 percent of aggregate average annual 
revenues. Even for the operator facing the largest increase as a 
portion of revenues (Company 1 in Table 2), the expected impact is less 
than a half of a percent of average annual revenues. The impact on the 
coal industry overall is smaller than that of the self-insured operator 
group because there is no impact (0.0 percent) on commercially insured 
operators.

C. Regulatory Flexibility Act and Executive Order 13272 (Proper 
Consideration of Small Entities in Agency Rulemaking)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
requires an agency to prepare a regulatory flexibility analysis for 
regulations that will have ``a significant economic impact on a 
substantial number of small entities'' or to certify that the 
regulations will have no such impact.
    The Department has determined that a regulatory flexibility 
analysis under the RFA is not required for this rulemaking. For the 
mining industry, the Small Business Administration (SBA) uses two 
levels of employee counts to define small mining operations:
    1. North American Industry Classification System (NAICS) code 
212114, Bituminous Coal and Lignite Surface Mining--1,250 employees.
    2. NAICS 212115, Bituminous Coal Underground Mining--1,500 
employees.
    For purposes of this analysis, operators were classified as Surface 
operations (NAICS = 212114) or Underground (NAICS = 212115) depending 
on their predominant method of coal mining. The SBA classification of 
small entities was applied according to the operator's NAICS code type 
of operations.
    According to the SBA criteria, 6 of the 16 self-insured operators, 
or 38 percent, are considered small firms. Tables 3A and 3B show the 
impact on small and large self- insured operators. As explained above, 
the minimum and maximum estimated costs of change in securities are 
based on 2 percent and 12 percent, respectively, of the total change in 
secured position for each operator.
    The combined impact on these 6 operators ranges from $0 to $3.5 
million, which translates to 0 percent to 0.18 percent of annual 
revenues. These impacts are very small, and for that reason the rule is 
not considered to have a significant economic impact on a substantial 
number of small operators. The overall impact on the large operators is 
less than 0.01 percent of annual revenues.\12\
---------------------------------------------------------------------------

    \12\ The RFA does not define ``significant'' or ``substantial.'' 
5 U.S.C. 601. It is widely accepted, however, that ``[t]he agency is 
in the best position to gauge the small entity impacts of its 
regulations.'' SBA Office of Advocacy, ``A Guide for Government 
Agencies: How to Comply with the Regulatory Flexibility Act,'' at 18 
(August 2017), available at https://cdn.advocacy.sba.gov/wp-content/uploads/2019/06/21110349/How-to-Comply-with-the-RFA.pdf. One measure 
for determining whether an economic impact is ``significant'' is the 
percentage of revenue affected. For this rule, the Department used 
as a standard of significant economic impact whether the costs for a 
small entity equal or exceed 3 percent of the entity's annual 
revenue. The Department has used the threshold of 3 percent of 
revenues for the definition of significant economic impact in a 
number of recent rulemakings. See, e.g., Wage and Hour Division, 
Establishing a Minimum Wage for Contractors, Notice of Proposed 
Rulemaking, 79 FR 34568, 34603 (June 17, 2014); Office of Federal 
Contract Compliance Programs, Government Contractors, Requirement To 
Report Summary Data on Employee Compensation, Notice of Proposed 
Rulemaking, 79 FR 46562, 46591 (Aug. 8, 2014). The 3 percent 
standard is also consistent with the standards utilized by various 
other Federal agencies in conducting their regulatory flexibility 
analyses. See, e.g., Department of Health and Human Services, 
Centers for Medicare & Medicaid Services, Medicare and Medicaid 
Programs; Regulatory Provisions To Promote Program Efficiency, 
Transparency, and Burden Reduction; Part II; Final Rule, 79 FR 
27106, 27151 (May 12, 2014).

                                                                        Table 3A--Small Self-Insured Coal Mine Operators
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Dollars in thousands (,000)                                                Employee counts \1\
                                                             -------------------------------------------------          ------------------------------------------------------------------------
                                                                Minimum     Maximum     Average                  Rule
    ID No.               Name             Operations type      estimated   estimated   estimated                change
                                                                cost of     cost of     cost of      Annual     impact           2020                 2021                 2022           3 Yr
                                                               change in   change in   change in    revenue       (%)                                                                    average
                                                              securities  securities  securities
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
4.............  Company 4............  Underground..........         987       5,920       3,453    1,972,500     0.175  1,133..............  1,127..............  1,172..............     1,144
5.............  Company 5............  Underground..........         716       4,296       2,506    1,738,700     0.144  1,401..............  704................  854................       986
10............  Company 10...........  Surface..............        -0.1        -0.5        -0.3      241,700    -0.000  500................  500................  500................       500
11............  Company 11...........  Surface..............           0           0           0      636,657     0.000  950 est............  950 est............  950 est............       950
14............  Company 14...........  Surface..............           2          13           8       68,545     0.011  142 est............  142 est............  142 est............       142
15............  Company 15...........  Surface..............           2          12           7       70,826     0.010  180................  180................  180................       180
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Employee counts reflects all employees for each company. It is not limited to coal mining employees.


[[Page 100317]]


                                                                        Table 3B--Large Self-Insured Coal Mine Operators
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Dollars in thousands (,000)                                                Employee counts \1\
                                                             -------------------------------------------------          ------------------------------------------------------------------------
                                                                Minimum     Maximum     Average                  Rule
    ID No.               Name             Operations type      estimated   estimated   estimated                change
                                                                cost of     cost of     cost of      Annual     impact           2020                 2021                 2022           3 Yr
                                                               change in   change in   change in    revenue       (%)                                                                    average
                                                              securities  securities  securities
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1.............  Company 1............  Underground..........       2,771      16,625       9,698    2,296,100     0.422  1,494..............  1,575..............  1,860..............     1,643
2.............  Company 2............  Underground..........       2,092      12,554       7,323    3,703,100     0.198  3,203..............  3,303..............  3,404..............     3,303
3.............  Company 3............  Underground..........       1,827      10,959       6,393    4,101,600     0.156  3,250..............  3,500..............  3,730..............     3,493
6.............  Company 6............  Underground..........         958       5,746       3,352    2,406,500     0.139  2,902..............  2,990..............  3,371..............     3,088
7.............  Company 7............  Surface..............         185       1,110         648    4,981,900     0.013  4,600..............  4,900..............  5,500..............     5,000
8.............  Company 8............  Underground..........         230       1,383         807    1,603,500     0.050  6,000 est..........  6,000 est..........  6,000 est..........     6,000
9.............  Company 9............  Surface..............         146         879         512   14,918,500     0.003  16,787.............  16,688.............  16,974.............    16,816
12............  Company 12...........  Surface..............           4          24          14   11,080,000     0.000  11,300.............  11,300 est.........  11,300 est.........    11,300
13............  Company 13...........  Surface..............           4          22          13   22,989,000     0.000  25,000.............  25,500.............  27,000.............    25,833
16............  Company 16...........  Surface..............          -4         -23         -14    2,551,800    -0.001  3,011..............  2,884..............  2,982..............     2,959
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Large Self-Insured Operators Total......................       8,213      49,278      28,745   70,632,000     0.008  77,547.............  78,640.............  82,121.............    79,436
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Employee counts reflects all employees for each company. It is not limited to coal mining employees.

    Based on these facts, the Department certifies that this final rule 
will not have a significant economic impact on a substantial number of 
small entities. Thus, the Department has made a final determination 
that a regulatory flexibility analysis is not required. The Department 
has provided the Chief Counsel for Advocacy of the Small Business 
Administration with a copy of this certification. See 5 U.S.C. 605.
Industry Profile and Analysis
Types of Operations
    The United States coal mine industry consists of hundreds of mines 
controlled by hundreds of operators. Coal mine operators vary in size 
from owners of multiple mines to operators of single mines. The two 
main categories of coal mining operations are surface and underground, 
but many operators are also involved in other coal-related enterprises, 
including steel production, mining technology and support services, 
petroleum products, other mineral mining operations, and energy 
generation. Coal mining is the only focus of some operators, while for 
others it is only incidental to their main enterprise. For purposes of 
this analysis, operators were classified as Surface operations (NAICS = 
212114) or Underground (NAICS = 212115) depending on their predominant 
method of coal mining. The SBA classification of small entities was 
applied according to the operator's NAICS code type of operations.
Revenues Versus Coal Production
    Typically, coal operators are analyzed on the basis of measures 
such as coal production, coal reserves, and mine productivity. Among 
self-insured operators, there are differences in the proportion of coal 
mining operations covered by self-insurance, and the proportion of 
operators' total operations that are mining-related. To determine the 
impact of the rule change, total company revenues were used, because an 
individual operator could have multiple revenue streams available to 
support their workers' compensation costs. As noted, 38 percent of the 
self-insured operators are classified as ``small'' using employee 
counts, under the SBA's definitions. However, 50 percent are classified 
as ``major'' coal producers based on coal production. The ``major'' 
classification is based on the U.S. Energy Information Administration 
(``EIA'') criterion of producing more than 5 million short tons of coal 
per year.

                                                          Table 4--Coal Production by Operator
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Coal mine operator                                Coal production (thousand short tons)
----------------------------------------------------------------------------------------------------------------------  % of U.S.
                                                Major U.S. coal                                               3 Yr      production      Business size
       ID No.                 Name                 producer            2020         2021         2022       average
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................  Company 1.............  Yes.................       18,790       23,963       24,103       22,285          3.9  Large.
2..................  Company 2.............  Yes.................       61,705       71,854       78,364       70,641         12.4  Large.
3..................  Company 3.............  Yes.................       13,897       15,835       15,867       15,200          2.7  Large.
4..................  Company 4.............  No..................            0            0            0            0          0.0  Small.
5..................  Company 5.............  Yes.................        7,864        5,605        6,315        6,595          1.2  Small.
6..................  Company 6.............  Yes.................       26,900       32,218       35,477       31,532          5.5  Large.
7..................  Company 7.............  Yes.................      104,814      105,383      101,929      104,042         18.3  Large.
8..................  Company 8.............  No..................            0            0            0            0          0.0  Large.
9..................  Company 9.............  No..................          456            0            0          152          0.0  Large.
10.................  Company 10............  Yes.................       30,801       27,852       28,899       29,184          5.1  Small.
11.................  Company 11............  Yes.................        8,146        6,845        6,425        7,139          1.3  Small.
12.................  Company 12............  No..................            0            0            0            0          0.0  Large.
13.................  Company 13............  No..................        1,612        1,443        1,437        1,498          0.3  Large.
14.................  Company 14............  No..................          115          121          143          126          0.0  Small.
15.................  Company 15............  No..................        1,741        2,065        1,685        1,831          0.0  Small.
16.................  Company 16............  No..................        3,737        3,503        3,735        3,658          0.6  Large.
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Self-Insured Operators Total.................................      280,578      296,687      304,380      293,882         51.6
                    -------------------------------------------------------------------------------------
    Coal Mine Industry Total.....................................      535,434      577,431      594,155      569,007        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 100318]]

 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   ...........  ...........  ...........  ...........         % of
                                                                                                                        production
--------------------------------------------------------------------------------------------------------------------------------------------------------
Major US Coal Producer: Self Insured.............................      272,917      289,555      297,379      286,617         57.8
Major US Coal Producer: Commercially Insured.....................      185,690      221,208      220,174      209,024         42.2
    Total Major US Coal Producers................................      458,607      510,763      517,553      495,641        100.0
Non-Major Self Insured...........................................        7,661        7,132        7,001        7,265          9.9
Non-Major Commercially Insured...................................       69,166       59,536       69,601       66,101         90.1
    Total Non-Major US Coal Producers............................       76,827       66,668       76,602       73,366        100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531 
et seq., directs agencies to assess the effects of Federal regulatory 
actions on State, local, and Tribal governments, and the private 
sector, ``other than to the extent that such regulations incorporate 
requirements specifically set forth in law.'' This rule does not 
include any Federal mandate that may result in increased expenditures 
by State, local, or Tribal governments, or increase expenditures by the 
private sector by more than $100 million, and therefore is not covered 
by the Unfunded Mandates Reform Act.

E. Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism and has determined that it does not 
have ``federalism implications.'' E.O. 13132, 64 FR 43255 (Aug. 4, 
1999). The rule will not ``have substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.'' Id.

F. Executive Order 12988 (Civil Justice Reform)

    This rule meets the applicable standards in sections 3(a) and 
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden.

G. Congressional Review Act

    Pursuant to Subtitle E of the Small Business Regulatory Enforcement 
Fairness Act of 1996, also known as the Congressional Review Act, 5 
U.S.C. 801 et seq, OIRA has determined that this rule does not meet the 
criteria set forth in 5 U.S.C. 804(2).

List of Subjects in 20 CFR Part 726

    Administrative practice and procedure, Black lung benefits, Coal 
miners, Mines, Penalties.

    For the reasons set forth in the preamble, OWCP amends 20 CFR part 
726 as follows:

PART 726--BLACK LUNG BENEFITS; REQUIREMENTS FOR COAL MINE 
OPERATOR'S INSURANCE

0
1. The authority citation for part 726 continues to read as follows:

    Authority:  5 U.S.C. 301; 30 U.S.C. 901 et seq., 902(f), 925, 
932, 933, 934, 936; 33 U.S.C. 901 et seq.; 28 U.S.C. 2461 note 
(Federal Civil Penalties Inflation Adjustment Act of 1990 (as 
amended by the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015)); Pub. L. 114-74 at sec. 701; 
Reorganization Plan No. 6 of 1950, 15 FR 3174; Secretary's Order 10-
2009, 74 FR 58834.


0
2. Revise subpart B to read as follows:

Subpart B--Authorization of Self-Insurers

Sec.
726.101 Who may be authorized to self-insure.
726.102 Application for authority to become a self-insurer; how 
filed; information to be submitted.
726.103 Application for authority to self-insure; effect of 
regulations contained in this part.
726.104 Action by OWCP upon application of operator.
726.105 Fixing the amount of security.
726.106 Type of security.
726.107 How negotiable securities are handled.
726.108 Withdrawal of securities.
726.109 Increase in the amount of security.
726.110 Filing of agreement and undertaking.
726.111 Notice of authorization to self-insure.
726.112 Reports required of self-insurer; examination of accounts of 
self-insurer.
726.113 Disclosure of confidential information.
726.114 Authorization and reauthorization timeframes.
726.115 Revocation of authorization to self-insure.
726.116 Appeal process.


Sec.  726.101  Who may be authorized to self-insure.

    (a) Pursuant to section 423 of part C of title IV of the Act, 
authorization to self-insure against liability incurred by coal mine 
operators on account of the total disability or death of miners due to 
pneumoconiosis may be granted or denied in the discretion of the 
Secretary. The provisions of this subpart describe the minimum 
requirements established by the Secretary for determining whether any 
particular coal mine operator may be authorized as a self-insurer.
    (b) The minimum requirements which must be met by any operator 
seeking authorization to self-insure are as follows:
    (1) The operator must demonstrate the administrative capacity to 
fully service such claims as may be filed against it; and,
    (2) Such operator must obtain security, in a form approved by OWCP 
(see Sec.  726.104) and in an amount to be determined by OWCP (see 
Sec.  726.105).
    (c) No application will be approved until OWCP receives security in 
the amount and in the form determined by OWCP. If the applicant is 
seeking authorization to self-insure for the first time, it is not 
authorized to self-insure while its application is under review.
    (d) No operator whose application for authorization to self-insure 
or to renew authorization to self-insure is denied may reapply until 12 
months after a final decision denying such application.


Sec.  726.102  Application for authority to become a self-insurer; how 
filed; information to be submitted.

    (a) How filed. An application for authorization to self-insure or 
to renew authorization to self-insure must be submitted electronically 
in the manner

[[Page 100319]]

prescribed by OWCP. Such application must be signed by the applicant 
and if the applicant is not an individual, by the principal officer of 
the applicant duly authorized to make such application.
    (b) Information to be submitted. Each application for authority to 
self-insure or to renew authorization to self-insure must contain the 
following:
    (1) Any application forms required by OWCP.
    (2) An actuarial report using OWCP-mandated actuarial assumptions, 
unless the applicant has submitted such a report within the preceding 3 
years. The operator may submit an additional actuarial report using 
alternate assumptions with an explanation of why it believes the 
alternative assumptions are appropriate.
    (3) A statement of the employer's payroll report for each of the 
preceding 3 years.
    (4) A statement of the average number of employees engaged in 
employment within the purview of the Act for each of the preceding 3 
years.
    (5) A list of the mine or mines to be covered by any particular 
self-insurance agreement. Each such mine or mines listed must be 
described by name and reference must be made to the Mine Identification 
Number assigned such mine by the Mine Safety and Health Administration, 
U.S. Department of Labor.
    (6) A statement demonstrating the applicant's administrative 
capacity to provide or procure adequate servicing for a claim including 
both medical and dollar claims.
    (7) In addition to the information required in paragraphs (b)(1) 
through (6) of this section, OWCP may in its discretion, require the 
applicant to submit such further information or such evidence as OWCP 
may deem necessary.
    (c) Who may file. An application for authorization to self-insure 
(including an application to renew authority to self-insure) may be 
filed by any parent or subsidiary corporation, partner or partnership, 
party to a joint venture or joint venture, individual, or other 
business entity which may be determined liable for the payment of black 
lung benefits under part C of title IV of the Act, regardless of 
whether such applicant is directly engaged in the business of mining 
coal. However, in each case for which authorization to self-insure is 
granted, the agreement and undertaking filed pursuant to Sec.  726.110 
and the security deposit must be respectively filed by and deposited in 
the name of the applicant only.


Sec.  726.103  Application for authority to self-insure; effect of 
regulations contained in this part.

    As appropriate, each of the regulations, interpretations, and 
requirements contained in this part, including those described in 
subpart C of this part, are binding upon each applicant under this 
subpart, and the applicant's consent to be bound by all requirements of 
the regulations in this part are deemed to be included in and a part of 
the application, as fully as though written therein.


Sec.  726.104  Action by OWCP upon application of operator.

    (a) Within 30 days after determining that an applicant's 
application for authorization to self-insure or to renew authorization 
to self-insure is complete, OWCP will review and consider all relevant 
information submitted in the application and issue a written 
determination either denying the application or determining the amount 
of security which must be given by the applicant to guarantee the 
payment of benefits and the discharge of all other obligations which 
may be required of such applicant under the Act. OWCP may extend the 
30-day deadline if it determines that additional evidence is needed or 
that the applicant's evidence is not in compliance with OWCP's 
requirements in this subpart.
    (b) The applicant will thereafter be notified that they may give 
security in the amount fixed by OWCP (see Sec.  726.105):
    (1) In the form of an indemnity bond with sureties satisfactory to 
OWCP;
    (2) By a deposit of negotiable securities with a Federal Reserve 
Bank in compliance with Sec. Sec.  726.106(c) and 726.107;
    (3) In the form of a letter of credit issued by a financial 
institution satisfactory to OWCP (except that a letter of credit is not 
sufficient by itself to satisfy a self- insurer's obligations under 
this part); or
    (4) In the form of a trust pursuant to section 501(c)(21) of the 
Internal Revenue Code (26 U.S.C. 501(c)(21)) established prior to 
December 12, 2024. Operators using such trusts must submit quarterly 
financial statements to OWCP documenting the value of the trust every 
ninety days, beginning with ninety days from the date on which OWCP's 
authorization or reauthorization of the operator's self-insurance 
becomes effective under paragraphs (d) and (e) of this section.
    (c) Operators that are required to submit an initial or increased 
security deposit may do so in quarterly increments over the course of 
one year. Such operators must deposit at least 25 percent of the newly 
required security amount within thirty days of OWCP issuing the 
notification provided in paragraphs (d) and (e) of this section, 
followed by at least 50 percent of their required security within four 
months, at least 75 percent within eight months, and 100 percent within 
one year. If an operator fails to timely submit any one of these 
security installments, OWCP will revoke its self-insurance 
authorization and the operator will be subject to the civil penalty 
provisions in subpart D of this part.
    (d) If the applicant is receiving authorization to self-insure for 
the first time, OWCP will notify the applicant that:
    (1) Its authorization to self-insure is contingent upon submitting 
the required security and completed agreement and undertaking; and
    (2) The applicant's authorization to self-insure is effective for 
12 months from the date such security (either the full amount or first 
quarterly installment under paragraph (c) of this section) and 
completed agreement and undertaking are received by OWCP.
    (e) If OWCP renews the applicant's authorization to self-insure, 
OWCP will notify the applicant that:
    (1) If there are no changes in the required security amount, the 
applicant's authorization to self-insure is granted and effective for 
12 months from the date the applicant's completed agreement and 
undertaking is received by OWCP; or
    (2) If changes are needed to the existing security amount, the 
applicant's authorization to self-insure is not granted until the 
applicant has submitted the required security (either the full amount 
or first quarterly installment under paragraph (c) of this section) and 
signed agreement and undertaking. The applicant's authorization to 
self-insure will be effective for 12 months from the date such updated 
security and completed agreement and undertaking are received by OWCP.
    (f) Any applicant who cannot meet the security deposit requirements 
imposed by OWCP in this subpart should proceed to obtain a commercial 
policy or contract of insurance and submit proof of such coverage 
within 30 days after OWCP issues notification to the applicant of its 
decision. Any applicant for authorization to self-insure whose 
application has been denied or who believes that the security deposit 
requirements imposed by OWCP in this subpart are excessive may appeal 
such determination in the manner set forth in Sec.  726.116.

[[Page 100320]]

Sec.  726.105  Fixing the amount of security.

    Any operator approved to self-insure must submit security equal to 
100 percent of the actuarially estimated liabilities (all present and 
future liabilities), as determined by OWCP based on the actuarial 
report or reports submitted with the operator's application or on file 
with OWCP, other information submitted with the operator's application, 
and any other materials or information that OWCP deems relevant.


Sec.  726.106  Type of security.

    (a) OWCP will determine the type or types of security which an 
applicant must or may procure. An operator may not provide any form of 
security other than those provided for in Sec.  726.104(b).
    (b) In the event the indemnity bond option is selected, the bond 
must be in such form and contain such provisions as OWCP prescribes: 
Provided that only corporations may act as sureties on such indemnity 
bonds. In each case in which the surety on any such bond is a surety 
company, such company must be one approved by the U.S. Treasury 
Department under the laws of the United States and the applicable rules 
and regulations governing bonding companies (see Department of 
Treasury's Circular-570).
    (c) If the form of negotiable securities is selected, the operator 
must deposit the amount fixed by OWCP in any negotiable securities 
acceptable as security for the deposit of public moneys of the United 
States under regulations issued by the Secretary of the Treasury in 31 
CFR part 225. The approval, valuation, acceptance, and custody of such 
securities is hereby committed to the several Federal Reserve Banks and 
the Treasurer of the United States.


Sec.  726.107  How negotiable securities are handled.

    (a) Deposits of securities provided for by the regulations in this 
part must be made with any Federal Reserve bank or any branch of a 
Federal Reserve bank designated by OWCP, or the Treasurer of the United 
States, and must be held in the name of the Department of Labor.
    (b) If the self-insurer defaults on its obligations under the Act, 
OWCP has the power, in its discretion, to:
    (1) Collect the interest as it may become due;
    (2) Sell any or all of the securities; and
    (3) Apply the collected interest or proceeds from the sale of 
securities to the payment of any benefits for which the self-insurer 
may be liable.
    (c) If a self-insurer with deposits of securities has neither 
defaulted nor appealed from a determination made by OWCP under Sec.  
726.104, OWCP may allow the self-insurer to collect interest on the 
security deposit.


Sec.  726.108  Withdrawal of securities.

    (a) Withdrawal of any form of security (indemnity bonds, negotiable 
securities, and/or letters of credit) is prohibited except upon express 
written authorization by OWCP.
    (b) If a self-insurer wishes to withdraw securities, it must submit 
a written request, and must submit either an updated actuarial report 
using OWCP-mandated actuarial assumptions to support why the existing 
security levels are no longer applicable or replacement securities in 
the amount and form approved by OWCP. If OWCP approves the operator's 
request to withdraw and replace its securities, the operator must 
provide the replacement securities before it withdraws its existing 
securities.


Sec.  726.109  Increase in the amount of security.

    (a) OWCP may, at its discretion, increase the amount of security a 
self-insurer is required to post whenever it determines that the amount 
of security on deposit is insufficient to secure 100 percent of the 
self-insurer's liability for payment of benefits and medical expenses 
under the Act. OWCP will provide a written explanation for the 
increase.
    (b) OWCP will not require an operator to post greater than 100 
percent of its estimated liabilities, based on the information 
prompting the increase in security.


Sec.  726.110  Filing of agreement and undertaking.

    (a) In addition to the requirement that adequate security be 
procured as set forth in this subpart, the applicant for the 
authorization to self-insure must, as a condition precedent to 
receiving such authorization, execute and file with OWCP an agreement 
and undertaking in a form prescribed and provided by OWCP in which the 
applicant must agree:
    (1) To pay when due, as required by the Act, all benefits payable 
on account of total disability or death of any of its employee-miners;
    (2) To furnish medical, surgical, hospital, and other attendance, 
treatment, and care as required by the Act;
    (3) To provide security in a form approved by OWCP (see Sec.  
726.104) and in an amount established by OWCP (see Sec.  726.105); and
    (4) To authorize OWCP to sell any negotiable securities so 
deposited or any part thereof, and to pay from the proceeds thereof 
such benefits, medical, and other expenses and any accrued penalties 
imposed by law as OWCP may find to be due and payable.
    (b) When an applicant has provided the requisite security, it must 
submit to OWCP a completed agreement and undertaking, together with 
satisfactory proof that its obligations and liabilities under the Act 
have been secured.
    (c) Any operator authorized to self-insure must notify OWCP of any 
changes to its business structure, including the purchase, sale, or 
lease of any coal mining operations, that could affect the operator's 
liability for benefits under the Act. The operator must provide such 
notification to OWCP within 30 days of such change. In all events, 
however, an operator's liability following a change or sale is governed 
by 20 CFR 725.490 through 725.497.
    (d) OWCP may, at its discretion, require an operator to provide any 
information that may affect the operator's liability for benefits under 
the Act.


Sec.  726.111  Notice of authorization to self-insure.

    Upon receipt of a completed agreement and undertaking and 
satisfactory proof that adequate security has been provided, OWCP will 
notify an applicant for authorization to self-insure in writing that it 
is authorized to self-insure to meet the obligations imposed upon such 
operator by section 415 and part C of title IV of the Act. OWCP will 
also notify the applicant of the date on which its authorization is 
effective, the date on which such authorization will expire, and the 
date by which the applicant must apply to renew such authorization if 
the applicant intends to continue self-insuring its liabilities under 
the Act.


Sec.  726.112  Reports required of self-insurer; examination of 
accounts of self-insurer.

    (a) Each operator who has been authorized to self-insure under this 
part must submit to OWCP reports containing such information as OWCP 
may from time to time require or prescribe.
    (b) Whenever it deems it to be necessary, OWCP may inspect or 
examine the books of account, records, and other papers of a self-
insurer for the purpose of verifying any financial statement submitted 
to OWCP by the self-insurer or verifying any information furnished to 
OWCP in any report required by this section, or any other section of 
this part, and such self-

[[Page 100321]]

insurer must permit OWCP or its duly authorized representative to make 
such an inspection or examination as OWCP may require. In lieu of this 
requirement OWCP may in its discretion accept an adequate report of a 
certified public accountant.
    (c) Failure to submit or make available any report or information 
requested by OWCP from an authorized self-insurer pursuant to this 
section may, in appropriate circumstances, result in a revocation of 
the authorization to self-insure.


Sec.  726.113  Disclosure of confidential information.

    Any financial information or records, or other information relating 
to the business of an authorized self-insurer or applicant for the 
authorization of self-insurance obtained by OWCP is exempt from public 
disclosure to the extent provided in 5 U.S.C. 552(b) and the applicable 
regulations of the Department of Labor in 29 CFR part 70.


Sec.  726.114  Authorization and reauthorization timeframes.

    (a) No initial or renewed authorization to self-insure may be 
granted for a period in excess of 12 months unless OWCP determines that 
extenuating circumstances exist to allow an extension.
    (b) If an applicant is seeking to renew its authority to self-
insure, the applicant must file its application no later than 90 days 
before its existing authorization period ends.
    (c) Each operator authorized to self-insure under this part must 
apply for reauthorization for any period during which it engages in the 
operation of a coal mine and for additional periods after it ceases 
operating a coal mine. Upon application by the operator, accompanied by 
proof that the security it has posted is sufficient to secure all 
benefits potentially payable to miners formerly employed by the 
operator, OWCP will issue a certification that the operator is exempt 
from the coal mine operator insurance requirements of this part based 
on its prior operation of a coal mine. The civil money penalty 
provisions of subpart D of this part will be applicable to any operator 
that fails to apply for reauthorization in accordance with the 
provisions of this section.


Sec.  726.115  Revocation of authorization to self-insure.

    OWCP may suspend or revoke the authorization of any self-insurer 
for good cause, including but not limited to:
    (a) Failure by a self-insurer to comply with any provision or 
requirement of law or of the regulations in this part, or with any 
lawful order or request made by OWCP;
    (b) The failure or insolvency of the surety on its indemnity bond, 
if such bond is used as security, or any other financial institution 
holding any form of security provided by an operator; or
    (c) Impairment of financial responsibility of such self-insurer.


Sec.  726.116  Appeal process.

    (a) How to appeal. Any applicant that wishes to appeal DCMWC's 
determination on an application must submit a written appeal to the 
Director of OWCP in the form and manner prescribed by OWCP within 30 
days of DCMWC issuing such determination. This deadline may not be 
extended.
    (b) What to submit. Within 30 days after filing a written appeal, 
the applicant must submit any briefing on which it intends to rely, 
including any arguments that DCMWC's initial determination was 
erroneous. The applicant is not entitled to submit any further evidence 
at this time; all evidence must be submitted to DCMWC with the initial 
application. OWCP may, at its discretion, extend this deadline at the 
applicant's request for up to 30 days upon a showing of good cause. No 
more than two extensions will be granted.
    (c) Conferences. (1) The applicant may request an informal 
conference to present its position. Such request must be made in 
writing when the applicant submits briefing in support of its appeal.
    (2) If the applicant requests a conference, the Director of OWCP 
will hold one with the applicant's representatives and the Department's 
Office of the Solicitor.
    (3) If the applicant does not request a conference, OWCP may either 
decide the appeal on the record or, at its discretion, schedule a 
conference on its own initiative.
    (4) The conference will be limited to the issues identified in the 
applicant's written materials.
    (d) OWCP's review. OWCP will review the previous determination and 
issue a final agency decision.
    (1) The Director of OWCP will review the initial decision, evidence 
of record, and arguments submitted on appeal. The applicant may not 
submit new evidence to the Director of OWCP.
    (2) The Director of OWCP will have 60 days from receipt of the 
appeal to take up the appeal and issue a final agency decision.
    (3) If the Director of OWCP issues a final agency decision denying 
self- insurance, any existing self-insurance authorization of the 
applicant will end. The applicant will have 30 days from the issuance 
of the final agency decision to obtain and submit proof of commercial 
insurance or begin facing civil penalties for failure to secure 
benefits.

    Signed at Washington, DC, this 3rd day of December 2024.
Christopher J. Godfrey,
Director, Office of Workers' Compensation Programs.
[FR Doc. 2024-28848 Filed 12-11-24; 8:45 am]
BILLING CODE 4510-CK-P`