100304 Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 

request the continuation of suspension 

under 19 U.S.C. 1516a(g)(5)(C)(iii). 

* * * * * 

[FR Doc. 2024–29091 Filed 12–11–24; 8:45 am] 

BILLING CODE 3510–DS–P 

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 selfinsurer ‘‘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 selfinsurer. 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 nonexhaustive 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 selfinsure, 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 


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Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 100305 

1OWCP 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). 

2This 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. 

bulletin, see BLBA Bulletin No. 21–01 

(Dec. 7, 2020).1

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 selfinsure, and the process for operators to 

appeal OWCP’s determinations. 

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-bySection 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 

§ 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 selfinsurance 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 


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3The 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. 

4 20 CFR 726.102(b)(2) in this rule (applicants 

must submit an actuarial report using OWCPmandated 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. 

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 § 726.104(b), 

and will allow operators to phase in any 

increased security over the course of 

one year, see § 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/gao20-21. GAO also noted that the Trust 

Fund faced particular risk in the selfinsurance 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

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 OWCPmandated 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. 

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 selfinsurance 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 

§ 726.101(b); (2) the requirement that 

applicants submit actuarial reports 

using OWCP-mandated actuarial 

assumptions under § 726.102(b)(2); (3) 

the updated process that OWCP will 

follow in issuing written determinations 

on self-insurance applications under 

§ 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 § 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 

§ 726.104(c); (6) the requirement that 

operators submit security equal to 100 

percent of their actuarially estimated 

liabilities under § 726.105; (7) the 

timeframes for authorization and 

reauthorization to self-insure under 

§ 726.114; and (8) the appeals process 

set forth under § 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 selfinsurance 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 § 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 


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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 selfinsured 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 selfinsure or to renew authorization to selfinsure. 

(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 


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100308 Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 

5OWCP provides information on the black lung 

program to operators and insurance carriers, 

available at https://www.dol.gov/agencies/owcp/ 

dcmwc/operators-insurers. 

6See Treasury’s reporting on financial statements 

for significant social insurance programs, available 

at https://www.fiscal.treasury.gov/reportsstatements/financial-report/statements-of-socialinsurance.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-foragencies/circulars/. 

additional report and, as stated below, 

is amending § 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. 

(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 selfinsurance 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). 


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Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 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 selfinsurance 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 

§ 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 noncompliant 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 selfinsurance 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 § 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 § 726.105 with the requirement 

that any operator approved to selfinsure 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 selfinsuring. 

(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 § 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 


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7The 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.’’). 

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 selfinsurance (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 selfinsurer 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[.]’’). 

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). 


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(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 § 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 § 726.109. New 

§ 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 § 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 § 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 

§ 726.114(a) and (b), the Department 

inadvertently omitted paragraph (c). 

Section 726.114(c) provides that selfinsured 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 § 726.114(c) is 

retained in its entirety. The Department 

is making stylistic changes to 

§ 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 decisionmaking, 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. 


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8The Supporting Statement is available on OMB’s 

website at https://omb.report/icr/202201-1240-003/ 

doc/122887700. 

(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 selfinsure 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 selfinsurance 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 § 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. 

This final rule provides a minimal 

burden in requiring quarterly financial 

statements for section 501(c)(21) trusts. 

See § 726.104(b)(4). OWCP estimates 

this will add a minimal burden to the 


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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. 

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 forprofit. 

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 selfinsurance 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 selfinsured 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 selfinsured 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. 

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 selfinsureds 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 selfinsured 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 


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100314 Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 

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 selfinsure. 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 

Operator 

reported 

black lung 

actuarial 

liability 

Present—on deposit Existing guidelines Final rule 

ID No. Name Status 

Operator 

securities 

on deposit 

Ratio of 

securities to 

reported 

actuarial 

liability 

(%) 

Operator 

securities 

requirement 

Ratio of 

securities to 

reported 

actuarial 

liability 

(%) 

Operator 

securities 

requirement 

Ratio of 

securities to 

reported 

actuarial 

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 Total .................... .................... 615,944 119,957 19 432,980 70 615,944 100 

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 caseby-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; 


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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. 11Surety 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. 

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 selfinsured operators and the most costeffective 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. 

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

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 

estimated 

cost of 

change in 

securities 

Maximum 

estimated 

cost of 

change in 

securities 

Average 

estimated 

cost of 

change in 

securities 

Annual 

revenue 

Year of 

annual 

revenue 

Estimated 

operator 

impact as a 

percent of 

revenue 

ID No. Name 

Operator 

reported 

black lung 

actuarial 

liability 

Operator 

securities 

on deposit 

Operator 

securities 

required: 

final rule 

Change in 

required 

secured 

position 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 Operators 

Total 2.

.................... .................... .................... .................... ................. ................. ................. ...................... ............... 0.000 

Coal Mine Industry Total (SelfInsured + Commercially Insured).

.................... .................... .................... .................... ................. ................. ................. ...................... ............... 0.024 

1The 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. 


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12The 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-theRFA.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). 

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 selfinsured 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 midrange 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

TABLE 3A—SMALL SELF-INSURED COAL MINE OPERATORS

ID No. Name Operations type 

Dollars in thousands 

(,000) 

Rule 

change 

impact 

(%) 

Employee counts 1

Minimum 

estimated 

cost of 

change in 

securities 

Maximum 

estimated 

cost of 

change in 

securities 

Average 

estimated 

cost of 

change in 

securities 

Annual 

revenue 

2020 2021 2022 3 Yr 

average 

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 

1Employee counts reflects all employees for each company. It is not limited to coal mining employees. 


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TABLE 3B—LARGE SELF-INSURED COAL MINE OPERATORS

ID No. Name Operations type 

Dollars in thousands 

(,000) 

Rule 

change 

impact 

(%) 

Employee counts 1

Minimum 

estimated 

cost of 

change in 

securities 

Maximum 

estimated 

cost of 

change in 

securities 

Average 

estimated 

cost of 

change in 

securities 

Annual 

revenue 

2020 2021 2022 3 Yr 

average 

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 

1Employee 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 selfinsured 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. 

production 

Business 

size ID No. Name 

Major U.S. 

coal 

producer 2020 2021 2022 3 Yr 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 


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TABLE 4—COAL PRODUCTION BY OPERATOR—Continued 

Coal mine operator Coal production 

(thousand short tons) % of U.S. 

production 

Business 

size ID No. Name 

Major U.S. 

coal 

producer 2020 2021 2022 3 Yr average 

% 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 

■ 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. 

■ 2. Revise subpart B to read as follows: 

Subpart B—Authorization of SelfInsurers 

Sec. 

726.101 Who may be authorized to selfinsure. 

726.102 Application for authority to 

become a self-insurer; how filed; 

information to be submitted. 

726.103 Application for authority to selfinsure; 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 selfinsure. 

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 selfinsure. 

726.116 Appeal process. 

§ 726.101 Who may be authorized to selfinsure. 

(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 § 726.104) and in an amount to be 

determined by OWCP (see § 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. 

§ 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 


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Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 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 OWCPmandated 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 § 726.110 

and the security deposit must be 

respectively filed by and deposited in 

the name of the applicant only. 

§ 726.103 Application for authority to selfinsure; 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. 

§ 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 

§ 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 §§ 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 

§ 726.116. 


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100320 Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 

§ 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. 

§ 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 § 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. 

§ 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 § 726.104, OWCP may 

allow the self-insurer to collect interest 

on the security deposit. 

§ 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. 

§ 726.109 Increase in the amount of 

security. 

(a) OWCP may, at its discretion, 

increase the amount of security a selfinsurer 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. 

§ 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 § 726.104) and 

in an amount established by OWCP (see 

§ 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 selfinsure 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. 

§ 726.111 Notice of authorization to selfinsure. 

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 selfinsure 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. 

§ 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 

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Federal Register / Vol. 89, No. 239 / Thursday, December 12, 2024 / Rules and Regulations 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 selfinsure. 

§ 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 selfinsurance 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. 

§ 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 selfinsure 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. 

§ 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. 

§ 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 selfinsurance, 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 

DEPARTMENT OF LABOR 

Occupational Safety and Health 

Administration 

29 CFR Part 1926 

[Docket No. OSHA–2019–0003] 

RIN 1218–AD25 

Personal Protective Equipment in 

Construction 

AGENCY: Occupational Safety and Health 

Administration (OSHA), Labor. 

ACTION: Final rule. 

SUMMARY: OSHA is finalizing a revision 

to its personal protective equipment 

standard for construction to explicitly 

require that the equipment must fit 

properly. 

DATES: This final rule is effective 

January 13, 2025. 

ADDRESSES: Docket: To read or 

download comments or other 

information in the docket, go to https:// 

www.regulations.gov. All comments and 

submissions are listed in the https://

www.regulations.gov index; however, 

some information (e.g., copyrighted 

material) is not publicly available to 

read or download through that website. 

All comments and submissions, 

including copyrighted material, are 

available for inspection through the 

OSHA Docket Office. Contact the OSHA 

Docket Office at (202) 693–2500 (TDY 

number 877–889–5627) for assistance in 

locating docket submissions. 

FOR FURTHER INFORMATION CONTACT: 

Press inquiries: Frank Meilinger, 

Director, OSHA Office of 

Communications, telephone: (202) 693– 

1999; email: meilinger.francis2@dol.gov. 

General and technical inquiries: 

Vernon Preston, OSHA Directorate of 

Construction, telephone: (202) 693– 

2020; email: preston.vernon@dol.gov. 

Copies of this Federal Register notice 

and news releases: Electronic copies of 

these documents are available at 

OSHA’s web page at https://

www.osha.gov. 

SUPPLEMENTARY INFORMATION: 


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