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By James Heslep Of Jenkins Fenstermaker, PLLC on 10/30/2022
Legislation Affecting Coal Operators: The Inflation Reduction Act

With inflation reaching levels not seen in decades, the entire country feels a financial squeeze. In an effort to stabilize the economy, the federal government created the Inflation Reduction Act (IRA) of 2022. The act has important implications that West Virginia (WV) businesses should review. More specifically, staying informed about and understanding legislation affecting coal operators, as this act does, is essential to stakeholders in WV’s energy industry.

Congress Passes Legislation Affecting Coal Operators

On August 12, 2022, Congress passed the Inflation Reduction Act of 2022, and the Act became law on August 16, 2022. The IRA's main goal is to fight rising inflation. Provisions of the act have implications for a broad range of industries and issues, including health care and various aspects of tax law, but there are some important aspects of the IRA that companies in the energy production industry should note.

Taxes in the Inflation Reduction Act

Some individuals and groups, including US Senator Joe Manchin, who introduced the bill along with Senate Majority Leader Chuck Schumer, claim the Inflation Reduction Act offers more benefits for WV coal operators than disadvantages. However, others, including US Senator Shelley Moore Capito, believe that the IRA will adversely affect WV’s businesses and its residents.

Manchin argues that tax subsidies included in the bill will provide incentives and funding for coal operators to upgrade and modernize their operations. However, an analysis by the Tax Foundation found that the tax increases included in the bill will have significant impacts on the coal industry, creating a net tax increase of 6.3 percent for the coal industry over the next ten years.

Legislation Affecting Coal Operators and the Black Lung Disability Trust Fund

Among its many provisions, a permanent extension of the Black Lung Excise Tax is included in the IRA. This tax provides financial stability for the Black Lung Disability Trust Fund, placing a significant burden on coal producers who must bear the costs of claims filed against companies that are no longer solvent.

The Black Lung Excise Tax subsidizes the Black Lung Disability Trust Fund, which pays medical costs and other expenses related to federal black lung benefit claims filed by coal miners. The excise tax had been on a year-to-year basis with Congress before the permanent extension. To understand how the tax changes to permanently fund the Black Lung Disability Trust Fund could affect your business and how you can better mitigate the impacts of black lung claims liability, contact a WV black lung defense lawyer.

Why It Is Important to Review Legislation Affecting Coal Operators

Coal operators and stakeholders need to be aware of the impacts the Inflation Reduction Act is likely to have on the energy industry. Existing and potential coal operators can take steps to decrease claims liability and costs and to defend against questionable claims aggressively when they are filed.

Residents of WV know the state’s economy and identity are deeply intertwined with the coal industry, and they know that legislation affecting coal operators ultimately will affect all of us. Jenkins Fenstermaker, PLLC has been an ally and advocate for the coal industry for many years, and its attorneys are committed to helping WV businesses manage and understand issues like this. To discuss how your business may be impacted by the Inflation Reduction Act and steps you can take to reduce federal black lung liabilities and workers’ compensation claim costs, contact WV black lung defense lawyer James "Mac" Heslep, at (304) 521-6120 or fill out the firm’s online contact form.