Since the U.S. government shut down, Alliance Resource Partners, L.P. (NASDAQ:ARLP), CONSOL Energy Inc. (NYSE:CNX), and Berkshire Hathaway Inc. (NYSE:BRK.B)'s MidAmerican Energy Holdings Company have all experienced fatalities at their coal facilities. Is this a direct result of the U.S. government shutdown?
The impact on inspections There are things that governments do poorly and things that they do well. One of the good things has typically been the regulation and policing of dangerous job sites. Being a coal miner is one such dangerous occupation. When the U.S. government shut down, however, the Mine Safety and Health Administration, or MSHA, had to trim back its inspections, looking only at mines with a history of problems. A 60% staff reduction pretty much forced that change.
But, in the short time the government has been shut down, there have been four deaths, and some of those deaths have come at public companies with a history of operating safely, like CONSOL Energy and Alliance Resource Partners. In fact, in its 2012 annual report, Alliance highlighted its success on the safety front: "During 2012, our employees' lost-time accident rate was below the industry's average and was one of the best in ARLP's history."
CONSOL, meanwhile, recently opened an underground mine training facility. The goal is to properly train employees to help ensure their safety. It is the only such facility in the country, and CONSOL had 14 teams participate in a mine rescue competition, with one of its crews winning top honors. This is another company that clearly takes safety seriously.
From a cynical point of view, squeezing out a few more pounds of coal might sound like the only thing a coal company cares about. However, companies, particularly public ones, have to care about the safety of their employees because it makes financial sense. Employees getting hurt slows production, leads to lawsuits, increases tensions between the company and unions, and is a public black eye. These are things no company wants to deal with.
Taking the lead In fact, both Arch Coal Inc (NYSE:ACI) and Alpha Natural Resources, Inc. (NYSE:ANR) recently told The Wall Street Journal that safety remains a key focus, regardless of government inspections. Arch Coal and CONSOL even noted that inspections continue to take place regularly at their mines, though perhaps not at the same rate as before the shutdown. While Alpha Natural Resources made the comment that, despite the shutdown, the company intends "to run right and run as safely" as possible.