[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
ASLEEP AT THE SWITCH:
HOW THE DEPARTMENT OF LABOR
FAILED TO OVERSEE THE BLACK
LUNG DISABILITY TRUST FUND
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND LABOR
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, FEBRUARY 26, 2020
__________
Serial No. 116-54
__________
Printed for the use of the Committee on Education and Labor
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: www.govinfo.gov
or
Committee address: https://edlabor.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-101 PDF WASHINGTON : 2022
-----------------------------------------------------------------------------------
COMMITTEE ON EDUCATION AND LABOR
ROBERT C. ``BOBBY'' SCOTT, Virginia, Chairman
Susan A. Davis, California Virginia Foxx, North Carolina,
Raul M. Grijalva, Arizona Ranking Member
Joe Courtney, Connecticut David P. Roe, Tennessee
Marcia L. Fudge, Ohio Glenn Thompson, Pennsylvania
Gregorio Kilili Camacho Sablan, Tim Walberg, Michigan
Northern Mariana Islands Brett Guthrie, Kentucky
Frederica S. Wilson, Florida Bradley Byrne, Alabama
Suzanne Bonamici, Oregon Glenn Grothman, Wisconsin
Mark Takano, California Elise M. Stefanik, New York
Alma S. Adams, North Carolina Rick W. Allen, Georgia
Mark DeSaulnier, California Lloyd Smucker, Pennsylvania
Donald Norcross, New Jersey Jim Banks, Indiana
Pramila Jayapal, Washington Mark Walker, North Carolina
Joseph D. Morelle, New York James Comer, Kentucky
Susan Wild, Pennsylvania Ben Cline, Virginia
Josh Harder, California Russ Fulcher, Idaho
Lucy McBath, Georgia Steve Watkins, Kansas
Kim Schrier, Washington Ron Wright, Texas
Lauren Underwood, Illinois Daniel Meuser, Pennsylvania
Jahana Hayes, Connecticut Dusty Johnson, South Dakota
Donna E. Shalala, Florida Fred Keller, Pennsylvania
Andy Levin, Michigan* Gregory F. Murphy, North Carolina
Ilhan Omar, Minnesota Jefferson Van Drew, New Jersey
David J. Trone, Maryland
Haley M. Stevens, Michigan
Susie Lee, Nevada
Lori Trahan, Massachusetts
Joaquin Castro, Texas
* Vice-Chair
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
ALMA S. ADAMS, North Carolina, Chairwoman
Mark DeSaulnier, California Bradley Byrne, Alabama,
Mark Takano, California Ranking Member
Pramila Jayapal, Washington Mark Walker, North Carolina
Susan Wild, Pennsylvania Ben Cline, Virginia
Lucy McBath, Georgia Ron Wright, Texas
Ilhan Omar, Minnesota Gregory F. Murphy, North Carolina
Haley M. Stevens, Michigan
C O N T E N T S
----------
Page
Hearing held on February 26, 2020................................ 1
Statement of Members:
Adams, Hon. Alma S., Chairwoman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 4
Wright, Hon. Ron, a Congressman from the State of Texas..... 5
Prepared statement of.................................... 6
Statement of Witnesses:
Brown Barnes, Ms. Cindy, Director, Education, Workforce and
Income Security, U.S. Government Accountability Office..... 8
Prepared statement of.................................... 11
Hearthway, Ms. Julia, Director, Office of Workers'
Compensation Programs, U.S. Department of Labor............ 27
Prepared statement of.................................... 29
Additional Submissions:
Ms. Adams:
Questions submitted for the record....................... 53
Ms. Brown Barnes response to question submitted for the
record..................................................... 55
ASLEEP AT THE SWITCH:
HOW THE DEPARTMENT OF LABOR
FAILED TO OVERSEE THE BLACK
LUNG DISABILITY TRUST FUND
----------
Wednesday, February 26, 2020
House of Representatives,
Subcommittee on Workforce Protections,
Committee on Education and Labor,
Washington, D.C.
----------
The subcommittee met, pursuant to call, at 3:01 p.m., in
Room 2175, Rayburn House Office Building, Hon. Alma S. Adams
(Chairwoman of the subcommittee) presiding.
Present: Representatives Adams, DeSaulnier, Jayapal, Cline,
and Wright.
Also Present: Representatives Scott, Foxx, Cartwright,
Walberg, Meuser, Keller, and Griffith.
Staff Present: Jordan Barab, Senior Labor Policy Advisor;
Ilana Brunner, General Counsel; Sharit Cardenas, Labor Policy
Fellow; Eli Hovland, Staff Assistant; Stephanie Lalle, Deputy
Communications Director; Jaria Martin, Clerk/Special Assistant
to the Staff Director; Kevin McDermott, Senior Labor Policy
Advisor; Max Moore, Staff Assistant; Ivorie Stanley, Health and
Labor Policy Fellow; Banyon Vassar, Deputy Director of
Information Technology; Gabriel Bisson, Minority Staff
Assistant; Courtney Butcher, Minority Director of Member
Services and Coalitions; Rob Green, Minority Director of
Workforce Policy; Jeanne Kuehl, Minority Legislative Assistant;
John Martin, Minority Workforce Policy Counsel; Hannah Matesic,
Minority Director of Operations; Alexis Murray, Minority
Professional Staff Member; Carlton Norwood, Minority Press
Secretary; and Kelly Tyroler, Minority Professional Staff
Member.
Chairwoman Adams. The Subcommittee on Workforce Protections
will come to order.
Welcome, everyone. I note that a quorum is present. I note
for the subcommittee that Mr. Tim Walberg of Michigan, Mr.
Meuser of Pennsylvania, Mr. Fred Keller of Pennsylvania, Mr.
Morgan Griffith of Virginia, and Mr. Matt Cartwright of
Pennsylvania are permitted to participate in today's hearing
with the understanding that their questions will come only
after all the Members of the Subcommittee on Workforce
Protections and the full committee, respectively, on both sides
of the aisle who are present have had an opportunity to
question the witnesses.
The subcommittee is meeting today for a hearing to hear
testimony on ``Asleep at the Switch: How the Department of
Labor Failed to Oversee the Black Lung Disability Trust Fund.''
Pursuant to Committee Rule 7(c), opening statements are limited
to the Chair and the Ranking Member. This allows us to hear
from our witnesses sooner and provides all Members with
adequate time to ask questions.
I recognize myself now for the purpose of making an opening
statement.
Today we will hear the disturbing story of a major failure
of government oversight, a failure apparently going back
several decades, and an even more troubling account of how the
coal operators and their creditors on Wall Street have left
taxpayers to take the hit. Last June the subcommittee held a
hearing about the growing red ink in the Black Lung Disability
Trust Fund. A decline of coal production, a reduced level of
funding due to the sunset of the Black Lung Excise Tax, and the
resurgence of black lung disease is pushing the Trust Fund
deeper and deeper into debt.
Today we will explore another important piece of this
problem, The Department of Labor's failure to ensure that coal
operators are covering their fair share of the benefits owed to
miners and their families. When miners are disabled from black
lung disease they can file a claim for black lung benefits with
the Department of Labor. If a claim is approved, the coal
operator that most recently employed them is required to
provide benefits and cover medical expenses for the miner and
their family.
The law requires that operators have insurance to cover
benefits for miners and their survivors, benefits that
frequently outlast the life of the mining company. If a mine
operator shuts down or files for bankruptcy, however, benefits
are paid from the Black Lung Disability Trust Fund, which is
financed by a small tax on each ton of mined coal.
In order to ensure that the obligations of the mine
operators do not fall on the Trust Fund and taxpayers,
operators are required by the DOL to either purchase commercial
insurance sufficient to cover their current and future
obligations or mine operators can self-insure, as long as they
can prove that they have collateral sufficient to cover their
obligations. DOL is supposed to oversee that self-insurance
program. But the Department of Labor has failed to enforce the
mandate that self-insured mine operators set aside sufficient
collateral in the event of bankruptcy. As a result, the amount
of collateral DOL has required from some of these operators is
tens of millions of dollars less than their most recent
estimated black lung benefit liability.
In 2016 Chairman Scott and then-Congressman Sander Levin
asked that the Government Accountability Office to examine the
potential exposure of the Trust Fund from self-insured mine
operators who file for bankruptcy, evaluate the effectiveness
of DOL's oversight over the program, and make recommendations
for improving oversight of the program.
The GAO is here today to detail their report. We will also
hear from the Director of the Department of Labor's Office of
Workers' Compensation Programs to describe the Department's
efforts to correct this problem. We will hear some troubling
findings today.
Last summer, we learned from GAO that of 22 self-insured
coal operators, DOL had not reassessed black lung liabilities
or collateral levels of almost half of them in the past 10
years. And one of these operators had not been examined for
over 30 years.
Today, we will learn that over 6 months after the DOL
required self-insured coal operators to update their
information, DOL has still not publicly released updated
estimates of liability and the appropriate levels of
collateral.
Today we will also hear about the consequences of this
inadequate oversight. GAO's report found that mine operators in
three very large recent bankruptcies involving nearly one
billion dollars in black lung liabilities were required to post
only three percent of the needed collateral.
At last June's hearing, the GAO made a preliminary finding
that the bankruptcies of those three companies, Alpha Natural
Resources, James River Coal, and Patriot Coal, had resulted in
$310 million being added to the Trust Fund's obligations. Today
we will learn that the true number is $865 million, three times
the original estimate. While taxpayers were saddled with debt,
coal executives were walking around with millions of dollars in
salaries and bonuses.
Following their bankruptcy declaration, one of the bankrupt
operators, Alpha Resources, offered executive bonuses of up to
$11.9 million to its top executives. Alpha CEO Kevin Crutchfeld
made almost $8 million in 2014, the year Alpha declared
bankruptcy, and then another $1.8 million in 2016 when Alpha
emerged from bankruptcy. At the same time, Alpha dumped $494
million in liabilities into the Trust Fund, while providing
only $12 million in collateral.
As part of the $12 million payment, DOL allowed Alpha's
successor to continue to self-insure after the bankruptcy. This
fleecing of the Trust Fund and taxpayers has occurred under
DOL's nose despite the Department's power to prevent it. The
Black Lung Benefits Act gives DOL the authority to hold coal
executives personally liable for the cost that was shifted to
the Trust Fund, but this power has rarely been used in the 40
years since this authority was given to DOL.
Finally, the Department had no functioning appeals process
in those rare occasions when they remove an operator's
permission to self-insure and the operator appealed.
The American people expect good government and deserve
answers.
I am disappointed that the Department has refused to brief
the committee prior to this hearing about its proposal to
remedy the self-insurance program.
That said, we will be particularly interested in their
plans to address this problem and we will want to ask GAO
whether they think these efforts are adequate.
This is a failure on multiple fronts over multiple
administrations. What we are seeing here is nothing less than a
gaming of the system. The winners are the coal operators and
their Wall Street creditors. The losers are the American
taxpayers. In other words, the costs of black lung disease have
been socialized and the gains from DOL's failed oversight have
been privatized.
Today we hope to learn what happened, how to fix it, and
how to prevent it from happening again.
Finally, I want to recognize all of the coal miners who are
attending this important hearing, thank you for traveling all
this distance.
I look forward to hearing from our witnesses and thank them
for their testimony.
I now recognize the distinguished ranking member, Mr.
Wright, for the purpose of making an opening statement.
[The statement by Chairwoman Adams follows:]
Prepared Statement of Hon. Alma S. Adams, Chairwoman, Subcommittee on
Workforce Protections
Today, we will hear the disturbing story of a major failure of
government oversight - a failure apparently going back several decades
- and an even more troubling account of how the coal operators and
their creditors on Wall Street have left taxpayers to take the hit.
Last June, this subcommittee held a hearing about the growing red
ink in the Black Lung Disability Trust Fund (Trust Fund). The decline
of coal production, a reduced level of funding due to the sunset of the
black lung excise tax, and a resurgence of black lung disease is
pushing the Trust Fund deeper and deeper into debt.
Today, we will explore another important piece of this problem: The
Department of Labor's (DOL)failure to ensure that coal operators are
covering their fair share of the benefits owed to miners and their
families.
When miners are disabled from black lung disease, they can file a
claim for black lung benefits with the Department of Labor. If a claim
is approved the coal operator that most recently employed them is
required to provide benefits and cover medical expenses for the miner
and their family. The law requires that operators have insurance to
cover benefits for miners and their survivors, benefits that frequently
outlast the life of the mining company. If a mine operator shuts down
or files for bankruptcy however, benefits are paid from the Black Lung
Disability Trust Fund, which is financed by a small tax on each ton of
mined coal.
In order to ensure that the obligations of the mine operators do
not fall on the Trust Fund and taxpayers, operators are required by the
DOL to either:
1. Purchase commercial insurance sufficient to cover their current
and future obligations, or
2. Mine operators can self-insure, as long as they can prove that
they have collateral sufficient to cover their obligations. DOL is
supposed to oversee that self-insurance program.
But the Department of Labor has failed to enforce the mandate that
self-insured mine operators set aside sufficient collateral in the
event of bankruptcy. As a result, the amount of collateral DOL has
required from some of these operators is tens of millions of dollars
less than their most recent estimated black lung benefit liability. In
2016, Chairman Scott and then-Congressman Sander Levin asked the
Government Accountability Office (GAO) to:
1. Examine the potential exposure of the Trust Fund from self-
insured mine operators who file for bankruptcy;
2. Evaluate the effectiveness of DOL's oversight over the program,
and
3. Make recommendations for improving oversight of the program.
The GAO is here today to detail their report. We will also hear
from the director of the Department of Labor's Office of Workers
Compensation Programs to describe the Department's efforts to correct
this problem. We will be hearing some troubling findings today.
Last summer, we learned from GAO that of 22 self-insured coal
operators, DOL had not reassessed black lung liabilities or collateral
levels of almost half of them in the past ten years. One of these
operators had not been examined for over 30 years.
Today, we will learn that over six months after the DOL required
self-insured coal operators to update their information, DOL has still
not publicly released updated estimates of liability and the
appropriate levels of collateral.
Today, we will also hear about the consequences of this inadequate
oversight. GAO's report found that mine operators in three very large
recent bankruptcies involving nearly $1 billion in black lung
liabilities were required to post only 3 percent of the needed
collateral.
At last June's hearing, the GAO made a preliminary finding that the
bankruptcies of those three companies - Alpha Natural Resources, James
River Coal, and Patriot Coal - had resulted in $310 million being added
to the Trust Fund's obligations. But today we will learn that true
number is $865 million - three times the original estimate.
While taxpayers were saddled with debt, coal executives were
walking away with millions of dollars in salaries and bonuses.
Following their bankruptcy declaration, one of the bankrupt
operators, Alpha Resources, offered executive bonuses of up to $11.9
million to its top executives. Alpha CEO Kevin Crutchfeld made almost
$8 million in 2014, the year Alpha declared bankruptcy, and then
another $1.8 million in 2016 when Alpha emerged from bankruptcy.
At the same time, Alpha dumped $494 million in liabilities into the
Trust Fund while providing only $12 million in collateral. As part of
the $12 million payment, DOL allowed Alpha's successor to continue to
self-insure after the bankruptcy.
This fleecing of the Trust Fund and taxpayers has occurred under
DOL's nose despite the Department's power to prevent it. The Black Lung
Benefits Act gives DOL the authority to hold coal executives personally
liable for the costs that were shifted to the Trust Fund. But this
power has rarely been used in the 40 years since this authority was
given to DOL.
Finally, the Department had no functioning appeals process in those
rare occasions when they remove an operator's permission to self-insure
and the operator appealed. The American people expect good government
and deserve answers.
I am disappointed that the Department has refused to brief the
Committee prior to this hearing about its proposal to remedy the self-
insurance program. That said, we will be particularly interested in
their plans to address this problem and whether those efforts are
adequate. This is a failure on multiple fronts by current and previous
administrations to protect American taxpayers, miners, and their
families.
What we are seeing here is nothing less than a gaming of the
system. The winners are the coal operators and their Wall Street
creditors. The losers are the American taxpayers. In other words, the
costs of black lung disease have been socialized and the gains from
DOL's failed oversight have been privatized. Today, we hope to learn
what happened, how to fix it, and how to prevent it from happening
again.
Finally, I want to recognize the coal miners who are attending this
important hearing. Thank you for travelling all this way. I look
forward to hearing from our witnesses and thank them for their
testimony. I yield to the Ranking Member, Mr. Wright, for his opening
statement.
______
Mr. Wright. Thank you, Madam Chair.
Workers in the mining industry have been an extremely
valuable part of the American economy for decades. Congress
created the Black Lung Benefit program to provide benefits to
mine workers who are disabled due to black lung disease. As the
chair has mentioned, unfortunately the Black Lung Disability
Trust Fund, which is funded primarily through a tax on coal and
designed to provide benefits to these workers when responsible
employers are not able to pay benefits, has not been managed
effectively.
According to a study released this morning, which was also
mentioned, by the GAO the Trust Fund has faced financial
challenges since it was established more than 40 years ago. In
fact, the Trust Fund has needed to borrow from the U.S.
Treasury almost every year to cover its expenditures, which
includes financing the debt that the program has generated
since its inception.
It is our understanding that today's hearing is intended to
focus on Department of Labor oversight of the Trust Fund
specifically related to the coal miner operator insurance
program. While there is bipartisan agreement that there have
been serious oversight problems facing this program, it is
disappointing that my Democrat colleagues have decided to
schedule this hearing only hours after the GAO publicly
released its report. This has left members and the public very
little time to thoroughly go through the findings and
recommendations included in the report and limited their
opportunity to question today's witnesses more effectively.
Program integrity and proper DOL oversight should not be
shortchanged and prematurely rushed by this committee.
I also take issue with the title of today's hearing.
Committee Democrats have once again titled this hearing in a
way to deceive the general public and place scrutiny solely on
the Trump Administration. The GAO made it clear that the Trust
Fund has faced financial challenges since it was established in
1978, not just under the Trump Administration, as the
misleading title of this hearing might suggest.
Additionally, the DOL's oversight of the Trust Fund and
operational failures have persisted for decades under both
Democrat and Republican administrations. Let us not forget the
Obama Administration's war on coal made it harder for coal
companies to thrive, while at the same time the Trust Fund's
financial problems continued to grow.
As we will hear from both of our witnesses today, the
Office of Workers' Compensation programs under the Trump
Administration is taking long overdue proactive steps to
improve oversight and management of the Trust Fund by
implementing new processes to reevaluate and reauthorize self-
insurance for coal mine operators, requesting additional data
on black lung claims and benefit liability and issuing
preliminary guidance to field supervisors and claim examiners.
I believe we can all work together with this Administration
to support common sense, workable, and innovative approaches to
ensure DOL is conducting proper oversight and ensuring miner
benefits are protected.
I am encouraged by Director Hearthway's work in this area
and the ongoing efforts to implement the GAO's recommended
reforms to improve oversight of this important program.
I want to thank both of our witnesses for being here today
and I look forward to your testimony.
Thank you, Madam Chair.
[The statement by Mr. Wright follows:]
Prepared Statement of Hon. Ron Wright, a Congressman from the State of
Texas
Workers in the mining industry have been an extremely important
part of the American economy for decades. Congress created the Black
Lung Benefits Program to provide benefits to mine workers who are
disabled due to black lung disease.
Unfortunately, the Black Lung Disability Trust Fund, which is
funded primarily through a tax on coal and designed to provide benefits
to these workers when responsible employers are not able to pay
benefits, has not been managed effectively.
According to a study released this morning by the Government
Accountability Office (GAO), the Trust Fund has faced financial
challenges since it was established more than 40 years ago. In fact,
the Trust Fund has needed to borrow from the U.S. Treasury almost every
year to cover its expenditures, which includes financing the debt that
the program has generated since its inception.
It is our understanding that today's hearing is intended to focus
on Department of Labor (DOL) oversight of the Trust Fund specifically
related to the coal mine operator insurance program. While there is
bipartisan agreement that there have been serious oversight problems
facing this program, it is disappointing that my Democratic colleagues
have decided to schedule this hearing only hours after the GAO publicly
released its report. This has left Members and the public very little
time to review thoroughly the findings and recommendations included in
the report and limited their opportunity to question today's witnesses
more effectively. Program integrity and proper DOL oversight should not
be shortchanged and prematurely rushed by this Committee.
I also take issue with the title of today's hearing. Committee
Democrats have once again titled this hearing in a way to deceive the
general public and place scrutiny solely on the Trump administration.
The GAO made it clear that the Trust Fund has faced financial
challenges since it was established in 1978, not just under the Trump
administration - as the misleading title of this hearing suggests.
Additionally, the DOL's oversight of the Trust Fund and operational
failures have persisted for decades under Democrat and Republican
administrations.
Let's not forget, the Obama administration's `war on coal' made it
harder for coal companies to thrive, while at the same time the Trust
Fund's financial problems continued to grow.
As we will hear from both of our witnesses today, the Office of
Workers' Compensation Programs under the Trump administration is taking
long overdue, proactive steps to improve oversight and management of
the Trust Fund by implementing new processes to reevaluate and
reauthorize self-insurance for coal mine operators; requesting
additional data on black lung claims and benefit liability; and issuing
preliminary guidance to field supervisors and claims examiners.
I believe we can all work together with the administration to
support commonsense, workable, and innovative approaches to ensure DOL
is conducting proper oversight and ensuring miner benefits are
protected. I am encouraged by Director Hearthway's work in this area
and the ongoing efforts to implement the GAO's recommended reforms to
improve oversight of this important program. I'd like to thank our
witnesses for being here today and I look forward to hearing your
testimony.
______
Chairwoman Adams. Thank you, Mr. Wright.
All of the Members who wish to insert written statements
into the record may do by submitting them to the Committee
Clerk electronically in Microsoft Word format by 5:00 p.m. on
March 10.
I will now introduce our two witnesses. Our first witness
will be Ms. Cindy Brown Barnes, who is the Director of
Education, Workforce, and Income Security with the Government
Accountability Office. Ms. Brown Barnes leads the Government
Accountability Office team that audited the Department of
Labor's management of the Black Lung Disability Trust Fund. She
has more than 30 years of experience performing audits of
Federal agencies, she holds a bachelor's degree in accounting
from Howard University and a master's degree in business from
Johns Hopkins University.
I am now pleased to recognize my colleague, Congressman
Meuser to introduce the second witness appearing before us
today. As I understand, they served together in the
Pennsylvania legislature.
Mr. Meuser, you may introduce our witness.
Mr. Meuser. Thank you, Madam Chair.
Yes, it is my honor and privilege to introduce to the
committee Ms. Julia Hearthway. Julia spent from 1993 to 2011 as
a prosecutor in the Pennsylvania Attorney General's Office. She
then from 2011 to 2015 did in fact serve as the secretary of
the Pennsylvania Department of Labor and Industry. Pennsylvania
is the fifth largest state and Miss Hearthway oversaw the fifth
largest state agency with over 5,000 employees, 150 offices,
and an annual operating budget in excess of $1.2 billion.
There she performed extraordinarily. She set up a website,
known as Job Gateway, that had strong effect on the gaining of
nearly 250,000 jobs, she established something called the
Keystone Works, something she created, a workforce development
initiative, which is still in effect, and she played a very
important role in the largest single investment ever made,
private sector investment ever made within the business
environment in Pennsylvania.
So in 2016, certainly worth mentioning Madam Chair, 2016 to
2017 Ms. Hearthway was appointed by a Democratic governor to
the Commonwealth Court of Pennsylvania as an appellate judge.
And from September 2017 until the present she now serves as the
director of the Office of Workers' Compensation Programs at the
Department of Labor.
I can tell you, from being a colleague and friend of Ms.
Hearthway's for a number of years, she is incredibly dedicated,
super smart, she is a great public servant. We are fortunate to
have her with us today. And she knows coal.
So nice to see you, Miss Hearthway.
I yield back, Madam Chair.
Chairwoman Adams. Thank you, thank you very much.
We appreciate the witnesses for being here today and look
forward to your testimony.
Let me remind the witnesses that we have read your written
statements and they will appear in full hearing record.
Pursuant to Committee Rule 7(d) and the committee practice,
each of you is asked to limit your oral presentation to a 5
minute summary of your written statement.
Let me remind the witnesses that pursuant to Title 18 of
the U.S. Code, Section 1001, it is illegal to knowingly and
willfully falsify any statement, representation, writing,
document, or material fact presented to Congress, or otherwise
conceal or cover up a material fact.
So before you begin your testimony please remember to press
the button on the microphone in front of you so that it will
turn on and members can hear you. As you begin to speak the
light in front of you will turn green. After 4 minutes the
light will turn yellow to signal that you have 1 minute
remaining. When the light turns red, your 5 minutes have
expired and we ask that you please wrap up.
We will let both the witnesses make their presentations
before we move to member questions. When answering a question,
please remember to once again turn on your microphone.
I will now recognize Ms. Cindy Brown Barnes. You have 5
minutes, ma'am.
TESTIMONY OF CINDY BROWN BARNES, DIRECTOR, EDUCATION, WORKFORCE
AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Brown Barnes. Chairwoman Adams, Ranking Member Wright,
and distinguished members of the subcommittee, thank you for
inviting me to discuss our concerns about oversight of coal
miner operator black lung insurance.
Black lung benefits are generally to be paid by coal
operators that are found responsible. However, the Trust Fund
pays benefits in certain circumstances, such as when an
operator goes bankrupt.
A domestic coal tax is the Trust's primary funding source.
Today I will discuss how coal mine operator bankruptcies have
affected the Trust Fund and how the Department of Labor, or
DOL, managed coal mine operator insurance to limit financial
risk to the Trust Fund.
Federal law generally requires coal mine operators to
secure their black fund benefit liability. A self-insured coal
mine operator assumes the financial responsibility for
providing black lung benefits to its eligible employees by
paying claims as they are incurred. Operators are allowed to
self-insure, if they meet certain DOL conditions and they must
provide collateral. Operators that do not self-insure must
obtain commercial coverage.
We found that commercial coverage can help limit Trust Fund
exposure from coal operator bankruptcies. However, for self-
insurance we found that DOL failed to protect the Trust Fund by
obtaining adequate collateral from coal operators.
On slide one we identified six coal mine operators that
filed for bankruptcy between 2014 and 2016 that DOL had
permitted to self-insure. Three of these bankruptcies resulted
in the transfer of estimated benefit liability from the coal
operator to the Trust Fund and three did not.
Slide two provides some additional details. The
bankruptcies of Alpha Natural Resources, James River Coal, and
Patriot Coal transferred responsibility for an estimated 3,300
beneficiaries to the Trust, which means the taxpayers will
ultimately be responsible for their black lung disability
payments.
We reported to this committee last June that these three
bankruptcies would transfer around $325 million, however, DOL
recently increased this estimate to $865 million as a result of
significant changes to their actuary analysis. In the three
bankruptcies DOL had secured just $27 million of collateral.
For example, the collateral DOL required from Alpha Natural
Resources was about $12 million and $494 of estimated benefit
liability was transferred to the Trust Fund. DOL has been
challenged collecting collateral from coal operators. For
example, in September 2001, DOL notified James River Coal that
$5 million in additional collateral was required, however, DOL
never received this collateral and from 2001 until the James
River bankruptcy in 2014 DOL took no action to obtain
additional collateral or revoke their self-insurance. As a
result, this bankruptcy transferred an estimated liability of
$141 million to the Trust Fund.
In 2015 DOL stopped monitoring self-insured coal operators
as it began developing a new self-insurance process. While DOL
was developing this process, several other self-insured
operators also filed for bankruptcy, including Cambrian Coal,
Cloud Peak Energy, Murray Energy, and Westmoreland Coal.
In 2015 DOL had also recommended revoking Murray Energy's
self-insurance due to deteriorating financial conditions,
however, Murray appealed this decision and DOL officials said
the postponed responding to the appeal until their new self-
insurance process was implemented. Murray filed for bankruptcy
about 4 years later and DOL had not revoked the self-insurance
or obtained a requested additional collateral.
In July 2019 DOL began implementing a new process for coal
miner operators' self-insurance that may help to address some
past deficiencies if implemented effectively. For example, when
setting collateral, DOL will consider an operator's current and
future benefit liabilities and an operator's risk of
insolvency. A low risk operator would be required to obtain
collateral of 15 percent of its estimated benefit liability, a
medium risk operator would be 45 percent, and a high risk
operator would be 90 percent. However, in February, these
percentages were revised to 70, 85, and 100 percent
respectively. These percentages have not been incorporating
formal agency guidance and we found that DOL's new process
still lacks procedures for self-insurance removals and coal
operator appeals.
In conclusion, coal operator bankruptcies have already
caused substantial damage to the Trust Fund and we remain
concerned about continued bankruptcies and the looming
unsecured black lung benefit liabilities that still threaten
the Trust Fund. While we commend DOL's efforts to address the
deficiencies of its past self-insurance process, DOL still has
not collected adequate collateral from self-insured coal
operators and implemented key internal control improvements
needed to protect the financial interests of the Trust Fund.
Thank you. This concludes my prepared statement. I would be
happy to entertain any questions.
[The statement of Ms. Brown Barnes follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Adams. Thank you very much.
I will now recognize Ms. Julia Hearthway. You are
recognized for 5 minutes, ma'am.
TESTIMONY OF JULIA HEARTHWAY, DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, U.S. DEPARTMENT OF LABOR
Ms. Hearthway. Chairwoman Adams, Representative Wright,
Representative Meuser--thank you so much for the kind
introduction--and distinguished members of the subcommittee,
thank you for inviting me here today to testify about the
Office of Workers' Compensation Program, OWCPs, administration
of the Black Lung Act's insurance provisions.
In reference to the title of this hearing, I am pleased to
report to this committee that OWCP is wide awake. The self-
insurance approval process for coal mine operators has been
completely revamped. The process today is robust, it is
financially sound, and it is designed to protect the Trust
Fund.
I also want to stress at the outset that no miner is at
risk for not receiving the benefits they deserve, nor have they
ever been at risk. All black lung recipients, miners and their
families, will receive their benefits. Congress made certain
that benefit payments would never be in jeopardy. U.S. Treasury
is required to make advances to the Trust Fund whenever
necessary to meet its obligations. America has always met this
obligation.
The GAO report highlights the failings of the prior self-
insurance approval process and the unfortunate impact on the
Trust Fund. It was a broken process that had been in place for
at least 20 years. And I agree, the process was woefully
inadequate.
One of my first acts when I joined this Administration in
September of 2017 as director of OWCP was to approve updates to
the self-insurance process. The new process was carefully
developed in consultation with economists, financial experts,
and actuaries. All coal mine operators that had previously been
approved to self-insure had to reapply for self-insurance
authority. Under the new approval process coal mine operators
are required to provide audited financial statements for the
past 3 years, all current black lung claims information, and an
actuarial estimate of current and future liabilities. Operators
must calculate those actuarial estimates on assumptions drawn
from historical data of the Black Lung Trust Fund.
OWCP has now performed financial health assessments of each
operator, analyzed the actuarial reports, and calculated
appropriate security. Last week OWCP notified most of the coal
mine operators of the new security requirements. These new
security requirements thus far will add an estimated $164
million of total security to the Trust Fund. To my knowledge,
this is the most thorough process in the history of the Black
Lung Benefits Act. GAO has recognized our efforts, and on
behalf of OWCP I thank them for the acknowledgement of our
work.
GAO made three recommendations regarding our new process
and we have already implemented those recommendations. But let
me add, while all these steps are necessary to protect the
Trust Fund, this is not the major driver of the Trust Fund
debt. The current debt, which is just under $6 billion, is
projected to exceed $12.6 billion in today's dollars by 2044.
Approximately $1 billion of that over the next 25 years is
attributed to bankruptcy of the self-insured operators. $11.4
billion is due to accrued interest on advances made from the
Treasury.
The Trust Fund has been in debt since it was created. Over
90 percent of the beneficiaries entering the Fund did so during
the first 6 years of its existence. Only 10 percent of the
beneficiaries entered in the following 36 years. Twelve years
after the Trust Fund creation annual revenue collected from
coal excise tax was sufficient to fully pay annual benefits and
expenses, however, it was not sufficient to finance the debt
generated during the program's early years.
With the overwhelming majority of beneficiaries entering
the Trust Fund in the early years, a financial structure that
provided no initial funding and an annual variable interest
rate on all borrowing, the Trust Fund has continuously borrowed
money to pay interest charges. But, again, despite the
consistent rising interest cost, no miner is ever at risk of
not receiving the benefits they deserve.
Thank you, and I will be happy to answer any questions you
may have.
[The statement of Ms. Hearthway follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Adams. Thank you very much.
Under Committee Rule 8(a) we will now question witnesses
under the 5 minute rule.
I will recognize myself now for 5 minutes.
Ms. Brown Barnes, do you think that DOL's revised criteria
for self-insurance, which was newly summarized in your report
today, is sufficient to prevent unfunded liabilities from being
transferred to the Trust Fund or does it need to be
strengthened?
Ms. Brown Barnes. We commend DOL's new collateral
requirements, but they still have to obtain the collateral and,
more importantly, they have to provide the oversight and
management of the program to prevent the mistakes from the
past.
Chairwoman Adams. So you believe that it needs to be
strengthened then?
Ms. Brown Barnes. Yes, it--and also continue to actually
anchor these policies or these procedures in formal agency
guidance would also be helpful.
Chairwoman Adams. Okay. Ms. Hearthway, according to GAO you
had originally reported that you would require a high risk
operator to secure with collateral 90 percent of estimated
benefit liability, a medium risk operator to secure 45 percent,
and a low risk operator to secure 15 percent. Then this month
DOL suddenly changed that, telling GAO that you now plan to
revise these percentages to 100 percent, 85 percent, and 70
percent for high risk, medium risk, and low risk operators
respectively.
Now, yes or no, did you adopt the higher levels of required
collateral? Yes or no?
Ms. Hearthway. We did adopt it.
Chairwoman Adams. You did?
Ms. Hearthway. Yes.
Chairwoman Adams. You did? Did you decide to adopt those
higher levels--or when did you decide to adopt them?
Ms. Hearthway. So the initial levels that you read, the 15,
45, 90, they were sort of initial placeholders. This has been
an ongoing process, but it was relatively recent, in the last
couple of months. We had been discussing as we neared the end
of the completion of evaluating all of the self-insured coal
mine operators what would be the appropriate amounts. And in
numerous discussions, with lots of help from our actuary, we
developed that we thought it should be higher. So a low risk
would now be at 70, a medium risk would be at 85, and a high
risk would be at 100. And when we sent out the letters for the
collateral amounts, that is what we have indicated to each of
those companies.
Chairwoman Adams. Okay. You state in your testimony that
you have issued 14 decision letters. What was the range of
collateral required of the coal operators in those decision
letters that you issued?
Ms. Hearthway. So out of the 14, 2 of the coal operators
were not accepted to continue to self-insure, 6 of those
operators showed low, so we are asking for 70 percent of the
collateral, 4 were medium, and 2 were high with 100 percent
being requested from them.
Chairwoman Adams. Okay, so that was going to be my--you
said two were high?
Ms. Hearthway. Two were at the high level, yes.
Chairwoman Adams. Okay. And how many medium and how many
low did you say?
Ms. Hearthway. Four were at the medium level, six at the
low level, and then there was two that were not agreeing to
self-insure.
Chairwoman Adams. Okay. All right. Can you provide the
committee with copies of those 14 letters?
Ms. Hearthway. I believe so. We will check with counsel,
but I don't think it is a problem.
Chairwoman Adams. Okay. Ms. Hearthway, I described how the
corporate directors of the three coal operators who saddled the
Fund with an additional $865 million in under collateralized
liabilities personally profited from their bankruptcies to the
tune of tens of millions of dollars. So do you think that was
right?
Ms. Hearthway. Well, these are--clearly had the appropriate
collateral been secured before the bankruptcy, this would not
have been a problem. And as I have indicated, this was a broken
system and has been for two plus decades. Had the current
collateral been collected, then it wouldn't have been an issue.
But, unfortunately, it was not.
Chairwoman Adams. What actions has DOL taken to protect the
Trust Fund in bankruptcy proceedings and keep coal executives
from profiting at the expense of taxpayers?
Ms. Hearthway. So, this I think is a huge step. This is a
step where to prevent--well, regardless of what occurs with a
coal mine operator, you have these sufficient collateral up
front protecting any future claims with respect to their
employees that may develop black lung and fall into need of
benefits and have a claim. That I think is the most critical
step.
The other tool available is to fine a coal mine operator if
they don't properly secure. And we can do that on a daily
basis. That had not been done in the past. We do intend to do
it in the future if they do not properly attain the correct
collateral or go to commercial insurance.
Chairwoman Adams. Thank you, ma'am. I am out of time now.
So I am now going to recognize Ranking Member Wright for
the purpose of questioning the witnesses.
You are recognized, Mr. Wright.
Mr. Wright. Thank you, Madam Chair.
Ms. Hearthway, the jump to $865 million, was that due
solely to the fact that collateral was not collected?
Ms. Hearthway. The 800?
Mr. Wright. The increased $865 million was a huge jump.
Ms. Hearthway. Yes. So the initial estimate that was done,
they were done--three different companies over the course of a
couple of years from about 2015 to 2017. We started to see a
trend where claims were increasing, both the submission of
claims and the acceptance of claims. And sometimes that occurs
after a bankruptcy, but this particular trend was sustained. So
we went back and recalculated the collateral, or the potential
liability of those three companies. That trend line changed the
dynamics. That, in addition to now we were 2 years later, there
was a different discount factor to apply to it, and there was 1
coal mine operator, when the original projections were made,
did not calculate in future claims. Those primary three factors
increased the amount. But we wanted to be completely
transparent and up front with what the actual liabilities were,
so we redid the calculations to say going forward, this is what
we think the impact to the Trust Fund will be.
Mr. Wright. And I commend you for that and also for the
steps you have taken. But speaking of trend lines, what is it
now?
Ms. Hearthway. The claims are still going up, both the
submission of claims and acceptance of claims. Our last
calculations have all been done as September 30 of 2019.
Mr. Wright. Okay. Ms. Barnes, the report released today
notes that between 2014 and 2016 coal production decreased by a
billion tons, down to 728 million tons. Now, what impact does
this decreased production have on the Black Lung Disability
Fund? Doesn't declining production contribute to this mess?
Ms. Brown Barnes. It does contribute to it and the
declining production decreases the revenue.
Mr. Wright. Realizing--and I am going back to you, Ms.
Hearthway--realizing that connection exist, isn't it at least
incongruous to be, you know, passing blame on the coal
companies when you had a President of the United States that
for 8 years launched a war on coal and made it as difficult as
possible for them to thrive, wanted them to die, wanted them to
fail, and now we have got this huge increase in liability?
During that period, wasn't it more difficult for the coal
companies to operate?
Ms. Hearthway. There is no question that between 2014 and
2016 eight coal companies declared bankruptcy. The three that
were being talked about today that are in the GAO report
happened during that time period, and the liabilities for
those--let me get the full picture. There have been four
bankruptcies since 2017 as well. That is a total of 12
bankruptcies, but currently 6 have entered--of those
liabilities have fallen on the Trust Fund. Three bankruptcies
have emerged from bankruptcy and those bankruptcies will not
impact the Trust Fund. There are three other bankruptcies where
we don't know yet.
So clearly the economy and the impact of these 12
bankruptcies have had an influence. But as I indicated in my
opening, main driver of the debt is still the interest
charges--
Mr. Wright. Right.
Ms. Hearthway.--on the outstanding debt.
Mr. Wright. Last thing, and I am about out of time, you
indicated earlier that you were in agreement with the
recommendations from GAO. Is there anything you disagree with
in their report?
Ms. Hearthway. No. The recommendations were well received,
they were of activities that we were planning on in many
respects. Everything should be very transparent. Of the letters
that we sent out we told all the coal mine operators that if
they want to appeal this it must be done within 30 days. My
intent is to have any response back on those appeals within a
total of 90 days. Every coal mine operator has also been told
that they will have to reapply for self-insurance status in a
year and that they need to get us all documents 3 months prior
to the end of that expiration period. All of those things were
recommendations that the GAO also made and we have already
implemented.
Mr. Wright. Great. Thank you.
Thank you, Madam Chair.
Chairwoman Adams. Thank you.
The gentlelady from Washington, Ms. Jayapal, you are
recognized for 5 minutes.
Ms. Jayapal. Thank you, Madam Chair, and thank you both for
being here.
I think we all understand the backbreaking work that miners
do. My husband is from Pennsylvania and his grandfather and his
grandfather's brother were both coal miners and I have heard a
lot of stories about that work and what it meant to come home
after a long day and all of the health effects that went along
with that. So I am grateful that Congress passed the Federal
Coal Mine Health and Safety Act and the Black Lung Benefits Act
to make sure that former miners who cannot work due to black
lung disease are cared for.
It is only logical that mine operators are responsible for
paying for these costs since their mines caused the miner's
lung disease and their companies profited from the miner's
labor. But too often, as we are seeing, these mining companies
are forcing taxpayers to foot the bill for their failures.
Ms. Brown Barnes, you are the director of Education,
Workforce, and Income Security at GAO. You have testified today
that the Department of Labor's Office of Workers' Compensation
Programs has permitted mine operators to avoid paying for
workers' compensation and instead many mine operators cut costs
by a process known as self-insuring. Is the DOL adequately
screening companies that apply for self-insurance?
Ms. Brown Barnes. Under the former process, they didn't.
But they have taken some steps to put this new process in
place, but it still remains to be seen in terms of the
oversight and the management of it.
Ms. Jayapal. Mm-hmm. And as you know, Alpha Natural
Resources' executives only posted $12 million of the company's
reserves to cover $495 million in liabilities, and yet Alpha's
executives managed to pay themselves tens of millions of
dollars prior to and during bankruptcy proceedings. If the DOL
were to use its current legal authorities to sue mining
executive to recover losses due to underfunded self-insurance,
do you expect that those executives would do a better job of
collateralizing their obligations?
Ms. Brown Barnes. Yes. And that would have to happen before
bankruptcy, because after bankruptcy DOL has to get in line
with the other unsecured creditors.
Ms. Jayapal. Exactly. It is too late by then.
Ms. Brown Barnes. Yes.
Ms. Jayapal. And the DOL has used this tool before and it
recovered money for the taxpayer.
In light of the declining financial health of the industry
overall and the egregious abuses by mine company CEOs, who
manage to escape their liability toward workers while getting
millions of dollars in payouts, it seems like it is time to end
self-insurance and simply require operators to rely on
commercial black lung claims insurance.
And so, Ms. Hearthway, you direct the Office of Workers'
Compensation Programs, can you give us any good argument for
why, given what the GAO has revealed, there should continue to
be a self-insurance program? Why shouldn't all operators be
required to just purchase commercial insurance?
Ms. Hearthway. So the statute itself allows for self-
insurance, so we are following the law by administering it. But
I do understand your concerns and you are absolutely correct.
Had the appropriate collateral been secured, then it doesn't
matter that they are self-insured because the appropriate
amount of collateral has already been secured. That is why
these reforms are so important and that is why we have done
them now, to ensure that regardless of whether it is commercial
or self-insurance, the appropriate amount of money is there to
pay future claims.
Ms. Jayapal. Right. That is right. I mean I agree with that
you that it is necessary to have the collateral, but why not
just ask--I guess I didn't hear an answer as to why not just
ask for commercial insurance instead of--are you saying it is
because it is in the law that it is allowed, and so you are
just following the law as it is?
Ms. Hearthway. Correct. Correct.
Ms. Jayapal. Okay. And so the DOL may, under the Black Lung
Benefits Act, impose personal liability on CEOs and high level
officers of the mining company when the company has not
complied with its obligation to provide sufficient insurance to
cover its liabilities to the program. Prior secretaries of the
DOL have successfully pursued those actions, including
Secretaries Brock and Donovan, who served under President
Reagan. But under this current leadership, the DOL doesn't seem
to have done that. Is that correct? Has the DOL enforced this
provision and required mining company executives to pay their
fair share instead of putting it on the taxpayers?
Ms. Hearthway. So I noticed you went back to the Reagan
Administration. I could not find an instance where daily fines
were administered against a coal operator for not securing the
appropriate insurance in the past 20 years.
Ms. Jayapal. But is there a reason you wouldn't do it? It
is allowed by the law, so--
Ms. Hearthway. No, I think it is--I think it is a valuable
tool if they do not secure the appropriate insurance or put up
the required collateral.
Ms. Jayapal. Because you could do that right now from the
executives of Alpha, Patriot, or James River. Those are all
three self-insured companies that recently went bankrupt. That
would be a great way to ensure that those companies actually
pay into the Fund that they knew from the very beginning that
they were supposed to pay into.
Ms. Hearthway. I could not impose a fine on them now, post
bankruptcy.
Ms. Jayapal. But you could have?
Ms. Hearthway. The past Administration could have.
Ms. Jayapal. Anyway, my time--yes, my time has expired, but
thank you so much.
Chairwoman Adams. Thank you very much.
I will now recognize the gentlelady from North Carolina,
ranking member of Education and Labor, Dr. Foxx.
Dr. Foxx. Thank you, Madam Chairman.
Ms. Hearthway, I think what you were trying to say that
didn't get heard because you were interrupted is the previous
Administration could have issued those fines. Is that what you
said?
Ms. Hearthway. Yes.
Dr. Foxx. Good. I think it is really important that we
determine that most of these problems occurred in the previous
Administration, the Obama Administration. But they do go back
for over 20 years, as you have said. So both Democrats and
Republicans are culpable.
It is really unfortunate that this has not been looked at
in the past. But much of what happened in the Obama
Administration in trying to put coal companies out of business
exacerbated the problem.
Ms. Hearthway, in your comments, included in the GAO report
released today, you mentioned that the Office of Workers'
Compensation Programs, OWCP, began efforts to address concerns
about coal miner operator insurance oversight in 2015. Could
you provide additional details about the timing and
implementation of improved processes and changes that have been
implemented since you were appointed as OWCP director?
And, by the way, if you have any ideas about why our
predecessor didn't do any of these, I would love to hear those.
Ms. Hearthway. So to give you an understanding of when the
bankruptcies started to occur in 2014, 2015, and 2016--
Dr. Foxx. Under the Obama Administration?
Ms. Hearthway. Yes, yes. The career individuals in our
office recognized a problem and they started looking at it.
When I came on board in September of 2017 under the Trump
Administration one of the first things I did was support them
from a leadership point of view to implement this actual
process. To give it--
Dr. Foxx. So the leadership in the Department of Labor did
not support the career people in implementing the proper
policies?
Ms. Hearthway. I can only speak that I did that at the time
I came in. It was not done--it had not been implemented before.
When I came in I signed a directive to move forward in putting
a new process in place. Myself and the team have worked very
hard to get this in place. It is a long time coming, but I
think it is good news that it is now there.
Dr. Foxx. Thank you. Ms. Hearthway, what is the primary
source of Black Lung Disability Trust Fund funding? I think you
have alluded to this before. How much of an impact did coal
mine company bankruptcies have on Trust Fund solvency compared
to other challenges, such as the interest? Again, you have
alluded to this. Are miners' and survivors' benefits ever at
risk? You have told us, I believe, that they are not even when
the Trust Fund faces financial administrative challenges.
Ms. Hearthway. Yes. The bankruptcies have had an impact,
but if you look at it in the totality of what is happening, it
is less than 10 percent. More than 90 percent of the impact to
the Trust Fund has been this accruing interest. It is really
government borrowing with government and charging interest on
it. The coal excise tax has been able to pay since 1990 the
benefits and administrative cost for the black lung program,
but they have not been able to make up the interest charges
that accrue annually.
Dr. Foxx. Thank you.
Ms. Brown Barnes, when GAO provided the draft report to the
Department of Labor for review and comment, what was the
Department's reaction to the recommendation you outlined, was
the Department aware of the concerns that the report detailed,
the report detail regarding oversight of Black Lung Disability
Trust Fund, and did the Department note that were ongoing
inference to correct these processes?
Ms. Brown Barnes. Yes. As far as the recommendations, they
agreed with all of the recommendations and they note that they
had already started taking some steps to address them.
Dr. Foxx. Thank you very much.
Ms. Hearthway, OWCP is in the process of overhauling how it
determines collateral amounts required for self-insured coal
mine operators. Can you compare the new criteria with the
criteria previously used, and discuss why using actuarial
analyses to assess the insolvency risk of operators in future
black lung benefits liabilities is important.
Dr. Hearthway. Yes, thank you for that question.
This is a key game changer with respect to protecting the
Trust Fund. Actuarial reports were not asked for in the past.
There is no way without an actuarial report to have any
indication as to what future liabilities will be, both for
current and future employees that may come down with black lung
disease.
But also, we are not allowing the coal operators to provide
their own actuarial reports based on their own factors. They
have to accept the factors we have given them. For example, if
it falls into the Trust Fund, it is what the Trust Fund has
experiencing in terms of medical cost. So we gave them the
factor in calculating the actuarial amount. They must use our
medical cost, they must use our claims information, so that,
one, every operator is using the same factors when calculating
their actuarial amount--
Chairwoman Adams. The gentlelady is out of time.
Ms. Hearthway.--and they are not using their own. That is
one of the key factors.
In addition to that, though, we have 3 years of financial
records, we have the claims information, we--
Chairwoman Adams. We are out of time, ma'am. The gentlelady
is out of time.
Thank you.
Dr. Foxx. Thank you, Madam Chairman.
Chairwoman Adams. I want to recognize now the gentleman
from Virginia, Chair of Education and Labor, Mr. Scott. You are
recognized for 5 minutes.
Mr. Scott. Thank you, Madam Chair.
I think there is one thing we can agree on with the ranking
member, and that is that both parties helped to get into this
mess, so if we could just look forward to see how we can get
out. We don't have to go through the blame game and all that.
The ranking member, the gentleman from Texas, mentioned
that this hearing is being held right after the report was
issued. I would like the record to reflect that my staff has
advised me that an embargoed draft of the report was available
to the Republican staff 2 weeks ago and the final draft was
made available to the Republican staff on Friday. If there is a
miscommunication then we can deal with that.
Ms. Hearthway, looking forward, what mechanisms are now
being used to enforce the collateral requirements?
Ms. Hearthway. So we just sent out the letters with the new
collateral amounts for each of the operators. They have 30 days
to respond to that. We will not grant them self-insurance
status until we have the appropriate proof that collateral has
been secured.
Mr. Scott. And what happens if they don't respond?
Ms. Hearthway. Then they will have to either get self-
insurance or they can be fined.
Mr. Scott. Okay. And is anything--
Ms. Hearthway. I am sorry, I said self-insurance. They
would have to get commercial insurance or be fined. I misspoke.
Mr. Scott. Okay. Is anything being done to go after
officials? It is my understanding that the officials of
companies jointly and severally and personally are liable if
they did not put up appropriate collateral. Is anything being
done now to go after the officials?
Ms. Hearthway. So once an operator falls into the
bankruptcy courts, our office is active in trying to negotiate
as well as put forward the--as any other creditor--of what is
to be paid. But that is all we can do at that point.
Mr. Scott. Well, that is--if the company is in bankruptcy,
are the officials in bankruptcy too?
Ms. Hearthway. No.
Mr. Scott. They are jointly, severally, and personally
liable. Is that right?
Ms. Hearthway. Yes, I believe so, but it is my
understanding through the bankruptcy court it would be still
very difficult had we not done fines ahead of time to collect
that amount.
Mr. Scott. Okay. Is any consideration being given to go
after the officials at this point?
Ms. Hearthway. In that sense no, sir, because the
bankruptcy courts, there are proceedings which our attorneys
are involved with respect to that. But our focus is to get the
correct amount of collateral now so that issue isn't in front
of us.
Mr. Scott. Okay. You indicated that the taxes were paying
the benefits but not the interest that is being accrued. Is
that the old interest rate that was paid 2 years ago or the
lower interest rate that is being collected now?
Ms. Hearthway. So every year the interest rate changes.
Mr. Scott. Yes, but the tax. The tax was not extended--
Ms. Hearthway. So we don't know the end of the borrowing
from this year yet, but we were not--we did not have to borrow
additional funds last year when the tax was reduced, to pay
benefits and administration expenses. To pay the ongoing
interest, a great deal had to be borrowed.
Mr. Scott. Okay. Does the Department of Labor support a
long-term extension of the tax rate?
Ms. Hearthway. No, that is not a position here. Tax is a
factor to be considered, but it is not the only factor to be
considered in the solution of the debt of the Fund.
Mr. Scott. Well, one of the problems with the tax not being
sufficient to pay the bills is that you have two--actually
three possibilities, either we continue to run up debt, and as
you indicated it is headed toward, what, $20 billion if we
don't do something, or we can just let the taxpayer continue to
subsidize. The third unfortunate possibility is we cut
benefits. Were benefits cut in 1981?
Ms. Hearthway. I am not certain, sir, but I don't think
there is any discussion of cutting benefits. And the real issue
on the debt is government borrowing from government. It is the
interest charges from the Treasury, which are charged each
year. The amounts are calculated, but that amount isn't
technically paid, it just shows up on the spreadsheet.
Mr. Scott. Let me ask one quick question, is there any
affect on the Trust Fund caused by the increase in the
progressive massive fibrosis, the more severe black lung? Does
that have an effect on the Trust Fund?
Ms. Hearthway. We have not been able to see a statistical
effect yet on that. We are certainly aware of the reports with
respect to that, but it hasn't shown up in our data in terms of
the number of claims, the length of claims. We are seeing an
increase in claims, as I indicated before, but I don't have
more data that I could pinpoint a reason for that.
Mr. Scott. Thank you, Madam Chair.
Chairwoman Adams. I now would like to recognize the
gentleman from Pennsylvania, Mr. Keller. Five minutes please.
Mr. Keller. Thank you, Madam Chair, and thank you to the
panel for being here today.
I do have a couple of questions regarding some things based
upon the report. But first, Miss Hearthway, under the Office of
Workers' Compensation Programs, new process for authorizing
coal mine operator self-insurance, what types of documentation
are coal mine operators required to provide as part of an
application.
Ms. Hearthway. So we ask a lot of more detailed questions
in our application. We ask for 3 years of audited financial
statements, we ask for the actuarial report. If they want to
send their own actuarial report, they are welcome to do that.
We ask for all current claims benefit information that have
been paid out over the past 3 years, and we have a tool in
which we are analyzing based on all that financial information
the low, medium, and high risk categories that we have placed
coal operators in.
Mr. Keller. Okay. Another just to follow up on that You say
that you require this now, were these always the requirements
or were there new additions based on the GAO or other
recommendations to strengthen the program oversight?
Ms. Hearthway. So these are strengthened. There has always
been a request for financial documents. And the big problem
here is that so much time went by without there being a review
of this. So if the earlier questions and testimony is accurate,
years would go by and no one had reviewed the self-insurance
process. So even if you asked for financial information, it may
have been 10 or 15 years old.
One of the key aspects of this new process is this will be
done annually and--and we are going to get quarterly financial
reports from all the operators going forward.
Mr. Keller. The operators. And you talk about having the
information available. Of course, many companies are organized
in different ways, are these companies privately held companies
or are they publicly traded companies or are they some of both?
Ms. Hearthway. I believe they are a mixture, sir.
Mr. Keller. They are a mixture. So actually a publicly
traded company then would have information more readily
available?
Ms. Hearthway. Correct.
Mr. Keller. Okay. Just sort of trying to understand that,
because I know we all talk about how we hold people accountable
and who owns these companies and makes the money from them. And
a lot of times it may not just be an individual, but it might
be something that is publicly traded on the stock market.
Ms. Hearthway. Correct.
Mr. Keller. Therefore owners could be pension funds and all
the other kind of things of some of these bankrupt companies?
Ms. Hearthway. That is correct.
Mr. Keller. Okay. Thank you.
Ms. Brown Barnes, you report mentions that the Black Lung
Disability Trust Fund has faced financial challenges since it
was first established over 40 years ago. If there are not
sufficient funds in the Trust Fund to pay benefits, how does
the Fund pay for these benefits?
Ms. Brown Barnes. The benefits are not in jeopardy, they
are paid for. That is under the Act, that they will be paid
for.
Mr. Keller. But where do we generate the--if the Fund--let
me ask this question, how often has the Fund had to borrow from
the Department of Treasury's general fund to be solvent, or
have they had to do that?
Ms. Brown Barnes. No, they have had to do that. They have
had to do that almost since the beginning.
Mr. Keller. Since the beginning of the Act.
Ms. Brown Barnes. Yes. Of the Trust Fund.
Mr. Keller. Of the Trust Fund? Okay.
The other question I guess, Ms. Brown Barnes, the GAO
examined eight coal miner operator bankruptcies in the report.
How any of the bankruptcies resulted in benefit liabilities
being transferred to the Black Lung Disability Trust Fund? Do
we know that?
Ms. Brown Barnes. We know about the three that we talked
about, James River Coal as well as Arch and Patriot. So we do
know about those three, but then there are four other ones that
we do not have complete estimates of. We have some information
about Westmoreland Coal. We have heard recently that was $17
million. And then there are others that did not--three others
that did not result in benefits being transferred to the Trust
Fund.
Mr. Keller. Okay. How many of the coal miner operators were
self-insured compared to the commercially insured? Do we know
that?
Ms. Brown Barnes. We know that out of the eight, two were
commercially insured. Those benefits were not transferred to
the Trust Fund. Then there were the six that I had in my chart,
and out of that six three of the self-insured were transferred
to the Trust Fund. The other three self-insured were
reorganized and their benefit liabilities did not end up on the
Trust Fund.
Mr. Keller. Okay. And another one part, were these
privately held companies or publicly traded companies, or
privately held? Or don't we have that information on these ones
that were bankruptcies?
Ms. Brown Barnes. Yes, I can get you some of the details of
that to give you a fuller picture.
Mr. Keller. I appreciate that. Thank you.
Ms. Brown Barnes. Yes, sure. Mm-hmm.
Mr. Keller. Thank you.
Chairwoman Adams. Thank you, sir.
I move to recognize the gentleman from Virginia, Mr. Cline.
You are recognized for 5 minutes.
Mr. Cline. Thank you, Madam Chair.
This subcommittee had a hearing back in June on advances in
protections for miners, and I am glad we are following up with
that with today's hearing.
As I mentioned then, Washington and Lee School of Law,
which is located in my district and has such esteemed alumni as
the gentleman from Virginia, Mr. Griffith, who is here, has an
advanced administrative litigation clinic for black lung. His
clinic assists coal miners and survivors who are pursuing
Federal black lung benefits. They have represented roughly 200
clients since being established in 1996 and has a success rate
of 5 times the national average.
Additionally, other Virginia schools are working on
research for ways to better health and safety practices. I am
proud that my home State of Virginia is active on these issues
and is a great contributor to raising the standard of care. And
I also want to thank the chairman of the full committee for his
remarks and like his tie today as well.
The issues that the Black Lung Trust Fund are serious.
Proper oversight over the distribution of the funds is needed.
Workers who need services should be taken care of any
misallocation should not be tolerated. With healthcare and
safety measures improving we are not in the same circumstances
we were when it was set up, so we should continue to evaluate
and adjust oversight over these funds to ensure miners are
being taken care of.
So with that I will ask Ms. Hearthway, can you tell us what
enforcement actions are OWCP prepared to take against coal mine
operators that do not comply with the new self-insurance
authorization protocol?
Ms. Hearthway. So I think the most critical thing is we
will not give them self-insurance status until they show us
appropriate proof of the collateral that we told them they have
to secure. So that is first and foremost. They won't have the
approval. If they continue--if they don't either get the
sufficient collateral or get commercial insurance, there are
fines that we can assess against them.
Mr. Cline. That was my next question, what enforcement
action can be taken against the operators that don't maintain
sufficient coverage, continuous coverage, and your answer is
certain levels of fines that are available.
What role does data from the NCCI play, the National
Council on Compensation Insurance, play in OWCP's oversight
enforcement of coal mine operator commercial insurance
policies?
Ms. Hearthway. So thank you for that question.
The other aspect of this is the commercial insurance. And
we are to have oversight of that as well. NCCI provides us with
a data feed. So we get notifications of when a policy has been
cancelled, revoked, not renewed. There are currently I believe
it is 455 coal mine operations. We have gone through to start
checking all of their current insurance. We are about halfway,
a little more than halfway through of checking current
commercial insurance for each of those. We are looking at the
data feed from NCCI and we are developing in our computer
system a way to have more checks and balances so that we can be
very proactive as soon as something happens.
I believe in the report there were two commercial insurers
that initially the GAO found that appeared their commercial
insurance had lapsed. When we looked into it, it actually had
not lapsed. They had always had commercial insurance. But I
agree, this is an oversight responsibility OWCP has and we are
putting steps in place to make sure that we also monitor that.
Mr. Cline. Are there limitations to the data and what
plans, if any, does OWCP have to address the limitations to
ensure that the operators are maintaining continuous coverage?
Ms. Hearthway. I think there are some technical limitations
in working a robust system, a computer system that will give us
these quick alerts, but I think we have the ability because we
are working through each of the 455 coal miners to monitor this
with our current staff at the time. So I wouldn't say it is not
without challenges, but I think the staff is more than up for
those challenges.
Mr. Cline. Thank you.
Thank you, Madam Chair. I yield back.
Chairwoman Adams. Thank you very much.
The gentleman from Michigan, Mr. Walberg. You are
recognized for 5 minutes.
Mr. Walberg. Thank you, Madam Chairwoman.
This brings back memories of when I chaired this
subcommittee for 6 years. And while there is certainly, as I
recollect, blame to go around on both sides, because my
chairmanship was during the time of the past Administration,
with what we often called the war on coal that went on, making
it more difficult for the resources in the Trust Fund to be
managed appropriately and to meet the needs that we had. Yet I
am thankful that it appears that there is some recognition that
is not acceptable and much has to be done to make sure the
financial resources grow and meet the needs of miners. And we
want to see that take place. So I appreciate the hearing today
and appreciate the witnesses being here.
Ms. Brown Barnes, approximately how many beneficiaries are
currently receiving black lung benefits?
Ms. Brown Barnes. There is over 25,000 I believe.
Mr. Walberg. Twenty five thousand?
Ms. Brown Barnes. Yes.
Mr. Walberg. Receiving the benefits right now?
Ms. Brown Barnes. Yes.
Mr. Walberg. Of these beneficiaries what percent of their
claims are paid for from the Black Lung Disability Trust Fund
and what percent are paid for by responsible coal mine
operators? Do you have a figure on that?
Ms. Brown Barnes. I can get you the figure on--it is more
than half that are paid by the Trust Fund.
Mr. Walberg. More than half?
Ms. Brown Barnes. Yes. But I can get you some exact
numbers.
Mr. Walberg. The rest would be by coal mine operators that
are approving some responsibility?
Ms. Brown Barnes. Some by coal mine operators and then
there is a portion where there are some interim benefits. And
that is also paid by the Trust Fund.
Mr. Walberg. By the Trust Fund?
Ms. Brown Barnes. Yes.
Mr. Walberg. In what cases does the Black Lung Disability
Trust Fund assume responsibility for benefit liability?
Ms. Brown Barnes. When there is no responsible coal mine
operator available or a responsible coal mine operator does not
pay because of bankruptcy.
Mr. Walberg. Okay. In addition to the coal mine operator
self-insurance program, GAO examined OWCP's oversight of the
coal mine operator commercial insurance program as well. Was
GAO able to determine what risk coal mine operators who had a
lapse in commercial coverage posed to the Trust Fund?
Ms. Brown Barnes. We didn't find any in terms of any
benefit liabilities being transferred to the Trust Fund from
commercial insurers
Mr. Walberg. None at all?
Ms. Brown Barnes. No. We found some problems with--in the
data. We saw where there was at least one of the operators that
didn't have adequate coverage or it was not at least indicated
in the data that we could get form the Department of Labor. And
they did have to go back out to that operator to make sure that
they extended their coverage.
Mr. Walberg. Okay. When implemented by the OWCP, will GAO's
recommendation to improve data collection and monitor
compliance allow this risk to be evaluated more fully?
Ms. Brown Barnes. It will if the oversight is there and the
quality checks that they are going to do to their systems are
actually implemented.
Mr. Walberg. Okay.
Ms. Hearthway, do you have any addition to that?
Ms. Hearthway. I just want to let you know that we are
implementing, have implemented a number of these reforms and we
are monitoring this. I think that is good news for the first
time in a couple of decades to have this kind of oversight at
the--both commercially and self-insured.
To answer your previous question, I do have the number.
What we call chief beneficiaries in the Trust Fund, there are
currently 13,040 chief beneficiaries in the Trust Fund.
Mr. Walberg. Thirteen thousand--
Ms. Hearthway. Forty.
Mr. Walberg.--forty. Thank you.
I yield back.
Chairwoman Adams. Thank you very much. I want to recognize
the gentleman from Pennsylvania, Mr. Cartwright. You are
recognized for 5 minutes, sir.
Mr. Cartwright. Thank you, Madam Chair, and thank you
particularly, Chairwoman Adams, for inviting me to join this
subcommittee today and considering some of the most urgent
issues facing America's miners and facing their benefits.
As this subcommittee has uncovered with the help of GAO--
thank you for being here Ms. Brown Barnes--the coal industry's
risky self-insurance practices have endangered those benefits,
and the mismanagement of funds and the lack of oversight by the
Department of Labor have made a bad situation worse. And we
will talk about that.
I also want to highlight another barrier standing between
disabled miners and their health benefits, the deceptive
practices coal companies often use to prevent miners and their
families from receiving the benefits they need and deserve, the
doctors paid by the coal companies systematically misdiagnosing
miners with diseases other than black lung, and the company
lawyers withholding medical evidence that miners could use to
defend their claims by proving that they have black lung.
As such, I will be introducing the Black Lung Benefit
Improvement Act to ensure that miners have access to unbiased
medical evidence, ample representation, and up to date benefit
payments. Senator Bob Casey of Pennsylvania has already
introduced this bill in the Senate and I do look forward to
working with this committee to advance this in the House very
soon. My hope is that we can ultimately bring a package of
bills to the floor addressing the various challenges facing
coal country.
Now, we have been talking about self-insurance here this
afternoon, and with my remaining time I would like to ask the
witnesses a couple of questions about that.
Murray Energy has been mentioned. It filed for bankruptcy
in October of 2019. That made it the eighth coal company in a
year to file for bankruptcy--eight within a year. That means
between 2018 and 2019. And we have twice heard in the space of
time I have been sitting here in the subcommittee, intoned the
expression ``war on coal''. I think we can all agree there
hasn't been a war on coal going on in 2018 and 2019.
Nevertheless, eight coal company bankruptcies. Obviously, and
it is as plain as the nose on everybody's face, it has to do
with the low price of competing natural gas.
So casting blame on whose administration is at fault, it
doesn't make any sense.
Ms. Brown Barnes, I understand the Department of Labor
ordered Murray Energy to end self-insurance in 2015.
Nevertheless, Murray Energy continued to self-insure until
filing for bankruptcy in 2019. Can you explain what went wrong
there?
Ms. Brown Barnes. Murray, they appealed the decision and
the Department of Labor, they had postponed responding to the
appeal because at that point it started looking into their new
self-insurance process and they wanted to wait until that was
implemented, but then in the interim Murray filed for
bankruptcy last October.
Mr. Cartwright. Right. Why was that appeal never
adjudicated in the intervening years until it went into
bankruptcy?
Ms. Brown Barnes. That--the Department of Labor would have
to answer.
Mr. Cartwright. Well, what are the consequences of that
Murray bankruptcy for the Black Lung Disability Trust Fund, Ms.
Brown Barnes?
Ms. Brown Barnes. The consequences are that those
liabilities will be transferred to the Trust Fund and not be on
the American public.
Mr. Cartwright. Well, Ms. Hearthway, can you speak to the
consequences of the Murray bankruptcy for the Trust Fund?
Ms. Hearthway. Currently--
Mr. Cartwright. You talked about 10 percent.
Ms. Hearthway. Currently none of their liabilities have
fallen into the Trust Fund. Currently, Murray is continuing to
pay benefits on their black lung claims. So nothing has
impacted with respect to Murray on the Trust Fund yet.
It perhaps may in the future, but we don't know that yet.
Mr. Cartwright. What is your answer about why that appeal
was never adjudicated between 2015 and when they filed for
bankruptcy in 2019?
Ms. Hearthway. So, as I indicated before, Murray's
collateral was determined back in 1996 and had never been
reviewed until 2015 when their self-insurance status was
revoke. At that time, they asked for reconsideration. There was
no enforcement action, and I can't explain to you why.
And then early 2017 it is discovered that they only
commercially insured some of their operators and not others.
We are now a couple of years down the road. We have started
to develop this new process that was supposed to be--and is--
much more robust. So we put all of the self-insured operators
into that process, including Murray, but the subsequently filed
bankruptcy.
Mr. Cartwright. So the miners continue to get the benefits,
but the American taxpayers take it in the neck?
Thank you, Madam Chair. I yield back.
Chairwoman Adams. I want to recognize now the gentleman
from Virginia, Mr. Griffith. You are recognized for 5 minutes.
Mr. Griffith. Thank you, Madam Chair, and thank you so much
for holding this important hearing.
Several people have said it, but it would be good to
repeat. Ms. Hearthway, all the folks who are receiving
benefits, they are in no danger of losing those benefits, is
that correct?
Ms. Hearthway. They are in no danger of losing their
benefits. None.
Mr. Griffith. All right. Now, I have a question, and I
think I know the answer, but I will ask Ms. Barnes. In your
chart in your testimony it talks about Alpha Natural Resources,
which was headquartered in my district, so I want to make
everybody aware that was in my district, it says amount of
collateral time of bankruptcy $12 million, estimated transfer
of benefit responsibility to the Trust Fund $495 million. Now,
the $12 million did not represent Alpha's net assets. That, if
I am reading it correctly--and you correct me if I am wrong--
that $12 million was how much they had set aside to pay for
black lung claims, is that correct?
Ms. Brown Barnes. Yes.
Mr. Griffith. Okay. That is what I thought, because they
came out of bankruptcy and they obviously had more assets than
$12 million.
So here is my question to either or both of you, one, did
the Department of Labor go into the bankruptcy court with these
numbers and ask for some of that money that was out there to be
put into the Trust Fund since there was a $494 million
shortfall? And is there a process for the Department of Labor
to go into the bankruptcy hearings?
And the reason I raise this question is a former CEO of
Alpha Natural Resources actually went into the bankruptcy court
because originally they were going to zero out, as I recall it,
the pension benefits as well and he filed in the bankruptcy
court a petition that they at least get some of their--the
pensioners get some of their money. And he was successful in
getting them some of their money.
So the question then becomes, because part of it ended up
with the equity firms, and I don't know all of the
transactions, but they came back out of bankruptcy as two
different entities. So there was money left over. Did DOL ask
for that money and is there a process for them to do that?
Ms. Brown Barnes. The Department would have to answer that.
Ms. Hearthway. So in a bankruptcy proceeding, yes, we are
one of the creditors, DOL, OWCP, and on behalf of the Trust
Fund, one of the creditors that puts forth the liabilities, or
what is due and owing. It is on current not the future. This is
why setting the collateral is so critical. But we are part of
that process along with all the other creditors--
Mr. Griffith. Right.
Ms. Hearthway.--to try and get and recoup as much as
possible for benefits.
Mr. Griffith. Do you know if you all made an attempt to get
more than the $12 million out of Alpha Natural Resources? And
you may not know that answer today.
Ms. Hearthway. And I will have to get back to you on that.
I know as part of the settlement agreement that we were in and
came out of the bankruptcy, but that they had to maintain some
of their current benefits and pay for them. But I would have to
get the specifics for you. I don't have that on hand.
Mr. Griffith. If you could get the specifics for Alpha,
James River, and Patriot, I would greatly appreciate that so
that I, you know, can have the information. And then if there
is something that your team thinks that we need to do
legislatively to make it possible to--and I don't want to get
in front of, you know, a lot of other people, but this is
important benefit to the miners who have black lung--is there
something that we need to pass legislatively to make sure that
we are getting some sort of a priority in the bankruptcy system
for these monies?
Can you do that?
Ms. Hearthway. Yes, sir. Yes, sir.
Mr. Griffith. I appreciate that. I do appreciate that you
all testified today. There are a lot of things that can be
done, and I am going to be taking a look at Mr. Cartwright's
bill. I do think we have to change some of the rules to make
sure that the miners are getting a fair shake in the process.
It takes way too long for the miners to get an answer in these
cases and we have got to figure out a better way to do that.
But I also want to make sure we get this information on the
bankruptcies to try to make sure that the taxpayers don't--as
Mr. Cartwright said--don't take it in the neck quite as bad as
they currently are.
At the same time, I am glad that the miners are going to
get all of the benefits they deserve.
Thank you and I yield back.
Chairwoman Adams. Thank you very much.
I want to remind my colleagues that pursuant to committee
practice, materials for submission for the hearing record must
be submitted to the committee clerk within 14 days following
the last day of the hearing, preferably in Microsoft Word
format. The materials submitted must address the subject matter
of the hearing. Only a member of the subcommittee or an invited
witness may submit materials for inclusion in the hearing
record. Documents are limited to 50 pages each. Documents
longer than 50 pages will be incorporated into the record by
way of an internet link that you must provide to the committee
clerk within the required timeframe. But please recognize that
years from now that link may no longer work.
Again, I want to thank the witnesses for their
participation today. What we have heard is very valuable and
members of the subcommittee may have some additional questions
for you and we ask the witnesses to please respond to those
questions in writing. The hearing record will be held open for
14 days in order to receive those responses.
I remind my colleagues that pursuant to committee practice,
witness questions for the hearing record must be submitted to
the majority committee staff or committee clerk within 7 days.
The questions submitted must address the subject matter of the
hearing.
I will now recognize the ranking member for his closing
statement.
Mr. Wright. Thank you, Madam Chair.
As we have heard today, there is bipartisan agreement that
Department of Labor oversight of the Black Lung Disability
Trust Fund has fallen short for decades during both Democrat
and Republican administrations.
I would like to thank our two witnesses for their
testimony.
Ms. Brown Barnes summarized the GAO report that was
released this morning, documenting past challenges and
outlining recommendations to improve oversight of the coal mine
operator insurance program and to ensure the Trust Fund is
managed effectively.
Director Hearthway in the Office of Workers' Compensation
Programs should be commended for initiating significant
improvements to Trust Fund oversight and coal mine operator
insurance authorization and compliance.
While there is more work to do, I am confident that the
Department is on the right track. We look forward to receiving
updates on the progress OWCP is making to implement the GAO's
recommendations.
As I mentioned in my opening statement, I hope we can
continue to work together with the Administration to support
common sense, workable, and innovative approaches to ensure
that the Trust Fund is properly administered.
Thank you, Madam Chair. And I yield back.
Chairwoman Adams. Thank you very much.
I now recognize myself for the purpose of making my closing
statement.
Again, I want to thank Director Brown Barnes and Director
Hearthway for joining us for this important discussion.
When the Black Lung Disability Trust Fund was established
more than 40 years ago it was meant to guarantee miners with
black lung disease access to the benefits and treatment they
need. Yet as the committee learned today, the combination of
declining coal production, resurgence in cases of black lung,
the inadequacy of the coal excise tax, and the Department's
failure to ensure coal operators carried enough insurance to
cover their liabilities, has already plunged the Trust Fund
into billions of dollars in debt, and it promises to get worse.
As a result, taxpayers are on the hook for a growing share
of miner's benefits and miner's and their families are hopeful
that the red ink will not be steamed by the prospect of painful
benefit cuts. That is what happened in 1981 and we do not want
a repeat 40 years later.
The Department of Labor's decades-long failure to hold coal
operators accountable for their full share of black lung
benefits is unacceptable. It is particularly offensive in light
of the exorbitant bonuses coal companies pay to their
executives while simultaneously dumping their Trust Fund
liabilities onto the taxpayers. We cannot continue to allow
coal companies to privatize their gains and socialize their
losses.
I remain concerned that the Department of Labor's new
approach will not adequately protect taxpayers or miners and
their families. And I hope that it will implement the
recommendations included in the GAO's analysis.
I look forward to working with the Department and with my
colleagues in Congress to ensure the long-term sustainability
of the Black Lung Disability Fund.
If there is no further business, without objection, the
committee stands adjourned.
[Questions submitted for the record and their responses
follow:]
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[Whereupon, at 4:28 p.m., the subcommittee was adjourned.]
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