WASHINGTON — North Carolina Rep. Alma Adams grilled a Trump administration official Wednesday over new charges that the Labor Department mismanaged a fund that supports coal miners with lung disease and their families.
Lax oversight has left the fund deeply in debt, shifting the financial burden to provide miners and families with benefits to taxpayers, according to a report released Wednesday by the Government Accountability Office (GAO), a government watchdog agency.
Adams, chairwoman of the House Education and Labor Subcommittee on Workforce Protections, called the findings “a disturbing story of a major failure of government oversight” at a hearing in the U.S. House.
“What we are seeing here is nothing less than a gaming of the system,” she said. “The winners are the coal operators and their Wall Street creditors. The losers are the American taxpayers.”
Committee Republicans agreed that the department’s oversight of the fund has “fallen short” and said both parties are culpable for funding shortfalls, which date back decades.
But Republicans took the opportunity to point fingers at the Obama administration.
“I think it’s really important that we determine that most of these problems occurred in the previous administration,” Rep. Virginia Foxx of North Carolina, the ranking Republican on the House Education and Labor Committee, said. President Barack Obama’s efforts to “put coal companies out of business exacerbated” funding shortfalls, she said.
Rep. Ron Wright, a Texas Republican, echoed the point, charging Democrats with titling the hearing, “Asleep at the Switch” to deceive the public and focus blame on the Trump administration. “Let’s not forget the Obama administration’s war on coal made it harder for coal companies to thrive,” he said.
Virginia Democratic Rep. Bobby Scott, chairman of the House Education and Labor Committee, urged his colleagues not to “play the blame game” and to focus instead on solving the problem.
Black lung disease growing in Appalachia
Black lung disease is caused by the inhalation of dust from coal and other particles, which can impair lung function and cause premature death. When miners become disabled by the disease, coal companies are required to give them cash assistance and medical care. Survivors of miners who die from the disease are also eligible for benefits.
North Carolina no longer produces coal, but its neighbors in central Appalachia are among the nation’s top producers of the product. The prevalence of black lung disease is growing, and more than one in five miners in the region shows symptoms, the highest level in a quarter century, according to the U.S. Centers for Disease Control and Prevention.
The Department of Labor administers benefits claims, which last year ranged from $660 to more than $1,330 a month, depending on the number of a recipient’s dependents. More than 25,000 Americans currently receive benefits, according to Cindy Brown Barnes, director of education, workforce and income security at the GAO.
Coal companies are typically liable for benefits, but if they are unable to pay, the Black Lung Disability Trust Fund picks up the tab. It is funded by a domestic coal tax and collateral put up by coal operators. When the trust fund is unable to cover the full cost of benefits, the government borrows money from taxpayers to make up the difference and pay out benefits.
The GAO report found that the Labor Department failed to ensure that coal companies had put up enough collateral to cover their full share of debts to the fund, pushing it deeper into debt. The fund is currently about $6 billion in the red, a shortfall that is projected to more than double in the coming decades as the rate of black lung disease rises and as coal companies close.
Fund revenues are limited by declining coal production and a decrease in the coal tax rate that took effect in 2019, according to the GAO. And Julia Hearthway, director of the Office of Workers’ Compensation Programs at the Labor Department, noted at the hearing that the main driver of debt is interest payments on accrued debt.
The fund has faced financial challenges for decades, she said, but shortfalls grew worse over the last decade. In 2014, three major coal companies went bankrupt, depriving the fund of $865 billion in revenues. But the bankrupt companies had only put up three percent of their debts — about $27 million — in collateral, leaving taxpayers to make up the difference.
During this time, the Labor Department failed to accurately estimate future liability, regularly review coal companies to determine whether to raise or lower collateral amounts they paid, or always take action to protect the fund’s finances by revoking an operator’s ability to self-insure, the GAO report found.
“The Department’s lax oversight allowed coal mine executives to shift the cost of paying black lung benefits onto the shoulders of the taxpayers to the tune of nearly a billion dollars, while those same coal executives rewarded themselves with tens of millions of dollars in salaries and bonuses,” Scott said in a statement.
Hearthway said the office is “wide awake” to problems facing the fund and said the office has revamped its processes and already implemented recommendations made by the GAO report. No miner is at risk for not receiving benefits they’re due, she added.
Wednesday’s hearing was the second this Congress on issues relating to miners. Last June, Adams’ subcommittee held a hearing on the decline of coal production, lower funding levels due to the sunset of the black lung excise tax and a resurgence of the disease.
Adams and Scott have also introduced legislation that would protect access to benefits for sick miners and their families. It would extend the black lung excise tax rate for 10 years to lessen pressure to cut benefits for miners or their families.
Rep. Matt Cartwright, a Pennsylvania Democrat, said he plans to introduce the Black Lung Benefits Improvement Act, which would improve miners’ access to benefits. Pennsylvania Sen. Bob Casey has introduced the bill in the Senate. “My hope is to bring a package of bills to the floor addressing the various challenges facing coal country,” Cartwright said.
Prospects for the legislation in a GOP-controlled Senate are unclear.