GAO Report Finds Lax Government Oversight Allowed Coal Mine Executives to Dump Nearly $1 Billion in Debt on U.S. Taxpayers
*Subcommittee on Workforce Protections will hold a hearing on the report today at 2:00 p.m.*
WASHINGTON – A new report released by the Government Accountability Office (GAO) today revealed that since 2014, the bankruptcies of just three coal companies – Alpha Natural Resources, James River Coal, and Patriot Coal – shifted $865 million in liabilities to the Black Lung Disability Trust Fund (Trust Fund) and American taxpayers. In each case, the report found that the Department of Labor failed to make sure the companies had enough collateral to fully cover what they owed to the Trust Fund.
According the report, the collateral put up by those three companies covered just three percent of what they owed to cover miners’ benefits.
“The GAO’s report details a decades-long failure by the Department of Labor to fulfill its duty to protect the solvency of Black Lung Disability Trust Fund,” said Chairman Robert C. "Bobby" Scott (VA-03), who originally requested the GAO report. “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.”
Under federal law, coal mine operators are required to provide cash assistance and medical care for miners they employ who become disabled by black lung disease. But in cases where the liable coal operator files for bankruptcy, closes, or is otherwise unable to pay, miners and their families receive benefits from the Trust Fund, which is funded by an excise tax on coal production and the collateral put up by coal operators.
The Department of Labor is responsible for verifying that coal companies take out enough commercial insurance—or set aside sufficient collateral to cover their self-insurance—to cover their full share of miners’ benefits in the event of a bankruptcy.
When the Trust Fund does not have enough money to cover benefits for disabled miners, it borrows money from U.S. taxpayers. The Trust Fund is currently approximately $5.8 billion in debt and the debt is expected to rise to more than $15 billion by 2050, according to GAO, unless Congress steps in and renews the black lung excise tax rate.
“The Department’s inability to enforce the requirement for coal operators to set aside adequate reserves to self-insure their black lung liabilities has compounded the existing financial challenges already facing the Black Lung Disability Trust Fund,” said Chairman Scott. “As a result, taxpayers are now being forced to cover rising interest payments, and miners and their families are being left to worry about the possibility of benefit cuts in the future. The Department of Labor must learn from this report and enact meaningful reforms to ensure it does not repeat its costly mistakes.”
The GAO’s report makes three recommendations to protect taxpayers and secure access to benefits for miners and their families.
- Establish new procedures for monitoring self-insurance;
- Establish a streamlined process for coal operators to appeal DOL findings of inadequate self-insurance; and,
- Develop a process to monitor whether commercially insured operators maintain adequate and continuous coverage.
To read the report, click here.
To read a summary of the report, click here.
*The Committee on Education and Labor Subcommittee on Workforce Protections will hold a hearing on the report today at 2:00 p.m. with witnesses from the GAO and Department of Labor. To watch the hearing live, click here.*
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