[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
      
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                               __________

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                    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:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    [Whereupon, at 4:28 p.m., the subcommittee was adjourned.]

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