Month: March 2017

The Corporate War on Coal Miners Continues

The signing ceremony for Donald Trump’s executive order nullifying the climate initiatives of the Obama Administration was staged so that about two dozen miners looked on adoringly as the president claimed to be ending the so-called war on coal. Trump then repeated his promise that the regulatory rollbacks would “put our miners back to work.”

Just about every analysis concludes this is a hollow promise. Trump’s action will have little impact on the long-term decline of coal industry jobs. Even industry figures such as Robert Murray, CEO of Murray Energy, are warning: “He can’t bring them back.”

And even if there is a modest improvement, it won’t include the kind of well-paying jobs that used to characterize coal mining. According to the latest annual report on coal from the U.S. Energy Information Administration, unionized underground mining jobs are now outnumbered three to one by non-union surface mining jobs. The executive order’s lifting of the freeze on federal coal leasing, which is concentrated in Western surface mines, will increase the gap.

This did not happen by accident. The coal industry has been seeking for years to weaken the United Mine Workers by shifting work to non-union operations or by spinning off UMW-represented mines as weak stand-alone companies. The industry’s biggest producer, Peabody Energy, did this in 2007 when it shed Patriot Coal, which subsequently declared bankruptcy and was given court approval to slash wages, pensions and healthcare benefits of its workers and retirees. Today Peabody has only one operation left with a UMW presence. Anti-union animus was pronounced at various companies — especially Pittston and Massey Energy — that merged into what is now called Alpha Natural Resources.

One consequence of de-unionization is that coal managers can more easily cut corners on safety. This was seen at Peabody more than three decades ago. In 1982 the company pleaded no contest and paid a penalty of $130,000 to settle federal charges that it falsified dust-sampling reports submitted to the Mine Safety & Health Administration (MSHA) as part of the monitoring of conditions that can cause black lung disease. In 1991, after a year-long investigation by MSHA, Peabody once again stood accused of tampering with coal-dust test results. It pleaded guilty to criminal charges and was fined $500,000, the largest penalty that had ever been assessed for a non-fatal violation of federal mine safety regulations.

In 2006 a dozen miners died in a methane gas explosion at the Sago Mine in West Virginia operation, which had been cited by MSHA for “combustible conditions” and “a high degree of negligence.” During 2005 the mine (then run by International Coal Group, which later merged into Arch Coal) had received more than 200 violations, nearly half of which were serious and substantial.

Allegations of poor safety practices at a non-union mine surrounded an even worse disaster — the death of 29 miners at Massey Energy’s Upper Big Branch operation in West Virginia in 2010. The mine had been cited more than 50 times by MSHA in the month before the explosion and had racked up 1,342 violations over the previous five years. In 2011 Alpha Natural Resources, which bought Massey after the accident, had to pay $209 million to settle federal criminal charges.

If Trump really wanted to do something to help coal miners, he would beef up MSHA’s enforcement capacity and embrace labor law reforms that would help the UMW regain lost ground. Instead, he is proposing a 21 percent cut in the budget of the Labor Department, of which MSHA is a part, and staying silent on the anti-worker practices of the coal companies he is so eager to assist.

Regulation is Not Dead Yet

Donald Trump tries to give the impression that his crusade against business regulation is moving ahead rapidly. While several rules have been rescinded and more are threatened, it turns out that for now the enforcement systems at most agencies are functioning normally.

In preparing a forthcoming update of the Violation Tracker database, I’ve found that since the inauguration federal regulatory agencies have announced more than 160 case resolutions with fines and settlements totaling more than $1.6 billion. This two-month dollar amount does not compare to the $20 billion collected by the Obama Administration during its final tens weeks in office. Yet it does show that the so-called administrative state is not dead yet.

A large portion of the Trump collections come from enforcement actions against a single company that are in line with the new president’s views. The Chinese telecommunications company ZTE was penalized $1.2 billion for violating economic sanctions against Iran and North Korea by supplying them with prohibited items. The Commerce Department’s Bureau of Industry and Security imposed a $661 million civil penalty and the Treasury’s Office of Foreign Assets Control collected another $106 million while the Justice Department got ZTE to plead guilty and pay $430 million in fines and criminal forfeiture.

The remaining $422 million was collected in cases brought by 21 different agencies and four divisions of the Justice Department. Among the larger actions:

  • The Commodity Futures Trading Commission reached an $85 million settlement with the Royal Bank of Scotland to resolve allegations that it attempted to manipulate interest-rate benchmarks.
  • The Federal Energy Regulatory Commission reached an $81 million settlement with GDF Suez to resolve allegations that it manipulated energy markets.
  • TeamHealth Holdings agreed to pay $60 million to settle Justice Department allegations that its subsidiary IPC Healthcare Inc. violated the False Claims Act by overbilling Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program.
  • Offshore oil driller Wood Group PSN was ordered to pay a total of $9.5 million to resolve criminal charges that it falsely reported over several years that its personnel had performed safety inspections on offshore facilities and that it negligently discharged oil into the Gulf of Mexico.
  • Keurig Green Mountain agreed to pay $5.8 million to settle allegations by the Consumer Product Safety Commission that it failed to report a defect in its Mini Plus Brewing System that had caused scores of serious burn injuries.
  • The Consumer Financial Protection Bureau imposed a $3 million penalty on Experian for deceptively marketing credit scores.

The list also includes: 14 settlements with the Equal Employment Opportunity Commission by employers in cases involving gender, pregnancy and disability discrimination; six cases in which private sponsors of Medicare Advantage plans violated consumer protection rules; two cases in which companies were charged with violating the Controlled Substances Act by failing to properly monitor opioid prescriptions; and much more.

On the other hand, the situation remains puzzling at the Labor Department, where agencies such as OSHA have not announced a single enforcement action since Trump took office. [UPDATE: It’s been pointed out to me that despite the absence of OSHA press releases the agency is still posting enforcement actions on its website on this page, which shows numerous cases since Inauguration Day.]

It is likely that most of the 160 cases were initiated while the Obama Administration was in office, but it is heartening that they have gotten resolved under the new management. The career officials in the various agencies should be commended for continuing to do their job in difficult circumstances. Let’s hope they can convince their new bosses that there is a value to protecting consumers, workers and the public against corporate misconduct in its many forms.

Labor Unenforcement

Once upon a time, a key component of American populism was the demand for stricter controls over big business: in other words, regulation. Today, the country’s purported populist in chief is instead promoting the dubious claim that deregulation is what will benefit the masses. Through executive orders and now with his administration’s budget blueprint, Donald Trump is seeking an unprecedented rollback of workplace, environmental and consumer protections.

There are signs that at least one agency in the Trump Administration may not waiting for the legal changes to take effect before providing relief to business. In the eight weeks since the inauguration, the regulatory arms of the Labor Department appear to have been in a near state of suspended animation, at least in terms of their announced enforcement activity.

Take the case of the Occupational Safety and Health Administration. Since the inauguration it has not posted a single press release about an enforcement matter on the DOL website. This compares to more than 70 releases — about the filing of cases or the imposition of penalties — posted during the same period last year.

This can’t be explained by delays in a new administration getting up and running. During the comparable time period for the newly installed Obama Administration in 2009, OSHA made more than 30 enforcement announcements.

A similar pattern can be seen at DOL’s Wage and Hour Division, which under the Obama Administration aggressively pursued employers that violated minimum wage, overtime and other provisions of the Fair Labor Standards Act. Since January 20, the WHD has made only one case announcement. By contrast, during the same period last year WHD announced 35 cases in which an employer was being sued or had settled allegations by agreeing to pay back wages and sometimes a monetary penalty. In 2009, right after Obama took office, the WHD announced 14 cases in the same period.

Other parts of the Labor Department are also quiet. The Office of Federal Contract Compliance Programs, which makes sure government contractors comply with anti-discrimination laws, has not issued a single press release since inauguration day — on enforcement matters or anything else.

Enforcement is handled by career employees of the DOL, whose activities should not be affected by the delays in filling the Labor Secretary’s job, unless their work is being impeded by Trump’s appointed “beachhead” officials now running the department.

There are no indications that the work of DOL agencies has been suspended. Yet the almost complete disappearance of enforcement announcements may indicate that the Trump appointees have been holding up case resolutions or are choosing not to publicize those matters that have been resolved.

In any event, this enforcement lethargy may be a rehearsal for things to come. The Trump budget blueprint calls for a 21 percent reduction in DOL funding, and while the document provides limited details on what would be targeted, a cut of that size is bound to impair enforcement. How many workers who voted for Trump were seeking more dangerous conditions on the job and greater vulnerability to wage theft?

UPDATE: It’s been pointed out to me that despite the absence of OSHA press releases the agency is still posting enforcement actions on its website on this page, which shows numerous cases since Inauguration Day.

Catastrophic Plans

During his private-sector career Donald Trump floated many dubious business ventures, and now as president he is pushing his biggest bait-and-switch scheme yet. Having run for office on promises that he would improve healthcare and protect safety net programs such as Medicaid, he is now embracing and promoting a Republican replacement for the Affordable Care Act that would do exactly the opposite.

Throughout the campaign, Trump made it abundantly clear that he wanted to repeal the ACA, which he repeatedly described as a disaster, and with his typical hyperbole promised voters: “You’re going to have such great healthcare at a tiny fraction of the cost, and it is going to be so easy.” During the transition he said that the replacement plan would seek to provide “insurance for everybody.”

Trump exploited the real frustrations of many people with the ACA — frustrations that were largely the result of Republican intransigence that prevented the inclusion of a public option, blocked any legislative fixes and precluded Medicaid expansion in many states. He implicitly promised that a replacement plan would do more.

When Trump stated on February 27 that “nobody knew health care could be so complicated,” he was in effect signaling that the bait phase of his con was over and he was moving on to the switch. Now he has dropped the extravagant promises and has joined the House Republican rush to enact a repeal and replace plan supposedly made urgent by the imminent collapse of Obamacare.

The House legislation has not yet been officially scored by the Congressional Budget Office, but it is widely anticipated that it will result in a loss of coverage for millions of people and sharp increases in premiums for many of those who hold onto their plans.

Yet there is another issue that is receiving less attention: the quality of coverage for those who remain in the individual marketplace. For now, the Republican plan retains the ACA’s list of essential benefits (preventive care, etc.) that must be included in any individual or small group plan, but it is possible that could be bargained away to placate social conservatives who don’t like the provisions relating to reproductive health.

Trumpcare does not, however, include the ACA’s cost-sharing provisions that cap out-of-pocket expenses in plans obtained through the exchanges by persons with income below 250 percent of the federal poverty line. As a result, these people could very well be subjected to sharply higher deductibles and co-pays.

This points to the little-acknowledged aspect of the assault on the ACA: at the heart of the Republican “solution” to rising premiums is giving people the ability to purchase lower-cost but substandard coverage. In other words, they want to return to the pre-ACA situation in which insurers could sell bare-bones policies that provided little or no cost reimbursement except in cases of major illnesses or accidents — and might be skimpy in those situations as well.

It is significant that Republicans keep quoting Aetna CEO Mark Bertolini in perpetuating the bogus claim that the ACA is in a “death spiral.” Bertolini is hardly an objective observer. He used misleading negative comments about the ACA to try to deter the Obama Administration from its opposition to Aetna’s anti-competitive acquisition of its rival Humana, which was recently blocked by a federal judge who accused the company of dropping out of the ACA marketplace in several states to “improve its litigation position” in the merger dispute.

Aetna is also the company that was one of the biggest promoters of bare-bones policies in the pre-ACA period. It got into the business, also known as junk health insurance, two decades ago through the purchase of U.S. Healthcare, an HMO whose bare-knuckles practices Aetna adopted in full and thus found itself the target of a series of class-action lawsuits brought by patients as well as providers.

The substandard policies sold by Aetna made up a substantial portion of the plans that were banned by the ACA. The people who had to give up that “coverage” became symbols of the supposed oppression of Obamacare.

Although they try hard to hide the fact, Republicans — and now Trump — are setting the stage for a resurgence of the bare-bones policies under the banner of affordability. That will be catastrophic coverage in every sense of the word.

Trump’s Misguided Crusade Against the EPA

Executives at Volkswagen must be cursing the bad timing. If only they had been able to keep their emissions cheating scheme quiet for a while longer, they could have avoided a lot of grief. That’s because the U.S. Environmental Protection Agency’s enforcement capacity may soon be crippled.

This is a likely consequence of the Trump Administration’s plans, just reported by the Washington Post, to cut the staff of the agency by one-fifth and eliminate dozens of programs. It’s not yet known exactly what functions are being targeted, but cuts of this magnitude will certainly make it more difficult for the EPA to pursue the kind of investigations that led to the filing of civil and criminal charges against VW.

In January, shortly before Trump took office, the company agreed to plead guilty to three federal felony counts and pay a criminal penalty of $2.8 billion along with another $1.5 billion to settle civil claims. VW previously reached a settlement with the EPA and other agencies under which it committed to spend more than $14 billion to buy back cars containing “defeat devices” and undertake projects to mitigate the extra pollution generated by those vehicles.

VW is one of the thousands of polluters whose activities have been thwarted by the EPA. As shown in Violation Tracker, since the beginning of 2010 the agency (on its own or with the Justice Department) has collected more than $43 billion in fines and settlements in more than 15,000 cases. That does not include billions more from companies such as BP in cases in which the EPA joined with other agencies in joint referrals to the DOJ. Apart from VW and BP, here are the biggest EPA penalty cases over the past seven years:

In 2015 a $5 billion settlement with the EPA and the DOJ went into effect under which Anadarko Petroleum agreed to pay for the clean-up of toxic waste sites across the country linked to Tronox Inc., a spinoff of Anadarko’s subsidiary Kerr-McGee.

In 2013 Wisconsin Power and Light Company, a subsidiary of Alliant Energy, agreed to spend over $1 billion on new equipment to substantially reduce air pollution generated by three coal-fired power plants.

In 2013 Transocean agreed to pay a $1 billion civil penalty to the EPA in connection with its role in the Deepwater Horizon disaster in the Gulf of Mexico three years earlier.

In a 2015 settlement with the EPA, fertilizer giant Mosaic agreed to establish a $630 million trust fund to pay for the future closure of and treatment of hazardous wastewater at four facilities in Florida and Louisiana. The company also agreed to spend $170 million on environmental mitigation at its operations.

In 2011 Hovensa, now owned by ArcLight Capital, agreed to spend more than $700 million on new air pollution controls at its massive petroleum refinery in the U.S. Virgin Islands.

Not all the companies are from the industrial and energy sectors. Retail behemoth Wal-Mart Stores has had to pay more than $90 million in EPA fines and settlements to resolve cases involving improper disposal of hazardous waste and other violations.

Data collected for an extension of Violation Tracker coverage back an additional ten years to 2000 includes EPA cases with total fines and settlements of more than $20 billion. Among these are a 2007 agreement by utility giant American Electric Power to spend an estimated $4.6 billion to reduce toxic air emissions at its power plants and a $50 million criminal penalty BP paid for environmental violations at its refinery in Texas City, Texas (now owned by Marathon Petroleum) where 15 workers were killed in an explosion in 2005.

These various examples do not include the many Superfund cases brought by EPA against multiple parties in connection with long-term toxic dumping or cases brought against government entities; nor do they include all the work EPA does apart from enforcement.

Trump’s assault on the EPA is based on the once common but now widely debunked notion that there is an inherent conflict between jobs and environmental protection. Today there is greater recognition that workers also need to breathe clean air and drink clean water, and that there are many business and employment opportunities associated with environmental clean-up and sustainable practices.

Decimating the EPA will serve only to empower rogue corporations such as Volkswagen. There is nothing to be gained from making polluters great again.