ESA Final Rule

Regulations Implementing the Federal Coal Mine Health and Safety Act of 1969, as Amended [12/20/2000]

Due to the large file size, this document has been divided into four parts:

Volume 65, Number 245, Page 79969-80018

[[pp. 79969-80018]] Regulations Implementing the Federal Coal Mine Health and Safety 
Act of 1969, as Amended

[[Continued from page 79968]]

[[Page 79969]]

    The commenters opposed to the Department's proposal also objected 
to the Department's failure to consult the National Institute of 
Occupational Safety and Health (NIOSH). Although NIOSH had commented 
favorably on the Department's proposal, and specifically on the 
provision recognizing the progressive nature of pneumoconiosis, the 
Department decided, in light of the divergent comments it had received 
from medical professionals, to seek additional guidance from NIOSH. The 
Department transmitted a copy of all of the testimony and commentary it 
had received to Dr. Linda Rosenstock, the Director of NIOSH, and asked 
NIOSH to determine, in light of the then existing record, whether NIOSH 
continued to support the Department's proposal. NIOSH responded, in a 
December 7, 1998 letter from Dr. Paul Schulte, the Director of NIOSH's 
Education and Information Division, that ``[t]he unfavorable comments 
received by DOL do not alter our previous position: NIOSH scientific 
analysis supports the proposed definitional changes.'' Dr. Schulte 
provided additional medical references to support NIOSH's conclusion. 
The Department notified parties of this additional evidence in its 
second notice of proposed rulemaking. See 64 FR 54978-79 (Oct. 8, 
1999).
    One commenter accuses the Department of obtaining assistance from 
NIOSH's information officer rather than its scientific staff. The 
Department does not agree that the identity or title of the agency 
official through whom NIOSH chose to communicate its response to the 
Department's inquiry renders that response invalid. The Department's 
request was sent to the Director of NIOSH, and observed that the 
resolution of the issues related to the definition of the term 
``pneumoconiosis'' required scientific and medical expertise. Dr. 
Schulte's letter, transmitted on behalf of NIOSH in response to the 
Department's request, specifically refers to ``NIOSH scientific 
analysis.'' Accordingly, the Department rejects the commenter's 
inferences that its consultation with NIOSH was less than complete, and 
that the Department sought to exclude the agency's scientific staff. To 
the extent that the statute imposes an obligation to consult with NIOSH 
on the definition of ``pneumoconiosis,'' the Department has fully 
complied with that obligation.
    The commenters opposed to the Department's proposal also attack the 
scientific basis of the conclusion that the Department and NIOSH have 
drawn from the evidence of record. In the following discussion, where a 
scientific article or treatise is cited, the Department has also cited 
to a Rulemaking Record Exhibit or, when appropriate, the Federal 
Register, where that source appears. This second citation is not an 
exhaustive list; thus, each source may appear at additional points in 
the Rulemaking Record. In support of their attack, the commenters have 
submitted an analysis of the available medical literature from Dr. 
Gregory Fino, a Board-certified physician in Internal Medicine and 
Pulmonary Disease, and Dr. Barbara Bahl, who has a doctorate in nursing 
and biostatistics. Drs. Fino and Bahl analyze nine articles and 
textbooks dealing with latency, which they define parenthetically as 
``0/0 or 0/1 to 1/0+.'' The analysis thus focuses on evidence that 
would show that a miner whose chest X-rays are classified by a 
radiologist as ``negative'' (0/0 or 0/1 under the ILO-UC classification 
scheme, see 20 CFR 718.102(b)), after he leaves the mine can develop a 
disease that will result in chest X-rays that are classified as 
``positive.'' Under the ILO-UC scheme, an X-ray classified as category 
1, 2, or 3, ranging from 1/0 to 3/3, is considered positive for simple 
pneumoconiosis. An X-ray classified as A, B, or C is considered 
positive for complicated pneumoconiosis, also known as progressive 
massive fibrosis or massive pulmonary fibrosis. 20 CFR 718.102(b), 
718.304(a) (1999). They conclude that ``the medical literature provides 
no evidence that coal workers' pneumoconiosis or silicosis in 
coalminers is a latent disease. There is also no evidence to show that 
the development of pulmonary impairment is latent.'' Rulemaking Record, 
Exhibit, 89-37, Appendix C at 29.
    Drs. Fino and Bahl also analyzed five articles dealing with 
progression, which they define parenthetically as ``1/0 to 
1/0.+'' Their analysis of progression thus focuses on whether 
individuals whose chest X-rays are initially read as 1/0, the lowest 
positive classification in the ILO-UC scheme, may have later chest X-
rays classified greater than 1/0. They observe that ``there are authors 
who have identified progression of pneumoconiosis in coal miners,'' but 
that other authors have reached the contrary conclusion. They conclude 
as follows:

    Why do some miners progress within the ILO scale of simple 
pneumoconiosis and others do not? The answer lies in the proper 
definition of pneumoconiosis. Careful attention must be made to 
differentiate simple coal workers' pneumoconiosis and silicosis. The 
miners who have been described to progress over time after exposure 
ceases are miners who have likely contracted silicosis, not simple 
coal workers' pneumoconiosis. * * *
    Silicosis may be a progressive disease in a small percentage of 
miners after coal mine dust exposure ends. The literature does not 
support the statement that coal workers' pneumoconiosis is 
progressive absent further dust exposure. There are no studies that 
show progressive impairment in miners who have left the mines. The 
studies do not show any progression in industrial bronchitis after a 
miner leaves the mines. In fact, the studies do suggest that the 
minor reduction in the FEV1 [Forced Expiratory Volume in one second] 
as a result of industrial bronchitis occurs in the first few years 
of mining and then the effect over the remaining years in the mines 
is negligible and may even recover.

    Rulemaking Record, Exhibit 89-37, Appendix C at 30-31. In 
evaluating the medical evidence contained in the rulemaking record, the 
Department is mindful that Congress provided an exceptionally broad 
definition of the term ``pneumoconiosis:'' ``a chronic dust disease of 
the lung and its sequelae, including respiratory and pulmonary 
impairments, arising out of coal mine employment.'' 30 U.S.C. 902(b). 
The regulatory definitions promulgated by the Department over the last 
25 years have reflected the scope of this provision.
    In 1978, the Department promulgated its interim criteria, 20 CFR 
Part 727. Those criteria included a definition of ``pneumoconiosis'' at 
20 CFR 727.202. After repeating the statutory definition, the 
regulation further provided that ``[t]his definition includes, but is 
not limited to, coal workers' pneumoconiosis, anthracosilicosis, 
anthracosis[,]anthrosilicosis, massive pulmonary fibrosis, progressive 
massive fibrosis[,] silicosis, or silicotuberculosis arising out of 
coal mine employment.'' 43 FR 36825 (Aug. 18, 1978). The Department 
promulgated its permanent criteria, 20 CFR Part 718, in 1980. Section 
718.201, entitled ``Definition of pneumoconiosis,'' contained a 
definition that was identical to that of Sec. 727.202. 45 FR 13685 
(Feb. 29, 1980). The federal courts of appeals have long recognized 
that the Act compensates not merely coal workers' pneumoconiosis, as 
that term is used by the medical community, but ``legal'' 
pneumoconiosis. See, e.g., Peabody Coal Co. v. Lowis, 708 F.2d 266, 268 
n.4 (7th Cir. 1983) (``the `legal' definition of pneumoconiosis 
contained in the above-quoted regulation [Sec. 727.202] includes not 
only `true or clinical' pneumoconiosis but also other respiratory or 
pulmonary diseases arising from dust exposure in coal mine 
employment''); Gulf & Western Industries v. Ling, 176 F.3d 226, 231 
(4th Cir. 1999) (``[the regulations detail the breadth of what is 
frequently called

[[Page 79970]]

`legal' pneumoconiosis * * *''); see also the Department's preamble to 
Sec. 718.201.
    The Department has reviewed all of the medical literature 
referenced in the record, and does not agree that it lacks support for 
the proposition that pneumoconiosis is a latent, progressive disease. 
Contrary to Dr. Fino's conclusions, a number of medical references 
document the latent, progressive nature of the disease. For example, 
Seaton, in ``Coal Workers' Pneumoconiosis,'' in Morgan, WKC and Seaton 
A, eds., Occupational Lung Diseases (WB Saunders Co., 3d ed. 1995) 389, 
see also Rulemaking Record, Exhibit 89-37, Appendix C at 34, 42, 
contains the observation that ``PMF [Progressive massive fibrosis] may 
occur after dust exposure has ceased, even when the miner has left the 
industry with no apparent simple pneumoconiosis, although this will 
only occur if the worker has had substantial dust exposure''). 
Similarly, National Institute for Occupational Safety and Health, 
Criteria for a Recommended Standard: Occupational Exposure to 
Respirable Coal Mine Dust, Sec. 4.2.1.3.1, Rulemaking Record, Exhibit 
2-1 at 48, summarized an article (Maclaren WM, Soutar CA, ``Progressive 
massive fibrosis and simple pneumoconiosis in ex-miners,'' Br. J. Ind. 
Med. 42:734-740 (1985)) as follows: ``Among 1,902 ex-miners who had not 
developed PMF within 4 years of leaving mining, 172 (9%) developed PMF 
after leaving mining. Of those 172 miners with PMF, 32% had no evidence 
of simple CWP (category 0) when they left mining.'' In that article, in 
fact, Maclaren and Soutar reported both small opacities (evidence of 
simple pneumoconiosis) and large opacities (evidence of complicated 
pneumoconiosis) in ex-miners who did not show evidence of coal workers' 
pneumoconiosis after the miners left the industry.
    Moreover, contrary to the conclusion of Dr. Fino and Dr. Bahl, the 
study conducted by Donnan et al. did find significant evidence of 
latency. Donnan PT, Miller BG, Scarisbrick DA, Seaton A, Wightman AJA, 
Soutar CA, ``Progression of simple pneumoconiosis in ex-coalminers 
after cessation of exposure to coalmine dust,'' IOM report TM/97/07 
(Institute of Occupational Medicine, December 1997) 1-67, see also 
Rulemaking Record, Exhibit 89-37, Appendix C at 26, 29. Dr. Fino and 
Dr. Bahl write that ``only one out of 200 miners [in the study] was 
found to progress from a negative to a positive film.'' That 
conclusion, however, was not the conclusion of the study's authors. 
Their tables 3.4a (Median profusion score for 14 CWP progressors and 19 
PMF progressors) and 3.4b (Median profusion score for 161 CWP non-
progressors) compare X-rays taken within two years of the dates on 
which the 200 miners left the coal mining industry with X-rays taken 10 
years later. They demonstrate that of 138 ex-miners whose early X-rays 
were read as 0/0 or 0/1, 11 had later X-rays read as positive for 
either simple or complicated pneumoconiosis. This proportion, 7.97%, 
has epidemiologic significance, and supports the authors' conclusion 
that ``[t]he results have demonstrated that progression does occur 
after cessation of exposure.'' Donnan et al. at 23.
    In light of this evidence, the Department is not persuaded by the 
reliance Dr. Fino and Dr. Bahl place on the conclusion of Drs. 
Merchant, Taylor and Hodous in ``Occupational Respiratory Diseases'' 
(National Institute for Occupational Safety and Health, 1986), see also 
Rulemaking Record, Exhibit 89-37, Appendix C at 26. Dr. Fino and Dr. 
Bahl quote the textbook's statement that ``the chance of radiological 
progression over ten years at a mean dust concentration of 2 milligrams 
per cubic meter is essentially zero for a miner with x-ray category 0/
0.'' This textbook was published by the Division of Respiratory Disease 
Studies of the Appalachian Laboratory for Occupational Safety and 
Health, a component of the National Institute of Occupational Safety 
and Health, more than 10 years prior to the Donnan study. In light of 
NIOSH's conclusion that scientific analysis supports the Department's 
regulations, the Department does not agree that the statement by 
Merchant et al. requires the Department to revise its regulatory 
approach.
    Similarly, the Department is not persuaded by Dr. Fino and Dr. 
Bahl's attempt to dismiss the effect of silica on coal miners, and 
therefore to discount the applicability of studies demonstrating the 
latency and progressivity of silicosis. It remains the Department's 
position that pneumoconiosis, as defined in the statute, 30 U.S.C. 
902(b), is both latent and progressive. The statutory definition 
includes both simple coal workers' pneumoconiosis and silicosis. 
Although they acknowledge studies showing that silicosis is a latent, 
progressive disease, Dr. Fino and Dr. Bahl argue that coal workers' 
pneumoconiosis must be distinguished from silicosis. The Black Lung 
Benefits Act, however, does not permit such a distinction. As discussed 
above, the regulatory definition of the term ``pneumoconiosis,'' 
implementing the broad statutory definition, includes silicosis within 
the list of conditions that must be considered pneumoconiosis. In 
addition, inclusion of silicosis in the definition of pneumoconiosis is 
based on practical as well as legal considerations. It is difficult to 
separate the effects of coal and silica in the occupational setting. 
Coal contains a number of non-organic materials, including quartz, and 
the percentage of quartz is greater in high rank coals. Seaton, ``Coal 
Workers' Pneumoconiosis,'' in Morgan, WKC and Seaton A, eds., 
Occupational Lung Diseases (WB Saunders Co., 3d ed. 1995) 389, see also 
Rulemaking Record, Exhibit 89-37, Appendix C at 34, 42. Seaton and 
colleagues reported a cohort of miners who had a rapid progression of 
radiologic findings resembling silicosis, despite a relatively low 
total coal dust exposure. Seaton A, Dick JA, Dodgson J, Jacobsen M., 
``Quartz and pneumoconiosis in coal miners,'' Lancet 2:1272 (1981), see 
also Rulemaking Record, Exhibit 2-1 at 50. Analysis revealed that the 
percentage of quartz in the mixed coal mine dust was significantly 
higher in these affected miners than in matched controls. They 
concluded that quartz exposure was an important factor contributing to 
pneumoconiosis in some miners and that disease in such miners was more 
aggressive. Moreover, miners who drill into hard rock, such as those 
who bore shafts or work as roof bolters, are exposed to higher 
concentrations of quartz and are known to be at higher risk for 
developing silicosis. Seaton, ``Coal Workers' Pneumoconiosis,'' in 
Morgan, WKC and Seaton A, eds., Occupational Lung Diseases (WB Saunders 
Co., 3d ed. 1995) 389, see also Rulemaking Record, Exhibit 89-37, 
Appendix C at 34, 42. Based on these observations, it is reasonable to 
conclude that there is a clear risk of developing pneumoconiosis with 
characteristics of silicosis in coal miners exposed to dusts with high 
quartz content. Accordingly, the Department believes that it may 
properly rely on studies of silicosis in promulgating regulations 
governing the compensability of pneumoconiosis as that term has been 
defined by Congress. See also Beckett WS, ``Occupational Respiratory 
Diseases,'' The New England Journal of Medicine, 342:406-13 (Feb. 12, 
2000) (citing a study of silicosis to support the conclusion that 
``[w]ith many substances (including coal and silica dust), the disease 
may progress for decades after the exposure has ceased.''). (Dr. 
Beckett's review article did not appear until after the

[[Page 79971]]

rulemaking record had closed; it is cited only as additional evidence 
confirming the Department's previous use of studies involving 
silicosis).
    Finally, there is also evidence that lung function can continue to 
deteriorate after a miner leaves the coal mining industry. The authors 
of Dimich-Ward H and Bates DV, ``Reanalysis of a longitudinal study of 
pulmonary function in coal miners in Lorraine, France,'' Am J Ind Med, 
25:613-623 (1994), see also 62 FR 3344 (Jan. 22, 1997), demonstrated a 
decline of pulmonary function in both smoking and non-smoking coal 
miners that continues over time even after retirement from mining. 
Given this evidence of progression, it is clear that a miner who may be 
asymptomatic and without significant impairment at retirement can 
develop a significant pulmonary impairment after a latent period. 
Because the legal definition of ``pneumoconiosis'' includes impairments 
that arise from coal mine employment, regardless of whether a miner 
shows X-ray evidence of pneumoconiosis, this evidence of deterioration 
of lung function among miners, including miners who did not smoke, is 
particularly significant.
    The commenters also cite the 1985 report of the Surgeon General, 
U.S. Department of Health and Human Services, The Health Consequences 
of Smoking: Cancer and Chronic Lung Disease in the Workplace (1985), 
see also Rulemaking Record, Exhibit 89-21, Appendix 11, in support of 
their argument. Of the seven items listed in the ``Summary and 
Conclusions'' section of Chapter Seven, ``Respiratory Disease in Coal 
Miners,'' none addresses the latency or progressivity of 
pneumoconiosis. In addition, the Surgeon General's report, which 
focused on the health consequences of smoking, did not review many of 
the articles on which the Department's conclusion is based. Because the 
overwhelming majority of the references cited by the Department in its 
first and second notices of proposed rulemaking, see 62 FR 3343-44 
(Jan. 22, 1997); 64 FR 54978-79 (Oct. 8, 1999), as well as the 
references discussed above, were prepared after 1985, this is not 
surprising. Accordingly, the Department does not believe that anything 
in the Surgeon General's report requires the Department to ignore the 
conclusions that it has drawn from the studies and articles in the 
rulemaking record.
    Contrary to the commenters' argument, then, the record does contain 
abundant evidence demonstrating that pneumoconiosis is a latent, 
progressive disease. That evidence is certainly sufficient to justify 
the Department's regulation governing subsequent claims. Moreover, 
neither the regulation permitting subsequent claims nor the 
Department's explicit recognition of the progressive nature of the 
disease represents a departure from the Department's prior positions. 
The Department's original promulgation of a regulation governing 
subsequent claims in 1978 was based on the progressive nature of the 
disease. 43 FR 36785 (Aug. 18, 1978). The federal courts of appeals 
have also recognized that pneumoconiosis is a progressive disease. 
Plesh v. Director, OWCP, 71 F.3d 103, 108 (3d Cir. 1995) 
(``pneumoconiosis is progressive and incurable''); Labelle Processing 
Co. v. Swarrow, 72 F.3d 308, 314-315 (3d Cir. 1995) (``Congress, in 
enacting the BLBA, recognized the perniciously progressive nature of 
the disease * * *. Moreover, courts have long acknowledged that 
pneumoconiosis is a progressive and irreversible disease.''); 
Kowalchick v. Director, OWCP, 893 F.2d 615, 621 (3d Cir. 1990) (``That 
the three earliest x-rays of record * * * were read negative is not 
inconsistent with the progressive nature of pneumoconiosis.''); 
Shendock v. Director, OWCP, 893 F.2d 1458, 1467 n.10 (3d Cir. 1990) 
(``it is well recognized that pneumoconiosis is a progressive disease 
whose symptoms increase in severity over time''); Bethenergy Mines Inc. 
v. Director, OWCP, 854 F.2d 632, 636 (3d Cir. 1988) (``Due to the 
progressive nature of pneumoconiosis, a coal mine operator is less 
likely to know the details underlying a particular claim than an 
employer is in the typical case arising under the LHWCA.''); Zielinski 
v. Califano, 580 F.2d 103, 107 (3d Cir. 1978) (``pneumoconiosis and 
related lung diseases progress slowly''); Eastern Associated Coal Corp. 
v. Director, OWCP, ____ F.3d ____, No. 99-1312, slip op. at pp. 11-12 
(4th Cir. July 12, 2000) (observing ``the assumption of progressivity 
that underlies much of the statutory regime''); Lane Hollow Coal Co. v. 
Lockhart, 137 F.3d 799, 803 (4th Cir. 1998) (``pneumoconiosis is 
progressive and irreversible''); Adkins v. Director, OWCP, 958 F.2d 49, 
51 (4th Cir. 1992) (``pneumoconiosis is a progressive disease''); Greer 
v. Director, OWCP, 940 F.2d 88, 90 (4th Cir. 1991) (pneumoconiosis is 
``a slowly-progressing condition''); Hamrick v. Schweiker, 679 F.2d 
1078, 1081 (4th Cir. 1982) (``pneumoconiosis is a progressive 
disease''); Prater v. Harris, 620 F.2d 1074, 1082 (4th Cir. 1980) 
(``pneumoconiosis is a progressive disease''); Barnes v. Mathews, 562 
F.2d 278, 279 (4th Cir. 1977) (``pneumoconiosis is a slow, progressive 
disease often difficult to diagnose at early stages''); Crace v. 
Kentland-Elkhorn Coal Corp., 109 F.3d 1163, 1167 (6th Cir. 1997) 
(``because of the progressive nature of pneumoconiosis, more recent 
evidence is often accorded more weight''); Consolidation Coal Co. v. 
McMahon, 77 F.3d 898, 906 (6th Cir. 1996) (recognizing ``the 
progressive nature of pneumoconiosis''); Sharondale Corp. v. Ross, 42 
F.3d 993, 997 (6th Cir. 1994) (``the material change provision 
[provides] relief from the principles of finality for those miners 
whose conditions have deteriorated due to the progressive nature of 
black lung disease''); Johnson v. Peabody Coal Co., 26 F.3d 618, 620 
(6th Cir. 1994) (``Pneumoconiosis is a progressive debilitating 
disease.''); Woodward v. Director, OWCP, 991 F.2d 314, 320 (6th Cir. 
1993) (``Pneumoconiosis is a progressive and degenerative disease.''); 
Campbell v. Consolidation Coal Co., 811 F.2d 302, 303 (6th Cir. 1987) 
(recognizing ``the progressive nature of pneumoconiosis''); Back v. 
Director, OWCP, 796 F.2d 169, 172 (6th Cir. 1986) (``Because of the 
progressive nature of pneumoconiosis, earlier negative and later 
positive X-rays of the same individual are not necessarily in 
conflict.''); Orange v. Island Creek Coal Co., 786 F.2d 724, 727 (6th 
Cir. 1986) (``pneumoconiosis * * * is a progressive disease''); 
Director, OWCP v. Bivens, 757 F.2d 781, 788 (6th Cir. 1985) (``the 
Black Lung Benefits Act provides compensation for disability based on 
an invisible and progressive disease''); Collins v. Sec'y of HHS, 734 
F.2d 1177, 1180 (6th Cir. 1984) (``Medically we note that 
pneumoconiosis is a slow, progressive disease. Its characteristics and 
symptoms often do not manifest themselves in a way that promote [sic] 
immediate detection. In some cases the disease may take years before it 
is readily detectable.''); Smith v. Califano, 682 F.2d 583, 587 (6th 
Cir. 1982) (``coal workers'' pneumoconiosis * * * is a progressive 
disease''); Hill v. Califano, 592 F.2d 341, 345 (6th Cir. 1979) 
(``pneumoconiosis is a slowly progressive disease''); Morris v. 
Mathews, 557 F.2d 563, 568 (6th Cir. 1977) (recognizing Congressional 
finding that ``pneumoconiosis [is] a progressive chronic dust disease 
of the lung''); Begley v. Mathews, 544 F.2d 1345, 1354 (6th Cir. 1976) 
(describing pneumoconiosis as ``a disease known to be of a slowly 
progressive character''); Amax Coal Co. v. Franklin, 957 F.2d 355, 359 
(7th Cir. 1992) (``Black lung

[[Page 79972]]

disease, at least when broadly defined, is a progressive disease * * 
*.''); Dotson v. Peabody Coal Co., 846 F.2d 1134, 1139 (7th Cir. 1988) 
(``Pneumoconiosis is a progressive disease* * *''.); Russell v. 
Director, OWCP, 829 F.2d 615, 616 (7th Cir. 1987) (``Coal miners'' 
pneumoconiosis (black lung) is a progressive, debilitating disease.''); 
Amax Coal Co. v. Director, OWCP, 801 F.2d 958, 964 (7th Cir. 1986) 
(recognizing ``the difficulty of clinically diagnosing the progressive 
disease''); Consolidation Coal Co. v. Chubb, 741 F.2d 968, 973 (7th 
Cir. 1984) (``In light of the progressive nature of pneumoconiosis, 
[the ALJ's] according greater weight to the recent x-ray was not 
irrational.''); Lovilia Coal Co. v. Harvey, 109 F.3d 445, 450 (8th Cir. 
1997) (recognizing progressive nature of pneumoconiosis); Robinson v. 
Missouri Mining Co., 955 F.2d 1181, 1184 (8th Cir. 1992) 
(``pneumoconiosis is a progressive disease''); Campbell v. Director, 
OWCP, 846 F.2d 502, 509 (8th Cir. 1988) (``pneumoconiosis is a 
progressive disease''); Newman v. Director, OWCP, 745 F.2d 1162, 1165 
(8th Cir. 1984) (``pneumoconiosis is a progressive disease''); Padavich 
v. Mathews, 561 F.2d 142, 146 (8th Cir. 1977) (``Pneumoconiosis is a 
progressive illness* * *.''); Humphreville v. Mathews, 560 F.2d 347, 
349 (8th Cir. 1977) (``pneumoconiosis is a progressive disease''); 
Wyoming Fuel Co. v. Director, OWCP, 90 F.3d 1502, 1507 (10th Cir. 1996) 
(recognizing ``the nature of pneumoconiosis as a disease that develops 
progressively and is difficult to diagnose''); Lukman v. Director, 
OWCP, 896 F.2d 1248, 1253 (10th Cir. 1990) (recognizing real purpose of 
duplicate claims regulation is to provide ``miners with progressively 
worsening health full and equal access to black lung benefits.''); 
Ohler v. Sec'y of HEW, 583 F.2d 501, 506 (10th Cir. 1978) 
(``pneumoconiosis is a progressive disease, as is emphysema''); Paluso 
v. Mathews, 573 F.2d 4, 10 (10th Cir. 1978) (``It is well-established 
medically that pneumoconiosis is a progressive disease which frequently 
defies diagnosis.''); Alabama Dry Dock and Shipbuilding Corp. v. 
Sowell, 933 F.2d 1561, 1566 (11th Cir. 1991) (black lung ``can lie 
essentially dormant in the body for many years after an employee has 
left his employment before progressing to the point where [it] is 
disabling''); Curse v. Director, OWCP, 843 F.2d 456, 457 (11th Cir. 
1988) (recognizing black lung disease develops slowly and 
progressively); Doss v. Califano, 598 F.2d 419, 421 (11th Cir. 1979) 
(``pneumoconiosis is a progressive disease''); but see Zeigler Coal Co. 
v. Lemon, 23 F.3d 1235, 1238 (7th Cir. 1994) (chastising an 
administrative law judge for assuming that pneumoconiosis is 
progressive without any evidence in the record to support the 
assumption).
    Although one commenter asserts that the regulation creates an 
irrebuttable presumption that each miner's condition is progressive, it 
actually does no such thing. As revised, Sec. 725.309 simply 
effectuates the current one-element test adopted by a substantial 
number of federal appellate courts and most recently the Benefits 
Review Board, Allen v. Mead Corp., ____ Black Lung Rep. (MB) ____, BRB 
No. 99-0474 BLA (May 31, 2000). The one-element test allows a miner who 
demonstrates a material change in one of the conditions of entitlement 
previously decided against him to avoid an automatic bar on 
establishing his current entitlement to benefits. To the extent that 
the commenter would require each miner to submit scientific evidence 
establishing that the change in his specific condition represents 
latent, progressive pneumoconiosis, the Department disagrees and has 
therefore not imposed such an evidentiary burden on claimants. Rather, 
the miner continues to bear the burden of establishing all of the 
statutory elements of entitlement, except to the extent that he is 
aided by two statutory presumptions, 30 U.S.C. 921(c)(1) and (c)(3). 
The revised regulation continues to afford coal mine operators an 
opportunity to introduce contrary evidence weighing against 
entitlement.
    (c) One comment submitted in connection with the first notice of 
proposed rulemaking, and cited by another comment submitted in 
connection with the second notice of proposed rulemaking, suggests that 
the Department's proposed revision would compensate the 15 to 20 
percent of cigarette smokers who develop chronic airway obstruction if 
they spent 10 years or more in the coal mining industry. The Department 
does not agree that the possibility that miners will suffer reduced 
pulmonary function as a result of cigarette smoking justifies the 
automatic denial of additional claims by miners under Sec. 725.309. In 
addition, the previously cited study by Dimich-Ward and Bates 
documented the progressive decrement in lung function among both miners 
who smoked and those who did not. Dimich-Ward H, Bates DV, ``Reanalysis 
of a longitudinal study of pulmonary function in coal miners in 
Lorraine, France,'' Am J Ind Med, 25:613-623 (1994), see also 62 FR 
3344 (Jan. 22, 1997). The Department accordingly believes that a miner 
who files his first claim before he is truly totally disabled, but 
later becomes totally disabled, must be afforded an opportunity to 
establish that his condition is related to his coal mine employment. 
Under Sec. 718.204, the miner continues to bear the burden of proving 
this element of his entitlement. To the extent that a coal mine 
operator produces medical evidence demonstrating that the miner's total 
disability is due solely to cigarette smoking, that evidence would also 
be relevant to the inquiry under Sec. 718.204.
    (d) A number of comments argue that Sec. 725.309 violates accepted 
principles of claim preclusion and issue preclusion, particularly with 
respect to the treatment of additional claims filed by miners' 
survivors. The Department disagrees. In its initial proposal, the 
Department explained that its additional filing rules gave full effect 
to the principles of claim preclusion but that the applicability of 
these principles was limited in two important respects: (1) The liberal 
reopening provision created by Congress under Sec. 22 of the Longshore 
and Harbor Workers' Compensation Act, 33 U.S.C. 922, incorporated into 
the Black Lung Benefits Act by 30 U.S.C. 932(a); and (2) the 
recognition that an individual's eligibility for workers' compensation 
benefits is not fixed at a single time, but, especially with respect to 
occupational diseases, may be subject to relitigation even if the 
worker's first claim is denied. 62 FR 3352 (Jan. 22, 1997). Under these 
principles, and subject to the limitation that the party must have a 
full and fair opportunity to litigate its position, Kremer v. Chemical 
Constr. Corp., 456 U.S. 461, 481 n. 22 (1982), a final adjudication of 
the merits of a cause of action will preclude the parties from 
relitigating issues that were or could have been raised in the first 
proceeding. Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 476 
(1998), citing Federated Department Stores, Inc. v. Moitie, 452 U.S. 
394, 398 (1981).
    Section 725.309 applies these principles to the adjudication of 
black lung benefits claims. For example, if the sole basis for denying 
a miner's claim is a finding on an issue that is not subject to change, 
and that the miner had an opportunity to fully and fairly litigate, a 
subsequent claim by the miner must also be denied. Thus, where the 
first claim was denied solely on the grounds that the applicant did not 
work as a miner, and he does not allege that he engaged in any 
additional coal mine employment since he filed that application, his 
second claim must be denied as well. Where the issue is subject to 
change, however, neither claim preclusion principles nor

[[Page 79973]]

Sec. 725.309 bars the litigation of the miner's additional claim. For 
example, where the original denial was based on the miner's failure to 
establish that his respiratory impairment was totally disabling, and 
new evidence establishes that that condition has worsened, the miner 
should not be barred from prosecuting a second application for 
benefits.
    The regulation gives similar treatment to cases involving miners' 
survivors. Where a previous survivor's claim was denied solely on the 
basis that the survivor did not prove that the miner died due to 
pneumoconiosis, an element not subject to change, the survivor may be 
barred from litigating another claim filed more than one year after the 
denial of the first one. The Department does not agree, however, with 
the commenters' suggestion that none of the elements of a survivor's 
claim is subject to change. In the case of a miner's survivor, for 
example, the Secretary's regulations recognize, consistent with 
Departmental practice, court of appeals precedent, and applicable 
Social Security law, that although a miner's survivor who remarries is 
not then eligible for benefits, she may become re-entitled to benefits 
if that marriage ends. See preamble to Sec. 725.213. Section 725.309 
recognizes this possibility by allowing a miner's survivor to litigate 
a second claim where one of the grounds on which the first claim was 
denied, e.g., that the survivor was married, is subject to change.
    Moreover, Sec. 725.309 incorporates two other limitations which are 
accepted components of traditional claim preclusion. First, where none 
of the elements is subject to change, and denial by virtue of claim 
preclusion is appropriate under Sec. 725.309, the regulation requires 
the party defending the claim to specifically plead that doctrine. The 
Supreme Court has observed that ``[c]laim preclusion (res judicata), as 
Rule 8(c) of the Federal Rules of Civil Procedure makes clear, is an 
affirmative defense.'' Rivet, 522 U.S. at 476. Section 725.309 
similarly requires an operator seeking the denial of an additional 
survivor's claim by virtue of preclusion to raise that issue at the 
appropriate time. Like traditional claim preclusion, Sec. 725.309 
offers the party defending the cause of action an affirmative defense 
that is subject to waiver if not properly and timely raised. See, e.g., 
Garry v. Geils, 82 F.3d 1362, 1367 n. 8 (7th Cir.1996).
    Second, claim preclusion is inappropriate even in traditional civil 
litigation where the party against whom the defense is invoked was not 
able to fully litigate those issues which the defendant now seeks to 
bar. Kremer, 456 U.S. at 481 n. 22. For example, this issue would arise 
if the administrative law judge adjudicating the survivor's first claim 
found that the survivor's remarriage barred her entitlement, and 
alternatively concluded that the miner did not die due to 
pneumoconiosis. In that case, the survivor could not have overturned 
the adverse finding on the cause of the miner's death because she would 
not have been able to avoid the prohibition on the eligibility of 
remarried widows. Accordingly, she could not be said to have had a full 
and fair opportunity to litigate the issue of the cause of the miner's 
death. In these circumstances, neither ordinary principles of claims 
preclusion nor Sec. 725.309 would preclude her from litigating her 
entitlement to benefits in a subsequent claim.
    Similarly, the Department's application of claim preclusion to 
additional claims contains an exception based on the absence of an 
opportunity to fully and fairly litigate the issues in a previous 
proceeding. As the Department explained in its second notice of 
proposed rulemaking, where one of the applicable conditions of 
entitlement has changed, e.g., where the miner has become totally 
disabled or a survivor has ended her second marriage, neither the party 
defending against the claim--the coal mine operator or the Trust Fund--
nor the claimant is entitled to rely on findings made in connection 
with the denial of an earlier claim for benefits. 64 FR 54985 (Oct. 8, 
1999). One commenter's suggestion that an administrative law judge's 
determination in the original proceeding that an X-ray is not worthy of 
credit precludes any further litigation of that issue in a subsequent 
proceeding simply reflects a misunderstanding of the tenets of issue 
preclusion. Where that finding was not essential to the original denial 
of benefits, because the ALJ ultimately denied benefits on another 
basis, or used alternative bases, issue preclusion would not prevent a 
second factfinder from making a different finding, based on his 
independent weighing of the evidence, in connection with an additional 
claim.
    (e) One comment opposes the revised version of Sec. 725.309, 
suggesting it represents a revised application of the common law 
concept of claim preclusion to adjudications under the Act. In fact, 
however, with one exception in the case of survivors' entitlement, the 
revised version of section 725.309 functions no differently than the 
former regulation with respect to this common law doctrine. As the 
Department observed in its initial proposal, its ``one-element'' rule, 
allowing a miner to avoid claim preclusion by establishing one of the 
conditions of entitlement decided against him in the previous 
adjudication, derives from a series of appellate decisions adopting the 
Department's interpretation of the former regulation. See 62 FR 3351 
(Jan. 22, 1997); see also 64 FR 54984 (Oct. 8, 1999). The provision 
requiring the denial of survivors' claims is also substantially the 
same as the former rule. Like the revised version, the former rule was 
subject to waiver just as any other affirmative defense would be under 
common law. See Clark v. Director, OWCP, 838 F.2d 197, 200 (6th Cir. 
1988) (permitting the Director to waive reliance on section 725.309). 
The provision governing additional survivors' claims has been altered 
only in order to accommodate revisions to section 725.213, which will 
explicitly permit a remarried survivor to establish her entitlement to 
benefits upon ending her marriage. Accordingly, the Department does not 
agree that it has substantially revised the applicability of the common 
law doctrine of claim preclusion under the Black Lung Benefits Act.
    (f) One comment argues that the one-element test codified by the 
revised regulation violates the principles of issue preclusion. The 
commenter suggests that an X-ray that is found not to be credible in an 
earlier adjudication may not be credited in a subsequent adjudication. 
Common law principles of issue preclusion, however, do not require such 
a result. Instead, once a claimant has submitted new evidence in order 
to establish one of the elements of entitlement previously resolved 
against him, an administrative law judge must conduct a de novo 
weighing of the evidence relevant to the remaining elements, regardless 
of whether any of that evidence is newly submitted. The Court of 
Appeals for the Seventh Circuit discussed this issue at length in 
Peabody Coal Co. v. Spese, 117 F.3d 1001 (7th Cir. 1997) (en banc). It 
held as follows:

    The law of preclusion also bars relitigation of issues between 
the same parties when those issues were actually litigated and 
necessary to the decision of the earlier tribunal. See Astoria Fed. 
Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107, 111 S.Ct. 2166, 
2169, 115 L.Ed.2d 96 (1991) (preclusion applies to administrative 
agency acting in judicial capacity to resolve fact issues properly 
before it); United States v. Wyatt, 102 F.3d 241, 245 n. 5 (7th Cir. 
1996), cert. denied, __ U.S. __, 117 S.Ct. 1325, 137 L.Ed.2d 486 
(1997); Waid v. Merrill Area

[[Page 79974]]

Public Schools, 91 F.3d 857, 866 (7th Cir. 1996) (state agency 
hearing). * * *
* * * * *
    [The Fourth Circuit, in Lisa Lee Mines v. Director, OWCP, 86 
F.3d 1358 (4th Cir. 1996) (en banc), cert. denied, 519 U.S. 1090 
(1997)] pointed out, correctly, that a claimant who loses on three 
possible alternate grounds has no incentive to take an appeal to 
``correct'' the agency on grounds 2 and 3, even if he thinks there 
was error, if ground 1 is unassailable. Assuming that the passage of 
time has led to a material change in ground 1 and he can demonstrate 
this to the Director, the question is whether he should be barred 
from proceeding on a new claim just because he has not also 
developed new evidence to negate grounds 2 and 3. Under the 
Director's ``one-element'' approach, as endorsed by the Fourth 
Circuit and others, * * * the answer is no. This answer is 
consistent with general principles of issue preclusion, under which 
holdings in the alternative, either of which would independently be 
sufficient to support a result, are not conclusive in subsequent 
litigation with respect to either issue standing alone. See Lisa Lee 
Mines, 86 F.3d at 1363, citing Restatement (Second) of Judgments 
Sec. 27, comment i (1982); Comair Rotron, Inc. v. Nippon Densan 
Corp., 49 F.3d 1535, 1538 (Fed. Cir. 1995) (issue on which 
preclusion is sought must have clearly been necessary to judgment); 
Baker Elec. Co-op., Inc. v. Chaske, 28 F.3d 1466, 1475 (8th Cir. 
1994); Gelb v. Royal Globe Insur. Co., 798 F.2d 38, 45 n. 6 (2d Cir. 
1986).
117 F.3d at 1008.

    The commenter's example, an X-ray that is found not to be credible 
in the previous adjudication, illustrates the operation of the 
regulation. If the prior claim was denied solely on the basis that the 
miner failed to establish the existence of pneumoconiosis, the 
commenter's concern about a re-weighing of the X-ray evidence submitted 
in the prior adjudication is simply unfounded. Because this was the 
only issue resolved against the claimant, he must introduce new 
evidence that demonstrates the existence of the disease if he is to 
avoid an automatic denial of an additional claim. Consequently, the 
factfinder may not award benefits simply by redetermining the 
credibility of the earlier evidence. In most cases, however, the denial 
of the prior claim will rest on multiple findings. For example, an 
administrative law judge may conclude that the claimant has not 
established either that he suffers from pneumoconiosis or that he 
suffers from a totally disabling respiratory impairment. In such a 
case, the Department's regulation, consistent with the principles of 
issue preclusion set forth in Spese, requires that the claimant submit 
new evidence relevant only to one of the issues. If he submits new 
evidence that establishes his total disability, the factfinder must 
weigh the X-ray evidence de novo. Far from contravening accepted 
principles of issue preclusion, the Department's regulation gives those 
principles full force and effect. The commenter's suggestion, that a 
party must be bound by a credibility determination that it was unable 
to overturn on appeal, turns those principles on their head.
    (g) One comment suggests that the Department would breach its 
fiduciary duty to the Black Lung Disability Trust Fund in any case in 
which it affirmatively waived its right to rely on the automatic denial 
of an additional survivor's claim. The Department's obligation to the 
Trust Fund is to ensure that the Fund not be required to pay non-
meritorious claims, i.e., that the Trust Fund does not pay benefits to 
individuals who do not meet the statutory eligibility criteria. Where 
appropriate, the Department will invoke the automatic denial provision 
in order to reduce the transaction costs that the Fund would incur in 
defending a non-meritorious survivor's claim. The Department does not 
believe, however, that it is obligated to invoke claim preclusion in 
order to bar a claim in which a surviving spouse meets all of the 
conditions of entitlement and simply erred in filing a first 
application while remarried.
    (h) One comment suggests that the Department should penalize 
individuals who file an additional claim without a change in condition. 
The Department disagrees. In its second notice of proposed rulemaking, 
the Department announced its desire to reduce the costs associated with 
non-meritorious claims by providing applicants with a more realistic 
view of their possible entitlement based on better pulmonary 
evaluations and better reasoned explanations of the denials of their 
claims. 64 FR 54968, 54984 (Oct. 8, 1999). The Department also 
explained, however, that it did not believe that it was appropriate to 
penalize an applicant simply because he had filed a previous claim for 
benefits prematurely. Id. The complete pulmonary evaluation provided by 
the Department includes difficult tests, and the Department does not 
believe that a miner would deliberately subject himself to that testing 
if he did not truly believe that he met the Act's eligibility criteria. 
Moreover, preventing a miner from filing an additional claim merely on 
the grounds that a previous additional claim was denied may result in 
the denial of benefits to individuals who meet the Act's eligibility 
requirements. Even requiring miners to wait an additional period of 
time between additional claims would involve similar risks. The average 
applicant for benefits is over 60 years old, and any delay in the 
receipt of benefits may effectively deny them the right to receive 
benefits and appropriate medical treatment. Accordingly, the Department 
does not intend to ``penalize'' individuals who file unsuccessful 
subsequent claims.
    (i) A number of comments object that the revisions encourage the 
repeated relitigation of cases without Congressional authority. The 
Department has previously explained that section 725.309 does not allow 
the relitigation of denied claims. 64 FR 54968, 54984-85 (Oct. 8, 
1999). Once a claim has been denied, and the one-year time period for 
modification has passed, a claimant cannot thereafter seek to have that 
claim reopened. Even if he prevails on a subsequent claim, the miner 
will be unable to obtain benefits for any period prior to the date on 
which the earlier denial became final. Thus, rather than encouraging 
repeated relitigation, the Department is simply effectuating 
Congressional intent that miners who are totally disabled due to 
pneumoconiosis receive compensation for their injury. Additional or 
subsequent claims must be allowed in light of the latent, progressive 
nature of pneumoconiosis. Thus, the additional claim is a different 
case, with different facts (if the claimant is correct that his 
condition has progressed). There is no indication that Congress 
intended to deny a miner benefits, or otherwise penalize him, for 
erroneously filing an application before his disease had progressed to 
the point of total disability.
    Moreover, as the Department explained in its second notice of 
proposed rulemaking, the revised version of Sec. 725.309 does not have 
a reopening effect equivalent to that of H.R. 2108. 64 FR 54972 (Oct. 
8, 1999). The House of Representatives passed H.R. 2108 in 1994, but 
the Senate adjourned without taking action on the legislation. If 
enacted, the bill would have required the de novo consideration of any 
claim filed on or after January 1, 1982, without regard to any earlier 
denials. The Department's regulation does not have that effect. It 
simply codifies the Department's former rule, as interpreted by the 
appellate courts, and provides procedures to be followed upon the 
filing of an additional claim covering later periods of alleged benefit 
entitlement. Accordingly, the Department is not authorizing the 
reopening or relitigation of claims in excess of Congressional 
authority. In addition, as the Department has previously explained, 
Congress' failure to enact legislation governing additional claims does 
not prevent the Department

[[Page 79975]]

from promulgating regulations on that subject as long as the 
regulations are issued pursuant to an appropriate grant of statutory 
authority. Ibid.
    (j) One comment suggests that the Black Lung Disability Trust Fund 
should be liable for the payment of any subsequent claims that are 
approved. The commenter states that imposing the liability for these 
claims on the insurance industry is fundamentally unfair. The 
Department disagrees. As revised, section 725.309 does not alter the 
adjudication of additional claims in any substantive manner. Since 
1978, section 725.309 has recognized the need for allowing additional 
claims and provided the conditions under which such claims could be 
approved. As the Department has repeatedly emphasized, the revised 
regulation simply effectuates the gloss given this regulation by the 
federal courts of appeals. The Department recognizes that additional 
claims filed after the effective date of these regulatory revisions 
will be adjudicated under new procedural rules, and under regulations 
that clarify the entitlement criteria in Part 718 in a manner 
consistent with appellate interpretations of the existing criteria. The 
insurance policies purchased by coal mine operators to secure their 
liability under the Black Lung Benefits Act require the insurer to 
assume the risk of adverse appellate court interpretations of the 
statute and regulations as well as the possibility of revision of the 
statutory criteria. See 20 CFR 726.203(b) (1999) (insurance 
endorsement). Accordingly, the Department does not agree that the 
insurance industry is entitled to relief from the effect of revising 
Sec. 725.309.
    (k) A number of comments voice their approval of the changes in the 
Department's second notice of proposed rulemaking. No other comments 
have been received concerning this section and no other changes have 
been made to it.

20 CFR 725.310

    (a) In its first notice of proposed rulemaking, the Department 
proposed amending subsection (b) to limit the documentary medical 
evidence that parties are entitled to submit in connection with a 
request for modification. 62 FR 3353 (Jan. 22, 1997). The Department 
amended subsection (c) to reconcile a number of appellate decisions 
concerning the district director's ability to conduct modification 
proceedings under the Black Lung Benefits Act and to ensure that any 
party requesting modification receives a de novo adjudication of the 
existing evidence of record. The Department also revised subsection (d) 
with the stated purpose of prohibiting the recovery, by either the 
Trust Fund or a responsible operator, of benefits paid pursuant to a 
final award of benefits that is later modified. In its second notice of 
proposed rulemaking, the Department added two provisions to subsection 
(d). The first would allow the recovery of any benefits that were paid 
when the claimant was at fault in creating the overpayment. The second 
provision implemented the Department's intention to bar recovery of 
overpayments arising from modification of awards where the award was 
final before initiation of the modification proceedings. 64 FR 54985-86 
(Oct. 8, 1999). In addition, the Department proposed revising the 
evidentiary limitation in subsection (b) to correspond to similar 
changes in Sec. 725.414. Finally, the Department responded to comments 
addressing the responsibility of factfinders to reweigh the evidence of 
record on modification, and the district director's authority to 
initiate modification in responsible operator cases.
    (b) One comment argues that the Department's proposed regulation 
destroys the effect of claim preclusion and issue preclusion, while 
another comment suggests that the revised regulation would allow an 
adjudicator simply to reweigh the evidence of record and reach a 
conclusion different from the one reached before. Both observations are 
correct, and both outcomes are mandated by the statutory language that 
the regulation implements, 33 U.S.C. 922, incorporated into the Black 
Lung Benefits Act by 30 U.S.C. 932(a). In Banks v. Chicago Grain 
Trimmers Association, 390 U.S. 459 (1968), the Supreme Court reversed 
an appellate court's holding that a claimant's modification request was 
barred by res judicata, or claim preclusion. Instead, the Court held 
that the statute clearly authorized reopening compensation awards in 
order to correct factual errors. In O'Keeffe v. Aerojet-General 
Shipyards, Inc., 404 U.S. 254, 255 (1972), the Court held that a 
factfinder was authorized to grant modification under section 22 
``merely on further reflection on the evidence initially submitted.'' 
See also Betty B Coal Co. v. Director, OWCP (Stanley), 194 F.3d 491, 
497 (4th Cir. 1999) (modification procedure is extraordinarily broad, 
especially insofar as it permits the correction of mistaken factual 
findings); The Youghiogheny & Ohio Coal Co. v. Milliken, 200 F.3d 942, 
954 (6th Cir. 1999) (ALJ has the authority on modification simply to 
rethink his conclusions). One commenter also objects that the 
regulation would prohibit an administrative law judge from simply 
denying a modification request based on the claimant's failure to 
present additional evidence. In its second notice of proposed 
rulemaking, the Department observed that the Supreme Court's O'Keeffe 
decision requires this result. 64 FR 54986 (Oct. 8, 1999). Accordingly, 
the commenters' observations do not provide a basis for altering the 
Department's proposal.
    (c) Two comments renew the argument that the Department should not 
be able to initiate modification in responsible operator cases. The 
Department responded to a similar comment in its second notice of 
proposed rulemaking by citing the clear statutory language providing 
the district director with the independent authority to initiate 
modification. (``Upon his own initiative, * * *, on the ground of a 
change in conditions or because of a mistake in a determination of fact 
* * * the deputy commissioner may * * * issue a new compensation order. 
* * * 33 U.S.C. 922(a), as incorporated by 30 U.S.C. 932(a)). The 
Department also observed that there were awarded cases in which a coal 
mine operator is nominally liable for the payment of benefits but, 
because of bankruptcy, dissolution, or other events, can no longer pay. 
In such cases, the Department noted the district director's need to 
exercise his modification authority. 64 FR 54986 (Oct. 8, 1999). In 
response, one commenter requests that the Department limit its 
authority to initiate modification to those specific cases involving 
operator bankruptcy. The Department declines to do so. The district 
director's initiation of modification in any case, whether the 
defendant is a responsible operator or the Trust Fund, is consistent 
with Congress's intent. Congress has included in the Black Lung 
Benefits Act section 22 of the Longshore and Harbor Workers' 
Compensation Act, a workers' compensation program in which the 
overwhelming majority of cases represent disputes between an employee 
and his private employer. Thus, Congress clearly contemplated that the 
district director would exercise his modification authority in cases 
involving private employers. The examples provided by the Department in 
its second notice of proposed rulemaking were not intended to be an 
exclusive listing of the circumstances in which a district director 
would be justified in initiating modification in a responsible operator 
case. Because the

[[Page 79976]]

Department does not believe it can readily identify all of the 
circumstances in which district director-initiated modification would 
be appropriate, it does not intend to limit the district director's 
discretion in the initiation of modification proceedings.
    (d) One comment argues that an operator seeking to modify a 
benefits award should not be able to obtain new pulmonary testing, but 
should instead be limited to the report of one consultant. The 
commenter also argues, however, that miners should be able to submit 
the results of additional testing in support of a modification petition 
seeking to change a denial of benefits to an award. The Department does 
not agree that opposing parties should be governed by different 
evidentiary rules. One of the Department's goals in proposing a 
limitation on the submission of documentary medical evidence, as 
reflected in Sec. 725.414 and Sec. 725.310, is to ensure that claimant 
and the responsible operator have an equal opportunity to present the 
highest quality evidence to the factfinder. That goal would not be 
served by creating an evidentiary advantage for a claimant who requests 
modification of a denial of benefits. In such cases, both the claimant 
and the responsible operator, or Trust Fund in appropriate cases, will 
be entitled to submit one medical report, and associated testing, as 
well as appropriate rebuttal evidence, as outlined in the Department's 
second notice of proposed rulemaking.
    (e) One comment argues that in light of the evidentiary limitations 
imposed by section 725.310 and 725.408, an operator will be deprived of 
its ability to seek modification of an erroneous responsible operator 
determination that is discovered after the hearing. The Department 
disagrees that the regulations will always prevent an operator from 
seeking modification of a responsible operator determination based on 
newly discovered evidence. It is true, however, that the regulations 
limit the types of additional evidence that may be submitted on 
modification and, as a result, an operator will not always be able to 
submit new evidence to demonstrate that it is not a potentially liable 
operator.
    The Department explained in its previous notices of proposed 
rulemaking that the evidentiary limitations of Secs. 725.408 and 
725.414 are designed to provide the district director with all of the 
documentary evidence relevant to the determination of the responsible 
operator liable for the payment of benefits. The regulations recognize, 
and accord different treatment to, two types of evidence: (1) 
Documentary evidence relevant to an operator's identification as a 
potentially liable operator, governed by Sec. 725.408; and (2) 
documentary evidence relevant to the identity of the responsible 
operator, governed by Sec. 725.414 and 725.456(b)(1). Under section 
725.408, a coal mine operator that has been identified as a potentially 
liable operator by the district director with respect to a particular 
claim for benefits must contest that identification within 30 days of 
the date on which it receives that notification, and must submit 
certain evidence within 90 days of receipt of notification. 
Sec. 725.408(a), (b). The specific issues on which the operator must 
submit all of its documentary evidence within this 90-day period 
include whether the operator was an operator after June 30, 1973; 
whether it employed the miner for a cumulative period of not less than 
one year; whether the miner was exposed to coal mine dust while working 
for the operator; whether the operator employed the miner for at least 
one day after December 31, 1969; and whether the operator is 
financially capable of assuming liability for the payment of benefits. 
The time period for submitting this evidence may be extended for good 
cause, Sec. 725.423, but the operator may not thereafter submit any 
further documentary evidence on these issues. Sec. 725.408(b)(2).
    Sections 725.414 and 725.456(b)(1) govern the remaining documentary 
evidence relevant to the liability issue, i.e., evidence relevant to 
which of the miner's former employers is the responsible operator 
according to the criteria set forth in Sec. 725.495. Under 
Sec. 725.414, an operator may submit documentary evidence to prove that 
a company that more recently employed the miner should be the 
responsible operator. This evidence must be submitted to the district 
director in accordance with a schedule to be established by the 
district director. Sec. 725.410. Additional documentary evidence may be 
submitted only upon a showing of extraordinary circumstances. 
Sec. 725.456(b)(1).
    The operator's ability to seek modification based on additional 
documentary evidence will thus depend on the type of evidence that it 
seeks to submit. Where the evidence is relevant to the designation of 
the responsible operator, it may be submitted in a modification 
proceeding if extraordinary circumstances exist that prevented the 
operator from submitting the evidence earlier. For example, assume that 
the miner's most recent employer conceals evidence that establishes 
that it employed the miner for over a year, and that as a result an 
earlier employer is designated the responsible operator. If that 
earlier employer discovers the evidence after the award becomes final, 
it would be able to demonstrate that extraordinary circumstances 
justify the admission of the evidence in a modification proceeding.
    That same showing, however, will not justify the admission of 
evidence relevant to the employer's own employment of the claimant. 
Under Sec. 725.408, all documentary evidence pertaining to the 
employer's employment of the claimant and its status as a financially 
capable operator must be submitted to the district director. The 
comment appears to suggest that there will be cases in which an 
operator discovers evidence bearing on its own employment of the miner 
after the period for submitting evidence has closed. The Department 
does not believe that there are extraordinary circumstances sufficient 
to justify the admission of this evidence in any further proceedings. 
The evidence in question is within the control of the operator notified 
by the district director or, where an insurance company is the real 
party-in-interest, in the control of a party with whom that insurer has 
contracted to provide necessary coverage. The time period set forth in 
section 725.408 is adequate to permit a full investigation and 
development of this evidence. If the operator or insurer is unable to 
locate the evidence within that period, it should seek an extension of 
time from the district director.
    A party's ability to seek reconsideration under Sec. 22 of the 
Longshore and Harbor Workers' Compensation Act is subject to the 
limitation that reconsideration must `` `render justice under the Act.' 
'' McCord v. Cephas, 532 F.2d 1377, 1380-81 (D.C. Cir. 1976). In 
McCord, an employer declined to supply evidence and participate in the 
initial adjudication of the claimant's application for benefits under 
the Longshore and Harbor Workers' Compensation Act. After the award 
became final, the employer sought reconsideration. The D.C. Circuit 
held that although the adjudication officer had jurisdiction to 
consider the employer's request, his consideration should take the 
interests of justice into account. See also General Dynamics Corp. v. 
Director, OWCP, 673 F.2d 23, 25 (1st Cir. 1982). In order to properly 
administer the Black Lung Benefits Act in accordance with this 
expression of Congressional intent, S.Rep. No. 588, 73d Cong., 2d 
Sess., 3-4 (1934); H.R.Rep. No. 1244, 73d Cong., 2d Sess.,

[[Page 79977]]

4 (1934), the Department has balanced the desire of operators to 
request modification against the Department's interest in ensuring that 
potentially liable operators submit all of the evidence relevant to 
their employment of the miner while the claim is first pending before 
the district director. The Department believes that it is appropriate 
to prohibit an operator's ability to introduce, in a modification 
proceeding, ``new'' evidence relevant to the operator's employment of 
the miner or the operator's status as a financially capable operator.
    (f) One comment argues that the Department has not taken sufficient 
steps to prevent the misuse of modification by claimants who file 
repeated modification petitions. The commenter has supplied no 
information that suggests there is a widespread problem involving the 
filing of non-meritorious modification petitions by claimants. Like 
operators, claimants may only obtain such reconsideration as will 
render justice under the Act, and operators remain free to assert, on a 
case-by-case basis, that the application of this standard requires a 
denial of a claimant's request for modification. The Department does 
not believe, however, that it should establish numerical or temporal 
limitations (e.g., limiting claimants to a maximum number of 
modification requests, or no more than a certain number in a given time 
period) on a claimant's right to seek modification. Congress's 
overriding concern in enacting the Black Lung Benefits Act was to 
ensure that miners who are totally disabled due to pneumoconiosis 
arising out of coal mine employment, and the survivors of miners who 
die due to pneumoconiosis, receive compensation. Because any limitation 
on the right to file modification petitions could deny, or delay, the 
payment of compensation to eligible claimants, the Department does not 
believe that such limitations are appropriate.
    (g) One comment suggests that the proposal authorizes claimants to 
petition for modification in order to avoid the repayment of an 
overpayment. The Department does not believe that the regulation 
addresses this situation. The Department's current practice, in cases 
in which payments from the Black Lung Disability Trust Fund have been 
made based on the district director's initial determination, and 
benefits have subsequently been denied by a higher tribunal, has been 
to suspend the collection of any potential overpayment if that denial 
has been appealed further. The Department currently permits its 
district directors to exercise discretion as to whether to suspend 
collection where the original denial has become final and the claimant 
has filed a request for modification. For example, in cases where the 
request is based solely on a change in the miner's condition, a 
district director could reasonably conclude that the overpayment of 
benefits for a period prior to that change should not be suspended. In 
both former Sec. 725.547(c) and new Sec. 725.549(a), district directors 
are permitted to ``issue appropriate orders to protect the rights of 
the parties.'' The Department anticipates that any disputes over the 
collection of overpayments will be resolved under that provision. 
Accordingly, there is no need to address the collection of overpayments 
in the regulation governing modification.
    (h) No other comments have been received concerning this section, 
and no other changes have been made to it.

20 CFR 725.311

    (a) The Department proposed revising Sec. 725.311 in its first 
notice of proposed rulemaking in order to remove the rule allowing 
parties an additional 7 days within which to respond to a document that 
is sent by mail, and to add the birthday of Martin Luther King, Jr., to 
the list of legal holidays contained in the regulation. 62 FR 3354 
(Jan. 22, 1997). The Department also sought to resolve a split between 
the Courts of Appeals for the Fourth and Tenth Circuits governing the 
time period for responding to a document which was supposed to be 
served by certified mail but was not. Compare Dominion Coal Corp. v. 
Honaker, 33 F.3d 401, 404 (4th Cir. 1994) with Big Horn Coal Co. v. 
Director, OWCP, 55 F.3d 545, 550 (10th Cir. 1995). In a case in which 
the party actually received the document, notwithstanding improper 
service, the rule would commence the time period for response upon a 
party's actual receipt of the document. The Department did not address 
this regulation in its second notice of proposed rulemaking. See list 
of Changes in the Department's Second Proposal, 64 FR 54971 (Oct. 8, 
1999).
    (b) One comment objects to deletion of the seven-day grace period, 
formerly applicable to all documents sent by mail, arguing that the 
Department has no good reason to eliminate it. The commenter also 
suggests that, if the grace period is not replaced with something else, 
the regulation will cause unnecessary litigation over deadlines and the 
unnecessary deprivation of the parties' rights.
    When the Department first proposed section 725.311, see 43 FR 
17743-44 (April 25, 1978), the regulation contained a three-day mailing 
rule which paralleled the rule in the Federal Rules of Civil Procedure. 
Compare Fed. R. Civ. P. 6(e). In the final rule, the Department changed 
the time period to seven days ``[i]n view of the difficulties 
encountered in mail deliveries in many rural coal mining areas.'' 43 FR 
36786 (Aug. 18, 1978). The Department's experience in administering the 
black lung benefits program, however, has suggested that the grace 
period contained in the former regulation was a source of confusion for 
the parties as well as for the district directors. For example, it 
could be argued that the former regulation added an additional seven 
days to the one-year time limit for filing a modification petition, or 
the 30-day time limit for filing a response to a proposed decision and 
order. The federal rule has engendered similar litigation. See, e.g., 
FHC Equities v. MBL Life Assurance Corp., 188 F.3d 678, 681-82 (6th 
Cir. 1997) (rule does not apply to time periods that begin with entry 
of an order or judgment).
    Accordingly, the Department has eliminated the seven-day grace 
period insofar as it formerly applied to all documents served by mail. 
The Department believes that, rather than increasing litigation, the 
revised regulation will provide the parties with more exact notice of 
when pleadings are due, and thus will reduce litigation over issues 
raised by the seven-day grace period. As a general rule, the analogy 
between the Department's black lung regulations and the federal rules 
is inexact. The federal rules govern the filing of a variety of 
pleadings, including responses to complex motions. Rule 6(e) attempts 
to ensure that a party receives the full amount of time--usually thirty 
days--allotted by the drafters of the rules for preparing a response. 
In contrast, the documents whose filing is governed by Part 725 are 
relatively straightforward and simple. They include responses to a 
schedule for the submission of evidence issued under Sec. 725.410, 
which will contain the district director's designation of the 
responsible operator, and a proposed decision and order issued under 
Sec. 725.418. The regulations require that a party do no more within 
the initial 30-day period following the issuance of these documents 
than indicate its agreement or disagreement with the assertions or 
findings contained in the document. The Department believes that this 
30-day time period, commencing with the date the document is sent, 
provides ample time for the parties' responses. Deleting the grace 
period

[[Page 79978]]

ensures that all parties to a claim, including claimants who are not 
represented by an attorney, are able to ascertain their response time 
from the date of a document.
    The Department recognizes that one of the filings governed by Part 
725 is more complex. Section 725.408 requires that an operator that has 
been identified by the district director of its status as a potentially 
liable operator must accept or contest that identification within 30 
days of the date on which it receives notification from the district 
director. That response requires the operator to address five specific 
assertions: that the operator was an operator after June 30, 1973; that 
the operator employed the miner for a cumulative period of not less 
than one year; that the miner was exposed to coal mine dust while 
working for the operator; that the miner's employment with the operator 
included at least one working day after December 31, 1969; and that the 
operator is capable of assuming liability for the payment of benefits. 
That response requires more investigation than the others in Part 725. 
In addition, unlike the other response times governed by Part 725, the 
operator's response does not begin to run on the date that the 
notification is mailed, but on the date that it is received. In order 
to ensure that operators have the full 30 days in which to file their 
responses, and to allow the Department to assess the timeliness of that 
response, the Department has added a sentence to subsection (d). This 
provision will allow the district director to presume, in the absence 
of evidence to the contrary, that the notice was received seven days 
after it was mailed.
    (c) One comment urges enlarging the number of communications which 
must be sent by certified mail to include several types of decisional 
documents issued by the district director. Specifically, the commenter 
suggests use of certified mail to serve the following documents: 
initial determination; proposed decision and order; decision on 
modification; denial by reason of abandonment; notice of conference; 
and memorandum of conference. The Department's revised regulations 
ensure that all important documents are served by certified mail. See 
proposed Sec. 725.407(b) notification of potentially liable operator, 
Sec. 725.409(b) (denial by reason of abandonment); Sec. 725.410(c) 
(evidentiary submission schedule); Sec. 725.418(b) (proposed decision 
and order). The revised regulations eliminate the district director's 
initial finding and memorandum of conference. The ``initial 
determination'' is a document, served on all the parties after the 
issuance of a proposed decision and order, requesting that the 
designated responsible operator commence the payment of benefits. It 
does not require a written response. 20 CFR 725.420 (1999). With 
respect to a case in which a petition for modification is being 
adjudicated, the district director may issue either a proposed decision 
and order or a denial by reason of abandonment at the conclusion of the 
proceedings; both of these documents must be served by certified mail. 
The Department believes the current requirements provide adequate 
protection for the parties, and therefore declines to add the notice of 
conference to the list of documents which must be served by certified 
mail. Section 724.416, governing the conduct of informal conferences, 
permits the imposition of sanctions only for a party's unexcused 
failure to attend. In the case of a claimant, the district director 
must offer the claimant an opportunity to explain why he did not appear 
at the conference. See Sec. 725.409(b). The Department believes that 
failure to receive the notice of conference would constitute an 
adequate explanation for a claimant's failure to appear. Similarly, any 
employer against whom the district director has imposed sanctions for 
an unexcused failure to appear at an informal conference may request 
reconsideration based on its failure to receive the required notice. 
Obviously, district directors may obviate the need for disputes over 
whether a party received the notice by sending it via certified mail.
    (d) Two comments urge the Department to afford a party either a 
rebuttable presumption or a conclusive finding of non-receipt of a 
document if it must be sent by certified mail, the party alleges a 
failure to receive it, and the Department cannot produce a signed 
return receipt. The recommended presumption is not necessary. In the 
foregoing circumstances, an allegation of non-receipt and absence of 
the signed return receipt is sufficient to impose on the Department the 
burden to prove by some other evidence that the individual received the 
document. The lack of the signed receipt itself, however, should not be 
conclusive if other circumstances demonstrate the individual actually 
received the document. The Department therefore declines to amend the 
proposal.
    (e) One comment argues that subsection (d) is inconsistent with 
existing law. The commenter believes subsection (d) requires the 
response time to commence upon service of the document rather than the 
date of actual receipt when a document is served in violation of the 
certified mail requirement. Subsection (d), however, states that the 
response time ``shall commence on the date the document was received.'' 
The provision is therefore clear that only actual receipt of a document 
served in violation of a certified mail requirement commences the 
recipient's time for response.
    (f) No other comments concerning this section were received, and no 
changes have been made in it.

Subpart D

20 CFR 725.351

    The Department made only technical changes to section 725.351 in 
its initial notice of proposed rulemaking, and the rule was not open 
for comment. See 62 FR 3340-41 (Jan. 22, 1997). In its second notice of 
proposed rulemaking, the Department proposed deleting the requirement 
in subsection (a)(3) that a district director must seek the approval of 
the Director, OWCP, before issuing a subpoena to compel the production 
of documents. 64 FR 54986-87 (Oct. 8, 1999). No comments were received 
concerning this section, and no changes have been made in it.

20 CFR 725.362

    In its initial notice of proposed rulemaking, the Department 
proposed revising section 725.362 in order to conform the regulation to 
the requirements of 5 U.S.C. 500(b), which allows an attorney to enter 
an appearance without submitting an authorization signed by the party 
he represents. The Department also proposed adding a requirement that a 
notice of appearance, whether by an attorney or by a lay 
representative, include the OWCP number of the claim. 62 FR 3354 (Jan. 
22, 1997). The Department did not discuss the rule in its second notice 
of proposed rulemaking. See list of Changes in the Department's Second 
Proposal, 64 FR 54971 (Oct. 8, 1999). No comments were received 
concerning this section, and no changes have been made in it.

20 CFR 725.365

    The Department received one comment relevant to Sec. 725.365. This 
section was not open for comment; it was repromulgated without 
alteration for the convenience of the reader. See 62 FR 3341 (Jan. 22, 
1997); 64 FR 54970 (Oct. 8, 1999). Therefore no changes are being made 
in it.

20 CFR 725.366

    The Department has received one comment relevant to Sec. 725.366. 
This

[[Page 79979]]

section had only technical revisions made to it and was not open for 
comment, see 62 FR 3341 (Jan. 22, 1997); 64 FR 54970 (Oct. 8, 1999). 
Therefore no changes are being made in it.

20 CFR 725.367

    (a) In its initial notice of proposed rulemaking, the Department 
proposed a number of revisions to clarify the application of section 28 
of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 928, 
as incorporated by 30 U.S.C. 932(a), and made relevant to adjudications 
under the Black Lung Benefits Act. 62 FR 3354 (Jan. 22, 1997). The 
regulation provided a non-exclusive list of instances in which an 
operator could be held liable for the payment of a claimant's 
attorney's fee, and recognized the Trust Fund's liability for fees by 
making it coextensive with that of a responsible operator. The 
Department proposed a substantial revision of this regulation in its 
second notice of proposed rulemaking. 64 FR 54987-88 (Oct. 8, 1999). 
Because the evidentiary limitations proposed by the Department make 
legal representation for claimants advisable at the earliest possible 
stage of claims adjudication, the Department revised the regulation to 
require operators or the Trust Fund to pay a reasonable fee for any 
necessary work done even if the work was performed prior to the date on 
which the operator controverted the claimant's entitlement to benefits. 
Thus, although the creation of an adversarial relationship and the 
ultimately successful prosecution of a claim were still necessary to 
trigger employer or fund liability for attorneys' fees, the date on 
which the adversarial relationship commenced no longer served as the 
starting point for such liability. The Department rejected comments 
suggesting that lay representatives should be entitled to collect fees 
from responsible coal mine operators or the fund. The Department also 
discussed the several appellate court decisions and their impact on 
responsible operator and fund liability for attorneys' fees.
    (b) The Department has revised the first sentence of subsection 
(a)(1) and the first sentence of subsection (a)(2) in order to reflect 
changes to Secs. 725.410 and 725.412. In place of the former initial 
finding, the district director will issue a schedule for the submission 
of additional evidence under Sec. 725.410. This schedule will include 
the district director's preliminary analysis of the medical evidence of 
record, and his designation of the responsible operator liable for the 
payment of benefits. Section 725.412 provides that, following receipt 
of the schedule, the designated responsible operator may file a 
statement accepting the claimant's entitlement to benefits. The 
operator may avoid any liability for attorneys' fees by filing this 
statement within 30 days of the issuance of the schedule. If it fails 
to do so, the responsible operator will be considered to have created 
an adversarial relationship between the operator and the claimant. If 
the district director exercises his authority under Sec. 725.415 or 
Sec. 725.417 to issue another schedule for the submission of additional 
evidence in order to designate a different operator as the responsible 
operator, and that operator is ultimately determined to be liable for 
the payment of benefits, that operator will be liable for the payment 
of attorneys' fees only if it fails to accept the claimant's 
entitlement within 30 days of the date upon which it is notified of its 
designation. In cases where there is no operator liable for the payment 
of benefits, the district director's issuance of a schedule for the 
submission of additional evidence will create the adversarial 
relationship between the Black Lung Disability Trust Fund and the 
claimant, such that the Trust Fund will be liable for attorneys' fees 
if the claim is successfully prosecuted. Similarly, in subsection 
(a)(4) the Department has deleted the reference to an operator's 
``notice of controversion'' contesting a claimant's request for an 
increase in the amount of benefits payable. As revised, the regulations 
do not require a specific notice of controversion to create the 
adversarial relationship between a claimant and an employer.
    The Department has also substituted the phrase ``reasonable fees 
for necessary services'' for the phrase ``fees for reasonable and 
necessary services'' in subsection (a), and has substituted the phrase 
word ``necessary'' for the word ``reasonable'' in subsections (a)(1)-
(5). The changes make the regulation consistent with Sec. 725.366(a). 
The previous wording was not intended to create a different test for 
gauging the need for an attorney's services, and the revision will 
eliminate any potential confusion.
    (c) Two comments argue that the Department's proposal violates the 
plain language of the incorporated provision of the Longshore and 
Harbor Workers' Compensation Act governing the payment of attorneys' 
fees. Specifically, they argue that section 28 permits employer 
liability for a claimant's attorney's fees only for services rendered 
after the employer controverts the applicant's eligibility for 
benefits. One of the commenters also cites the expectation, created by 
the statute, that a claimant is responsible for a portion of the fees 
owed to his attorney and specifically the fee for any service provided 
before the employer controverts the applicant's entitlement. The 
commenter suggests that, by removing that responsibility from the 
claimant, the Department has not properly implemented the statute.
    The Department does not agree that the revised regulation violates 
the plain language of the statute. The only court to have considered 
this issue is the Court of Appeals for the Fourth Circuit. In Kemp v. 
Newport News Shipbuilding and Dry Dock Co., 805 F.2d 1152 (4th Cir. 
1986), the court held that the LHWCA is ambiguous on the issue of 
whether an employer may be liable for attorneys' fees incurred by a 
claimant before the employer has controverted the claimant's 
entitlement. 805 F.2d at 1153. Instead, the statute provides only that 
an employer will be liable for attorneys' fees after it contests the 
applicant's entitlement, leaving unresolved the starting point of such 
liability. The court recently reiterated its interpretation of LHWCA 
Sec. 28 in Clinchfield Coal Co. v. Harris, 149 F.3d 307, 310-11 (4th 
Cir. 1998). In resolving statutory ambiguity through the regulatory 
process, the Department is entitled to select any reasonable 
interpretation that is consistent with Congressional intent. Chevron 
U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-3 
(1984).
    The Department is fundamentally altering the obligations of the 
parties at the district director level in a manner that will encourage 
claimants to consult with attorneys much earlier in the process. Among 
other things, the Department is limiting the quantity of medical 
evidence that all parties are entitled to submit. In addition, at the 
claimant's request, the Department will provide his treating physician 
with the test results obtained during the complete pulmonary evaluation 
authorized by section 413(b) of the Act, 30 U.S.C. 923(b). Because 
these revisions will require claimants to make critical decisions at 
the earliest stage of adjudication, the regulations must also encourage 
attorneys to represent claimants as early as possible. The Department 
hopes that claimants will receive advice when that advice is most 
helpful. Insurance carriers, who are primarily liable in cases in which 
they provide insurance to the responsible operator, as well as self-
insured operators, most commonly have the assistance of experienced 
attorneys and claims processing agents in the early

[[Page 79980]]

stages of claim development, and the Department believes that claimants 
should have comparable aid. Accordingly, the Department believes that 
it is justified in adopting a new interpretation as to the starting 
point of the employer's or the fund's liability for attorneys' fees.
    In addition, contrary to the suggestion of the commenter, the 
Department's proposal does not eliminate all instances in which a 
claimant may be responsible for his attorney's fees. Section 28(c), 33 
U.S.C. 928(c), states that ``[a]n approved attorney's fee, in cases in 
which the obligation to pay the fee is upon the claimant, may be made a 
lien upon the compensation due under an award.'' The commenter argues 
that a claimant will never be liable for attorneys' fees under the 
Department's proposal, and that the proposal thus contravenes the 
statutory language. The Department does have the authority to vary 
incorporated provisions of the Longshore Act for purposes of 
administering the Black Lung Benefits Act, see 30 U.S.C. 932(a). It has 
not done so in this case, however. Instead, the Department's regulation 
does contemplate that a claimant may be liable for an attorney's fee. 
20 CFR 725.365. For example, in any case in which the liable party, 
either the Trust Fund or the operator, accepts the claimant's 
entitlement prior to the expiration of the 30-day period in 
Sec. 725.412(b) but the claimant has nevertheless retained counsel who 
has performed services in connection with the claim, the prerequisite 
for shifting fee liability--the controversion of entitlement--has not 
been met. A similar case may arise where the operator initially 
designated the responsible operator by the district director fails to 
accept the claimant's eligibility, but the finally designated 
responsible operator does accept the claimant's eligibility. In such a 
case, the responsible operator would not be liable for the payment of 
the claimant's attorney's fee. Because the overwhelming majority of 
coal mine operators contest claimant eligibility at this stage, the 
Department does not expect this kind of case to arise often. In either 
case, however, the claimant remains responsible for any reasonable fees 
approved by the district director for necessary work performed in 
obtaining the award. Accordingly, the Department's revised attorney fee 
regulation does not violate any statutory command.
    (c) One comment observes that the Department's revisions would 
expand the availability and award of attorneys' fees, while another 
argues that the Department's provision may not be applied 
retroactively. It has consistently been the Department's position that 
before liability for a claimant's attorney's fee may shift to a 
responsible operator or the fund, there must be a controversion of 
entitlement sufficient to create an adversarial relationship followed 
by the successful prosecution of a claim. Nothing in this regulation 
alters that requirement. The Department does agree, however, that once 
these prerequisites are met, the revised regulation could result in the 
award of higher attorneys' fees. The Department believes that an 
increase in attorneys' fees is necessary in order to encourage earlier 
attorney involvement in the adjudicatory process, and that such 
involvement will be helpful to claimants in light of the evidentiary 
restrictions imposed by these regulations. The Department also hopes to 
encourage a larger number of attorneys to represent claimants by 
allowing the award of higher fees. During the rulemaking hearings, 
witnesses repeatedly brought to the Department's attention that few 
attorneys are willing to represent claimants, in part because of the 
many restrictions on the award of attorneys' fees. Transcript, Hearing 
on Proposed Changes to the Black Lung Program Regulations, (June 19, 
1997), p. 22 (testimony of Cecil Roberts); p. 168 (testimony of John 
Cline); pp. 238-239, 246 (testimony of Grant Crandall). The Department 
also agrees that the rule should not be applied retroactively, and has 
changed Sec. 725.2 accordingly.
    (d) Several comments agree with the Department's revisions, but two 
urge the Department to take further steps to increase the participation 
of attorneys in black lung benefits adjudications by providing 
additional attorney funding from the Black Lung Disability Trust Fund. 
Specifically, the commenters urge the Department to make funds 
available to pay black lung associations and other non-profit groups 
assisting claimants or to advance fees awarded to claimant attorneys 
litigating against responsible operators before the award of benefits 
becomes final. The commenters also urge the Department to repeal the 
prohibition on receiving fees for time spent preparing a fee petition, 
and to clarify the right of attorneys to obtain fees for time spent 
litigating their right to fees.
    The Department cannot agree that amounts from the Trust Fund should 
be made available to pay additional attorneys' fees. In its initial 
proposal, the Department observed that one of its goals in revising the 
regulation of attorneys' fees was to ensure that the liability of the 
Trust Fund for such fees was coextensive with that of a liable coal 
mine operator. 62 FR 3354 (Jan. 22, 1997). This liability derives from 
a series of appellate court opinions holding that the Trust Fund must 
stand in the shoes of a coal mine operator in any case in which no 
operator may be held liable for the payment of benefits. 62 FR 3354 
(Jan. 22, 1997). Those opinions rejected the Department's argument that 
the Trust Fund could not be held liable for any attorneys' fees. 
Although the Department's regulations have been revised to acknowledge 
the Trust Fund's liability under these circumstances, the Department 
does not believe that the statute can be read in the manner suggested 
by these commenters to authorize the expenditure of additional amounts 
of Trust Fund moneys to increase counsel availability for black lung 
claimants.
    With respect to time spent preparing a fee petition and litigating 
the issue of attorneys' fees, two comments seek the revision of 
material in Sec. 725.366. Because Sec. 725.366 was not listed among the 
regulations open for comment, no changes are being made in it. 62 FR 
3341 (Jan. 22, 1997); 64 FR 54970 (Oct. 8, 1999). Moreover, the 
regulation's current language does not prohibit an attorney from 
receiving a fee for time spent litigating the amount of his attorney's 
fees, and the Department does not believe that more explicit language 
is necessary. The Benefits Review Board has held that time spent by an 
attorney defending a fee represents ``necessary work done,'' so as to 
entitle the attorney to an additional fee under 20 CFR 802.203(c) 
(1999), see Workman v. Director, OWCP, 6 Black Lung Rep. (MB) 1-1281, 
1-1283 (Ben Rev. Bd. 1984), and the Department believes that 
Secs. 725.366 and 725.367 require the same result. The prohibition in 
Sec. 725.366 on fees for time spent filling out a fee application 
presents an entirely different question from whether it is reasonable 
to require an employer who unsuccessfully challenges that application 
to pay a fee for the necessary additional time that the attorney was 
required to spend defending his fee request. Because the Department 
believes that the current regulations permit an award of attorneys' 
fees in the latter case, it is not necessary to change the regulation.
    (e) No other comments were received concerning this section, and no 
changes have been made in it.

[[Page 79981]]

Subpart E

20 CFR 725.403

    The Department made only technical revisions to Sec. 725.403 in its 
first notice of proposed rulemaking, and the regulation was not open 
for comment. 62 FR 3341 (Jan. 22, 1997). In its second notice of 
proposed rulemaking, the Department proposed deleting Sec. 725.403. 64 
FR 54988 (Oct. 8, 1999). Section 725.403 implemented the requirement in 
30 U.S.C. 923(c) that claimants who filed applications under the Black 
Lung Benefits Act between July 1 and December 31, 1973, 30 U.S.C. 925, 
must file a claim under the workers' compensation law of their state 
unless such filing would be futile. Because the time period for filing 
such claims expired over 25 years ago, the Department proposed removing 
Sec. 725.403, and specifically invited comment on its removal. The 
Department did not receive any comments on the proposed removal of 
Sec. 725.403 and therefore has removed it from further publications of 
the Code of Federal Regulations. The Department has not altered the 
rules applicable to any claim filed between July 1 and December 31, 
1973, however. Parties interested in reviewing Sec. 725.403 may consult 
20 CFR 725.403 (1999).

20 CFR 725.404

    The Department received one comment relevant to Sec. 725.404. The 
Department made only technical revisions to this section, and the 
regulation was not open for comment; see 62 FR 3340-41 (Jan. 22, 1997); 
64 FR 54970 (Oct. 8, 1999). Therefore no changes are being made in it.

20 CFR 725.405

    (a) In its first notice of proposed rulemaking, the Department 
proposed revising subsection (b) to recognize its practice of refusing 
to provide a complete pulmonary evaluation to claimants who never 
worked as a miner. 62 FR 3354 (Jan. 22, 1997). The Department did not 
discuss Sec. 725.405 in its second notice of proposed rulemaking. See 
list of Changes in the Department's Second Proposal, 64 FR 54971 (Oct. 
8, 1999).
    (b) Two comments argue the regulation is too limited because it 
does not address the district director's obligation to develop evidence 
other than medical evidence. The Department disagrees. The specific 
purpose of this regulation is stated in its title: ``Development of 
medical evidence; scheduling of medical examinations and tests.'' The 
development of evidence in general is addressed at Sec. 725.404. In any 
event, subsection (d) of Sec. 725.405 authorizes the district director 
to collect ``other evidence'' concerning the miner's employment and 
``[a]ll other matters relevant to the determination of the claim.'' 
This language is sufficiently broad to acknowledge the district 
director's obligations concerning evidentiary development of a claim as 
well as the authority to discharge those obligations. No useful purpose 
would be served by a more specific enumeration of particular areas of 
inquiry in this provision.
    The type of inquiry urged by these commenters is covered in more 
detail elsewhere in the Secretary's regulations. Section 725.495(b) 
imposes on the Director, OWCP, the burden of proving that the 
responsible operator designated liable for the payment of benefits is a 
potentially liable operator. In addition, Sec. 725.495(d) requires that 
if the responsible operator designated for the payment of benefits is 
not the operator that most recently employed the miner, the district 
director must explain the reasons for his designation. These provisions 
make necessary the district director's gathering of a miner's 
employment history, including, in most instances, his Social Security 
earnings record. Indeed, Sec. 725.404(a) requires each claimant to 
furnish the district director with a complete and detailed history of 
coal mine employment and, upon request, supporting documentation. The 
district director must send to each operator notified of its potential 
liability for a claim copies of the claimant's application and all 
evidence obtained by the district director relevant to the miner's 
employment. Sec. 725.407(b), (c). If the district director concludes 
that the miner's most recent employer cannot be designated the 
responsible operator because it is not financially capable of assuming 
liability for the payment of benefits, the district director must 
explain his conclusion based on a search of the records maintained by 
the OWCP. Sec. 725.495(d). Only if the OWCP has no record of insurance 
or authorization to self-insure for that last employer, and the record 
so states, may OWCP name an employer other than the miner's most recent 
as the responsible operator for the claim. Thus, the district 
director's obligation to develop the evidence of record, other than 
medical, is set forth elsewhere in the regulations where relevant.
    (c) One comment recommends changing the regulatory reference to 
``miner'' in paragraph (a) from Sec. 725.202 to Sec. 725.101(a)(19). 
This recommendation is rejected. While both sections define ``miner,'' 
Sec. 725.202 provides the more detailed definition as well as the 
criteria and presumptions which apply to determining whether a 
particular individual satisfies the definition.
    (d) No other comments were received concerning this section, and no 
changes have been made in it.

20 CFR 725.406

    (a) In its first notice of proposed rulemaking, the Department 
proposed revising Sec. 725.406 to address the relationship between the 
evidentiary limitations contained in Sec. 725.414 and the complete 
pulmonary evaluation provided by the Department under 30 U.S.C. 923(b). 
62 FR 3354-55 (Jan. 22, 1997). As initially proposed, Sec. 725.406 
retained the Department's practice of allowing a claimant to select the 
physician to perform the complete pulmonary evaluation at the 
Department's expense. In those cases, however, the report generated by 
the evaluation would have counted as one of the two reports that the 
claimant was entitled to submit into evidence. If, on the other hand, 
the claimant went to a physician selected by the Department, the 
evaluation would not count against the limitations imposed on the 
claimant. Instead, in cases in which the Black Lung Disability Trust 
Fund would bear liability for benefits, such a report would count as 
one of the two reports that could be offered by the Director. In cases 
in which a responsible operator was potentially liable for benefits, 
the complete pulmonary evaluation provided by a doctor of the 
Department's choosing would not have counted against the evidentiary 
limit imposed on either the responsible operator or the claimant. The 
Department also discussed its responsibilities for ensuring that the 
report, and each component of the evaluation, substantially complied 
with the Department's quality standards. Finally, the Department 
clarified the mechanism by which it might seek reimbursement of the 
cost of the evaluation from an operator that had been finally 
determined to be liable for the payment of claimant's benefits.
    The Department proposed major revisions to Sec. 725.406 in its 
second notice of proposed rulemaking. 64 FR 54988-990 (Oct. 8, 1999). 
The Department agreed with commenters who suggested that it placed an 
unnecessary burden on a claimant to choose whether or not to select a 
physician to perform his complete pulmonary evaluation. In most cases, 
such a choice would be made before a claimant obtained representation, 
and could result in a claimant being limited

[[Page 79982]]

thereafter to the submission of only one additional medical report. 
Accordingly, the Department proposed the creation of a list of 
physicians, authorized by the Department to perform complete pulmonary 
evaluations. Miners who applied for benefits would be required to 
select a physician from that list, but could choose any listed doctor 
either in their state of residence or from a contiguous state. The 
resulting evaluation would not be considered one of the two medical 
reports that a claimant was entitled to submit in support of his claim 
for benefits.
    The Department further stated its intent to develop more rigorous 
standards for selecting physicians authorized to perform a complete 
pulmonary evaluation. The Department's suggested standards included: 
(1) Qualification in internal or pulmonary medicine; (2) ability to 
perform each of the necessary tests; (3) ability to schedule the 
claimant for an evaluation promptly; (4) ability to produce a timely, 
comprehensive report; and (5) willingness to answer follow-up questions 
and defend his conclusions under cross-examination. The Department 
specifically sought comment on these and other standards for selecting 
physicians to be included on its list, 64 FR 54989 (Oct. 8, 1999). In 
addition, the Department stated its intention to survey clinics and 
physicians on the fees they charged for these services, with the goal 
of attracting highly qualified doctors to perform the testing and 
evaluation required by the Department for the complete pulmonary 
evaluation. The Department also added subsection (d) to the proposed 
regulation in order to allow a claimant to have the Department send the 
objective test results obtained in connection with the complete 
pulmonary evaluation to his treating physician. The Department noted 
its intent to make available to each claimant at least one set of 
legally sufficient objective test results so that no claimant would be 
hindered by a lack of financial resources in pursuing his application 
for benefits. 64 FR 54989 (Oct. 8, 1999).
    The Department rejected comments suggesting the deletion of 
subsection (e), permitting the district director to clarify 
``unresolved medical issues.'' The Department also discussed comments 
concerning the district director's ability to determine whether all 
parts of the complete pulmonary evaluation were in substantial 
compliance with the Department's quality standards. The Department 
revised subsection (c) to provide a claimant whose initial tests do not 
comply with the quality standards due to a lack of effort with one 
additional opportunity to take those tests. Finally, the Department 
discussed its treatment of subsequent claims, in which the Department 
provides a new complete pulmonary evaluation, and modification 
requests, in which it does not. 64 FR 54989-90 (Oct. 8, 1999).
    (b) Several comments continue to oppose subsection (e), observing 
that if the Department develops a list of highly qualified physicians 
to perform the complete pulmonary evaluation, it should have no need to 
seek the opinion of yet another physician at this stage of the 
adjudication. Another comment objects to the proposed substitution of 
evidence under subsection (e), calling it the destruction of relevant 
evidence. In response to the initial proposal, the same commenter 
objected to subsection (e) because the district director's authority to 
have the miner retested and reexamined invited piecemeal and protracted 
evidentiary development. The Department has reconsidered the authority 
granted by subsection (e), and agrees that the provision should be 
deleted. The Department has relabeled subsection (f) as subsection (e) 
to accommodate this revision. The deletion of subsection (e) does not 
affect the district director's authority under subsection (c) to 
determine whether the individual components of the complete pulmonary 
evaluation have been administered and reported in compliance with the 
Department's quality standards. The Department agrees, however, that 
the district director should have no need to send the claimant for 
additional examination and testing after completion of a complete 
pulmonary evaluation, the components of which are in substantial 
compliance with the applicable quality standards, Sec. 725.406(a)-(c). 
Under revised Sec. 725.406, the initial evaluation will be performed by 
a highly qualified physician who may be asked to clarify and/or 
supplement an initial report if unresolved medical issues remain.
    (c) Two comments state that a miner should be entitled to choose an 
authorized physician anywhere in the country to perform his complete 
pulmonary evaluation rather than being limited to one from his state of 
residence or a contiguous state. The commenters state that claimants 
would be willing to pay the additional costs incurred as a result of 
such travel. Although the commenters suggest that there will not be a 
sufficient supply of physicians in some areas, such as Wyoming and 
Alabama, the Department has no evidence that would support that 
contention. Moreover, even if the Department is unable to obtain a 
sufficient pool of physicians in certain states (a pool that includes 
physicians in all contiguous states), the Department will simply adjust 
the procedural rules applicable to claimants who reside in those 
states. The absence of a sufficient pool of physicians in some limited 
number of states would not justify a national exception to the policy 
of requiring claimants to submit to a complete pulmonary evaluation in 
their own region. In addition, claimants remain free to go to any 
physician of their choosing for the development of evidence in support 
of their claims.
    (d) One comment argues that claimants should be randomly assigned 
to physicians on the Department's list rather than allowing claimants 
their own choice. The Department disagrees. The list that the 
Department ultimately compiles will contain physicians who are well-
qualified to perform complete pulmonary evaluations, and whose opinions 
the Department is willing to accept in the initial stages of 
adjudication of the claimant's eligibility. Claimants may already be 
acquainted with one or more physicians on the list, and requiring that 
claimant submit to an examination by a different physician, perhaps in 
a neighboring state, would be inefficient. Accordingly, the Department 
has not changed the regulation.
    The commenter also argues that the mere fact that a physician is 
included on the Department's approved list by meeting the Department's 
standards does not guarantee that the physician will provide an 
impartial opinion, particularly when a claimant has a role in selecting 
the physician who will perform the complete pulmonary evaluation. The 
Department does not believe that it is required to provide an absolute 
guarantee of the impartiality of physicians selected for inclusion on 
the list. By establishing high standards for the performance of these 
evaluations, and by ensuring that only highly qualified physicians are 
included on the approved list, the Department will be taking 
appropriate steps to ensure impartial opinions. In addition, the 
Department has revised subsection (c) to limit a miner's choice of the 
examining physician in two respects. First, the miner may not select a 
close relative of himself or his spouse. The regulation uses the term 
``fourth degree of consanguinity'' to exclude, among others, parents, 
children, grandchildren, brothers, sisters, nephews, nieces, aunts, 
uncles, and first cousins from those individuals otherwise qualified to 
perform a complete pulmonary evaluation. Second, the miner may not 
select any physician who has examined him or treated him in the year 
preceding

[[Page 79983]]

his application for benefits. The Department believes that it would be 
inappropriate to allow a miner to select a physician with whom he has 
an ongoing treatment relationship to perform the complete pulmonary 
evaluation paid for by the Department. Although the Department does not 
mean to suggest that a physician would be unable to provide an 
impartial assessment of the miner's respiratory condition in such a 
case, his opinion could present at least the appearance of a conflict 
of interest. In order to ensure the credibility of the Department's 
pulmonary evaluation, the Department has adopted a bright-line test, in 
the form of a one-year cutoff, that will be easily understood by miners 
and their physicians. The Department believes that a physician's 
examination or treatment of the miner prior to the one-year period 
preceding the miner's application should not disqualify that physician 
from performing the complete pulmonary evaluation. The Department 
reserves the right to delete a physician from the list if he is unable 
to provide an impartial opinion.
    (e) Several comments argue that the Department needs to make public 
the criteria it will use to select physicians for inclusion on the 
list. In its second notice of proposed rulemaking, the Department 
notified interested parties that these criteria will be published in 
the Department's Black Lung Program Manual which will be available to 
the public. 64 FR 54989 (Oct. 8, 1999). Interested parties will thus be 
able to monitor the Department's standards and use of these standards 
in selecting physicians for inclusion on the list.
    In addition, a number of commenters responded to the Department's 
request for comments on the standards that the Department proposed to 
use to select physicians. Two commenters emphasized the importance of 
requiring that the evaluations be performed by a physician board-
certified in internal medicine or a physician board-eligible in 
pulmonary medicine or one with extensive knowledge of pulmonary 
disease. The Department will make every effort to ensure that its list 
includes highly qualified physicians. Optimally, the Department will be 
able to enlist the services of Board-certified internists who have a 
subspecialty in pulmonary medicine, who are Board-eligible in pulmonary 
medicine, or who can demonstrate extensive experience in the diagnosis 
and treatment of pneumoconiosis to perform complete pulmonary 
evaluations. There may be circumstances, however, in which there will 
not be a sufficient supply of such highly qualified physicians willing 
to perform the evaluation. In such areas, the criteria will need to 
afford the Department enough flexibility to ensure an adequate supply 
of physicians who meet certain minimum qualifications, such as 
affiliation with a black lung clinic funded in part by the Department 
of Health and Human Services.
    Two comments urge the Department to rule out physicians who have 
demonstrated that they do not accept one or more of the basic premises 
of the Black Lung Benefits Act. These commenters urge the Department to 
review the opinions and depositions of each physician who seeks to be 
included on the list, eliminating those with opinions which make it 
impossible to provide a sound evidentiary basis for the district 
director's initial decision. Another comment urges the Department to 
accept any physician who applies for inclusion on the list provided 
that the physician possesses the necessary professional qualifications. 
As an initial matter, the Department does not intend to screen 
physicians who apply for inclusion on the list beyond satisfying itself 
that the basic requirements for inclusion are met. The Department 
simply does not have the resources to conduct an intensive review of 
the medical reports and/or deposition testimony submitted by each 
physician in previous black lung cases. The Department reserves the 
right, however, to exclude from its list of approved physicians those 
who prove unable to provide opinions that are consistent with the 
premises underlying the statute and the Secretary's regulations. The 
federal courts of appeals have held that a denial of benefits may not 
be based on a medical opinion that is fundamentally at odds with the 
premises of the Black Lung Benefits Act. See, e.g., Lane Hollow Coal 
Co. v. Director, OWCP, 137 F.3d 799, 804-5 (4th Cir. 1998); Penn 
Allegheny Coal Co. v. Mercatell, 878 F.2d 106, 109-110 (3rd Cir. 1989); 
Robbins v. Jim Walter Resources, Inc., 898 F.2d 1478, 1482 (11th Cir. 
1990); Wetherill v. Director, OWCP, 812 F.2d 376, 382 (7th Cir. 1987); 
Kaiser Steel Corp. v. Director, OWCP, 757 F.2d 1078, 1083 (10th Cir. 
1985). The Department reserves the right to determine appropriate 
exclusions from the list on a case-by-case basis.
    (f) One comment states that the regulation should require the 
district director to explain to a claimant the possible consequences of 
having his test results provided to his treating physician. The 
Department intends to provide such information to claimants, see also 
64 FR 54989 (Oct. 8, 1999), but does not believe that the regulation 
must reflect this intention. The regulation itself does state that a 
report from the claimant's treating physician, based on the 
Department's clinical testing, will count as one of the two reports the 
claimant is entitled to submit into evidence under Sec. 725.414, 
Sec. 725.406(d).
    (g) One comment states that the Department's requirements prevent 
physicians from exercising their professional judgment by dictating the 
tests that they are required to perform and by emphasizing promptness 
and timeliness over completeness and thoroughness. The Department 
disagrees. The Act authorizes the Department to set minimal quality 
standards for medical evidence. Reports of physical examination must 
substantially comply with the applicable quality standards, 
Sec. 718.104. That regulation requires that a report of physical 
examination be based on, among other things, a chest X-ray, a pulmonary 
function test, and a blood gas study, unless medically contraindicated. 
Because these tests are necessary for a complete pulmonary evaluation, 
the Department has authorized their performance under Sec. 413(b) of 
the Act, 30 U.S.C. 923(b), for the last two decades. The Department 
expects that each physician included on the list will not only be able 
to administer these tests, but will commit to doing so in substantial 
compliance with the Department's quality standards, Secs. 718.102-.106. 
The Department does not believe that its requirements prevent a 
physician from preparing a thorough and complete medical report. In 
order to process claims expeditiously, however, the Department must 
also ensure that the examination is scheduled promptly, and the 
resulting report is prepared in a timely manner. The Department 
recognizes that, in some cases, the claimant's choice of a physician 
may result in a slight delay if the physician he has selected is busy. 
The delay in such a case, however, is solely within the control of the 
claimant. If he is willing to accept the delay, he may wait for that 
physician. If not, he may choose another from the Department's approved 
list.
    (h) Several comments approved of the revisions affording the 
claimant the right to select a doctor to perform the complete pulmonary 
evaluation from an approved list.
    (i) No other comments were received concerning this regulation.

20 CFR 725.407

    (a) In its first notice of proposed rulemaking, the Department 
proposed moving subsections (a) and (c) of 20

[[Page 79984]]

CFR 725.407 (1999) to Sec. 725.406 and eliminating subsection (b). See 
preamble to Secs. 725.407 and 725.408, 62 FR 3355 (Jan. 22, 1997). In 
their place, the Department proposed a new regulation governing the 
identification and notification of ``potentially liable operators,'' a 
subset of the miner's former employers that might be liable for a given 
claim. Depending on the complexity of the miner's employment history, 
section 725.407 would permit the district director initially to notify 
one or more potentially liable operators, and their insurers, of the 
existence of a claim and would also allow the notification of 
additional potentially liable operators at any time prior to referral 
of the case to the Office of Administrative Law Judges. The proposal 
placed no time limit on the notification of an operator if that 
operator fraudulently concealed its identity as an employer of the 
miner.
    In its second notice of proposed rulemaking, the Department 
proposed revising subsection (d) to permit the district director to 
notify additional potentially liable operators after an administrative 
law judge reversed a district director's denial by reason of 
abandonment pursuant to Sec. 725.409 and remanded the case for further 
proceedings. 64 FR 54990 (Oct. 8, 1999). The Department observed that 
without this provision, subsection (d) could have been read to prohibit 
the notification of additional operators, notwithstanding the fact that 
the district director had not been able to complete his administrative 
processing of the claim before its referral to the Office of 
Administrative Law Judges. In addition, the Department rejected a 
suggestion that it provide guidelines for district directors to use in 
determining the cases in which it would be appropriate to name more 
than one potentially liable operator.
    (b) The Department has made two changes to Sec. 725.407 to conform 
to changes to other regulations in this subpart. The Department has 
deleted the reference to a district director's initial finding in 
subsection (a) because the district director will no longer issue 
initial findings. The Department has replaced the reference to 
Sec. 725.413 in the first sentence of subsection (d) with a reference 
to Sec. 725.410(a)(3). This change reflects a move to Sec. 725.410 of 
the district director's authority to dismiss potentially liable 
operators that the district director has previously notified.
    (c) One comment objects that the Secretary's regulations preclude 
the dismissal of potentially liable operators who can prove that they 
were not properly named. This comment is more appropriately addressed 
under Sec. 725.465, the regulation governing the dismissal of claims 
and parties.
    (d) One comment argues that the revised regulation will raise the 
litigation costs of responsible operators. The commenter observes that 
the Department does not dispute the allegation, made in response to the 
Department's first notice of proposed rulemaking, that the Department's 
changes will generally increase litigation costs by $6,000 per claim. 
The commenter states that the revisions in the Department's second 
notice of proposed rulemaking will result in an additional $6,000 in 
costs per claim. With regard to the first figure, the commenter appears 
to have mischaracterized its prior comment. An economic analysis 
conducted by Milliman & Robertson, Inc., and submitted to the 
Department in response to the first notice, was based in part on an 
assumption that ``the average defense costs of $6,000 per claim 
currently expended by the responsible operators/insurers primarily on 
claims that are initially awarded or denied and appealed by the 
claimant (presently, approximately 30% of all claims filed), will be 
expended on all claims at the earliest stage of adjudication.'' 
Rulemaking Record, Exhibit 5-174, Appendix 5 at 4. This economic 
analysis did not assert that costs would rise in all cases, but that 
operators and insurers would be required to incur the cost of fully 
developing evidence in cases (70 percent of the claims filed) in which 
they formerly did not have to do so. The analysis did not assert that 
the Department's proposal would raise litigation costs in the remaining 
30 percent of cases. The Department has no basis on which to dispute 
the industry's statement that its average defense costs, in cases that 
proceed beyond an initial denial of benefits by the district director, 
are $6,000. In fact, the economic analysis prepared for the Department 
in connection with the Regulatory Flexibility Act adopted the figures 
provided by the Milliman & Robertson economic analysis with respect to 
the costs of litigating claims at various levels of adjudication. 
Rulemaking Record, Exhibit 80 at 42.
    The Department's second notice of proposed rulemaking, however, 
undermined the assumption that all of an employer's defense costs would 
be expended at the earliest stage of adjudication. Under the 
Department's first proposal, an employer would have been required to 
develop all of its evidence regarding both its liability as an operator 
and the claimant's eligibility while the case was pending before the 
district director. The Department's second notice of proposed 
rulemaking, however, proposed a substantial alteration in procedure 
that would permit parties to maintain their current practice of 
deferring the development of medical evidence until after a case has 
been referred to the Office of Administrative Law Judges. 64 FR 54993 
(Oct. 8, 1999). The Department has adopted this second proposal in 
these final regulations. Consequently, while potentially liable 
operators will be required to develop evidence relevant to their 
liability while claims are pending before the district directors, they 
will no longer need to expend money on the development of medical 
evidence in those cases (70% of cases, according to industry estimates) 
that do not proceed beyond the district director level. In addition, 
the Department has further revised its regulations to require that all 
but one potentially liable operator, the one finally designated as 
responsible operator, be dismissed as parties to the case upon issuance 
of the district director's proposed decision and order. See 
Sec. 725.418(d) and explanation accompanying Sec. 725.414. Thus, only 
one potentially liable operator will incur costs in the adjudication of 
each claim