Throwback Thursday: U.S. Wasted $10M on Mine Equipment Testing Center
In the early 1980s, the Department of Labor’s Mine Safety and Health Administration wasted $10 million – $28 million in 2023 dollars – operating a mine equipment testing facility at a loss for three years.
Sen. William Proxmire, a Democrat from Wisconsin, awarded the agency his Golden Fleece Award in 1985 for this poorly managed project.
According to Proxmire, from 1981 to 1984, the mine safety agency’s equipment testing center charged private companies using their facilities at rates so low that it recovered less than 10% of what the center cost to operate. Auditors had been pointing out cost overruns since 1981, but the center continued operating at a loss.
The reason the center operated at such a heavy loss was because it hadn’t updated its prices in over 20 years, as costs rose while revenue stayed flat. In 1985, it lost about $300,000 each month. Despite this, officials didn’t seem very concerned, waiting over a year to implement its next fee increase.
Not only is this bad business, but its also in violation of federal law, which requires the center to recover the entire cost of equipment testing by charging the equipment manufacturers fees for its services. By operating at a loss, it shifts the financial burden off the companies benefiting from it and onto the taxpayers.
In addition to its financial mismanagement, the center wasn’t even excelling in its main purpose of ensuring mining equipment was safe. It post-evaluated less than 2% of 25,000 pieces of equipment that it had previously approved for use. That’s troubling since one out of eight pieces of equipment initially tested turned out to have critical or major deficiencies later.
By keeping its fees low, taxpayers were forced to pay for the benefits the wealthy mine equipment manufacturers received. As Proxmire notes, “April may be too early to give MSHA coal in its stocking for this pitiful performance, but it’s a grand time for awarding it a Golden Fleece.”
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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