[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                       H.R. 5479, COAL ACCOUNT-


                          ABILITY AND RETIRED


                         EMPLOYEE ACT OF 2010

=======================================================================



                          LEGISLATIVE HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                        Wednesday, June 23, 2010

                               __________

                           Serial No. 111-59

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Frank Pallone, Jr., New Jersey       Jeff Flake, Arizona
Grace F. Napolitano, California      Henry E. Brown, Jr., South 
Rush D. Holt, New Jersey                 Carolina
Raul M. Grijalva, Arizona            Cathy McMorris Rodgers, Washington
Madeleine Z. Bordallo, Guam          Louie Gohmert, Texas
Jim Costa, California                Rob Bishop, Utah
Dan Boren, Oklahoma                  Bill Shuster, Pennsylvania
Gregorio Sablan, Northern Marianas   Doug Lamborn, Colorado
Martin T. Heinrich, New Mexico       Adrian Smith, Nebraska
Ben Ray Lujan, New Mexico            Robert J. Wittman, Virginia
George Miller, California            Paul C. Broun, Georgia
Edward J. Markey, Massachusetts      John Fleming, Louisiana
Peter A. DeFazio, Oregon             Mike Coffman, Colorado
Maurice D. Hinchey, New York         Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Cynthia M. Lummis, Wyoming
    Islands                          Tom McClintock, California
Diana DeGette, Colorado              Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, June 23, 2010.........................     1

Statement of Members:
    Lummis, Hon. Cynthia M., a Representative in Congress from 
      the State of Wyoming.......................................    11
        Prepared statement of....................................    12
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Roberts, Cecil E., President, United Mine Workers of America.     4
        Prepared statement of....................................     6
    Whitehouse, Alfred, Chief of the Division of Reclamation 
      Support, Office of Surface Mining Reclamation and 
      Enforcement, U.S. Department of the Interior...............    22
        Prepared statement of....................................    23
    Young, David M., President, Bituminous Coal Operators' 
      Association, Inc...........................................    13
        Prepared statement of....................................    14


 LEGISLATIVE HEARING ON H.R. 5479, TO AMEND THE SURFACE MINING CONTROL 
    AND RECLAMATION ACT OF 1977 TO PROVIDE FOR USE OF EXCESS FUNDS 
AVAILABLE UNDER THAT ACT TO PROVIDE FOR CERTAIN BENEFITS, AND FOR OTHER 
   PURPOSES. ``COAL ACCOUNTABILITY AND RETIRED EMPLOYEE ACT OF 2010''

                              ----------                              


                        Wednesday, June 23, 2010

                     U.S. House of Representatives

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 10:02 a.m. in Room 
1324, Longworth House Office Building, Hon. Nick J. Rahall, II 
[Chairman of the Committee] presiding.
    Present: Representatives Rahall, Holt, Christensen, Inslee, 
Hastings, Smith, and Lummis.

 STATEMENT OF THE HON. NICK J. RAHALL, II, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    The Chairman. The Committee on Natural Resources will come 
to order. I would begin by observing that while the horrific 
disaster which took place at the Upper Big Branch Coal Mine in 
my home county of Raleigh, West Virginia, has largely been 
swept from the national spotlight by the explosion of the 
Deepwater Horizon rig in the Gulf of Mexico, it continues to 
weigh heavily on the citizens of West Virginia and throughout 
the coalfields. Federal and state investigations are 
proceeding, and we in the Congress are developing a legislative 
response to ensure a more safe working environment for our 
nation's underground coal miners--brave and hardworking souls, 
every one of them.
    While the country continues to focus on the Gulf of Mexico 
and the impact that spill is having on so many businesses, on 
the people and the economy of that region, I do believe and, in 
fact, I insist that we, as a nation, continue to address the 
plight of the coal miner and the economy of coalfield 
communities in the Appalachian Region, and that is what we are 
doing this morning. Today the Committee is meeting for the 
consideration of H.R. 5479, The Coal Accountability and Retired 
Employee Act of 2010, or the CARE Act.
    This legislation keeps faith with an historic Federal 
commitment made to the mine workers in 1946. At the time, with 
President Harry Truman looking on, Interior Secretary Julius 
Krug signed an agreement with the UMWA President John L. Lewis 
guaranteeing the health and welfare of the coal miner. The 
Krug-Lewis agreement was the very foundation for a welfare and 
retirement system established for the mine workers and their 
dependents. This Federal guarantee to the mine workers also 
served as the basis for the 1992 Coal Act, in which through my 
efforts Congress authorized a transfer of interest accruing to 
the account to the unspent balance of the Abandoned Mine 
Reclamation Fund for the purpose of providing solvency to 
UMWA's health care fund.
    At the time, because so many companies had escaped their 
responsibility under the National Bituminous Coal Wage 
Agreement, over 60 percent of the people who received their 
health care under the UMWA's program never worked for the coal 
operators, who were making premium payments. This large 
``orphaned'' miner population threatened to overwhelm the 
entire system. The 1992 legislation threw a lifeline to the 
health care fund for several years, but as more and more coal 
companies abrogated their responsibilities, Congress was 
compelled to act again in the 2006 amendments to the Abandoned 
Mine Reclamation Program, which provides transfers of general 
funds to ensure the solvency of the UMWA's three health care 
plans.
    The problems which plagued the UMWA health program in the 
past are now afflicting their pension plan. At present, well 
over half of the current retirees never worked for the coal 
companies currently participating in that plan. This situation, 
as well as the recent economic downturn, has placed the pension 
plan on the road to insolvency. At stake are the pensions of 
over 120,000 people, around 38,000 who reside in my home state 
of West Virginia, and the economic viability of the 
contributing coal companies.
    Think about that. These hardworking people who engaged in 
the noble but often dangerous occupation of mining coal for the 
energy security of this country now may find, in their elderly 
years, dilemma and confusion when it comes to the security of 
their pensions. I fought long, I fought hard, and I was 
relentless in my efforts to get these coal miners the health 
care they deserve, and I will not allow their pensions to be 
threatened. This matter has been the first thing on my mind 
when I wake up in the morning, and it is in my prayers every 
evening.
    The pending legislation would tap into these funds made 
available by the 2000 amendments to the Abandoned Mine 
Reclamation Program that are not necessary for any current law 
obligation, and transfer those amounts to the UMWA pension fund 
in order to ensure its solvency. I have spent a career standing 
up for our coal miners, their widows, and our coalfield 
communities, whether it be black lung benefits, coal mine 
safety, or health care, and I will tell you this, I will fight 
for these individuals' pensions with every breath in my body.
    I would like to particularly thank UMWA President Cecil 
Roberts for being here this morning. He is the President of a 
union with a proud tradition, and one which has pioneered many 
things in the American workplace that we take for granted 
today, such as the eight-hour workday and collective bargaining 
rights. Cecil Roberts' every breath of air is devoted to what 
is just and good for our nation's coal miners, across the 
coalfields and across this world.
    I commend him, I thank him for his expertise, for his 
professionalism and, most importantly, for the friendship that 
he has bestowed upon this Chairman and so many of us in the 
coalfields from whence he comes. Our second panelist this 
morning will be Mr. David Young, an individual I have known for 
quite a while as well, President of the Bituminous Coal 
Operators' Association, and an individual who knows coal and 
knows our coalfield communities intimately as well. I would now 
recognize the Ranking Member before we move on to the panel.
    Mr. Hastings. Thank you, Mr. Chairman. Mr. Chairman, I 
don't have an opening statement and I intended to yield my time 
to Mrs. Lummis from Wyoming, and if we could do that when she 
arrives I would appreciate that courtesy, but I have no opening 
statement myself.
    The Chairman. The Chair will recognize Mrs. Lummis as soon 
as she arrives. And pending that, we will move on with our 
panel. I have already introduced him, Mr. Cecil Roberts, 
President of the United Mine Workers of America, and Mr. David 
Young, President of the Bituminous Coal Operators' Association. 
Gentlemen, we do have your prepared testimony and it will be 
made a part of the record as if actually read, and you may 
proceed as you desire. Cecil, you want to start?
    [The prepared statement of Chairman Rahall follows:]

       Statement of The Honorable Nick J. Rahall, II, Chairman, 
                     Committee on Natural Resources

    The Committee on Natural Resources will come to order. I would 
begin by observing that while the horrific disaster which took place at 
the Upper Big Branch coal mine in my home county of Raleigh, West 
Virginia, has largely been swept from the national spotlight by the 
explosion of the Deepwater Horizon rig in the Gulf of Mexico, it 
continues to weigh heavily on the citizens of West Virginia and 
throughout the coalfields.
    Federal and State investigations are proceeding. And we in the 
Congress are developing a legislative response to ensure a more safe 
working environment for our Nation's underground coal miners: Brave and 
hardworking souls, every one of them.
    While the country continues to focus on the Gulf of Mexico, and the 
impact that spill is having on so many businesses, people and the 
economy of that region, I do believe--and in fact, I insist--that we as 
a Nation continue to address the plight of the coal miner and the 
economy of coalfield communities in the Appalachian Region. And that is 
what we are doing this morning.
    Today, the committee is meeting for the consideration of H.R. 5479, 
the ``Coal Accountability and Retired Employee Act of 2010'' or the 
CARE Act. This legislation keeps faith with an historic federal 
commitment made to the mineworkers in 1946.
    At the time, with President Harry Truman looking on, Interior 
Secretary Julius Krug signed an agreement with UMWA President John L. 
Lewis guaranteeing the health and welfare of the coal miner. The Krug-
Lewis Agreement was the very foundation for a welfare and retirement 
system established for the mineworkers and their dependents.
    This Federal guarantee to the mineworkers also served as the basis 
for the 1992 Coal Act, in which through my efforts Congress authorized 
the transfer of interest accruing to the unspent balance of the 
Abandoned Mine Reclamation Fund for the purpose of providing solvency 
to the UMWA's health care fund.
    At the time, because so many companies had escaped their 
responsibility under the National Bituminous Coal Wage Agreement, over 
60% of the people who received their health care under the UMWA's 
program never worked for the coal operators who were making premium 
payments. This large ``orphaned'' miner population threatened to 
overwhelm the entire system.
    That 1992 legislation threw a lifeline to the health care fund for 
several years, but as more and more coal companies abrogated their 
responsibilities, Congress was compelled to act again in the 2006 
amendments to the Abandoned Mine Reclamation Program which provided 
transfers of general funds to insure the solvency of the UMWA's three 
health care plans.
    The problems which plagued the UMWA health program in the past are 
now afflicting their pension plan. At present, well over half of the 
current retirees never worked for the coal companies currently 
participating in that plan. This situation, as well as the recent 
economic downturn, has placed the pension plan on the road to 
insolvency.
    At stake are the pensions of over 120,000 people--around 38,000 who 
reside in my home State of West Virginia--and the economic viability of 
the contributing coal companies.
    Think about that. These hardworking people, who engaged in the 
noble but often dangerous occupation of mining coal for the energy 
security of this country, now may find, in their elderly years, dilemma 
and confusion when it comes to the security of their pensions. I fought 
long,
    I fought hard, and I was relentless in my efforts to get these coal 
miners the health care they deserve. And I will not now allow their 
pensions to be threatened. This matter has been the first thing on my 
mind when I wake up in the morning, and it is in my prayers every 
evening.
    The pending legislation would tap into funds made available by the 
2006 amendments to the Abandoned Mine Reclamation Program that are not 
necessary for any current law obligation, and transfer those amounts to 
the UMWA pension fund in order to insure its solvency.
    I have spent a career standing up for the coal miner, their widows 
and coalfield communities. Whether it be black lung benefits, coal mine 
safety, or health care. And I will tell you this: I will fight for 
these people's pensions with every breath in my body.
    I would like to particularly thank UMWA President Cecil Roberts for 
being here this morning. He is the president of a union with a proud 
tradition, and one which pioneered many things in the American 
workplace that we take for granted today such as the eight-hour workday 
and collective bargaining rights.
                                 ______
                                 

           STATEMENT OF CECIL E. ROBERTS, PRESIDENT, 
                 UNITED MINE WORKERS OF AMERICA

    Mr. Roberts. Thank you very much, Mr. Chairman, for 
allowing the United Mine Workers to participate in this hearing 
today and thank you for scheduling the hearing. Let me begin by 
thanking you, not only for the hearing today but the friendship 
that you and I have had for over 30 years now, and the efforts 
that you have made on behalf of coal miners, one of which was 
my dad who we know passed away a couple years ago, and he died 
with dignity, had the best health care in the world. And one of 
the widows who receives a pension that we are going to talk 
about today happens to be my mother who will be 91 here in a 
few weeks.
    So, this is not only something that is an institutional 
question for us, this is a very personal situation for every 
member of United Mine Workers. In West Virginia, Pennsylvania, 
Ohio, Kentucky, wherever we are from, we all have someone who 
is drawing a pension and we all have someone that has health 
care. We did an analysis in the last month, and about 152,000 
Americans who live in the coalfields have health care, and I 
think they can look to you, Mr. Chairman, that over 100,000 of 
them have health care as a direct response to what you have 
done in this Congress.
    I still remember meeting with you in 1992 when you came up 
with the concept of using the interest money to help pay the 
health care benefits that were guaranteed as you said in 1946 
in Harry Truman's White House. And I appreciate the fact that 
you have continued to fight not only for health care but for 
the safety of all coal miners, and I just wanted to reiterate 
what you just said, our hearts and prayers go out today to the 
29 families from Upper Big Branch. While this was a non-union 
mine, I have said frequently that we all know one another.
    In the coalfields I was personal friends with some of these 
miners who passed away, and our prayers are with those miners 
and we appreciate very much your hard work in trying to make 
the mines in this country safe and for the black lung victims, 
we know over 100,000 miners have died from pneumoconiosis in 
this country, and you have been a champion to provide benefits 
and safer workplaces for those people. We come today, Mr. 
Chairman, it is somewhat ironic, the history of the coalfields 
has been one of conflict if you go back to the early days, and 
quite frankly even occasionally today.
    But the problem we come today with is not of the making of 
the Union and it is not the making of the coal industry, and it 
certainly wasn't something that the pensioners and the 
beneficiaries of this fund created. The fund that we are going 
to talk about here today or we will be talking about today at 
the time of the signing of the last collective bargaining 
agreement had over $6 billion in assets and was about 94 
percent funded. There is only one event, only one, that has 
occurred since the signing of this collective bargaining 
agreement to the present to change the funding status of this, 
and that was the recession that hit in 2008.
    It is ironic as we come here today that we have chosen, and 
we respect decisions of Congress to bail out Wall Street, we 
see the CEOs that made the decisions that led to the financial 
downfall of our economy now getting bonuses, I don't fault them 
for that. But the decisions that they made have adversely 
affected a lot of people in this country, and I find it very 
tragic that it is affecting hardworking coal miners, it is 
adversely affecting or could adversely affect people who are in 
their 90s. Some people in this fund are as old as 100 years 
old.
    A few years ago we did an analysis of this fund and found 
that the oldest beneficiary was 112, unfortunately that lady 
has passed away since we did that analysis, but I can say to 
you today if we did another analysis, we will find someone in 
this fund that is at least 100 years of age. I think that 
people depend greatly--in fact, I know they depend greatly--on 
these pension checks. I want to point out to the Committee that 
in the last ten years $6 billion has been paid to retirees or 
their widows, most of this in Appalachia.
    The people, the states that receive the most from this are 
states, I think West Virginia is first, I think Pennsylvania is 
second, I believe Kentucky is third, and I believe Virginia is 
fourth. A lot of hand loading went on in the old days in these 
areas, at one time coal mining was very labor intensive. And 
that is not the case now, it is highly mechanized, longwalls 
producing lots and lots of coal with very few people. So, today 
we come and, as the Pension Protection Act tells us, we have to 
do certain things--one of which would be to increase funding to 
this plan and ask the coal industry that did nothing wrong to 
pay as much as $20 an hour into this fund, which would bankrupt 
some of them, put people out of work, and perhaps lead to total 
collapse of this fund.
    The other thing is eventually you get around to the 
possibility of reducing benefits. I have to tell you what I 
told our members, I am not going to be a person who supports 
the cutting of benefits for people who have earned them. These 
people have given their lives to this industry, we have all 
benefitted from this, all of us. Fifty percent of the 
electricity in this country comes from coal, our economy is 
being fueled off the backs of these coal miners who are now 
retired, and their widows who are now surviving, and I think 
this nation made a promise to these people and this promise 
should be kept. And I will be glad to answer any questions that 
you have, Mr. Chairman.
    [The prepared statement of Mr. Roberts follows:]

   Statement of Cecil E. Roberts, President, United Mine Workers of 
                                America

    Mr. Chairman and Members of the Committee:
    I want to thank you for the opportunity to be here today to speak 
on behalf of over 120,000 current and former UMWA members who are 
participants in the UMWA 1974 Pension Plan. Let me state at the outset 
that the UMWA strongly supports H.R. 5479 and urges the Committee and 
the Congress to enact it as soon as possible.
    The 1974 Pension Plan is a Taft-Hartley multiemployer pension plan 
negotiated between the UMWA and the Bituminous Coal Operators' 
Association (BCOA). It is part of the UMWA Health and Retirement Funds, 
a separate institution jointly administered by trustees appointed by 
the UMWA and BCOA. The 1974 Plan provides pension benefits to coal 
miners who work under the National Bituminous Coal Wage Agreement 
(NBCWA). Other funds administered by the UMWA Health and Retirement 
Funds provide health benefits to retired coal miners and their 
dependents under the Coal Act and the NBCWA.
    When the last NBCWA was negotiated at the end of 2006, the 1974 
Plan had approximately $6 billion in assets and was about 93% funded. 
As of May 31, 2010 the 1974 Plan had total assets of $4.3 billion and 
its funding level has fallen below 80%. It currently pays out about 
$650 million per year in pension benefits to some 97,500 retired and 
disabled miners and surviving spouses. Employers operating under the 
NBCWA of 2007 are currently contributing $5.00 per hour worked by their 
UMWA-represented employees. The rate will increase to $5.50 in January 
2011. Under the provisions of the Pension Protection Act (PPA), because 
the plan's funding level is below 80%, the UMWA and the BCOA as plan 
sponsors will have to adopt funding improvement plans that may raise 
contribution rates to $20 per hour worked by UMWA members. If such 
rates are required, signatory employers may seek to withdraw from the 
plan or go out of business.
    I have attached a chart to this statement that shows projections of 
the funded status of the plan made by the 1974 Plan's actuary in 
December 2007 and then again in October 2009. You'll note that prior to 
the financial crisis the 1974 Plan was well funded at about 93% and was 
projected to steadily improve its funded status throughout the coming 
decade. This projection, shown as the green line on the chart, was done 
at the end of 2007 before the credit crisis led to the financial 
meltdown on Wall Street. Now look at the same projection made in late 
2009, shown as the red line. As you can see, instead of being in good 
shape for as far as the actuary could project, the 1974 Plan is now on 
a steady downward path. Only one thing changed in that intervening 
period between these two projections-the 2008 financial crisis caused 
markets to fall precipitously and placed the country in the worst 
economic slump since the Great Depression.
    As I mentioned, the 1974 Plan currently pays out about $650 million 
per year in pension benefits to retired miners and surviving spouses. 
Due to the demographics of the coal industry this represents the period 
of our highest payout. The loss of assets in 2008 due to the financial 
crisis could not have come at a worse time for the 1974 Plan. The 
second chart attached to the statement shows the assets and liabilities 
of the 1974 Plan over the last fifteen years. As you'll note the 
economic decline in the aftermath of 9/11 terrorist attacks led to 
declines in the value of the Plan's assets in 2002 and 2003. But the 
assets of the Plan stayed relatively close to the liabilities. With the 
sharp market declines due to the 2008 financial crisis, the Plan has 
developed a significant separation between assets and liabilities, one 
that is not expected to close even with a return to less volatile 
financial markets.
    The 1974 Pension Plan finds itself in dire financial straights 
solely as a result of the financial crisis of 2008. While it has been 
well managed and in good financial shape for many years, the market 
crash in 2008 and early 2009 left the 1974 Plan with a significant loss 
of assets just at the time of its greatest payout. Indeed, the trustees 
who govern the 1974 Plan and the investment professionals they employ 
have done an exemplary job investing the Plan's assets over many years. 
They have a well diversified portfolio of investments that has produced 
returns comparable to or better than many of their pension industry 
peers. However, the 2008 financial crisis left such a deep hole for the 
Plan that, without a significant increase in income, the plan's 
actuaries project that the financial condition of the plan will 
continue to erode.
    The UMWA 1974 Pension Plan grew out of a contract between the 
federal government and the UMWA at a time of government seizure of the 
nation's bituminous coal mines in 1946. The Krug-Lewis Agreement, named 
for Secretary of the Interior Julius Krug and UMWA president John L. 
Lewis, was signed in the White House under the watchful eye of 
President Harry S. Truman. The Krug-Lewis agreement called for the 
creation of a Retirement fund to provide for payments to miners for 
disability, death or retirement and a Medical and Hospital fund to 
provide medical, hospital and related services.
    The Retirement fund created by the Krug-Lewis agreement became the 
object of intense dispute between the UMWA and the coal operators (when 
the government returned the mines to private control) and as a result, 
pension payments were delayed for several years. It was only after 
intervention by the Speaker of the House of Representatives and the 
appointment of Senator Styles Bridges of New Hampshire as the neutral 
trustee that pension payments were activated in 1950. Since that time, 
the 1974 Pension and its predecessors have provided pension benefits to 
hundreds of thousands of retired coal miners. The federal government 
has had a long history of involvement with the UMWA Health and 
Retirement Funds. Both Democratic and Republican administrations, as 
well as Democratic and Republican Congresses, have recognized the 
special promise contained in the agreement between the federal 
government and the coal miners. And while there were times when the 
fulfillment of that promise was in doubt, each time Congress and the 
president have risen to the occasion and ensured that the promise was 
kept.
    The retirees and surviving spouses who depend on the 1974 Pension 
Plan live in all 50 states, but the majority of them still reside in 
the coal mining states of West Virginia, Pennsylvania, Kentucky, 
Illinois, Virginia, Alabama, Ohio and Indiana. A state by state 
breakdown of active, retired and terminated vested participants is 
attached to this statement. Many of the retirees are elderly with 
nearly 40% of the retired population over 75 years of age and about 17% 
of the population over 85 years of age. The 1974 Plan provides them 
with modest but crucial income. The average pension benefit for a 
retired miner currently receiving benefits from the 1974 Pension Plan 
is $590 per month and for a surviving spouse the average benefit is 
about $304 per month.
    The financial crisis of 2008 and its economic aftermath were not 
the fault of the retired miners. Nor was it the fault of their 
representatives in the UMWA or the coal operators with whom we bargain. 
The cause of the financial crisis lay primarily with the banks and 
other large financial institutions on Wall Street. While the very same 
institutions that created the crisis were bailed out with taxpayer 
money, the victims of the crisis such as pension funds have been left 
to their own devices.
    An analysis of the 1974 Plan shows that a significant portion of 
the Plan's population and liabilities are related to companies that are 
now defunct and no longer contribute to the Plan. About 40% of the 
Plan's liabilities are related to retirees whose employers no longer 
contribute to the 1974 Plan; nearly 54% of the 1974 Plan population is 
composed of participants whose employer no longer contributes to the 
plan. So the 1974 Pension Plan is dealing with the same orphan retiree 
problem that Congress has grappled with in the Coal Act.
    The 2007 National Bituminous Coal Wage Agreement (NBCWA) is 
scheduled to expire on December 31, 2011. The Pension Protection Act 
enacted in 2006 requires multiemployer pension plans to maintain a 
certain level of funding or face consequences. Generally, this is 80% 
funding for multiemployer plans. Plans that fall below this level are 
considered in ``endangered'' status. Plans that fall below 80% and have 
an Accumulated Funding Deficiency in the next six years are considered 
``seriously endangered.'' Plans that fall below 65% funding and have a 
projected AFD in the next four years are considered in 
``critical''status. Under the PPA, plans that fall into endangered or 
critical status must adopt funding improvement or rehabilitation plans 
to reduce the underfunding over the next ten to fifteen years. These 
plans may involve increases in contributions by employers, reduction or 
elimination of certain benefits, or a combination of both. As noted 
earlier, the 1974 Plan's actuarial projections indicate that a 
contribution rate of about $20 per hour may be necessary to satisfy the 
PPA. As a bargainer I don't like making public predictions about what 
positions my bargaining partners may take in negotiations. But I will 
say that if the law requires coal operators a choice of paying $20 per 
hour or attempting to withdraw from the plan, many of them will be 
tempted to try to withdraw. The UMWA, of course, will seek to prevent 
that. The conflict that will result if employers seek to abandon the 
1974 Plan will not be in the best interests of any of the parties to 
the contract, the coal field communities or the nation at large. The 
UMWA wants to avoid disruption in the nation's coal fields when the 
NBCWA expires in 2011. But we will take whatever actions are necessary 
and within our power to protect the 1974 Pension Plan and the more than 
120,000 miners and widows who depend on it for economic sustenance. It 
may well be that conflict in the coal fields cannot be avoided; but we 
believe that H.R. 5479 offers a better way forward.
    H.R. 5479 simply builds on the framework and mechanisms Congress 
has put in place to deal with the problem of orphan retiree health care 
benefits in the coal industry. It provides for the transfer to the 1974 
Pension Plan of funds that exceed the amounts needed to meet existing 
obligations to the States and the UMWA Health and Retirement Funds 
retiree health plans under Title IV of the Surface Mining Control and 
Reclamation Act of 1977. In 2006, Congress amended Title IV to provide 
for a permanent appropriation of up to $490 million a year to repay 50% 
of the Abandoned Mine Land (AML) reclamation fees generated from 
certified States that have completed abandoned coal mine reclamation 
projects and to supplement interest earned on the AML fund to ensure 
the solvency of the three health plans administered by the UMWA Health 
and Retirement Funds. I want to point out that allowing the 1974 Plan 
to access the permanent appropriation would in no way jeopardize 
payments to the States or to the retiree health plans. They would 
continue to have first priority claim to the permanent appropriation. 
Under H.R. 5479, only funds not needed to fulfill those existing 
obligations would be available to the 1974 Plan.
    Mr. Chairman, a promise was made to the nation's coal miners in the 
White House long ago in 1946. That promise was that if the miners 
produced the energy that the nation so desperately needed, they would 
have pensions and health care when they retired so they could live out 
their lives with a small measure of dignity and security. I submit that 
coal miners have earned these benefits through hard work that has 
allowed many Americans to enjoy a better life. We only have to look at 
the recent disasters in the coal fields, such as the Sago mine and 
Upper Big Branch tragedies in West Virginia and the Crandall Canyon 
mine in Utah to know how dangerous the work of coal mining can be. 
While these tragedies draw public attention, many miners die quietly 
without notice each year from black lung disease. The National 
Institute for Occupational Safety and Health (NIOSH) estimates that up 
until a few years ago as many as 1,500 miners died each year from 
complications of black lung. That's a Titanic going down in the coal 
fields each and every year. All told, NIOSH estimates that more than 
10,000 miners died of black lung disease in the last decade. I think 
any reasonable observer would agree that coal miners work in harsh 
conditions that endanger their lives in many ways. They should not have 
to worry about the modest pensions that have been promised them after 
they retire.
    The miners who depend on the UMWA Health and Retirement Funds and 
the 1974 Pension Plan have upheld their part of the bargain made in 
President Truman's White House. Now, through no fault of their own, 
their pension plan has fallen into financial difficulty. Congress has 
already seen fit to permanently appropriate up to $490 million per year 
to fulfill the promise of retiree health care for these same retirees. 
It appears likely that because of the efficiency with which the UMWA 
Funds delivers medical care, the full amount will not be needed each 
year. We think it makes good sense to extend the application of that 
commitment to the 1974 Pension Plan. We urge the Committee and the 
Congress to enact H.R. 5479 to ensure that the promise is kept to the 
nation's coal miners.
    We appreciate the opportunity to be here today and would be happy 
to answer any questions you may have.


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                                 .eps__
                                 
    The Chairman. Thank you, Cecil, I will have some questions, 
but per the request of the Ranking Member and before going to 
you, Dave, I would like to recognize the gentlelady from 
Wyoming.
    Ms. Lummis. Thank you very much, Mr. Chairman.
    The Chairman. For any comments, opening statement you would 
like to make.

 STATEMENT OF THE HON. CYNTHIA M. LUMMIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF WYOMING

    Ms. Lummis. I so appreciate this opportunity and want to 
welcome our panel this morning as well. Thank you, Mr. 
Chairman, and thank you, Mr. Hastings, for yielding to me. The 
nation's leader in coal is Wyoming, and we have a vested 
interest in the fate of the AML Program. Since AML's creation 
in 1977, Wyoming has worked diligently to reclaim mining sites 
on over 32,000 acres. This work was done despite the Federal 
Government's failure to distribute AML funds to the states as 
required by law.
    Finally, under the bipartisan leadership of the Chairman of 
this Committee and others, a bipartisan agreement was reached 
in 2006 that finally granted Wyoming, West Virginia, and other 
states what the Federal Government had co-opted for nearly 30 
years. Chairman Rahall's understanding of this complicated 
history of AML has resulted in the carefully crafted 
legislation under consideration by the Committee today.
    As currently written and absent other interference, it 
appears the legislation would have no effect on the historic 
agreement reached in 2006 on certified states and tribes. I 
commend the Chairman for his artful drafting of this bill. 
Having said that, I have two concerns that I sincerely hope the 
Chairman will consider. There were many, including the Chairman 
himself I would suspect, who hoped that following passage of 
the 2006 agreement, this issue had finally been put to rest for 
the good of everyone involved. Unfortunately, that has not been 
the case, the program has continued to be the target of those 
who do not understand the promises made and broken by the 
Federal Government throughout the history of AML.
    The sharks continue to circle, Mr. Chairman, and I am 
deeply concerned that passage of this legislation will give 
opponents the opening they have been seeking. On a more 
philosophical level, the intent of the legislation under 
consideration helps to highlight what is a very troubling 
trend. From so called agency guidance to coal lash to permit 
suspensions and delays to Clean Air and Water Act revisions and 
more, the Obama Administration has worked overtime to hinder 
domestic coal production. The only possible outcome of these 
policies is a crippled industry unable to hire new workers of 
any kind.
    Again, I have great respect for the Chairman of this 
Committee. His leadership on the AML Program is undisputed. I 
understand his desire to shore up a failing pension plan for 
coal miners. However, if we were truly concerned about the fate 
of America's hardworking coal miners, we would also be working 
night and day to beat back the onslaught from an Administration 
hell-bent on halting coal production altogether. I look forward 
to working with the Chairman on all of these issues in the 
weeks ahead. And, Mr. Chairman, again, I am thankful for the 
opportunity to present my statement. I yield back.
    [The prepared statement of Ms. Lummis follows:]

   Statement of The Honorable Cynthia M. Lummis, a Representative in 
                   Congress from the State of Wyoming

    Thank you Mr. Chairman, and thank you Mr. Hastings for yielding me 
the time.
    As the nation's leading producer of coal, Wyoming has a vested 
interest in the fate of the Abandon Mine Lands (AML) program. Since 
AML's creation in 1977, Wyoming has worked diligently to reclaim mining 
sites on over 32,000 acres. This work was done despite the federal 
government's failure to distribute AML funds to the states as required 
by the law. Finally, and under the leadership of the Chairman of this 
Committee and others, a bi-partisan agreement was reached in 2006 that 
finally granted to Wyoming, West Virginia, and other states what the 
federal government had co-opted for nearly 30 years.
    Chairman Rahall's understanding of the complicated history of AML 
has resulted in the carefully crafted legislation under consideration 
by the Committee today. As currently written, and absent other 
interference, it appears the legislation would have no affect on the 
historic agreement reached in 2006 on certified states and tribes. I 
commend the Chairman for his artful drafting of this bill.
    Having said that, I have two concerns that I sincerely hope the 
Chairman will consider today. There were many, including the Chairman 
himself I would suspect, who hoped that following passage of the 2006 
agreement this issue had finally been put to rest for the good of 
everyone involved. Unfortunately, that has not been the case. The 
program has continued to be the target of those who do not understand 
the promises made, and broken, by the federal government throughout the 
history of AML. The sharks continue to circle, Mr. Chairman, and I am 
deeply concerned that passage of this legislation will give opponents 
the opening they've been seeking.
    On a more philosophical level, the intent of the legislation under 
consideration helps to highlight what is a very troubling trend. From 
so-called agency ``guidance,'' to coal ash, to permit suspensions and 
delays, to Clean Air and Water Act revisions and more, the Obama 
Administration has worked overtime to hinder domestic coal production. 
The only possible outcome of these policies is a crippled industry 
unable to hire new workers of any kind.
    Again, I have great respect for the Chairman of this Committee; his 
leadership on the AML program is undisputed. I understand his desire to 
shore up a failing pension plan for coal miners. However, if we were 
truly concerned about the fate of America's hardworking coal miners, we 
would be working night and day to beat back the onslaught from an 
Administration hell bent on halting coal production altogether.
    I look forward to working with the Chairman on all of these issues 
in the weeks ahead.
                                 ______
                                 
    The Chairman. Thank you. Let us proceed with our panel. I 
have already introduced Mr. Dave Young. Dave?

            STATEMENT OF DAVID M. YOUNG, PRESIDENT, 
          BITUMINOUS COAL OPERATORS' ASSOCIATION, INC.

    Mr. Young. Mr. Chairman and Members of the Committee, I am 
pleased to be here this morning to testify on a matter of 
critical importance to the organized coal industry. As 
President of the Bituminous Coal Operators' Association, the 
BCOA represents its member companies in collective bargaining 
with negotiations for the National Bituminous Coal Wage 
Agreement with the United Mine Workers of America. The BCOA is 
also the management settlor of the UMWA 1974 Pension Plan, a 
multi-employer pension plan created by the National Bituminous 
Coal Wage Agreement.
    I am here today to testify in support of H.R. 5479, The 
Coal Accountability and Retired Employee Act of 2010. H.R. 5479 
would make available funds generated by the provisions of the 
Surface Mining Act of 2006 to the 1974 plan to offset funding 
needed for the losses caused by the 2008 market collapse. This 
legislation is necessary to protect the pensions of the 1974 
Pension Plan beneficiaries and to avoid either a plan 
insolvency or plan termination under Title IV of ERISA.
    Prior to the 2008 market collapse, as referenced by 
President Roberts earlier, the Plan was 94 percent funded and 
on a clear path to full funding. However, the combination of 
the 2008 market decline on plan net assets and the Plan being 
in its peak cash flow years today that require nearly $700 
million annually to meet pension benefit obligations means that 
the restoration of prior funding levels really is no longer 
realistic today.
    The root cause of the Plan's difficulty has been a 
persistent decline in the number of contributing employers 
really since the 1970s, which in a large part reflects the 
shift in coal production from east to west in response to 
governmental environmental policy at that time. The result is 
that today the 1974 plan is nearly a 12-to-1 ratio of retirees 
to active miners. This imbalance clearly creates a crushing 
financial burden for the remaining contributing employers.
    The result is today a last man's club of only ten employer 
groups supporting the pension benefits of over 110,000 
retirees. Yet the signatory contributing employers of these 
groups only employ 10,000 representative active miners 
themselves. I should note that about one-third, or 33,000, of 
the pension beneficiaries as we have discussed are really 
widows of retired miners, and nearly 10,000 of these retirees 
are totally disabled miners.
    Passage of H.R. 5479 will allow these remaining signatory 
employers to continue funding pension benefits for all of their 
current and former employees, and at the same time help to 
protect the 66,000 in our estimate retired ``orphan'' miners 
whose employers are no longer in the coal business for various 
reasons. The companies that currently contribute to the '74 
Pension Plan are the last line of defense for the plan and 
stand in the shoes of the government when it comes to funding 
the pension benefits of those orphan miners, who under other 
circumstances would already be the responsibility of the 
pension benefit guarantee corporation.
    As an example, Bethlehem Steel entered bankruptcy a few 
years ago. Employees of the steel company became the 
responsibility of the PBGC. However, miners who retired from 
Bethlehem Steel at the same time remained in the 1974 Plan, and 
their full benefits guaranteed and funded by the remaining 
contributors to the '74 Pension Plan. Mr. Chairman, as you 
know, the government has been deeply involved in the coal 
industry and with these plans since the 1940s. Indeed, the 
mines were seized unbelievably in 1946 with the express purpose 
of establishing this pension program.
    The pension benefits did not start until the Speaker of the 
House Joseph Martin in 1948 met with the fund trustees and 
effected the appointment of Senator Styles Bridges as a neutral 
trustee. Senator Bridges then sided with John L. Lewis, the 
UMWA President and trustee in agreeing to a pay-as-you-go 
funding structure and setting the retirement age, length of 
service requirements that are still the core of today's benefit 
program.
    Together all of us, the miners, the companies, and the 
government, have made a great deal of difference in the lives 
of people in the coalfields and for our energy needs. Today we 
are once again at a juncture when the historic promise to these 
miners is in jeopardy. We believe that H.R. 5479 recognizes 
this stark fact and provides the best way to correct it. Thank 
you for this opportunity to support and protect the livelihood 
of the nation's retired coal miners.
    [The prepared statement of Mr. Young follows:]

                Statement of David M. Young, President, 
              Bituminous Coal Operators' Association, Inc.

    Mr. Chairman and members of the Committee. My name is David Young. 
I am pleased to be here this morning to testify on a matter of critical 
importance to the organized coal industry. I am President of the 
Bituminous Coal Operators' Association (BCOA). The BCOA represents its 
member companies in collective bargaining negotiations for the National 
Bituminous Coal Wage Agreement (NBCWA) with the United Mine Workers of 
America. The BCOA is also the management Settlor of the UMWA 1974 
Pension Plan, a multi-employer pension plan created by the NBCWA.
    I am here today to testify in support of H.R. 5479, The Coal 
Accountability and Retired Employee Act of 2010. H.R. 5479 would make 
available funds generated by the provisions of the Surface Mining Act 
of 2006 to the 1974 Plan to offset funding needed for losses caused by 
the 2008 market collapse. This legislation is necessary to protect the 
pensions of the 1974 Pension Plan beneficiaries and to avoid either 
plan insolvency or plan termination under Title IV of ERISA.
    Prior to the 2008 market collapse, the 1974 Plan was 94% funded and 
on a clear path to full funding. However, the combination of the 2008 
market decline on Plan net assets and the Plan being in its peak cash 
flow years, that require nearly $700 Million per year to meet pension 
benefit obligations, means that restoration of prior funding levels is 
no longer realistic.
    The root cause of the Plan's difficultly has been a persistent 
decline in the number of contributing Employers since the 1970s, which 
in large part reflects the shift in coal production from east to west 
in response to governmental environmental policy. The result is that 
today the 1974 Plan has a nearly 12-to-1 ratio of retirees to active 
miners. This imbalance clearly creates a crushing financial burden for 
the remaining contributing Employers.
    The result is today a last man's club of only ten employer groups 
support the pension benefits of over 110,000 retirees; yet the 
signatory contributing Employers of these groups only employ 10,000 
represented active miners themselves. I should note that about one-
third or more than 33,000 of the pension beneficiaries are widows of 
retired miners and nearly 10,000 are totally disabled miners.
    Passage of H.R. 5479 will allow these remaining signatory Employers 
to continue funding pension benefits for all their current and former 
employees and, at the same time, help to protect the more than 66,000 
retired ``orphan'' miners whose employers are no longer in the coal 
business. The companies that currently contribute to the 1974 Pension 
Plan are the last line of defense for the Plan and stand in the shoes 
of the government when it comes to funding the pension benefits of 
these ``orphan'' miners--who, under other circumstances, would already 
be the responsibility of the Pension Benefit Guarantee Corporation 
(PBGC). For example, when Bethlehem Steel entered bankruptcy, Employees 
of the steel company became the responsibility of the PBGC. However, 
miners who retired from Bethlehem Steel remained in the 1974 Plan with 
their full benefits guaranteed and funded by the remaining contributing 
Employers.
    Mr. Chairman, as you know, the government has been deeply involved 
in the coal industry and with these Plans since the 1940's. Indeed, the 
mines were seized in 1946 with the express purpose of establishing this 
pension program. The pension benefits did not start until the Speaker 
of the House Joseph Martin (R-MA) in 1948 met with the Fund Trustees 
and effected the appointment of Senator Styles Bridges (R-NH) as 
neutral trustee. Senator Bridges then sided with John L. Lewis, the 
UMWA President and Trustee in agreeing to a pay-as-you-go funding 
structure and setting the retirement age and length of service 
requirements that are still the core of today's benefit program.
    Together, all of us, the miners, the companies and the government, 
have made a great deal of difference in the lives of people in the 
coalfields and for our energy needs. Today we are once again at a 
juncture when the historic promise to these miners is in jeopardy. We 
believe that H.R. 5479 recognizes this stark fact and provides the best 
way to correct it. Thank you for this opportunity to support and 
protect the livelihood of the nation's retired coal miners.
                                 ______
                                 
    The Chairman. Thank you, gentlemen, both for your 
compelling testimony and the manner in which you presented it. 
Let me start by asking both of you about the types of pensions 
involved. We are not talking about gold-plated pensions, as we 
are all aware. President Roberts, you said the average pension 
for a surviving spouse for example is only $304 a month. So, 
basically, these women are getting along with their UMWA health 
care, their pension, Social Security, is that correct? That is 
what they are asked to----
    Mr. Roberts. That is correct, Mr. Chairman.
    The Chairman. That is what they are asked to live on these 
days in face of rising costs of everything it confronts us.
    Mr. Roberts. Correct.
    The Chairman. Let us discuss the orphan population for a 
moment. President Roberts, you stated that pension benefits are 
provided to 97,500 retired and disabled miners and nearly 54 
percent of the plan population is composed of people whose 
employer no longer contributes to the plan. If you add in 
active participants and terminated vested participants, the 
total population is slightly over 120,000 with about 60 percent 
of them being orphans. Could you please explain a little bit 
more in detail about how this large orphan population came 
about?
    Mr. Roberts. I believe I can, Mr. Chairman. If you go to 
what Mr. Young said about Bethlehem, at one time we know 
Bethlehem was one of the largest corporations in America, had 
at one time I think 120,000 employees. Many people may not 
realize this, but Bethlehem owned many coal mines in 
Pennsylvania and West Virginia in particular. In fact my dad's 
last employer was Bethenergy which was a subsidiary of 
Bethlehem Steel, but we know what happened with Bethlehem, they 
went into bankruptcy.
    And one of the things that has happened here, as opposed to 
the Federal Government picking up the pensions of the 
Bethenergy workers, we have between negotiations between the 
Bituminous Coal Operators' Association and the Union continued 
to provide those benefits now. The employees of Bethlehem Steel 
retirees, the government has been subsidizing those pensions 
through the Public Benefit Guarantee Corporation under ERISA. 
So, we have tried and we have been successful in the coal 
industry to make sure the government has not had to do that.
    Now it is not just Bethlehem Steel that went into 
bankruptcy over the years. If you go back and read the history 
of coal production in this country, I will take you quickly 
through this. In the '30s the UMWA was the largest union in the 
country because coal was mined by hand with a shovel, very 
labor intensive. I would like to go back to those employment 
numbers, I don't know if we would want to go back to loading 
coal again by hand.
    But as time went on we had a mechanization period in the 
late '40s, early '50s, and we went from like 800 and some 
thousand workers down to like 300,000, and then as time went on 
became more and more mechanized. However, we have also gone 
through many, many bankruptcies and employers walking away from 
this industry. You will not find, that I am aware of, one 
single UMWA retiree being paid for by PBGC right now, unless 
you, I think the Anthracite miners might have, a handful of 
those might have fallen into that category. But the two parties 
sitting here have been responsible and negotiated agreements 
that allowed for the payment of pensions to continue for those 
people who worked for companies that are gone.
    They are not there for us to deal with, the Union can't go 
and bargain with those people, they don't exist anymore. But 
the two parties sitting here have continued to see that those 
benefits arrive at the door every single month, and there are 
about 100,000 people, Mr. Chairman, Members of the Committee, 
that go to the post office or go out by the gate and reach in 
there and get a check that they depend on very heavily. And $6 
billion in the last ten years, you talk about economic stimulus 
plan, that is pretty darn good when down in southern West 
Virginia and eastern Kentucky and Appalachia. And by the way, 
every state in the Union, all fifty states, have pensioners 
that receive benefits.
    The Chairman. Thank you.
    Mr. Young. Mr. Chairman, can I follow up on that please?
    The Chairman. Sure, sure, Dave.
    Mr. Young. You know, I think I can relate from my own 
experience in a prior life before coming to Washington about 11 
years ago, I was in the coal industry about 20 years and spent 
time in Appalachia and Indiana and Illinois and Kentucky as 
well. Part of my experience was in Illinois in the early '90s. 
I was there and worked for Old Ben Coal at the time, we had a 
great operation there, we had four longwall mines and couple CM 
mines and super people working for us.
    And along came the Clean Air Act. And we saw a lot of coal 
that moved from east to west, to the benefit of the Powder 
River Basin, strictly due to sulfur. I was selling coal at the 
time for $13 a ton, and you can't buy much for $13 when you get 
2,000 pounds of anything, let alone coal, and we couldn't find 
a market for that product. And unfortunately, I mean the 
government has created part of this problem with the reduction 
in manpower and the companies that have gone bankrupt or have 
gone out of the business during this time period, most of whom 
would have been organized in the east.
    And I can relate personally at that time friends of mine, 
people that I grew to know in Illinois, I shut down four 
longwall mines doing a fabulous job, safe, efficient 
operations, and 2,000 people went home, and I am not sure any 
of them have worked a day since the early '90s. And that is 
just one example, sir, I mean there are so many out there that 
would break your heart sometimes. But we did a good job, and 
for various reasons, Clean Air Act, we have gone to lower 
sulfur coal. And you know, we see a lot of effects by climate 
and we have a lot of unknowns even going today, where are we 
going to go in the coal industry today? So, we need a policy as 
you know, and I am sure you are going to help us get there. 
Thank you.
    The Chairman. Very good observation, Dave. The Chair 
recognizes the gentleman from Washington, Mr. Hastings, who has 
72 UMWA pensioners in his district.
    Mr. Hastings. I am glad to know that. I don't know 72 of 
them.
    The Chairman. We will get you the names and addresses.
    Mr. Hastings. Mr. Chairman, I will yield whatever time I 
have to Mrs. Lummis if she has any questions.
    The Chairman. The gentlelady from Wyoming is recognized, 
who has 91 UMWA pensioners in her district.
    Ms. Lummis. Mr. Chairman, I would be delighted to have 
their names and addresses. You both have tremendous experience 
in the coal industry and a lifelong effort to see some of these 
changes through, and so my question is this. The 2000 changes 
to SMCRA were important--excuse me, the 2006 changes, the 
negotiation. How long did it take to negotiate the changes with 
all these interested parties? I know it was a herculean effort.
    Mr. Roberts. Let me be the first to try to speak to that. 
By the way I should inform you that the first person to receive 
a pension check from this fund in 1946 was from Wyoming, so 
just a little historic note here today. And let me also, if I 
may, thank the leadership in Wyoming. The Governor, the people 
that were here from Congress at the time, never ever tried to 
prevent the passage of this Act without taking care of these 
pensioners' health care. And although there were very few 
people in Wyoming who were receiving these benefits, the people 
of Wyoming understood that we can't walk away from these, and I 
wanted to thank you and everyone that was in a leadership 
position in Wyoming and continues today for that.
    This, I know this went on for years, years. I am guessing 
at a minimum four years, but it might have been more. The 
Chairman could tell you, he is doing the multiplications with 
his hands up there. But when we were struggling from '92 
forward with respect to trying to determine how to take care of 
these health care benefits until we finally passed the '06 
legislation, there was conversations about this all through 
that period, I think is the best way to answer it.
    Mr. Young. Let me comment, I was heavily involved, I came 
to town in 1999, which is close to the Chairman's ten fingers 
he put up there. And it was an issue at that time, it was there 
before I arrived, and it was number one on our list. And I also 
kind of woke up every morning praying about this orphan health 
care issue. So, then it really came together when we worked 
with all the states and we saw the value of the AML process and 
the issues that were needed in all areas, and with that I think 
it unified us as a group that we were able to solve the 
problem.
    Ms. Lummis. Well, it is to all of your credit that it was 
solved, and I deeply appreciated it as well. Question for Mr. 
Roberts. Do you support the President's proposed changes to 
SMCRA? And I am talking now about the distributions in the 
President's 2011 budget.
    Mr. Roberts. Excuse me, could you be a little more specific 
about what we are talking about?
    Ms. Lummis. It has to do with the manner in which monies 
are distributed, to exclude certified states.
    Mr. Roberts. I think the answer to that is that we don't 
support that. I must apologize that I am not as up to date on 
that as you are, but I don't think the mine workers are on 
record supporting--in fact, I believe we opposed it.
    Ms. Lummis. Thank you. And one more question, are you 
concerned that the rewrite of the stream buffer zone rule and 
other actions by the Administration will adversely impact both 
coal mining companies and their employees, some of whom are 
union members?
    Mr. Roberts. Yes, we have about, for your information, 
about 1,000 UMWA members in southern West Virginia doing this 
type work. We have worked with the industry with respect to 
that, we are concerned about that, yes, ma'am.
    Ms. Lummis. Mr. Chairman, those are all the questions I 
have. Thank you very much.
    The Chairman. Thank you. The gentleman from New Jersey, who 
has West Virginia in his blood, is recognized, and who also has 
54 UMWA pensioners in his district.
    Mr. Holt. Well, I don't represent the entire State of New 
Jersey, but there certainly are some in New Jersey and, of 
course, many friends and acquaintances in West Virginia that I 
have. But more to the point, President Roberts, you make in 
your testimony, you state that a promise was made to the 
nation's coal miners in the White House long ago in 1946. I 
would like to draw attention to that. It is not how many 
members of the UMWA are in each person's district, it is, are 
we going to make good on our national promise, our national 
obligation.
    The miners have held up their end in difficult times, in 
difficult circumstances while the energy market has changed 
underneath them. And we have to do our best to hold up our 
national obligation here, and I think the Chairman has done a 
fine job with this. Let me ask Mr. Roberts to put this in 
perspective and the declining prospects for the pension fund. 
How does this compare with other pension funds? There is 
trouble all over. I guess I would like to establish for the 
record that this isn't an example of individual mismanagement.
    Mr. Roberts. I thank you for that question and I think you 
are making a very good point, Congressman. By the way thank you 
for the kind remarks about the government keeping the promises 
it makes, because once the government starts breaking promises 
I think people start losing faith in their government. But we 
just did a presentation throughout the country at four 
different conferences. In 2008 when this fund saw the dramatic 
decline of over $3.5 billion in assets, and no one did a thing 
wrong here.
    This fund was 92 to 94 percent funded, we increased the 
contributions we asked industry to make, and those were 
significant amounts. The contribution rate went from almost 
zero to $5.50 for every hour people worked when we did the last 
bargaining. We acted responsibly. But we, the industry, the 
Union, did nothing wrong here. Certainly the pensioners did 
nothing wrong, the beneficiaries did nothing wrong. But we saw 
this collapse in '08 because of the mismanagement on Wall 
Street. And I commend the Congress for trying to deal with that 
problem also.
    But to answer your question specifically, we have a chart 
that where almost every pension plan in the United States had 
this happen to them. One of the things that hasn't been 
mentioned here that I think would be helpful to the Committee, 
many of these plans will have an opportunity to recover ten 
years, fifteen, whatever it may take. What is significantly 
problematic here with this particular pension plan, we are at 
our peak for paying out benefits.
    We are paying out $660 some million a year now, which is 
the highest amount we have ever had to pay out in any 
particular year, and we anticipate that being higher as time 
goes on for a period of time. At the same time, we have seen 
our assets dramatically reduced because of the recession. The 
problem is obvious here, is with the responsibility to pay 
these benefits you may not have the time for this fund to 
recover, like some plans may have that opportunity but this 
fund will not.
    Mr. Holt. Thank you.
    Mr. Young. Congressman, could I add to that also?
    Mr. Holt. Yes, Mr. Young.
    Mr. Young. One unique item I think of our '74 pension fund, 
that I have not heard from any other industry or area that I am 
aware, is our twelve to one ratio of all the retirees that we 
have out there which have certainly paid their way and done 
their bit to get there. And now we are down to, you know, as 
our organized industry is shrinking the ratio of active people 
to try to fund those people, we had cash in the bank, we had 
$6.7 billion at one point in time in the bank to make these 
payments. They have disappeared.
    And as President Roberts has said, with the ratio of what 
few active people we have working for that 100,000 retirees, we 
just don't have time as some other industries do. We are going 
to be forced by the PPA to come up with a huge funding hourly 
rate here, which is very difficult for someone to look at a 
$18, $20 rate per hour for pensions, let alone the hourly rate. 
The coal economics in the marketplace today will not pay for 
that.
    Mr. Holt. Well, thank you. And in the time that I don't 
have remaining I will just say that I appreciate the Chairman's 
undertaking this. The worst that can be said about this 
legislation is, I think, it might not work to put the pension 
fund back on sound footing. But for the sake of the miners we 
have to try. Thank you.
    The Chairman. The gentleman from Nebraska, Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman. Actually my questions 
have been answered, so I would yield back.
    The Chairman. Let me finish asking my questions then. In 
the '74 Plan, if the '74 Plan is certified as endangered or 
critical later this year under the Pension Protection Act of 
'06, funding improvement plans will have to be adopted. 
President Roberts, in your testimony you note that under these 
circumstances company contribution rates may have to rise from 
$5 an hour to $20 an hour. What other adjustments would have to 
be made?
    Mr. Roberts. This is some new ground we are all plowing 
here with this 2006 Act, Mr. Chairman, and I have spent more 
time than I care to talk about with lawyers who are experts in 
this field who at any given time will say, well we really don't 
know what you are supposed to do with A if B happens. But you 
have a classification of endangered, you have a classification 
of seriously endangered, and the third classification is 
critical. Obviously when you get to critical that is the most 
severe declaration that could be made under this Act, and as I 
understand it the IRS and the Department of Labor jointly have 
responsibilities for enforcing this provision.
    It requires us to come up with a, within 200 and some, it 
is a little less than a year, they give you about a little less 
than a year to come up with a funding mechanism to get out of 
endangered or in seriously endangered or in critical. Critical, 
if you get to that stage, not only would it mandate additional 
funding but adjustment in benefits. And obviously it is the 
same thing with seriously endangered too. Here is the thing I 
think we might be missing here, and I think it needs to be 
said. Would $20 an hour if the industry agreed to pay it fix 
this problem?
    I fear it might make it worse. I think we are going to have 
fewer employers that will be standing in line to pay this. I 
think what they may do is attempt to withdraw from this fund, 
which they can do under the '74 Act, but that would create the 
biggest legal fight. Perhaps I should point out that the 
collective bargaining agreement itself expires at the end of 
next year.
    A union is not in the business of saying, well let us cut 
our people's benefits. And, of course, the industry would tell 
me they are not in the business of going out of business. So, I 
think it is setting the stage here for a horrendous conflict 
between the Union and the BCOA that we didn't create. Now we 
find lots of things to fight about, we are pretty good at that, 
but we didn't ask for this one to fight over.
    So, we will have to establish a plan, the BCOA and the 
Union are required to do this under this Act, and I guess 
someone in the government either at the IRS or the Department 
of Labor, it is a little bit unclear to me who makes these 
decisions at what level, would either approve or disapprove 
this plan. But I think actually the actuaries that you have 
working for the '74 Plan are supposed to approve or disapprove 
this funding mechanism to get the plan back under a what they 
would call I guess solvency as we move forward. But it seems to 
me like we will be given an almost impossible task here.
    The Chairman. Let me ask you, worst case scenario and the 
'74 Plan is completely insolvent and the PBGC takes over.
    Mr. Roberts. That would be----
    The Chairman. What can the retirees expect?
    Mr. Roberts. Well, here is what happens, that is even over 
and above the Pension Protection Act. The Pension Protection 
Act was designed I think, I think Congress had good intentions 
there and I respect that. But I think the Pension Protection 
Act was geared so no one ever goes into the PBGC quite frankly. 
But I think they may have also inadvertently created a 
situation where PBGC will end up taking over some of these 
plans. If PBGC takes over, we all understand that they say they 
guarantee pensions, but they only guarantee them at a certain 
level. We have done somewhat of an analysis here, and I think 
people would in some instances be getting about half of what 
they are getting now if the PBGC stepped in.
    Now this is a failure of the Pension Protection Act to do 
what it is supposed to do, this would be a failure of the Union 
and the Coal Operators from being able to figure this out in 
negotiations, the PBGC is now stepping in to say, we are going 
to take over. At that point in time people do not get the 
benefit level that they were entitled to. So, people that you 
referred to as not having a gold-plated pension would be 
getting less than they are now if we ever got to that stage. 
But I am committed, and I have told our members this, I am 
committed to keep that from happening.
    The Chairman. Thank you.
    Mr. Young. Let me follow up with that, Mr. Chairman. Also 
we have also made kind of a quick look at how the beneficiaries 
could be affected if the PBGC were to, forced to take over here 
and our funding base fails for whatever reason. Unbelievable to 
me that someone who is receiving, you know, it is going to be 
an elderly lady probably, we are talking about widows here 
again who is receiving a check for $304 a month, we think that 
individual would see about a 10 percent cut in that check, if 
you can believe that, down to about $270. And it just 
progressively increases. So, you know, the more money you are 
entitled to in your package the more the PBGC makes a cut. So, 
our estimate would be, everyone would receive at a minimum of 
10 percent cut, some could see as high as a 40 percent cut in 
their retirement.
    The Chairman. Thank you, gentlemen, thank you both for your 
testimony today, we appreciate it.
    The Committee will now hear from Mr. Alfred Whitehouse, the 
Chief of the Division of Reclamation Support, Office of Surface 
Mining Reclamation Enforcement. Nice to have you, Mr. 
Whitehouse, before the Committee, good to see you again. And we 
do have your prepared testimony and it will be made part of the 
record as if actually read. You may proceed as you wish.

   STATEMENT OF ALFRED WHITEHOUSE, CHIEF OF THE DIVISION OF 
 RECLAMATION SUPPORT, OFFICE OF SURFACE MINING RECLAMATION AND 
                          ENFORCEMENT

    Mr. Whitehouse. Mr. Chairman and Members of the Committee, 
thank you very much for the opportunity to testify on behalf of 
the Office of Surface Mining Reclamation and Enforcement on 
H.R. 5479, The Coal Accountability and Retired Employee Act of 
2010. H.R. 5479 would require that the unused portion of the 
U.S. Treasury funds below the annual cap of $490 million 
established by the 2006 amendments to the Surface Mining 
Control and Reclamation Act be paid each year to the trustees 
of the 1974 United Mine Workers of America Pension Plan. While 
we recognize the importance of ensuring that retired miners 
receive their pensions, we have serious concerns with this 
bill. SMCRA established OSM for two basic purposes. First, to 
ensure that the nation's coal mines operate in a manner that 
protects citizens and the environment during mining operations 
and restores the land to beneficial use after mining. Second, 
to implement an abandoned mine land program to address the 
hazards and environmental damage created by centuries of weakly 
regulated coal mining that occurred before SMCRA's enactment.
    The AML program is funded by a fee assessed on each ton of 
coal produced and deposited in the Abandoned Mine Land 
Reclamation Fund. Historically, Congress appropriated far less 
money from the Abandoned Mine Land Fund than the total fees 
collected, which allowed the fund to grow. Beginning in Fiscal 
Year 1996, an amount equal to the interest earned by the AML 
Fund but capped at $70 million has been available for transfer 
to the United Mine Workers of America Combined Benefit Fund. 
This was to defray the cost of providing health care to certain 
retired coal miners and their dependents.
    Congress amended SMCRA as part of the Tax Relief and Health 
Care Act of 2006. The amendments removed the $70 million cap 
and added funding for two additional UMWA health care plans. 
After 2006 amendments, OSM became responsible for transferring 
an annual amount to the three UMWA health care plans based on 
estimated expenses. Any shortfall between the interest earned 
by OSM and the amount of the transfer estimated by health care 
plan trustees would be funded from the U.S. Treasury's general 
fund.
    Under Title IV of SMCRA, OSM expended $336 million from the 
general Treasury fund in Fiscal Year 2010. Approximately $227 
million was distributed through AML grants to states and 
tribes, and approximately $108 million was transferred to the 
three health care plans. H.R. 5479 would require an amount 
representing the difference between the SMCRA transfer from the 
Treasury general fund and the $490 million cap to be 
transferred to the 1974 Pension Plan every fiscal year.
    As a result, this bill would significantly increase 
expenditures from the Treasury under SMCRA and would eliminate 
all of the savings to be achieved through reductions proposed 
in the President's Fiscal Year 2011 budget. For example, the 
President's Fiscal Year 2011 budget proposes to eliminate 
Abandoned Mine Land payments to states and tribes that have 
been certified as completing reclamation of their high priority 
abandoned mine land coal problems. Under the budget proposal, 
the eliminated payments would remain in the Treasury.
    However, H.R. 5479 would require that the full amount of 
the cap on the SMCRA Treasury allocations be spent every year, 
eliminating any savings. The Administration takes seriously the 
financial problems facing many multi-employer pension plans, 
including those sponsored by the United Mine Workers of 
America, and is committed to working with Congress to find 
solutions that address the long term solvency of these plans 
and protect the retirement security of workers and their 
beneficiaries.
    However, we have serious concerns that H.R. 5479 if enacted 
would add significant new costs and eliminate any savings 
sought by the Administration's 2011 budget. Thank you very much 
for the opportunity to appear before the Committee today and 
testify on the bill. I look forward to working with the 
Committee to ensure the nation's abandoned mine lands are 
reclaimed.
    [The prepared statement of Mr. Whitehouse follows:]

 Statement of Alfred Whitehouse, Chief of the Division of Reclamation 
  Support, Office of Surface Mining Reclamation and Enforcement, U.S. 
                       Department of the Interior

    Mister Chairman and Members of the Committee, thank you for the 
opportunity to testify on behalf of the Office of Surface Mining 
Reclamation and Enforcement (OSM) regarding H.R. 5479, the Coal 
Accountability and Retired Employee Act of 2010.
    H.R. 5479 would require that the unused portion of U.S. Treasury 
funds below the annual cap of $490 million established by the 2006 
Amendments to the Surface Mining Control and Reclamation Act (SMCRA) be 
paid each year to trustees of the 1974 United Mine Workers of America 
(UMWA) Pension Plan. While we recognize the importance of ensuring that 
retired miners receive their pensions, we have serious concerns with 
this bill. We believe the AML program should remain focused on 
reclaiming high priority abandoned coal mine sites, and further, this 
bill is inconsistent with the President's Budget and goals of ensuring 
greater fiscal responsibility during today's challenging economic 
times.
Background
    SMCRA established OSM for two basic purposes. First, to ensure that 
the Nation's coal mines operate in a manner that protects citizens and 
the environment during mining operations and to restore the land to 
beneficial use following mining. Second, to implement an AML program to 
address the hazards and environmental degradation created by centuries 
of weakly regulated coal mining that occurred before SMCRA's enactment.
    Title IV of SMCRA created an AML reclamation program funded by a 
reclamation fee assessed on each ton of coal produced. The fees 
collected have been placed in the Abandoned Mine Reclamation Fund (the 
Fund). OSM, either directly or through grants to states and tribes with 
approved AML reclamation plans under SMCRA, has been using the Fund 
primarily to reclaim lands and waters adversely impacted by coal mining 
conducted before the enactment of SMCRA and to mitigate the adverse 
impacts of mining on individuals and communities. Eligible lands and 
waters were those that were mined for coal or affected by coal mining 
or coal processing, were abandoned or left inadequately reclaimed prior 
to the enactment of SMCRA on August 3, 1977, and for which there was no 
continuing reclamation responsibility under state or other Federal 
laws.
    Historically, Congress appropriated far less money from the Fund 
than the total fees collected and deposited into the Fund on an annual 
basis. This allowed the Fund to grow considerably in years past. 
Beginning in Fiscal Year 1996, an amount equal to the interest earned 
by and paid to the Fund has been available for direct transfer to the 
United Mine Workers of America Combined Benefit Fund (CBF) to defray 
the cost of providing health care benefits for certain retired coal 
miners and their dependents. Prior to 2006, OSM's annual payments to 
the CBF were limited to the lesser of the interest earned on the AML 
fund, or $70 million.
    In 2006, Congress amended SMCRA as part of the Tax Relief and 
Health Care Act of 2006, (2006 Amendments). The amendments removed the 
$70 million cap, and added funding for two additional UMWA health care 
plans. With the 2006 Amendments, OSM became responsible for 
transferring an annual amount based on the estimated expenses of three 
UMWA Health Care Plans. Any shortfall between the amount of interest 
earned by OSM, and the amount of the transfer estimated by health care 
plan trustees would be funded from the U.S. Treasury's General Fund.
H.R. 5479
    As noted earlier, the 2006 amendments capped SMCRA expenditures 
from the Treasury General Fund at $490 million per year. In the current 
fiscal year, approximately $227 million of the Treasury General Fund 
was distributed through mandatory AML grants to states and tribes and 
approximately $108 million was transferred to the three heath care 
plans. Thus, OSM expended $336 million from the Treasury General Fund 
in fiscal year 2010.
    H.R. 5479 would require an amount representing the difference 
between the SMCRA transfer from the Treasury General Fund and the $490 
million cap to be transferred every fiscal year to the 1974 UMWA 
Pension Plan. As a result, this bill would significantly increase 
expenditures from the Treasury under SMCRA.
    This bill would also most likely eliminate all of the savings to be 
achieved through reductions proposed in the President's Fiscal Year 
2011 budget. For example, the President's FY 2011 Budget proposes to 
eliminate AML payments to states and tribes that have been certified as 
completing reclamation of their high priority AML coal problems. Under 
the proposal, the eliminated payments would remain in the treasury; 
however, this bill would require that the full amount of the cap on 
SMCRA Treasury allocations be spent every year, eliminating any 
savings.
    The Administration takes seriously the financial problems facing 
many multiemployer pension plans, including those sponsored by the 
UMWA, and understands the valuable benefits that these plans provide to 
millions of workers and retirees. When people retire, they deserve to 
know that they will receive the benefits they were promised. The 
Administration is committed to working with the Congress to find 
solutions that address the long-term solvency of these plans and 
protects the retirement security of workers and retirees. However, we 
have serious concerns that H.R. 5479, if enacted, would add significant 
new costs, and eliminate savings sought by the Administration's FY 2011 
budget
    Thank you for the opportunity to appear before the Committee today 
and testify on this bill. I look forward to working with the Committee 
to ensure that the Nation's abandoned coal mine lands are adequately 
reclaimed.
                                 ______
                                 
    The Chairman. Thank you, Mr. Whitehouse. I realize fully, 
and we have seen this many times in this city, that you are I 
guess what we could call the proverbial sacrificial lamb at 
this hearing, and you have been directed by OMB what to say 
about the pending measure, and I am sure you would like to use 
this money to make the deficit look smaller, that is 
commonplace. But I would point out two things with respect to 
your testimony. First, as I am sure you are aware, there would 
be no AML Program today if it were not for this gentleman 
sitting in this chair.
    I almost singlehandedly, against utility and coal industry 
opposition, extended the program in the late '80s, and then 
again in '92, and played a major role in the '06 extension. I 
say this because I know there are people within your agency who 
simply do not like to be put in the position of managing funds 
for the purpose of mine workers' health care plans, pure and 
simple. And I believe that sentiment is coming out today with 
respect to the pending legislation.
    And second, as you heard me questioning President Cecil 
Roberts, if the '74 plan goes under, then the PBGC takes over, 
and guess who foots the bill? The taxpayers, the American 
taxpayers, and that is a fact. So, I am not going to grill you 
this morning or ask you any questions on your heartless 
testimony, but I realize the position you have been put in and 
I guess I will let it go at that. You will too, huh?
    Mr. Whitehouse. Thank you very much.
    The Chairman. OK----
    Ms. Christensen. That is fine with me too.
    The Chairman. That is fine with the gentlelady from the 
Virgin Islands? Thank you.
    Mr. Whitehouse. Thank you.
    The Chairman. If there is no further business, the 
Committee stands adjourned.
    [Whereupon, at 10:57 a.m., the Committee was adjourned.]

                                 
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