[Congressional Record Volume 146, Number 74 (Wednesday, June 14, 2000)]
[Senate]
[Pages S5113-S5115]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CONRAD (for himself and Mr. Smith of Oregon):
  S. 2729. A bill to amend the Internal Revenue Code of 1986 and the 
Surface Mining Control and Reclamation Act of 1977 to restore stability 
and equity to the financing of the United Mine Workers of America 
Combines Benefit Fund by eliminating the liability of reachback 
operations, to provide additional sources of revenue to the Fund, and 
for other purposes; to the Committee on Finance.


                combined fund stability and fairness act

  Mr. CONRAD. Mr. President, I rise to introduce, along with my 
colleague, Senator Gordon Smith of Oregon, legislation that we call the 
Combined Fund Stability and Fairness Act.
  The Coal Act of 1992 represents an unbreakable commitment to retired 
miners, their spouses, and their dependents. But it is clear today that 
if we do not address the shortcomings of the 1992 Act, we will fall 
short of keeping that promise.
  Simply put, the Combined Benefit Fund needs to be put on a firm 
financial footing so that the miners and their family members--who 
depend on the health benefits the Fund provides--can stop worrying 
about when their benefits might be cut.
  The Coal Act of 1992 cast a wide net in identifying companies that 
would be obligated to pay into the fund. Not only were companies then 
in the coal mining business included, but the Act also brought in 
companies that were no longer in the bituminous coal mining business as 
well as successor companies. Nearly eight years later, we know that 
Congress overreached.
  Two years ago, the Supreme Court in Eastern Enterprises versus Apfel, 
held that the so-called ``super reachback'' companies should not have 
been included among Combined Benefit Fund contributors in the first 
place.
  The logic of the Court's decision in Eastern appears just as 
applicable to the reachback companies. They should not have been 
included either.
  The bill the Senator from Oregon and I are introducing today is not a 
bailout for the reachback companies. In fact, the reachbacks will not 
receive one penny under this legislation. It provides relief to the 
reachbacks on a prospective basis only.
  There are a limited number of companies that will receive payments 
under this bill. One group--what we refer to as the ``final judgment'' 
companies--are companies in the same situation as Eastern Enterprises. 
However, they had been unsuccessful in litigation decided before the 
Eastern decision, and were barred from recovery by the doctrine of res 
judicata. The other group--the ``stranded interim'' companies--are 
companies that were assessed following the enactment of the 1992 Act 
but were never assigned any beneficiaries.
  The total of the refunds to be paid to these two groups of companies 
amounts to about $28 million. That is the only money under this bill 
that would not go retired miners and their dependents.
  I think this is a fundamental question of fairness and equity. Those 
companies ought to be treated the same way as those companies that were 
relieved of the obligation because of the Eastern decision. That is 
just basic fairness.
  To help ensure the solvency of the Combined Benefit Fund into the 
future, the legislation would extend the Abandoned Mine Reclamation Fee 
program beyond its current expiration date of 2004 through 2010. The 
interest earned on the Abandoned Mine Lands Fund would be made 
available to the Combined Benefit Fund. This is similar to

[[Page S5114]]

the approach Congress took with respect to the AML fund in the 1992 
Act.
  It is important to stress that the AML fees would be lowered 
substantially from current levels. The rate on surface-mined coal would 
drop from 35 cents per ton to 20 cents per ton; the rate on 
underground-mined coal would drop from 15 cents per ton to 5 cents per 
ton; and the rate on lignite coal would drop from 10 cents per ton to 5 
cents per ton.
  The legislation also authorizes the transfer of $38 million in 
general fund revenues every year to cover any shortfall in the fund.
  The combination of the AML Fund interest money, the premium 
adjustment mechanism, and the annual general fund transfers will ensure 
that all Combined Benefit Fund obligations will be fully met.
  The fundamental purpose of the Combined Fund Stability and Fairness 
Act is to provide a secure, sound and fair financial foundation for the 
benefits miners have been promised. It is my hope that Congress will 
not delay in addressing this issue. Too many people are depending on 
us.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2729

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENTS OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Combined 
     Fund Stability and Fairness Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

                     TITLE I--REACHBACK PROVISIONS

     SEC. 101. REFORM OF REACHBACK PROVISIONS OF COAL INDUSTRY 
                   HEALTH BENEFIT SYSTEM.

       (a) Agreements Covered by Health Benefit System.--
       (1) In general.--Section 9701(b)(1) (defining coal wage 
     agreement) is amended to read as follows:
       ``(1) Coal agreements.--
       ``(A) 1988 agreement.--The term `1988 agreement' means the 
     collective bargaining agreement between the settlors which 
     became effective on February 1, 1988.
       ``(B) Coal wage agreement.--The term `coal wage agreement' 
     means the 1988 agreement and any predecessor to the 1988 
     agreement.''
       (2) Conforming amendment.--Section 9701(b) (relating to 
     agreements) is amended by striking paragraph (3).
       (b) Definitions Applicable to Operators.--
       (1) Signatory operator.--Section 9701(c)(1) (defining 
     signatory operator) is amended to read as follows:
       ``(1) Signatory operator.--The term `signatory operator' 
     means a 1988 agreement operator.''
       (2) 1988 agreement operator.--Section 9701(c)(3) (defining 
     1988 agreement operator) is amended to read as follows:
       ``(3) 1988 agreement operator.--The term `1988 agreement 
     operator' means--
       ``(A) an operator which was a signatory to the 1988 
     agreement, or
       ``(B) a person in business which, during the term of the 
     1988 agreement, was a signatory to an agreement (other than 
     the National Coal Mine Construction Agreement or the Coal 
     Haulers' Agreement) containing pension and health care 
     contribution and benefit provisions which are the same as 
     those contained in the 1988 agreement.
     Such term shall not include any operator who was assessed, 
     and paid the full amount of, contractual withdrawal liability 
     to the 1950 UMWA Benefit Plan, the 1974 UMWA Benefit Plan, or 
     the Combined Fund.''
       (3) Conforming amendments.--
       (A) Section 9711(a) is amended by striking ``maintained 
     pursuant to a 1978 or subsequent coal wage agreement''.
       (B) Section 9711(b)(1) is amended by striking ``pursuant to 
     a 1978 or subsequent coal wage agreement''.
       (c) Modifications To Reflect Reachback Reforms.--
       (1) Board of trustees of combined fund.--
       (A) In general.--Section 9702(b)(1) is amended--
       (i) by striking ``one individual who represents'' in 
     subparagraph (A) and inserting ``two individuals who 
     represent'',
       (ii) by striking subparagraph (B) and redesignating 
     subparagraphs (C) and (D) as subparagraphs (B) and (C), 
     respectively, and
       (iii) by striking ``(A), (B), and (C)'' in subparagraph (C) 
     (as so redesignated) and inserting ``(A) and (B)''.
       (B) Conforming amendment.--Section 9702(b)(3) is amended to 
     read as follows:
       ``(3) Special rule.--If the BCOA ceases to exist, any 
     trustee or successor under paragraph (1)(A) shall be 
     designated by the 3 employers who were members of the BCOA on 
     the enactment date and who have been assigned the greatest 
     number of eligible beneficiaries under section 9706.''
       (C) Transition rule.--Any trustee serving on the date of 
     the enactment of this Act who was appointed to serve under 
     section 9702(b)(1)(B) of the Internal Revenue Code of 1986 
     (as in effect before the amendments made by this paragraph) 
     shall continue to serve until a successor is appointed under 
     section 9702(b)(1)(A) of such Code (as in effect after such 
     amendments).
       (2) Assignment of beneficiaries.--Section 9706 (relating to 
     assignment of eligible beneficiaries) is amended by adding at 
     the end the following:
       ``(h) Assignment as of October 1, 2000.--
       ``(1) In general.--Effective October 1, 2000, the 
     Commissioner of Social Security shall--
       ``(A) revoke all assignments to persons other than 1988 
     agreement operators for purposes of assessing premiums for 
     periods after September 30, 2000,
       ``(B) make no further assignments to persons other than 
     1988 agreement operators, and
       ``(C) terminate all unpaid liabilities of persons other 
     than 1988 agreement operators with respect to eligible 
     beneficiaries whose assignment to such persons is pending on 
     October 1, 2000.
       ``(2) Reassignment upon purchase.--This subsection shall 
     not be construed to prohibit the reassignment under 
     subsection (b)(2) of an eligible beneficiary.''
       (3) Liability for 1992 plan.--
       (A) In general.--Section 9712(d) (relating to guarantee of 
     benefits) is amended by striking paragraph (3) and by 
     redesignating paragraphs (4), (5), and (6) as paragraphs (3), 
     (4), and (5), respectively.
       (B) Conforming amendment.--Section 9712(d)(3) (as 
     redesignated under subparagraph (A)) is amended by striking 
     ``or last signatory operator described in paragraph (3)''.
       (C) Effective date.--The amendments made by this paragraph 
     shall apply to premiums assessed for periods after September 
     30, 2000, except that a person other than a 1988 agreement 
     operator shall not be liable for any unpaid premium under 
     section 9712(d) of the Internal Revenue Code of 1986 as of 
     such date if liability for such premium had not been assessed 
     or was being contested on such date.

                     TITLE II--FINANCING PROVISIONS

                          Subtitle A--Premiums

     SEC. 201. REDUCTION IN ANNUAL PREMIUMS TO COAL MINERS 
                   COMBINED FUND IF SURPLUS EXISTS.

       (a) In General.--Part II of subchapter B of chapter 99 
     (relating to financing of Combined Benefit Fund) is amended 
     by inserting after section 9704 the following new section:

     ``SEC. 9704A. REDUCTIONS IN HEALTH BENEFIT PREMIUM IF SURPLUS 
                   EXISTS.

       ``(a) General Rule.--If this section applies to any plan 
     year, the per beneficiary premium used for purposes of 
     computing the health benefit premium under section 9704(b) 
     for the plan year shall be the reduced per beneficiary 
     premium determined under subsection (c).
       ``(b) Years to Which Section Applies.--
       ``(1) In general.--This section applies to any plan year 
     beginning after September 30, 2000, if the trustees determine 
     that the Combined Fund has an excess reserve for the plan 
     year.
       ``(2) Excess reserve.--For purposes of this section--
       ``(A) In general.--The term `excess reserve' means, with 
     respect to any plan year, the excess (if any) of--
       ``(i) the projected net assets as of the close of the test 
     period for the plan year, over
       ``(ii) the projected 3-month asset reserve as of such time.
       ``(B) Projected net assets.--For purposes of subparagraph 
     (A)(i), the projected net assets shall be the amount of the 
     net assets which the trustees determine will be available at 
     the end of the test period for projected fund benefits. Such 
     determination shall be made in the same manner used by the 
     Combined Fund to calculate net assets available for projected 
     fund benefits in the Statement of Net Assets (Deficits) 
     Available for Fund Benefits for purposes of the monthly 
     financial statements of the Combined Fund for the plan year 
     beginning October 1, 1999.
       ``(C) Projected 3-month asset reserve.--For purposes of 
     subparagraph (A)(ii), the projected 3-month asset reserve is 
     an amount equal to 25 percent of the projected expenses 
     (including administrative expenses) from the health benefit 
     premium account and unassigned beneficiaries premium account 
     for the plan year immediately following the test period. The 
     determination of such amount shall be based on the 10-year 
     forecast of the projected net assets and cash balance of the 
     Combined Fund prepared annually by an actuary retained by the 
     Combined Fund.
       ``(D) Test period.--For purposes of this section, the term 
     `test period' means, with respect to any plan year, the plan 
     year and the following plan year.
       ``(c) Reduced Per Beneficiary Premium.--For purposes of 
     this section, the reduced per beneficiary premium for any 
     plan year to which this section applies is the per 
     beneficiary premium determined under section 9704(b)(2) 
     without regard to this section, reduced (but not below zero) 
     by--

[[Page S5115]]

       ``(1) the excess reserve for the plan year, divided by
       ``(2) the total number of eligible beneficiaries which are 
     assigned to assigned operators under section 9706 as of the 
     close of the preceding plan year.
       ``(d) Termination of Premium Reduction.--If, on any day 
     during a plan year to which this section applies, the 
     Combined Fund has net assets available for projected fund 
     benefits (determined in the same manner as projected net 
     assets under subsection (b)(2)(B)) in an amount less than the 
     projected 3-month asset reserve determined under subsection 
     (b)(2)(C) for the plan year--
       ``(1) this section shall not apply to months in the plan 
     year beginning after such day, and
       ``(2) the monthly installment under section 9704(g)(1) for 
     such months shall be equal to the amount which would have 
     been determined if the health benefits premium under section 
     9704(b) had not been reduced under this section for the plan 
     year.''
       (b) Conforming Amendments.--
       (1) Section 9704(a) (relating to annual premiums) is 
     amended by striking ``Each'' and inserting ``Subject to 
     section 9704A, each''.
       (2) The table of sections for part II of subchapter B of 
     chapter 99 is amended by inserting after the item relating to 
     section 9704 the following new item:

``Sec. 9704A. Reductions in health benefit premium if surplus exists.''

       (c) Effective Date.--The amendments made by this subsection 
     shall apply to plan years of the Combined Fund beginning 
     after September 30, 2000.

     SEC. 202. ELECTION TO PREFUND REQUIRED CONTRIBUTIONS.

       (a) Combined Fund.--Section 9704(g) (relating to payment of 
     premiums) is amended by redesignating paragraph (2) as 
     paragraph (3) and by inserting after paragraph (1) the 
     following:
       ``(2) Election to prefund.--
       ``(A) In general.--An assigned operator shall be entitled 
     to prefund its obligations to the Combined Fund by depositing 
     into an irrevocable trust dedicated solely to the payment of 
     such obligations an amount which the board of trustees 
     determines, on the basis of reasonable actuarial assumptions, 
     to be equal to the present value of the operator's present 
     and future obligations to the Combined Fund.
       ``(B) Effects on liability.--If an assigned operator 
     prefunds its obligations under this paragraph--
       ``(i) the assigned operator (and any successor) shall 
     continue to remain liable for such obligations if the amount 
     deposited is insufficient, but
       ``(ii) any related person to such operator (or successor) 
     shall be relieved of any liability for such obligations.''
       (b) 1992 Fund.--Section 9712(d) (relating to guarantee of 
     benefits), as amended by section 101, is amended by adding at 
     the end the following:
       ``(6) Election to prefund.--
       ``(A) In general.--A 1988 last signatory operator shall be 
     entitled to prefund its obligations to the 1992 UMWA Benefit 
     Plan by depositing into an irrevocable trust dedicated solely 
     to the payment of such obligations an amount which the board 
     of trustees determines, on the basis of reasonable actuarial 
     assumptions, to be equal to the present value of the 
     operator's present and future obligations to such plan.
       ``(B) Effects on liability.--If a 1988 last signatory 
     operator prefunds its obligations under this paragraph--
       ``(i) the operator (and any successor) shall continue to 
     remain liable for such obligations if the amount deposited is 
     insufficient, but
       ``(ii) any related person to such operator (or successor) 
     shall be relieved of any liability for such obligations.''

     SEC. 203. FIRST YEAR PAYMENTS OF 1988 OPERATORS.

       So much of section 9704(i)(1)(D) as precedes clause (ii) is 
     amended to read as follows:
       ``(D) Premium reductions and refunds.--
       ``(i) 1st year payments.--In the case of a 1988 agreement 
     operator making payments under subparagraph (A)--

       ``(I) the premium of such operator under subsection (a) 
     shall be reduced by the amount paid under subparagraph (A) by 
     such operator for the plan year beginning February 1, 1993, 
     or
       ``(II) if the amount so paid exceeds the operator's 
     liability under subsection (a), the excess shall be refunded 
     to the operator.''

       Subtitle B--Transfers From Abandoned Mine Reclamation Fund

     SEC. 211. TRANSFER OF INTEREST FROM ABANDONED MINE 
                   RECLAMATION FUND TO COMBINED FUND.

       (a) In General.--Section 402(h)(2) of the Surface Mining 
     Control and Reclamation Act of 1977 (30 U.S.C. 1232(h)(2)) is 
     amended to read as follows:
       ``(2)(A) Except as provided in subparagraph (B), the 
     Secretary shall transfer from the fund to the United Mine 
     Workers of America Combined Benefit Fund established under 
     section 9702 of the Internal Revenue Code of 1986 for any 
     fiscal year the amount of interest which the Secretary 
     estimates will be earned and paid to the fund during the 
     fiscal year.
       ``(B) The Secretary shall increase the amount transferred 
     under subparagraph (A) for fiscal year 2001 by the excess 
     of--
       ``(i) the total amount of interest earned and paid to the 
     fund after September 30, 1992, and before October 1, 2000, 
     over
       ``(ii) the total amount transferred to the Combined Fund 
     under this subsection for fiscal years beginning before 
     October 1, 2000.''
       (b) Conforming Amendments.--Section 204(h) of such Act (30 
     U.S.C. 1232(h)) is amended by striking paragraph (3) and by 
     redesignating paragraph (4) as paragraph (3).
       (c) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning after September 30, 
     2000.

     SEC. 212. MODIFICATIONS OF ABANDONED MINE RECLAMATION FEE 
                   PROGRAM.

       (a) Reductions in Reclamation Fees.--Section 402(a) of the 
     Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 
     1232(a)) is amended--
       (1) by striking ``35 cents'' and inserting ``20 cents'',
       (2) by striking ``15 cents'' and inserting ``5 cents'', and
       (3) by striking ``10 cents'' and inserting ``5 cents''.
       (b) Extension of Fee Program.--Section 402(b) of such Act 
     (30 U.S.C. 1232(b)) is amended by striking ``2004'' and 
     inserting ``2010''.
       (c) Effective Date.--The amendments made by subsection (a) 
     shall apply to fiscal years beginning after September 30, 
     2000.

     SEC. 213. USE OF FUNDS TRANSFERRED FROM ABANDONED MINE 
                   RECLAMATION FUND.

       (a) In General.--Section 9705(b)(2) of the Internal Revenue 
     Code of 1986 (relating to use of funds) is amended to read as 
     follows:
       ``(2) Use of funds.--The amount transferred under paragraph 
     (1) for any fiscal year shall be used--
       ``(A) first, to refund to an assigned operator (and any 
     related person to such operator) an amount equal to the sum 
     of--
       ``(i) any amount paid by such operator or person to the 
     Combined Fund (and not previously refunded) solely by reason 
     of the operator having been a signatory to a pre-1974 coal 
     wage agreement, plus
       ``(ii) interest on the amount under clause (i) at the 
     overpayment rate established under section 6621 for the 
     period from the payment of such amount to the refund under 
     this subparagraph,
       ``(B) second, to make any refund required under section 
     9704(i)(1)(D)(i)(II),
       ``(C) third, to proportionately reduce the unassigned 
     beneficiary premium under section 9704(a)(3) of each assigned 
     operator for the plan year in which transferred, and
       ``(D) last, to pay the amount of any other obligation 
     occurring in the Combined Fund.''
       (b) Effective Date.--The amendment made by this subsection 
     shall apply to fiscal years beginning after September 30, 
     2000.

                       Subtitle C--Authorization

     SEC. 221. AUTHORIZATION OF TRANSFER OF FUNDS TO COMBINED 
                   BENEFIT FUND.

       Section 9705 (relating to transfers to the Combined Benefit 
     Fund) is amended by adding at the end the following:
       ``(c) Authorization of Appropriations.--
       ``(1) In general.--There is authorized to be appropriated 
     $38,000,000 for each fiscal year beginning after September 
     30, 2000.
       ``(2) Use of funds.--Any amounts transferred to the 
     Combined Fund under paragraph (1) shall be available, without 
     fiscal year limitation, to cover any shortfall in any premium 
     account established under section 9704(e).
       ``(3) Transfers.--
       ``(A) In general.--The Secretary shall transfer amounts 
     appropriated under paragraph (1) on October 1 of each fiscal 
     year.
       ``(B) Excess amounts.--If the Secretary, after examining 
     the audit of the Combined Fund by the Comptroller General of 
     the United States, determines that the amount transferred for 
     any fiscal year exceeds the amount required to cover 
     shortfalls for that year, the Secretary shall notify the 
     Committees on Appropriations of the House of Representatives 
     and the Senate and the authorization of appropriations for 
     the first fiscal year after the determination shall be 
     reduced by the amount of the excess.''

     SEC. 222. ANNUAL AUDIT.

       Section 9702 (relating to establishment of the Combined 
     Fund) is amended by adding at the end the following:
       ``(d) Annual Audit.--
       ``(1) Audit.--The Comptroller General of the United States 
     shall conduct an annual audit of the Combined Fund. Such 
     audit shall include--
       ``(A) a review of the progress the Combined Fund is making 
     toward a managed care system as required under this 
     subchapter, and
       ``(B) a review of the use of, and necessity for, amounts 
     transferred to the Combined Fund under section 9705(c).
       ``(2) Report.--The Comptroller General shall report the 
     results of any audit under paragraph (1) to the Secretary of 
     the Treasury and to the appropriate committees of Congress, 
     including its recommendations (if any) as to any 
     administrative savings which may be achieved without reducing 
     the effective level of benefits under section 9703.''
                                 ______