[Congressional Record (Bound Edition), Volume 149 (2003), Part 11]
[Senate]
[Pages 14197-14198]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE COAL ACT

  Mr. GRASSLEY. Mr. President, I rise today to call attention to an 
issue whose time for reform and resolution has come. I am speaking of 
the so-called ``reachback'' and ``super-reachback'' issues enacted in 
the Coal Act in the 1992 Energy bill. This insidious tax has caused 
numerous businesses to fail over the past 10 years as a result of its 
inequitable taking from those that should not have been included in 
this effort in the first place.
  The Coal Act obligated companies to pay an annual tax to cover 
premiums of coal miner retirees' health care benefits. Not only did the 
Coal Act require companies then active in the coal mining business to 
pay but it also retroactively required companies--referred to as the 
reachback companies--that were no longer in the coal mining business to 
participate and assessed them liability to pay in to the Coal Act's 
combined benefit fund, CBF. This retroactive tax has been so crippling 
for a number of companies that many have been driven into bankruptcy. 
The very existence of many other companies that are subject to this tax 
is in danger due to the heavy obligation this tax imposes on them.
  Needless to say, the provisions of the Coal Act that created the CBF 
were hastily crafted and rushed into law without the benefit of 
hearings in the Senate Finance Committee or serious examination by the 
Senate.
  The combined benefit fund is not only financed by the taxes on these 
reachback and superreachback companies. At its inception, the coal 
miners' pension funds were used for part of the startup money for the 
fund. It is additionally funded through current transfers of the 
surplus interest income of the abandoned mine lands reclamation fund, 
or the AML. As of 2003, those transfers have been in the hundreds of 
millions of dollars.
  Since the beginning, the solvency of the CBF has been in question. 
Even now, the possibility exists that, without reform in the near 
future, this fund could fail putting in jeopardy the coal miner 
retirees' health care benefits. To temporarily stabilize the CBF, 
Congress appropriated $68 million for fiscal year 2000 and another $96 
million for fiscal year 2001 and $35 million for fiscal year 2003. 
These ad hoc appropriations are not a permanent solution and do nothing 
to guarantee that retirees will continue to receive health benefits in 
future years. For some younger retirees, the benefits from the CBF is 
their only source of health care until they are eligible for Medicare. 
For

[[Page 14198]]

older retirees, it serves as a kind of Medigap policy.
  In addition to reachback companies, the current law imposed crippling 
taxes on companies such as Plumb Supply in my home State of Iowa. Plumb 
Supply has been designated as a superreachback company. The 
superreachback companies were relieved of their prospective liability 
by the U.S. Supreme Court since 1998. They were not, however, afforded 
refunds of those improperly assessed taxes they had been required to 
pay into the CBF. This hurts Plumb Supply and all other similarly 
situated companies. The superreachback companies have been waiting 
patiently for the return of their money for nearly 7 years.
  Many of us in the Senate, along with our colleagues in the House of 
Representatives, pursued legislation aimed at solving the reachback 
issue in a comprehensive manner during the 106th and 107th Congresses. 
We took on these efforts in order to create stability and fairness in 
the combined benefit fund, and to thereby provide a solution that would 
address the needs of all interested parties.
  I sincerely hope that the Ways and Means Committee will take up 
legislation during this session of Congress to continue this program 
for coal mine retirees and their beneficiaries in a responsible 
fashion, while ending the unfair taxation imposed on businesses no 
longer active in the coal mining business.
  Such legislation should do four things. First, it should provide for 
permanent solvency for the combined benefit fund. Second, it should 
relieve all reachback companies of prospective liability. Third, the 
long-overdue refunds to the superreachback companies should be 
satisfied immediately. Finally companies with an ongoing reachback 
liability should be given an opportunity to prefund their obligations 
on an actuarially sound basis.
  If the Ways and Means Committee can send us this legislation, the 
Finance Committee will be most happy to receive and examine it so this 
issue can finally be resolved.

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