[House Report 107-647]
[From the U.S. Government Publishing Office]



                                                                       
107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-647

======================================================================
 
   COAL ACCOUNTABILITY AND RETIRED EMPLOYEE ACT FOR THE 21ST CENTURY

                                _______
                                

 September 9, 2002.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Hansen, from the Committee on Resources, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3813]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Resources, to whom was referred the bill 
(H.R. 3813) to modify requirements relating to allocation of 
interest that accrues to the Abandoned Mine Reclamation Fund, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                          PURPOSE OF THE BILL

    The purpose of H.R. 3813 is to modify requirements relating 
to allocation of interest that accrues to the Abandoned Mine 
Reclamation Fund.

                  BACKGROUND AND NEED FOR LEGISLATION

    The Surface Mining Control & Reclamation Act of 1977 
(Public Law 95-87; 30 U.S.C. 1201 et seq.) established an 
abandoned coal mine reclamation fund supported by a fee on 
domestically produced coal. Section 6002 of Public Law 101-508 
provided for investing unappropriated abandoned mine land (AML) 
funds and unspent appropriated funds in U.S. Treasury bills.
    The Coal Act of 1992 created the United Mine Workers of 
America (UMWA) Combined Benefits Fund (CBF) to provide health 
benefits by merging retiree benefit programs negotiated between 
the Bituminous Coal Operators Association (BCOA) and the UMWA 
in 1950. The CBF is financed through premiums levied on 
companies and individuals signatory to BCOA-UMWA labor 
agreements.
    An ``unassigned beneficiaries'' class of retirees exists 
where no signatory company exists to pay their premiums. To 
finance these benefits, beginning in 1996, Congress provided 
that up to 100 percent of the interest collected on the AML 
fund in each fiscal year or $70 million, whichever is smaller, 
be transferred to the CBF (Section 19143 of Public Law 102-
486). This law also authorized transfer to the CBF of the 
interest earned on AML money from 1992 through 1996, if needed 
to finance net asset deficits exceeding the actual interest 
earned during the fiscal year, up to the $70 million cap. The 
transferred funds are not subject to appropriation and can only 
be used to provide benefits to unassigned beneficiaries. The 
House Committee on Ways and Means has jurisdiction over the 
finances of the CBF, but the Resources Committee must authorize 
transfers from the AML to the CBF.
    The number of unassigned beneficiaries has significantly 
increased due to several court decisions limiting signatory 
companies and bankruptcies. The effects of these factors 
combined with rising health care costs have created a financial 
crisis for the CBF. The problem has been temporarily solved by 
emergency appropriations from the unobligated interest balance 
earned on AML funds.
    H.R. 3813 would remove the $70 million cap on annual 
transfers of interest balances to the CBF. It would also remove 
the requirement that transferred funds must be used to provide 
benefits for the unassigned beneficiaries and allows interest 
transfers to be made to offset the amount of any deficits to 
the CBF to prevent reduction in health care coverage.

                            COMMITTEE ACTION

    H.R. 3813 was introduced on February 27, 2002, by 
Congressman Nick J. Rahall II (D-WV). The bill was referred to 
the Committee on Resources, and within the Committee to 
theSubcommittee on Energy and Mineral Resources. On June 26, 2002, the 
Full Committee met to consider the bill and by unanimous consent 
discharged the Subcommittee on Energy and Mineral Resources from 
further consideration of H.R. 3813. No amendments were offered and the 
bill was ordered favorably reported to the House of Representatives by 
unanimous consent.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides that H.R. 3813 may be cited as the 
``Coal Accountability and Retired Employee Act for the 21st 
Century.''
    Section 2 authorizes the transfer of any interest received 
on unappropriated AML funds and unspent appropriated funds to 
the CBF in such amounts needed to offset the estimated deficit 
in net assets in the CBF. The effect of Section 2 is to remove 
the $70 million cap on annual transfers of interest balances to 
the CBF and the requirement that the transfers can only be used 
to offset deficits in the premium account for unassigned 
beneficiaries.

            COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Resources' oversight findings and recommendations 
are reflected in the body of this report.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Article I, section 8 of the Constitution of the United 
States grants Congress the authority to enact this bill.

                    COMPLIANCE WITH HOUSE RULE XIII

    1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(3)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    2. Congressional Budget Act. As required by clause 3(c)(2) 
of rule XIII of the Rules of the House of Representatives and 
section 308(a) of the Congressional Budget Act of 1974, this 
bill does not contain any new budget authority, credit 
authority, or an increase or decrease in revenues or tax 
expenditures. According to the Congressional Budget Office, 
enactment of this bill would result in a net change in direct 
spending of $405 million over the 2004-2012 time period.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to modify requirements relating to 
allocation of interest that accrues to the Abandoned Mine 
Reclamation Fund.
    4. Congressional Budget Office Cost Estimate. Under clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 403 of the Congressional Budget Act 
of 1974, the Committee has received the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 5, 2002.
Hon. James V. Hansen,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3813, the Coal 
Accountability and Retired Employee Act for the 21st Century.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Alexis 
Ahlstrom.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 3813--Coal Accountability and Retired Employee Act for the 21st 
        Century

    Summary: H.R. 3813 would require the Office of Surface 
Mining to transfer any remaining interest credited to the 
Abandoned Mine Reclamation (AML) Fund to the United Mine 
Workers of America Combined Benefit Fund (CBF) in the case of a 
deficit of net assets in that fund (that is, when expenditures 
exceed revenues in a particular year). CBO estimates that the 
CBF will record a deficit of net assets in 2002 and in each 
year thereafter.
    If the bill were enacted, CBO estimates that an additional 
$71 million in 2003 and about $500 million over the 2003-2012 
period would be transferred to the CBF, assuming that the 
reclamation fees paid by coal companies to the AML Fund expire 
in 2004 as scheduled and that no discretionary appropriations 
are made from the fund after fiscal year 2002. By themselves, 
the transfers, from one federal budget account to another, 
would not affect the budget totals. The transfers would, 
however, provide additional resources to the CBF, which would 
otherwise run out of money to pay health benefits to retired 
mine workers and their dependents. CBO estimates that those 
transfers would result in additional benefit payments of $4 
million in 2004 and $421 million over the 2004-2012 period.
    In addition, because of the increased payments from the 
CBF, federal Medicaid spending would decline by about $2 
million a year beginning in 2005. Therefore, CBO estimates that 
the net change in direct spending would be an increase of $405 
million over the 2004-2012 period. Because implementing H.R. 
3813 would affect direct spending, pay-as-you-go procedures 
would apply.
    H.R. 3813 contains no private-sector or intergovernmental 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would reduce Medicaid spending by state governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3813 is shown in Table 1. The costs of 
this legislation fall within budget function 550 (health).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Additional Spending from the CBF:
    Estimated Budget Authority............................        0        0        4       63       60       58
    Estimated Outlays.....................................        0        0        4       63       60       58
Federal Share of Medicaid:
    Estimated Budget Authority............................        0        0      (*)       -2       -2       -2
    Estimated Outlays.....................................        0        0      (*)       -2       -2       -2
Net Effect on Federal Spending:
    Estimated Budget Authority............................        0        0        4       61       58       56
    Estimated Outlays.....................................        0        0        4       61       58       56
----------------------------------------------------------------------------------------------------------------
Note.--*=Reduction of less than $500,000.

    Basis of estimate: The Abandoned Mine Reclamation Fund is 
supported by a fee on domestically produced coal, and a portion 
of the interest credited to that fund each year is transferred 
to the Combined Benefit Fund to provide health benefits for 
certain retired mine workers and their dependents. Under 
current law, the transfer of interest earnings is capped at $70 
million a year. H.R. 3813 would remove that cap and would allow 
interest transfers to be made to offset any deficits in the 
CBF. CBO estimates that the CBF will run a deficit of more than 
$450 million over the 2003-2012 period because the cost of 
providing health benefits has been growing more rapidly than 
the premiums collected by the fund. It the fill is enacted, CBO 
estimates that an additional $71 million would be transferred 
in 2003 to cover deficits in 2002 and 2003.
    Although the CBF is privately administered, revenues to the 
fund and outlays from the fund are recorded on the federal 
budget. The payments to the fund--health insurance premiums 
paid by certain coal producers--are mandated by the government, 
and the benefits paid by the fund are a federal entitlement 
program. Therefore, the transfer of funds from the AML to the 
CBF is an intragovernmental transaction and, by itself, has no 
net budgetary effect.
    The budgetary impact of H.R. 3813 would not be the transfer 
itself, but the additional benefits that would be paid from the 
CBF as a result of the transfer. In the event of a deficit, the 
trustees of the CBF will first try to balance the fund by 
reducing spending on items and services other than health 
benefits. But if the deficit is large enough, they will have to 
cut benefits. CBO estimates that the fund will have to reduce 
benefits starting in 2004 and will need to cut $421 million in 
benefits over the 2004-2012 period under current law--that is, 
with transfers limited to $70 million a year.
    This cost estimate assumes that no appropriations are made 
from the AML Fund after 2002, and that the fund receives no 
additional income after 2004 from taxes on companies producing 
coal. (Under current law, those taxes expire on September 30, 
2004.) On that basis, CBO estimates that there would be enough 
interest available in the AML Fund to cover net deficits in the 
CBF so that no benefits would be cut through 2012 if H.R. 3813 
were enacted. Thus, the transfer of interest from the AML Fund 
to cover net deficits in the CBF would enable the CBF to avoid 
reducing benefits, and therefore, would increase direct 
spending by $421 million over the 2004-2012 period.
    The result would be different if additional appropriations 
for other purposes were made from the AML Fund after 2002. If 
appropriations continue at current levels (without extensions 
of the taxes), the AML Fund would gradually be depleted and the 
sums available for transfer to the CBF would decline over time. 
After a few years, benefits payments would have to be reduced. 
Under that scenario, enactment of H.R. 3813 would not add to 
aggregate spending over the 2004-2012 period.
    For beneficiaries who are also enrolled in Medicaid, a loss 
of benefits from the CBF would shift costs to the Medicaid 
program. Because this legislation would eliminate the need to 
reduce health benefits paid from the CBF, it would reduce the 
health care costs that would have to be paid by Medicaid. CBO 
estimates that this change would decrease federal Medicaid 
spending by $2 million in 2005 and $16 million over the 2005-
2012 period.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays that are subject to pay-
as-you-go procedures are shown in the following table. For the 
purposes of enforcing pay-as-you-go procedures, only the 
effects through 2006 are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      0      4     61     58     56     53     50     45     41     36
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: This bill 
contains no new intergovernmental or private-sector mandates as 
defined in UMRA. Because additional resources in the Combined 
Benefit Fund would provide health benefits to eligible 
beneficiaries, Medicaid spending would decrease. Consequently, 
CBO estimates that states would save over $1 million in 2005 
and $12 million over the 2003-2012 period in the Medicaid 
program.
    Estimate prepared By: Federal Costs: AML and CBF Funds--
Alexis Ahlstrom, Medicaid--Eric Rollings, Impact on State, 
Local, and Tribal Governments: Leo Lex; and Impact on the 
Private Sector: Lauren Marks.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                    COMPLIANCE WITH PUBLIC LAW 104-4

    This bill contains no unfunded mandates.

                PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

    This bill is not intended to preempt any State, local or 
tribal law.

                        CHANGES IN EXISTING LAW

    If enacted, this bill would make no changes to existing 
law.

                  ADDITIONAL VIEWS OF HON. NICK RAHALL

    The purpose of this legislation is to restore our Nation's 
historic commitment to insuring lifetime health care for 
retired coal miners. At the outset, I would note that joining 
me as a sponsor of H.R. 3813 is the distinguished gentleman 
from Ohio, Bob Ney.
    Enactment this year of CARE 21, the ``Coal Accountability 
and Retired Employee Act for the 21st Century,'' is necessary 
if we are to avoid seeing a curtailment in health care coverage 
for thousands of retired coal miners and their widows. Indeed, 
this would not be the first time that Congress has acted in 
this matter. In 1992, in what is known as the ``Coal Act'' 
enacted as part of the Energy Policy Act, Congress established 
the UMWA Combined Benefit Funds (CBF) combining the union's 
1950 and 1974 benefit plans. This action came in response to 
changes in the coal industry which created a large class of 
`orphaned' miners whose benefits were no longer being paid by 
an active coal company. A key feature of the Coal Act was the 
financing of orphaned miner health care costs through an annual 
transfer of a portion of the interest which accrues to the 
unappropriated balance in the Abandoned Mine Reclamation Fund.
    Simply put, in restoring abandoned coal mine lands we must 
not abandon the retired coal miner.
    The Coal Act was working well, health care for retirees 
whose former employers could be identified would be financed by 
premiums paid by those companies while providing for a transfer 
of reclamation fund interest to finance orphaned miner care.
    However, a barrage of litigation and adverse court 
decisions once again is threatening the financial integrity of 
the program. Among them, what is known as the ``Chater'' 
decision which overturned the Social Security Administration's 
premium determination reducing premiums by 10 percent. Another 
court decision ordered the CBF to refund about $40 million in 
contributions. And the Supreme Court has rendered two 
especially harsh decisions; in the Eastern Enterprise case 
adding some 8,000 retirees to the orphaned miner rolls and just 
last week ruling that successor companies to signatories of the 
national wage agreement are not responsible to continue paying 
premiums for former employees. The result: Without a new source 
of funds, the CBF will face a cash shortage most likely 
beginning at the end of this year which could force 
curtailments in health care coverage for some 50,000 retirees 
and widows whose average age is 78.
    CARE 21 takes a relatively simple and straightforward 
approach to addressing this impending crisis: It would lift the 
restriction in current law that reclamation fund interest can 
only be used for orphaned miner health care. Rather, it would 
allow AML interest transfers to be made for the purpose of 
offsetting any deficit in net assets in the CBF.
    I would note that interest accrues to the Abandoned Mine 
Reclamation Fund at a rate of, for example, $103 million last 
fiscal year. Meanwhile, there is a $1.8 billion unappropriated 
balance in the Fund. CARE 21 in no way adversely affects the 
abandoned mine reclamation program. The principal remains 
intact for that effort, and is fueled by annual reclamation 
fees assessed on every ton of mined coal which finances the 
program.
    As such, one of the key features of CARE 21 is that the 
general taxpayer is not being called upon to pay for retired 
coal miner health care, but rather, the coal industry itself 
would provide for this coverage through the interest which 
accrues to the fees it pays into the Abandoned Mine Reclamation 
Fund.
    Earlier, I noted there is a historical commitment to 
providing health care for retired coal miners. This is a unique 
situation in that what would normally be a matter solely for 
the private sector is not in this instance. The genesis for 
this situation dates back to 1946 in an agreement between then-
UMW President John L. Lewis and the federal government to 
resolve a long-running labor dispute. At the time, President 
Truman had ordered the Interior Secretary to take possession of 
all bituminous coal mines in the country in an effort to break 
a United Mine Workers of America strike. Eventually, Lewis and 
Secretary Julius Krug reached an agreement that included an 
industry-wide, miner controlled health plan.
    In fact, the 1992 Coal Act itself was formulated partly on 
the basis of recommendations from the Coal Commission, 
established by former labor Secretary Libby Dole, which in 1990 
recommended a statutory obligation to help finance the UMWA's 
Health Benefit Funds.
    The people covered by this health care program spent their 
careers producing the energy which powered this Nation to 
greatness. We must not forsake them. We must not cast them 
adrift in their later years, robbed of the health care they so 
desperately need.

                                                       Nick Rahall.

                                
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