[House Report 108-328]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    108-328

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

                                _______
                                

October 28, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 313]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Resources, to whom was referred the bill 
(H.R. 313) 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. 313 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 and Reclamation Act of 1977 
(Public Law 95-87; 30 U.S.C. 1201 et seq.) established an 
abandoned coal mine reclamation (AML) fund supported by a fee 
on domestically produced coal. The fee was originally slated to 
expire in 1992, but Congress has twice extended the fee and it 
is now slated to expire on September 30, 2004 (Public Law 102-
486, Sec. 19143; 30 U.S.C. 1232).
    The Coal Act of 1992 established the United Mine Workers of 
America (UMWA) Combined Benefits Fund (CBF) to pay for health 
care benefits for retired mine workers. Coal companies and 
companies that were coal companies and were signatories to 
retiree benefit programs pay for the health care premiums of 
these retirees. However, an ``unassigned beneficiaries'' class 
of UMWA retirees exists where no entity exists to pay their 
benefits. To protect the solvency of the CBF, Congress opted to 
allow the transfer to the CBF of not more than $70 million 
annually of interest from the unappropriated balance of the AML 
trust fund for the unassigned beneficiaries. This transfer, 
which is not subject to appropriation, is made after an annual 
audit calculates the necessary amount. The combination of 
rising health care costs and court decisions that have expanded 
the pool of unassigned beneficiaries is putting stress on the 
solvency of the CBF.
    H.R. 313 would lift the current $70 million limitation on 
the amount of interest that can be transferred to the CBF. It 
would not allow transfers of the principal in the AML fund to 
be transferred to the CBF.

                            COMMITTEE ACTION

    H.R. 313 was introduced on January 8, 2003, by Congressman 
Nick J. Rahall (D-WV). The bill was referred to the Committee 
on Resources and within the Committee to the Subcommittee on 
Energy and Mineral Resources. On October 1, 2003, the Full 
Resources Committee met to consider the bill. The Subcommittee 
was discharged from further consideration of the bill by 
unanimous consent. No amendments were offered and the bill was 
then ordered favorably reported to the House of Representatives 
by unanimous consent.

            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 
(CBO), the transfer of funds from the AML to the CBF has no net 
budgetary effect. However, because of increased payments from 
the CBF, federal Medicaid spending would decrease by about $2 
million per year beginning in 2005. From this, CBO concludes 
there would be a net increase in direct spending of $454 
million over the 2005-2013 time period if additional 
appropriations for other purposes are not made from the AML 
fund after 2003.
    3. General Performance Goals and Objectives. This bill does 
not authorize funding and therefore, clause 3(c)(4) of rule 
XIII of the Rules of the House of Representatives does not 
apply.
    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, October 16, 2003.
Hon. Richard W. Pombo,
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. 313, 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 Tom Bradley.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 313--Coal Accountability and Retired Employee Act for the 21st 
        Century

    Summary: H.R. 313 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 2004 and in each 
year thereafter.
    If the bill were enacted, CBO estimates that an additional 
$67 million in 2004 and about $500 million over the 2004-2013 
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 2003. 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 have no effect on benefit payments in 2004 and 
would result in additional benefit payments of $472 million 
over the 2005-2013 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 $454 
million over the 2005-2013 period.
    H.R. 313 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. 313 is shown in Table 1. The costs of 
this legislation fall within budget function 550 (health).

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2004   2005   2006   2007   2008   2009   2010   2011   2012   2013
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Additional Spending from the CBF:
    Estimated Budget Authority............      0     69     64     60     54     49     46     45     43     41
    Estimated Outlays.....................      0     69     64     60     54     49     46     45     43     41
Federal Share of Medicaid:
    Estimated Budget Authority............      0     -2     -2     -2     -2     -2     -2     -2     -2     -2
    Estimated Outlays.....................      0     -2     -2     -2     -2     -2     -2     -2     -2     -2
Net Effect on Federal Spending:
    Estimated Budget Authority............      0     67     62     58     52     47     44     43     41     39
    Estimated Outlays.....................      0     67     62     58     52     47     44     43     41     39
----------------------------------------------------------------------------------------------------------------

    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. 313 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 
$500 million over the 2004-2013 period because the cost of 
providing health benefits has been growing more rapidly than 
the premiums collected by the fund. If the bill is enacted, CBO 
estimates that an additional $67 million would be transferred 
in 2004 to cover deficits in 2003 and 2004.
    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. 313 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 2005 and will need to cut $472 million in 
benefits over the 2005-2013 period under current law--that is, 
with transfers limited to $790 million a year.
    This cost estimate assumes that no appropriations are made 
from the AML Fund after 2003, 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 2013 if H.R. 313 
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 $472 million over the 2005-2013 period.
    The result would be different if additional appropriations 
for other purposes were made from the AML Fund after 2003. If 
appropriations continue at the 2003 level (without extension 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, benefit payments would have to be reduced. 
Under that scenario, enactment of H.R. 313 would not add to 
aggregate spending over the 2005-2013 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 $18 million over the 2005-
2013 period.
    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' share of those savings would total 
about $1 million in 2005 and $14 million over the 2005-2013 
period.
    Estimate prepared by: Federal Costs: AML and CBF Funds--Tom 
Bradley; Medicaid--Eric Rollins; Impact on State, Local, and 
Tribal Governments: Leo Lex; Impact on the Private Sector: 
Cecil McPherson.
    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 in existing 
law.

                                
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