[House Report 111-651]
[From the U.S. Government Publishing Office]


111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-651

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



 
                                CARE ACT

                                _______
                                

 September 29, 2010.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Rahall, from the Committee on Natural Resources, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5479]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (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, 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. 5479 is 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.

                  Background and Need for Legislation

    H.R. 5479 would amend Title IV of the Surface Mining 
Control and Reclamation Act of 1977 (SMCRA) to allow the 
transfer of certain unobligated funds to the United Mine 
Workers of America (UMWA) 1974 Pension Plan. The UMWA 1974 
Pension Plan provides pensions or future pensions to 
approximately 120,000 employees in the bituminous coal industry 
and to their eligible spouses. Imminently, however, the Pension 
Plan faces insolvency.
    Prior to 2008, actuaries deemed the Plan to be on solid 
financial footing and soundly managed, but the market collapse 
severely depleted its assets, which lost 22% of their value 
that calendar year. Compounding the Plan's problems is the fact 
that currently, only about 10,000 active mine workers support 
pension payments for 120,000 retirees. Additionally, 60% of the 
retirees in the plan are ``orphans''--retirees for whom no 
company any longer makes contributions to the Pension Fund, 
typically because of bankruptcy. The cost of their pension 
payments represents 40% of plan liability and more than $200 
million of the Plan's annual beneficiary obligation.
    Given this perfect storm of problems, actuaries now project 
that without a significant infusion of income, the Plan's 
assets will continue to erode. By 2015 the Plan will face a 
funding deficiency. Cutting benefits--which average a mere $565 
per beneficiary per month--cannot close the gap. For 
contributing employers to make up the shortfall and get the 
Pension Fund to a ``funded status'' of 80% (a ratio of assets 
to liabilities, a basic measure of health), employers would 
need to make an additional contribution of about $40,000 per 
employee annually--a tripling or quadrupling of their current 
contributions. If faced with such a requirement, many would 
likely abandon union workers, close mines, or declare 
bankruptcy.
    H.R. 5479 would help solidify the Plan's financial health 
by transferring to the Pension Plan funds in excess of amounts 
needed to meet existing obligations under Title IV of SMCRA. 
This transfer would buy time for the Plan's asset base to 
recover. Currently, Title IV of SMCRA authorizes a mandatory 
annual appropriation from the Treasury of a maximum of $490 
million for three purposes: (1) payments to states and Indian 
tribes in an amount equivalent to unappropriated state-share 
balances prior to October 1, 2007, from the Abandoned Mine Land 
(AML) Fund; (2) payments to certified states and tribes of an 
amount equivalent to their state-share balances after 2007; and 
(3) contributions to three UMWA health care plans. Projections 
by UMWA's actuary, using data from the Office of Surface Mining 
Reclamation and Enforcement, suggest that $75-283 million a 
year, or a total of $2.295 billion over the next 10 years, may 
not be needed to meet those three obligations. H.R. 5479 would 
transfer those unused funds to the Pension Plan, but would not 
affect statutory payments to certified states and tribes.

                            Committee Action

    H.R. 5479 was introduced by Natural Resources Committee 
Chairman Nick J. Rahall II (D-WV) on June 8, 2010. The bill was 
referred to the Committee on Natural Resources. At a June 21, 
2010 hearing before the Committee, the President of the United 
Mine Workers of America and the President of the Bituminous 
Coal Operators Association testified in support of H.R. 5479. 
The Administration expressed appreciation of the problem but 
noted budgetary concerns.
    On July 22, 2010, the full Natural Resources Committee met 
to consider H.R. 5479. The bill was 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 Natural 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, spending 
authority, credit authority, or an increase or decrease in 
revenues or tax expenditures.
    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 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.
    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:

H.R. 5479--Coal Accountability and Retired Employee Act of 2010

    Summary: H.R. 5479 would require the Office of Surface 
Mining (OSM) to make annual payments to the 1974 United Mine 
Workers Association (UMWA) pension plan for retired coal 
miners. Based on information provided by OSM, CBO estimates 
that enacting the legislation would increase direct spending by 
$2.3 billion over the 2011-2020 period; therefore, pay-as-you-
go procedures apply. Enacting the legislation would not affect 
revenues.
    H.R. 5479 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5479 is shown in the following table. 
The costs of this legislation fall within budget functions 300 
(natural resources and environment) and 550 (health).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        By fiscal year in millions of dollars--
                                                             -------------------------------------------------------------------------------------------
                                                               2011   2012   2013   2014   2015   2016   2017   2018   2019   2020  2011-2015  2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING

Estimated Budget Authority..................................     40    116    114    135    321    335    335    266    266    336       726      2,264
Estimated Outlays...........................................     40    116    114    135    321    335    335    266    266    336       726      2,264
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted in 2010.
    Under current law, OSM is obligated to make payments to 
certain states and private pension plans. Those obligations 
include grants to states where significant coal production 
occurred in the past and to states that have completed all of 
their outstanding coal reclamation projects, so-called 
certified states. OSM also makes annual payments derived from 
the general fund of the Treasury to certain pension plans for 
retired coal miners; however, the size of those payments depend 
on the interest credited to balances in the Abandoned Mine 
Reclamation Fund. Under current law, total obligations derived 
from the general fund for those purposes cannot exceed $490 
million a year.
    Under the bill, if those annual obligations are less than 
the $490 million cap, OSM would pay the 1974 UMWA pension plan 
the difference between that cap and its existing obligations to 
the states and other pension plans. Based on information from 
OSM and UMWA, CBO estimates that actual obligations authorized 
under current law will total about $2.3 billion less than the 
maximum amount authorized over the next 10 years. Thus, we 
estimate that enacting H.R. 5479 would increase direct spending 
by about $2.3 billion over that period. (Because the bill's 
provisions would be permanent, direct spending would continue 
after 2020.)

Estimated payments to states

    Under current law, OSM must obligate $187 million a year 
over the 2011-2014 period to states where significant coal 
production occurred in the past. (Those payments end after 
2014.) In addition, based on information from OSM, CBO 
estimates that the agency will obligate $100 million a year, on 
average, over the 2011-2020 period to certified states, based 
on those states' share of coal production in the U.S. in the 
prior year. In total, CBO estimates that OSM will obligate 
about $1.7 billion to coal-producing states over the 2011-2020 
period. (We estimate that outlays from those obligated amounts 
will occur over the 2011-2023 period).

Estimated payments to UMWA pension plans

    CBO estimates that, under current law, OSM will pay an 
average of $190 million a year to certain UMWA pension plans 
over the 2011-2020 period. Those payments are derived from the 
general fund of the Treasury and from interest earned on 
balances in the Abandoned Mine Reclamation Fund, a federal fund 
consisting of accrued collections of certain taxes on coal 
producers. Considering historical interest earnings on 
balances, CBO estimates that the fund will be credited with 
about $100 million a year in interest over the next 10 years 
that will be paid to the pension plans. In addition, we 
estimate that the OSM will spend $90 million a year--or about 
$900 million over the 2011-2020 period--to cover the remaining 
required contributions to those pension plans.

Estimated new direct spending

    As described above, OSM currently is obligated to make 
payments to certain states and UMWA pension plans that CBO 
estimates will total $2.6 billion over the next 10 years ($1.7 
billion for grants to states and $900 million for payments to 
UMWA pension plans). The general fund payment to the UMWA 
pension plans will vary depending on the amount of interest 
credited to the Abandoned Mine Reclamation Fund in future 
years. The total amount of obligations derived from the general 
fund for those purposes cannot exceed $4.9 billion over the 
2011-2020 period. Over the next 10 years, the difference 
between the $4.9 billion cap and the required OSM obligations 
over that period will total $2.3 billion; thus, CBO estimates 
that, under the bill, OSM would make payments totaling $2.3 
billion to the 1974 UMWA pension plan over the 2011-2020 
period. Those payments would constitute new direct spending 
over that period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

     CBO ESTIMATE OF PAY-AS-YOU-CO EFFECTS FOR H.R. 5479, THE COAL ACCOUNTABILITY AND RETIRED EMPLOYEE ACT OF 2010, AS ORDERED REPORTED BY THE HOUSE
                                                     COMMITTEE ON NATURAL RESOURCES ON JULY 22, 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2010   2011   2012   2013   2014   2015   2016   2017   2018   2019   2020  2010-2015  2010-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICIT

Statutory Pay-As-You-Go Impact.......................      0     40    116    114    135    321    335    335    266    266    336       726      2,264
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 5479 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Jeff LaFave and Julia 
Christensen; Impact on State, Local, and Tribal Governments: 
Melissa Merrell; Impact on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    Compliance With Public Law 104-4

    This bill contains no unfunded mandates.

                           Earmark Statement

    H.R. 5479 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                Preemption of State, Local or Tribal Law

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

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

SURFACE MINING CONTROL AND RECLAMATION ACT OF 1977

           *       *       *       *       *       *       *


TITLE IV--ABANDONED MINE RECLAMATION

           *       *       *       *       *       *       *


                            RECLAMATION FEE

  Sec. 402. (a)   * * *

           *       *       *       *       *       *       *

  (i) Funding.--
          (1) * * *
          (2) Payments to states and indian tribes.--[Subject 
        to]   
                  (A)   In general.--Subject to paragraph (3), 
                out of any funds in the Treasury not otherwise 
                appropriated, the Secretary of the Treasury 
                shall transfer to the Secretary of the Interior 
                for distribution to States and Indian tribes 
                such sums as are necessary to pay amounts 
                described in paragraphs (1)(A) and (2)(A) of 
                section 411(h).
                  (B) Excess amounts.--
                          (i) In general.--Subject to paragraph 
                        (3), and after all transfers referred 
                        to in paragraph (1) and subparagraph 
                        (A) of this paragraph have been made, 
                        any amounts remaining after the 
                        application of paragraph (3)(A) 
                        (without regard to this subparagraph) 
                        shall be transferred to the trustees of 
                        the 1974 UMWA Pension Plan and used 
                        solely to pay pension benefits required 
                        under such plan.
                          (ii) 1974 umwa pension plan.--In this 
                        subparagraph the term ``1974 UMWA 
                        Pension Plan'' means a pension plan 
                        referred to in section 9701(a)(3) of 
                        the Internal Revenue Code of 1986 but 
                        without regard to whether participation 
                        in such plan is limited to individuals 
                        who retired in 1976 and thereafter.

           *       *       *       *       *       *       *


                                  
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