[House Report 111-651]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 111-651
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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).
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By fiscal year in millions of dollars--
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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011-2015 2011-2020
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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
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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
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By fiscal year in millions of dollars--
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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010-2015 2010-2020
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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
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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.
* * * * * * *