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57-092 PDF 2010

H.R. 5479, COAL ACCOUNTABILITY AND RETIRED 

EMPLOYEE ACT OF 2010 

LEGISLATIVE HEARING 

BEFORE THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

Wednesday, June 23, 2010 

Serial No. 111-59 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

or 

Committee address: http://resourcescommittee.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL, II, West Virginia, Chairman 

DOC HASTINGS, Washington, Ranking Republican Member 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Frank Pallone, Jr., New Jersey 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

Gregorio Sablan, Northern Marianas 

Martin T. Heinrich, New Mexico 

Ben Ray Luja ́n, New Mexico 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Donna M. Christensen, Virgin Islands 

Diana DeGette, Colorado 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Joe Baca, California 

Stephanie Herseth Sandlin, South Dakota 

John P. Sarbanes, Maryland 

Carol Shea-Porter, New Hampshire 

Niki Tsongas, Massachusetts 

Frank Kratovil, Jr., Maryland 

Pedro R. Pierluisi, Puerto Rico 

Don Young, Alaska 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Jeff Flake, Arizona 

Henry E. Brown, Jr., South Carolina 

Cathy McMorris Rodgers, Washington 

Louie Gohmert, Texas 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Doug Lamborn, Colorado 

Adrian Smith, Nebraska 

Robert J. Wittman, Virginia 

Paul C. Broun, Georgia 

John Fleming, Louisiana 

Mike Coffman, Colorado 

Jason Chaffetz, Utah 

Cynthia M. Lummis, Wyoming 

Tom McClintock, California 

Bill Cassidy, Louisiana 

James H. Zoia, Chief of Staff 

Rick Healy, Chief Counsel 

Todd Young, Republican Chief of Staff 

Lisa Pittman, Republican Chief Counsel 

(III) 

CONTENTS 

Page 

Hearing held on Wednesday, June 23, 2010 ......................................................... 1 

Statement of Members: 

Lummis, Hon. Cynthia M., a Representative in Congress from the State 

of Wyoming .................................................................................................... 11 

Prepared statement of ............................................................................... 12 

Rahall, Hon. Nick J., II, a Representative in Congress from the State 

of West Virginia ............................................................................................ 1 

Prepared statement of ............................................................................... 3 

Statement of Witnesses: 

Roberts, Cecil E., President, United Mine Workers of America ................... 4 

Prepared statement of ............................................................................... 6 

Whitehouse, Alfred, Chief of the Division of Reclamation Support, Office 

of Surface Mining Reclamation and Enforcement, U.S. Department of 

the Interior .................................................................................................... 22 

Prepared statement of ............................................................................... 23 

Young, David M., President, Bituminous Coal Operators’ Association, 

Inc. ................................................................................................................. 13 

Prepared statement of ............................................................................... 14 

(1) 

LEGISLATIVE HEARING ON 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. ‘‘COAL ACCOUNTABILITY AND 

RETIRED EMPLOYEE ACT OF 2010’’ 

Wednesday, June 23, 2010 

U.S. House of Representatives 

Committee on Natural Resources 

Washington, D.C. 

The Committee met, pursuant to call, at 10:02 a.m. in Room 

1324, Longworth House Office Building, Hon. Nick J. Rahall, II 

[Chairman of the Committee] presiding. 

Present: Representatives Rahall, Holt, Christensen, Inslee, 

Hastings, Smith, and Lummis. 

STATEMENT OF THE HON. NICK J. RAHALL, II, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA 

The CHAIRMAN. The Committee on Natural Resources will come 

to order. I would begin by observing that while the horrific disaster 

which took place at the Upper Big Branch Coal Mine in my home 

county of Raleigh, West Virginia, has largely been swept from the 

national spotlight by the explosion of the Deepwater Horizon rig in 

the Gulf of Mexico, it continues to weigh heavily on the citizens of 

West Virginia and throughout the coalfields. Federal and state investigations are proceeding, and we in the Congress are developing 

a legislative response to ensure a more safe working environment 

for our nation’s underground coal miners—brave and hardworking 

souls, every one of them. 

While the country continues to focus on the Gulf of Mexico and 

the impact that spill is having on so many businesses, on the 

people and the economy of that region, I do believe and, in fact, I 

insist that we, as a nation, continue to address the plight of the 

coal miner and the economy of coalfield communities in the Appalachian Region, and that is what we are doing this morning. Today 

the Committee is meeting for the consideration of H.R. 5479, The 

2 

Coal Accountability and Retired Employee Act of 2010, or the 

CARE Act. 

This legislation keeps faith with an historic Federal commitment 

made to the mine workers in 1946. At the time, with President 

Harry Truman looking on, Interior Secretary Julius Krug signed an 

agreement with the UMWA President John L. Lewis guaranteeing 

the health and welfare of the coal miner. The Krug-Lewis agreement was the very foundation for a welfare and retirement system 

established for the mine workers and their dependents. This Federal guarantee to the mine workers also served as the basis for the 

1992 Coal Act, in which through my efforts Congress authorized a 

transfer of interest accruing to the account to the unspent balance 

of the Abandoned Mine Reclamation Fund for the purpose of providing solvency to UMWA’s health care fund. 

At the time, because so many companies had escaped their responsibility under the National Bituminous Coal Wage Agreement, 

over 60 percent of the people who received their health care under 

the UMWA’s program never worked for the coal operators, who 

were making premium payments. This large ‘‘orphaned’’ miner population threatened to overwhelm the entire system. The 1992 legislation threw a lifeline to the health care fund for several years, but 

as more and more coal companies abrogated their responsibilities, 

Congress was compelled to act again in the 2006 amendments to 

the Abandoned Mine Reclamation Program, which provides transfers of general funds to ensure the solvency of the UMWA’s three 

health care plans. 

The problems which plagued the UMWA health program in the 

past are now afflicting their pension plan. At present, well over 

half of the current retirees never worked for the coal companies 

currently participating in that plan. This situation, as well as the 

recent economic downturn, has placed the pension plan on the road 

to insolvency. At stake are the pensions of over 120,000 people, 

around 38,000 who reside in my home state of West Virginia, and 

the economic viability of the contributing coal companies. 

Think about that. These hardworking people who engaged in the 

noble but often dangerous occupation of mining coal for the energy 

security of this country now may find, in their elderly years, 

dilemma and confusion when it comes to the security of their pensions. I fought long, I fought hard, and I was relentless in my 

efforts to get these coal miners the health care they deserve, and 

I will not allow their pensions to be threatened. This matter has 

been the first thing on my mind when I wake up in the morning, 

and it is in my prayers every evening. 

The pending legislation would tap into these funds made available by the 2000 amendments to the Abandoned Mine Reclamation 

Program that are not necessary for any current law obligation, and 

transfer those amounts to the UMWA pension fund in order to ensure its solvency. I have spent a career standing up for our coal 

miners, their widows, and our coalfield communities, whether it be 

black lung benefits, coal mine safety, or health care, and I will tell 

you this, I will fight for these individuals’ pensions with every 

breath in my body. 

I would like to particularly thank UMWA President Cecil 

Roberts for being here this morning. He is the President of a union 

3 

with a proud tradition, and one which has pioneered many things 

in the American workplace that we take for granted today, such as 

the eight-hour workday and collective bargaining rights. Cecil 

Roberts’ every breath of air is devoted to what is just and good for 

our nation’s coal miners, across the coalfields and across this world. 

I commend him, I thank him for his expertise, for his professionalism and, most importantly, for the friendship that he has 

bestowed upon this Chairman and so many of us in the coalfields 

from whence he comes. Our second panelist this morning will be 

Mr. David Young, an individual I have known for quite a while as 

well, President of the Bituminous Coal Operators’ Association, and 

an individual who knows coal and knows our coalfield communities 

intimately as well. I would now recognize the Ranking Member before we move on to the panel. 

Mr. HASTINGS. Thank you, Mr. Chairman. Mr. Chairman, I don’t 

have an opening statement and I intended to yield my time to Mrs. 

Lummis from Wyoming, and if we could do that when she arrives 

I would appreciate that courtesy, but I have no opening statement 

myself. 

The CHAIRMAN. The Chair will recognize Mrs. Lummis as soon 

as she arrives. And pending that, we will move on with our panel. 

I have already introduced him, Mr. Cecil Roberts, President of the 

United Mine Workers of America, and Mr. David Young, President 

of the Bituminous Coal Operators’ Association. Gentlemen, we do 

have your prepared testimony and it will be made a part of the 

record as if actually read, and you may proceed as you desire. 

Cecil, you want to start? 

[The prepared statement of Chairman Rahall follows:] 

Statement of The Honorable Nick J. Rahall, II, Chairman, 

Committee on Natural Resources 

The Committee on Natural Resources will come to order. I would begin by observing that while the horrific disaster which took place at the Upper Big Branch coal 

mine in my home county of Raleigh, West Virginia, has largely been swept from the 

national spotlight by the explosion of the Deepwater Horizon rig in the Gulf of Mexico, it continues to weigh heavily on the citizens of West Virginia and throughout 

the coalfields. 

Federal and State investigations are proceeding. And we in the Congress are developing a legislative response to ensure a more safe working environment for our 

Nation’s underground coal miners: Brave and hardworking souls, every one of them. 

While the country continues to focus on the Gulf of Mexico, and the impact that 

spill is having on so many businesses, people and the economy of that region, I do 

believe—and in fact, I insist—that we as a Nation continue to address the plight 

of the coal miner and the economy of coalfield communities in the Appalachian Region. And that is what we are doing this morning. 

Today, the committee is meeting for the consideration of H.R. 5479, the ‘‘Coal Accountability and Retired Employee Act of 2010’’ or the CARE Act. This legislation 

keeps faith with an historic federal commitment made to the mineworkers in 1946. 

At the time, with President Harry Truman looking on, Interior Secretary Julius 

Krug signed an agreement with UMWA President John L. Lewis guaranteeing the 

health and welfare of the coal miner. The Krug-Lewis Agreement was the very foundation for a welfare and retirement system established for the mineworkers and 

their dependents. 

This Federal guarantee to the mineworkers also served as the basis for the 1992 

Coal Act, in which through my efforts Congress authorized the transfer of interest 

accruing to the unspent balance of the Abandoned Mine Reclamation Fund for the 

purpose of providing solvency to the UMWA’s health care fund. 

At the time, because so many companies had escaped their responsibility under 

the National Bituminous Coal Wage Agreement, over 60% of the people who received their health care under the UMWA’s program never worked for the coal operVerDate Nov 24 2008 09:19 Jul 22, 2010 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 L:\DOCS\57092.TXT Hresour1 PsN: KATHY
4 

ators who were making premium payments. This large ‘‘orphaned’’ miner population 

threatened to overwhelm the entire system. 

That 1992 legislation threw a lifeline to the health care fund for several years, 

but as more and more coal companies abrogated their responsibilities, Congress was 

compelled to act again in the 2006 amendments to the Abandoned Mine Reclamation Program which provided transfers of general funds to insure the solvency of the 

UMWA’s three health care plans. 

The problems which plagued the UMWA health program in the past are now afflicting their pension plan. At present, well over half of the current retirees never 

worked for the coal companies currently participating in that plan. This situation, 

as well as the recent economic downturn, has placed the pension plan on the road 

to insolvency. 

At stake are the pensions of over 120,000 people—around 38,000 who reside in 

my home State of West Virginia—and the economic viability of the contributing coal 

companies. 

Think about that. These hardworking people, who engaged in the noble but often 

dangerous occupation of mining coal for the energy security of this country, now 

may find, in their elderly years, dilemma and confusion when it comes to the security of their pensions. I fought long, 

I fought hard, and I was relentless in my efforts to get these coal miners the 

health care they deserve. And I will not now allow their pensions to be threatened. 

This matter has been the first thing on my mind when I wake up in the morning, 

and it is in my prayers every evening. 

The pending legislation would tap into funds made available by the 2006 amendments to the Abandoned Mine Reclamation Program that are not necessary for any 

current law obligation, and transfer those amounts to the UMWA pension fund in 

order to insure its solvency. 

I have spent a career standing up for the coal miner, their widows and coalfield 

communities. Whether it be black lung benefits, coal mine safety, or health care. 

And I will tell you this: I will fight for these people’s pensions with every breath 

in my body. 

I would like to particularly thank UMWA President Cecil Roberts for being here 

this morning. He is the president of a union with a proud tradition, and one which 

pioneered many things in the American workplace that we take for granted today 

such as the eight-hour workday and collective bargaining rights. 

STATEMENT OF CECIL E. ROBERTS, PRESIDENT, 

UNITED MINE WORKERS OF AMERICA 

Mr. ROBERTS. Thank you very much, Mr. Chairman, for allowing 

the United Mine Workers to participate in this hearing today and 

thank you for scheduling the hearing. Let me begin by thanking 

you, not only for the hearing today but the friendship that you and 

I have had for over 30 years now, and the efforts that you have 

made on behalf of coal miners, one of which was my dad who we 

know passed away a couple years ago, and he died with dignity, 

had the best health care in the world. And one of the widows who 

receives a pension that we are going to talk about today happens 

to be my mother who will be 91 here in a few weeks. 

So, this is not only something that is an institutional question for 

us, this is a very personal situation for every member of United 

Mine Workers. In West Virginia, Pennsylvania, Ohio, Kentucky, 

wherever we are from, we all have someone who is drawing a pension and we all have someone that has health care. We did an 

analysis in the last month, and about 152,000 Americans who live 

in the coalfields have health care, and I think they can look to you, 

Mr. Chairman, that over 100,000 of them have health care as a 

direct response to what you have done in this Congress. 

I still remember meeting with you in 1992 when you came up 

with the concept of using the interest money to help pay the health 

care benefits that were guaranteed as you said in 1946 in Harry 

5 

Truman’s White House. And I appreciate the fact that you have 

continued to fight not only for health care but for the safety of all 

coal miners, and I just wanted to reiterate what you just said, our 

hearts and prayers go out today to the 29 families from Upper Big 

Branch. While this was a non-union mine, I have said frequently 

that we all know one another. 

In the coalfields I was personal friends with some of these miners who passed away, and our prayers are with those miners and 

we appreciate very much your hard work in trying to make the 

mines in this country safe and for the black lung victims, we know 

over 100,000 miners have died from pneumoconiosis in this country, and you have been a champion to provide benefits and safer 

workplaces for those people. We come today, Mr. Chairman, it is 

somewhat ironic, the history of the coalfields has been one of conflict if you go back to the early days, and quite frankly even occasionally today. 

But the problem we come today with is not of the making of the 

Union and it is not the making of the coal industry, and it certainly 

wasn’t something that the pensioners and the beneficiaries of this 

fund created. The fund that we are going to talk about here today 

or we will be talking about today at the time of the signing of the 

last collective bargaining agreement had over $6 billion in assets 

and was about 94 percent funded. There is only one event, only 

one, that has occurred since the signing of this collective bargaining agreement to the present to change the funding status of 

this, and that was the recession that hit in 2008. 

It is ironic as we come here today that we have chosen, and we 

respect decisions of Congress to bail out Wall Street, we see the 

CEOs that made the decisions that led to the financial downfall of 

our economy now getting bonuses, I don’t fault them for that. But 

the decisions that they made have adversely affected a lot of people 

in this country, and I find it very tragic that it is affecting hardworking coal miners, it is adversely affecting or could adversely affect people who are in their 90s. Some people in this fund are as 

old as 100 years old. 

A few years ago we did an analysis of this fund and found that 

the oldest beneficiary was 112, unfortunately that lady has passed 

away since we did that analysis, but I can say to you today if we 

did another analysis, we will find someone in this fund that is at 

least 100 years of age. I think that people depend greatly—in fact, 

I know they depend greatly—on these pension checks. I want to 

point out to the Committee that in the last ten years $6 billion has 

been paid to retirees or their widows, most of this in Appalachia. 

The people, the states that receive the most from this are states, 

I think West Virginia is first, I think Pennsylvania is second, I believe Kentucky is third, and I believe Virginia is fourth. A lot of 

hand loading went on in the old days in these areas, at one time 

coal mining was very labor intensive. And that is not the case now, 

it is highly mechanized, longwalls producing lots and lots of coal 

with very few people. So, today we come and, as the Pension Protection Act tells us, we have to do certain things—one of which 

would be to increase funding to this plan and ask the coal industry 

that did nothing wrong to pay as much as $20 an hour into this 

6 

fund, which would bankrupt some of them, put people out of work, 

and perhaps lead to total collapse of this fund. 

The other thing is eventually you get around to the possibility of 

reducing benefits. I have to tell you what I told our members, I am 

not going to be a person who supports the cutting of benefits for 

people who have earned them. These people have given their lives 

to this industry, we have all benefitted from this, all of us. Fifty 

percent of the electricity in this country comes from coal, our economy is being fueled off the backs of these coal miners who are now 

retired, and their widows who are now surviving, and I think this 

nation made a promise to these people and this promise should be 

kept. And I will be glad to answer any questions that you have, Mr. 

Chairman. 

[The prepared statement of Mr. Roberts follows:] 

Statement of Cecil E. Roberts, President, United Mine Workers of America 

Mr. Chairman and Members of the Committee: 

I want to thank you for the opportunity to be here today to speak on behalf of 

over 120,000 current and former UMWA members who are participants in the 

UMWA 1974 Pension Plan. Let me state at the outset that the UMWA strongly supports H.R. 5479 and urges the Committee and the Congress to enact it as soon as 

possible. 

The 1974 Pension Plan is a Taft-Hartley multiemployer pension plan negotiated 

between the UMWA and the Bituminous Coal Operators’ Association (BCOA). It is 

part of the UMWA Health and Retirement Funds, a separate institution jointly administered by trustees appointed by the UMWA and BCOA. The 1974 Plan provides 

pension benefits to coal miners who work under the National Bituminous Coal Wage 

Agreement (NBCWA). Other funds administered by the UMWA Health and Retirement Funds provide health benefits to retired coal miners and their dependents 

under the Coal Act and the NBCWA. 

When the last NBCWA was negotiated at the end of 2006, the 1974 Plan had approximately $6 billion in assets and was about 93% funded. As of May 31, 2010 the 

1974 Plan had total assets of $4.3 billion and its funding level has fallen below 80%. 

It currently pays out about $650 million per year in pension benefits to some 97,500 

retired and disabled miners and surviving spouses. Employers operating under the 

NBCWA of 2007 are currently contributing $5.00 per hour worked by their UMWArepresented employees. The rate will increase to $5.50 in January 2011. Under the 

provisions of the Pension Protection Act (PPA), because the plan’s funding level is 

below 80%, the UMWA and the BCOA as plan sponsors will have to adopt funding 

improvement plans that may raise contribution rates to $20 per hour worked by 

UMWA members. If such rates are required, signatory employers may seek to withdraw from the plan or go out of business. 

I have attached a chart to this statement that shows projections of the funded status of the plan made by the 1974 Plan’s actuary in December 2007 and then again 

in October 2009. You’ll note that prior to the financial crisis the 1974 Plan was well 

funded at about 93% and was projected to steadily improve its funded status 

throughout the coming decade. This projection, shown as the green line on the 

chart, was done at the end of 2007 before the credit crisis led to the financial meltdown on Wall Street. Now look at the same projection made in late 2009, shown 

as the red line. As you can see, instead of being in good shape for as far as the 

actuary could project, the 1974 Plan is now on a steady downward path. Only one 

thing changed in that intervening period between these two projections–the 2008 financial crisis caused markets to fall precipitously and placed the country in the 

worst economic slump since the Great Depression. 

As I mentioned, the 1974 Plan currently pays out about $650 million per year in 

pension benefits to retired miners and surviving spouses. Due to the demographics 

of the coal industry this represents the period of our highest payout. The loss of assets in 2008 due to the financial crisis could not have come at a worse time for the 

1974 Plan. The second chart attached to the statement shows the assets and liabilities of the 1974 Plan over the last fifteen years. As you’ll note the economic decline 

in the aftermath of 9/11 terrorist attacks led to declines in the value of the Plan’s 

assets in 2002 and 2003. But the assets of the Plan stayed relatively close to the 

liabilities. With the sharp market declines due to the 2008 financial crisis, the Plan 

7 

has developed a significant separation between assets and liabilities, one that is not 

expected to close even with a return to less volatile financial markets. 

The 1974 Pension Plan finds itself in dire financial straights solely as a result 

of the financial crisis of 2008. While it has been well managed and in good financial 

shape for many years, the market crash in 2008 and early 2009 left the 1974 Plan 

with a significant loss of assets just at the time of its greatest payout. Indeed, the 

trustees who govern the 1974 Plan and the investment professionals they employ 

have done an exemplary job investing the Plan’s assets over many years. They have 

a well diversified portfolio of investments that has produced returns comparable to 

or better than many of their pension industry peers. However, the 2008 financial 

crisis left such a deep hole for the Plan that, without a significant increase in income, the plan’s actuaries project that the financial condition of the plan will continue to erode. 

The UMWA 1974 Pension Plan grew out of a contract between the federal government and the UMWA at a time of government seizure of the nation’s bituminous 

coal mines in 1946. The Krug-Lewis Agreement, named for Secretary of the Interior 

Julius Krug and UMWA president John L. Lewis, was signed in the White House 

under the watchful eye of President Harry S. Truman. The Krug-Lewis agreement 

called for the creation of a Retirement fund to provide for payments to miners for 

disability, death or retirement and a Medical and Hospital fund to provide medical, 

hospital and related services. 

The Retirement fund created by the Krug-Lewis agreement became the object of 

intense dispute between the UMWA and the coal operators (when the government 

returned the mines to private control) and as a result, pension payments were delayed for several years. It was only after intervention by the Speaker of the House 

of Representatives and the appointment of Senator Styles Bridges of New Hampshire as the neutral trustee that pension payments were activated in 1950. Since 

that time, the 1974 Pension and its predecessors have provided pension benefits to 

hundreds of thousands of retired coal miners. The federal government has had a 

long history of involvement with the UMWA Health and Retirement Funds. Both 

Democratic and Republican administrations, as well as Democratic and Republican 

Congresses, have recognized the special promise contained in the agreement between the federal government and the coal miners. And while there were times 

when the fulfillment of that promise was in doubt, each time Congress and the 

president have risen to the occasion and ensured that the promise was kept. 

The retirees and surviving spouses who depend on the 1974 Pension Plan live in 

all 50 states, but the majority of them still reside in the coal mining states of West 

Virginia, Pennsylvania, Kentucky, Illinois, Virginia, Alabama, Ohio and Indiana. A 

state by state breakdown of active, retired and terminated vested participants is attached to this statement. Many of the retirees are elderly with nearly 40% of the 

retired population over 75 years of age and about 17% of the population over 85 

years of age. The 1974 Plan provides them with modest but crucial income. The average pension benefit for a retired miner currently receiving benefits from the 1974 

Pension Plan is $590 per month and for a surviving spouse the average benefit is 

about $304 per month. 

The financial crisis of 2008 and its economic aftermath were not the fault of the 

retired miners. Nor was it the fault of their representatives in the UMWA or the 

coal operators with whom we bargain. The cause of the financial crisis lay primarily 

with the banks and other large financial institutions on Wall Street. While the very 

same institutions that created the crisis were bailed out with taxpayer money, the 

victims of the crisis such as pension funds have been left to their own devices. 

An analysis of the 1974 Plan shows that a significant portion of the Plan’s population and liabilities are related to companies that are now defunct and no longer 

contribute to the Plan. About 40% of the Plan’s liabilities are related to retirees 

whose employers no longer contribute to the 1974 Plan; nearly 54% of the 1974 Plan 

population is composed of participants whose employer no longer contributes to the 

plan. So the 1974 Pension Plan is dealing with the same orphan retiree problem 

that Congress has grappled with in the Coal Act. 

The 2007 National Bituminous Coal Wage Agreement (NBCWA) is scheduled to 

expire on December 31, 2011. The Pension Protection Act enacted in 2006 requires 

multiemployer pension plans to maintain a certain level of funding or face consequences. Generally, this is 80% funding for multiemployer plans. Plans that fall 

below this level are considered in ‘‘endangered’’ status. Plans that fall below 80% 

and have an Accumulated Funding Deficiency in the next six years are considered 

‘‘seriously endangered.’’ Plans that fall below 65% funding and have a projected AFD 

in the next four years are considered in ‘‘critical’’status. Under the PPA, plans that 

fall into endangered or critical status must adopt funding improvement or rehabilitation plans to reduce the underfunding over the next ten to fifteen years. These 

8 

plans may involve increases in contributions by employers, reduction or elimination 

of certain benefits, or a combination of both. As noted earlier, the 1974 Plan’s actuarial projections indicate that a contribution rate of about $20 per hour may be necessary to satisfy the PPA. As a bargainer I don’t like making public predictions 

about what positions my bargaining partners may take in negotiations. But I will 

say that if the law requires coal operators a choice of paying $20 per hour or attempting to withdraw from the plan, many of them will be tempted to try to withdraw. The UMWA, of course, will seek to prevent that. The conflict that will result 

if employers seek to abandon the 1974 Plan will not be in the best interests of any 

of the parties to the contract, the coal field communities or the nation at large. The 

UMWA wants to avoid disruption in the nation’s coal fields when the NBCWA expires in 2011. But we will take whatever actions are necessary and within our 

power to protect the 1974 Pension Plan and the more than 120,000 miners and widows who depend on it for economic sustenance. It may well be that conflict in the 

coal fields cannot be avoided; but we believe that H.R. 5479 offers a better way forward. 

H.R. 5479 simply builds on the framework and mechanisms Congress has put in 

place to deal with the problem of orphan retiree health care benefits in the coal industry. It provides for the transfer to the 1974 Pension Plan of funds that exceed 

the amounts needed to meet existing obligations to the States and the UMWA 

Health and Retirement Funds retiree health plans under Title IV of the Surface 

Mining Control and Reclamation Act of 1977. In 2006, Congress amended Title IV 

to provide for a permanent appropriation of up to $490 million a year to repay 50% 

of the Abandoned Mine Land (AML) reclamation fees generated from certified 

States that have completed abandoned coal mine reclamation projects and to supplement interest earned on the AML fund to ensure the solvency of the three health 

plans administered by the UMWA Health and Retirement Funds. I want to point 

out that allowing the 1974 Plan to access the permanent appropriation would in no 

way jeopardize payments to the States or to the retiree health plans. They would 

continue to have first priority claim to the permanent appropriation. Under 

H.R. 5479, only funds not needed to fulfill those existing obligations would be available to the 1974 Plan. 

Mr. Chairman, a promise was made to the nation’s coal miners in the White 

House long ago in 1946. That promise was that if the miners produced the energy 

that the nation so desperately needed, they would have pensions and health care 

when they retired so they could live out their lives with a small measure of dignity 

and security. I submit that coal miners have earned these benefits through hard 

work that has allowed many Americans to enjoy a better life. We only have to look 

at the recent disasters in the coal fields, such as the Sago mine and Upper Big 

Branch tragedies in West Virginia and the Crandall Canyon mine in Utah to know 

how dangerous the work of coal mining can be. While these tragedies draw public 

attention, many miners die quietly without notice each year from black lung disease. The National Institute for Occupational Safety and Health (NIOSH) estimates 

that up until a few years ago as many as 1,500 miners died each year from complications of black lung. That’s a Titanic going down in the coal fields each and 

every year. All told, NIOSH estimates that more than 10,000 miners died of black 

lung disease in the last decade. I think any reasonable observer would agree that 

coal miners work in harsh conditions that endanger their lives in many ways. They 

should not have to worry about the modest pensions that have been promised them 

after they retire. 

The miners who depend on the UMWA Health and Retirement Funds and the 

1974 Pension Plan have upheld their part of the bargain made in President Truman’s White House. Now, through no fault of their own, their pension plan has fallen into financial difficulty. Congress has already seen fit to permanently appropriate 

up to $490 million per year to fulfill the promise of retiree health care for these 

same retirees. It appears likely that because of the efficiency with which the UMWA 

Funds delivers medical care, the full amount will not be needed each year. We think 

it makes good sense to extend the application of that commitment to the 1974 Pension Plan. We urge the Committee and the Congress to enact H.R. 5479 to ensure 

that the promise is kept to the nation’s coal miners. 

We appreciate the opportunity to be here today and would be happy to answer 

any questions you may have. 

9 


57092.001.eps 57092.002.eps
10 


57092.003.eps
11 

The CHAIRMAN. Thank you, Cecil, I will have some questions, but 

per the request of the Ranking Member and before going to you, 

Dave, I would like to recognize the gentlelady from Wyoming. 

Ms. LUMMIS. Thank you very much, Mr. Chairman. 

The CHAIRMAN. For any comments, opening statement you would 

like to make. 

STATEMENT OF THE HON. CYNTHIA M. LUMMIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING 

Ms. LUMMIS. I so appreciate this opportunity and want to 

welcome our panel this morning as well. Thank you, Mr. Chairman, and thank you, Mr. Hastings, for yielding to me. The nation’s 

leader in coal is Wyoming, and we have a vested interest in the 

fate of the AML Program. Since AML’s creation in 1977, Wyoming 

has worked diligently to reclaim mining sites on over 32,000 acres. 

This work was done despite the Federal Government’s failure to 

distribute AML funds to the states as required by law. 

Finally, under the bipartisan leadership of the Chairman of this 

Committee and others, a bipartisan agreement was reached in 

2006 that finally granted Wyoming, West Virginia, and other states 

what the Federal Government had co-opted for nearly 30 years. 

Chairman Rahall’s understanding of this complicated history of 

AML has resulted in the carefully crafted legislation under consideration by the Committee today. 

As currently written and absent other interference, it appears 

the legislation would have no effect on the historic agreement 

reached in 2006 on certified states and tribes. I commend the 


57092.004.eps
12 

Chairman for his artful drafting of this bill. Having said that, I 

have two concerns that I sincerely hope the Chairman will consider. There were many, including the Chairman himself I would 

suspect, who hoped that following passage of the 2006 agreement, 

this issue had finally been put to rest for the good of everyone involved. Unfortunately, that has not been the case, the program has 

continued to be the target of those who do not understand the 

promises made and broken by the Federal Government throughout 

the history of AML. 

The sharks continue to circle, Mr. Chairman, and I am deeply 

concerned that passage of this legislation will give opponents the 

opening they have been seeking. On a more philosophical level, the 

intent of the legislation under consideration helps to highlight 

what is a very troubling trend. From so called agency guidance to 

coal lash to permit suspensions and delays to Clean Air and Water 

Act revisions and more, the Obama Administration has worked 

overtime to hinder domestic coal production. The only possible outcome of these policies is a crippled industry unable to hire new 

workers of any kind. 

Again, I have great respect for the Chairman of this Committee. 

His leadership on the AML Program is undisputed. I understand 

his desire to shore up a failing pension plan for coal miners. However, if we were truly concerned about the fate of America’s hardworking coal miners, we would also be working night and day to 

beat back the onslaught from an Administration hell-bent on halting coal production altogether. I look forward to working with the 

Chairman on all of these issues in the weeks ahead. And, Mr. 

Chairman, again, I am thankful for the opportunity to present my 

statement. I yield back. 

[The prepared statement of Ms. Lummis follows:] 

Statement of The Honorable Cynthia M. Lummis, a Representative in 

Congress from the State of Wyoming 

Thank you Mr. Chairman, and thank you Mr. Hastings for yielding me the time. 

As the nation’s leading producer of coal, Wyoming has a vested interest in the fate 

of the Abandon Mine Lands (AML) program. Since AML’s creation in 1977, Wyoming has worked diligently to reclaim mining sites on over 32,000 acres. This work 

was done despite the federal government’s failure to distribute AML funds to the 

states as required by the law. Finally, and under the leadership of the Chairman 

of this Committee and others, a bi-partisan agreement was reached in 2006 that finally granted to Wyoming, West Virginia, and other states what the federal government had co-opted for nearly 30 years. 

Chairman Rahall’s understanding of the complicated history of AML has resulted 

in the carefully crafted legislation under consideration by the Committee today. As 

currently written, and absent other interference, it appears the legislation would 

have no affect on the historic agreement reached in 2006 on certified states and 

tribes. I commend the Chairman for his artful drafting of this bill. 

Having said that, I have two concerns that I sincerely hope the Chairman will 

consider today. There were many, including the Chairman himself I would suspect, 

who hoped that following passage of the 2006 agreement this issue had finally been 

put to rest for the good of everyone involved. Unfortunately, that has not been the 

case. The program has continued to be the target of those who do not understand 

the promises made, and broken, by the federal government throughout the history 

of AML. The sharks continue to circle, Mr. Chairman, and I am deeply concerned 

that passage of this legislation will give opponents the opening they’ve been seeking. 

On a more philosophical level, the intent of the legislation under consideration 

helps to highlight what is a very troubling trend. From so-called agency ‘‘guidance,’’ 

to coal ash, to permit suspensions and delays, to Clean Air and Water Act revisions 

and more, the Obama Administration has worked overtime to hinder domestic coal 

13 

production. The only possible outcome of these policies is a crippled industry unable 

to hire new workers of any kind. 

Again, I have great respect for the Chairman of this Committee; his leadership 

on the AML program is undisputed. I understand his desire to shore up a failing 

pension plan for coal miners. However, if we were truly concerned about the fate 

of America’s hardworking coal miners, we would be working night and day to beat 

back the onslaught from an Administration hell bent on halting coal production altogether. 

I look forward to working with the Chairman on all of these issues in the weeks 

ahead. 

The CHAIRMAN. Thank you. Let us proceed with our panel. I have 

already introduced Mr. Dave Young. Dave? 

STATEMENT OF DAVID M. YOUNG, PRESIDENT, 

BITUMINOUS COAL OPERATORS’ ASSOCIATION, INC. 

Mr. YOUNG. Mr. Chairman and Members of the Committee, I am 

pleased to be here this morning to testify on a matter of critical 

importance to the organized coal industry. As President of the 

Bituminous Coal Operators’ Association, the BCOA represents its 

member companies in collective bargaining with negotiations for 

the National Bituminous Coal Wage Agreement with the United 

Mine Workers of America. The BCOA is also the management settlor of the UMWA 1974 Pension Plan, a multi-employer pension 

plan created by the National Bituminous Coal Wage Agreement. 

I am here today to testify in support of H.R. 5479, The Coal 

Accountability and Retired Employee Act of 2010. H.R. 5479 would 

make available funds generated by the provisions of the Surface 

Mining Act of 2006 to the 1974 plan to offset funding needed for 

the losses caused by the 2008 market collapse. This legislation is 

necessary to protect the pensions of the 1974 Pension Plan beneficiaries and to avoid either a plan insolvency or plan termination 

under Title IV of ERISA. 

Prior to the 2008 market collapse, as referenced by President 

Roberts earlier, the Plan was 94 percent funded and on a clear 

path to full funding. However, the combination of the 2008 market 

decline on plan net assets and the Plan being in its peak cash flow 

years today that require nearly $700 million annually to meet pension benefit obligations means that the restoration of prior funding 

levels really is no longer realistic today. 

The root cause of the Plan’s difficulty has been a persistent decline in the number of contributing employers really since the 

1970s, which in a large part reflects the shift in coal production 

from east to west in response to governmental environmental policy 

at that time. The result is that today the 1974 plan is nearly a 12- 

to-1 ratio of retirees to active miners. This imbalance clearly creates a crushing financial burden for the remaining contributing 

employers. 

The result is today a last man’s club of only ten employer groups 

supporting the pension benefits of over 110,000 retirees. Yet the 

signatory contributing employers of these groups only employ 

10,000 representative active miners themselves. I should note that 

about one-third, or 33,000, of the pension beneficiaries as we have 

discussed are really widows of retired miners, and nearly 10,000 of 

these retirees are totally disabled miners. 

14 

Passage of H.R. 5479 will allow these remaining signatory employers to continue funding pension benefits for all of their current 

and former employees, and at the same time help to protect the 

66,000 in our estimate retired ‘‘orphan’’ miners whose employers 

are no longer in the coal business for various reasons. The companies that currently contribute to the ’74 Pension Plan are the last 

line of defense for the plan and stand in the shoes of the government when it comes to funding the pension benefits of those orphan miners, who under other circumstances would already be the 

responsibility of the pension benefit guarantee corporation. 

As an example, Bethlehem Steel entered bankruptcy a few years 

ago. Employees of the steel company became the responsibility of 

the PBGC. However, miners who retired from Bethlehem Steel at 

the same time remained in the 1974 Plan, and their full benefits 

guaranteed and funded by the remaining contributors to the ’74 

Pension Plan. Mr. Chairman, as you know, the government has 

been deeply involved in the coal industry and with these plans 

since the 1940s. Indeed, the mines were seized unbelievably in 

1946 with the express purpose of establishing this pension program. 

The pension benefits did not start until the Speaker of the House 

Joseph Martin in 1948 met with the fund trustees and effected the 

appointment of Senator Styles Bridges as a neutral trustee. Senator Bridges then sided with John L. Lewis, the UMWA President 

and trustee in agreeing to a pay-as-you-go funding structure and 

setting the retirement age, length of service requirements that are 

still the core of today’s benefit program. 

Together all of us, the miners, the companies, and the government, have made a great deal of difference in the lives of people 

in the coalfields and for our energy needs. Today we are once again 

at a juncture when the historic promise to these miners is in jeopardy. We believe that H.R. 5479 recognizes this stark fact and provides the best way to correct it. Thank you for this opportunity to 

support and protect the livelihood of the nation’s retired coal miners. 

[The prepared statement of Mr. Young follows:] 

Statement of David M. Young, President, 

Bituminous Coal Operators’ Association, Inc. 

Mr. Chairman and members of the Committee. My name is David Young. I am 

pleased to be here this morning to testify on a matter of critical importance to the 

organized coal industry. I am President of the Bituminous Coal Operators’ Association (BCOA). The BCOA represents its member companies in collective bargaining 

negotiations for the National Bituminous Coal Wage Agreement (NBCWA) with the 

United Mine Workers of America. The BCOA is also the management Settlor of the 

UMWA 1974 Pension Plan, a multi-employer pension plan created by the NBCWA. 

I am here today to testify in support of H.R. 5479, The Coal Accountability and 

Retired Employee Act of 2010. H.R. 5479 would make available funds generated by 

the provisions of the Surface Mining Act of 2006 to the 1974 Plan to offset funding 

needed for losses caused by the 2008 market collapse. This legislation is necessary 

to protect the pensions of the 1974 Pension Plan beneficiaries and to avoid either 

plan insolvency or plan termination under Title IV of ERISA. 

Prior to the 2008 market collapse, the 1974 Plan was 94% funded and on a clear 

path to full funding. However, the combination of the 2008 market decline on Plan 

net assets and the Plan being in its peak cash flow years, that require nearly $700 

Million per year to meet pension benefit obligations, means that restoration of prior 

funding levels is no longer realistic. 

15 

The root cause of the Plan’s difficultly has been a persistent decline in the number 

of contributing Employers since the 1970s, which in large part reflects the shift in 

coal production from east to west in response to governmental environmental policy. 

The result is that today the 1974 Plan has a nearly 12-to-1 ratio of retirees to active 

miners. This imbalance clearly creates a crushing financial burden for the remaining contributing Employers. 

The result is today a last man’s club of only ten employer groups support the pension benefits of over 110,000 retirees; yet the signatory contributing Employers of 

these groups only employ 10,000 represented active miners themselves. I should 

note that about one-third or more than 33,000 of the pension beneficiaries are widows of retired miners and nearly 10,000 are totally disabled miners. 

Passage of H.R. 5479 will allow these remaining signatory Employers to continue 

funding pension benefits for all their current and former employees and, at the 

same time, help to protect the more than 66,000 retired ‘‘orphan’’ miners whose employers are no longer in the coal business. The companies that currently contribute 

to the 1974 Pension Plan are the last line of defense for the Plan and stand in the 

shoes of the government when it comes to funding the pension benefits of these ‘‘orphan’’ miners—who, under other circumstances, would already be the responsibility 

of the Pension Benefit Guarantee Corporation (PBGC). For example, when Bethlehem Steel entered bankruptcy, Employees of the steel company became the responsibility of the PBGC. However, miners who retired from Bethlehem Steel remained in the 1974 Plan with their full benefits guaranteed and funded by the remaining contributing Employers. 

Mr. Chairman, as you know, the government has been deeply involved in the coal 

industry and with these Plans since the 1940’s. Indeed, the mines were seized in 

1946 with the express purpose of establishing this pension program. The pension 

benefits did not start until the Speaker of the House Joseph Martin (R–MA) in 1948 

met with the Fund Trustees and effected the appointment of Senator Styles Bridges 

(R–NH) as neutral trustee. Senator Bridges then sided with John L. Lewis, the 

UMWA President and Trustee in agreeing to a pay-as-you-go funding structure and 

setting the retirement age and length of service requirements that are still the core 

of today’s benefit program. 

Together, all of us, the miners, the companies and the government, have made 

a great deal of difference in the lives of people in the coalfields and for our energy 

needs. Today we are once again at a juncture when the historic promise to these 

miners is in jeopardy. We believe that H.R. 5479 recognizes this stark fact and provides the best way to correct it. Thank you for this opportunity to support and protect the livelihood of the nation’s retired coal miners. 

The CHAIRMAN. Thank you, gentlemen, both for your compelling 

testimony and the manner in which you presented it. Let me start 

by asking both of you about the types of pensions involved. We are 

not talking about gold-plated pensions, as we are all aware. President Roberts, you said the average pension for a surviving spouse 

for example is only $304 a month. So, basically, these women are 

getting along with their UMWA health care, their pension, Social 

Security, is that correct? That is what they are asked to—— 

Mr. ROBERTS. That is correct, Mr. Chairman. 

The CHAIRMAN. That is what they are asked to live on these days 

in face of rising costs of everything it confronts us. 

Mr. ROBERTS. Correct. 

The CHAIRMAN. Let us discuss the orphan population for a moment. President Roberts, you stated that pension benefits are provided to 97,500 retired and disabled miners and nearly 54 percent 

of the plan population is composed of people whose employer no 

longer contributes to the plan. If you add in active participants and 

terminated vested participants, the total population is slightly over 

120,000 with about 60 percent of them being orphans. Could you 

please explain a little bit more in detail about how this large orphan population came about? 

16 

Mr. ROBERTS. I believe I can, Mr. Chairman. If you go to what 

Mr. Young said about Bethlehem, at one time we know Bethlehem 

was one of the largest corporations in America, had at one time I 

think 120,000 employees. Many people may not realize this, but 

Bethlehem owned many coal mines in Pennsylvania and West Virginia in particular. In fact my dad’s last employer was Bethenergy 

which was a subsidiary of Bethlehem Steel, but we know what happened with Bethlehem, they went into bankruptcy. 

And one of the things that has happened here, as opposed to the 

Federal Government picking up the pensions of the Bethenergy 

workers, we have between negotiations between the Bituminous 

Coal Operators’ Association and the Union continued to provide 

those benefits now. The employees of Bethlehem Steel retirees, the 

government has been subsidizing those pensions through the Public Benefit Guarantee Corporation under ERISA. So, we have tried 

and we have been successful in the coal industry to make sure the 

government has not had to do that. 

Now it is not just Bethlehem Steel that went into bankruptcy 

over the years. If you go back and read the history of coal production in this country, I will take you quickly through this. In the 

’30s the UMWA was the largest union in the country because coal 

was mined by hand with a shovel, very labor intensive. I would like 

to go back to those employment numbers, I don’t know if we would 

want to go back to loading coal again by hand. 

But as time went on we had a mechanization period in the late 

’40s, early ’50s, and we went from like 800 and some thousand 

workers down to like 300,000, and then as time went on became 

more and more mechanized. However, we have also gone through 

many, many bankruptcies and employers walking away from this 

industry. You will not find, that I am aware of, one single UMWA 

retiree being paid for by PBGC right now, unless you, I think the 

Anthracite miners might have, a handful of those might have fallen 

into that category. But the two parties sitting here have been responsible and negotiated agreements that allowed for the payment 

of pensions to continue for those people who worked for companies 

that are gone. 

They are not there for us to deal with, the Union can’t go and 

bargain with those people, they don’t exist anymore. But the two 

parties sitting here have continued to see that those benefits arrive 

at the door every single month, and there are about 100,000 people, 

Mr. Chairman, Members of the Committee, that go to the post office or go out by the gate and reach in there and get a check that 

they depend on very heavily. And $6 billion in the last ten years, 

you talk about economic stimulus plan, that is pretty darn good 

when down in southern West Virginia and eastern Kentucky and 

Appalachia. And by the way, every state in the Union, all fifty 

states, have pensioners that receive benefits. 

The CHAIRMAN. Thank you. 

Mr. YOUNG. Mr. Chairman, can I follow up on that please? 

The CHAIRMAN. Sure, sure, Dave. 

Mr. YOUNG. You know, I think I can relate from my own experience in a prior life before coming to Washington about 11 years 

ago, I was in the coal industry about 20 years and spent time in 

Appalachia and Indiana and Illinois and Kentucky as well. Part of 

17 

my experience was in Illinois in the early ’90s. I was there and 

worked for Old Ben Coal at the time, we had a great operation 

there, we had four longwall mines and couple CM mines and super 

people working for us. 

And along came the Clean Air Act. And we saw a lot of coal that 

moved from east to west, to the benefit of the Powder River Basin, 

strictly due to sulfur. I was selling coal at the time for $13 a ton, 

and you can’t buy much for $13 when you get 2,000 pounds of anything, let alone coal, and we couldn’t find a market for that product. And unfortunately, I mean the government has created part of 

this problem with the reduction in manpower and the companies 

that have gone bankrupt or have gone out of the business during 

this time period, most of whom would have been organized in the 

east. 

And I can relate personally at that time friends of mine, people 

that I grew to know in Illinois, I shut down four longwall mines 

doing a fabulous job, safe, efficient operations, and 2,000 people 

went home, and I am not sure any of them have worked a day 

since the early ’90s. And that is just one example, sir, I mean there 

are so many out there that would break your heart sometimes. But 

we did a good job, and for various reasons, Clean Air Act, we have 

gone to lower sulfur coal. And you know, we see a lot of effects by 

climate and we have a lot of unknowns even going today, where are 

we going to go in the coal industry today? So, we need a policy as 

you know, and I am sure you are going to help us get there. Thank 

you. 

The CHAIRMAN. Very good observation, Dave. The Chair recognizes the gentleman from Washington, Mr. Hastings, who has 72 

UMWA pensioners in his district. 

Mr. HASTINGS. I am glad to know that. I don’t know 72 of them. 

The CHAIRMAN. We will get you the names and addresses. 

Mr. HASTINGS. Mr. Chairman, I will yield whatever time I have 

to Mrs. Lummis if she has any questions. 

The CHAIRMAN. The gentlelady from Wyoming is recognized, who 

has 91 UMWA pensioners in her district. 

Ms. LUMMIS. Mr. Chairman, I would be delighted to have their 

names and addresses. You both have tremendous experience in the 

coal industry and a lifelong effort to see some of these changes 

through, and so my question is this. The 2000 changes to SMCRA 

were important—excuse me, the 2006 changes, the negotiation. 

How long did it take to negotiate the changes with all these interested parties? I know it was a herculean effort. 

Mr. ROBERTS. Let me be the first to try to speak to that. By the 

way I should inform you that the first person to receive a pension 

check from this fund in 1946 was from Wyoming, so just a little 

historic note here today. And let me also, if I may, thank the leadership in Wyoming. The Governor, the people that were here from 

Congress at the time, never ever tried to prevent the passage of 

this Act without taking care of these pensioners’ health care. And 

although there were very few people in Wyoming who were receiving these benefits, the people of Wyoming understood that we can’t 

walk away from these, and I wanted to thank you and everyone 

that was in a leadership position in Wyoming and continues today 

for that. 

18 

This, I know this went on for years, years. I am guessing at a 

minimum four years, but it might have been more. The Chairman 

could tell you, he is doing the multiplications with his hands up 

there. But when we were struggling from ’92 forward with respect 

to trying to determine how to take care of these health care benefits until we finally passed the ’06 legislation, there was conversations about this all through that period, I think is the best way to 

answer it. 

Mr. YOUNG. Let me comment, I was heavily involved, I came to 

town in 1999, which is close to the Chairman’s ten fingers he put 

up there. And it was an issue at that time, it was there before I 

arrived, and it was number one on our list. And I also kind of woke 

up every morning praying about this orphan health care issue. So, 

then it really came together when we worked with all the states 

and we saw the value of the AML process and the issues that were 

needed in all areas, and with that I think it unified us as a group 

that we were able to solve the problem. 

Ms. LUMMIS. Well, it is to all of your credit that it was solved, 

and I deeply appreciated it as well. Question for Mr. Roberts. Do 

you support the President’s proposed changes to SMCRA? And I 

am talking now about the distributions in the President’s 2011 

budget. 

Mr. ROBERTS. Excuse me, could you be a little more specific 

about what we are talking about? 

Ms. LUMMIS. It has to do with the manner in which monies are 

distributed, to exclude certified states. 

Mr. ROBERTS. I think the answer to that is that we don’t support 

that. I must apologize that I am not as up to date on that as you 

are, but I don’t think the mine workers are on record supporting— 

in fact, I believe we opposed it. 

Ms. LUMMIS. Thank you. And one more question, are you concerned that the rewrite of the stream buffer zone rule and other 

actions by the Administration will adversely impact both coal mining companies and their employees, some of whom are union members? 

Mr. ROBERTS. Yes, we have about, for your information, about 

1,000 UMWA members in southern West Virginia doing this type 

work. We have worked with the industry with respect to that, we 

are concerned about that, yes, ma’am. 

Ms. LUMMIS. Mr. Chairman, those are all the questions I have. 

Thank you very much. 

The CHAIRMAN. Thank you. The gentleman from New Jersey, 

who has West Virginia in his blood, is recognized, and who also has 

54 UMWA pensioners in his district. 

Mr. HOLT. Well, I don’t represent the entire State of New Jersey, 

but there certainly are some in New Jersey and, of course, many 

friends and acquaintances in West Virginia that I have. But more 

to the point, President Roberts, you make in your testimony, you 

state that a promise was made to the nation’s coal miners in the 

White House long ago in 1946. I would like to draw attention to 

that. It is not how many members of the UMWA are in each person’s district, it is, are we going to make good on our national 

promise, our national obligation. 

19 

The miners have held up their end in difficult times, in difficult 

circumstances while the energy market has changed underneath 

them. And we have to do our best to hold up our national obligation here, and I think the Chairman has done a fine job with this. 

Let me ask Mr. Roberts to put this in perspective and the declining 

prospects for the pension fund. How does this compare with other 

pension funds? There is trouble all over. I guess I would like to establish for the record that this isn’t an example of individual mismanagement. 

Mr. ROBERTS. I thank you for that question and I think you are 

making a very good point, Congressman. By the way thank you for 

the kind remarks about the government keeping the promises it 

makes, because once the government starts breaking promises I 

think people start losing faith in their government. But we just did 

a presentation throughout the country at four different conferences. 

In 2008 when this fund saw the dramatic decline of over $3.5 billion in assets, and no one did a thing wrong here. 

This fund was 92 to 94 percent funded, we increased the contributions we asked industry to make, and those were significant 

amounts. The contribution rate went from almost zero to $5.50 for 

every hour people worked when we did the last bargaining. We 

acted responsibly. But we, the industry, the Union, did nothing 

wrong here. Certainly the pensioners did nothing wrong, the beneficiaries did nothing wrong. But we saw this collapse in ’08 because 

of the mismanagement on Wall Street. And I commend the Congress for trying to deal with that problem also. 

But to answer your question specifically, we have a chart that 

where almost every pension plan in the United States had this 

happen to them. One of the things that hasn’t been mentioned here 

that I think would be helpful to the Committee, many of these 

plans will have an opportunity to recover ten years, fifteen, whatever it may take. What is significantly problematic here with this 

particular pension plan, we are at our peak for paying out benefits. 

We are paying out $660 some million a year now, which is the 

highest amount we have ever had to pay out in any particular year, 

and we anticipate that being higher as time goes on for a period 

of time. At the same time, we have seen our assets dramatically 

reduced because of the recession. The problem is obvious here, is 

with the responsibility to pay these benefits you may not have the 

time for this fund to recover, like some plans may have that opportunity but this fund will not. 

Mr. HOLT. Thank you. 

Mr. YOUNG. Congressman, could I add to that also? 

Mr. HOLT. Yes, Mr. Young. 

Mr. YOUNG. One unique item I think of our ’74 pension fund, 

that I have not heard from any other industry or area that I am 

aware, is our twelve to one ratio of all the retirees that we have 

out there which have certainly paid their way and done their bit 

to get there. And now we are down to, you know, as our organized 

industry is shrinking the ratio of active people to try to fund those 

people, we had cash in the bank, we had $6.7 billion at one point 

in time in the bank to make these payments. They have disappeared. 

20 

And as President Roberts has said, with the ratio of what few active people we have working for that 100,000 retirees, we just don’t 

have time as some other industries do. We are going to be forced 

by the PPA to come up with a huge funding hourly rate here, 

which is very difficult for someone to look at a $18, $20 rate per 

hour for pensions, let alone the hourly rate. The coal economics in 

the marketplace today will not pay for that. 

Mr. HOLT. Well, thank you. And in the time that I don’t have remaining I will just say that I appreciate the Chairman’s undertaking this. The worst that can be said about this legislation is, I 

think, it might not work to put the pension fund back on sound 

footing. But for the sake of the miners we have to try. Thank you. 

The CHAIRMAN. The gentleman from Nebraska, Mr. Smith. 

Mr. SMITH. Thank you, Mr. Chairman. Actually my questions 

have been answered, so I would yield back. 

The CHAIRMAN. Let me finish asking my questions then. In the 

’74 Plan, if the ’74 Plan is certified as endangered or critical later 

this year under the Pension Protection Act of ’06, funding improvement plans will have to be adopted. President Roberts, in your testimony you note that under these circumstances company contribution rates may have to rise from $5 an hour to $20 an hour. What 

other adjustments would have to be made? 

Mr. ROBERTS. This is some new ground we are all plowing here 

with this 2006 Act, Mr. Chairman, and I have spent more time 

than I care to talk about with lawyers who are experts in this field 

who at any given time will say, well we really don’t know what you 

are supposed to do with A if B happens. But you have a classification of endangered, you have a classification of seriously endangered, and the third classification is critical. Obviously when you 

get to critical that is the most severe declaration that could be 

made under this Act, and as I understand it the IRS and the Department of Labor jointly have responsibilities for enforcing this 

provision. 

It requires us to come up with a, within 200 and some, it is a 

little less than a year, they give you about a little less than a year 

to come up with a funding mechanism to get out of endangered or 

in seriously endangered or in critical. Critical, if you get to that 

stage, not only would it mandate additional funding but adjustment in benefits. And obviously it is the same thing with seriously 

endangered too. Here is the thing I think we might be missing 

here, and I think it needs to be said. Would $20 an hour if the industry agreed to pay it fix this problem? 

I fear it might make it worse. I think we are going to have fewer 

employers that will be standing in line to pay this. I think what 

they may do is attempt to withdraw from this fund, which they can 

do under the ’74 Act, but that would create the biggest legal fight. 

Perhaps I should point out that the collective bargaining agreement itself expires at the end of next year. 

A union is not in the business of saying, well let us cut our people’s benefits. And, of course, the industry would tell me they are 

not in the business of going out of business. So, I think it is setting 

the stage here for a horrendous conflict between the Union and the 

BCOA that we didn’t create. Now we find lots of things to fight 

21 

about, we are pretty good at that, but we didn’t ask for this one 

to fight over. 

So, we will have to establish a plan, the BCOA and the Union 

are required to do this under this Act, and I guess someone in the 

government either at the IRS or the Department of Labor, it is a 

little bit unclear to me who makes these decisions at what level, 

would either approve or disapprove this plan. But I think actually 

the actuaries that you have working for the ’74 Plan are supposed 

to approve or disapprove this funding mechanism to get the plan 

back under a what they would call I guess solvency as we move forward. But it seems to me like we will be given an almost impossible task here. 

The CHAIRMAN. Let me ask you, worst case scenario and the ’74 

Plan is completely insolvent and the PBGC takes over. 

Mr. ROBERTS. That would be—— 

The CHAIRMAN. What can the retirees expect? 

Mr. ROBERTS. Well, here is what happens, that is even over and 

above the Pension Protection Act. The Pension Protection Act was 

designed I think, I think Congress had good intentions there and 

I respect that. But I think the Pension Protection Act was geared 

so no one ever goes into the PBGC quite frankly. But I think they 

may have also inadvertently created a situation where PBGC will 

end up taking over some of these plans. If PBGC takes over, we 

all understand that they say they guarantee pensions, but they 

only guarantee them at a certain level. We have done somewhat of 

an analysis here, and I think people would in some instances be 

getting about half of what they are getting now if the PBGC 

stepped in. 

Now this is a failure of the Pension Protection Act to do what 

it is supposed to do, this would be a failure of the Union and the 

Coal Operators from being able to figure this out in negotiations, 

the PBGC is now stepping in to say, we are going to take over. At 

that point in time people do not get the benefit level that they were 

entitled to. So, people that you referred to as not having a goldplated pension would be getting less than they are now if we ever 

got to that stage. But I am committed, and I have told our members this, I am committed to keep that from happening. 

The CHAIRMAN. Thank you. 

Mr. YOUNG. Let me follow up with that, Mr. Chairman. Also we 

have also made kind of a quick look at how the beneficiaries could 

be affected if the PBGC were to, forced to take over here and our 

funding base fails for whatever reason. Unbelievable to me that 

someone who is receiving, you know, it is going to be an elderly 

lady probably, we are talking about widows here again who is receiving a check for $304 a month, we think that individual would 

see about a 10 percent cut in that check, if you can believe that, 

down to about $270. And it just progressively increases. So, you 

know, the more money you are entitled to in your package the 

more the PBGC makes a cut. So, our estimate would be, everyone 

would receive at a minimum of 10 percent cut, some could see as 

high as a 40 percent cut in their retirement. 

The CHAIRMAN. Thank you, gentlemen, thank you both for your 

testimony today, we appreciate it. 

22 

The Committee will now hear from Mr. Alfred Whitehouse, the 

Chief of the Division of Reclamation Support, Office of Surface 

Mining Reclamation Enforcement. Nice to have you, Mr. Whitehouse, before the Committee, good to see you again. And we do 

have your prepared testimony and it will be made part of the 

record as if actually read. You may proceed as you wish. 

STATEMENT OF ALFRED WHITEHOUSE, CHIEF OF THE DIVISION OF RECLAMATION SUPPORT, OFFICE OF SURFACE 

MINING RECLAMATION AND ENFORCEMENT 

Mr. WHITEHOUSE. Mr. Chairman and Members of the Committee, 

thank you very much for the opportunity to testify on behalf of the 

Office of Surface Mining Reclamation and Enforcement on 

H.R. 5479, The Coal Accountability and Retired Employee Act of 

2010. H.R. 5479 would require that the unused portion of the U.S. 

Treasury funds below the annual cap of $490 million established 

by the 2006 amendments to the Surface Mining Control and Reclamation Act be paid each year to the trustees of the 1974 United 

Mine Workers of America Pension Plan. While we recognize the importance of ensuring that retired miners receive their pensions, we 

have serious concerns with this bill. SMCRA established OSM for 

two basic purposes. First, to ensure that the nation’s coal mines operate in a manner that protects citizens and the environment during mining operations and restores the land to beneficial use after 

mining. Second, to implement an abandoned mine land program to 

address the hazards and environmental damage created by centuries of weakly regulated coal mining that occurred before 

SMCRA’s enactment. 

The AML program is funded by a fee assessed on each ton of coal 

produced and deposited in the Abandoned Mine Land Reclamation 

Fund. Historically, Congress appropriated far less money from the 

Abandoned Mine Land Fund than the total fees collected, which allowed the fund to grow. Beginning in Fiscal Year 1996, an amount 

equal to the interest earned by the AML Fund but capped at $70 

million has been available for transfer to the United Mine Workers 

of America Combined Benefit Fund. This was to defray the cost of 

providing health care to certain retired coal miners and their 

dependents. 

Congress amended SMCRA as part of the Tax Relief and Health 

Care Act of 2006. The amendments removed the $70 million cap 

and added funding for two additional UMWA health care plans. 

After 2006 amendments, OSM became responsible for transferring 

an annual amount to the three UMWA health care plans based on 

estimated expenses. Any shortfall between the interest earned by 

OSM and the amount of the transfer estimated by health care plan 

trustees would be funded from the U.S. Treasury’s general fund. 

Under Title IV of SMCRA, OSM expended $336 million from the 

general Treasury fund in Fiscal Year 2010. Approximately $227 

million was distributed through AML grants to states and tribes, 

and approximately $108 million was transferred to the three health 

care plans. H.R. 5479 would require an amount representing the 

difference between the SMCRA transfer from the Treasury general 

fund and the $490 million cap to be transferred to the 1974 Pension Plan every fiscal year. 

23 

As a result, this bill would significantly increase expenditures 

from the Treasury under SMCRA and would eliminate all of the 

savings to be achieved through reductions proposed in the President’s Fiscal Year 2011 budget. For example, the President’s Fiscal 

Year 2011 budget proposes to eliminate Abandoned Mine Land 

payments to states and tribes that have been certified as completing reclamation of their high priority abandoned mine land coal 

problems. Under the budget proposal, the eliminated payments 

would remain in the Treasury. 

However, H.R. 5479 would require that the full amount of the 

cap on the SMCRA Treasury allocations be spent every year, eliminating any savings. The Administration takes seriously the financial problems facing many multi-employer pension plans, including 

those sponsored by the United Mine Workers of America, and is 

committed to working with Congress to find solutions that address 

the long term solvency of these plans and protect the retirement 

security of workers and their beneficiaries. 

However, we have serious concerns that H.R. 5479 if enacted 

would add significant new costs and eliminate any savings sought 

by the Administration’s 2011 budget. Thank you very much for the 

opportunity to appear before the Committee today and testify on 

the bill. I look forward to working with the Committee to ensure 

the nation’s abandoned mine lands are reclaimed. 

[The prepared statement of Mr. Whitehouse follows:] 

Statement of Alfred Whitehouse, Chief of the Division of Reclamation 

Support, Office of Surface Mining Reclamation and Enforcement, U.S. 

Department of the Interior 

Mister Chairman and Members of the Committee, thank you for the opportunity 

to testify on behalf of the Office of Surface Mining Reclamation and Enforcement 

(OSM) regarding H.R. 5479, the Coal Accountability and Retired Employee Act of 

2010. 

H.R. 5479 would require that the unused portion of U.S. Treasury funds below 

the annual cap of $490 million established by the 2006 Amendments to the Surface 

Mining Control and Reclamation Act (SMCRA) be paid each year to trustees of the 

1974 United Mine Workers of America (UMWA) Pension Plan. While we recognize 

the importance of ensuring that retired miners receive their pensions, we have serious concerns with this bill. We believe the AML program should remain focused on 

reclaiming high priority abandoned coal mine sites, and further, this bill is inconsistent with the President’s Budget and goals of ensuring greater fiscal responsibility during today’s challenging economic times. 

Background 

SMCRA established OSM for two basic purposes. First, to ensure that the Nation’s coal mines operate in a manner that protects citizens and the environment 

during mining operations and to restore the land to beneficial use following mining. 

Second, to implement an AML program to address the hazards and environmental 

degradation created by centuries of weakly regulated coal mining that occurred before SMCRA’s enactment. 

Title IV of SMCRA created an AML reclamation program funded by a reclamation 

fee assessed on each ton of coal produced. The fees collected have been placed in 

the Abandoned Mine Reclamation Fund (the Fund). OSM, either directly or through 

grants to states and tribes with approved AML reclamation plans under SMCRA, 

has been using the Fund primarily to reclaim lands and waters adversely impacted 

by coal mining conducted before the enactment of SMCRA and to mitigate the adverse impacts of mining on individuals and communities. Eligible lands and waters 

were those that were mined for coal or affected by coal mining or coal processing, 

were abandoned or left inadequately reclaimed prior to the enactment of SMCRA 

on August 3, 1977, and for which there was no continuing reclamation responsibility 

under state or other Federal laws. 

24 

Historically, Congress appropriated far less money from the Fund than the total 

fees collected and deposited into the Fund on an annual basis. This allowed the 

Fund to grow considerably in years past. Beginning in Fiscal Year 1996, an amount 

equal to the interest earned by and paid to the Fund has been available for direct 

transfer to the United Mine Workers of America Combined Benefit Fund (CBF) to 

defray the cost of providing health care benefits for certain retired coal miners and 

their dependents. Prior to 2006, OSM’s annual payments to the CBF were limited 

to the lesser of the interest earned on the AML fund, or $70 million. 

In 2006, Congress amended SMCRA as part of the Tax Relief and Health Care 

Act of 2006, (2006 Amendments). The amendments removed the $70 million cap, 

and added funding for two additional UMWA health care plans. With the 2006 

Amendments, OSM became responsible for transferring an annual amount based on 

the estimated expenses of three UMWA Health Care Plans. Any shortfall between 

the amount of interest earned by OSM, and the amount of the transfer estimated 

by health care plan trustees would be funded from the U.S. Treasury’s General 

Fund. 

H.R. 5479 

As noted earlier, the 2006 amendments capped SMCRA expenditures from the 

Treasury General Fund at $490 million per year. In the current fiscal year, approximately $227 million of the Treasury General Fund was distributed through mandatory AML grants to states and tribes and approximately $108 million was transferred to the three heath care plans. Thus, OSM expended $336 million from the 

Treasury General Fund in fiscal year 2010. 

H.R. 5479 would require an amount representing the difference between the 

SMCRA transfer from the Treasury General Fund and the $490 million cap to be 

transferred every fiscal year to the 1974 UMWA Pension Plan. As a result, this bill 

would significantly increase expenditures from the Treasury under SMCRA. 

This bill would also most likely eliminate all of the savings to be achieved through 

reductions proposed in the President’s Fiscal Year 2011 budget. For example, the 

President’s FY 2011 Budget proposes to eliminate AML payments to states and 

tribes that have been certified as completing reclamation of their high priority AML 

coal problems. Under the proposal, the eliminated payments would remain in the 

treasury; however, this bill would require that the full amount of the cap on SMCRA 

Treasury allocations be spent every year, eliminating any savings. 

The Administration takes seriously the financial problems facing many multiemployer pension plans, including those sponsored by the UMWA, and understands the 

valuable benefits that these plans provide to millions of workers and retirees. When 

people retire, they deserve to know that they will receive the benefits they were 

promised. The Administration is committed to working with the Congress to find solutions that address the long-term solvency of these plans and protects the retirement security of workers and retirees. However, we have serious concerns that 

H.R. 5479, if enacted, would add significant new costs, and eliminate savings 

sought by the Administration’s FY 2011 budget 

Thank you for the opportunity to appear before the Committee today and testify 

on this bill. I look forward to working with the Committee to ensure that the Nation’s abandoned coal mine lands are adequately reclaimed. 

The CHAIRMAN. Thank you, Mr. Whitehouse. I realize fully, and 

we have seen this many times in this city, that you are I guess 

what we could call the proverbial sacrificial lamb at this hearing, 

and you have been directed by OMB what to say about the pending 

measure, and I am sure you would like to use this money to make 

the deficit look smaller, that is commonplace. But I would point out 

two things with respect to your testimony. First, as I am sure you 

are aware, there would be no AML Program today if it were not 

for this gentleman sitting in this chair. 

I almost singlehandedly, against utility and coal industry 

opposition, extended the program in the late ’80s, and then again 

in ’92, and played a major role in the ’06 extension. I say this because I know there are people within your agency who simply do 

not like to be put in the position of managing funds for the purpose 

of mine workers’ health care plans, pure and simple. And I believe 

25 

that sentiment is coming out today with respect to the pending legislation. 

And second, as you heard me questioning President Cecil 

Roberts, if the ’74 plan goes under, then the PBGC takes over, and 

guess who foots the bill? The taxpayers, the American taxpayers, 

and that is a fact. So, I am not going to grill you this morning or 

ask you any questions on your heartless testimony, but I realize 

the position you have been put in and I guess I will let it go at 

that. You will too, huh? 

Mr. WHITEHOUSE. Thank you very much. 

The CHAIRMAN. OK—— 

Ms. CHRISTENSEN. That is fine with me too. 

The CHAIRMAN. That is fine with the gentlelady from the Virgin 

Islands? Thank you. 

Mr. WHITEHOUSE. Thank you. 

The CHAIRMAN. If there is no further business, the Committee 

stands adjourned. 

[Whereupon, at 10:57 a.m., the Committee was adjourned.] 

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