II

104TH CONGRESS

2D SESSION S. 2135

To amend the Internal Revenue Code of 1986 to provide reductions in

required contributions to the United Mine Workers of America Combined

Benefit Fund, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 26, 1996

Mr. COCHRAN (for himself and Mr. CONRAD) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

reductions in required contributions to the United Mine

Workers of America Combined Benefit Fund, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Coal Industry Retiree

5 Health Equity Act’’.
2

•S 2135 IS

1 SEC. 2. REDUCTION IN CONTRIBUTIONS OF ELIGIBLE

2 SMALL ASSIGNED OPERATORS TO COAL MIN3 ERS COMBINED BENEFIT FUND.

4 (a) IN GENERAL.—Part II of subchapter B of chap5 ter 99 of the Internal Revenue Code of 1986 (relating to

6 financing of Combined Benefit Fund) is amended by in7 serting after section 9704 the following new section:

8 ‘‘SEC. 9704A. REDUCTIONS IN ANNUAL PREMIUMS OF ELIGI9 BLE SMALL ASSIGNED OPERATORS.

10 ‘‘(a) GENERAL RULE.—The annual premium of an

11 assigned operator under section 9704(a) shall, in the case

12 of an eligible small assigned operator, be reduced as pro13 vided in subsection (b).

14 ‘‘(b) REDUCTIONS FOR ELIGIBLE SMALL ASSIGNED

15 OPERATORS.—

16 ‘‘(1) IN GENERAL.—If this subsection applies to

17 an eligible small assigned operator for any plan year

18 of the Combined Fund, the annual premium under

19 section 9704(a) for such operator for such plan year

20 shall not exceed 5 percent of the operator’s average

21 annual taxable income for purposes of chapter 1 for

22 the 5-taxable year period ending with the operator’s

23 most recent taxable year ending before the beginning

24 of the plan year.

25 ‘‘(2) CREDIT FOR OVERPAYMENTS.—To the ex26 tent that an eligible small assigned operator has
3

•S 2135 IS

1 paid annual premiums in excess of such premiums

2 required by paragraph (1) for plan years beginning

3 before the date of the enactment of this section, any

4 annual premiums owed by such operator on or after

5 October 1, 1996 (after the application of paragraph

6 (1)) shall be reduced (but not below zero) by the

7 amount of such excess.

8 ‘‘(b) YEARS TO WHICH SECTION APPLIES.—

9 ‘‘(1) IN GENERAL.—This section shall apply to

10 any plan year of the Combined Fund which begins

11 after January 31, 1993 and before October 1, 2003.

12 ‘‘(2) COORDINATION.—This section shall not

13 apply to any eligible small assigned operator for any

14 plan year for which no annual premium is imposed

15 on such operator.

16 ‘‘(c) ELIGIBLE SMALL ASSIGNED OPERATORS.—For

17 purposes of this section—

18 ‘‘(1) IN GENERAL.—The term ‘eligible small as19 signed operator’ means any assigned operator—

20 ‘‘(A) the average annual gross income of

21 which for purposes of chapter 1 for the 5-tax22 able year period ending with the operator’s

23 most recent taxable year ending before October

24 1, 1993, did not exceed $25,000,000, and
4

•S 2135 IS

1 ‘‘(B) which is not engaged in the produc2 tion of coal for the plan year for which the de3 termination is being made.

4 For purposes of this subparagraph, production

5 by a related person shall be treated as production by

6 the assigned operator.

7 ‘‘(2) PRODUCTION OF COAL.—For purposes of

8 paragraph (1), an assigned operator or related per9 son shall be treated as engaged in the production of

10 coal if it has employed employees in—

11 ‘‘(A) the extraction of coal, or

12 ‘‘(B) the preparation, processing, or chang13 ing of coal for sale.

14 ‘‘(d) AGGREGATION RULES.—In determining gross

15 income or taxable income for purposes of this section, an

16 assigned operator and any related persons shall be treated

17 as 1 person.

18 ‘‘(e) OVERALL LIMITATION.—

19 ‘‘(1) IN GENERAL.—In no event shall the total

20 reductions in annual premiums payable to the Com21 bined Fund under this section for any plan year ex22 ceed $5,000,000.

23 ‘‘(2) CALCULATION OF REDUCTIONS.—For pur24 poses of paragraph (1), the total reductions in an25 nual premiums for any plan year shall not include
5

•S 2135 IS

1 any reductions under this section in premiums pay2 able by an eligible small assigned operator who,

3 prior to the date of the enactment of this section,

4 has not paid at least 50 percent of the premiums as5 sessed such assigned operator for the period October

6 1, 1993, through September 30, 1996.’’

7 (b) CONFORMING AMENDMENT.—The table of sec8 tions for part II of subchapter B of chapter 99 of the In9 ternal Revenue Code of 1986 is amended by inserting

10 after the item relating to section 9704 the following new

11 item:

‘‘Sec. 9704A. Reductions in annual premiums of eligible small assigned operators.’’

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to plan years beginning after Janu14 ary 31, 1993.

15 SEC. 3. WAIVER OF PENALTIES.

16 (a) IN GENERAL.—In the case of an eligible small

17 assigned operator (as defined in section 9704A(c) of the

18 Internal Revenue Code of 1986, as added by section 2),

19 no penalty shall be imposed under section 9707 of such

20 Code on any failure of such operator to pay any install21 ment of a premium due under section 9704 of such Code

22 before January 1, 1997, if the operator pays such install23 ment before such date. For purposes of this subsection,
6

•S 2135 IS

1 the amount of the installment shall be determined after

2 application of the amendments made by section 2.

3 (b) COMPLIANCE.—An operator shall not be treated

4 as failing to meet the requirements of subsection (a) with

5 respect to any installment if—

6 (1) the failure to pay the installment before

7 January 1, 1997, was due to reasonable cause and

8 not to willful neglect, and

9 (2) the failure is corrected within 90 days of

10 the later of—

11 (A) notice of the failure, or

12 (B) a final administrative or judicial deter13 mination of the amount of the installment

14 which is not reviewable or appealable.

15 SEC. 4. SUSPENSION OF CONTRIBUTIONS FOR CERTAIN AS16 SIGNED OPERATORS TO THE COMBINED

17 FUND.

18 (a) IN GENERAL.—Section 9704 of the Internal Rev19 enue Code of 1986 (relating to liability of assigned opera20 tors) is amended by adding at the end the following new

21 subsection:

22 ‘‘(j) ONE-TIME SUSPENSION OF CONTRIBUTIONS

23 FOR CERTAIN ASSIGNED OPERATORS.—

24 ‘‘(1) IN GENERAL.—Effective on and after the

25 date of the enactment of the Coal Industry Retiree
7

•S 2135 IS

1 Health Equity Act, whenever the net assets in the

2 Combined Fund (as reported in the monthly UMWA

3 Combined Fund Financial Statements) first exceed

4 10 percent of the benefits and administrative costs

5 paid by the Combined Fund during the preceding

6 plan year, no further monthly premium payments

7 shall be made by assigned operators which are not

8 1988 agreement operators for the succeeding 24-

9 month period. In the case of assigned operators

10 which sought protection under title 11 of the United

11 States Code before October 24, 1992, the preceding

12 sentence shall be applied without regard to section

13 9706(b)(1)(A).

14 ‘‘(2) TERMINATION OF SUSPENSION.—The pe15 riod of suspension under paragraph (1) shall termi16 nate whenever such net assets no longer exceed 10

17 percent of such costs, and assigned operators which

18 are not 1988 agreement operators shall resume mak19 ing monthly premium payments with the next

20 monthly installment due after such termination.

21 ‘‘(3) REPORT.—Not later than the end of the

22 first 12-month period of the 24-month period de23 scribed in paragraph (1), the Comptroller General

24 of the United States shall report to Congress on the

25 current operations of the Combined Fund for such
8

•S 2135 IS

1 12-month period and the background history of the

2 Combined Fund.’’

3 (b) CONFORMING AMENDMENT.—Section 9704(a) of

4 the Internal Revenue Code of 1986 is amended by striking

5 ‘‘Each’’ and inserting ‘‘Except as provided in subsection

6 (j), each’’.

7 SEC. 5. AMOUNT OF PER BENEFICIARY PREMIUM.

8 Paragraph (2) of section 9704(b) of the Internal Rev9 enue Code of 1986 (relating to per beneficiary premium)

10 is amended—

11 (1) by striking subparagraph (A) and inserting

12 the following new subparagraph:

13 ‘‘(A) $2,116.67, plus’’, and

14 (2) by striking ‘‘the amount determined under

15 subparagraph (A)’’ in subparagraph (B) and insert16 ing ‘‘$2,116.67’’.

17 SEC. 6. DISCLOSURE REQUIREMENTS.

18 (a) IN GENERAL.—Section 9704(h) of the Internal

19 Revenue Code of 1986 (relating to information) is amend20 ed—

21 (1) by striking ‘‘(h) INFORMATION.—The’’ and

22 inserting:

23 ‘‘(h) INFORMATION.—

24 ‘‘(1) INFORMATION TO SECRETARY.—The’’, and
9

•S 2135 IS

1 (2) by adding at the end the following new

2 paragraph:

3 ‘‘(2) INFORMATION TO CONTRIBUTORS.—

4 ‘‘(A) IN GENERAL.—The trustees of the

5 Combined Fund shall, within 30 days of a writ6 ten request, make available to any assigned op7 erator information relating to the employment

8 history of assigned beneficiaries.

9 ‘‘(B) FEES.—The trustees may charge rea10 sonable fees (not in excess of actual expenses)

11 for providing documents under this paragraph.’’

12 (b) ADDITIONAL AMENDMENT.—Clause (ii) of sec13 tion 9703(b)(2)(A) of the Internal Revenue Code of 1986

14 is amended by inserting ‘‘(without regard to any reduction

15 under section 9704(e)(3)(B)(ii))’’ after ‘‘for the plan

16 year’’.

17 SEC. 7. TREATMENT OF WITHDRAWAL LIABILITY.

18 (a) WITHDRAWAL LIABILITY.—Subsection (g) of sec19 tion 9711 of the Internal Revenue Code of 1986 (relating

20 to continued obligations of individual employer plans) is

21 amended by adding at the end the following new para22 graph:

23 ‘‘(3) CERTAIN 1988 AGREEMENT OPERATORS.—

24 Notwithstanding any other provision of this chapter,

25 in the case of 1988 agreement operators which ei-
10

•S 2135 IS

1 ther have contingent liability for, or which were as2 sessed by and did pay contractual withdrawal liabil3 ity to, the 1950 UMWA Benefit Plan, the 1974

4 UMWA Benefit Plan or the Combined Fund; the fol5 lowing shall apply as of the date of the enactment

6 of the Coal Industry Retiree Health Equity Act:

7 ‘‘(A) The Combined Fund shall imme8 diately cease assessing, collecting, or attempting

9 to collect contractual withdrawal liability under

10 Article XX, Section (i) or (j), or both, of the

11 1988 agreement, and promptly shall segregate

12 from its other assets a sum equal to the con13 tractual withdrawal liability previously paid by

14 any such 1988 agreement operator.

15 ‘‘(B) Each such 1988 agreement operator

16 and any related persons are hereafter exempted

17 from the requirements of subsections (a) and

18 (b).

19 ‘‘(C) The 1992 UMWA Benefit Plan here20 after shall provide health benefits coverage to

21 all beneficiaries who would have been eligible to

22 receive health benefits under such 1988 agree23 ment operator’s individual employer plans, but

24 for this paragraph.
11

•S 2135 IS

1 ‘‘(D) The 1992 UMWA Benefit Plan shall

2 assess no premiums against any such 1988

3 agreement operator under subparagraphs (A)

4 and (B) of section 9712(d)(1) and, instead,

5 shall assess such premiums against the Com6 bined Fund, which shall promptly pay such pre7 miums until the sum segregated with respect to

8 such 1988 Agreement operator from the Com9 bined Fund’s other assets pursuant to this

10 paragraph has been exhausted. The segregated

11 sum shall continue to earn interest at the rate

12 prescribed under section 6621 until such sum is

13 exhausted, at which time the 1992 UMWA

14 Benefit Plan shall commence assessing pre15 miums against such 1988 agreement operator.’’

16 (b) CONFORMING AMENDMENT.—Subsections (a)

17 and (b)(2) of section 9711 of the Internal Revenue Code

18 of 1986 are each amended by striking the period at the

19 end of the second sentence thereof and inserting ‘‘, except

20 as provided in subsection (g)(3).’’

Æ