II

106TH CONGRESS

2D SESSION S. 2729

To amend the Internal Revenue Code of 1986 and the Surface Mining

Control and Reclamation Act of 1977 to restore stability and equity

to the financing of the United Mine Workers of America Combined

Benefit Fund by eliminating the liability of reachback operators, to

provide additional sources of revenue to the Fund, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 14, 2000

Mr. CONRAD (for himself and Mr. SMITH of Oregon) 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 and the Surface Mining Control and Reclamation Act of 1977 to

restore stability and equity to the financing of the United

Mine Workers of America Combined Benefit Fund by

eliminating the liability of reachback operators, to provide additional sources of revenue to the 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,
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1 SECTION 1. SHORT TITLE; AMENDMENTS OF 1986 CODE.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Combined Fund Stability and Fairness Act’’.

4 (b) AMENDMENT OF 1986 CODE.—Except as other5 wise expressly provided, whenever in this Act an amend6 ment or repeal is expressed in terms of an amendment

7 to, or repeal of, a section or other provision, the reference

8 shall be considered to be made to a section or other provi9 sion of the Internal Revenue Code of 1986.

10 TITLE I—REACHBACK

11 PROVISIONS

12 SEC. 101. REFORM OF REACHBACK PROVISIONS OF COAL

13 INDUSTRY HEALTH BENEFIT SYSTEM.

14 (a) AGREEMENTS COVERED BY HEALTH BENEFIT

15 SYSTEM.—

16 (1) IN GENERAL.—Section 9701(b)(1) (defining

17 coal wage agreement) is amended to read as follows:

18 ‘‘(1) COAL AGREEMENTS.—

19 ‘‘(A) 1988 AGREEMENT.—The term ‘1988

20 agreement’ means the collective bargaining

21 agreement between the settlors which became

22 effective on February 1, 1988.

23 ‘‘(B) COAL WAGE AGREEMENT.—The term

24 ‘coal wage agreement’ means the 1988 agree25 ment and any predecessor to the 1988 agree26 ment.’’
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1 (2) CONFORMING AMENDMENT.—Section

2 9701(b) (relating to agreements) is amended by

3 striking paragraph (3).

4 (b) DEFINITIONS APPLICABLE TO OPERATORS.—

5 (1) SIGNATORY OPERATOR.—Section 9701(c)(1)

6 (defining signatory operator) is amended to read as

7 follows:

8 ‘‘(1) SIGNATORY OPERATOR.—The term ‘signa9 tory operator’ means a 1988 agreement operator.’’

10 (2) 1988 AGREEMENT OPERATOR.—Section

11 9701(c)(3) (defining 1988 agreement operator) is

12 amended to read as follows:

13 ‘‘(3) 1988 AGREEMENT OPERATOR.—The term

14 ‘1988 agreement operator’ means—

15 ‘‘(A) an operator which was a signatory to

16 the 1988 agreement, or

17 ‘‘(B) a person in business which, during

18 the term of the 1988 agreement, was a signa19 tory to an agreement (other than the National

20 Coal Mine Construction Agreement or the Coal

21 Haulers’ Agreement) containing pension and

22 health care contribution and benefit provisions

23 which are the same as those contained in the

24 1988 agreement.
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1 Such term shall not include any operator who was

2 assessed, and paid the full amount of, contractual

3 withdrawal liability to the 1950 UMWA Benefit

4 Plan, the 1974 UMWA Benefit Plan, or the Com5 bined Fund.’’

6 (3) CONFORMING AMENDMENTS.—

7 (A) Section 9711(a) is amended by strik8 ing ‘‘maintained pursuant to a 1978 or subse9 quent coal wage agreement’’.

10 (B) Section 9711(b)(1) is amended by

11 striking ‘‘pursuant to a 1978 or subsequent

12 coal wage agreement’’.

13 (c) MODIFICATIONS TO REFLECT REACHBACK RE14 FORMS.—

15 (1) BOARD OF TRUSTEES OF COMBINED

16 FUND.—

17 (A) IN GENERAL.—Section 9702(b)(1) is

18 amended—

19 (i) by striking ‘‘one individual who

20 represents’’ in subparagraph (A) and in21 serting ‘‘two individuals who represent’’,

22 (ii) by striking subparagraph (B) and

23 redesignating subparagraphs (C) and (D)

24 as subparagraphs (B) and (C), respec25 tively, and
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1 (iii) by striking ‘‘(A), (B), and (C)’’ in

2 subparagraph (C) (as so redesignated) and

3 inserting ‘‘(A) and (B)’’.

4 (B) CONFORMING AMENDMENT.—Section

5 9702(b)(3) is amended to read as follows:

6 ‘‘(3) SPECIAL RULE.—If the BCOA ceases to

7 exist, any trustee or successor under paragraph

8 (1)(A) shall be designated by the 3 employers who

9 were members of the BCOA on the enactment date

10 and who have been assigned the greatest number of

11 eligible beneficiaries under section 9706.’’

12 (C) TRANSITION RULE.—Any trustee serv13 ing on the date of the enactment of this Act

14 who was appointed to serve under section

15 9702(b)(1)(B) of the Internal Revenue Code of

16 1986 (as in effect before the amendments made

17 by this paragraph) shall continue to serve until

18 a successor is appointed under section

19 9702(b)(1)(A) of such Code (as in effect after

20 such amendments).

21 (2) ASSIGNMENT OF BENEFICIARIES.—Section

22 9706 (relating to assignment of eligible bene23 ficiaries) is amended by adding at the end the fol24 lowing:

25 ‘‘(h) ASSIGNMENT AS OF OCTOBER 1, 2000.—
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1 ‘‘(1) IN GENERAL.—Effective October 1, 2000,

2 the Commissioner of Social Security shall—

3 ‘‘(A) revoke all assignments to persons

4 other than 1988 agreement operators for pur5 poses of assessing premiums for periods after

6 September 30, 2000,

7 ‘‘(B) make no further assignments to per8 sons other than 1988 agreement operators, and

9 ‘‘(C) terminate all unpaid liabilities of per10 sons other than 1988 agreement operators with

11 respect to eligible beneficiaries whose assign12 ment to such persons is pending on October 1,

13 2000.

14 ‘‘(2) REASSIGNMENT UPON PURCHASE.—This

15 subsection shall not be construed to prohibit the re16 assignment under subsection (b)(2) of an eligible

17 beneficiary.’’

18 (3) LIABILITY FOR 1992 PLAN.—

19 (A) IN GENERAL.—Section 9712(d) (relat20 ing to guarantee of benefits) is amended by

21 striking paragraph (3) and by redesignating

22 paragraphs (4), (5), and (6) as paragraphs (3),

23 (4), and (5), respectively.

24 (B) CONFORMING AMENDMENT.—Section

25 9712(d)(3) (as redesignated under subpara-
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1 graph (A)) is amended by striking ‘‘or last sig2 natory operator described in paragraph (3)’’.

3 (C) EFFECTIVE DATE.—The amendments

4 made by this paragraph shall apply to pre5 miums assessed for periods after September 30,

6 2000, except that a person other than a 1988

7 agreement operator shall not be liable for any

8 unpaid premium under section 9712(d) of the

9 Internal Revenue Code of 1986 as of such date

10 if liability for such premium had not been as11 sessed or was being contested on such date.

12 TITLE II—FINANCING

13 PROVISIONS

14 Subtitle A—Premiums

15 SEC. 201. REDUCTION IN ANNUAL PREMIUMS TO COAL MIN16 ERS COMBINED FUND IF SURPLUS EXISTS.

17 (a) IN GENERAL.—Part II of subchapter B of chap18 ter 99 (relating to financing of Combined Benefit Fund)

19 is amended by inserting after section 9704 the following

20 new section:

21 ‘‘SEC. 9704A. REDUCTIONS IN HEALTH BENEFIT PREMIUM

22 IF SURPLUS EXISTS.

23 ‘‘(a) GENERAL RULE.—If this section applies to any

24 plan year, the per beneficiary premium used for purposes

25 of computing the health benefit premium under section
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1 9704(b) for the plan year shall be the reduced per bene2 ficiary premium determined under subsection (c).

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

4 ‘‘(1) IN GENERAL.—This section applies to any

5 plan year beginning after September 30, 2000, if the

6 trustees determine that the Combined Fund has an

7 excess reserve for the plan year.

8 ‘‘(2) EXCESS RESERVE.—For purposes of this

9 section—

10 ‘‘(A) IN GENERAL.—The term ‘excess re11 serve’ means, with respect to any plan year, the

12 excess (if any) of—

13 ‘‘(i) the projected net assets as of the

14 close of the test period for the plan year,

15 over

16 ‘‘(ii) the projected 3-month asset re17 serve as of such time.

18 ‘‘(B) PROJECTED NET ASSETS.—For pur19 poses of subparagraph (A)(i), the projected net

20 assets shall be the amount of the net assets

21 which the trustees determine will be available at

22 the end of the test period for projected fund

23 benefits. Such determination shall be made in

24 the same manner used by the Combined Fund

25 to calculate net assets available for projected
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1 fund benefits in the Statement of Net Assets

2 (Deficits) Available for Fund Benefits for pur3 poses of the monthly financial statements of the

4 Combined Fund for the plan year beginning Oc5 tober 1, 1999.

6 ‘‘(C) PROJECTED 3-MONTH ASSET RE7 SERVE.—For purposes of subparagraph (A)(ii),

8 the projected 3-month asset reserve is an

9 amount equal to 25 percent of the projected ex10 penses (including administrative expenses) from

11 the health benefit premium account and unas12 signed beneficiaries premium account for the

13 plan year immediately following the test period.

14 The determination of such amount shall be

15 based on the 10-year forecast of the projected

16 net assets and cash balance of the Combined

17 Fund prepared annually by an actuary retained

18 by the Combined Fund.

19 ‘‘(D) TEST PERIOD.—For purposes of this

20 section, the term ‘test period’ means, with re21 spect to any plan year, the plan year and the

22 following plan year.

23 ‘‘(c) REDUCED PER BENEFICIARY PREMIUM.—For

24 purposes of this section, the reduced per beneficiary pre25 mium for any plan year to which this section applies is
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1 the per beneficiary premium determined under section

2 9704(b)(2) without regard to this section, reduced (but

3 not below zero) by—

4 ‘‘(1) the excess reserve for the plan year, di5 vided by

6 ‘‘(2) the total number of eligible beneficiaries

7 which are assigned to assigned operators under sec8 tion 9706 as of the close of the preceding plan year.

9 ‘‘(d) TERMINATION OF PREMIUM REDUCTION.—If,

10 on any day during a plan year to which this section ap11 plies, the Combined Fund has net assets available for pro12 jected fund benefits (determined in the same manner as

13 projected net assets under subsection (b)(2)(B)) in an

14 amount less than the projected 3-month asset reserve de15 termined under subsection (b)(2)(C) for the plan year—

16 ‘‘(1) this section shall not apply to months in

17 the plan year beginning after such day, and

18 ‘‘(2) the monthly installment under section

19 9704(g)(1) for such months shall be equal to the

20 amount which would have been determined if the

21 health benefits premium under section 9704(b) had

22 not been reduced under this section for the plan

23 year.’’

24 (b) CONFORMING AMENDMENTS.—
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1 (1) Section 9704(a) (relating to annual pre2 miums) is amended by striking ‘‘Each’’ and insert3 ing ‘‘Subject to section 9704A, each’’.

4 (2) The table of sections for part II of sub5 chapter B of chapter 99 is amended by inserting

6 after the item relating to section 9704 the following

7 new item:

‘‘Sec. 9704A. Reductions in health benefit premium if surplus exists.’’

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

9 this subsection shall apply to plan years of the Combined

10 Fund beginning after September 30, 2000.

11 SEC. 202. ELECTION TO PREFUND REQUIRED CONTRIBU12 TIONS.

13 (a) COMBINED FUND.—Section 9704(g) (relating to

14 payment of premiums) is amended by redesignating para15 graph (2) as paragraph (3) and by inserting after para16 graph (1) the following:

17 ‘‘(2) ELECTION TO PREFUND.—

18 ‘‘(A) IN GENERAL.—An assigned operator

19 shall be entitled to prefund its obligations to

20 the Combined Fund by depositing into an irrev21 ocable trust dedicated solely to the payment of

22 such obligations an amount which the board of

23 trustees determines, on the basis of reasonable

24 actuarial assumptions, to be equal to the
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1 present value of the operator’s present and fu2 ture obligations to the Combined Fund.

3 ‘‘(B) EFFECTS ON LIABILITY.—If an as4 signed operator prefunds its obligations under

5 this paragraph—

6 ‘‘(i) the assigned operator (and any

7 successor) shall continue to remain liable

8 for such obligations if the amount depos9 ited is insufficient, but

10 ‘‘(ii) any related person to such oper11 ator (or successor) shall be relieved of any

12 liability for such obligations.’’

13 (b) 1992 FUND.—Section 9712(d) (relating to guar14 antee of benefits), as amended by section 101, is amended

15 by adding at the end the following:

16 ‘‘(6) ELECTION TO PREFUND.—

17 ‘‘(A) IN GENERAL.—A 1988 last signatory

18 operator shall be entitled to prefund its obliga19 tions to the 1992 UMWA Benefit Plan by de20 positing into an irrevocable trust dedicated sole21 ly to the payment of such obligations an

22 amount which the board of trustees determines,

23 on the basis of reasonable actuarial assump24 tions, to be equal to the present value of the op-
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1 erator’s present and future obligations to such

2 plan.

3 ‘‘(B) EFFECTS ON LIABILITY.—If a 1988

4 last signatory operator prefunds its obligations

5 under this paragraph—

6 ‘‘(i) the operator (and any successor)

7 shall continue to remain liable for such ob8 ligations if the amount deposited is insuffi9 cient, but

10 ‘‘(ii) any related person to such oper11 ator (or successor) shall be relieved of any

12 liability for such obligations.’’

13 SEC. 203. FIRST YEAR PAYMENTS OF 1988 OPERATORS.

14 So much of section 9704(i)(1)(D) as precedes clause

15 (ii) is amended to read as follows:

16 ‘‘(D) PREMIUM REDUCTIONS AND RE17 FUNDS.—

18 ‘‘(i) 1st YEAR PAYMENTS.—In the

19 case of a 1988 agreement operator making

20 payments under subparagraph (A)—

21 ‘‘(I) the premium of such oper22 ator under subsection (a) shall be re23 duced by the amount paid under sub24 paragraph (A) by such operator for
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1 the plan year beginning February 1,

2 1993, or

3 ‘‘(II) if the amount so paid ex4 ceeds the operator’s liability under

5 subsection (a), the excess shall be re6 funded to the operator.’’

7 Subtitle B—Transfers From Aban8 doned Mine Reclamation Fund

9 SEC. 211. TRANSFER OF INTEREST FROM ABANDONED

10 MINE RECLAMATION FUND TO COMBINED

11 FUND.

12 (a) IN GENERAL.—Section 402(h)(2) of the Surface

13 Mining Control and Reclamation Act of 1977 (30 U.S.C.

14 1232(h)(2)) is amended to read as follows:

15 ‘‘(2)(A) Except as provided in subparagraph

16 (B), the Secretary shall transfer from the fund to

17 the United Mine Workers of America Combined

18 Benefit Fund established under section 9702 of the

19 Internal Revenue Code of 1986 for any fiscal year

20 the amount of interest which the Secretary estimates

21 will be earned and paid to the fund during the fiscal

22 year.

23 ‘‘(B) The Secretary shall increase the amount

24 transferred under subparagraph (A) for fiscal year

25 2001 by the excess of—
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1 ‘‘(i) the total amount of interest earned

2 and paid to the fund after September 30, 1992,

3 and before October 1, 2000, over

4 ‘‘(ii) the total amount transferred to the

5 Combined Fund under this subsection for fiscal

6 years beginning before October 1, 2000.’’

7 (b) CONFORMING AMENDMENTS.—Section 204(h) of

8 such Act (30 U.S.C. 1232(h)) is amended by striking

9 paragraph (3) and by redesignating paragraph (4) as

10 paragraph (3).

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

12 this section shall apply to fiscal years beginning after Sep13 tember 30, 2000.

14 SEC. 212. MODIFICATIONS OF ABANDONED MINE RECLAMA15 TION FEE PROGRAM.

16 (a) REDUCTIONS IN RECLAMATION FEES.—Section

17 402(a) of the Surface Mining Control and Reclamation

18 Act of 1977 (30 U.S.C. 1232(a)) is amended—

19 (1) by striking ‘‘35 cents’’ and inserting ‘‘20

20 cents’’,

21 (2) by striking ‘‘15 cents’’ and inserting ‘‘5

22 cents’’, and

23 (3) by striking ‘‘10 cents’’ and inserting ‘‘5

24 cents’’.
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1 (b) EXTENSION OF FEE PROGRAM.—Section 402(b)

2 of such Act (30 U.S.C. 1232(b)) is amended by striking

3 ‘‘2004’’ and inserting ‘‘2010’’.

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

5 subsection (a) shall apply to fiscal years beginning after

6 September 30, 2000.

7 SEC. 213. USE OF FUNDS TRANSFERRED FROM ABANDONED

8 MINE RECLAMATION FUND.

9 (a) IN GENERAL.—Section 9705(b)(2) of the Internal

10 Revenue Code of 1986 (relating to use of funds) is amend11 ed to read as follows:

12 ‘‘(2) USE OF FUNDS.—The amount transferred

13 under paragraph (1) for any fiscal year shall be

14 used—

15 ‘‘(A) first, to refund to an assigned oper16 ator (and any related person to such operator)

17 an amount equal to the sum of—

18 ‘‘(i) any amount paid by such oper19 ator or person to the Combined Fund (and

20 not previously refunded) solely by reason

21 of the operator having been a signatory to

22 a pre-1974 coal wage agreement, plus

23 ‘‘(ii) interest on the amount under

24 clause (i) at the overpayment rate estab25 lished under section 6621 for the period
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1 from the payment of such amount to the

2 refund under this subparagraph,

3 ‘‘(B) second, to make any refund required

4 under section 9704(i)(1)(D)(i)(II),

5 ‘‘(C) third, to proportionately reduce the

6 unassigned beneficiary premium under section

7 9704(a)(3) of each assigned operator for the

8 plan year in which transferred, and

9 ‘‘(D) last, to pay the amount of any other

10 obligation occurring in the Combined Fund.’’

11 (b) EFFECTIVE DATE.—The amendment made by

12 this subsection shall apply to fiscal years beginning after

13 September 30, 2000.

14 Subtitle C—Authorization

15 SEC. 221. AUTHORIZATION OF TRANSFER OF FUNDS TO

16 COMBINED BENEFIT FUND.

17 Section 9705 (relating to transfers to the Combined

18 Benefit Fund) is amended by adding at the end the fol19 lowing:

20 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—

21 ‘‘(1) IN GENERAL.—There is authorized to be

22 appropriated $38,000,000 for each fiscal year begin23 ning after September 30, 2000.

24 ‘‘(2) USE OF FUNDS.—Any amounts trans25 ferred to the Combined Fund under paragraph (1)
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1 shall be available, without fiscal year limitation, to

2 cover any shortfall in any premium account estab3 lished under section 9704(e).

4 ‘‘(3) TRANSFERS.—

5 ‘‘(A) IN GENERAL.—The Secretary shall

6 transfer amounts appropriated under paragraph

7 (1) on October 1 of each fiscal year.

8 ‘‘(B) EXCESS AMOUNTS.—If the Secretary,

9 after examining the audit of the Combined

10 Fund by the Comptroller General of the United

11 States, determines that the amount transferred

12 for any fiscal year exceeds the amount required

13 to cover shortfalls for that year, the Secretary

14 shall notify the Committees on Appropriations

15 of the House of Representatives and the Senate

16 and the authorization of appropriations for the

17 first fiscal year after the determination shall be

18 reduced by the amount of the excess.’’

19 SEC. 222. ANNUAL AUDIT.

20 Section 9702 (relating to establishment of the Com21 bined Fund) is amended by adding at the end the fol22 lowing:

23 ‘‘(d) ANNUAL AUDIT.—
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1 ‘‘(1) AUDIT.—The Comptroller General of the

2 United States shall conduct an annual audit of the

3 Combined Fund. Such audit shall include—

4 ‘‘(A) a review of the progress the Com5 bined Fund is making toward a managed care

6 system as required under this subchapter, and

7 ‘‘(B) a review of the use of, and necessity

8 for, amounts transferred to the Combined Fund

9 under section 9705(c).

10 ‘‘(2) REPORT.—The Comptroller General shall

11 report the results of any audit under paragraph (1)

12 to the Secretary of the Treasury and to the appro13 priate committees of Congress, including its rec14 ommendations (if any) as to any administrative sav15 ings which may be achieved without reducing the ef16 fective level of benefits under section 9703.’’

Æ