[Senate Report 114-374]
[From the U.S. Government Publishing Office]
Calendar No. 669
114th Congress } { Report
SENATE
2d Session } { 114-374
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MINERS PROTECTION ACT OF 2016
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November 16, 2016.--Ordered to be printed
_______
Mr. Hatch, from the Committee on Finance,
submitted the following
R E P O R T
[To accompany S. 3470]
The Committee on Finance, having considered an original
bill, S. 3470, to amend the Surface Mining Control and
Reclamation Act of 1977 to transfer certain funds to the
Multiemployer Health Benefit Plan and the 1974 United Mine
Workers of America Pension Plan, and for other purposes, having
considered the same, reports favorably thereon and recommends
that the bill do pass.
CONTENTS
Page
I. LEGISLATIVE BACKGROUND............................................1
II. EXPLANATION OF THE BILL...........................................2
A. Inclusion of Certain Retirees in Multiemployer Health
Benefit Plan (sec. 2 of the bill and sec. 402 of the
SMCRA)............................................... 2
B. Clarification of Financing Obligations (sec. 3 of the
bill and secs. 9704 and 9712 of the Code)............ 7
C. Customs User Fees (sec. 4 of the bill and sec. 13031
of COBRA 1985)....................................... 8
III.BUDGET EFFECTS OF THE BILL........................................8
A. Committee Estimates................................... 8
B. Budget Authority and Tax Expenditures................. 9
C. Consultation with Congressional Budget Office......... 9
IV. VOTES OF THE COMMITTEE............................................9
V. REGULATORY IMPACT AND OTHER MATTERS...............................9
A. Regulatory Impact..................................... 9
B. Unfunded Mandates Statement........................... 9
C. Tax Complexity Analysis............................... 10
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............10
I. LEGISLATIVE BACKGROUND
The Committee on Finance, having considered S. 3470, the
Miners Protection Act of 2016, a bill to amend the Surface
Mining Control and Reclamation Act of 1977 to transfer certain
funds to the Multiemployer Health Benefit Plan and the 1974
United Mine Workers of America Pension Plan, and for other
purposes, having considered the same, reports favorably thereon
and recommends that the bill do pass.
BACKGROUND AND NEED FOR LEGISLATIVE ACTION
Background--Based on a proposal recommended by Chairman
Hatch, the Committee on Finance marked up original legislation
(the ``Miners Protection Act of 2016'') on September 21, 2016,
and, with a majority present, ordered the bill favorably
reported.
Need for legislative action--The Chairman, Ranking Member,
and a majority of the members of the Committee believe
legislation is necessary to prevent the imminent loss of health
benefits to ``orphan'' UMWA retirees, reduce the likelihood of
insolvency of the UMWA pension plan and protect the Pension
Benefit Guaranty Corporation's multiemployer pension insurance
program. Previously, Senators Manchin and Capito introduced
miner protection legislation (S. 1714, the Miners Protection
Act of 2015, 114th Congress, 1st Session). In addition, as
noted below, during this Congress the Committee held a hearing
at which it received testimony regarding coal miner health and
pension benefits. The legislative proposal and the hearing
informed the content of this bill.
HEARINGS
On March 1, 2016, the Committee held a hearing on the
Multiemployer Pension Plan System: Recent Reforms and Current
Challenges, which included testimony on the condition of the
United Mine Workers of America health and retirement funds.
II. EXPLANATION OF THE BILL
A. Inclusion of Certain Retirees in Multiemployer Health Benefit Plan
(sec. 2 of the bill and sec. 402 of the SMCRA)
PRESENT LAW
United Mine Workers of America (``UMWA'') retiree health benefits
In general
Three multiemployer plans\1\ provide retiree health
benefits for employees in the coal industry (and their
beneficiaries): the UMWA Combined Benefit Fund (``Combined
Fund''), the UMWA 1992 Benefit Plan (``1992 Benefit Plan''),
and the UMWA 1993 Benefit Plan (``1993 Benefit Plan''). In
addition, retiree health benefits are provided to some retirees
through plans maintained by their particular employers
(``individual employer plans''). Moreover, pension benefits are
provided by the UMWA 1974 Pension Plan (the ``Pension
Plan'').\2\
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\1\Under section 414(f) of the Internal Revenue Code of 1986
(``Code'') and section 2(37) of the Employee Retirement Income Security
Act of 1974 (``ERISA''), a multiemployer plan is a plan maintained
pursuant to one or more collective bargaining agreements with two or
more unrelated employers and to which the employers are required to
contribute under the collective bargaining agreement(s).
\2\Another plan, the UMWA 1950 Pension Plan, generally covering
employees who retired before 1976, was merged into the Pension Plan on
June 30, 2007. Section 9701(a)(3) refers to the Pension Plan as the
``1974 UMWA Pension Plan'' and describes participation in the Pension
Plan as being substantially limited to individuals who retired in 1976
and thereafter.
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The Combined Fund and the 1992 Benefit Plan were
established under the Coal Industry Retiree Health Benefit Act
of 1992 (the ``Coal Act'').\3\ The Combined Fund provides
health benefits with respect to retirees (and related
beneficiaries) who, on July 20, 1992, were receiving health
benefits under previous UMWA plans.\4\ The 1992 Benefit Plan
provides benefits with respect to participants (and related
beneficiaries) who were eligible for health benefits under
previous UMWA plans based on age and service earned as of
February 1, 1993, or to whom coverage was required to be
provided by an individual employer plan but who does not
receive coverage,\5\ provided that the participant retired from
the coal industry by September 30, 1994.
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\3\Pub. L. No. 102-486, which enacted Chapter 99 of the Code (Code
secs. 9701-9722). Section 9702 provides for the establishment of the
Combined Fund, and section 9712 provides for the establishment of the
1992 Plan. Chapter 99 also contains provisions relating to benefits
under the plans and funding of the plans.
\4\The previous plans were the UMWA 1950 Benefit Plan and the UMWA
1974 Benefit Plan.
\5\Section 9711 requires coverage under individual employer plans
to be provided to participants (and related beneficiaries) receiving
benefits as of February 1, 1993, or with respect to whom the age and
service requirements for eligibility were met as of that date and who
retired by September 30, 1994.
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The 1993 Benefit Plan was established under the National
Bituminous Coal Wage Agreement of 1993. Generally, the 1993
Benefit Plan provides health benefits to certain retired and
disabled mine workers who are not eligible for benefits under
the Combined Fund or the 1992 Benefit Plan and would have been
eligible for benefits under the previous UMWA plans, but for
enactment of the Coal Act. The UMWA 1993 Benefit Plan also
provides benefits to certain retirees under the Pension Plan
whose last employer contributed to the 1993 Benefit Plan and
whose retiree health benefits would end because, inter alia,
the employer is no longer engaged in mining operations, is
financially unable to provide the benefits, and has no related
entity that is financially able to provide the benefits.
Retiree health plan funding
The Combined Fund and the 1992 Benefit Plan are funded in
part by premiums required under the Code to be paid by coal
mining operators.\6\ The 1993 Benefit Plan is funded in part by
contributions by employers that are bargaining agreement
signatories. The three plans (collectively, the ``UMWA Health
Plans'') are funded also in part by transfers under the Surface
Mining Control and Reclamation Act of 1977 (``SMCRA'').\7\
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\6\Code secs. 9704 and 9712(d). Failure to pay the required
premiums under section 9704 may result in the imposition of a penalty
under section 9707. In addition, under section 9721, a civil action may
be brought by a plan fiduciary, employer, or plan participant or
beneficiary with respect to an obligation to pay the required premiums,
in the same manner as a claim arising from an employer's obligation to
pay withdrawal liability under section 4301 of the Employee Retirement
Income Security Act of 1974.
\7\Section 402 of Pub. L. No. 95-87; 30 U.S.C. sec. 1232.
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Under the SMCRA, coal mining operators are required to pay
certain fees to the Secretary of the Interior, which are
deposited in the Abandoned Mine Reclamation Fund (commonly
referred to as the ``AML Fund''). In addition to transfers to
States and Indian tribes relating to mining reclamation, the
Secretary of the Treasury (``Secretary'') is authorized to
transfer interest earned on the AML Fund to the UMWA Health
Plans for financial assistance. To the extent interest
transferred from the AML Fund is not sufficient to provide
benefits under the UMWA Health Plans, the Secretary is
authorized under SMCRA to make supplemental payments on an
annual basis from the General Fund of the U.S. Treasury. The
supplemental payments to the UMWA Health Plans, together with
payments from the General Fund for certain States and Indian
Tribes, are subject to a combined annual limit of $490
million.\8\
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\8\Section 402(i)(3) of SMCRA; 30 U.S.C sec. 1232(i)(3). Amounts to
be transferred to the recipients are adjusted as needed to come within
this limit.
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In the case of transfers of interest from the AML Fund to
the 1993 Benefit Plan,\9\ the benefits due under the plan are
determined by taking into account only those retirees (and
related beneficiaries) who were actually enrolled in the plan
as of December 31, 2006, and who are eligible for benefits on
the first day of the calendar year for which the transfer is
made. Thus, benefits for retirees (and related beneficiaries)
who become eligible for benefits under the 1993 Benefit Plan
after December 31, 2006, are not taken into account in
determining the amount that can be transferred to the 1993
Benefit Plan. For example, if retirees (and related
beneficiaries) become eligible for the 1993 Benefit Plan after
2006 because of the loss of retiree health benefits under an
individual employer plan through the employer's bankruptcy
proceeding, benefits for those retirees and beneficiaries are
not taken into account in determining the amount that can be
transferred from the AML Fund to the 1993 Benefit Plan.
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\9\Under SMCRA, the 1993 Benefit Plan is referred to as the
``Multiemployer Health Benefit Plan.''
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UMWA 1974 Pension Plan
The Pension Plan is a multiemployer defined benefit plan
established by the National Bituminous Coal Wage Agreement of
1974 between the UMWA and the Bituminous Coal Operators
Association (``BCOA''), effective December 6, 1974. The Pension
Plan provides retirement, disability, and survivors' benefits
to employees in the coal industry and their beneficiaries in
accordance with plan terms. SMCRA does not provide for funds to
be transferred to the Pension Plan.
Like other pension plans, the Pension Plan is subject to
various annual reporting and notice requirements under the Code
and ERISA, including reporting with respect to the funded
status of the plan.\10\ Some of these reporting requirements
are met by the filing of Form 5500, Annual Return/Report of
Employee Benefit Plan. Additional requirements apply in the
case of an underfunded multiemployer defined benefit plan in
endangered or critical status, including with respect to a
funding improvement or rehabilitation plan.
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\10\See, for example, Code secs. 432(b)(3)(A) and (D) and 6057-6059
and ERISA secs. 101(f), 103, 104 and 305(b)(3)(A) and (D).
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REASONS FOR CHANGE
The contraction of the coal industry, including the
bankruptcy of some coal companies, has adversely impacted the
financing of the funds that provide health and pension benefits
to retired coal miners, thus jeopardizing retiree benefits and
the financial security of retirees. The Committee wishes to
help stabilize these funds by providing additional resources.
EXPLANATION OF PROVISION
Transfers to the UMWA 1993 Benefit Plan
The provision expands the group whose retiree health
benefits are taken into account in determining the amount to be
transferred by the Secretary to the 1993 Benefit Plan under
SMCRA. As expanded, the group includes (1) retirees (and
related beneficiaries) actually enrolled in the 1993 Benefit
Plan as of the date of enactment of the provision, and who are
eligible for benefits on the first day of the calendar year for
which the transfer is made,\11\ and (2) retirees (and related
beneficiaries) whose health benefits would be denied or reduced
as a result of a bankruptcy proceeding commenced in 2012 or
2015.\12\
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\11\However, this group does not include individuals (and related
beneficiaries) enrolled in the 1993 Benefit Plan under the terms of a
participation agreement with the current or former employer of the
individuals.
\12\The provision further provides that individuals described in
(2) are to be treated as eligible to receive health benefits under the
1993 Benefit Plan.
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The provision contains additional rules with respect to a
voluntary employees' beneficiary association (``VEBA'')\13\
established as a result of a bankruptcy proceeding described in
(2). The administrator of the VEBA is directed to transfer to
the 1993 Benefit Plan any amounts received as a result of the
bankruptcy proceeding, reduced by the amount of the VEBA's
administrative costs. Further, the amount that would otherwise
be transferred by the Secretary to the 1993 Benefit Plan under
SMCRA, as amended by the provision, is reduced by any amount
transferred to the 1993 Benefit Plan by the VEBA.
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\13\A VEBA is an organization exempt from tax under section
501(c)(9).
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Transfers to the UMWA 1974 Pension Plan
If amounts available for transfer under SMCRA's $490
million annual limit exceed the amounts required to be
transferred for other purposes (including to the UMWA Health
Plans), the provision directs the Secretary to transfer the
excess to the Pension Plan to pay plan benefits.\14\ Transfers
are to end as of the first fiscal year beginning after the
first plan year for which the Pension Plan's funded percentage
(as defined under the Code funding rules) is at least 100
percent.
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\14\The provision describes the Pension Plan as the 1974 UMWA
Pension Plan under section 9701(a)(3), but without regard to the
limitation on participation to individuals who retired in 1976 and
thereafter, thereby reflecting the merger of the UMWA 1950 Pension Plan
into the Pension Plan.
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During any fiscal year in which the Pension Plan receives a
transfer, no plan amendment may be adopted that increases plan
liabilities by reason of a benefit increase, a change in the
accrual of benefits, or a change in the rate at which benefits
vest under the plan unless the amendment is required as a
condition for qualified retirement plan status under the Code.
In addition, a transfer is not to be made for a fiscal year
unless the persons obligated to contribute to the Pension Plan
on the date of the transfer are obligated to make contributions
at rates that are not less than those in effect on the date 30
days before the date of enactment of the provision. Any amounts
transferred to the Pension Plan are disregarded in determining
the unfunded vested benefits of the Pension Plan and the
allocation of unfunded vested benefits to an employer for
withdrawal liability purposes.
The provision applies additional reporting requirements to
the Pension Plan. Not later than the 90th day of each plan year
beginning after the date of enactment, the Pension Plan
trustees must file with the Secretary\15\ and the Pension
Benefit Guaranty Corporation (``PBGC'') a report (including
appropriate documentation and actuarial certifications from the
plan actuary, as required by the Secretary) that provides--
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\15\References in this description to ``Secretary'' include the
Secretary's delegate, for this purpose, the Internal Revenue Service.
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whether the Pension Plan is in endangered or
critical status;
the Pension Plan's funded percentage as of
the first day of the plan year and the underlying
actuarial value of assets and liabilities taken into
account in determining the funded percentage;
the market value of plan assets as of the
last day of the preceding plan year;
the total of all plan contributions made
during the preceding plan year;
the total benefits paid during the preceding
plan year;
cash flow projections for the plan year and
either the six or 10 succeeding plan years, at the
election of the trustees, and the assumptions relied on
in making the projections;
funding standard account projections for the
plan year and the nine succeeding plan years, and the
assumptions relied on in making the projections;
the total investment gains or losses during
the preceding plan year;
any significant reduction in the number of
active participants during the preceding plan year and
the reason for the reduction;
a list of employers that withdrew from the
Pension Plan in the preceding plan year and the
resulting reduction in contributions;
a list of employers that paid withdrawal
liability to the Pension Plan during the preceding plan
year and, for each employer, a total assessment of the
withdrawal liability paid, the annual payment amount,
and the number of years remaining in the payment
schedule with respect to the withdrawal liability;
any material changes to benefits, accrual
rates, or contribution rates during the preceding plan
year;
any scheduled benefit increase or decrease
in the preceding plan year having a material effect on
plan liabilities;
details of any funding improvement plan or
rehabilitation plan and updates;
the number of participants and beneficiaries
during the preceding plan year who are active
participants, the number of participants and
beneficiaries in pay status, and the number of
terminated vested participants and beneficiaries;
the information contained in the Pension
Plan's most recent annual funding notice;
the information contained in the Pension
Plan's most recent Form 5500; and
copies of the plan document and amendments,
other retirement benefit or ancillary benefit plans
relating to the Pension Plan and contribution
obligations under those plans, a breakdown of the
Pension Plan's administrative expenses, participant
census data and distribution of benefits, the most
recent actuarial valuation report as of the plan year,
copies of collective bargaining agreements, and
financial reports, and such other information as the
Secretary may require, in consultation with the
Secretary of Labor and the Director of the PBGC.
This report must be submitted electronically, and the
Secretary is directed to share the information in the report
with the Secretary of Labor. A failure to file the report on or
before the date required results in a tax reporting penalty of
$100 per day while the failure continues unless the Secretary
determines that reasonable diligence was exercised by the plan
sponsor in attempting to timely file the report.
EFFECTIVE DATE
The provision generally applies to fiscal years beginning
after September 30, 2016. The reporting requirement relating to
the Pension Plan applies to plan years beginning after the date
of enactment of the provision.
B. Clarification of Financing Obligations (sec. 3 of the bill and secs.
9704 and 9712 of the Code)
PRESENT LAW
The Combined Fund is financed by premiums paid by current
and former signatories to labor agreements with the UMWA
(referred to as ``assigned operators'') and, as discussed
above, transfers under SMCRA.\16\ Assigned operators are
generally required to pay to the Combined Fund an annual amount
equal to the sum of three types of premiums: (1) premiums for
participants (and their beneficiaries) assigned to the
operator, (2) a ``death benefit'' premium, and (3) an
``unassigned beneficiaries'' premium. However, for plan years
beginning on or after October 1, 2006, no unassigned
beneficiaries premiums apply unless the transfers to the
Combined Fund under the SMCRA are less than the amount required
to be transferred under SMCRA.
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\16\Code secs. 9704-9706.
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The 1992 Benefit Plan is financed by premiums paid by
``signatory operators'' and, as discussed above, transfers
under SMCRA.\17\ Signatory operators are responsible for
additional ``backstop'' premiums if the transfers to the 1992
Benefit Plan under the SMCRA are less than the amount required
to be transferred under SMCRA.
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\17\Code sec. 9712(d).
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REASONS FOR CHANGE
The SMCRA provisions requiring the transfer of moneys to
the UMWA Combined Fund and 1992 Benefit Plan are sufficient to
ensure that the required transfers occur. The Committee
therefore considers it unnecessary to retain the present-law
provisions under which unassigned beneficiaries premiums or
backstop premiums would be owed in the event transfers under
the SMCRA are less than the amount required to be transferred.
EXPLANATION OF PROVISION
The provision eliminates the potential application of
unassigned beneficiaries premiums in the case that the
transfers to the Combined Fund under the SMCRA are less than
the amount required to be transferred from SMCRA. Thus, under
the provision, unassigned beneficiaries premiums do not apply.
The provision also eliminates any requirement to pay backstop
premiums.
EFFECTIVE DATE
The provision applies to plan years beginning after
September 30, 2016.
C. Customs User Fees (sec. 4 of the bill and sec. 13031 of COBRA 1985)
PRESENT LAW
Under section 13031(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (``COBRA 1985''), the Secretary of
the Treasury is authorized to charge and collect fees for the
provision of certain customs services. Pursuant to section
13031(j)(3), the Secretary of the Treasury may not charge fees
for the provision of certain customs services after September
30, 2025.
REASONS FOR CHANGE
The Committee believes it is appropriate to extend the
collection authority for the merchandise processing fee for
budgetary offset purposes.
EXPLANATION OF PROVISION
The provision amends section 13031(j)(3)(A) of COBRA 1985
to extend the period that the Secretary of the Treasury may
charge for certain customs services for imported goods from
September 30, 2025 to May 6, 2026, and extends the ad valorem
rate for the Merchandise Processing Fee collected by Customs
and Border Protection that offsets the costs incurred in
processing and inspecting imports from September 30, 2025, to
May 6, 2026.
EFFECTIVE DATE
The provision is effective on the date of enactment.
III. BUDGET EFFECTS OF THE BILL
A. Committee Estimates
In compliance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 308(a)(1) of the
Congressional Budget and Impoundment Control Act of 1974, as
amended (the ``Budget Act''), the following statement is made
concerning the estimated budget effects of the revenue
provisions of the Miners Protection Act of 2016, as reported.
The revenue effects of the bill will be included in the
statement from the Congressional Budget Office that will be
provided separately, as described in Part C below.
B. Budget Authority and Tax Expenditures
In compliance with section 308(a)(1) of the Budget Act, the
Committee states that the extent to which the provisions of the
bill as reported involve new or increased budget authority or
affect levels of tax expenditures will be included in the
statement from the Congressional Budget Office that will be
provided separately, as described in Part C below.
C. Consultation With Congressional Budget Office
In accordance with section 403 of the Budget Act, the
Committee advises that the Congressional Budget Office has not
submitted a statement on the bill. The statement from the
Congressional Budget Office will be provided separately.
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that, with a
majority present, the Miners Protection Act of 2016, was
ordered favorably reported on September 21, 2016, by a roll
call vote of 18 ayes and 8 nays. The vote was as follows:
Ayes: Hatch, Crapo, Roberts (proxy), Burr, (proxy),
Portman, Toomey, Wyden, Schumer (proxy), Stabenow (proxy),
Cantwell, Nelson, Menendez (proxy), Carper, Cardin, Brown,
Bennet (proxy), Casey, Warner.
Nays: Grassley, Enzi, Cornyn (proxy), Thune (proxy),
Isakson, Coats, Heller, Scott (proxy).
V. REGULATORY IMPACT AND OTHER MATTERS
A. Regulatory Impact
Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the provisions of the bill.
Impact on individuals and businesses, personal privacy and paperwork
The bill revises the provisions of the SMCRA relating to
transfers to UMWA benefit funds. The provisions of the bill are
not expected to impose additional administrative requirements
or regulatory burdens on individuals or businesses. The
provisions of the bill do not impact personal privacy.
B. Unfunded Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the tax provisions of the
reported bill do not contain Federal private sector mandates or
Federal intergovernmental mandates on State, local, or tribal
governments within the meaning of Public Law 104-4, the
Unfunded Mandates Reform Act of 1995.
C. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (``IRS Reform Act'') requires the
staff of the Joint Committee on Taxation (in consultation with
the Internal Revenue Service and the Treasury Department) to
provide a tax complexity analysis. The complexity analysis is
required for all legislation reported by the Senate Committee
on Finance, the House Committee on Ways and Means, or any
committee of conference if the legislation includes a provision
that directly or indirectly amends the Internal Revenue Code
and has widespread applicability to individuals or small
businesses. The staff of the Joint Committee on Taxation has
determined that there are no provisions that are of widespread
applicability to individuals or small businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).
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