Senate Finance Committee Issues Report on Miners Protection Act
Excerpts of the report follow:
I. LEGISLATIVE BACKGROUND
BACKGROUND AND NEED FOR LEGISLATIVE ACTION
Background--Based on a proposal recommended by Chairman Hatch, the
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
HEARINGS
On
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
In general
Three multiemployer plans1 provide retiree health benefits for employees in the coal industry (and their beneficiaries): the
1Under 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).
2Another plan, the UMWA 1950 Pension Plan, generally covering employees who retired before 1976, was merged into the Pension Plan on
3Pub. L. No. 102-486, which enacted Chapter 99 of the Code (Code secs. 9701-9722). Section 9702 provides for the establishment of the
4The previous plans were the UMWA 1950 Benefit Plan and the UMWA 1974 Benefit Plan.
5Section 9711 requires coverage under individual employer plans to be provided to participants (and related beneficiaries) receiving benefits as of
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
Retiree health plan funding
6Code 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.
7Section 402 of Pub. L. No. 95-87; 30 U.S.C. sec. 1232.
Under the SMCRA, coal mining operators are required to pay certain fees to the Secretary of the Interior, which are deposited in the
8Section 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.
In the case of transfers of interest from the
9Under SMCRA, the 1993 Benefit Plan is referred to as the "Multiemployer Health Benefit Plan."
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
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.
10See, 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).
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
11However, 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.
12The provision further provides that individuals described in (2) are to be treated as eligible to receive health benefits under the 1993 Benefit Plan.
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.
13A VEBA is an organization exempt from tax under section 501(c)(9).
Transfers to the UMWA 1974 Pension Plan
If amounts available for transfer under SMCRA's
14The 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.
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 Secretary15 and the
15References in this description to "Secretary" include the Secretary's delegate, for this purpose, the
- 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
EFFECTIVE DATE
The provision generally applies to fiscal years beginning after
B. Clarification of Financing Obligations (sec. 3 of the bill and secs. 9704 and 9712 of the Code)
PRESENT LAW
16Code secs. 9704-9706.
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.
17Code sec. 9712(d).
REASONS FOR CHANGE
The SMCRA provisions requiring the transfer of moneys to the
EXPLANATION OF PROVISION
The provision eliminates the potential application of unassigned beneficiaries premiums in the case that the transfers to the
EFFECTIVE DATE
The provision applies to plan years beginning after
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
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
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
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
C. Consultation With Congressional Budget Office
In accordance with section 403 of the Budget Act, the Committee advises that the
IV. VOTES OF THE COMMITTEE
In compliance with paragraph 7(b) of rule XXVI of the Standing Rules of the
Ayes: Hatch, Crapo, Roberts (proxy), Burr, (proxy), Portman,
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
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 ("
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
The full text of the report is found at: https://www.congress.gov/congressional-report/114th-congress/senate-report/374/1?r=5.
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