Analysis of the Administration's Proposal to Ensure Solvency of the United Mine Workers of America Combined Benefit Fund

Pursuant to a congressional request, GAO reviewed the administration's proposal to ensure solvency of the United Mine Workers of America (UMWA) Combined Benefit Fund, focusing on the impact of the proposal to: (1) extend the Abandoned Mine Land (AML) Reclamation fees; (2) reverse the effects of National Coal v. Chater; (3) reverse the effects of Dixie Fuel Company v. Social Security Administration; and (4) appropriate federal funds.

GAO noted that: (1) if the administration's proposal is not adopted, the federal government potentially would have to provide $513 million over the next 8 years to ensure the Fund's solvency through 2008, assuming that the Dixie Fuel decision is not implemented; (2) however, if the Dixie Fuel decision is implemented, the Fund may have to refund an estimated net $57 million in premiums to coal companies and would have to find funding for 10,000 additional unassigned beneficiaries; (3) although an estimate of the cost has not yet been developed, nationwide implementation of the Dixie Fuel decision would increase the Fund's projected deficit; (4) according to GAO's review of available financial data, while the administration's proposal improves the projected financial position of the Fund, reducing the fiscal year 2008 anticipated cumulative deficit, not including borrowing costs, from $513 million to $83 million, it does not ensure the solvency of the Fund; and (5) additional funds will be needed to ensure the solvency of the Fund.