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The Abandoned Mine Land Fund: Grants
Distribution and Issues

Robert L. Bamberger
Specialist in Energy Policy
Environment and Natural Resources Policy Division

March 26, 1997

97-401

SUMMARY

The Surface Mining Control and Reclamation Act (SMCRA, P.L. 95-87), enacted in 1977, established reclamation standards for all coal surface mining operations, and for the surface effects of underground mining. It also established the Abandoned Mine Land (AML) program to promote the reclamation of sites mined and abandoned prior to the enactment of SMCRA. To finance reclamation of abandoned mine sites, the legislation established fees on coal production. These collections are divided into federal and state shares; subject to annual appropriation, AML funds are distributed annually to states with approved reclamation programs. Since the program's inception and through FY1996, collections have totaled $4.4 billion; disbursements have totaled $3.3 billion.

The AML program touches upon long-held state concerns about levying fees on businesses in states to remedy nationwide problems -- albeit for the "common good" -- but which dot the landscape disproportionately among the states. In the case of AML, coal production -- current and historic -- is the fundamental and initial determinant of the amounts from each state paid into the AML fund, and what each state receives back for its reclamation program. Coal production has shifted westward. As time passes, more and more of unfunded or unreclaimed sites will be situated in Eastern and Appalachian states where coal production, and the corollary contributions to the AML fund, have declined, suggesting that reauthorization of the fund in later years may be controversial.

In the near-term, annual grants to states with less production, and the accumulating unappropriated balance in the AML fund, are likely to be issues. A designated minimum annual grant is made to states whose current and historic coal production would not otherwise support an annual distribution at or above the minimum program level. The authorization to these "minimum program states" is $2.0 million annually. However, Congress reduced the appropriation to minimum program states to $1.5 million for FY1995-FY1997. The FY1998 budget request proposes to retain this figure.

AML distributions were less than receipts in the early years of the program because few states had developed reclamation plans and several carried unobligated balances from prior appropriations. Unappropriated balances are projected to exceed $1.2 billion by the end of FY1997, and some argue that appropriations have been flat in recent years as a means of furthering a different public policy: reducing federal borrowing and the federal deficit. A plan developed by the Interstate Mining Compact Commission proposes a distribution of unappropriated balances to states and tribal accounts. While such a plan might resolve some state discontent, it would have the effect of raising AML expenses over present levels and therefore still require a significant shift in congressional priority toward abandoned mine reclamation.

CONTENTS

Background
    The FY1997 Appropriations and FY1998 Request

    Assignment of AML Collections

Distribution Calculation of AML Monies
    The General Intentions
    Calculation of the Draw From the State Share
    Distribution from the Federal Share
    The Minimum Program Adjustment

What Might Be Congress' Interest?
   Adequacy of the Program to Achieve Its Purpose
    The Unappropriated Balances
    The Appropriation for Minimum Program States

APPENDIX I. Abandoned Mine Land Fund: Accumulated Receipts and Appropriations, FY1978-FY1998

Background

The Surface Mining Control and Reclamation Act (SMCRA, P.L. 95-87), enacted in 1977, established federal standards for environmental protection at surface coal mining operations, and for the surface effects of underground coal mining operations. It also established the Abandoned Mine Land (AML) program to oversee state and federal reclamation of sites mined and abandoned prior to the enactment of SMCRA.1 Administration of the AML program was to be one of the responsibilities of the Office of Surface Mining (OSM), which was also established by SMCRA.

The cost of reclamation of these sites was estimated at the time of enactment at $33 billion;2 however, the operators of these mines--whether or not they were still in business--often could not be held responsible for these older sites because no standards had been in effect when these mines were in production. The legislation envisioned that the states would develop their own pro grams for reclamation (as well as enforcement of surface mining regulations governing mines in current production), and upon federal approval of these programs, would assume primary responsibility for these activities.

To finance reclamation of abandoned mine sites, the legislation established that a fee on coal production -- $.35/ton for surface production and $.15/ton for underground production -- would be paid by coal producers into an Abandoned Mine Reclamation trust fund. SMCRA authorized collection of AML fees through the end of 1992; the Energy Policy Act of 1992 (P.L. 102-486) extended the AML authorization through the end of FY2004. In the interim, the Omnibus Budget Reconciliation Act of 1990 (OBRA, P.L. 101-508) had extended authority for AML collections through FY1995. Additionally, OBRA authorized the OSM to invest the unappropriated balance of AML funds in U.S. Treasury securities. The investment interest ($69 million in FY1996, and $241 million during the period FY1991-96) is deposited to the AML fund; however, the Energy Policy Act of 1992 (P.L. 102-486) authorized transfer of up to $70 million annually of this interest income, beginning in FY1996, to the United Mine Workers to help pay the health benefits of retired miners.3 Distribution of reclamation grants from the AML fund are subject to annual congressional appropriation.

An inventory of AML sites nationally was developed, with sites classified based upon the public health and safety hazards they posed. States with reclamation programs meeting federal requirements are eligible to receive AML funds.4

SMCRA provided that 50% of AML collections would be allocated to the states; this is generally referred to as the "state share" of AML fees. The balance of the collections was placed under the control of the Secretary of the Interior and is generally referred to as the "federal share." As amended by P.L. 101-508, 40% of this federal share (or 20% of the whole of AML collections) is designated for (1) emergency projects in states and on tribal lands; (2) projects in states and on tribal lands without approved reclamation plans; (3) the Small Operator Assistance Program (SOAP); and (4) federal administrative costs. Twenty percent (or 10% percent of total AML collections) is set aside to be transferred to the Department of Agriculture for its Rural Abandoned Mine Program (RAMP).5 An additional earmark is made for the Appalachian Clean Streams Initiative (ACSI). The ACSI program was initiated in FY1994 to clean up and restore streams damaged by acid mine drainage, largely the result of past coal mining.

The remaining 40% of the federal half of total AML collections constitutes a pool from which supplemental grants may be awarded to the states for remedy of Priority 1 and 2 sites,6 based upon historic coal production.

The fundamental purpose of the AML program does not appear to be in jeopardy or under challenge; nonetheless, its design and operation raises significant issues, some unique to the AML fund, and some common to trust funds in general. The AML program touches upon long-held state concerns about levying fees on residents or businesses operating in one state to remedy nationwide problems -- albeit for the "common good" -- but which dot the landscape disproportionately among the several states. The allocation and distribution of AML collections are designed to preserve a rough equity, given the anomaly that the states with the greatest inventory of priority AML sites are no longer among the largest coal producers. But not all states are comfortable with the distribution.

Nor are they sanguine about the level of annual congressional appropriations from the fund. From the inception of the program, the fund has had unappropriated balances (see Appendix 1). This places the AML fund in company with other trust funds held by the federal government (such as the Highway Trust, and Land and Water Conservation Funds) where some states

-- eyeing the unappropriated balances -- believe their citizens, and businesses operating within their borders, pay more into the fund than the state receives in benefits. Some also point out that the unappropriated balances exist only on paper and argue that the Administration does not seek, and Congress does not enact, larger appropriations because it would add to the federal deficit.

The description which follows of the process by which the distribution of grants from the AML is calculated will help set these and other issues concerning the AML fund in better context.

The FY1997 Appropriations and FY1998 Request

Congress annually appropriates money from the AML fund. OSM then calculates the distribution to each eligible state and Indian tribe from its shares of state and federal apportionments of AML collections. Since the program 5 inception and through FY1996, collections have totaled $4.4 billion; disbursements have totaled $3.3 billion.7 At the end of FY1996, unappropriated collections in the State Share Balance totaled nearly $583 million; unappropriated federal balances totaled nearly $500 million. However, only half of the more than estimated $1.2 billion in total unappropriated balances projected by the end of FY1997 might be available for grants because of other earmarks .8

As shown in Table 1, Congress appropriated $177.1 million for AML for FY1997, of which $141.7 million is being distributed for reclamation, including an allocation to the ACSI.9 The latter figure is also net of allocations to federal expenses for program administration and other specific activities.10

The Energy Policy Act of 1992 (P.L. 102-486) provided that payments of up to $70 million annually would be made from interest earned on AML funds to the retired miners health benefits fund of the United Mine Workers (UMWACBF, United Mine Workers of America Combined Benefit Fund) to pay the premiums of retirees who worked for companies that went bankrupt, or which no longer exist. A transfer of $47.2 million was made in FY1996, and a transfer of $31.4 million has been made for FY1997. A transfer of $56 million has been estimated for FY1998.11

 

TABLE 1. FY1997 AML Fund Appropriation

Federal Expenses $ 35,085,000
Appalachian Clean Streams Initiative
(ACSI)
4,000,000
Non-Emergency State Reclamation Grants 131,756,000
State Emergency Program Funding 6,244,000
Total FY1997 AML Fund Appropriation $177,085,000

                Source:Office of Surface Mining (OSM).

The Administration's request for FY1998 is $177.3 million. However, owing to a 20% increase in spending for the Appalachian Clean Streams Initiative (ACSI), boosting it to $5 million for FY1998, the requested appropriation would net out to a reduction of nearly $670,000 in non-ACSI grants to states and tribes.

Assignment of AML Collections

The amount approved by Congress for non-emergency state reclamation grants is drawn from unappropriated balances in the state and federal shares of the AML fund. However, before annual grants are made to the states, money is set aside from the Congressional appropriations to fund emergency programs in states that have their own emergency programs.12 This figure is based on estimates of needs provided to OSM in advance of the fiscal year. Then the AML appropriation, net of emergency funding to states that operate their own emergency programs and funding for the ASCI, is divided into state and federal "shares;" 55 percent of the balance is designated to the state share, and 45 percent to the federal share. Distributions for State Emergency Programs, and the Appalachian Clean Streams Initiative (ACSI) are separate line items (see Table 2).

 

TABLE 2. FY1997 State Reclamation Grant Distribution

State Share Distribution
55% x $131,756,000
$ 72,465,800
Federal Share Distribution
45% x $131,756,000
$ 59,290,200
State Emergency Programs $ 6,244,000
Appalachian Clean Streams Initiative (ACSI) $ 3,675,000*
Total State Reclamation Grant Distribution $141,675,000

* A distribution of $325,000 for an ACSI project to Tennessee, a non-primacy state, was transferred to federal Reclamation Program Activity.

 

Distribution Calculation of AML Monies

The General Intentions

Just as AML collections are divided into state and federal shares, annual distributions are paid from both shares. Designating an amount of current AML collections for the federal share removes the identification with any specific state of virtually half of AML collections. While the draw from the pool of AML revenues allocated to individual state shares is fairly straightforward and proportional, more complex adjustments affect the proportionality of the final distribution paid from the federal share. This makes it difficult to measure a direct transfer of wealth among individual states.

Calculation of the distribution of grants to a state from its share of AML collections is based on the state's share of previously collected, but yet undistributed AML fees. The distribution to a state from the federal share is based on: [1] a state's coal production prior to 1978, before enactment of the Surface Mining Control and Reclamation Act (SMCRA) that established the AML fund; and [2] adjustments to the distribution made on behalf of minimum program states to bring their grants up to a designated minimum level of funding for reclamation.

Minimum program states are states with relatively low annual coal production. For these states,13 SMCRA was amended in 1990 to authorize appropriations for the reclamation of the most dangerous sites (so-called priority 1 and 2 sites) listed in the AML inventory at the lesser of (a) the estimated cost to reclaim those sites; or (b) a minimum program level of $2.0 million. Prior to that, annual appropriations had provided $1.5 million annually to minimum program states.

These minimum program levels, however, are subject to annual appropriations by the Congress. Congress may appropriate all, or less than, the $2.0 million currently authorized. For FY1995, Congress reduced the minimum program appropriation to $1.5 million. In its FY1996 and FY1997 budget submissions, the Administration retained the FY1995 congressional language reducing the appropriation to minimum program states to $1.5 million. The appropriations legislation was reported accordingly by the reviewing committees, and approved.

Calculation of the Draw From the State Share

The distribution of AML collections to individual states from the state share is based on the state's percentage of the total balance of unappropriated AML funds that remain allocated to the states. Consequently, the percentage of funds returned to states from their remaining designated share of AML collections does not vary greatly among the states participating in the program. As is shown in Table 3, the state share distribution for FY1997 amounted to 12.43% of state share balances at the end of FY1996. This uniformity is quite deliberate.

Because coal production was concentrated until fairly recent times in the eastern and Appalachian regions, the greatest number of abandoned mine land sites are located in these areas. It was acknowledged at the time of enactment that AML revenues would be insufficient to address all AML sites. The regional shift in production threatened to exacerbate further the insufficiency of reclamation funds for older coal-producing states. This is because minesites in the West are far likelier to come under state and federal standards that were not in place when eastern minesites were in production. As production shifts westward, AML collections from western states are increasing even though reclamation needs in that region are less -- while collections have declined from eastern and Appalachian states that have some of the oldest and greatest reclamation needs.

This implies a transfer of AML revenues collected on western production to be spent on reclaiming minesites in eastern and Appalachian states. While a uniform percentage of AML funds is returned to states from their designated share, the relative magnitude of the share of AML grants paid to states and Indian tribes from the federal share of AML revenues can vary. This makes it difficult to measure transfers of AML collections from states with high production and few abandoned sites to states with low production and a high inventory of AML sites.

Distribution from the Federal Share

The annual grants to individual states drawn from the federal share are determined by a more complex series of calculations. An initial calculation of the grant to individual states and tribes from the federal share of AML revenues is made by multiplying the federal share (45%) of the annual appropriation by each state's share of historic coal production prior to 1978. States or tribes without qualifying historic coal production are excluded, as are states that have no unfunded priority 1 and 2 AML problems in the AML inventory. The calculation of the percentages of historical coal production is adjusted so that the percentages of states or tribes eligible for a distribution from the federal share totals 100 percent. The adjusted calculation is the "preliminary federal share" of the grant appropriation, subject to adjustment to provide for minimum

 

 

TABLE 3. State Share Balances and Distribution: FY1997

State(Tribe State Share
Collections
Through
FY1996
State Share
Distributions
Through
FY1996
State Share
Balance as of
09/30/96
State Share Distribution, FY1997a
Alabama $56,150,873 $43,232,476 $13,277,897 $1,650,950
Alaska 4,056,046 2,758,206 1,297,840 161,371
Arkansasb 375,822 395,605 (19,783) 0
Colorado 44,459,672 32,671,725 11,787,947 1,465,692
Illinois 116,004,839 91,911,146 24,093,693 2,995,766
Indiana 95,663,964 72,710,940 22,953,024 2,853,937
Iowa 1,204,500 1,135,507 68,993 8,578
Kansas 2,966,352 2,593,500 372,852 46,360
Kentucky 328,629,524 244,978,580 83,650,944 10,401,007
Louisiana 1,607,927 846,274 761,653 94,703
Maryland 7,701,994 D,968,899 1,733,095 215,490
Missouri 12,557,689 11,333,479 1,224,210 152,216
Montana 101,999,635 73,507,804 28,491,831 3,542,623
New Mexico 32,961,593 22,018,096 10,943,497 1,360,695
North Dakota 22,963,776 15,684,337 7,279,439 905,112
Ohio 87,084,275 69,547,651 17,536,624 2,180,472
Oklahoma 10,285,783 8,767,621 1,518,162 188,766
Pennsylvania 163,280,971 131,015,133 32,265,838 4,011,876
Texas 41,738,207 29,125,869 12,612,338 1,568,195
Utah 23,966,535 15,956,702 8,009,833 995,928
Virginia 70,296,154 52,044,543 18,251,611 2,269,372
West Virginia 249,154,478 172,688,697 76,465,781 9,507,616
Wyoming 489,013,122 311,908,454 177,104,668 22,020,873
Crow Tribe 9,981,067 6,253,117 3,727,950 463,527
Hopi Tribe 8,610,696 5,148,335 3,462,360 430,504
Navajo Tribe 65,315,316 41,395,283 23,920,033 2,974,174
National Total 2,048,390,311 1,465,597,980 582,792,331 72,465,800

This is exclusive of any distribution to certain states for the Appalachian Clean Streams Initiative (ACSI).
b Arkansas is expected to have a negative state share balance through FY1998. Source. Office of Surface Mining

 

The Minimum Program Adjustment

If the calculated distribution to a minimum program state falls short of the minimum program level, the state receives a supplement paid out of the Federal Expenses share of AML collections. The supplement is set at whatever sum will bring the state's distribution for a given year up to the minimum program level --authorized at $2 million, but currently appropriated at $1.5 million.

The needs for the minimum program states are summed, and the federal share to the other states is adjusted downward proportionately to meet the minimum program need. The use of historic coal production and the minimum program adjustment assures that states that generate less AML collections but have a greater number of AML sites receive a larger award than they would if grants were based solely on the geographic origins of current payments into the AML fund.

The calculation of the minimum program adjustment is shown in Table 4. Final distribution of AML revenues follows in Table 5. While the calculation of the minimum program adjustment measures how much certain states are "contributing" to the needs of minimum program states, some might argue that this does not have much meaning as a wealth transfer because the adjustment is subtracted from federal AML funds. On the other hand, others might suggest that the designation between the federal and state shares is an artifice given that the funds are generated from coal production in the separate states, and that the fairness of certain features of the AML program can be debated. Whatever issues might be raised by the minimum state program, it should be borne in mind that the factor having the greatest effect upon the relative proportionality of AML grants among the states is the portion of the allocation based upon historical coal production and, therefore, reclamation needs.

 

 

TABLE 4. Minimum Program Adjustment to Federal Share: FY1997

State/Tribe Column I
State Share
Distribution
Column 2
Preliminary
Federal
Share Distribution
Column 3
Minimum
Program
Need5
Column 4 % Contributionc Column 6
Minimum
Program
Contributiond
Column 6
Final Federal
Share
Distribution
(Col.2 Col.5)
Alabama $1,650,950 $1,736,629 0 3.0873 $237,298 $1,499,331
Alaska 161.371 18,740 1,319,889 0 0 1,338.629
Arkansas 0 144,386 1.355,614 0 0 1.500.000
Colorado 1,465,692 846,844 0 1.5046 115,647 730.697
Illinois 2,995.766 6,433,594 0 11.4375 879.103 5.554.491
Indiana 2,853,937 2,094.577 0 3.7237 286.209 1,808.368
Iowa 8.578 508,525 982.897 0 0 1.491.422
Kansas 46,360 412,241 1,041,399 0 0 1.453,640
Kentucky 10,401,007 6,305,330 0 11.2094 861.577 5,443.753
Louisianaa 94.703 0 0 0 0 0
Maryland 215.490 408,583 775,927 0 0 1,184.510
Missouri 152.216 497,753 850.031 0 0 1.347,784
Montanaa 3,542,623 0 0 0 0 0
New Mexico 1,360,695 205,757 0 0.3658 28.115 177,642
North Dakota 905,112 263.388 331.500 0 0 594.888
Ohio 2,180.472 3.943,876 0 7.0113 538,902 3,404.974
Oklahoma 188.766 296,499 1.014.735 0 0 1,311,234
Pennsylvania 4,011,876 20.796,568 0 36.9715 2.841,598 17,954.870
Texasa 1.568.195 0 0 0 0 0
Utah 995.928 489,887 14.185 0 0 504.072
Virginia 2,269,3722 1.935.303 0 3.4405 264,445 1.670,858
West Virginia 9,507,616 11,952,220 0 21.2483 1,633.183 10.319,037
Wyominga 22,020,872 0 0 0 0 0
Crow Tribea 463.527 0 0 0 0 0
Hopi Tribea 430,504 0 0 0 0 0
Navajo Tribe 2,974,174 0 0 0 0 0
National Total 72,465,800 59,290,200 7,686,177 100.00 7,686,177 59,290,200

These states and the Navajo Tribe have no further coal reclamation projects and therefore not eligible for distribution from the federal share. The Hopi Tribe has insufficient inventory of Priority I and 2 sites to qualify for a distribution from federal Share funds, the Crow Tribe inventory still shows some high priority sites, but the Tribe has been adequately funded to address these sites.

This is the amount needed to raise the sum of the state and federal share to 81.5 million.

c The preliminary federal share distribution of all non-minimum program states is summed ($86,250, 198), and percentage contribution represents what percentage each state's preliminary share is of that total.

d Calculated as the percentage in Column 4 multiplied by the total emergency program need ($7,686,177).

Source: Office of Surface Mining

 

TABLE 5. FY1997 Distributions from State and Federal Shares

State/Tribe

1997 State Share
Distributiona

1997 Federal Share
Distribution

Emergency Pro gram Funding

1997 Total Distribution

Alabama

$1,975,950

$1,499,331

S300.000

$3,775.28 I

Alaska

161,371

1.338.629

25,000

1,525,000

Arkansas

0

1,500.000

13.000

1,513.000

Colorado

1,465,692

730.697

0

2,196.359

Illinois 2,995,766 5,554.491 588.970 9,139,222
Indiana 3,178.937 1.808,368 247.998 5.235,303
Iowa 8,578 1,491.422 0 1,500.000
Kansas 46.360 1.453,640 450.000 1,950,000
Kentucky 10.726,006 5,443.753 0 16.169,759
Louisiana

94,703

0

0

94,703

Maryland

315.490

1,184,510 0 1.500.000
Missouri 152.216 1,347.784 0 1.500,000
Montana 3,542,623 0 125.000 3,667,623
New Mexico 1,360,695 177,642 0 1,538.337
North Dakota 905.112 594,888 50.000 1.500,000
Ohio 2,830,472 3.404,974 2.240.000 8.475,446
Oklahoma 188.766 1,311,234 0 1.0-00,000
Pennsylvania 4,661,876 17,954,870 0 22,816,745
Texas 1,568,195 0 0 1,568,195
Utah 995,928 504,072 0 1,500,000
Virginia 2,594,372 1.670.858 500,000 4,765,230
West Virginia 10,482.615 10.319,037 1,704,032 22,505,684
Wyoming 22,020,872 0 0 22.020,872
Crow Tribe 463,527 0 0 463,527
Hopi Tribe 430,504 0 0 430.504
Navajo Tribe 2.974,174 0 0 2,974.174
National Total

76,140.800

59,290,200

6,244,000

141,675.000

a Includes $3.7 million in grants for the Appalachian Clean Streams Initiative (ACS ) for specific projects in certain states. 
Source: Office of Surface Mining

 

What Might Be Congress' Interest?

The AML program touches upon long-held state concerns about levying fees on businesses within states to remedy nationwide problems -- albeit for the "common good" -- but which dot the landscape disproportionately among the several states. As has been shown here, state coal production -- current and historic -- is the fundamental and initial determinant of what mine owners and lessees in a state pay into the AML fund, and what the state reclamation programs receive from it. The division of AML collections into federal and state shares, and the additional adjustments built into the process, are designed to preserve a rough equity, given the anomaly that the states with the greatest inventory of priority AML sites are no longer among the largest coal producers.

The fundamental purpose and design of the AML program does not appear to be in jeopardy or under challenge. Progress has been measurable, and the AML program appears to have established, for most, an acceptable balance between the state and federal role in reclaiming abandoned sites.14 In the near-term, the greatest concerns may be the unappropriated balances in the AML fund, and the objections of minimum program states at being denied the maximum annual distribution previously authorized by Congress.

Adequacy of the Program to Achieve Its Purpose

At its inception, the AML program provided that states, upon approval of submitted plan designs, would play a central role in reclamation. This was because it was anticipated that AML collections and grants would fall far short of needs, and that the states would be best qualified to establish their own site-specific priorities.

At the end of FY1996, the estimate of the cost of reclaiming remaining Priority 1 and 2 sites was $2.5 billion. An additional $1.7 billion may be needed to complete Priority 3 sites.15 This, however, reflects only those Priority 3 sites currently in the AMLIS inventory. Reclamation of all known Priority 3 sites is estimated at $20 billion.16

Additions to the AML fund during each of the next two fiscal years are projected around $360 million.17 If one assumes congressional appropriations of AML funds at the level approved in the FY1997 budget (and essentially identical in the Administration's FY1998 request), it strongly suggests there will be a need to reauthorize the AML fund beyond FY2004. As time passes, more and more of the balance of unfunded or unreclaimed sites will be situated in Eastern and Appalachian states, suggesting that reauthorization of the fund in later years may grow more controversial.

The Unappropriated Balances

In the first years of AML collections, appropriations from the fund were low because few states had reclamation programs in place. As more state programs were approved, annual appropriations increased and, during FY1983-85, exceeded collections (see Appendix). Since then, collections have exceeded appropriations; unappropriated balances are projected to exceed $1.2 billion by the end of FY1997. Generally, the argument against higher disbursements was that several states were not in a position to effectively administer larger grants. However, in recent years, the states contend that they could accelerate AML reclamation under the programs they have in place, and that appropriations have been restrained by the effort to balance the federal budget.

In September 1996, the National Association of Abandoned Mine Land Programs (NAAMLP), a group of state officials directly involved in AML grant administration, released a proposed plan prepared by the Interstate Mining Compact Commission to increase the amount of money available for reclamation. The plan would eliminate the unappropriated balances in the trust fund and establish a more direct role for the states and tribes in managing AML monies.18 Under the plan, the unappropriated balance and earned interest on AML monies would be deposited to state and tribe accounts.19 States would prepare multi-year Reclamation Management Plans that, once approved, would allow states to draw on their accounts consistent with annual spending levels set out in their Plans.

The plan's intention is to have the pace of reclamation governed not by congressional appropriation, but by a particular state or tribe's capacity to manage and administer its own reclamation program (consistent with the multi-year plan the state or tribe will have submitted to OSM). Proponents of the plan argue that this would accelerate the pace of reclamation at lower cost, and create employment.

For the plan to be adopted, however, there would have to be a shift in the Congressional posture toward AML appropriations. Distribution of the unappropriated balance would create obligations certain in the near-term to be higher than current appropriated levels. Moreover, even were spending of these balances authorized by Congress, actual expenditure of AML funds would still be subject in the future to annual appropriations. Consequently, for the plan to be implemented, it would probably require that the AML fund be taken entirely off-budget.20 Additionally, noting that the portion of the grant allocation based on historic coal production is for Priority 1 and 2 projects only, OSM pointed out that some states might receive more money under the proposed initial distribution than they are entitled to under present statute.21

Distribution of the unappropriated balance on the scale favored by the NAAMLP could lessen the amount of AML monies available for the United Mine Workers Combined Benefit Fund (UMWACBF).22 Transfers to this fund are limited by P.L. 102-486 to a maximum of $70 million annually; however, the transfer is paid from the interest earned on the unappropriated balances in the AML fund. While the demands of the UMWACBF will presumably decline with the passage of time, the interests of the UMW retiree health benefits and abandoned mine reclamation could become caught up in a potentially unusual crosscurrent.23

The Appropriation for Minimum Program States

Though authorized to receive as much as $2.0 million annually, Congress set the appropriation to minimum program states at $1.5 million for FY1995, FY1996 and FY1997. The FY1998 budget request from the Administration proposes to maintain it at that level.

Minimum program states would prefer the higher level. In June 1996, the Western Governors' Association passed a resolution expressing support for boosting the minimum grant to $2.0 million. Arguing that it is unfair to cut funding to minimum program states when there are unappropriated balances in state share accounts, the Western Governors, in the same resolution, called for "distribution of the cumulative unappropriated fund balances to the States."24

On the other hand, minimum program states have received more than the proportion of the federal share these states would have received were the allocation based only on the states' pre-SMCRA coal production. However, this does not refute the main argument of minimum program states that they are disadvantaged by the cut. The increase in the minimum program state authorization from $1.5 million to $2.0 million, it can be argued, was a recognition by Congress that there are enough high-priority reclamation sites in those states to utilize the full $2 million authorized, and that a 25% cut in this appropriation is disruptive to the program. If minimum program states, estimated to number 10 in FY1998, were granted the full authorization of $2.0 million per state, it would add $5.0 million, or roughly 2.8% to the budget request, as proposed.

While it is not known whether there will be any legislative proposals to adjust the authorization or appropriation to minimum program states, or to increase overall annual appropriations from the AML fund, these issues are likely to be the subject of discussion and study in the future.

 

APPENDIX I. Abandoned Mine Land Fund:
Accumulated Receipts and Appropriations, FYl978-FY1998
(dollars in thousands)

Fiscal Year Receipts Appropriations Cummulative Unappropriated Fund Balance
Amounta Cumulative Amount1) Cumulative
1978 105,444 105,444 36,647 36,647 68,797
1979 184,433 289,877 61,451 98,098 191,779
1980 199,000 488,877 94,843 192,941 295,936
1981 192,657 681,534 82,485 275,426 406,108
1982 222,644 904,178 115,333 390,759 513,419
1983 197,196 1,101,374 213,079 603,838 497,536
1984 216,554 1,317,928 271,228 875,066 442,862
1985 226,426 1,544,354 296,941 1,172,007 372,347
1986 219,162 1,763,516 197,277 1,369,284 394,232
1987 215,304 1,978,820 203,720 1,573,004 405,816
1988 229,890 2,208,710 199,380 1,772,384 436,326
1989 235,493 2,444,203 193,160 1,965,544 478,659
1990 243,519 2,687,722 192,771 2,158,315 529,407
1991 243,759 2,931,481 198,955 2,357,270 574,211
1992 281,281 3,212,762 187,803 2,545,073 628,361
1993 268,786 3,481,548 187,930 2,733,003 748,545
1994 284,388 3,765,936 190,107 2,923,110 842,826
1995 317,147 4,083,083 182,386 3,105,496 977,587
1996 325,834 4,408,917 221,071 3,326,567 1,082,350
1997* 359,000 4,767,917 208,485 3,535,052 1,232,865
1998* 363,000 5,130,917 233,000 3,768,052 1,362,865

* Projected
a Receipts for FY1992-1998 include interest payments on the unappropriated balance of AML funds.
b Appropriated balances for FY1996-FY1998 include payments to the United Mine Workers of America Combined Benefit Fund (UMWACBF).

Source: Office of Surface Mining and Reclamation

REFERENCES

1 The authorization for the AML fund was amended in 1990 (P .L. 101-508) to allow use of AML funds to clean up certain high-priority sites in operation after 1977 if their operators or companies holding bond have since gone bankrupt, and if reclamation funds from other sources were insufficient.

2 U.S.Congress. Congressional Research Service. Thompson, Duane A., The Abandoned Mine Reclamation Program: Too Little, Too Late, to Complete. March 5, 1986: p.7.

3 United States Department of the Interior Budget Justification, FY1998. Office of Surface Mining Reclamation and Enforcement, p.75.

4 Twenty-three states and three Indian tribes are receiving reclamation grants during FY1997.

5 There have been repeated attempts to abolish RAMP. Congress did not appropriate any money to RAMP from the AML fund in FY1996 or FY1997, and no transfer to RAMP is proposed for FY1998.

6 SMCRA defines Priority 1 sites as those warranting "the protection of public health, safety, general welfare, and property from extreme danger of adverse effects of coal mining practices." Priority 2 sites are similarly defined, with the exception that the "adverse effects" do not pose "extreme danger," as with Priority 1 sites. Sec. 403(a) of SMCRA. 30 U.S.C. 1233.

7 See Appendix I for cumulative AML receipts, appropriations, and unappropriated balances, including estimates through FY 1998. Receipts by that time should exceed $5.1 billion, and disbursements more than $3.7 billion.

8 As noted earlier, P.L. 101-508 designated that, as of FY1992, the establishment of new and specific congressional directives reduced to 40% from 50% the percentage of those monies designated for supplemental AML grants to states with reclamation programs. As a consequence, the funds technically available for supplemental grants since the inception of the program is higher than 40% of the current total unappropriated balance.

9 Office of Surface Mining. Fiscal Year 1997 Grant Distribution.

10 Among others, these include restoration, reclamation, abatement or other actions where an emergency situation exists that constitutes "a danger to the public health, safety, or general welfare" (Sec. 410(a)(1)); and for expenditures to carry out the objectives of the program in locales where a state or Indian tribe does not have an approved reclamation program.

11 United States Department of the Interior Budget Justifications, FY1998, op. cit p.75, 78. The Energy Policy Act of 1992 provided that the unobligated balances would begin to earn interest in FY1993, however, transfers did not begin until FY1996 so as not to violate deficit-control measures included in the Budget Enforcement Act of 1990 provisions of P.L. 101-508. For a complete discussion of the genesis and implications of this transfer payment, see: Noto, Nonna. Interest Transfers from the Abandoned Mine Reclamation Fund, appearing in: U.S. Congress. House of Representatives. Committee on Ways and Means. Development and Implementation of the Coal Industry Retiree Health Benefit Act of 1992. June 22, 1995. WMCP: 104-3, p.50-54.12 These states include Alabama, Alaska, Arkansas, Illinois, Indiana, Kansas, Montana, North Dakota, Ohio, Virginia, and West Virginia.

12 These states include Alabama, Alaska, Arkansas, Illinois, Indiana, Kansas, Montana, North Dakota, Ohio, Virginia, and West Virginia

13 As Table 3 reveals, the minimum program states currently are: Alaska, Arkansas, Iowa, Kansas, Maryland, Missouri, North Dakota, Oklahoma, and Utah. OSM anticipates that New Mexico may be a minimum program state in FY1998. See Budget Justification, op. cit., p.23.

14 The balance with respect to other reclamation programs may be more controversial.

15 United States Department of the Interior Budget Justifications, FY1988, op. cit p. 75, and telephone conversation with Cynthia King of OSM, February 7, 1997. Priority 3 is "restoration of land and Water resources and the environment previously degraded by adverse effects of coal mining practices including measures for the conservation and development of soil, water (excluding channelization), woodland, fish and wildlife, recreation resources, and agricultural productivity." USC 30 1233.

16 Priority 3 sites are not required to be in the AML inventory as are Priority 1 and 2 sites. See also: U.S. Department of the Interior. Office of Surface Mining Reclamation and Enforcement. Assessment, Evaluation, and Analysis of the Fee Collection Provisions and the Abandoned Mine Land Reclamation Program of the Surface Mining Control and Reclamation Act of 1977. August 1990. See p.2-11, which estimates the cost of reclamation of the Priority 3 sites known in 1990 at $13.7 billion 1978 dollars. This exceeds $18 billion in today's dollars.

17 There are two components to this figure. AML fee collections on coal production are estimated at $285-$287 million in FY1997 and FY1998. However, earnings on the unappropriated balance of AML funds is credited to the fund as well, and this is estimated to be $73-$75 million in each of FY1997 and FY1998.

18 The Abandoned Mine Reclamation Trust Fund: A Management Plan for Primacy States, prepared and submitted by the Interstate Mining Compact Commission, September 1996.

19 The plan proposes that the initial distribution to states and tribes would comprise of (1) the state share; (2) the balance of the Rural Abandoned Mine Land earmark, distributed according to historic coal production; and (3) the balance of the federal share, distributed according to historic coal production. Minimum program states would receive $2.0 million, and an additional $500,000 for those years where the appropriation was less than $2.0 million. Presumably, this would extend back only to 1992, when the $2.0 million authorization to minimum program states was established. The plan also provides a distribution formula for current collections, which includes $2 million to minimum program states and an otherwise conventional distribution after making provisions for administrative expense, emergency programs, the Small Operator Assistance Program (SOAP), the United Mine Workers Combined Benefit Fund, and any other established uses and expenses.

20 A related, though not entirely comparable experience is the Payment in Lieu of Taxes (PILT) program. In 1994, Congress amended PILT to raise the authorized payment to counties gradually over 5 years. Appropriations, however, have not risen to match the higher authorized levels. Under the 1994 amendment, if Congress does not appropriate the full amount, counties receive a pro rata share of their expected payment. See, Corn, Lynne. PILT (Payments in Lieu of Taxes): Somewhat Simplified. CRS Report 95-259 ENR; as well as her general distribution memo: Funding Levels for Payment in Lieu of Taxes (PILT), FY 1995., December 1,1995.2 p.

21 Letter to Stan Bernard, President of NAAMLP, from Mary Josie Blanchard, Assistant Director, Program Support, OSM. Oct. 23,1996.

22 The precise impact would depend upon the scale of the distribution of unappropriated balances, and the interest rate paid on these balances. Under some scenarios, it is possible that higher interest rates could compensate for a gradually scaled decline in the unappropriated balance.

23 It is unusual for the interest earnings of a trust or special fund to be used for another program. See Noto, Nonna. Interest Transfers from the Abandoned Mine Reclamation Fund, op. cit., p.52.

24 Except for FY1983-FY1985, annual receipts to the AML fund have exceeded appropriations (see Appendix) from the program's inception. In recent years, the gap between collections and appropriations has again increased, with the consequence of a net reduction in Federal borrowing to cover AML grant expenses and a steadily increasing total unappropriated balance.