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House reps, industry suggest lack of oversight on Abandoned Mine Lands fund

U.S. House representatives and a coal industry spokesperson questioned the Abandoned Mine Lands program for a perceived lack of oversight at a congressional hearing June 7.

"The 2021 expiration of the fee provides an end-date which should carry a sense of urgency for reforming the administration of the program to deliver the funding to its intended purpose," said Hal Quinn, president and CEO of the National Mining Association, in his submitted testimony to a House Subcommittee on Energy and Mineral Resources oversight hearing on the Office of Surface Mining Reclamation and Enforcement's AML program.

The AML was created through the Surface Mining Control and Reclamation Act of 1977 and is financed through fees from coal producers. The money is redistributed to states and tribes for coal mine reclamation.

Quinn said about $8.5 billion of the $11 billion total of the fund has been spent, but as of Sept. 30, 2016, only $2.8 billion has been used for the reclamation of priority coal abandoned mine sites.

In a follow-up email to S&P Global Market Intelligence, the OSMRE sought to clarify these numbers. The agency said that as of Sept. 30, 2016, a total of more than $10.9 billion had been collected in the AML fund. He said that the $8.5 billion appropriated from the fund so far breaks down as such: about $3.5 billion for construction, more than $1 billion for project design, $438 million for administrative costs, $297 million for acid mine drainage, and $262 million for undelivered orders. Included in this $8.5 billion is more than $1.4 billion transferred to certain health care plans administered by the United Mine Workers of America Health and Retirement Funds, and more than $1.6 billion used for SMCRA authorized expenditures since the 1978 fiscal year which included OSMRE operating expenses.

"This is not only a financial gap for the program but a credibility gap for the program managers. Accounting for the $5.7 billion gap is difficult, if not impossible, from the information OSM makes publicly available," Quinn said, referring to a U.S. Department of the Interior Inspector General report on OSMRE's oversight of the AML program. Some of the issues he specifically highlighted included states diverting AML money to non-coal projects even though they had a number of high-priority reclamation projects outstanding.

Quinn said that extensions of the AML fee charged to coal producers have allowed the continuation of suboptimal business-as-usual practices.

"People in the industry don't believe they should continue to have to pay for that," he said at the hearing.

Representatives from OSMRE, including witness Glenda Owens, the agency's acting director, stated that it was looking into improving the process of how states received and spent funds.

Rob Rice, chief of the West Virginia Office of Abandoned Mine Lands & Reclamation, said at the hearing that Quinn's numbers were inaccurate. He said that West Virginia had received over $1 billion, but the analysis only showed $800 million went to construction. From the remaining $200 million, some went to design, which was about $80 million or so and tens of millions of dollars in maintenance.

"We can easily account for every dollar spent," he said.

In Wyoming's case, Todd Parfitt, director of the Wyoming Department of Environmental Quality, said at the hearing that the state only spent about 3% of its share of AML funds on administrative costs.

Parfitt said that one of the challenges with making sure that AML funding was used more quickly and efficiently on the ground included the fact that any project to clean up the environment had to first get approval through the National Environmental Policy Act. He recommended that this process be streamlined for reclamation work.

Rep. Steve Pearce, R-N.M., said that this process seemed incongruous. "That does seem amazing — you spend that much time and money to go through a process to decide the environmental impact of cleaning up the environment," he said.

Old inventories

Some of the witnesses noted that the inventories for mine lands that needed to be reclaimed should be updated, since some had gone decades without change.

Rice said AML and the funding needs can be confusing, but part of this has to do with the fact that previously unknown mine sites are continually being discovered, while some of the mine areas that are known are worsening in condition.

Furthermore, he said that the OSMRE removed half the sites from the the inventory of abandoned mines in the 1990s, getting rid of ones far from population centers. However, as populations expand in states like West Virginia and ATV trails are developed, some areas that were removed from the inventory are now close once more to human populations. It is also difficult to tell what is going on underground, since there is a huge amount of water impounded in mines below the surface, he said.

Overall, House subcommittee Chairman Paul Gosar, R-Ariz., said that Congress must consider the ways the AML program and the problems involved with cleaning up sites have changed.

"[A]ny conversation about fee extensions or reauthorization cannot happen without or before examining the effectiveness of the AML program," he said in a press release.