Abandoned Mine Clean-Up: Federal Funding Formula and State Uses Criticized

The Wall Street Journal features a front page story highlighting that four states and three Native American tribes have received $180 million in federal funding with few strings attached to clean up abandoned mines when their reclamation worries have been largely fixed. At issue is a change made in 2006 to the Abandoned Mine Lands (AML) program and a fund made up of fees imposed on coal companies meant to help clean up old sites and for reclamation efforts. The legislative change  made disbursements to states "mandatory" instead of "discretionary" through the Congressional appropriations process, and consequently there is little funding left for other states with long-term clean up projects that may take decades. 

According to the Department of Interior the top five states receiving AML funding in FY 2012 are:

  • Wyoming - $150 million
  • Pennsylvania - $67.2 million
  • West Virginia - $66.5 million
  • Kentucky - $47 million
  • Illinois - $24 million

All told, $485 million was disbursed - the most ever for the program. In 1977, Congress passed the Surface Mining Control and Reclamation Act which charged coal companies a reclamation fee of 31.5 cents per ton of coal produced by surface coal mining and 13.5 cents per ton of coal produced by underground mining. Before the law was passed, many states were burdened with abandoned mines and their associated environmental problems and the hazards they posed to the public. Under the law, 50 percent of the money was supposed to go back to the individual state for reclamation efforts and the remainder went to the Department of Interior to help other states across the country that needed extra help to alleviate extraordinary clean-up situations. Large coal producing states expected to see substantial payouts from the fund, however, disbursements were subject to the appropriations process by Congress and they rarely ever received their 50 percent rate of return. Provisions were added to the AML program in 1990 that allowed "certified" states to expand the use of funds to other "non-reclamation" activities even when their larger coal mine issues had been resolved. In essence, a "certified" state were ones who identified that they had no major immediate remediation projects. They include: Wyoming, Texas, Montana, Louisiana, and the Crow, Hopi, and Navajo Tribes.

In 2006, Senator Mike Enzi of Wyoming instituted a landmark change to AML funding. Instead of being subject to the whims of Congressional action, he secured passage of a measure that guaranteed states would receive their funds directly to make up for the lack of payments over the years. To provide some perspective, AML funding in FY2005 was $69 million compared $485 million under current levels. Under the terms of the deal, states like Wyoming would get "historic" payments owed to them from the AML fund for seven years and then a direct payment afterwards from the US Treasury for other mineral reclamation projects. Certified states were also no longer guaranteed all of their share of state payments made after 2006. 

According to the Wall Street Journal article, AML funding has been used for some potentially controversial projects such as $10 million for renovating the basketball arena for the University of Wyoming. The Obama Administration's budget has called for changes to the AML program and it is based largely on recommendations from the Simpson-Bowles deficit reduction plan, which argues that certified states and Tribes should not be eligible for more AML funds if their major reclamation sites have been cleaned up. Instead, the Administration's budget suggests limiting funds to only "priority" clean up sites and using the rest ($1 billion) of the AML funding for deficit reduction purposes. This move has been opposed by industry groups like the National Mining Association that believe reclamation funds should be used for environmental restoration rather than for deficit reduction purposes. 

The Department of Interior highlights several states that have long-term mine clean up problems, but do not fare well under the AML fund structure because most of their large mining operations no longer exist. For example, Kansas has $226 million in restoration costs from abandoned mines yet under the current funding formula it will take them 75 years to finish their clean up work. Policymakers from Wyoming, Montana and other states counter that they are trying to recoup what is owed to them under federal law after years of haphazard funding by Congress.  For example, Wyoming contributed nearly $3 billion to the AML fund and has only recouped roughly one-third of the money in disbursements.