Coal Tattoo

Obama and abandoned coal mines

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President Barack Obama seems to be picking a fight with Wyoming, the nation’s top coal-producing state. But at the same time, the president might be proposing a change in the federal Abandoned Mine Lands program that would end some long-standing abuses.

We don’t have a lot of detail yet on Obama’s first budget proposal for the 2010 financial year. The administration is still very new, and they’re in the process of developing all of their detailed proposals.

But they did release today short fact sheets on their spending plans for all major government agencies.

Buried in the one for the Department of Interior is one little sentence that says Obama’s plans include:

Terminating payments to coal-producing states that no longer need funds to clean up abandoned coal mines.

I wasn’t completely sure what they were up to , until I read a slightly longer explanation in the bigger budget book issued today:

 Eliminating Mine Clean-Up Payments to States that Have Completed Clean-up. Abandoned Mine Lands (AML) payments from the Office of Surface Mining are made to states with abandoned coal mines requiring clean up. These AML payments were originally intended to be used only for clean-up efforts. In 2006, a provision was added that provided payments, available for unrestricted use, for States that have completed clean-up of all of their abandoned coal mines. This proposal would eliminate these unrestricted payments to States that have completed clean-up, saving close to $200 million in 2014.

To anyone who follows the AML program, the reaction is WOW!

“This is going to be huge,” said Greg Conrad, who follows the AML program for the Interstate Mining Compact Commission, which represents mining states.  “It’s going to be controversial. How the heck did this ever find its way in there? It just completely eludes me.”

But, Obama singled out this proposal when he announced his budget proposal:

Interior Secretary Salazar will save nearly $200 million by stopping wasteful payments to clean up abandoned coal mines that just happen to have already been cleaned up.

What Obama is doing may be aimed at fixing a huge problem that the Gazette pointed out in a series five years ago about the AML program, Abandoned Promises. As I wrote at the time:

 … Lawmakers and regulators have allowed more than $1.3 billion of AML money to be diverted to other projects.

— States have poured $282 million into reclamation of low-priority problems — coal mine sites that harm the environment, but do not threaten public health and safety.

— Huge amounts of AML taxes paid by coal companies have been diverted to reclamation of non-coal mines in Western states. Through the end of June, $281 million – about $1 out of every $10 spend on AML cleanups — had been earmarked for such projects.

— Congress allowed states to funnel money to infrastructure construction that has little, if anything, to do with cleaning up old coal mines. Wyoming — the nation’s largest coal producer — has spent more than $90 million in mine reclamation money to build roads, water systems and a new geology building for the University of Wyoming.

— Since 1996, about $665 million of interest on the AML fund has paid for health-care benefits of thousands of retired miners. Congress ordered these transfers to avoid the financial collapse of the United Mine Workers Combined Benefit Fund, and to acquire money for the bailout from the coal industry.

This all gets a little complicated, and I explained Wyoming’s situation in more detail in this story from the Gazette’s 2004 series.  In short:

  … Wyoming has spent more than $90 million in mine reclamation money on public works projects that have little — if anything — to do with coal mining. Wyoming has diverted AML money to build highways, schools and hospitals.

How could they do this? Well, there were a bunch of loopholes in the AML portion of the 1977 federal strip mining law. Congress intended that once states cleaned up all of their abandoned coal mines, they would become “certified” and no longer get AML money. But the law’s loopholes allowed the funding to continue to flow, and let certified states spend it pretty much however they wanted.

rahall_photo.jpgSome lawmakers from Eastern coalfield states — primarily Rep. Nick J. Rahall, a West Virginia Democrat who loves the AML program — tried for a number of years reform this situation. But senators and representatives from Wyoming just wouldn’t got along. In Wyoming’s defense, their situation is a bit unique. Coal mining is relatively new there — it doesn’t go back a century or more like it does in West Virginia and Pennsylvania — so the state’s inventory of mines abandoned prior to 1977 isn’t very large. But as the nation’s current top coal producing state by far, Wyoming pays far more in per-ton AML taxes than any other state, especially since most all of its production comes from strip mines, which pay a higher fee.

In 2006, with the AML tax about to expire, Eastern and Western lawmakers reached a compromise, and extended the program for another 14 years. Part of the deal was that certified states would no longer receive the standard state share of 50 percent of the AML fees collected from their coal operators, for AML fees paid in future years.  Several other reforms were made, such as elimination of broad language allowing AML money to go to any project that served a state’s “general welfare.”

But, certified states would continue to receive annual AML money, in the form of the “unappropriated state-share balances.”  That’s money that states paid into the AML fund over the years, but which administrations from both parties kept bottled up in Washington to make the federal debt look smaller. (For more on that problem, see this story).

Along with Wyoming, there are three other states — Louisiana,  Montana, and Texas — that are certified. Also listed as certified are three tribes, the Crow, Hopi and Navajo. But by far the biggest player here is Wyoming, which accounts for something like $500 million of the total unappropriated AML money, or about half of the total fund.

So now, Obama wants to stop Wyoming from spending money intended for cleaning up abandoned coal mines on other projects.

Wyoming lawmakers will fight this one to the death. This year alone, the state got about $100 million in AML money. Wyoming’s annual share alone makes up most of the $142 million Obama says his plan would save next year.

And it’s not clear whether Obama’s proposal — as solid as it may be, in terms of spending AML money where it was meant to go — has any kind of constituency. Historically, environmental groups have paid little attention to the AML program. Neither has the coal industry. The folks who follow it are mostly the guys who run cleanup programs at state agencies, the people who administer AML for the federal Office of Surface Minining, and Jim Zoia, the longtime top aide to Rahall.

Another twist is that Obama’s Interior Secretary, Kenneth Salazar, is from Colorado. Officially, Colorado isn’t listed as certified. But a lot of AML watchers think it should be. And under the 2006 amendments, OSM has authority to certify states, whether the states want to be certified or not.

And finally, for the record, Republican John McCain beat Obama in Wyoming, with 65 percent of the vote to 33 percent for Obama.