Monday, July 30, 2012

New Federal Transportation Law Reduces Mine Reclamation Funding To PA By $200 Million

On July 6, 2012, President Obama signed into law the Surface Transportation Bill (HR 4348). Included in the bill within Section 100125 was a provision known as the Baucus Amendment which will reduce federal Abandoned Mine Reclamation Funding to Pennsylvania by $200 million over the next 10 years.
The amendment sets a limit of a maximum of $15 million in total annual payments from the AML Fund to a certified state, a state that has completed reclamation of all of its high-priority coal mining AML features.
On the surface, this small amendment would appear to only impact the State of Wyoming which currently receives approximately $150 million annually and is certified.   According to an analysis undertaken by the Interstate Mining Compact Commission, the total impact to the State of Wyoming over the remaining ten years of the AML Program is a reduction in total grant payments of approximately $718 million.
However, further analysis by IMCC identified that this would then result in a reduction in payments to uncertified states, like Pennsylvania, with remaining high-priority coal mining Abandoned Mine Lands features in need of reclamation, by a total of nearly $550 million over the life of the AML program whenever the reduction to Wyoming is analyzed in context with other provisions in the federal surface mining law and the federal Office of Surface Mining funding allocation formula.
There are five subaccounts within the federal AML fund.  Two of these subaccounts are known as the “in lieu” of state share fund and the historic coal fund.  A complex formula is used by OSM to determine the funding for each state/tribe from the various subaccounts.  
Without getting into the fine details of the funding allocation formula, the amount of funding that is not paid to Wyoming from the “in lieu” of state share fund subaccount will result in a corresponding decrease to the historic coal fund subaccount.  
Applying this to the federal FY 2012 OSM AML grant distribution summary results in a reduction in the historic coal fund subaccount which reduces the annual AML grant to individual states by the approximate amounts as follows: Pennsylvania ($17.8 million), West Virginia ($10.2 million), Illinois ($5.5 million), Kentucky ($5.4 million), Ohio ($3.4 million), Indiana ($1.8 million), Virginia ($1.6 million) and Alabama ($1.5 million). Thirteen other states will also be affected representing an additional $5 million.  
These examples are a best case scenario, and depending on which subaccount OSM draws from for Wyoming’s AML grant, the impacts and the reduction in annual grants to the uncertified states which receive funding from the historic coal subaccount (like Pennsylvania) could be even higher.
In terms of the federal AML Program, Pennsylvania is an uncertified state which receives significant AML Grant funds from the historic coal fund subaccount of the federal AML fund, about 34 percent of the total.  
Depending on how OSM implements the amendment, there would be a range of between approximately $52 million and $67 million reduction to the amount paid to Wyoming from the “in lieu” subaccount for the next few years.  
As such, the annual loss to PA’s AML Program during those years would be approximately $17.8 million if the reduction is $52 million and as high as approximately $23.2 million if the reduction to the historic coal fund is $67 million.   This would then translate to a corresponding loss of approximately $5.3 – 7.0 million annually to Pennsylvania’s 30 percent Acid Mine Drainage Set-Aside Program.
The total loss to Pennsylvania’s AML and AMD Set-Aside Programs over the remaining ten year life of the federal AML Program could well be in excess of $200 million.
Rollback Of 2006 Commitment
In December 2006 Pennsylvania successfully lead a bipartisan effort to extend the mine reclamation fee imposed on each new ton of coal mined to pay for abandoned mine land reclamation.
The language Congress passed then allowed Pennsylvania to claim more than triple the funding it would have received over the next 10 years. In fact, starting in fiscal year 2008 and going through until 2017, state officials will receive approximately $680 million - with further adjustments promising to yield as much as $1.5 billion over the next 15 years.
Annual AML funding to Pennsylvania would increase from an estimated $21.4 million in 2007, to $31.6 million in 2008, $52.4 million in 2010, $60 million in 2011 to a high of $90 million in 2013.  In addition, the legislation allows states to increase its reclamation setaside from 10 percent to 30 percent for locally-sponsored mine reclamation and acid mine drainage treatment projects.
All told, the AML’s new funding formula would allow state and local officials to reclaim and recover nearly all of Pennsylvania’s high-priority sites a full 45 years earlier than they would have under the current arrangement.
Ironically, on August 2 the federal Office of Surface Mining and mining states will celebrate the 35th anniversary of the passage of the federal surface mine regulation act which created the federal mine reclamation program.
Next Steps
Efforts are underway on Capitol Hill to explore potential fixes for this debilitating amendment to the federal surfacing mining act.  
The first official attempt is HR 6113, introduced by Rep. Lummis (R-WY) and Rep. Rahall (D-WV) which would invalidate the amendment contained in the Transportation bill.  Prognosis for the movement of this bill is uncertain at this point, but two potential vehicles include S. 897, which is awaiting action on the floor of the House and the Farm Bill.  
Other efforts that are being considered include a fix to be contained in the technical corrections bill associated with the Transportation bill, which could be several months down the line,  and a bill that would invalidate the AML amendment while providing different sources of funding for the Secure Rural Schools and Payment in Lieu of Taxes programs, which the AML offset funding was intended to address.  
Background on this issue came from a Department of Environmental Protection briefing paper circulated late last week.

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