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Wyo. diverts its mine reclamation funds

Published: Monday, August 16, 2004
Page: P1A
Byline: Ken Ward Jr. IN the fall of 1999, University of Wyoming students and faculty moved into a new, $20 million geology building.

Located on the university's Laramie campus, the 65,500-square-foot facility included new computer equipment, state-of-the-art laboratories and a student lounge.

Wyoming officials paid for most of the building with $17.9 million in federal Abandoned Mine Land money - coal taxes meant to fund reclamation of old coal mines. Federal regulators gave Wyoming the general go-ahead for public facility spending 10 years before. This was the state's first such project.

Since then, 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, according to federal Office of Surface Mining data and state records.

In Campbell County, Wyoming spent $12 million on an addition at Gillette High School. In Sheridan County, $7.8 million bought a new hospital. The town of Medicine Bow got $560,000 for a new water treatment plant.

Until last month - prompted by questions from The Charleston Gazette - the OSM did not have a complete accounting of how the money was spent.

"The state of Wyoming, quite frankly, was spending the money any way it wanted to," said Guy Padgett, director of the OSM's field office in Casper, Wyo.

Such free spending was allowed only because the state had "certified" in 1984 that it was done reclaiming pre-1977 coal-mine damage.

Wyoming, however, was never really finished with its abandoned coal sites.

Earlier this year, state officials demanded "hundreds of millions of dollars" to reclaim what they say are newly discovered abandoned mine sites. In Wyoming, elected officials and AML administrators say that they just want back some of the $120 million in reclamation taxes their state's mine operators pay every year.

Wyoming's mining industry has demanded a reduction or elimination in the AML tax. They also complain that too much is spent on AML administration, and not enough on reclamation.

"It is clearly evident that unless there is a fundamental change in how the program is administered, this program will be a never-ending bottomless pit," said Marion Loomis, executive director of the Wyoming Mining Association.

Other states and some federal officials, though, say Wyoming's spending has depleted - and will continue to deplete - the AML fund of money that is badly needed for cleanups in the Appalachian coalfields.

"I am not opposed to Wyoming spending money to remodel schools, to build geology buildings, to do all of the projects they are doing," said Jeff Jarrett, director of the OSM. "If they are entitled to federal dollars to help them do that, that's fine.

"What I have a problem with is that every dollar that is spent on a project like that is a dollar that is taken away from high-priority reclamation projects in West Virginia, Pennsylvania or some other state," Jarrett said.

A 50-50 split In 1977, when Congress created the AML program, states west of the Mississippi River mined about 164 million tons of coal. Today, Western states generate 600 million tons of coal, more than half of annual U.S. production.

In the Powder River Basin of Wyoming's northeastern corner, huge strip mines - mostly on public land - produced nearly a third of the nation's coal in 2003, according to the U.S. Department of Energy.

Almost all of Wyoming's production is subject to the larger, 35-cents-per-ton AML tax for surface mines. So every year, Wyoming accounts for more than 40 percent of all AML tax collections, according to OSM records.

At the same time, most coal production in Wyoming occurred after 1977.

The state had among the smallest inventories of mines to be reclaimed by the AML program.

The original law, though, ordered a 50-50 split of AML revenues. Half of the money is to go back to states; half is distributed by the OSM. This conflict - where the state that pays the most has among the smallest needs - is at the heart of the problems that face the government's abandoned mine cleanup program.

"Each year, less and less money is being spent to reclaim the hundreds of dangerous, life-threatening sites," Jarrett said.

Wyoming gets 'certified' As part of a compromise to get the strip-mine law passed, Congress wrote in an AML loophole for states with few pre-1977 mines. Lawmakers said that, if a state had cleaned up all of its abandoned mines, it could spend AML money for "construction of specific public facilities in communities impacted by coal development." On May 25, 1984, Wyoming was the first state to certify. State officials said, and the OSM agreed, "All inventoried coal mines eligible for AML reclamation have been completed or were being reclaimed or scheduled for reclamation." Seven years later, federal auditors said that the OSM had been wrong to approve the Wyoming certification. In a June 1991 report, the U.S. General Accounting Office said that the OSM also wrongly approved certifications for Montana and Louisiana.

None of the three states had reclaimed all of their abandoned coal mines, the GAO said. Instead, they and the OSM based the certification only on the status of the most serious sites. Those sites were done, GAO said, but others remained.

In 1990, Congress tightened the rules. To be certified, states would have to show that all coal mines were reclaimed. But in that same legislation, lawmakers grandfathered approval of the Wyoming, Montana and Louisiana certifications.

The 1990 law also greatly loosened the restrictions on the ability of those states to fund public works projects with reclamation tax dollars. When it wrote rules to implement those changes, the OSM worried about the impacts.

"OSM is concerned that the AML program, which is financed by a tax on coal production, not be 'side-tracked' from its primary mission to reclaim lands and waters damaged by coal and noncoal mining process," the agency said.

Competing reform proposals Various proposals are being considered to rewrite the way the OSM allocates reclamation money among the states. In its plan, the Bush administration proposed to pay back certified states their 50 percent of AML taxes.

Bush would funnel $53 million a year for 10 years to certified states for their share of that unappropriated balance. Also, it would remove any restrictions on how states like Wyoming use their AML money.

Interior Secretary Gale Norton has called the proposal "a tremendous example of the president's environmental commitment." But, under the Bush plan, certified states would receive no portion of future AML taxes their coal operators pay. This would free up that money - about $153 million in 2003 - for states with larger numbers of abandoned mines.

"We're advocating that we spend the money where the problems are," said OSM's Jarrett.

Western lawmakers, though, said there was no way their states would give up a share of future AML taxes.

"The president's proposal is simply not a viable option," said Rep.

Barbara Cubin, a Wyoming Republican and chairwoman of a key subcommittee.

Instead, Cubin joined forces with Rep. Nick J. Rahall, D-W.Va., on a different proposal.

Like Bush, Cubin and Rahall want to free up the certified states' share of unappropriated AML money for states with bigger abandoned mine problems. Like Bush, they would distribute the new money to states based on their pre-1977, historic coal production, a proxy for the amount of old mine sites.

But Cubin and Rahall would pay off certified states' unappropriated past taxes with money from mineral leases on federal lands.

In addition, certified states like Wyoming would continue to receive an amount equal to their half-share of future AML taxes. This money would also come from federal mineral leases.

"The states and [American Indian] tribes entered into an agreement with the federal government premised on their receiving at a minimum a 50 percent return on their contributions to the program," Rahall said during a March hearing. "Cubin-Rahall maintains the integrity of those agreements. The administration does not." Neither proposal has gotten very far in Congress.

A new problem?

When Bush administration officials talk about the problems created by the 50-50 split in AML money, it sounds like something new.

During a Senate hearing in March, Jarrett said that during "the early years of the program, [the split] didn't cause a considerable problem." But OSM officials have worried about the problem for years. In an unpublished 1990 report, the agency said lawmakers should consider reducing the share that Western states get back once they are certified.

Also, lawmakers knew from the start that the Western production shift was coming. In fact, lawmakers wrote the 50-50 split in part for just that reason.

During the debate on the strip-mining bill, lawmakers knew the most serious abandoned mine problems were in the East and Midwest. They also knew that much of the new growth predicted for the coal industry would be in the strip mines of the West.

For example, the House report on the strip-mining law showed that only 3 percent of the land disturbed by pre-1977 mining was in the six Western states of Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming. At the same time, those same states contained 58 percent of the "available strippable reserves" of coal.

To address these Western concerns, and get Western lawmakers to support passage of the law, states were promised one-half of their AML taxes. Then-Sen. John Melcher, D-Mont., has taken credit for adding the 50-50 split to the bill.

Paying for other industries Wyoming and other Western states have also benefited greatly from a provision in the strip-mining law that allowed AML money to be spent to reclaim noncoal mines. In the past, far more Western land was damaged from the mining of other minerals than from coal mining.

States, almost exclusively in the West, have spent more than $272 million in AML money on such projects. Wyoming has spent by far the most, more than $168 million, according to OSM records. Colorado is next, with more than $33 million, the records show.

The coal industry's per-ton tax funds cleanups of gold, copper and other minerals mining. Those other industries pay no such tax to help reclaim the sins of their past.

'We should have caught these things' Earlier this year, the Gazette obtained an OSM inventory of Wyoming's AML spending and a state Department of Environmental Quality list of AML-funded infrastructure projects.

The two lists didn't match. The OSM listed projects the state didn't.

The state listed projects the OSM knew nothing about.

The OSM's Padgett ordered an audit, and last month produced a new list. It showed $90 million in infrastructure projects funded with AML money - more than either of the original state or federal lists.

Padgett said he has ordered his staff to keep a closer watch on such spending in the future.

"It is embarrassing," Padgett said. "This should have been correct, and we should have caught these things through normal oversight." Updating the inventory While OSM officials were trying to figure out how much Wyoming had spent on schools and sewer systems, state representatives were demanding more AML money from Congress.

During a March Senate hearing, Wyoming AML administrator Evan Green dropped a bombshell. Green told lawmakers that an investigation by his agency had discovered more than 1,700 abandoned mine sites no one knew about before.

With new aerial photography and sophisticated computer mapping, Green said, Wyoming officials are "for the first time" getting a "comprehensive overview" of their state's AML problems.

"The cost for remaining work in Wyoming will greatly exceed the funds delivered under the administration's proposal, and will likely exceed hundreds of millions of dollars," Green told senators.

Green's announcement, though, should not have surprised anyone.

Wyoming's unfunded AML inventory has been creeping up since the state hired a contractor to update it in 1999.

In 1995, the OSM listed less than $500,000 in unfunded AML projects.

But by 2000, it had increased its inventory to $13.5 million. At the end of last year, it was $41.7 million.

In an interview, Green said many of the newly identified sites really are new problems. Residential areas expand, moving closer to previously isolated abandoned mines. In underground mines, aging timbers give way, causing new ground subsidence.

"To me, it's frustrating to have people make the assumption that, because we are certified, we don't have any more coal sites," Green said. "There are going to be coal mine-related hazards in Wyoming forever." Padgett, the OSM official, is not so sure. He promises to scrutinize Wyoming's new inventory and make sure all the entries are justified.

"I'm going to hold their feet to the fire on that," Padgett said.

Tuesday in the Gazette: Environmentalists and some state officials are pushing to divert more AML money away from sites that threaten health and safety.

To contact staff writer Ken Ward Jr., use e-mail or call 348-1702.

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