Coal Age

JUN 2017

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10 June 2017 news continued d a t e l i n e w a s h i n g t o n We interrupt our normal programing about Wash- ington's regulatory follies to bring you this message about an obscure federal program that was the long-overdue subject of a U.S. House of Represena- tives oversight hearing last month. This would be the Abandoned Mine Land (AML) fund, paid for by the coal industry and administered by the Office of Surface Mining and Reclamation En- forcement (OSM). The House subcommittee on energy and minerals heard how this ramshackle, multibillion-dollar program has become equally inefficient and ineffective. Billions from the fund can't be accounted for, with the only certainty that most of the money hasn't been spent on abandoned coal mine cleanup, the intended purpose. Here's the plot to date. Since 1977, the AML fund has collected some $11 billion from fees, with interest, on each ton of mined coal to clean up abandoned coal mines prioritized for this purpose. Of this total, about $8.5 billion as of last fall has been spent — but not on abandoned coal mines. In fact, just $2.8 billion has been spent on high and low priority sites, according to OSM's records. Sounds like a shell game. Some $11 billion goes into the fund, $8.5 billion goes out, but only $2.8 billion of that goes to the program's in- tended purpose. That's a $5.7 billion credibility gap. This wouldn't be surprising if it was Iraq's defense budget. But it was alarming to hear this about a federal program intended to clean up abandoned coal mines in the U.S. Some say this is a Ponzi scheme, others say that's unfair to Mr. Ponzi. If you learned that your favorite charity spent only one of every three of your dollars on its advertised purpose, you would be quite cross and re- allocate your charitable giving. Especially if the charity asked you to up your contribution, which may well be what the coal industry hears when the current AML fee expires in 2021. Examples describe a program needing reform. Over one five-year period, the General Accounting Office found that fully 28% of AML ex- penditures were used for federal and state administrative expenses. The National Mining Association (NMA) could not find a single source of infor- mation tracking the amount of AML fees used for administration over the life of the program. But even assuming a lower 20% administrative figure for the program's first 25 years, it turns out that $1.7 billion was spent for administrating the fund, exceeding the $1.66 billion spent on the highest priority projects. Part of the problem is Bernie Madoff-style accounting practices, inaccurate or infrequent reporting, and bad databases. But maybe more blame should fall on structural problems that cry out for AML reform. Funds are misaligned with the core mission: 20% goes to states based on historic coal production while 80% of program monies go to a variety of purposes that have little to do with site cleanup. Popular programs like the Appalachian Clean Streams Initiative and Technology Development and Transfer Programs bleed AML money from funding high priority projects. "The program has been divided into too many competing buckets of money leading to the diversion of substantial sums to non-core pur- poses," NMA President and CEO Hal Quinn told Congress. What's needed, Quinn said, is "fewer buckets scooping up and diverting money and more focus directed to the top priority coal AML projects." States have often spent AML money on worthy projects, he suggested, just not on aban- doned coal sites. Meanwhile, the gradual shift of coal production from the East to the West prompted no corresponding adjustment in the allocations. Over time, large portions of AML monies ended up in states with few if any priority sites. Here's hoping Congress steps in with reforms before the present fee structure expires. If it doesn't, the AML's present beneficiaries will likely propose a simple "solution" for cleaning up the remaining priority sites: more money from the coal industry. Luke Popovich is a spokesperson for the National Mining Association, the industry's trade group based in Washington, D.C. Who's Mining the AML Store? by luke popovich "Some say this is a Ponzi scheme, others say that's unfair to Mr. Ponzi." NMA President and CEO Hal Quinn speaks before Congress.

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