PDF _ RL32993 - Abandoned Mine Reclamation Fee on Coal
24-Apr-2006; Nonna A. Noto; 13 p.

Update: August 31, 2006 Previous releases:

Abstract: The Abandoned Mine Reclamation Fund, also known as the Abandoned Mine Land (AML) Fund, is financed by fees levied per ton of domestically produced coal. The fee is 35 cents per ton for surface-mined coal, 15 cents per ton for undergroundmined coal, and 10 cents per ton for lignite. The fund and the fees were established by the Surface Mining Control and Reclamation Act of 1977 (SMCRA) to finance restoration of land abandoned or inadequately restored by mining companies before August 3, 1977. The fees were originally scheduled to expire in 1992, but Congress has extended them six times. The four extensions since 2004 have been for periods of under one year. The FY2006 Interior, Environment, and Related Agencies Appropriations Act (H.R. 2361, P.L. 109-54) enacted on August 2, 2005, extended the fees for nine months, until June 30, 2006. Thus, the extension of the AML fees remains an issue for the 109th Congress to address.

The AML Fund has an unappropriated balance of $1.8 billion which earns interest. Since FY1996, most of the annual interest earnings of the fund have been transferred to the United Mine Workers of America (UMWA) Combined Benefit Fund (CBF) to help pay the medical expenses of “orphan” retirees, their spouses, and dependents. From FY1996 through FY2005, $746 million in interest was transferred. The law provides that if the regular AML fees sunset, special fees should be established solely to provide for the annual transfer to the CBF.

Under current law, 50% of the AML fees collected are allocated back to the state or Indian tribe that collected them (known as the state share). Since 1977, when SMCRA was enacted, the production of coal has shifted westward, mostly to Wyoming, while most of the remaining high priority reclamation sites are in eastern states, the location of historic (pre-1978) coal production. The Office of Surface Mining estimates that at least $3 billion in additional reclamation expenditures is needed to clean up remaining Priority 1 and 2 sites. AML fees could be lower, or collected for fewer years, if the state share allocation were eliminated and the AML Fund focused on reclaiming these high priority sites. However, western states would have less interest in supporting the AML Fund if they received nothing in return for their producers’ contributions.

The Bush Administration’s FY2007 budget requests that the AML fees be extended through September 30, 2007, at their current levels. This interim extension is intended to provide time for the Administration to work with Congress to change the rules governing expenditures from the AML Fund.

In the 109th Congress, there are proposals to extend the AML fees longer term as part of bills to reauthorize the abandoned mine reclamation program. H.R. 2721 (John Peterson) and S. 961 (Rockefeller) would extend the fees at their current rates through FY2019. H.R. 1600 (Cubin) would lower all of the fees by 20% and extend them through FY2020. S. 1701 (Thomas) would lower all of the fees by 20%, in different stages, and extend them through FY2015. S. 2616 (Santorum) would lower the fees by 20%, in two stages, and extend them through FY2021. This report will be updated when legislative events warrant.

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Topics: Natural Resources, Waste Management

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