[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
H.R. 3796 AND H.R. 3778, TO AMEND THE SURFACE MINING CONTROL AND
RECLAMATION ACT OF 1977 AND REAUTHORIZE AND REFORM THE ABANDONED MINE
RECLAMATION PROGRAM
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
Tuesday, March 30, 2004
__________
Serial No. 108-88
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
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______
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COMMITTEE ON RESOURCES
RICHARD W. POMBO, California, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana Eni F.H. Faleomavaega, American
Jim Saxton, New Jersey Samoa
Elton Gallegly, California Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland Frank Pallone, Jr., New Jersey
Ken Calvert, California Calvin M. Dooley, California
Scott McInnis, Colorado Donna M. Christensen, Virgin
Barbara Cubin, Wyoming Islands
George Radanovich, California Ron Kind, Wisconsin
Walter B. Jones, Jr., North Jay Inslee, Washington
Carolina Grace F. Napolitano, California
Chris Cannon, Utah Tom Udall, New Mexico
John E. Peterson, Pennsylvania Mark Udall, Colorado
Jim Gibbons, Nevada, Anibal Acevedo-Vila, Puerto Rico
Vice Chairman Brad Carson, Oklahoma
Mark E. Souder, Indiana Raul M. Grijalva, Arizona
Greg Walden, Oregon Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona George Miller, California
Tom Osborne, Nebraska Edward J. Markey, Massachusetts
Jeff Flake, Arizona Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana Ciro D. Rodriguez, Texas
Rick Renzi, Arizona Joe Baca, California
Tom Cole, Oklahoma Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas
Steven J. Ding, Chief of Staff
Lisa Pittman, Chief Counsel
James H. Zoia, Democrat Staff Director
Jeffrey P. Petrich, Democrat Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
BARBARA CUBIN, Wyoming, Chairman
RON KIND, Wisconsin, Ranking Democrat Member
W.J. ``Billy'' Tauzin, Louisiana Eni F.H. Faleomavaega, American
Chris Cannon, Utah Samoa
Jim Gibbons, Nevada Solomon P. Ortiz, Texas
Mark E. Souder, Indiana Grace F. Napolitano, California
Dennis R. Rehberg, Montana Tom Udall, New Mexico
Tom Cole, Oklahoma Brad Carson, Oklahoma
Stevan Pearce, New Mexico Edward J. Markey, Massachusetts
Rob Bishop, Utah VACANCY
Devin Nunes, California VACANCY
Randy Neugebauer, Texas Nick J. Rahall II, West Virginia,
Richard W. Pombo, California, ex ex officio
officio
------
C O N T E N T S
----------
Page
Hearing held on Tuesday, March 30, 2004.......................... 1
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming........................................... 1
Prepared statement of.................................... 4
Peterson, Hon. John E., a Representative in Congress from the
State of Pennsylvania...................................... 9
Prepared statement of.................................... 11
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia................................. 6
Prepared statement of.................................... 8
Sessions, Hon. Pete, a Representative in Congress from the
State of Texas............................................. 49
Prepared statement of.................................... 51
Letter submitted for the record.......................... 53
Statement of Witnesses:
Hohmann, Stephen, Director, Division of Abandoned Mine Lands,
Kentucky Department for Natural Resources.................. 38
Prepared statement of.................................... 40
Jarrett, Jeff, Director, Office of Surface Mining, U.S.
Department of the Interior................................. 12
Prepared statement of.................................... 14
Masterson, John A., Counsel to the Governor, Wyoming State
Capitol.................................................... 30
Prepared statement of.................................... 31
Response to questions submitted for the record........... 36
Roberts, Cecil E., President, United Mine Workers of America. 58
Prepared statement of.................................... 59
Roberts, J. Scott, Deputy Secretary, Office of Mineral
Resources Management, Pennsylvania Department of
Environmental Protection (DEP), Office of Mineral Resources
Management................................................. 26
Prepared statement of.................................... 28
Sharp, William Michael, Assistant Director -- AML Program,
Oklahoma Conservation Commission........................... 42
Prepared statement of.................................... 44
Young, Dave, Bituminous Coal Operators Association........... 55
Prepared statement of.................................... 56
Additional materials supplied:
Cantor, Hon. Eric, a Representative in Congress from the
State of Virginia, Statement submitted for the record...... 69
Citizens Coal Council, Statement submitted for the record.... 67
LEGISLATIVE HEARING ON H.R. 3796 AND H.R. 3778, TO AMEND THE SURFACE
MINING CONTROL AND RECLAMATION ACT OF 1977 AND REAUTHORIZE AND REFORM
THE ABANDONED MINE RECLAMATION PROGRAM.
----------
Tuesday, March 30, 2004
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Resources
Washington, DC
----------
The Subcommittee met, pursuant to notice, at 10:15 a.m., in
Room 1324, Longworth House Office Building, Hon. Barbara Cubin
[Chairman of the Subcommittee] presiding.
Present: Representatives Cubin, Rehberg, Cole, Pearce,
Rahall, and Tom Udall.
Also Present: Representatives Peterson and Sessions.
STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WYOMING
Mrs. Cubin. I now call the Subcommittee on Energy and
Mineral Resources' legislative hearing to order.
The Subcommittee is meeting today to hear testimony on H.R.
3796 and H.R. 3778, to amend the Surface Mining Control and
Reclamation Act of 1977 and to reauthorize and reform the
Abandoned Mine Land program.
Under Committee Rule 4(g), the Chairman and Ranking
Minority Member can make opening statements, but since we don't
have a huge crowd here today, we will certainly welcome Mr.
Peterson and Mr. Rehberg to have statements, and likewise, for
any other Members who come in.
The Subcommittee meets today to consider legislation that
focuses on problems that exist within the Abandoned Mine Land
program.
When Congress passed the Surface Mining Control and
Reclamation Act of 1977, or SMCRA, it recognized the Federal
Government's obligation to clean up years of lax regulation of
coal mining operations and direct the reclamation of abandoned
coal mines around the Nation.
To fund this reclamation effort, Congress established a fee
on coal production to be collected by the Office of Surface
Mining in the amount of 35 cents per ton for surface mined
coal, 15 cents per ton for underground mined coal, and 10 cents
per ton of lignite.
In 1977, western coal mines were just beginning to
establish themselves, and western politicians wanted to ensure
that a portion of the AML fees went back to the States from
which they were collected. A compromise was reached by which 50
percent of the share would be returned to the State of origin
and the other 50 percent would be dispersed by the Federal
Government based on historic coal production and other Federal
priorities. I believe we are aware that, despite the letter of
the law, this is not how things have worked out.
Almost $6 billion has been collected for the program since
its inception, with about $3.2 billion of that intended for
reclamation projects. The program was initially meant to take
only about 12 years to complete, but despite the enormous
amount of money already collected, it is estimated that at
least an additional $6 billion, and anywhere from 12 to 100
years will be needed to complete the work on priority one and
priority two sites, the areas of greatest concern to the health
and safety of our constituents.
The House and Senate appropriators have not been applying
the funds to the States over the years, nor have the projects
that needed to be funded been funded. In fact, a little over
half of the funds are being appropriated. Year after year,
Congress has failed to live up to its promise and States like
Wyoming are suffering the consequences.
Wyoming's unappropriated state balance now approaches $425
million, without interest, and the total unappropriated State
balance nationwide is as high as $1.1 billion. Yes, that's a
``b''. This is a huge sum of money that could be put to
legitimate reclamation needs to save the lives and protect the
environment.
As we look to reauthorize this program, we must find a
solution to the appropriations problem and compel the Congress
and Administration to live up to their commitments to return 50
percent of the State share balances to the States where they're
collected.
When the AML program was started, the vast majority of coal
production was done in the East, where most of the reclamation
work needs to be done. Over the last couple of decades, though,
coal production has migrated West. Wyoming mined coal currently
pays for over 40 percent of the AML program. Wyoming money is
being used to clean up eastern problems. I don't have a problem
with that, as long as Wyoming is treated fairly, too. The
future funding of the AML program must ensure that one region
of the country, and largely one State, does not pay for a
disproportionate share of the reclamation work in another
region from a different era.
Further, the law was amended in 1992 to use a portion of
the interest earned by the AML to fund the Combined Benefits
Fund that pays for unassigned beneficiaries, or retired mine
workers whose former companies are no longer in business and no
longer pay for their health care premiums.
Rising prescription drug costs, lower interest rates, and
an increasing pool of unassigned beneficiaries are stretching
the Combined Benefit Fund, or CBF, to its limits. I have always
believed that the CBF obligation and our debt to those workers
who toiled in the mines and mills and helped power us to
victory in World War II and beyond is a national
responsibility, not one that should be heaped upon the
shoulders of either the mine workers, a single State, or a
limited number of States.
This is a problem that requires a national solution, not
one supported solely be the AML fund. Some say the art of
compromise is disappearing, but I believe Ranking Member Nick
Rahall and I have found a way to adequately fund the health
care benefits of those retired miners, and I firmly believe
that H.R. 3796, the Cubin/Rahall bill as I call it--and I hope
Nick calls it the Rahall/Cubin bill--is a way that we can do
that.
I also strongly believe that the Cubin/Rahall proposal best
achieves the varied needs of all the AML program States, rather
than focusing on just a small handful of problems. It is
unconscionable that the Administration's proposal seeks to
single out western States and tribes who already bear a
disproportionate load of the fund and asks them to forego all
future contributions to the AML fund, just for the privilege of
seeking the appropriation of monies that they are already
authorized to receive.
The Bureau of Land Management estimates released in
February state that coal production in Wyoming's Powder River
Basin, only one of our four production sites in the State, is
expected to increase 80 by the year 2020, and rising to 646
million tons annually.
Assuming the report is correct, and under the 20 percent
reduction in the AML fee used in both bills, the State of
Wyoming would stand to lose upwards of $75 million per year of
State share revenues currently owed. Over the 14-year
reauthorization of the Administration's proposal, my
constituents would be looking at a cut of over one billion
dollars in State shares for the promise of a continued increase
in the President's budget and future appropriated dollars of
monies we can already receive under law.
There is no difference. Why would we ever think that we
would get our money. This Administration won't be around
forever to see that we do, and it's at the whims of the
appropriators. The President's proposal simply is not a viable
option.
Just this week, the House of Representatives will debate
whether it's possible to pass--I guess it's going to be this
week now--the reauthorization of the TEA-21 bill. Could you
imagine if the State of Pennsylvania, for example, was asked to
donate millions or billions of dollars to the Highway Trust
Fund and receive zero percent back on their payments? It simply
doesn't pass the straight face test, and that's the way I feel
about this.
The Cubin/Rahall proposal makes great strides toward
addressing the needs of all 24 States and tribes who
participate in the program. The Cubin/Rahall bill has already
garnered wide bipartisan support from many members of States
such as West Virginia, Kentucky, Ohio, Indiana, and Wyoming.
The list grows every week as folks become educated on the issue
and how our bill will affect them. In fact, every single State
and tribe in the AML program, all 24 of them, will receive a
boost in funding under the Cubin/Rahall bill. The same cannot
be said for the Administration's proposal.
We have before us today representatives of the broad
stakeholder interests in the AML fund. We will hear many
different perspectives and priorities about reauthorization of
SMCRA, how the Cubin/Rahall and Administration proposals
differ, and in what ways we can move forward in this process. I
will do my best to address each of these perspectives as we
move forward.
Finally, I have nothing but the utmost respect for my
colleague, Mr. Peterson, and I commit to working with him on
this issue until we can find an answer. We have worked on
issues just as tough as this in the past, from ESA reform to
passing an energy bill, and I have no doubts that we will be
able to come together for a solution. The AML fund is very
complex and contentious, but it is an issue so important that
we owe the American people a rational and common sense solution
I look forward to working with Mr. Rahall and Mr. Peterson
and other Members of Congress, as well as with the
Administration, States and tribes and all the various
stakeholders to find a solution to this.
I want to welcome John Masterson, counsel to Governor
Freudenthal of Wyoming, who will be here. He does a good job
for the State, both John and the Governor, and I look forward
to his testimony later on.
After all of that, I would now like to yield to Mr. Rahall.
[The prepared statement of Mrs. Cubin follows:]
Statement of The Honorable Barbara Cubin, Chairman,
Subcommittee on Energy & Minerals Resources
The Subcommittee meets today to consider legislation that focuses
on problems within the Abandoned Mine Land Program.
When Congress passed the Surface Mining Control & Reclamation Act
of 1977, or SMCRA, it recognized the federal government's obligation to
clean up years of lax regulation of coal mining operations and direct
the reclamation of abandoned coal mines around the nation.
To fund this reclamation effort, Congress established a fee on coal
production, to be collected by the Office of Surface Mining, in the
amount of 35 cents per ton for surface-mined coal, 15 cents per ton for
underground-mined coal, and 10 cents per ton of lignite. In 1977,
western coal mines were just beginning to establish themselves and
western politicians wanted to ensure that a portion of the AML fees
went back to the states from which they were collected.
A compromise was reached by which 50 percent of the share would be
returned to the state of origin, and the other 50 percent would be
disbursed by the federal government based on historic coal production
and other federal priorities. I believe we are aware that, despite the
letter of the law, this is not how things have worked out.
Almost $6 billion has been collected for the program since its
inception, with about $3.2 billion of that intended for reclamation
projects. The program was initially meant to take only about 12 years
to complete. But, despite the enormous amount of money already
collected, it is estimated that at least an additional $6 billion and
anywhere from 12 to 100 years will be needed to complete work on
priority one and two sites, the areas of greatest concern to human
health and safety.
The largest problem we face is that the money being collected is
not being appropriated back to the states and to the AML program as it
should be, preventing the important dirt work from being done. The
original 1977 statute made a commitment that half of the money would be
returned to the states from where they were collected.
The House and Senate Appropriators have not been applying the funds
to the states, nor to the projects that need to be funded. In fact,
little over half of the funds are being appropriated. Year after year,
Congress has failed to live up to its promises, and states like Wyoming
are suffering the consequences.
Wyoming's unappropriated state balance now approaches $425 million,
and the total unappropriated state balance nationwide is as high as
$1.1 Billion. Yes, that is billion with a ``B.'' This is a huge sum of
money that could be put to legitimate reclamation needs to save lives
and protect the environment.
As we look to re-authorize this program, we must find a solution to
this appropriations problem and compel the Congress and Administration
to live up to their commitments to return the 50% state share balances
to the states where they were collected.
When the AML program was started, the vast majority of coal
production was in the East where most of the reclamation work needs to
be done. Over the past couple of decades, though, coal production has
migrated West. Wyoming mined coal currently pays for over 40% of the
AML program. Wyoming money is being used to clean up Eastern problems.
Future funding of the AML program must ensure that one region of the
country, and largely one state, does not pay for a disproportionate
share of the reclamation work in another region from a different era.
Further, the law was amended in 1992 to use a portion of the
interest earned by the AML fund to support the Combined Benefits Fund
that pays for unassigned beneficiaries--retired mineworkers whose
former companies are no longer in business and no longer pay for their
health care premiums.
Rising prescription drug costs, lower interest rates and an
increasing pool of unassigned beneficiaries are stretching the Combined
Benefits Fund, or CBF, to its limits. I have always believed the CBF
obligation and our debt to those workers who toiled in the mines and
mills and helped power us to victory in World War II and beyond is a
national responsibility, not one that should be heaped upon the
shoulders of Wyoming and a limited number of other coal-producing
states.
This is a national problem that requires a national solution, not
one supported solely by the AML fund. Some say the art of compromise is
disappearing, but I believe Ranking Member Rahall and I have found a
way to adequately fund the health care benefits of these retired mine
workers, and I firmly believe that H.R. 3796, the Cubin/Rahall
proposal, is the way to do it.
I also strongly believe that the Cubin/Rahall proposal best
achieves the varied needs of all of the AML Program states, rather than
focusing on just a small handful of the problems. It is unconscionable
that the Administration's proposal seeks to single out Western states
and tribes, who already bear a disproportionate load of the AML fee,
and asks them to forego all future contributions to the AML Fund, just
for the privilege of seeking the appropriation of monies they are
already authorized to receive under current law.
Bureau of Land Management (BLM) estimates released in February
state that coal production in Wyoming's Powder River Basin, only one of
our coal production areas in the state, is expected to increase 80
percent by the year 2020, rising to 646 million tons annually.
Assuming the report is correct, and under the 20% reduction in the
AML fee used in both bills, the state of Wyoming would stand to lose
upwards of $75 million per year of state share revenues currently owed.
Over the 14 year re-authorization of the Administration's proposal, my
constituents would be looking at a cut of over $1 Billion in state
shares, for the promise of continued increase in the President's budget
and future appropriated dollars of monies we can already receive under
law. And yes, I again used a ``B'' there. It would be comical if the
amounts weren't so staggering.
Just this week the House of Representatives will debate whether it
is possible to pass a re-authorization of the TEA-21 bill. Could you
imagine if the state of Pennsylvania, for example, was asked to donate
millions or billions of dollars to the Highway Trust Fund, and receive
ZERO percent back upon their payments? It simply does not pass the
straight face test.
The Cubin/Rahall proposal makes great strides towards addressing
the needs of all 24 states and tribes who participate in the program.
The Cubin/Rahall bill has already garnered wide bipartisan support from
many members in states such as West Virginia, Kentucky, Ohio, Indiana
and Wyoming.
The list grows every week as folks become educated on the issue and
how our bill will affect them. In fact, every single state and tribe in
the AML program, all 24 of them, will receive a boost in funding under
the Cubin/Rahall bill. The same cannot be said of the Administration's
proposal.
We have before us today representatives of the broad stakeholder
interests in the AML fund. We will hear many different perspectives and
priorities about re-authorization of SMCRA, how the Cubin/Rahall and
Administration proposals differ, and in what ways we can move forward
in this process. I will do my best to address each of these
perspectives as we move to further consensus key issues regarding re-
authorization.
Finally, I have nothing but the utmost respect for my colleague Mr.
Peterson, and commit to working on this issue with him until we can
find an answer. We have worked on issues just as tough as this in the
past from ESA reform to passing an energy bill, and I have no doubts
we'll find a solution. The AML Fund is a very complex and contentious
issue, but it is an issue so important that we owe the American people
a rational and common-sense solution.
I look forward to working with Mr. Rahall, Mr. Peterson, other
members of the Congress, the Administration, states, tribes and all of
the various stakeholders to find a solution that is good for the
Nation, good for our environment and keeps our promises to the American
people.
I would like to welcome John Masterson, Counsel to Governor
Freudenthal of Wyoming. He does a good job for our home state, and I
look forward to his testimony, and the testimony of all the witnesses.
______
STATEMENT OF HON. NICK J. RAHALL, II, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Madam Chair. I appreciate the fact
that you are holding these hearings today, and I appreciate
your leadership on this most important issue. I totally agree
with you. We will call it Cubin/Rahall, or call it whatever you
want to call it. I would be glad to go to the top of the dome
and yell it out at any time--once we get it passed and signed
into law.
The purpose of this hearing today is to consider a rather
fundamental proposition, and it is whether we will keep the
promise or not. It is that simple, a promise made to the coal
miner.
In 1946, this was devised by the White House as a direct
result of the sweat and blood of generations of coal miners,
whose toil carried this Nation through war and peace, through
the industrial and technological revolutions. It was a promise
of cradle to grave health care that manifested itself into the
1992 Coal Act. It was a promise made to coal field citizens and
communities. In 1977, again at the White House, it was devised
as a result of the ravages of past abuses and on the souls of
the 118 individuals who perished in 1972 at Buffalo Creek in
Logan County, WV. It was a promise to reclaim their devastated
landscapes, to return their land to productive uses, and to
protect their health and safety that is part and parcel of the
landmark Surface Mining Control and Reclamation Act.
The Abandoned Mine Reclamation program has been a success.
Unlike the Superfund, this program has a track record of real,
on-the-ground progress in restoring lands and eliminating
health and safety threats to our coal field residents.
Since 1992, through the transfer of just the interest which
accrues to the Abandoned Mine Reclamation fund to the Combined
Benefit Fund, we have provided health care for tens of
thousands of elderly retired coal miners whose former employers
can no longer be identified. Many from southern West Virginia
are in this Committee room today, in the back row.
The nexus is there. The welfare of abandoned miners and of
reclaiming abandoned mines, you see, go hand in hand. To date,
the promise has been kept. Yet, at the end of this year, the
fees assessed on the coal industry which finances this effort
expire.
In this regard, it is no secret that for many years the
interests of Wyoming, the largest producer of coal, and West
Virginia, with a large legacy of abandoned coal mines and
retired coal miners, differed on the issue of reauthorizing the
Abandoned Mine Reclamation fund.
But over the course of the past 3 years, the gentlelady
from Wyoming, Barbara Cubin, and myself have engaged in dialog
on these issues. We have always respected each other's views.
We have worked in good faith, we are working in good faith, and
we have found that on at least this matter common ground can be
found between the coal fields of the Appalachian basin and
those of the Powder River Basin.
I commend the gentlelady from Wyoming. As I say, she has
truly operated in good faith and truly understands the issue
and has been successful in brokering what I term an historic
agreement here.
The result is H.R. 3796, the Cubin/Rahall bill. This
legislation keeps the promise to the retired miner, to coal
field citizens, and to the States and tribes. We have an old
adage in the Appalachian coal fields--and president Cecil
Roberts knows it very well--that dates back to 1932 and the
Harlan County coal wars. And that is, ``which side are you on?
Which side are you on?''
I had hoped the Administration would be on our side. Yet,
it chose to ignore the historic agreement that Representative
Cubin has brokered and instead has launched a torpedo into a
ship that already has some rough ocean to navigate.
I welcome the Administration's interest. I welcome Mr.
Jarrett's testimony this morning. It's always fascinating when
the Administration attempts to come forward with a pro-
environment, pro-labor proposal. But in my view, it is a flawed
proposal. I fear that under the Administration's proposal the
program's goals will not be achieved, that through loopholes
there will be a continued hemorrhaging of funds to lower
priority projects. Cubin/Rahall says protecting human health
and safety must come first.
In my view, the Administration's bill does not keep faith
with the coal States and tribes. It appears to say that
reclaiming an abandoned coal mine in Oklahoma is less important
than reclaiming an abandoned coal mine in Pennsylvania. I do
not accept that notion.
The fact of the matter is that the States and 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. Cubin/Rahall, as the gentlelady
from Wyoming has said, maintains the integrity of those
agreements. The Administration's plan does not.
Finally, the Administration's bill does not keep faith with
the retired coal miner. It does not keep the promise. Cubin/
Rahall does. Whether they reside in Salt Rock, WV or Rock
Springs, WY, our bill keeps the promise to some 50,000 retired
coal miners that their health care will continue uninterrupted.
The eyes of coal field communities and coal mining
families, ladies and gentlemen, are upon us this day. So to
this gentleman from West Virginia, enacting the principles of
Cubin/Rahall are a matter of justice, a matter of human dignity
and respect, and are those which I shall not flag nor fail in
our efforts to achieve.
Thank you, Madam Chair.
[The prepared statement of Mr. Rahall follows:]
Statement of The Honorable Nick J. Rahall, II, Ranking Democrat,
Committee on Resources
The purpose of this hearing is to consider a rather fundamental
proposition. Will we keep the promise or not.
It is that simple.
A promise made to the coal miner. In 1946. In the White House.
Devised as a direct result of the sweat and blood of generations of
coal miners whose toil carried this Nation through war and peace,
through the Industrial and the Technological Revolutions.
A promise of cradle-to-grave health care that manifested itself
into the 1992 Coal Act.
And a promise made to coalfield citizens and communities. In 1977.
Again, at the White House. Devised as a result of the ravages of past
abuses, and on the souls of the 118 individuals who perished in 1972 at
Buffalo Creek in Logan County, West Virginia.
A promise to reclaim their devastated landscapes, to return their
land to productive uses, and to protect their health and safety that is
part and parcel of the landmark Surface Mining Control and Reclamation
Act.
The Abandoned Mine Reclamation Program has been a success. Unlike
the Superfund, this program has a track record of real, on-the-ground
progress in restoring lands and eliminating health and safety threats.
And since 1992, through the transfer of just the interest which
accrues to the Abandoned Mine Reclamation Fund to the Combined Benefit
Fund, we have provided health care for tens of thousands of elderly
retired coal miners whose former employers can no longer be identified.
The nexus is there. The welfare of abandoned miners and of
reclaiming abandoned mines, you see, go hand in hand. To date, the
promise has been kept.
Yet, at the end of this year the fees assessed on the coal industry
which finances this effort expire.
In this regard, it is no secret that for many years the interests
of Wyoming, the largest producer of coal, and West Virginia, with a
large legacy of abandoned coal mines and retired coal miners, differed
on the issue of re-authorizing the Abandoned Mine Reclamation Fund.
But over the course of the past three years the gentlelady from
Wyoming and myself have engaged in a dialogue on these issues. Always
respectful of each other's views, working in good faith, we have found
that in at least this matter common ground can be found between the
coalfields of the Appalachian basin and those of the Powder River
Basin.
The result: H.R. 3796, the Cubin-Rahall bill.
This legislation keeps the promise. To the retired miner, to
coalfield citizens and to the States and tribes.
We have an old adage in the Appalachian coalfields, dating back to
1932 and the Harlan County Coal Wars. Which side are you on? Which side
are you on?
I had hoped the Administration would be on our side. Yet, it chose
to ignore the historic agreement brokered by the gentlelady from
Wyoming and myself and instead launch a torpedo into a ship that
already has some rough ocean to navigate.
I welcome the Administration's interest. It is always fascinating
when this Administration attempts to come forward with a pro-
environment, pro-labor proposal.
But in my view it is a flawed proposal.
I fear that under the Administration's bill the program's goals
will not be achieved. That through loopholes there will be a continued
hemorrhaging of funds to lower priority projects. Cubin-Rahall says
protecting human health and safety must come first.
In my view, the Administration's bill does not keep faith with the
coal States and tribes. It appears to say that reclaiming an abandoned
coal mine in Oklahoma is less important than reclaiming an abandoned
coal mine in Pennsylvania. I do not accept that notion.
The fact of the matter is that the States and tribes entered an
agreement with the federal government premised on their receiving at a
minimum a 50% return on their contributions to the program. Cubin-
Rahall maintains the integrity of those agreements. The Administration
does not.
And finally, the Administration's bill does not keep faith with the
retired coal miner. It does not keep the promise. Cubin-Rahall does.
Whether they reside in Salt Rock, West Virginia, or Rock Springs,
Wyoming, it keeps the promise to some 50,000 retired coal miners that
their health care will continue uninterrupted.
The eyes of coalfield communities and coal mining families, ladies
and gentlemen, are upon us this day.
To this gentleman from West Virginia, enacting the principles of
the Cubin-Rahall bill are a matter of justice, a matter of human
dignity and respect, and are those which I shall not flag nor fail in
my efforts to achieve.
______
Mrs. Cubin. Thank you, Mr. Rahall.
Let me ask the gentlemen if they would like to give an
opening statement. Mr. Peterson?
STATEMENT OF HON. JOHN E. PETERSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. Peterson. Thank you, Madam Chair. I look forward to
working with you. We have worked together on many issues and
have had a good friendship.
I want to thank you for holding this hearing, and I want to
thank Ranking Member Rahall for his comments, though I think
his characterization of my bill as a ``torpedo'' was a little
bit of a stretch. It's not a torpedo. It's just another point
of view that I think when we merge them we might come out with
a perfect bill. But it will take some discussion. But a
``torpedo'', that's a little explosive, a little overstretching
of the term, I think.
I want to thank Scott Roberts, who is also here today from
Pennsylvania, who we will hear from later, and all of those
witnesses who have come to help us better understand this
issue.
I hope we're all aware of the major role that Pennsylvania
played in the history of coal. As we will hear in the testimony
this morning, the Commonwealth of Pennsylvania provided the
coal that fired the boilers of trans-Atlantic steamships and
the furnaces of our once great steel mills. It was
Pennsylvania's coal that helped fuel the Industrial Revolution
and got this country through two world wars and has made the
country an industrial leader in the world today.
A majority of Pennsylvania's coal was mined before Congress
passed the Surface Mining Control and Reclamation Act in 1977.
The State still bears the scars of this unregulated historic
production. I represent a lot of those counties. Seventeen
counties in the lower half of my district was all coal country.
More than a billion dollars is still needed to clean up the
4,600 abandoned sites in Pennsylvania that are considered
dangerous or environmentally harmful, and more than 1.6 million
Pennsylvanians live less than a mile from a dangerous mine
site. Abandoned mine lands encompass more than 189,000 acres in
44 of Pennsylvania's 67 counties, and more than 3,000 miles of
stream in Pennsylvania are affected by acid mine drainage from
them. This flows down the Susquehanna and into the Chesapeake,
it flows down the Ohio into the Mississippi and into the Gulf,
so it really adds pollution to the waters that encompass this
country.
It is clear that the abandoned mines and acid mine drainage
are the number one environmental issue facing Pennsylvania, and
the bill I have introduced, H.R. 3778, addresses those needs
while maintaining the Federal commitments made to other States
in SMCRA. I am proud to say that the entire Pennsylvania
delegation has signed on to my bill.
Pennsylvania is not asking for special treatment, nor are
we asking to receive a single dollar more than is necessary to
fix our abandoned mine problems. However, under the current
system and other proposals, Pennsylvania will continue to
receive inadequate resources to address priority sites, while
States that have certified completion of their abandoned mine
sites simply see their outstanding share balance grow. H.R.
3778 will get the job done quicker, and about $3 billion
cheaper, than other proposals.
The Commonwealth has taken great steps to reclaim our
abandoned mines and to clean up our waterways over the past 50
years. I have served with five Governors, and all of them have
had initiatives to clean up these sites and have always put the
money on the table to more than match the Federal money that's
been given them.
On top of the $600 million we have received from the
Federal AML program, Pennsylvania continues to put hundreds of
millions of dollars of State money on the table to fix these
problems. Mr. Roberts will share that in his testimony today.
Clearly, Pennsylvania and its residents continue to do
their fair share, but they need our help. All citizens of this
Nation benefited from the cheap and abundant fuel we provided
at a tremendous expense to Pennsylvania's environment. Our
legacy of coal mining needs to be addressed so that we can
properly protect the health, safety and well-being of our
residents.
It reminds me of Toby Creek, a creek that runs in my
district, that when I first became a State Senator was a stream
that was red and there was no aquatic life in it. Through our
clean-up work today, it is stocked with trout from the Fish
Commission, which says that it's a stream now that is stable
for fish and aquatic life. We have a number of streams like
that in my district and other parts of the State who have been
brought back to their normal wholeness through this program.
The point I would like to make, though, that I hope is not
missed, is who pays into the fund? Do States pay into the fund,
or do consumers pay into the fund? I think those who purchase
the coal--because this fee is added to the price of the coal--
it's really paid for by the users, in my view, that use the
coal.
Now, I'm from a production State, a timber State, a coal
State, and I know whenever we sell timber or coal, we make
money. You know, our people go to work. We put a lot of people
to work in natural resources. So the States that are producing
are winners economically. But the people who really pay are the
people who use the product when this kind of a tax is imposed.
So I guess we could argue whose money really is it. Well, I
think it's the consumers of America's money, and we really
ought to be cleaning up the worst hazardous sites and bring our
environment back to where it used to be.
The Commonwealth of Pennsylvania and this Nation cannot
afford for the AML program not to be reauthorized before it
expires. I'm looking forward to working together with Chairman
Cubin and Representative Rahall and all those who are
interested to bring about a program that I think serves the
needs of America, not just Pennsylvania.
Thank you.
[The prepared statement of Mr. Peterson follows:]
Statement of The Honorable John Peterson, a Representative in Congress
from the State of Pennsylvania
Good morning. I would like to thank Chairwoman Cubin for calling
this hearing, as well as thank Deputy Secretary Scott Roberts from
Pennsylvania and the rest of our witnesses for coming today to share
their testimony.
We are all well aware of the major role Pennsylvania has played in
the history of coal. As we will hear in testimony this morning, the
Commonwealth of Pennsylvania provided the coal that fired the boilers
of transatlantic steamships and the furnaces of our once great steel
mills. It was Pennsylvania coal that helped fuel the industrial
revolution, got this country through two world wars and has made this
country an industrial leader of the world today.
A majority of Pennsylvania's coal was mined before Congress passed
Surface Mine Control and Reclamation Act in 1977, and the state still
bears the scars of this unregulated historic production. Abandoned mine
lands encompass over 189,000 acres in 44 of Pennsylvania's 67 counties
and over 3,000 miles of the commonwealth's streams are impaired by Acid
Mine Drainage.
It is clear that Abandoned Mines and Acid Mine Drainage are the
number one environmental issues facing Pennsylvania, and the bill I
have introduced, H.R. 3778, addresses those needs while maintaining the
federal commitments made to other states in SMCRA. I am proud to say
that the entire Pennsylvania delegation, from Melissa Hart in Western
Pennsylvania to Chaka Fatah in downtown Philadelphia has cosponsored
H.R. 3778.
Pennsylvania is not asking for special treatment, nor are we asking
to receive a single dollar more than is necessary to fix our Abandoned
Mine problems. However, under the current system and other proposals,
Pennsylvania will continue to receive inadequate resources to address
priority sites while states that have certified completion of their
abandoned mine sites simply see their outstanding share balance grow.
H.R. 3778 will get the job done quicker and about $3 billion cheaper
than other proposals.
The Commonwealth has taken great steps to reclaim our abandoned
mines and to clean up our waterways over the past 50 years. On top of
the $600 million we have received from the federal AML program,
Pennsylvania continues to put hundreds of millions of state money on
the table to fix this problem, as Mr. Roberts will share with us in his
testimony.
Clearly, Pennsylvania and its residents continue to do their fare
share, but they need our help. All citizens of this nation benefitted
from the cheap and abundant fuel we provided at a tremendous expense to
Pennsylvania's environment. Our legacy of coal mining needs to be
addressed so that we can properly protect the health, safety and well-
being of our residents.
The Commonwealth of Pennsylvania and this nation cannot afford for
the AML program to not be reauthorized before it expires. I am looking
forward to working together with Chairwoman Cubin and Representative
Rahall to reauthorize this vital program in a way that is fair to all
parties involved.
Thank you.
______
Mrs. Cubin. Thank you. I find it interesting, though, that
your opening statement didn't talk about any of the other
issues other than Pennsylvania. I think that reflects quite
well what the Administration's bill takes care of.
Mr. Cole, did you want to give an opening statement?
Mr. Cole. No, Madam Chair.
Mrs. Cubin. OK.
Now it is my pleasure to introduce the first panel, Mr.
Jeff Jarrett, the Director of the Office of Surface Mining from
the U.S. Department of Interior.
Mr. Jarrett, I think you know the rules here. The timing
lights will be on the table for a 5-minute oral presentation.
Your entire statement will be entered into the record. Thank
you.
STATEMENT OF JEFFREY D. JARRETT, DIRECTOR, OFFICE OF SURFACE
MINING RECLAMATION AND ENFORCEMENT, U.S. DEPARTMENT OF THE
INTERIOR
Mr. Jarrett. Thank you, Madam Chairperson. It is a
pleasure, I think, for me to be here today as well, so far
anyway.
Distinguished members of the Committee, thank you for the
opportunity to participate in this hearing and to discuss what
we all know is a very important issue raised by the approaching
expiration of the OSM's authority to collect the Abandoned Mine
Land fee.
Since it was enacted by Congress in 1977, the AML program
has reclaimed more than 260,000 acres of abandoned coal mine
sites, hazards associated with over 2.9 million feet of
dangerous highwalls, and 27,000 open mine pools and shafts have
been eliminated. Thousands of citizens who live, work and
recreate in America's coal fields are now safer because of the
AML program.
But the job is not finished. The States and tribes estimate
it will take an additional $3 billion just for construction to
abate the highest priority health and safety problems
associated with these sites, and nearly 3.5 million coal field
citizens live within a mile of these sites. Too often, that
proximity results in tragedy. And while there's no systematic
national accounting of injuries or fatalities of abandoned mine
sites, we know from anecdotal information provided from some
States that fatalities do occur.
Pennsylvania has reported 45 fatalities in the past 30
years in the anthracite coal region alone. Oklahoma has
reported 11 fatalities in the past decade. Although a
comprehensive national accounting of injuries and fatalities
would be powerful information, it is simply not necessary for
us to know that it's imperative that we finish the job we set
out to do nearly 26 years ago.
We are here today to discuss two bills, the
Administration's bill introduced by Congressman Peterson, and
the bill introduced by Congresswoman Cubin and Congressman
Rahall. You notice that I did use Congresswoman Cubin's name
first.
Mrs. Cubin. I'm not fussy about that.
[Laughter.]
Mr. Jarrett. I want to express my sincere thanks to
Congressmen Peterson, Rahall and Congresswoman Cubin, as well
as several Senators who have introduced legislation on the
Senate side. I think it speaks a lot on how Congress is viewing
this pending expiration of the AML fee. I think it speaks a lot
for those who have been engaged in this debate.
I think today is a good day for coal field citizens,
because despite some disagreements that we all know we have on
how we need to reform the AML program, I think we can at least
stand here shoulder to shoulder and say that we all care and
that we're all willing to do our best to do what is right and
fair.
I think of the two bills we're here to discuss today, both
of those bills obviously satisfy our primary objective of
reauthorizing OSM's authority to collect the needed AML fees.
Both bills recognize the inherent problem with the current
formula for allocating AML resources, and both bills focus more
AML funding on the most dangerous abandoned mine sites.
For the past 18 months, I and my staff have been consulting
with a lot of people, Members of Congress, the coal industry,
the States, looking for their opinions on what we need to
accomplish with this reauthorization effort. Of course, we
found significant agreement that the AML fee collection
authority should be extended and that fundamental changes
should be made to the structure of the program. But as we know,
that's about as much as all agree on.
In the past few weeks, as our stakeholders evaluated the
various pending proposals, I have had the opportunity to
revisit several of them. What I have found is varying support
for each bill. More importantly, what I found is a significant
misunderstanding about what each bill does. So it is my sincere
hope that over the next several weeks we can develop a common
understanding of each proposal so we can move forward together
and reauthorize the AML program in a way that makes sense and
is fair to all.
We understand and respect that each of the stakeholders can
and should fight for what is in their own best interest. But
quite frankly, that is not a luxury that I had in developing
the Administration's proposal. The problem of abandoned mine
lands is a national problem that requires a national solution.
We were constrained to devise that national solution in the
context of the existing AML program, and with significant
budget constraints.
Choices had to be made. We chose first and foremost to
fulfill the promise made to coal field citizens 25 years ago by
abating abandoned mine land hazards that pose a risk to human
health and safety. Our solution, simply put, is to put the
money where the problem is. But at the same time, we did not
want to ignore the promise made under current law to States and
tribes who have completed their AML abatement work, that are
still owed substantial State share money. Likewise, we wanted
to make sure that no State or tribe with remaining AML problems
would receive less money under a new allocation formula than
they currently receive under existing law.
That is why we worked so hard to include an additional $53
million in the Administration's 2005 budget request. Fourteen
million dollars of that additional money will be used to
supplement grants to certified States to pay off the
unappropriated balance on an expedited schedule over 10 years.
Thirty-nine million dollars of that additional money will be
used to supplement grants to noncertified States to abate the
most dangerous abandoned mine sites. So we welcome the
opportunity to clarify what we intended with our proposal and
to discuss with you the details of both bills today and in the
weeks to come. It is our sincere hope that the bills now
pending before this Committee will provide a platform for fair,
open, and honest debate and resolution of significant issues
and competing demands for the AML dollars.
Again, I want to thank this Committee for its leadership
and its interest in this important issue. I know, Congressman
Rahall, you have been among us the one I have known the
longest, and I know that you have followed and worked with this
program for 26 years now. I appreciate that. I also understand
that you spent most of the night driving up from West Virginia
to be here at this hearing today, and I think that speaks
highly of your interest in this issue. I appreciate that.
It would be my pleasure to respond to questions any of you
have.
[The prepared statement of Mr. Jarrett follows:]
Statement of Jeffrey D. Jarrett, Director, Office of Surface Mining
Reclamation and Enforcement, U.S. Department of the Interior
Madam Chairman and members of the Subcommittee, thank you for the
opportunity to participate in this hearing and to discuss the important
issues raised by the approaching expiration of the Office of Surface
Mining Reclamation and Enforcement's (OSM's) authority to collect the
Abandoned Mine Land (AML) fee.
In particular, I would like to thank Representative Peterson for
introducing the Administration's bill, H.R. 3778. The Administration's
bill seeks to reauthorize OSM's authority to collect the AML fee, set
to expire on September 30, 2004, and to make positive changes to get
this important program back on track.
I would also like to thank you, Madam Chairman, and Representative
Rahall for introducing your bill, H.R. 3796. We look forward to working
with the Congress to reach agreement on the important issues
surrounding the collection and use of the AML fee.
The Administration believes that the problem of Abandoned Mine
Lands is a national problem that requires a national solution.
In the years since it was enacted in 1977, the AML program has been
responsible for significant reclamation of abandoned coal mine sites
and for improving and protecting the lives, health and safety of
Americans living in the coalfields. However, that job is not finished.
Moreover, an inherent conflict in the way the AML program operates
makes it unlikely that the current system is even capable of finishing
the job within the lifetime of anyone living in the coalfields today.
H.R. 3778, the Administration's legislative proposal, will focus
more AML funding on the areas most damaged by this nation's reliance on
coal for industrial development and wartime production, long before the
establishment of reclamation requirements in the Surface Mining Control
and Reclamation Act of 1977 (SMCRA).
Shifting the program's resources based on historic production will
allow us to spend the money where the problems exist. By distributing
future fees based on need, the Administration's proposal will provide a
national solution for reducing the current, ongoing threats to the
health and safety of millions of citizens living, working and
recreating in our Nation's coalfields.
We cannot support the provisions in H.R. 3796 that call for
additional funding because they are inconsistent with the
Administration's budget and program priorities. Neither can we support
the allocation provisions because they do not further the goal of
expediting cleanup as quickly as those provisions contained in H.R.
3778. In addition, the Administration cannot support creating new
mandatory spending programs or allocate funds designated for AML
cleanup for other purposes.
Background
The Surface Mining Control and Reclamation Act (SMCRA) was enacted
by Congress in 1977. Since then, the Abandoned Mine Land program has
reclaimed thousands of dangerous sites left by abandoned coal mines,
resulting in increased safety for millions of Americans. Specifically,
more than 260,000 acres of abandoned coal mine sites have been
reclaimed through $3.4 billion in grants to States and Tribes under the
AML program. In addition, hazards associated with more than 27,000 open
mine portals and shafts, 2.9 million feet of dangerous highwalls, and
16,000 acres of dangerous piles and embankments have been eliminated
and the land has been reclaimed. Despite these impressive
accomplishments, $3 billion worth of high priority health and safety
problems remain to be reclaimed.
Even if all collected AML fees and the unappropriated balances of
$1.5 billion were used, we would still have insufficient funds to
address the health and safety-related coal mining problems because of
the fund's current distribution formula. Moreover, under the current
distribution formula, it would take an average of 47 more years to
complete reclamation. As a result, dangerous sites would continue to be
a threat to life and health for almost another half-century. In some
cases, remediation would take nearly a century.
The current allocation system makes it impossible to complete the
job of reclamation in the way that Congress intended. The September
30th expiration of the current AML fee collection authority is our
opportunity to reform that authority and the distribution formula, and
put it on track to finish the job of reclaiming abandoned coal mine
problems.
SMCRA's Fee Allocation Problem
SMCRA requires that all money collected from tonnage fees assessed
against industry on current coal production ($0.35/surface mined ton;
$0.15/deep mined ton; and $0.10/lignite) be deposited into one of
several accounts established within the AML fund. Fifty percent (50%)
of the fee income generated from current coal production in any one
state is allocated to an account established for that state. Likewise,
50% of the fee income generated from current coal production on Indian
lands is allocated to a separate account established for the tribe
having jurisdiction over such Indian lands. The funds in these state or
tribal share accounts can only be used to provide AML grant money to
the state or tribe for which the account is established.
Twenty percent (20%) of the total fee income is allocated to the
``Historic Production Account.'' Each state or tribe is entitled to a
percentage of the annual expenditure from this account in an amount
equal to its percentage of the nation's total historic coal
production--that is, coal produced prior to 1977. As is the case with
state or tribal share money, each state or tribe must follow the
priorities established in SMCRA in making spending decisions using
money from the historic production account. However, unlike the
allocation of state or tribal share money, once the state or tribe
certifies that all abandoned coal mine sites have been reclaimed, it is
no longer entitled to further allocations from the historic production
account.
Ten percent (10%) of the total fee income is allocated to an
account for use by the Department of Agriculture for administration and
operation of its Rural Abandoned Mine Program (RAMP).
The remaining 20% of the total fee income is allocated to cover
Federal operations, including the Federal Emergency Program, the
Federal high-priority reclamation program, the Clean Streams Program,
the fee compliance program, and overall program administrative costs.
In the early years of AML program, most of the fees collected went
directly to cleaning up abandoned coal mine sites. Some states and
tribes with fewer abandoned coal mine sites finished their reclamation
work relatively soon. However, under current law, those states and
tribes are still entitled to receive half of the fees collected from
coal companies operating in their states. In the early years of the
program this didn't cause a considerable problem, because the Eastern
states, where 93% hazardous sites are located, were also the states
where most of the coal was being mined and were, therefore, receiving
the majority of the AML fees.
However, beginning in the 1980s, a shift occurred whereby the
majority of the coal mined in this country began coming from mines in
Western states. This shift resulted in the allocation of a large part
of AML fees to states that have no abandoned coal mine sites left to
clean up. As a result, each year less and less money is being spent to
reclaim the hundreds of dangerous, life-threatening sites. Currently,
only 52% of the money appropriated each year is being used for the
primary purpose for which is it collected--reclaiming high priority
abandoned coal mine sites. That percentage will continue to decline
each year unless the law is reauthorized and amended to correct this
fundamental problem.
The Administration has proposed legislation that accomplishes four
primary objectives:
Extend the authorization of fee collection authority
while balancing the interests of all coal states and focusing on the
need to accelerate the cleanup of dangerous abandoned coal mines by
directing funds to the highest priority areas so that reclamation can
occur at a faster rate, thereby removing the risks to those who live,
work and recreate in the coalfields as soon as possible;
Honor the commitments made to states and tribes under the
current law;
Provide additional funding for the 17,000 unassigned
beneficiaries of the United Mine Workers of America Combined Benefit
Fund (CBF) while protecting the integrity of the AML fund; and,
Provide for enhancements, efficiencies and the effective
use of funds.
These objectives recognize the need to strike a balance that
addresses both the ongoing problems faced by states with high priority
coal-related health and safety issues while not placing those states
where the majority of fees are currently generated at a disadvantage.
Bill Analysis
A. Changes to the Allocation Formula
H.R. 3778 would change the current statutory allocation of fee
collection which is progressively directing funds away from the most
serious coal-related problem sites. All future AML fee collections,
plus the existing unappropriated balance in the RAMP account, will be
directed into a new single account. Grants to noncertified states or
tribes (those states and tribes that still have unreclaimed coal
problems) will be distributed from that single account based upon
historic production, which is directly related to the magnitude of the
AML problems. As a result of these modifications, H.R. 3778 completes
the reclamation of the highest priority work while avoiding $3.2
billion in collections that would have been necessary under current law
to achieve the same result. At the same time, H.R. 3778 will remove
more people at risk from the dangers of health and safety coal sites
(142,000 per year or an increase of 87%).
H.R. 3778 provides that no noncertified state or tribe could
receive an annual allocation that would exceed 25 percent of the total
amount appropriated for those grants each year. This provision would
ensure that no one State receives too high a percentage of the grants
in any one year. Any State whose allocation would otherwise exceed this
cap would recoup the difference in the program's latter years as other
States and tribes complete their high-priority coal-related projects
and are no longer eligible for future grants.
Existing state and tribal share accounts will not receive any
additional fees collected after September 30, 2004. The current
unappropriated balance in the state and tribal share accounts will be
distributed in one of two ways, depending on certification status:
Certified states and tribes would receive the current unappropriated
balances in their accounts on an accelerated basis in payments spread
over ten years (FY 2005-2014), subject to appropriation. There would be
no restrictions on how these monies are spent, apart from a requirement
that they be used to address in a timely fashion any newly discovered
problems related to abandoned coal mines. Non-certified states and
tribes will receive their unappropriated balances in annual grants
based upon historic production. If a noncertified state or tribe
completes its abandoned coal mine reclamation before exhausting the
balance in its state share account, it will receive the remaining
balance of state share funds in equal annual payments through FY 2014.
Noncertified states and tribes that exhaust their unappropriated state
share balances before completing their abandoned coal mine reclamation
will continue to receive annual grants from the newly-created single
account in amounts determined by their historic coal production.
In contrast to the Administration's proposal, H.R. 3796 would spend
approximately $750 million more by continuing to allocate 50% of the
fees collected to state or tribal share accounts regardless of whether
the state or tribe has any unreclaimed high priority coal-related AML
problems. In addition, if a certified state has public domain lands
available for leasing, H.R. 3796 would amend current law to transfer
revenues generated by the Mineral Leasing Act that currently go to the
Treasury, in amount equal to the existing unappropriated balance of
that state's State-share account. An amount equivalent to the amount
provided to the state from Mineral Leasing Act revenues would then be
debited from that state's State-share account and reassigned to the
historic production. As a result, certified states and tribes with
leasable public domain lands would receive their current unappropriated
State-share balance as well as an amount equivalent to their 50% State-
share distribution going forward. These mandatory payments of
approximately $1 billion over ten years would neither be subject to
Congressional appropriation nor contribute to our broader objective of
AML reform.
B. Elimination of AML funding for the RAMP Program
H.R. 3778 amends SMCRA to remove the existing authorization of
expenditures from the AML fund for the Rural Abandoned Mine Program
(RAMP) under the jurisdiction of the Secretary of Agriculture. No funds
have been appropriated for this program, which reclaimed lower priority
abandoned mine land (AML) sites, since FY 1995. Elimination of this
authorization would facilitate the redirection of AML fund expenditures
to high-priority sites. Accumulated unappropriated balances in the RAMP
account would be made available for reclamation of high-priority coal-
related sites.
H.R. 3796 also endorses eliminating future allocations to the RAMP
fund. However, it would reassign those funds to offsetting any deficit
in the net assets of the United Mine Workers of America Combined
Benefit Fund, rather than making those funds available for its intended
purpose of AML reclamation.
C. AML Reclamation Fee Rates
H.R. 3778 extends reclamation fee collection for 14 years and
modifies reclamation fee rates in an effort to closely match
anticipated appropriations from the AML fund with anticipated revenues
during that time. The proposed changes would maintain the current fee
structure while uniformly reducing the fee rates by 15 percent for the
five years beginning with FY 2005, 20 percent for the next five years,
and 25 percent for the remaining years through September 30, 2018.
Those rates are based on an analysis of coal production trends and the
resultant impacts on reclamation fee receipts. The Administration's
proposed uniform graduated fee reductions make the program revenue
neutral and possibly have the added benefit of resulting in lower costs
to consumers. The new expiration date reflects the time required to
collect revenues sufficient to reclaim all outstanding currently
inventoried coal-related health and safety problem sites within 25
years. Finally, existing language requiring the Secretary to establish
a new fee rate after September 30, 2004, based on CBF transfer
requirements would be removed.
H.R. 3796 proposes to extend the fee collection authority for 15
years to 2019. H.R. 3796 also proposes to lower the reclamation fee
rates by 7 cents per ton for surface-mined coal, 3 cents per ton for
underground-mined coal, and 2 cents per ton for lignite. This is a
reduction overall of 20 percent. However, since reclamation would take
significantly longer than under H.R. 3778, fee collection authority
would need to be reauthorized again to raise sufficient revenue to
eliminate the AML inventory.
D. United Mine Workers of America Combined Benefit Fund (CBF)
In the Energy Policy Act of 1992, Congress established the United
Mine Workers of America Combined Benefit Fund (CBF). The CBF provides
health care and death benefits to certain retired union coal miners and
their dependents and survivors. Approximately 40,000 of the CBF's
beneficiaries have been ``assigned'' to responsible mining companies.
These companies pay a yearly premium into the CBF on behalf of each of
their assigned beneficiaries. However, approximately 17,000 additional
beneficiaries cannot be assigned to any company because neither the
original employer nor any other responsible company remains in
existence.
Under the law creating the CBF, premiums for unassigned
beneficiaries are to be assessed equally against all of the companies
participating in the CBF. To reduce the financial burden on the
industry, however, Congress mandated the transfer of interest earned on
the AML fund to the CBF to defray the cost of health care benefits for
these unassigned beneficiaries. Historically, these interest transfers
have met nearly all of the CBF's unassigned beneficiary premiums. It is
our understanding that, until recently, no mining companies have had to
pay unassigned beneficiary premiums since the CBF was created.
The transfer provision in SMCRA has been interpreted to permit a
yearly transfer from the AML Fund to the CBF of up to, but not more
than, $70 million per year. H.R. 3778 amends SMCRA by adding a new
provision that governs transfers from the fund to the CBF for health
benefits for unassigned beneficiaries. The Administration's bill would
replace and improve upon the existing provisions in SMCRA by removing
the $70 million per year cap, and by making interest credited to the
account in prior years available. These measures would protect the
integrity of the AML fund while providing additional monies to meet CBF
needs for unassigned beneficiaries.
H.R. 3796 would require transfer of all interest projected to be
``earned and paid to the Combined Fund'' each fiscal year. We believe
that the authors meant to refer to interest earned and paid to the AML
fund, not the Combined Fund. If so, H.R. 3796 would remove the $70
million cap on annual transfers. It also would expand the allowable
uses of the transfers to include payment of any deficit in the net
assets of the CBF, not just expenditures for health care benefits for
unassigned beneficiaries. Both the stranded interest and the
unappropriated balance of the Rural Abandoned Mine Program (RAMP)
allocation (currently approximately $302 million) would be available
for transfer to the CBF in FY 2004 and future years. This transfer
language appears to strike the provision in existing law that limits
transfers to the amount needed to cover specific CBF expenditures. H.R.
3796 seemingly requires the transfer of all interest and other
available funds without limitation.
E. Minimum Program Funding
H.R. 3778 provides that no State or tribe with high-priority
problem sites would receive an annual allocation of less than $2
million. This provision would ensure that States and tribes will
receive an amount conducive to the operation of a viable reclamation
program.
H.R. 3796 requires a minimum annual grant of $2 million for all
states and tribes regardless of their certification status. Any
shortfalls in appropriations for this purpose are to be made up from
the Federal share account. It also adds Tennessee as a minimum state,
without regard to the existing SMCRA requirement for a state to
maintain an active regulatory (Title V) program before it is entitled
to receive AML grants.
F. Remining
Both bills extend the remining incentives existing in current law,
which provide reduced revegetation responsibility periods for remining
operations and an exemption from the permit block sanction for
violations resulting from an unanticipated event or condition on lands
eligible for remining. H.R. 3778 makes these incentives permanent by
removing the expiration date while H.R. 3796 extends the expiration
date to 2019. Additionally, H.R. 3778 authorizes the Secretary to adopt
other remining incentives through the promulgation of regulations,
thereby leveraging those funds to achieve more reclamation of abandoned
mine lands and waters. H.R. 3796 does not provide for the creation of
additional remining incentives.
G. AML Reclamation Priority
H.R. 3778 preserves the autonomy of the states and tribes by
maintaining the current priority structure and requires that
expenditures from the AML fund on eligible lands and water for coal-
related sites reflect the listed priorities in the order stated. H.R.
3778 focuses on collecting enough money to provide each state or tribe
with sufficient funds to complete its highest priority AML sites. The
Administration's bill will accomplish these objectives by providing
funds for all States and tribes to finish in less time than under a
continuation of the current program: on average 22 years sooner, but in
many cases, decades sooner.
H.R. 3796 amends the priority system to eliminate the general
welfare component of priorities 1 and 2, leaving public health and
safety as the only elements of those priorities. H.R. 3796 also
requires that Priority 3 work be undertaken only in conjunction with a
Priority 1 or 2 project; eliminates Priority 4 (public facilities); and
eliminates Priority 5 (development of publicly owned land). Finally,
for State- share and historic production grants to noncertified States,
H.R. 3796 requires strict adherence to the revised priority rankings.
Both H.R. 3778 and H.R. 3796 remove the existing 30 percent cap on
the amount of a State's allocation that may be used for replacement of
water supplies adversely affected by past coal mining practices. This
change is consistent with our goal of focusing fund expenditures on
high-priority problems. The lack of potable water is one of the most
serious problems resulting from past coal mining practices,
particularly in Appalachia.
H. Emergency Reclamation Program
H.R. 3778 proposes amending the emergency reclamation program for
abandoned mine land problems that present a danger too great to delay
reclamation until funds are available under the standard grant
application and award process. H.R. 3778 would revise this section by
authorizing the Secretary to adopt regulations requiring States to
assume responsibility for the emergency reclamation program. This
change would promote efficiency and eliminate a redundancy in that
potential emergencies would be investigated only by the State, not by
both the OSM and the State, as occurs under the current program.
H.R. 3796 does not alter the existing emergency reclamation program
structure.
I. Reclamation Set-Aside Programs
H.R. 3778 revises future reclamation set-aside program provisions
to specify that expenditures from funds set aside under this program
may not begin until the State or tribe is no longer eligible to receive
an allocation from AML grant appropriations under SMCRA. The revised
date in the Administration's proposal is more consistent with the
purpose of this set-aside, which is to provide States and tribes with a
source of funding to address abandoned mine land problems that remain
or arise after funds are no longer available under SMCRA.
H.R. 3796 removes the authorization for this set-aside.
Both bills provide that states and tribes can set-aside up to 10%
of their historic production grant funds in an interest-bearing trust
fund for comprehensive abatement and treatment of acid mine drainage in
qualified hydrologic units. Both bills provide for simplification and
streamlining of the requirements for the acid mine drainage treatment
trust fund set-aside program, including removal of the requirement for
Secretarial review and approval of individual treatment plans.
J. Completion of Coal Reclamation--Certification
H.R. 3778 establishes the conditions under which a State or tribe
may certify that it has completed all coal-related reclamation of
eligible lands and waters. Under the existing provisions, the State or
tribe would then be eligible to spend its State share allocation on
sites impacted by mining for minerals other than coal. The draft bill
would amend this section by revising SMCRA to clarify that
certification means that all coal-related high-priority health, safety
and environment reclamation has been achieved. This subsection
previously did not specify which priorities must have been met. H.R.
3778 also allows the Secretary to make the certification for a State or
tribe in which all coal-related reclamation work has been completed.
We are aware of recent information regarding the current status of
coal reclamation in Wyoming. I have asked my office to review this
information and to report back to me so that we can determine what
effect, if any, this may have on the reauthorization proposals.
H.R. 3796 maintains current certification procedures.
K. Black Lung Excise Tax Collection and Auditing
H.R. 3778 authorizes the expenditures for collection and audit of
the black lung excise tax. This revision would synchronize collections
and allow OSM auditors to conduct audits of black lung excise tax
payments at the same time as they audit payment of reclamation fees
under SMCRA. It would promote governmental efficiency, eliminate
redundancies, and reduce the reporting and record keeping burden on
industry.
H.R. 3796 does not contain a similar provision.
Conclusion
The problems posed by mine sites that were either abandoned or
inadequately reclaimed prior to the enactment of SMCRA do not lend
themselves to easy, overnight solutions. To the contrary, these long-
standing health and safety problems require legislation that strikes a
balance by providing States and tribes with the funds needed to
complete reclamation, while fulfilling the funding commitments made to
States and tribes under SMCRA. This is the inherent tension that
currently exists in SMCRA. We look forward to an open and a productive
debate to amend and reform OSM's fee collection authority to fulfill
the mandate of SMCRA to address these high-priority healthy and safety
concerns in a manner that directs the funds to the States and tribes
where they are needed. As noted earlier, the current fee collection
authority is scheduled to expire in just over six months, on September
30, 2004. There is much work to be done to ensure that reforming the
AML fee collection authority, allocation formula, and other needed
reforms become a reality. We believe that H.R. 3778 addresses these
problems in a manner that is fair to all States and supports the
Administration's budget and program priorities.
We stand ready to assist the Committee. We thank the Committee for
this opportunity to present the Administration's views on these
important legislative proposals and we look forward to working together
as Congress continues consideration of these important measures.
______
Mrs. Cubin. Thank you, Mr. Jarrett.
I want to start off by clearing up one thing. The first
thing I want to bring up is, wasn't it about a year ago, a
little over a year ago, that you came to my hideaway and we
went over the white paper that you had written, and I let you
know that that would in no way be suitable to me or other
Members?
Mr. Jarrett. That's correct.
Mrs. Cubin. You talk about wanting to compromise and get
something done, but isn't that white paper virtually identical
to the bill that you have produced for the Administration?
Mr. Jarrett. With respect to the allocation formula, that
is correct.
Mrs. Cubin. So how can you talk to me about compromising
when you didn't even call me and let me know, or call Mr.
Rahall, or let anyone know, that that bill was going to be put
in the President's budget? I mean, that doesn't speak of
compromise to me. Does it to you?
Mr. Jarrett. We actually did meet with your staff prior to
introducing that bill. But quite frankly, the dilemma that we
had--and we really talked to a lot of people. It was our
original hope and plan to work with the States, to try to make
sure all of the States--
Mrs. Cubin. It was your original hope and plan, but it
wasn't, in fact, what you did.
Mr. Jarrett. That's correct.
Mrs. Cubin. Thank you.
And then, I have to take exception with another remark you
made, about how hard you worked to get the $53 million in the
President's budget. Isn't it true that Senator Thomas and I,
during the energy bill discussion over on the Senate side,
extracted an agreement from the Administration in writing, that
they would pay Wyoming its over $400 million share?
Mr. Jarrett. I'm not--
Mrs. Cubin. Let me tell you that it is true.
Mr. Jarrett. OK.
Mrs. Cubin. You know, I'm sitting here wondering what kind
of luck we are going to have. I would really hope that you
would try to compromise with us more, that you would work with
us, rather than ``boom, this is my way'', because that's the
way I see the negotiations that have taken place between you
and me so far.
Now, I want to ask you a question, if this statement is
wrong, that for the privilege of paying over the term of your
bill--Wyoming has the privilege of paying over a billion
dollars under your bill, and what we receive for having done
that is we might or might not be able to collect the $425
million that we're owed now. Is that wrong?
Mr. Jarrett. That is not wrong.
Mrs. Cubin. So what is the rationale then for that
proposal?
Mr. Jarrett. The AML program, over the past couple of
years, I think, based on many discussions that I had, was
pretty widely criticized as a program that simply is not
getting the job done. So our proposal came after we evaluated
what it was about the program that was not allowing us to get
the job done.
Again, we focused on what we believe the primary purpose of
the AML program is, and that is to reclaim abandoned coal mine
sites on a priority basis.
Mrs. Cubin. But you didn't take into consideration any of
the changes that have, in fact, taken place over--if you want
to call it the demographics--over the last 25 years.
Your testimony states that the Administration cannot
support mandatory spending or allocations. So does that mean
that you don't support our bill's mandatory grants to minimum
program States?
Mr. Jarrett. That is what that means.
Mrs. Cubin. Since you appear to be expanding your mission
to include taxation, does OSM or the Department of the Interior
provide any oversight or audits of the Combined Benefits Fund?
Mr. Jarrett. The Combined Benefits Fund is audited by the
audit firm of KPMG. Those audits are provided to us. In
addition, the Office of Inspector General did an audit of the
CBF some years ago.
Mrs. Cubin. What interest rate is the AML fund earning?
Mr. Jarrett. Currently, the fund is earning, I believe,
about 4.17 percent.
Mrs. Cubin. Is there any way to increase that interest
earned on the fund, and what are the investments that you're
making that produce that interest?
Mr. Jarrett. The statute requires that investments be made
in government securities. Over the course of the past year and
a half, we have worked with the stakeholders, the Department of
Treasury, as well as the managers of the Combined Benefits
Fund, to restructure those investments. So of the total balance
in the fund, about $1.3 billion is now invested in 10-year
government securities.
Prior to that, the fund was making less than 1 percent.
Mrs. Cubin. So how long has it been making 4.5 percent?
Because that was the figure that I knew, less than 1 percent.
Mr. Jarrett. Again, we started reinvesting the
unappropriated fund balance over the course of the past year,
and we've obviously dollar averaged that a little. So on a
quarterly basis, as existing investments matured, we reinvested
those dollars into longer term funds. All of that has happened
over the course of the past year.
Mrs. Cubin. My time is up. But I do want to ask of you that
you deal with the negotiations that need to take place in a
more and open way than you have in the past. I certainly will
do the same.
Mr. Jarrett. We appreciate the opportunity to work with
you.
Mrs. Cubin. Mr. Rahall.
Mr. Rahall. Thank you, Madam Chair.
I appreciate your testimony, Mr. Jarrett. You know, you
have a tough job.
Mr. Jarrett. You say that every time we meet. I'm starting
to believe it.
[Laughter.]
Mr. Rahall. As you mentioned in your testimony, I am
probably the only member of this Congress that was around in
1977 and sat on the Conference Committee. The late, great Mo
Udall appointed me as a freshman Member of Congress at that
time to serve on the Conference Committee that wrote SMCRA. I
have seen a lot of OSM Directors come and go and testify before
this Committee. But you really have a tough job. Let me just
say that at the beginning.
One of your predecessors, a gentleman by the name of Bob
Durham, former OSM Director, advanced a policy which I believe
corrupted the AML project priority ranking system. You may have
heard in my opening testimony one of my attacks against the
Administration's proposal was the loophole that allows some of
the money to get to lower priority projects, in my opinion.
Under that corruption, what were formerly Priority 3 projects
could be deemed to be Priority 2 projects, under the guise of
protecting the general welfare. Only one State took advantage
of that loophole.
My question is, what is your opinion of that policy change
and do you support it?
Mr. Jarrett. Congressman, we actually looked at that issue.
You are correct. The State of Pennsylvania added $3.8 billion
to the Priority 2 inventory sites that had previously been
Priority 3 sites.
I would make a couple of points about that. Number one,
when we provided some analysis on the Cubin/Rahall proposal, as
well as the Administration's proposal, we did not take into
account the Priority 2 general welfare sites that are on the
inventory. So we discounted those when we looked at how much
money do we really need to collect to get that job done.
Furthermore, it is our understanding and belief that no
money in Pennsylvania has actually been spent on any of those
Priority 2 general welfare problems. To me, that signals that
even Pennsylvania recognizes that, whether they call them
Priority 3's or Priority 2's, they are less important than the
health and safety Priority 1's and Priority 2's.
So while I would not think it would be appropriate to
remove them from the inventory altogether, I don't have any
problem with downgrading them once again to a Priority 3. I
don't see any problem--
Mr. Rahall. You don't consider that as somehow not keeping
faith with the original intent of SMCRA?
Mr. Jarrett. I think the original intent of SMCRA was to
reclaim all of the sites on a priority basis. To me, Priority 1
and Priority 2 health and safety problems are more important
than even the most serious environmental problem.
Mr. Rahall. Let me go to another area that I understand you
have a great deal of fascination with, and that's the area of
remining.
For the record, I think it should be noted that every
single remining incentive in Federal law today has my name on
it.
Mr. Jarrett. I understand that. We always appreciated it
when I was with the States.
Mr. Rahall. Well, on every remining provision I have
sponsored, the EPA even has a section that I understand it
calls the ``Rahall Remining Permits''.
Mr. Jarrett. That's correct.
Mr. Rahall. With that said, I simply cannot understand the
provision in the Administration's proposal that would have coal
operators, through the AML fees they pay, finance their
competition by allowing AML funds to be used to subsidize the
costs of bonding in a remining operation.
I would like to ask you if you think it's a good idea, or
could you explain why you think it's a good idea for Wyoming
and West Virginia coal producers to not only pay to reclaim
abandoned coal mines, but also to pay other companies to mine
coal in remining areas?
Let me say also, that I understand of the some 328 remining
permits, Rahall remining permits, over 300 have been done in
the State of Pennsylvania.
Mr. Jarrett. That's correct.
We started looking at a lot of different ideas of how we
could use AML dollars to leverage reclamation through remining.
Bonding was one of the ideas that we considered. At the end of
the day, however, rather than put that provision right in the
Administration's proposal, we opted to put in the proposal a
provision that would allow the Secretary to develop regulations
to develop those types of incentives.
The reason for that, quite frankly, is we thought we needed
to work with the States because the bottom line was most of
those provisions would be financed by the States, through the
States AML program, that we needed to work with each of those
States to better evaluate and determine under which
circumstances AML dollars, for example, could be used to
support bonding assistance to encourage operators to get
remining done.
So I guess the short of what I'm telling you is that we
don't have all of the answers. That's the reason our proposal
simply gives us the authority to do some outreach and develop
regulations to get that job done.
Overall, we have a lot of great remining incentives, thanks
to you--I agree with that statement--in place right now that
are hugely successful in those States who aggressively and
responsibly pursue those. But we still believe that we have
some gaps where we could get a lot more AML reclamation
completed at a much lower cost if we can come up with the
proper ways to leverage AML dollars.
I can give you a great example that goes back to my
Pennsylvania days. We had a site that was several hundred
acres. It had serious acid mine drainage throughout the site.
An operator wanted to remine that particular site, but the only
way under Pennsylvania's regulatory program that could occur is
through what Pennsylvania at that time called the alkaline
addition policy. That meant the operator would have to pay to
bring in, as a best management practice, a lot of alkaline
material so that the mining operation would not result in more
acid mine drainage. The cost of bringing that alkaline material
in simply put the economics beyond the operator's reach.
What we would like to have been able to do is spend a
little bit of AML dollars to purchase materials for that site,
and then let the operator do the remining, do the reclamation,
and we could have cleaned up a multimillion dollar site for
literally pennies on the dollar. The problem was we simply
didn't have the ability to use AML dollars and there were no
other dollars available. So there are those types of incentives
that we are looking for to encourage reclamation through
remining.
Mr. Rahall. Thank you.
Thank you, Madam Chair.
Mrs. Cubin. Where are you from, Mr. Jarrett?
Mr. Jarrett. I'm from West Virginia.
Mrs. Cubin. You resided awhile in Pennsylvania?
Mr. Jarrett. I resided in Pennsylvania from 1987 until 2
years ago.
Mrs. Cubin. Thank you.
Mr. Peterson.
Mr. Peterson. Thank you, Madam Chairman.
I guess I still have high hopes. I don't have the history
on this issue of all that has gone on in the past, so
hopefully, maybe I can bring a perspective where all things are
negotiable until we come to a solution, because I don't have
the scars, I guess, that have been felt about this issue.
But I would like to ask, Mr. Jarrett, you said 3.5 million
people live near dangerous sites?
Mr. Jarrett. Yes.
Mr. Peterson. And 1.6 million of them are in Pennsylvania.
Well, I think the gravity of the Pennsylvania problem is that
that's 46 percent of them. That shows you that Pennsylvania is
the State with the dangerous sites and the sites that are
causing great pollution, not only to Pennsylvania but to the
Mississippi River and the Chesapeake Bay. So the Pennsylvania
problem is a problem that's a national problem. The Nation
benefited from our coal.
The Chairman said that I spoke of Pennsylvania. Well,
that's what I represent. That's what I understand the most. I'm
hear to learn about the rest of the States and their issues.
But I do bring the Pennsylvania perspective because I've worked
with three or four Governors on this issue. So it's an issue
that we have not made progress on as quickly as we had hoped.
Every Governor, from Thornburg to Casey, to Ridge, to Rendell,
have had this on their agenda, because it's the scars that our
State is covered with.
Each Administration I think has tried to put up significant
State dollars to match the Federal dollars. In fact, most times
we were kind of always waiting for the Federal dollars because
Pennsylvania was poised and ready--and I think Scott Roberts
will tell us that today when he speaks. I'm not speaking for
him.
Isn't the greatest scar in the country left from coal
mining in Pennsylvania?
Mr. Jarrett. That is correct. We estimate about 34 percent
of all of the abandoned mine land problems are in Pennsylvania.
Mr. Peterson. But 46 percent of the people that live near
Pennsylvania, which is even a larger percentage, both of those
percentages I think are pretty significant when you think of
all the States that are involved here.
I want to thank you for your work. If I were drafting the
bill, I might have done it a little differently, personally.
But that's what the process is about. I think that hopefully
this process can allow us to negotiate in good faith. I just
hope that's the case. When I disagree with the Administration
on something, I will be siding with others. But I think there
has to be room here where we can find a solution, because it's
so important that we accomplish it. I hope we can get by the
States, because it's a country problem. It's a U.S. problem.
And again I say, the consumers pay this tax, who use the coal,
and they're from all over the country.
Though I do think States should forever receive some
benefit, that's one part of the bill I would have written
differently. I don't think we should have a limit of when
States could--So I think there's lots of room for compromise,
but I hope we can get past the history and get on to a
meaningful compromise. I would hope the Administration would
come to the table with that approach. Let's somehow get this
done.
Mrs. Cubin. Thank you, Mr. Peterson.
I would like to respond that I would submit that the coal
that's being produced today is benefiting the whole Nation,
especially when you consider the price of gas. You know, I
don't really think it's right to say there was a greater
contribution later, but I do accept that there are more sites
in Pennsylvania that need to be taken care of. I just think
this bill is slanted so far toward Pennsylvania and away from
the other producers.
Mr. Peterson. Would the gentlelady yield?
Mrs. Cubin. Certainly.
Mr. Peterson. I would like to, at some point in time, if
our schedule permits, I would like to have you see some of the
sites, a quick flyover. We could fly up and back real quick. I
know Secretary Norton, when she was there, she was shocked at
what she saw, at what is there. The southern part of
Pennsylvania was decimated. Unfortunately, all those waste coal
piles and the way it was done, under no laws, no regulations,
the citizens of Pennsylvania and the country, the waterways of
the country, are paying the price for it because it goes right
into the Chesapeake.
I guess the wonderful part is I have seen in my district
two major streams, Toby Creek and--I can't think of the other
one--that have had such a wonderful transformation. It was
remining, thank you, Congressman Rahall. Remining was part of
those contracts. But the transformation in the environment and
the land, cleaning those sites up has been wonderful. They have
become a part of beautiful wild Pennsylvania in a few years.
But we have a lot of work yet to do there, and we just hope
that we can come out with a compromise that everybody does well
with. We want to work with you toward that end.
Mrs. Cubin. Thank you very much.
Thank you,.Mr. Jarrett. The panel may have more questions
that they will send to you in writing, and the record will be
held open for 10 days for those responses.
Mr. Jarrett. Thank you.
Mrs. Cubin. Thank you.
Now I would like to call the second panel, J. Scott
Roberts, the Deputy Secretary of the Office of Mineral
Resources Management from the Pennsylvania Department of
Environmental Protection; John Masterson, Counsel to the
Governor for the State of Wyoming; Steve Hohmann, Director of
the Division of Abandoned Mine Lands, Kentucky Department for
National Resources; and William Michael Sharp, Assistant
Director, AML Programs, Oklahoma Conservation Commission.
That's it.
Mr. Rahall. Madam Chair, while the panel is taking its
seat, I would like to ask permission of the Chair and members
of the Committee if I might recognize those retired coal miners
that are with us at this hearing today from across the coal
fields. I would like to call their names and have them stand up
to be recognized by my colleagues and all of us in this room
and all of us in this Nation who have benefited from their hard
work and toil over so many decades.
Mr. Robert Wade, Mr. Francis Martin, Mr. Jim Wills, Mr.
Bobby Hicks, Mr. Paul Deardon, Mr. Charles Petri, Mr. Jimmy
Austin, Mr. Kenny Lively, Mr. Sam Gregory, Mr. Bill Baily, Mr.
Jerry Kerns, Mr. Jason Hawk, Mr. Mark March, and Mr. Bryan
Lacy. Have I missed anybody?
We salute each of you.
[Applause.]
Mrs. Cubin. Thank you, Mr. Rahall. I, too, welcome you
here. Actually, I'm very gratified that you came. I know you
had to take the time and probably drive up here. We do
appreciate that, because this is an issue that affects the
whole country and it needs to have a solution for the whole
country. Thank you.
Now I will start by recognizing J. Scott Roberts, who I
already introduced as the Deputy Secretary for the Office of
Mineral Resources Management.
STATEMENT OF J. SCOTT ROBERTS, DEPUTY SECRETARY FOR MINERAL
RESOURCES MANAGEMENT, DEPARTMENT OF ENVIRONMENTAL PROTECTION,
COMMONWEALTH OF PENNSYLVANIA
Mr. J. Scott Roberts. Thank you very much.
As you said, my name is J. Scott Roberts, and I am Deputy
Secretary of Mineral Resource Management for Pennsylvania's
Department of Environmental Protection.
I am speaking today on behalf of Governor Edward G.
Rendell, and the Governor wishes to thank this Committee for
providing the Commonwealth its opportunity to advocate passage
of H.R. 3778 and present its views on the reauthorization of
the Surface Mine Control and Reclamation Act's fee that
supports abandoned mine reclamation.
No other State has as much at stake in this debate as
Pennsylvania. In enacting SMCRA, Congress found that prior to
1977 coal mining operations ``result in the disturbance of
surface areas that burden and adversely affect commerce and the
public welfare by destroying the utility of land for
commercial, industrial, residential, recreational, agricultural
and forestry purposes.'' It is in the Commonwealth of
Pennsylvania where those effects on commerce and public welfare
are most greatly felt.
Our motivation to engage in this debate is not greedy
desire, nor are we before you as beggars. As Congressman
Peterson mentioned, in Pennsylvania we have a 50-year legacy of
taking action to deal with our AML problems.
In 1968, the Commonwealth of Pennsylvania issued a $200
million bond issue, called Operation Scarlift. In 1999, we
authorized $500 million of our taxpayers' dollars to be
applied, in part, to abandoned mine reclamation through the
Growing Greener program. Today, Governor Rendell is pushing for
another bond issue, called Growing Greener II, to be placed on
the ballot in our November elections. If the voters agree, that
will put another $180 million of our money toward AML
reclamation in the State.
With these funds, and the nearly $600 million the State has
received under grants from SMCRA, funded with the AML fees,
much has been accomplished. But much remains to be done. The
job is simply not finished.
The National Abandoned Mine Land Inventory lists for
Pennsylvania over one billion of Priority 1 and 2 nongeneral
welfare work. These dollar figures are for construction alone.
The do not account for administrative nor design-development
expenses, and to the best of my knowledge, were not adjusted
for inflation. Using that one billion dollar inventory amount
and present State grant levels, simple arithmetic suggests it
will take 40 years to do that Priority 1 and 2 nongeneral
welfare work.
There are several bills before this Committee and several
bills before the Senate. Governor Rendell and Pennsylvania are
solidly supporting H.R. 3778, introduced by Congressman
Peterson, and cosponsored by our congressional delegation. It
is a companion bill to S. 2049, introduced in the Senate by
Senator Specter and cosponsored by Pennsylvania Senator
Santorum. This bill has the support of the Bush Administration
and was presented earlier today by OSM Director Jarrett.
I would direct your attention to the fact that Governor
Rendell, a Democrat, stood shoulder-to-shoulder with Interior
Secretary Gale Norton when Congressman Peterson announced this
bill as testimony to the bipartisan support the bill has in
Pennsylvania.
The issues surrounding reauthorization are complicated and
their solutions will be complex. I believe the three toughest
are distribution of collected fees, transfers to the United
Mine Workers health care plans, and handling the unappropriated
State share balances accrued under existing law.
Pennsylvania prefers a future distribution of collected
funds that maximizes completion of Priority 1 and 2 AML sites.
We believe H.R. 3778 accomplishes this by replacing the present
State share/Federal share system with allocations based upon a
given State percentage of pre-SMCRA coal production. This
approach directs the resources most efficiently to the
problems.
H.R. 3778 also offers a responsible balance between
reclaiming abandoned mine lands and fulfilling Federal promises
made to retired mine workers. But it represents a compromise
and not a perfect solution. I fully recognize that the proposal
does not commit to providing for the full cost of the Combined
Benefits Fund, nor does it include Reach-Back or Super Reach-
Back categories of retirees, nor does it provide relief for
those coal companies struggling with contractual obligations
left them by now defunct companies. These are serious issues
that, if Federal commitments were made, then they are issues
that America needs to live to and Pennsylvania supports finding
solutions to those.
Pennsylvania also strongly believes the Government,
regardless of its level, needs to meet its other commitments.
We support the payment of fees collected and allocated to the
various States under the present law but never appropriated. To
the extent that those States are certified as having completed
their AML work, they should have the freedom to choose what to
do with those monies.
H.R. 3778 also contains provisions aimed to reduce costs,
eliminate paperwork, and encourage others to do the reclamation
work at no or reduce costs. It eliminates the lien requirements
that carry significant manpower costs but offer little benefit.
It provides that some of the fees collected can be used to bond
sites that were previously affected, and it allows the
promulgation of regulations to create other incentives to
maximize bang for the buck and create levers.
Sustainable development is a modern day buzz word for a
concept that Congress used in 1977 when they passed SMCRA. In a
mining context, it means that mined land is reclaimed to allow
other resource potentials, and that communities are left with
the ability to transition to other economies. To its credit--
and this point is ignored by critics--America's coal mining
industry has embraced this concept. However, for Pennsylvania,
the bait before us today is ever giving our coal communities a
level playing field as they compete for economic opportunities
in a world after coal. AML does adversely effect our commerce
and public welfare. Our citizens have invested their own timer
and money. They have reaped benefits of the present program.
And while the job is completed in some States, close to being
completed in others, under the current allocation--
Mrs. Cubin. Are you just about finished?
Mr. J. Scott Roberts. I'm sorry.
Mrs. Cubin. That's OK. Go ahead and conclude.
Mr. J. Scott Roberts. In closing, by passing H.R. 3778,
Congress can help get the job done in years, not generations.
Thank you. I'm sorry for going over.
[The prepared statement of J. Scott Roberts follows:]
Statement of J. Scott Roberts, Deputy Secretary for Mineral Resources
Management, Department of Environmental Protection, Commonwealth of
Pennsylvania
My name is Jay Scott Roberts and I am Deputy Secretary of Mineral
Resource Management for Pennsylvania's Department of Environmental
Protection. I am speaking today on behalf of Pennsylvania Governor
Edward G. Rendell. The Governor wishes to thank the Committee for
providing the Commonwealth the opportunity to present its views on the
reauthorization of the Surface Mine Control and Reclamations Act's
(SMCRA) fee that supports abandoned mine land (AML) reclamation.
Sustainable Development is a modern day buzzword for a concept that
Congress used in passing SMCRA in 1977. In a mining context,
Sustainable Development can mean that mine land is reclaimed to allow
other resource potentials of the area. It also means that communities,
which prospered while supporting the mineral economy, are left with the
ability to transition to other economies.
Before 1977 Sustainable Development was a foreign concept to the
nation's mining industry. That fact is reflected in Congress' finding
that the surface mine operations of the time, and presumably before,
``result in disturbance of surface areas that burden and adversely
affect commerce and the public welfare by destroying the utility of
land for commercial, industrial, residential, recreational,
agricultural, and forestry purposes'' [30 U.S.C. 1201, Sec 101(c)] and
``coal mining operations affect interstate commerce'' [30 U.S.C. 1201,
Sec 101(j)].
To its credit, and this is a point ignored by critics, America's
coal mining industry has embraced the concept of sustainable
development. When a modern mine is completed the land is ready for new
uses and the community has the opportunity to transition into new
economies.
But pre-1977 miners had no such forward vision. Congress also
recognized this by finding, again in 1977, that ``there are a
substantial number of acres of land throughout major regions of the
United States disturbed by surface and underground coal on which little
or no reclamation was conducted, and the impacts from these unreclaimed
lands impose social and economic costs on residents in nearby and
adjoining areas as well as continuing to impair environmental quality''
[30 U.S.C. 1201, Sec 101(h)].
Pennsylvania was blessed with abundant natural wealth--endless
forests, good soils, plenty of clean water, and minerals. Chief among
those minerals was coal. Although having only the 9th largest original
reserves of any state in the nation (but Pennsylvania accounted for 95%
of the world's known anthracite reserves), Pennsylvania's coal was the
basis for much of the nation's historic production. Pennsylvania
anthracite fired the boilers of transatlantic steamships and
Pennsylvania bituminous fired the blast furnaces of Carnegie's steel
mills. The production of Pennsylvania's mines was staggering. In 1917
the production of Anthracite coal, found in only 5 of our 67 counties,
peaked at 117,000,000 tons. The same year production of Bituminous coal
was 171,000,000 tons; a combined total that year of 288,000,000 tons of
coal. Pennsylvania miners produced nearly 16 billion tons of coal
before Congress made it's finding that uncontrolled mining ``burden and
adversely affect commerce and the public welfare.''
Although downplayed because of the general good times created by a
booming coal economy, the price of that production was high. In 1910,
the U.S. Army Corps of Engineers concluded that the rapid corrosion on
the Monongahela River of steel river locks and barge hulls was the
result of acid from abandoned mines. By the 1920's the river intakes of
the water supplies for population centers like McKeesport, Greensburg,
Latrobe, Johnstown, and Altoona were lost to mine drainage and were
being replaced with water piped from reservoirs built high in the
mountains. Sediment loading at the Philadelphia's Schuylkill River
water works that, in 1948, the legislature authorized the construction
of a series of desilting basins on the river. Today, those basins
continue to function and the state continues to operate the dredges
necessary to maintain their capacity.
Certainly Pennsylvania benefitted from all that coal being mined
but, like most Appalachian states, the coal royalties went to the
private coal owners. The communities' costs of hosting the industry
were paid from the wealth created in the community. But, in a society
that did not plan for a sustainable future, when the coal runs out, the
mines close, the jobs and the wealth disappear, and all that's left are
highwalls, spoil piles, pits full of water, mountains of waste coal,
open shafts, orange streams, destroyed water supplies, inferno-like
mine fires, and the clear and present danger that without warning homes
and businesses will collapse from mine subsidence. Unable to effective
compete for new economic opportunities, its young people move way, and
the community slowly declines.
Today Pennsylvania is here to engage in the debate on re-
authorization of the fees collected under SMCRA to reclaim abandoned
mine lands. No other state has as much at stake as Pennsylvania. It is
the Commonwealth's whose ``commerce and public welfare'' is most
greatly compromised by abandoned mine lands. Our motivation to engage
this debate is not greedy desire nor are we before you as beggars. The
Commonwealth has a more than 50-year legacy of action in dealing with
our AML problems. Our citizens stepped to the plate in 1968 with the
$200 Million ``Operation Scarlift'' bond issue. They again put their
money where their mouth is with 1999's $500 million Growing Greener
program. Presently, Governor Rendell is pushing that another bond
issue, called Growing Greener II, be placed on the ballot in November.
If the voters agree, then they will put another $180 million towards
AML reclamation in our state. With these funds, and the nearly $600
million the state has received under state grants from SMCRA's funded
with the AML fee, much has been accomplished. But much remains yet to
do. The job is simply not finished.
The National Abandoned Mine Land Inventory lists for Pennsylvania
over $1 Billion of Priority 1 and Priority 2 non-general welfare work.
These dollar figures are for construction alone. They do not account
for administrative nor design/development expenses and, since they were
generated in the 1980's, were never adjusted for inflation. Using the
$1 Billion inventory amount and present state-grant levels simple
arithmetic suggests it will take 40 years for just the P1/P2 non-
general welfare work.
The state recognizes the burden the fee places on mine operators
around the nation and tries to be a good steward of the funds we
receive from them. To that end, we have developed programs designed to
encourage reclamation by the modern industry as it seeks to recover
resources left by past practices. This is known as remining. We also
partner with our business communities, local governments, property
owners, and civic organizations to find ways to reduce costs or
leverage AML funds to the greatest extent possible. In the Commonwealth
our citizens are choosing to be proud of their industrial heritage, not
to be victims of it. Across the state they are rolling up their sleeves
and getting to work. But they need help. Pennsylvania's Congressional
delegation has stepped to the plate. They know SMCRA needs reauthorized
and they are working hard to make sure that the political realities
driving the reauthorization start with abandoned mine reclamation.
There are several bills before this Committee and several bills
before the Senate. Governor Rendell and Pennsylvania are solidly
supporting H.R. 3778 primarily introduced by Congressmen Peterson and
co-sponsored by all 16 members of our Congressional Delegation. It is a
companion bill to S. 2049 introduced in the Senate by Senator Specter
and co-sponsored by Senator Santorum. This bill has the support of the
Bush Administration and was presented earlier today by OSM Director
Jarrett. I would direct your attention to the fact that Governor
Rendell, a Democrat, stood shoulder-to-shoulder with Interior Secretary
Gale Norton when Congressmen Peterson announced this bill as testimony
to the bipartisan support the bill has in Pennsylvania.
The issues surrounding re-authorization are complicated and their
solutions will likely be complex. I believe the three toughest are:
Distribution of collected fees;
Transfers to the United Mine Workers of America's health
care plans; and
Handling the unappropriated state share balances accrued
under the existing law.
Pennsylvania prefers a future distribution of collected fees that
maximizes completion of Priority 1 and Priority 2 AML sites. H.R. 3778
accomplishes this by replacing the present state-share/federal-share
system with allocations based upon a given state's percentage of pre-
SMCRA coal production. This approach directs the resources most
efficiently to the problems while setting future distributions upon a
solid foundation. Systems using a state-share system leave future
distributions at risk of production declines from resource depletion or
market completion.
H.R. 3778 also offers a responsible balance between reclaiming
abandoned mine lands and fulfilling Federal promises made to retired
mine workers. It is a compromise and is not a perfect solution. I fully
recognize that H.R. 3778 does not commit to providing the full costs of
the Combined Benefits Fund, nor does it include either the Reach-Back
or Super Reach-Back categories of retirees, nor does it provide relief
for certain coal companies struggling with contractual obligations left
them by now defunct companies. These are serious issues that, if
Federal commitments were made, then they are that America needs to live
up to.
Pennsylvania believes strongly that government, regardless of
whether it is a township, state, or the federal government, needs to
meet its commitments. We support the payment of fees collected and
allocated to the various states under the present law but never
appropriated for payment. To the extent that those states have
completed their P1 and P2 inventories and the states have certified
under the provisions of SMCRA they should have the freedom to choose
what to do with the monies. This provides those states with an
opportunity to reclaim their abandoned non-coal mines that affect their
communities and economies the same as coal AML does in Pennsylvania.
That is an opportunity that states with large inventories and long
paths to reach certified status will not enjoy.
H.R. 3778 also contains provisions aimed to reduce costs, eliminate
paperwork, and encourage others to do the reclamation work at no or
reduced costs to the fee payers. It eliminates the lien requirements
that carry significant manpower costs but offer little benefit. It also
provides that fees collected can be used to cover the bond costs for
the previously abandoned portions of remining sites. In a time when
bonds are difficult to purchase this promises to significantly reduce
the modern industries costs for reclaiming the past. Finally, and
perhaps most importantly, it gives the Secretary of the Interior the
flexibility, through the promulgation of regulations, to create other
incentives to maximize bang for the buck and create levers to bring
other resources to bear on the problem.
For Pennsylvania this debate is over giving our coal communities a
level playing filed as they compete for economic opportunities with
communities across the nation, and indeed, around the world. AML does
adversely affect our commerce and our public welfare. Our citizens have
invested their own time and money in this effort. They have also reaped
the benefits of SMCRA's fees collected for AML reclamation. But while
the job is completed in some states, and close to being completed in
others, under the current allocation formula it will be decades before
it is done in the Commonwealth. By passing H.R. 3778 Congress can help
us to get the job done in years, not generations.
Thank you.
______
Mrs. Cubin. That's OK. We would like the oral statements to
stay within 5 minutes.
Mr. Masterson, you are recognized for 5 minutes.
STATEMENT OF JOHN A. MASTERSON, COUNSEL TO HON. DAVID D.
FREUDENTHAL, GOVERNOR OF THE STATE OF WYOMING
Mr. Masterson. Thank you, Madam Chairwoman. My name is John
Masterson. I am appearing today at your invitation with our
thanks on behalf of Governor David Freudenthal of Wyoming.
I want to first of all point out that 5 minutes seems like
a long period right now, but in 15 minutes, I'll bet it doesn't
seem like that long of a period.
It seems to the State of Wyoming that this is fundamentally
a simply concept. We need to honor promises. We promised the
State of Wyoming and the other States that are contributing to
the AML fund that we would pay them and return to them half of
the tax. We promised by way of the Combined Benefits Fund that
we would take care of coal miners. It seems to me that's what
we really need to be doing.
For a variety of reasons, the State of Wyoming cannot
support the Administration's bill. It cannot support the
administration of Pennsylvania's bill, including it takes too
long to repay that money. There is no interest on those monies
being returned. There is no participation in future
collections.
We do support the Rahall/Cubin bill. We are in support of
that. It seems to us that there's four essential items that
Cubin/Rahall covers that are important to the State of Wyoming,
and I will just highlight those very quickly.
First of all, obviously, is the return of money owed to the
States and the tribes. There are tribes and States out there
that are owed hundreds of millions of dollars. Wyoming is at
the forefront of those, and we feel those need to be repaid.
Reaffirming the commitment to work with States in the
future on an ongoing basis is the second item that Wyoming
feels is important. With all due respect to my colleagues from
Pennsylvania, we don't think that their solution offers that on
a continuing, ongoing basis.
Cutting the rate of tax is the third element that we feel
is important. We think that that should happen. Finally,
commitments made to the miners and their families need to be
honored, and they need to be honored on a forward basis.
Those are the important things to the State of Wyoming,
Madam Chairwoman. I will defer for any questions that you have.
I want to thank you and the staff, and the staff of the
Committee, for helping us, for working with us.
I need to tell you that the State of Wyoming feels somewhat
excluded from the process that the Office of Surface Mining was
involved in. My recollection is we have had about one meeting
with Director Jarrett, and we were not involved in the crafting
of the proposal that they had. We would like to be involved in
those going forward, and we would like to participate in those.
Your staff has been kind enough to include us in a lot of these
conversations and a lot of these discussions, and whenever you
want to meet with us, wherever, we will try to be there.
Thank you.
[The prepared statement of Mr. Masterson follows:]
Statement of John A. Masterson, Counsel to The Honorable David D.
Freudenthal, Governor, State of Wyoming
Good Morning Mr. Chairman. My name is John A. Masterson, and I am
the legal counsel to Governor David D. Freudenthal of the State of
Wyoming. I have been invited here today to speak briefly on the
reauthorization of Abandoned Mine Land Reclamation fee, and changes to
the Surface Mining Control and Reclamation Act of 1977 as proposed by
H.R. 3796 and H.R. 3778.
I speak from the perspective of our nation's largest producer of
coal and therefore, the nation's largest source of AML funds. I commend
you for your willingness to hear from representatives of coal-producing
states about this important issue. We stand ready to work with the
Congress in addressing the shortcomings of SMCRA and the need for a
fair and equitable distribution of past collections and future revenues
from the AML fee.
I wish to thank Chairwoman Cubin and the members of the
Subcommittee on Energy and Mineral Resources of the House Committee on
Resources for inviting the State of Wyoming to testify at this hearing
today.
SUMMARY OF WYOMING'S POSITION
I wish to begin by saying that Wyoming supports many of the AML fee
reauthorization concepts contained in H.R. 3796 sponsored by
Congresswoman Cubin and Congressman Rahall of West Virginia. This
approach addresses both the serious reclamation needs facing our state
and provides relief for our mining industry. To be specific, we request
that this Committee support H.R. 3778 on the following items:
A prompt release of Wyoming's share from the AML Trust
Fund.
Providing a fair share of future AML revenues to complete
the reclamation of abandoned mine sites in Wyoming. This requires that
we continue to receive a fair share of fees paid by coal producers in
our state. Like Pennsylvania, Ohio, and West Virginia, Wyoming has
learned a lot since 1977 about the ongoing problems created by historic
coal mining, and we have high hazard reclamation work remaining that
exceeds our state share of the AML trust fund;
A reduced fee structure that lowers the tax burden on
Wyoming coal producers.
Wyoming strongly objects to the Administration's reauthorization
proposal as contained in the H.R. 3778 on several counts:
Wyoming's coal producers would pay $1.5 billion in
reclamation fees. No portion of these collections would be returned to
Wyoming;
Wyoming's trust fund of $400 million would be returned
over a prolonged period with no interest added, further depreciating
the real value of the fund;
The Administration's proposal is still dependent on the
annual budget process and requires a substantial increase in yearly
appropriations by Congress. There is no guarantee that Wyoming will
receive our trust fund valance, and we are left out of any share of
future collections.
Wyoming recognizes the need to address Priority 1 and Priority 2
hazards in historic coal fields. We also recognize the commitment this
body has made to the Combined Benefits Fund and believe it should be
honored. The Cubin/Rahall Bill, and the bill sponsored by Senator
Thomas, addresses these needs while providing all those entities with a
stake the reauthorization issue with a fair and equitable allocation of
available funds.
HISTORY
Since the middle of the 19th Century, Wyoming has been a major
source of energy to fuel America's industrial revolution and to support
subsequent development. The transcontinental railroad project in the
1860's created both the demand for coal to operate locomotives, and the
transportation artery for coal delivery to areas of demand. Wyoming
sites along the transcontinental route, now Carbon, Sweetwater, Lincoln
and Uinta Counties, were mined extensively.
As the network of rail lines expanded to serve more and more areas,
so also expanded the market for Wyoming coal. Mines opened in Sheridan
and Campbell Counties to supply demands nationwide for cheap, clean
coal. Coal has been mined on some scale in nearly every one of
Wyoming's 23 counties, and Wyoming citizens continue to live with that
legacy. As I will discuss below, continuing inventory efforts have
shown a much more extensive amount of reclamation than is currently
recognized by the OSM. Further, small towns no longer supported by
these historic mines are saddled with deteriorating infrastructure that
requires attention. These needs can be adequately met only through a
fair and balanced reauthorization bill.
When the Surface Mining Control and Reclamation Act was enacted in
1977, it included a fee on coal production. Proceeds from the fee were
placed in the Abandoned Mine Land (AML) fund. By law, one-half of the
fees collected in each state or on tribal lands were to be returned to
the state or tribe of origin. The other half of the collections were to
be spent at the discretion of the Secretary of the Interior to address
reclamation issues of national importance. All AML expenditures,
including state and tribal shares and the OSM's allocation, are subject
to the federal budgeting process and annual appropriation by Congress.
Despite the bill's intent and the clear mandate of law, Congress
has never appropriated to states and tribes the 50% of fee collections
guaranteed in the law. Wyoming, for example, has received only 29% of
fees collected in our state since the approval of Wyoming's reclamation
plan in 1983. This refusal of the Federal Government to discharge its
obligations to the states is of grave concern to Wyoming.
In addition to the failure to allocate these funds, the
unappropriated pool of money became an irresistible source of
substantial interest income. As a result, SMCRA was amended by the Coal
Act of 1992 to allocate that interest to mitigate deficits in the
United Mine Workers Combined Benefit Fund (CBF). This diversion of
interest deprives the states and tribes of an additional $70 million in
annual revenue that could have been used to remediate the public safety
hazards of unreclaimed mine sites. The potential to add additional
beneficiaries to CBF coverage is another concern to Wyoming, as it
would further reduce the pool of funds available to meet the original
intent of SMCRA.
We are very concerned that Wyoming's coal producers will be asked
to bear the largest burden of AML fee collections without the return of
an equitable portion of those funds to Wyoming. In 2003, Wyoming
producers paid in $129,934,233, yet Wyoming's AML program received only
$29,305,188 in distributions. That's only 22.5% of money Wyoming
contributed, while other states have received 40%, 50% and even over
100% of their contributions.
Appropriations from Congress to address AML problems in Wyoming and
other coal states are constrained by budget ceilings established by
Office of Management and Budget. Annual AML distributions to states and
tribes have never reached the 50% of AML fee collections mandated by
Congress in SMCRA. As a result, the AML Trust Fund now contains almost
$1.5 billion, of which $972 million is the states' share balance,
which, by law, should have been distributed to AML states and tribes.
Through Fiscal 2003, Wyoming coal companies have paid over $1.894
billion into the fund. Only about 26% of these collections have
returned to the State. Wyoming has received only $493,756,000 in annual
allocations. Over $400,000,000 million of Wyoming's state share resides
in the AML fund. This money--now idle in this federal account--could be
put to productive use reclaiming hazardous mine sites and mitigating
the deleterious effects of mining and mineral processing activities in
Wyoming communities.
In addition to the failure to allocate these funds, the
unappropriated pool of money became an irresistible source of
substantial interest income. As a result, SMCRA was amended by the Coal
Act of 1992 to allocate that interest to mitigate deficits in the
United Mine Workers Combined Benefit Fund (CBF). This diversion of
interest deprives the states and tribes of an additional $70 million in
annual revenue that could have been used to remediate the public safety
hazards of unreclaimed mine sites. The potential to add additional
beneficiaries to CBF coverage is another concern to Wyoming, as it
would further reduce the pool of funds available to meet the original
intent of SMCRA.
OBLIGATIONS TO COMBINED BENEFITS FUND
The 1992 Coal Act shifted the AML Trust Fund interest away from
reclamation and towards the social needs of United Mine Workers'
dependents and the desires of the bituminous coal operators by
subsidizing shortfalls in the Combined Benefits Fund (CBF). These
social priorities have steered AML funds away from the needs of states
and tribes, especially those states that produce the lion's share of
the Nation's coal. Wyoming is here today to remind you of the
obligations of law adopted as part of SMCRA in 1977. States and tribes
are to receive one-half of AML fee collections within their borders.
The federal government has not lived up to this law, and appears to be
moving even further from its original commitments under pressure from
smaller, perhaps more vocal, constituencies.
Wyoming recognizes the Federal Government's obligations to the
Combined Benefit Fund and accepts that the promises made to the miners
who produced the energy to fuel America's industrial development must
be kept. Wyoming encourages Congress to consider creative alternative
funding mechanisms which would sever CBF dependency from AML revenues
and allow those funds to be applied to the priorities established by
Congress. The United Mine Workers Combined Benefits Fund is a
healthcare problem that should not be resolved in the context of the
AML fund debate. If the CBF funding remains a part of the AML
obligations, then Wyoming suggests that the unpaid Trust Fund balance
due the states be used to fund the required benefits going forward.
ACCOMPLISHMENTS OF THE WYOMING AML PROGRAM
Since implementation of the Surface Mining Control and Reclamation
Act of 1977, Wyoming coal producers have paid almost $2 billion in
reclamation fees into the AML Trust Fund. In return, Wyoming has
received about $520 million, or about 29% of total collections. Wyoming
consistently maintains an obligation rate in excess of 95% of funds
received, and spends less than 3% on administrative costs. Over the
past five years, Wyoming has spent or budgeted 25% to 30% of each
year's consolidated grant for the reclamation of Priority 1and Priority
2 Coal sites, as such sites are identified. The balance of available
funds has gone to Priority 1 and Priority 2 non-coal sites, and to
public infrastructure projects in communities impacted by past and
present mining activities.
Since the inception of the AML program, Wyoming has closed 1,300
hazardous mine openings, reclaimed over 30,000 acres of disturbed land,
and abated or controlled 22 mine fires. Thirty-five miles of hazardous
highwalls have been reduced to safer slopes, and over $75 million has
been spent to mitigate and prevent coal mine subsidence in residential
and commercial areas of several Wyoming communities. Wyoming has also
partnered with the BLM, the Forest Service, and the National Park
Service to eliminate mine-related hazards on federal lands. In
addition, Wyoming has invested $83 million in infrastructure projects,
such as public water systems, flood control projects, health clinics,
schools, roads and other projects to abate public safety problems in
communities impacted by mining.
Today, Wyoming is the largest producer of coal in the nation, with
production expanding at a rate at about 6% a year. Unfortunately,
Wyoming has not enjoyed economic diversification and remains largely
dependent on mineral extraction--primarily coal. While Wyoming has
certainly benefitted from our abundance of natural resources, the State
has suffered, and continues to suffer, from the effects of an
inequitable distribution of AML funds. Wyoming has been, and expects to
continue to be, the single largest contributor to the AML reclamation
fund. This contribution has enabled some states to receive more money
than they have contributed to the program, while Wyoming has never
received our fair share of the money we sent to Washington.
In essence, Wyoming has not only provided the bulk of funding for
AML reclamation in other states, but has handled revenues returned to
the state in an effective and efficient program to protect our citizens
from mine-related hazards, and to mitigate the impact of mining
activities on Wyoming Communities.
HAZARDS REMAINING TO BE RECLAIMED IN WYOMING
The impacts associated with historic mining include 30,000 acres of
land undermined by coal production in Sweetwater County alone. Sheridan
County and Lincoln County each have over 5,000 acres undermined by
historic coal mining. While a portion of these areas at risk are rural,
some are in immediate proximity to cities, towns or recreation areas on
public land. Each season, Wyoming AML identifies new subsidence
features, failed shaft closures, mine openings, erosion into mine
workings and other Priority 1 hazards. Incidentally, Wyoming sets the
standard for mitigation of potential subsidence through our vast
experience in Rock Springs, Hanna and Glenrock. Since the cost of
mitigating subsidence-prone areas is extremely high, Wyoming AML
mitigates large scale subsidence in only those areas that have been
developed for residential or commercial use. Priority 1 hazards in
rural areas are evaluated and addressed under either the AML state
emergency program, or under the normal AML project priority system.
Wyoming AML is currently involved in a major statewide inventory
process to identify both existing hazards and areas where deteriorating
conditions (rotting support timbers, subsidence, failed closures, etc.)
will create hazards in the future. Inventories conducted in the early
days of the Wyoming AML program were based on aerial photography and
USGS mapping, techniques that only scratched the surface of remaining
work. Today's inventory effort includes a wealth of resources
integrated for the first time into a comprehensive overview of
potential AML projects. Inventory personnel reviewed historic mine maps
from Bureau of Mines records, from company files, from museum records,
and archives of the Wyoming Geologic Service. Files and records from
the Department of Energy (uranium), from Federal Land Management
Agencies, and from the U.S. Geologic Survey were reviewed in detail for
information on the location of mines and mining districts.
The results of this intensive research will be validated by site
inspections in the field during the coming (2004) season. Obviously,
construction costs to remediate these sites cannot be accurately
established until site inspections are complete. However, preliminary
results from the research portion of the inventory project indicate
that there may be 1,739 additional coal sites and 4,050 non-coal sites,
which will be verified by field inspections in 2004. These numbers
compare to the 1,419 total sites now recorded for Wyoming on the AMLIS
data base.
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. Mine fires and ongoing
subsidence work will add to that total.
WYOMING'S POSITION ON REAUTHORIZATION OF THE RECLAMATION FEE
Because Wyoming has been a responsible custodian of the funds
entrusted to our AML program, your Committee can have confidence in
taking the following actions:
1. Return of Trust Fund
Wyoming has never received the 50% return of collections
promised in SMCRA. Wyoming wants a prompt return of the money
now held in the AML Trust Fund from previous contributions by
the State's coal producers.
Because annual AML appropriations to states and tribes have
lagged behind AML fee collections, the AML fund has a current
balance of $1.4 billion. Every year that these funds are not
returned to the states and tribes of origin, the real value of
these funds declines because of inflation and the rising cost
of reclamation construction. Wyoming's state share balance in
this account is estimated to exceed $420 million by September
30, 2004. These funds, now idle in a federal account, should be
put to productive use reclaiming hazardous mine sites and
mitigating the deleterious effects of mining activities on
Wyoming communities. This requires that the funds be returned
without preconditions so the certified states are able to use
the funds as they deem appropriate.
2. A Fair Share of Future Revenues
Wyoming wants a fair share of future fee collections
returned to the State to address remaining hazardous coal and
non-coal mine sites.
Under the reauthorization proposals recently introduced into
the House and Senate, Wyoming coal producers will pay $1 to
$1.5 billion into the AML Trust Fund in the next 10 to 15
years. The Administration's proposal would distribute those
collections to Eastern States, and no money would be returned
to Wyoming. While Wyoming recognizes that the problems in these
Eastern States must be addressed, it is patently unfair for the
State making the largest financial contribution to the AML
program to be excluded from future distributions. Wyoming
citizens remain at risk from the hazards of abandoned mines.
Visitors to our vast public lands and magnificent recreation
areas encounter unexpected dangerous conditions that could
claim an innocent life. Wyoming communities are impacted by the
boom and bust cycles of mineral extraction.
Future revenues are needed to respond to the remaining
hazards identified through Wyoming's aggressive pursuit and
identification of remaining coal and non-coal mining hazards.
Much work remains to be done to protect our citizens and
visitors to our state from such hazards. Money from future
revenues is required to give our state the capacity to respond
to on-going conditions that will exist in perpetuity.
Unfortunately, Wyoming's current ongoing inventory work is not
yet reflected in the Abandoned Mine Land Information System
(AMLIS) upon which the Administration has based much of its
proposal for future funding. Wyoming, like Pennsylvania, West
Virginia, Ohio, and other eastern states has learned a great
deal since the early 1980's, when initial inventories were
prepared and certification decisions made.
The Abandoned Mine Land Reclamation program in Wyoming has
been an outstanding example of Federal-State cooperation in the
remediation of hazards to public health and safety resulting
from past mining practices. We ask the opportunity to continue
that relationship with sufficient funds to complete the work
envisioned by the original drafters of SMCRA
3. Reduction of Reclamation Fees
Wyoming wants the burden of reclamation fees on Wyoming coal
producers reduced.
Coal production in Wyoming continues to increase at about 6%
a year. This increase in production will offset a portion of
the fee reduction and will generate funds for additional
reclamation work nationwide. All coal producers as well as
energy consumers would benefit from a reduction in reclamation
fees. The Cubin/Rahall bill and the Thomas bill divert
currently unappropriated RAMP funds (20% of current
collections) and an additional 20% of fund revenues after state
share allocations to historic coal allocations. Given these
allocations, we can finish the job in all coal-impacted states
and still be fair to all states and Tribes participating in the
AML Program.
4. Objections to Administration's Proposal
As discussed above, Wyoming has strong concerns with the
Administration's proposal as contained in House Resolution 3778
and in Senate Bill 2049.
Wyoming strongly objects to any proposal that would continue
to tax Wyoming coal producers and return no part of those
collections to the State. The Administration's proposal
provides that some states are big winners in fund allocations,
some states are held relatively harmless, while Wyoming is a
big loser. We believe that the bills sponsored by Congresswoman
Cubin and Congressman Rahall and by Senator Thomas are fair to
all states and tribes with AML programs. Wyoming also notes
that the Administration's proposal is still dependent on yearly
budgets and Congressional appropriations. The reluctance of
successive Administrations to recommend full funding of the AML
program, and the reluctance of Congress to appropriate
additional funding will not be resolved by the Administration's
proposal.
CONCLUSION
All of the States and Tribes have continuing needs under the
legitimate purposes of SMCRA. As Congress debates reauthorization of
the AML fee, the discussion should begin with the premise that the
Federal Government will honor its commitment to the states and the
tribes to return their share of the AML trust fund, and that all
participating states and tribes should be fairly treated by
reauthorization legislation.
Wyoming respectfully requests that we continue to be consulted and
included in future discussions. We are proud of our role in supporting
the nation's economy, industry, and environment. We cannot forget that
the ultimate resolution of this issue will affect the health and safety
of our citizens, the quality of our environment, and the well-being of
our communities.
In conclusion, Wyoming wishes to thank the House Subcommittee on
Energy and Mineral Resources for the opportunity to be heard on these
important issues.
______
[Mr. Masterson's response to questions submitted for the
record follows:]
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Mrs. Cubin. Thank you, Mr. Masterson.
Now I recognize Steven Hohmann for 5 minutes.
STATEMENT OF STEVEN HOHMANN, DIRECTOR, DIVISION OF ABANDONED
MINE LANDS, KENTUCKY DEPARTMENT FOR NATURAL RESOURCES
Mr. Hohmann. Good morning, Madam Chairman, and members of
the Subcommittee. My name is Steve Hohmann and I'm Director of
the Division of Abandoned Mine Lands within the Kentucky
Department for Natural Resources. I am also president of the
National Association of Abandoned Mine Land Programs. I am
pulling triple duty here today because I'm representing the
NAAMLP, the Interstate Mining Compact Commission, and the
Commonwealth of Kentucky. Initially, my remarks will be on
behalf of the NAAMLP and the IMCC.
The future of the AML fund and its potential impacts on the
economy, public safety and the environment will depend upon how
we manage the fund and how we adjust the current provisions of
SMCRA. We are aware in particular, Madam Chairman, of the bill
you and Congressman Rahall have introduced, H.R. 3796, and the
bill introduced by Congressman Peterson of Pennsylvania, H.R.
3778, reflecting the Administration's position.
However, given the diversity of opinions among our members,
and the unique circumstances facing each State and tribe, we
have been unable to agree upon a consensus position on either
of these bills. Nonetheless, the States and tribes through IMCC
and the NAAMLP and western Governors have over the past several
years advanced proposed amendments to SMCRA that reflect a
minimalist approach to adjusting the law. They are as follows:
To extend fee collection authority for at least 12 years;
to adjust the procedure by which States and tribes receive
their annual allocation of funds to address AML problems; to
eliminate RAMP, the Rural Abandoned Mine Program; to assure
adequate funding for minimum program under-funded States; to
address a few other select provisions, including remining
incentives, State set aside programs, handling of liens, and
enhancing the ability of States to undertake water line
projects; and finally, to address how the accumulated
unappropriated State and tribal share balances in the fund will
be handled, while at the same time assuring that an adequate
State share continues for the balance of the program.
The States and tribes welcome the opportunity to work with
your Committee, Madam Chairman, and other affected parties, to
address the myriad issues that attend the future ability of the
fund to address the needs of our coal field citizens. Our
overriding concerns can be summarized as follows:
Adequate, equitable and stable funding must be provided to
the States and tribes on an annual basis. The unexpended State
share balance in the trust fund should be distributed to all
the States and tribes as expeditiously as possible. Funding for
minimum program States should be restored to the statutorily
authorized amount of not less than $2 million annually. Any
adjustment to the AML program should not inhibit or impair
remining opportunities or incentives, and any adjustments to
the existing system of priorities must consider the impacts to
existing State set aside programs in the current State efforts
to remedy acid mine draining. Any adjustments to the current
certification process should not inhibit the ability of States
and tribes to address high priority noncoal projects. Any
review or adjustments to the current inventory should account
for past discrepancies and provide for the inclusion of
legitimate new sites. Finally, any changes must be considered
in a judicious environment that allows for all affected
parties' concerns to be addressed, including the coal field
residents.
Keep in mind, please, that any legislative adjustments that
significantly reduce State AML funding or the efficacy of State
programs could lead State legislatures, facing difficult budget
times, to seriously reconsider SMCRA primacy entirely, both
Title IV and Title V. Hence, the importance of ensuring that
the current State share provisions in SMCRA are held harmless.
The NAAMLP and the IMCC appreciate the opportunity to
present this testimony today, Madam Chairman, and look forward
to working with you in the future.
Now, the remainder of my comments will be on behalf of the
Commonwealth of Kentucky.
Kentucky endorses and its entire House delegation is
cosponsoring H.R. 3796, the legislation introduced by you and
Representative Rahall. In addition to the singularly important
issue of guaranteeing solvency for the Combined Benefits Fund,
Kentucky supports H.R. 3796 for the following major reasons:
It provides immediate and long-term significant funding
increases to all States and tribes. The bill maintains the
State's share into the future. It eliminates the 30 percent cap
on water line expenditures. The bill maintains the status quo
concerning the administration of the AML Emergency Reclamation
Program. And it extends the fee collection authority to 2019.
Madam Chairman, these are the major provisions that
Kentucky desires and supports in an equitable AML
reauthorization bill, and we feel that these provisions and
others as presented in H.R. 3796 will ensure that no State or
tribe is forgotten in the future of the AML reclamation
program.
Kentucky is keenly aware that there are other approaches to
attaining the same goals. With that understanding and a true
need to continue our reclamation efforts, Kentucky remains
willing to work with Congress, States and tribes, OSM, industry
and citizen groups, to forge a new future for the AML program.
Kentucky staunchly supports reauthorization of the fee and
believes the approach embodied in H.R. 3796 is the preferable
option.
I thank you for the opportunity to make this statement
today.
[The prepared statement of Mr. Hohmann follows:]
Statement of Steve Hohmann, Director, Kentucky Division of Abandoned
Mine Lands, Kentucky Department for Natural Resources
Madam Chairman, members of the Committee, thank you for inviting me
to testify. I am present on behalf of the Commonwealth of Kentucky to
remark on pending legislation to reauthorize the Abandoned Mine Land
(AML) fee and revamp the national AML Program. Kentucky is very
encouraged by the recent activity aimed at AML reauthorization. With
the AML fee expiration looming in September, now is the time to address
the critical issue of reauthorization and to direct the future course
of the AML program.
Currently, there are several different versions of an AML
reauthorization proposal in Congress. The two proposals in the House
are H.R.3778, the Peterson bill, and H.R. 3796, the Cubin/Rahall bill.
Both of them extend the period for fee collection, increase funding to
states with historic coal problems, and reduce the financial burden on
the western states. There exist significant differences and some
similarities in the methods each bill employs to attain the same goal.
Kentucky endorses, and its House delegation is cosponsoring H.R.
3796, the legislation introduced by Reps. Cubin and Rahall. H.R. 3796
contains the following items that Kentucky supports:
Provides immediate and long-term, significant funding
increases to all states and tribes;
Targets funding at historic coal problems by redefining
the priorities for expenditure. Kentucky prefers this approach to one
that changes the method of funding distribution to target historic coal
problems;
Maintains the state share into the future and ultimately
returns these funds based on the state share balance, or some
equivalent method, keeping the state share promise. Kentucky has the
third largest state share balance, and it is critical to return those
funds to the state to meet our reclamation needs. Kentucky has always
used all its historic coal and state share funding to address high
priority coal problems;
Eliminates the 30% cap on waterline expenditures. Coupled
with increased funding, this would allow Kentucky more discretion and
ability to address the vital task of providing clean drinking water to
the citizens in our coalfields. Provides immediate and long-term,
significant funding increases to all states and tribes;
Maintains the status quo concerning the administration of
the AML emergency reclamation program. OSM already has the procurement
guidelines in place, alternative environmental review procedures, and
better access to critical funding to operate the emergency program.
Kentucky believes that assumption of emergency reclamation would over
burden Kentucky's already cash-strapped, normal reclamation program;
Provides Remining incentives into the future;
Reduces AML fees to operators in a manner that does not
adversely affect state grants. Kentucky coal operators are struggling
to compete in today's energy market and any financial relief received
by a reduction in the AML fee would aid the Kentucky industry. A
healthy coal industry is vital to our Commonwealth's economic
prosperity;
Returns state share balances to certain certified states
with non-AML funds, and redistributes the replaced state share balances
to the historic coal share;
Addresses the financial solvency of the UMWA Combined
Benefit Fund;
Retains the AML Enhancement Rule; and
Extends the AML program to 2019.
Madam Chairman, these are the provisions that Kentucky supports in
an equitable AML reauthorization bill. We feel that inclusion of these
provisions in AML legislation will ensure that no state or tribe is
forgotten in the future of the Abandoned Mine Land Reclamation Program.
Kentucky is keenly aware that there are other approaches to attaining
the same goals. With that understanding, and a true need to continue
our reclamation efforts, Kentucky remains willing to work with
Congress, states and tribes, OSM, industry, and citizen groups to forge
a new future for the AML program.
The AML program is vital to the citizens residing in Kentucky's
coalfields. It is the only program that offers relief to our citizens
from the health and safety dangers created by past coal mining. The
federal Office of Surface Mining estimates that over 400,000
Kentuckians are at risk because they live within one mile of an
abandoned coal mine hazard. Kentucky currently has over $330 million in
unfunded high priority reclamation problems listed in the National AML
Inventory. This figure includes, 32,000 feet of unreclaimed highwall,
1,500 acres of landslides, 1,500 open mine portals, and 9,000 acres
subject to flooding from streams choked with sediment and mine refuse.
These problems remain even though the Kentucky AML program has
eliminated thousands of mine hazards throughout the Commonwealth. And
the unfunded problems list grows longer each year.
Last year alone the Kentucky Division of Abandoned Mine Lands
received 831 complaints from coalfield residents and their elected
officials reporting hazardous conditions from abandoned mines. There
has been a marked increase in the number of complaints reported to the
state from the previous year. All of these are new complaints, and
based on experience we expect that roughly half are actually
attributable to abandoned mining. This significant increase in
complaints is due in part to greater than average precipitation in
Kentucky over the past couple of years and increasing urban development
into previously remote areas of the coalfields. Kentucky's ability to
perform the reclamation necessary to resolve the problems cited in
these complaints is solely dependent on the amount of AML funding
Kentucky receives. Static or inadequate funding results in long delays
from the time the complaint is received, to the time a reclamation
project can be initiated to address the problem. Only significant,
immediate increases in AML funding can remedy this difficulty.
Since its inception, the Kentucky AML program has completed 745
reclamation projects reclaiming over 1800 open mine portals, 2000 acres
of dangerous landslides, 43 miles of polluted streams, 33,000 feet of
unstable highwall, 300 acres of mine fires, and many other hazards
created by old mines. Over the same period, the OSM federal reclamation
program has conducted more than 1200 emergency projects at a cost of
$130 million in Kentucky.
Recent statistics prepared by the Kentucky AML program highlight
the benefit of AML hazard reclamation to coalfield citizens. From July
1 to December 31, 2003, the Kentucky AML program abated 82 abandoned
mine hazards including 9 dangerous landslides, 3 unstable highwalls, 41
open portals, and 6 hazardous impoundments. Abatement of these hazards
directly eliminated the risk to 476 citizens and indirectly benefitted
another 851. During that same time period Kentucky AML restored 4 miles
of streams and completed 6 waterline projects providing water to 704
households and businesses.
The AML waterline program is a shining example of AML success in
Kentucky. The Kentucky AML program expends 30% of each annual grant
(the current limit allowed by law) to fund waterlines into areas where
past mining has adversely impacted groundwater resources, rendering it
unfit for consumption. Approximately one-quarter-million coalfield
residents rely on groundwater as their primary drinking water source.
To date Kentucky has completed 77 waterline projects providing clean,
potable water to 9300 Kentucky households and businesses. The people
served by these waterlines are generally in remote, rural areas that
local water districts cannot afford to serve. The AML waterline program
has been the only hope for those residents to receive a source of
potable water. Fresh drinking water, free from contamination caused by
mining, is a basic necessity that all citizens have a right to expect.
Currently, Kentucky has a $15 million backlog of waterline projects
waiting for construction funding.
Over the life of the AML program, Kentucky coal operators have paid
more than $875 million into the AML Trust Fund. Fifty percent of that
amount, $437.6 million, is assigned to Kentucky's state share. To date,
Kentucky has received $317 million from its state share through annual
grants, leaving a balance in Kentucky's state share account of over
$120 million. This unappropriated balance is part of the larger AML
Trust Fund balance of $1.5 billion. Implicit in SMCRA is the promise
that states would receive at least a 50% return on the amount of
reclamation fees collected from within their borders. Without question,
many more AML sites in Kentucky would have been reclaimed had Kentucky
received its full return of state share money. It is important to note
that any additional funding Kentucky receives, regardless of its origin
as state or federal share, will be expended on high priority, coal-
related hazard abatement and waterline projects.
Although the demands on Kentucky's AML program are increasing, our
AML grant has remained essentially static over the last eight to ten
years hovering around $16 to 17 million. However, each year the amount
of funding devoted to reclamation is slightly reduced because of the
unavoidable increase in the cost of reclamation construction and
materials. Based on a random sample of project costs since 1996,
Kentucky has seen prices for earthwork double, prices for gabion
retaining walls increase 35%, and prices for rock channel lining
increase 13%. The higher prices translate into less on-ground
reclamation and a resultant increase in risk to the citizens of our
Commonwealth from abandoned mine hazards. The only solution to this
dilemma is an immediate, significant increase in AML funding to
Kentucky.
The AML program has had many successes in Kentucky and throughout
the nation, but as OSM has stated, ``The job is not yet finished.'' In
order to protect the present and future safety of our coalfield
residents, Kentucky staunchly supports reauthorization of the AML fee
and believes the approach embodied in H.R. 3796 is the preferred
option.
______
Mrs. Cubin. Thank you, Mr. Hohmann.
William Michael Sharp, Assistant Director of the AML
program for Oklahoma Conservation Commission. Welcome, Mr.
Sharp.
STATEMENT OF WILLIAM MICHAEL SHARP, ASSISTANT DIRECTOR,
DIVISION OF ABANDONED MINE LAND, OKLAHOMA CONSERVATION
COMMISSION
Mr. Sharp. Good morning, Madam Chairman, and members of the
Subcommittee. My name is William Michael Sharp, Assistant
Director of the Abandoned Mine Land reclamation program in
Oklahoma. I appreciate the opportunity to appear before you to
present testimony for the State of Oklahoma on the
reauthorization of the Abandoned Mine Land reclamation fee and
changes to the Surface Mining Control and Reclamation Act of
1977, often referred to as Public Law 95-87.
Of the 26 States and tribes with an approved AML
reclamation program, eight States--Alaska, Arkansas, Iowa,
Kansas, Maryland, Missouri, North Dakota and Oklahoma--are
considered as minimum program States. Webster's defines
``minimum'' as ``least attainable''. So, to many, the word
could mean low lever, which in terms of AML problems, might be
misinterpreted as not having very many AML problems.
Nothing could be farther from the truth. Even though
Congress has established in law that minimum program States
should receive annually not less than $2 million, the fact
remains that for the past ten fiscal years they have received
an annual appropriation of just $1.5 million.
This level of funding is simply inadequate to reclaim the
number of high-hazard Priority 1 and 2 AML sites that exist in
the minimum program States. AML programs in these critically
underfunded States are forced to face projects over several
years. Project inspection is cut back, and less on-the-ground
reclamation is completed.
AML problems in minimum program States continue to take
human lives and property, as well as degrade water quality. For
example, subsidence continues to plague buildings and
structures in North Dakota and Kansas. Acid mine drainage from
underground coal mines in Maryland continues to degrade the
water quality of the Potomac River, and deaths and injuries
associated with dangerous high walls in Oklahoma persist.
Madam Chairman, in an effort to make the public more aware
of the dangers associated with abandoned mines, the NAAMLP, in
cooperation with several Federal and State agencies, has
sponsored the production of an educational video on abandoned
mine safety. It is titled ``Stay out and stay alive.'' I would
like to request that this video be placed into the record of
this hearing.
Mrs. Cubin. Without objection.
Mr. Sharp. Thank you, ma'am.
[The video has been retained in the Committee's official
files.]
Mr. Sharp. In Public Law 95-87, the Natural Resource
Conservation Service also has AML trust fund monies set aside
for reclamation purposes under the Rural Abandoned Mine
Program. Since Fiscal Year 1996, Congress has not appropriated
any RAMP funds to States, thereby creating a balance of over
$300 million in the AML trust fund earmarked for RAMP. The
proposed legislation before us today is to eliminate RAMP under
Title IV and reallocate the accumulated RAMP balance to States
and tribes using the historic coal production formula in H.R.
3778, or to transfer it to the Combined Benefit Fund, H.R.
3796.
With either proposal, minimum program States will see no
additional source of funding to address their Priority 1 and 2
AML problems. If one of the goals of reauthorizing SMCRA is to
eliminate Priority 1 and 2 AML problems, then how can that be
accomplished with funding minimum program States annually at $2
million? We would like the Congress to address this critical
issue with regard to the minimum program States.
One suggestion we ask to be considered is to earmark a
portion of the RAMP balance in the AML trust fund such that
minimum program States could apply to OSM for supplemental
grants above their annual $2 million grant. If the State is
capable of obligating these funds in a timely manner, they
could continue to apply these funds in future years.
Approximately $90 million in high priority AML problem
areas in Oklahoma continue to threaten death or injury to the
public. In many cases, coal companies would mine through 100
feet of overburden to obtain 18-24 inches of coal. As a result,
many sites are abandoned, leaving 100 foot dangerous high walls
and water-filled strip pits. This is the reason so many deaths
and injuries have occurred and will continue to occur in
Oklahoma's 16-county AML area.
These AML hazards are located in heavily populated areas of
the State, near major cities such as Tulsa, and two of the
fastest growing areas of the State, Claremore and Broken Arrow.
Near the town of Foyil, north of Claremore, seven known deaths
have occurred in a radius of two miles. Open mine shafts/
portals and subsidence related to underground coal mines also
have the potential for death and injury.
In summary, since deaths and injuries related to AML
problems continue, we support Congress in their effort to amend
the Surface Mining Control and Reclamation Act of 1977 by
reauthorization and reform of the Abandoned Mine Reclamation
program, especially as outlined in H.R. 3796, the Cubin/Rahall
bill.
We support present legislation that provides minimum
program States no less than $2 million per year, since minimum
program States have many AML problem areas that pose a health
and safety threat to the public. Oklahoma has approximately $90
million of high priority AML problem areas.
Congress should require all States and tribes to reclaim
Priority 1 and 2 AML problems before addressing lower priority
problems. Minimum program States should be given the
opportunity to apply for supplemental grants based on their
ability to timely obligate those funds toward reclaiming high
hazard Priority 1 and 2 AML problems.
We wish to thank the House Subcommittee on Energy and
Mineral Resources for the opportunity to give this testimony,
and I would be glad to answer any questions you may have.
[The prepared statement of Mr. Sharp follows:]
Statement of William Michael Sharp, Assistant Director,
Division of Abandoned Mine Land, Oklahoma Conservation Commission
Good morning, Madam Chairman. My name is William Michael Sharp,
assistant director of the Abandoned Mine Land (AML) Reclamation Program
for Oklahoma. I appreciate the opportunity to appear before you to
present testimony for the state of Oklahoma on the reauthorization of
the Abandoned Mine Land Reclamation fee and changes to the Surface
Mining Control and Reclamation Act of 1977 (PL 95-87).
Minimum Program States
Of the 26 states and tribes with an approved AML Reclamation
Program, eight states (Alaska, Arkansas, Iowa, Kansas, Maryland,
Missouri, North Dakota, and Oklahoma) are considered as ``Minimum''
Program states. Webster's defines ``minimum'' as ``least attainable.''
So, to many the word could mean low level, which in terms of AML
problems might be misinterpreted as not having very many AML problems.
Over the years, coal production in these states declined to the point
that there was not sufficient coal tax revenue to administer an AML
Reclamation Program as mandated by PL 95-87, even though these states
had multiple AML problem areas posing a threat to the health and safety
of the public. As a result, the ``Minimum Program'' was established by
Congress in FY 1988 requiring that each State and Tribe receive no less
than $1.5 million annually. In FY 1989 actual funding fell to $1
million, but in FY 1990 and 1991 it returned to $1.5 million.
With $500 to $600 million of high hazard Priority 1 and 2 AML
problems resulting in many mine-related deaths and injuries each year,
these eight ``Critically Underfunded States,'' with broad-based
support, convinced Congress that their annual program funding should be
at least $2 million. As a result, Congress passed the Abandoned Mine
Reclamation Act of 1990 amending PL 95-87 (adding Section 402(g)(8)),
which set an annual funding level of not less than $2 million for each
state and tribe having an eligible AML Reclamation Program. For the
next three fiscal years (FY 1992 thru FY 1994), the Minimum Program
States received the annual $2 million. However, for the last 10 fiscal
years (FY 1995 thru FY 2004) these States received an annual
appropriation of only $1.5 million (excluding a small amount of funding
for AML emergencies and Clean Streams Initiative projects).
There are several billion dollars of Priority 1 and 2 AML problems
yet to be reclaimed nationwide. At least 25 percent of these problems
are in the eight Minimum Program States, but these eight states receive
only 10 percent of the funding each year.
An annual appropriation of $1.5 million is simply inadequate to
reclaim the number of high- hazard Priority 1 and 2 AML sites in each
respective state. Why? Because at this level, AML staffs are reduced to
a ``bare bones'' staff, reclamation contracts must be phased over
several years (which results in not reclaiming the total AML hazard),
project inspection is cutback (which is critical to quality control),
and less on-the-ground reclamation is completed.
In the last few years, there seems to be a misconception that
Minimum Program States have reclaimed all of their high priority areas,
therefore, they need less funding. In fact, the opposite is true. AML
problems in Minimum Program States continue to take human lives and
property, as well as degrade water quality. For example, subsidence
continues to plague buildings and structures in North Dakota and
Kansas. Acid mine drainage from underground coal mines in Maryland
continues to degrade the water quality of the Potomac River, and deaths
and injuries associated with dangerous highwalls in Oklahoma persist.
The lack of funding at the annual $2 million level the last ten
years has resulted in a total loss of over $40 million to the eight
Minimum Program States. For these States to again operate a more
effective, viable, and efficient AML reclamation program, we were very
encouraged to see that recent House and Senate bills concerning AML
reauthorization contained language that Minimum Program States will
receive not less than $2 million annually.
Reallocation of Rural Abandoned Mine Land Program (RAMP) Funds
In PL95-87 the Natural Resources Conservation Service (formerly
SCS) also has AML Trust Fund monies set aside for reclamation purposes
under RAMP. Since the passage of PL95-87, RAMP averaged approximately
$4-9 million per year for projects nationwide. Several Minimum Program
States were very active in RAMP, including Arkansas and Oklahoma,
receiving $500,000 to $600,000 each year. Since FY 1996 Congress has
not appropriated any RAMP funds to States. So, in addition to the ten-
year $5 million loss due to Minimum Program underfunding, Oklahoma has
also lost between $4.5 and $5.4 million in RAMP funds in the last nine
years. Furthermore, since funds dedicated to RAMP have not been
appropriated by Congress, there exists a balance of over $ 300 million
in the AML Trust Fund earmarked for RAMP. The proposed legislation
before us today is to eliminate RAMP under Title IV and reallocate the
accumulated RAMP balance to States and Tribes using the historic coal
production formula (H.R. 3778) or to transfer it to the Combined
Benefit Fund (H.R. 3796). With either proposal, Minimum Program States
will see no increased funding to address their Priority 1 and 2 AML
problems.
If one of the goals of reauthorizing SMCRA is to eliminate Priority
1 and 2 AML problems, then how can that be accomplished with funding
Minimum Program States annually at $2 million? We would like the
Congress to address this critical issue with regard to the Minimum
Program States. One suggestion we ask to be considered is to earmark a
portion of the RAMP balance in the AML Trust Fund such that Minimum
Program States could apply to OSM for supplemental grants from these
earmarked funds above their annual $2 million grant. If the state is
capable of obligating these funds in a timely manner, they could
continue to apply for these funds in future years. Once Minimum Program
States have exhausted their existing inventory of Priority 1 and 2 AML
hazards, they could no longer apply for these funds.
Oklahoma AML Inventory
Approximately $90 million in high priority AML problem areas in
Oklahoma continue to threaten death or injury to the public. In our
state over 30,000 acres were surfaced mined for coal and over 40,000
acres were mined underground for coal. In many cases, coal companies
would mine through 100 feet of overburden to obtain 18 to 24 inches of
coal. As a result, many sites are abandoned leaving 100-foot dangerous
highwalls and water-filled strip pits. This is the reason so many
deaths and injuries have occurred and will continue to occur in
Oklahoma's 16-county AML area. These AML hazards are located in heavily
populated areas near major cities such as Tulsa (population 367,302)
and two of the fastest-growing areas of the state, Claremore (29 miles
northeast of Tulsa) and Broken Arrow (a suburb of Tulsa). Both of these
cities have numerous high priority AML hazards. Near the town of Foyil,
north of Claremore, 7 known deaths have occurred in a radius of two
miles. Just recently, we received a call from a landowner north of
Claremore that witnessed a young boy who had tied a garden hose to a
tree and was repelling down an 80-foot highwall. Open mine shafts/
portals and subsidence related to underground coal mines also have the
potential for death or injury.
Conclusion
In summary:
Since deaths and injuries related to AML problems
continue, we support Congress in their effort to amend the Surface
Mining Control and Reclamation Act of 1977 (PL95-87) by reauthorization
and reform of the Abandoned Mine Reclamation Program, especially H.R.
3796;
We support present legislation that provides Minimum
Program States no less than $2 million per year since Minimum Program
States have many AML problem areas that pose a health and safety threat
to the public. Oklahoma has approximately $90 million of high priority
AML problem areas;
Congress should require all states and tribes to reclaim
Priority 1 and 2 AML problems before addressing lower priority
problems; and
Minimum Program states should be given the opportunity to
apply for supplemental grants based on their ability to timely obligate
those funds toward reclaiming high hazard Priority 1 and 2 AML
problems.
We wish to thank the House Subcommittee on Energy and Mineral
Resources for this opportunity to present this testimony today. I would
be glad to answer any questions you may have.
______
Mrs. Cubin. Thank you.
As you can tell by the bells, we have been called for a
vote. But I would like to get some of the questioning in before
we are called to leave. I will start with you, Mr. Masterson.
You have indicated that Wyoming's ongoing inventory efforts
have not been reflected in the AML Information System, which
the Administration uses to make its prediction for future
funding needs. Could you describe briefly the differences that
you have seen? What sort of communications have taken place and
so on?
Mr. Masterson. Madam Chairwoman, my understanding of the
information system is that sites are allowed to be put into the
information system after they are evaluated, after we have all
the specifics, descriptions, and cost estimates of what items
can be added and included on that formal system.
That is to be contrasted with the situation where we're
going around and taking a statewide inventory and kicking tires
and finding all these other sites, trying to identify those. We
cannot put them on that information system, at least that's my
understanding, until we have a better description and
particulars as to all those cost estimates and exactly what
it's going to take to clean them up. So the inventory, as I
understand it, is going to be larger than what ends up on the
information system at the end of the day. I think that the
actual State physical inventory that's happening in the State
of Wyoming will happen this summer.
Mrs. Cubin. But the State has discovered sites that will
qualify or should qualify for Priority 1 and Priority 2 clean
up?
Mr. Masterson. Yes, ma'am.
Mrs. Cubin. Actually, can you give me an idea of so far how
extensive those inventories have been?
Mr. Masterson. I do not have the numbers, Madam Chairwoman.
I would be happy to supplement that and I will have Mr. Green
fax that answer to your staff. We should be able to get it to
you within 24 hours.
Mrs. Cubin. That's fine. Thank you.
Oklahoma's situation sounded a lot like Wyoming's. We do
have sites developing, so I think that really exposes the need
for the program to be able to continue funding sites that
occur.
With that, I would like to yield to Mr. Rahall.
Mr. Rahall. Thank you.
Let me begin by publicly thanking the Oklahoma Conservation
Commission for all the assistance you have provided me and my
staff over the years on this issue. Without failure, when I
went to the States in the late eighties and early nineties to
solicit their views on reauthorization, as I did again in 2000
and 2001, Oklahoma always provided the most detailed,
constructive, and thoughtful comments. So I want to publicly
thank you again for that.
Mr. Sharp. Thank you.
Mr. Rahall. I also appreciate the other three testimonies,
and to the panel in general, but to Pennsylvania specifically,
I have heard your concerns over watershed funding, and I have
heard this concern from certain other groups as well. Yet, the
priority ranking system for projects in the law is that human
health and safety must come first. Under Cubin/Rahall, we mean
to strictly enforce that priority. As I have said over and
over, that is maintaining the integrity of the original
legislation.
At the same time, we first continue the acid mine drainage
set aside; second, we allow the Appalachian Clean Streams
Program to continue; third, we allow lower priority P-3
projects to be done prior to the completion of P-1's and P-2's,
if done in conjunction with those types of projects; and
fourthly, we provide for the State share balances to be used
entirely for Priority 3 projects, once the Priority 1 and 2
human health and safety threats are addressed.
I guess I would just ask a general question, because it
appears to some that that's not good enough. My response to
that is, could we please leave some money to address the open
pitfalls that swallow our teenagers, to mitigate the landslide
that threatens grandma's home, and to combat the subsidence
that may engulf an entire community?
Your comments. I mean, is that asking too much?
Mr. J. Scott Roberts. No, sir, that's not asking too much.
I think in Pennsylvania we certainly agree and support that the
first and foremost priority of any of our abandoned mine land
programs within the Commonwealth is health and safety. That
absolutely needs to come first.
You asked Director Jarrett earlier this morning about
inventory items that Pennsylvania did put on the inventory, as
provided for by the 1992 amendments, that are watershed basin
type projects. I will tell you right now that we have not,
through any of these negotiations over the past year, said that
we continue to advocate that they be given Priority 1 or 2
status. We do believe it's a problem and we do believe it needs
addressing. We are trying to address it as best we can, but we
do recognize that health and safety needs to be first.
Mr. Rahall. Thank you.
Thank you, Madam Chair.
Mrs. Cubin. Mr. Pearce?
Mr. Pearce. No questions.
Mrs. Cubin. Mr. Peterson.
Mr. Peterson. Thank you.
What is the difference between a Priority 1 and a Priority
2? Maybe some of you can probably answer that.
Mr. J. Scott Roberts. Priority 1 are sites that are
classified as extreme danger. Priority 2 are health and safety.
The rule of thumb might be if there was an injury or a fatality
on a site, it would generally be a Priority 1. If there was a
danger of that, it would be a Priority 2.
Mr. Peterson. It would be interesting to know, in the
history of the fund, what percentage of the money that's going
out annually is going to Priority 1 sites, because it would
seem like that should be the first priority--I mean, if it's
prioritized.
Does anybody have that data?
Mr. Hohmann. No, but I think OSM could probably provide
that. I do think, just from general knowledge, that most of the
money that the States and tribes do expend is on Priority 1,
the difference being the extreme danger is Priority 1 and
Priority 2 is classified mostly as adverse effects of past coal
mining.
Mr. Peterson. OK.
Mr. Rahall. Would the gentleman from Pennsylvania yield,
very quickly?
Mr. Peterson. Absolutely.
Mr. Rahall. Just to quote directly from the law, Priority 1
is an ``imminent'' threat to health and safety. Priority 2 is a
threat ``nonimminent'' to health and safety.
Mr. Peterson. I guess it would be interesting to know if
nationally we are putting the bulk of the funding toward
Priority 1 sites. I don't know.
Mr. Rahall. It's supposed to be, yes.
Mr. Peterson. Currently, I think last year Pennsylvania got
17 percent of the money. We have 35 percent of the sites, and
we have 46 percent of the people that live within a mile of a
dangerous site. I think it shows that we're certainly not being
overcompensated if you're looking at the historic problem. I
don't think we're asking for 46 percent of the money or 35
percent of the money, but it seems like, if we really are going
after the priority sites, we need to deal effectively with
where they are and in some fair ration down the road. Is that
an unfair statement? Anybody can answer that. Is that an unfair
request?
Mr. Sharp. From Oklahoma's perspective, we certainly don't
think so, because we're having a heck of a time trying to
address Priority 1 and 2 sites in Oklahoma with just $1.5
million right now.
Mr. Peterson. It would seem to me that we ought to solve
all of the Priority 1 sites before we spend a lot of money on
Priority 2 sites. Is that commonly happening?
Mr. Sharp. I would say, in Oklahoma's case, we have
eliminated most of our Priority 1 sites, and we are working on
the high Priority 2's now.
Mr. J. Scott Roberts. In Pennsylvania, I believe we have
$42 million worth of Priority 1's remaining on the books. The
bulk of the one billion then would be Priority 2 sites.
Mr. Peterson. OK.
Mr. Hohmann. In Kentucky, we have about $330 million in
both Priority 1 and 2 sites on the books, and we currently
spend the vast majority of our grant money on the Priority 1
sites.
Mr. Peterson. Do all States have to match this with some--
Is there a formula? You don't have to match this but you can
just use it?
Mr. Hohmann. That's correct. There is no match.
Mr. Peterson. No match. So States are not required.
Pennsylvania, in all the projects I have been involved in, have
been a combination of Federal and State funding, I think.
Mr. J. Scott Roberts. I think we have been fortunate in
that our taxpayers have stepped up to the plate and given us
their monies to spend on these problems, also.
Mr. Peterson. Yes, because of the severity of
Pennsylvania's problems. But that's not common in all States.
OK.
Mrs. Cubin. I would like to thank the panel and remind them
that we may have questions we will submit in writing, and that
the record will remain open for 10 days to receive those. Thank
you.
We're going to run and vote. We will be right back for the
last panel.
[Recess.]
Mrs. Cubin. I would like to resume the hearing.
At this point I would like to ask unanimous consent to
allow Mr. Sessions from Texas to sit at the dais and offer a
statement for the record. Hearing no objection, so ordered.
I ask unanimous consent that Mr. Sessions be allowed to
give his statement now and then we'll take the testimony of the
two witnesses.
STATEMENT OF HON. PETE SESSIONS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF TEXAS
Mr. Sessions. I thank the young Chairwoman for her help in
this matter, and I appreciate her holding this hearing today.
Mrs. Cubin. I heard that ``young''.
[Laughter.]
Mr. Sessions. I also thank the members of the Subcommittee,
including your Ranking Member, for his appearance today and the
opportunity to talk about the reauthorization of the Abandoned
Mine Land program, AML.
Continuing this worthwhile program to finance the
reclamation of abandoned mines is critical to address the
safety and health issues that are faced by citizens living near
these sites. While the legislation being discussed today is
important in providing abandoned mine cleanup, remedying State
imbalances and providing for continued solvency of the Combined
Benefit Fund is also important. It continues a pattern by the
Congress to apply a piecemeal remedy to the serious flaws in
the Coal Act of 1992.
Dating back to the 105th Congress, a number of my
colleagues and I have worked tirelessly on a piece of
legislation to resolve the deficiencies of the Coal Act in a
comprehensive, bipartisan fashion. If the Congress is going to
remedy the Combined Benefit Fund solvency issue created by the
1992 Coal Act, I believe we also must remedy the business
issues which are equally, if not more, damaging.
I am speaking of addressing the reachback tax, providing a
refund of improperly collected premiums from the super
reachback companies and eliminating the joint and several
liability provisions for related entities of those companies
who choose to prefund coal miner retiree health obligations.
These issues are fundamentally tied to the reauthorization
of AML, but not addressed in the bill being examined today. To
finally fix this problem in a fair and responsible manner for
all parties involved, I believe three things must be included.
For more than a decade, a large number of companies, now
commonly referred to as reachback companies, have been burdened
with an inequitable tax burden imposed on them by the Coal Act
of 1992.
In that legislation, Congress scrapped a long history of
dealing with the issue of health care benefits for retired coal
miners through the collective bargaining process and, instead,
mandated that the reachback companies, most of which had been
out of the bituminous coal mining business for quite some time,
step in and subsidize the financing of such benefits. These
companies had never promised lifetime health care benefits to
their employees. This financial burden being placed on the
reachback companies has driven many into bankruptcy and put
others on the brink of financial ruin, threatening the jobs of
thousands of Americans.
In all of our history, Congress has never imposed such a
retroactive burden on any industry. It is time now for Congress
to correct this injustice. Congress must provide prospective
relief for the reachback companies from this insidious tax.
Prospective relief from this tax will allow reachback companies
to spend money on internal growth, research, development, job
creation, and economic security.
The second issue is the joint and several liability
provision of the Coal Act. A logical and fair mechanism for
funding is to permit a company to prepay its retiree health
benefit liabilities in an actuarially sound fashion. With such
prepayment, the company or the business would remain liable for
any shortage in the actuarial-determined prefund premium and
other units of the company would be relieved of their joint and
several liability for the premiums. This approach would ensure
that the industry's obligation to the Combined Benefit Fund
will be fully met, while no longer penalizing the companies,
many of whom were never before in the coal mining business.
Let me be clear. These companies are not seeking to avoid
their obligation to the Combined Benefit Fund but simply to
prefund this obligation, and to do it wholly. This prefunding
option will remove any concern by the retired miners and their
dependents that their future health care benefits might be
threatened and will allow the companies who choose this option
to remove the unfair burden of the financial uncertainty
imposed by the provisions of the Coal Act of 1992.
Finally, it is critically important that any legislation in
this area refund the improperly collected premiums from the
super reachback companies. The Supreme Court concluded that
these and other similarly situated companies should never have
been assessed premiums to finance the Combined Benefit Fund in
the first place.
Including these three issues in the AML reauthorization
legislation will serve the dual purpose of assuring the funding
of retiree health benefits and ending the unfair burden placed
on business entities, some of whom never employed a coal miner
and never participated in the coal mining business. It is a
comprehensive solution that will provide stability and fairness
in meeting our commitments to the coal industry and to those
retired miners, their families, and the remaining reachback
companies that have been so unjustly saddled with this tax.
I want to thank the Chairwoman, the young Chairwoman, for
allowing me to be here today. I would also like to ask
unanimous consent to place two additional pieces of
correspondence in the record.
Mrs. Cubin. Without objection.
[The prepared statement of Mr. Sessions and additional
correspondence follows:]
Statement of The Honorable Pete Sessions, a Representative in Congress
from the State of Texas
I commend the Chairwoman for holding this hearing and thank the
Members of the Subcommittee and the full Committee for allowing me the
opportunity to address the reauthorization of the Abandoned Mine Lands
(AML) program. Continuing this worthwhile program to finance the
reclamation of abandoned mines is critical to address the safety and
health hazards faced by citizens living in and near such sites.
While the legislation being discussed today is important in
providing abandoned mine cleanup, remedying state share imbalances and
providing for continued solvency of the Combined Benefit Fund, it
continues a pattern by the Congress to apply a piecemeal remedy to the
serious flaws in the Coal Act of 1992. Dating back to the 105th
Congress, a number of my colleagues and I have worked tirelessly on
legislation to resolve the deficiencies of the Coal Act in a
comprehensive, bipartisan fashion. If the Congress is going to remedy
the Combined Benefit Fund solvency issue created by the 1992 Coal Act,
we must also remedy the business issues which are equally, if not more,
damaging.
I am speaking of addressing the Reachback tax, providing a refund
of improperly collected premiums from the ``Super Reachback''
companies, and eliminating the joint and several liability provisions
for the related entities of those companies who choose to pre-fund coal
miner retiree health obligations. These issues are fundamentally tied
to the reauthorization of the AML, but not addressed in the bills being
examined today. To finally fix this problem in a fair and responsible
manner for all parties involved, these three issues must be included.
For more than a decade a large number of companies, now commonly
referred to as Reachback companies, have been burdened with an
inequitable tax imposed on them by the Coal Act of 1992. In that
legislation, Congress scrapped a long history of dealing with the issue
of health care benefits for retired coal miners through the collective
bargaining process, and instead mandated that the Reachback companies,
most of which had been out of the bituminous coal mining business for
quite some time, step in and subsidize the financing of such benefits.
These companies had never promised lifetime health care benefits to
their employees. This financial burden being placed on the Reachback
companies has driven many into bankruptcy and put others on the brink
of financial ruin, threatening the jobs of thousands of Americans.
In all of our history, Congress has never imposed such a
retroactive burden on any other industry. It is time now for Congress
to correct this grave injustice. Congress must provide prospective
relief for the Reachback companies from this insidious tax. Prospective
relief from this tax will allow Reachback companies to spend money on
internal growth, research and development, job creation and economic
security.
The second issue is the joint and several liability provision of
the Coal Act. A logical and fair mechanism for funding is to permit a
company to prepay its retiree health benefit liabilities in an
actuarially sound fashion. With such prepayment, the parent company of
the business would remain liable for any shortage in the actuarially
determined prepaid premium and other units of the company would be
relieved of their joint and several liability for the premiums. This
approach would ensure that industry's obligations to the Combined
Benefit Fund are met, while no longer penalizing companies--many of
which were never in the coal mining business.
Let me be clear, these companies are not seeking to avoid their
obligations to the Combined Benefit Fund but simply to pre-fund this
obligation. This pre-funding option will remove any concern by retired
miners and their dependents that their future health care benefits
might be threatened, and will allow the companies who choose this
option to remove the unfair burden of financial uncertainty imposed by
provisions of the Coal Act of 1992.
Finally, it is critically important that any legislation in this
area refund the improperly collected premiums from the ``Super
Reachback'' companies. The Supreme Court concluded that these, and
similarly situated companies, should never have been assessed premiums
to finance the Combined Benefit Fund in the first place.
Including these three issues in AML reauthorization legislation
will serve the dual purpose of assuring the funding of retiree health
benefits and ending the unfair burden placed on business entities--some
of whom never employed a coal miner and never participated in the coal
mining business. It is a comprehensive solution that will provide
stability and fairness in meeting our commitments to these retired coal
miners, their families and the remaining Reachback companies that have
been so unjustly saddled with this tax.
______
[The letter submitted for the record by Mr. Sessions
follows:]
[GRAPHIC] [TIFF OMITTED] T2803.001
[GRAPHIC] [TIFF OMITTED] T2803.002
Mrs. Cubin. Mr. Rahall.
Mr. Rahall. Thank you, Madam Chair.
I didn't expect this testimony today, but I think it's very
important that the other side of this story be put on the
record at this point. There is another side to this issue, as
everybody in attendance today knows, and I think it's very
important that it be raised, I guess at this point, although as
I said, it's not the subject of today's hearing, nor did I
expect this. But the bottom line is, these so-called
``reachbacks'' signed contractual agreements with the UMWA that
contained what is known as the Evergreen clause. They signed
these contractual agreements, promising health care.
Now they want out of the agreements, for whatever reason
we'll not get into, but they want to walk away from these
contractual obligations. So I think that clearly must be put on
the record, that there is another side to this story.
Mrs. Cubin. Thank you, Mr. Rahall.
Mr. Sessions, I do appreciate your testimony. As Mr. Rahall
said, there are two sides to this story. I don't see the
relationship between AML funding and the reachback companies,
but I would recommend that you present this same testimony at a
Ways and Means hearing because I truly see it in the
jurisdiction of Ways and Means. But we are appreciative that
you're here and appreciate your testimony.
Thank you, and thank you for calling me ``young'' twice.
Now I would like to recognize the third panel, Dave Young
of the Bituminous Coal Operators Association, and Cecil
Roberts, President of the United Mine Workers of America. We
have had Cecil before this Committee many times and appreciate
your appearance here again today.
With that, I recognize Mr. Young for 5 minutes of
testimony.
STATEMENT OF DAVID M. YOUNG, PRESIDENT,
BITUMINOUS COAL OPERATORS' ASSOCIATION
Mr. Young. Good afternoon, Madam Chairman. I am President
of the Bituminous Coal Operators' Association, and I would like
to express my appreciation to the Committee for conducting this
hearing. It gives the BCOA and other interested parties the
opportunity to comment and make recommendations on the
reauthorization of the Abandoned Mine Land program, or AML,
within the context of H.R. 3796, as introduced by yourself and
Congressman Rahall.
Our member companies have a keen interest in the operation
of the program, and we believe that H.R. 3796, Cubin/Rahall,
puts forth necessary reforms for the program to ensure that
needed reclamation can be completed in this country.
We also urge the Committee to include provisions extending
to coal ``orphan'' retirees in the '92 and '93 plans the same
protection the legislation provides for ``orphan''
beneficiaries in the Combined Benefit Fund. With this addition,
we will support the legislation.
The Coal Act set forth the principle that existing, in-
business companies would pay for the retiree health expenses of
their former employees, and the Government, by the use of
interest from the coal industry funded AML program, would cover
the cost of those retirees whose former employers were no
longer in business, ``orphans.''
Coal industry retirees who become orphans receive benefits
from three separate plans today based solely on their date of
retirement. The Combined Benefit Fund provides benefits to
miners who retired before July 20, 1992, based on premiums
charged to employers and the use of AML interest to cover the
orphan retirees.
In the case of a complete bankruptcy, that company's
retirees in the Combined Benefit Fund are transferred to orphan
status. The Coal Act also required companies to pay for the
benefits of the retirees who were on their company plans and
active employees who retired by September 30 of 1994. In this
instance, the Act created the 1992 plan to provide for retiree
health benefits for these company plan orphans. Finally,
eligible miners who retired after September 30th of '94, who
become orphans, are enrolled in the '93 fund.
Since the passage of the Coal Act, the distribution of coal
industry orphans retirees has changed dramatically, and in ways
that could not have been foreseen in 1992. When the Combined
Benefit Fund was established in February of 1993, more than 95
percent of the orphans were in the combined fund. At the end of
2003, however, less than 60 percent of the orphans today are in
the combined fund. This percentage shift is a trend that will
continue in the coming years.
Unlike the combined fund, the 1992 and 1993 orphan plans
rely exclusively on private companies to provide health
benefits. At the time of the legislative compromise that
created the Coal Act, it was not anticipated that by adopting
the 1992 orphan plan funding mechanism Congress was creating a
``last employer standing'' club, which like its predecessor
plans, would prove to be unsustainable. This is dramatically
demonstrated by the recent bankruptcies in the steel industry
that could not have been foreseen and projected in 1992.
For example, LTV, Bethlehem Steel, and National Steel have
each filed for Chapter 7 bankruptcy, adding approximately 5,000
of their former coal miners to the orphan beneficiaries already
in the 1992 plan, and another 5,000 steel industry mining
retirees were transferred to orphan status in the combined
fund. One other major contributor with over 5,000 beneficiaries
is in Chapter 11, and the outcome of that bankruptcy proceeding
is very uncertain at this time.
The Medicare drug demonstration program has helped to
address orphan plan needs for this calendar year. Special
appropriations of prior year AML interest have averted the
Combined Benefit Fund cuts in the earlier years. However, these
stopgap measures are not a long-term solution to the orphan
financing problem. Benefit cuts could occur as early as next
year, 2005, unless the orphan financing mechanisms of the Coal
Act are revised to meet the Act's goal of providing health care
benefits to orphan retirees.
The steel industry bankruptcies have created inequitable
and unsustainable burdens and, therefore, a fresh approach is
required if the Coal Act's goals are to be maintained. Congress
was correct to make AML interest an integral part of the
original solution to the coal industry retiree health care
problem. Reauthorization of the AML program provides the
opportunity to complete the job begun in 1992 by financing the
costs of all coal orphan retirees. Failure to use this
opportunity to address the orphan financing issue clearly
threatens the long-term viability of these funds.
We appreciate this opportunity to provide our views on H.R.
3796 and look forward to working with the Committee as the
legislative process unfolds.
Thank you.
[The prepared statement of Mr. Young follows:]
Statement of David M. Young, President,
Bituminous Coal Operators' Association
Good morning, my name is Dave Young and I am President of the
Bituminous Coal Operators' Association (BCOA). The BCOA represents its
members in collective bargaining with the United Mine Workers of
America. BCOA is a settler of various multi-employer Funds including
those established by the Coal Industry Retiree Health Benefit Act of
1992 (``Coal Act''). BCOA also represents its members before Congress
and the Executive Branch on retiree health and pension issues and coal
mine health and safety.
I want to express my appreciation to the Committee for conducting
this hearing. It gives the BCOA and other interested parties the
opportunity to comment and make recommendations on the reauthorization
of the Abandoned Mine Land (``AML'') Program within the context of H.R.
3796 as introduced by Representatives Cubin and Rahall. Our member
companies have a keen interest in the operation of the Program, and we
believe H.R. 3796 (Cubin/Rahall) puts forth necessary reforms for the
program to insure that needed reclamation can be completed. We also
urge the Committee to include provisions extending to coal ``orphan''
retirees in the 1992 and 1993 Plans the same protection the legislation
provides for ``orphan'' beneficiaries in the Combined Benefit Fund
(CBF). With this addition we will support the legislation.
The Coal Act set forth the principle that existing, in-business,
companies would pay for the retiree health expenses of their former
employees, and the government, by use of interest from the coal
industry funded AML program, would cover the cost of those retirees
whose former employers were no longer in business (``orphans'').
Coal industry retirees who become ``orphans'' receive benefits from
three separate Plans based solely on their date of retirement. The CBF
provides benefits to miners who retired before July 20, 1992, based on
premiums charged to employers and the use of AML interest to cover the
``orphan'' retirees. In the case of a complete bankruptcy, where the
company is no longer in business, that company's retirees in the CBF
are transferred to ``orphan'' status. The Coal Act also required coal
companies to pay for the benefits of the retirees who were on their
company plans and active employees who retired by September 30, 1994.
In this instance, the Act created the 1992 Plan to provide for retiree
health benefits for these company plan ``orphans.'' Finally, eligible
miners who retired after September 30, 1994, who become orphans are
enrolled in the 1993 Fund.
Since the passage of the Coal Act, the distribution of Coal
Industry orphan retirees has changed dramatically and in ways that
could not have been completely foreseen in 1992. When the CBF was
established in February of 1993 more than 95% of the 28,400 ``orphans''
were in the CBF. At the end of 2003, however, less than 60% of the
29,100 ``orphans'' are in the CBF. This percentage shift is a trend
that will continue in the coming years.
Until recently, AML annual interest had been large enough to cover
the Combined Benefit Fund's ``orphan'' expenses. It is important to
note that this interest is earned from an almost $2 billion balance in
the AML Fund that was created and is supported solely by coal industry
contributions. Between 1996 and 2002, Combined Benefit Fund orphan
expense ranged between $47 and $68 million, and AML interest was
generally adequate on an annual basis to cover these expenses.
Reauthorization of the Program is an important part of maintaining the
necessary funding base to provide for interest transfers to the CBF to
pay for ``orphan'' retiree health benefits.
Unlike the CBF, the 1992 and 1993 Orphan Plans rely exclusively on
private companies to provide health benefits. At the time of the
legislative compromise that created the Coal Act, it was not
anticipated that by adopting the 1992 Orphan Plan funding mechanism,
Congress was creating a ``last employer standing'' club that, like its
predecessor plans, would prove to be unsustainable. This is
dramatically demonstrated by the recent bankruptcies in the steel
industry that could not have been projected when the Act was passed in
1992. For example, LTV, Bethlehem Steel and National Steel have each
filed for Chapter 7 bankruptcy adding a total of approximately 5,000 of
their former coal miners to the ``orphan'' beneficiaries already in the
1992 Plan and another 5,000 steel industry mining retirees were
transferred to ``orphan'' status in the CBF. One other major
contributor with over 5,000 retired beneficiaries is in Chapter 11 and
the outcome of that bankruptcy proceeding is uncertain at this time.
The Medicare drug demonstration program has helped to address
orphan plan needs for this calendar year. Special appropriations of
prior year AML interest have averted CBF benefit cuts in earlier years.
However, these stopgap measures are not a long-term solution to the
orphan-financing problem. Benefit cuts could occur as early as 2005
unless the orphan financing mechanisms of the Coal Act are revised to
meet the Act's goal of providing health care benefits to orphan
retirees.
The steel industry bankruptcies have created inequitable and
unsustainable burdens and, therefore, a fresh approach is required if
Coal Act's goals are to be maintained. Congress was correct to make AML
interest an integral part of the original solution to the coal industry
retiree health care problem. Reauthorization of the AML Program
provides the opportunity to complete the job begun in 1992 by financing
the costs of all coal ``orphan'' retirees. Failure to use this
opportunity to address the orphan financing issue clearly threatens the
long-term viability of these Funds.
We appreciate this opportunity to provide our views on H.R. 3796
and look forward to working with the Committee as the legislative
process unfolds.
______
Mrs. Cubin. Thank you, Mr. Young.
I would now like to recognize Mr. Roberts for 5 minutes.
STATEMENT OF CECIL ROBERTS, PRESIDENT,
UNITED MINE WORKERS OF AMERICA
Mr. Cecil Roberts. Madam Chairman, there has been a lot
said about keeping promises here today. I want to take a moment
and thank you for keeping one.
I first appeared before your Subcommittee 4 years ago,
after a rally here in Washington of 12,000 UMWA retirees who
were fighting to keep their health care. On that day, after the
rally, I had the pleasure of testifying before your
Subcommittee, and you promised that day that you would work
with Congressman Rahall to try to find a solution and to help
coal miners keep their health care. You have kept that promise.
On behalf of all these beneficiaries, I want to thank you.
I would also like to thank and put on the record our thanks
to the Governor's office in Wyoming, who has been very
supportive as we have tried to find a solution to meet
Wyoming's needs and West Virginia's needs, and all the coal
field communities' needs, that we also do not leave behind
these retirees. We want to thank his office and him, and if you
would pass that on, I would certainly appreciate it.
Of course, I always state publicly the appreciation that I
have and the friendship that I have, as well as all our
members, for the work of Congressman Rahall. It is our belief
that coal miners don't have a better friend in the House of
Representatives, or have we ever had a better friend in the
House of Representatives, than Congressman Rahall. He knows
these issues and he has fought hard for them over many, many
years. We thank him publicly today for that.
Much has been said today and I don't desire to restate some
of the facts that are on the record already. But I just want to
remind everyone of the Government's heavy involvement in the
protection of coal miners and the promise that was made.
Congressman Rahall, in his opening statement, mentioned the
fact that the President of the United States, the highest
official in our land, initially made this promise in 1946 to
John L. Lewis, who was the president of the United Mine Workers
of America at that time. I think we should go back to the
thirties for just a moment, if I might.
Leading up to the war and during the war, World War II,
John L. Lewis and the United Mine Workers desired to have
pension protection for coal miners and health care for coal
miners, but they stayed on the job at the President's urging so
that we could win that war. Then in 1946 we had the historic
agreement.
But after we had the historic agreement in 1946, the
Government set up a commission known as the Boone Commission
that went out and looked at the health care and the living
standards of coal miners throughout the United States of
America, every State in the Union where coal was being mined.
That report is on record that indicates the need for health
care in coal field communities and pensions in the coal field
communities. So the Government was involved before 1946, the
Government was involved in 1946, and the Government was
involved right after 1946. I believe the final report of the
Boone Commission either came out in 1947 or 1948.
Then in 1990, during the historic Pittston strike over the
cutting off of 1,600 pensioners' health care, the U.S.
Government once again became involved in this dispute through
the Secretary of Labor's office, Elizabeth Dole, and
establishing a mediator that she appointed, and also William
Usery and other Secretaries of Labor. I would point out that
both of these Secretaries of Labor that I just mentioned were
Republicans and were appointed by Republican Presidents, so it
has been a bipartisan effort to deal with this particular
effort.
Of course, we had the passage in 1992 of the historic Coal
Act, introduced in the Senate by Jay Rockefeller and in the
House by Nick Rahall. Of course, down through the years Senator
Byrd has had to step forward and help provide funding for this
program. Here recently, this current Administration helped
provide additional funding to carry this program forward until
October of next year.
Everyone involved in this, Republican and Democrat, this
White House, all the leadership in this country, says this is a
program that needs to be protected and we need to find a long
term, permanent solution to this problem. I support the efforts
that you, Congressman Rahall, are making on behalf of this
Nation's 46,000 coal miners.
I just want to mention one thing, if I might. Last Thursday
I was in southwestern Pennsylvania, and I met with 1,000
beneficiaries of this program. They lined up after that
meeting, and I spoke to widows whose husbands has just passed
away, and they were crying and saying, if it was not for this
particular fund, they would be bankrupt. They would not have
been able to survive.
This one particular lady that had just lost her husband,
she has cancer herself. She said, ``I don't know what I would
do without the United Mine Workers, this Combined Benefit Fund,
and our friends in Congress.'' That's the message I will leave
with the two of you today.
Thank you.
[The prepared statement of Mr. Cecil Roberts follows:]
Statement of Cecil Roberts, President, United Mine Workers of America
Madam Chairman, members of the Subcommittee, I am Cecil Roberts,
President of the United Mine Workers of America (UMWA). The UMWA is a
labor union that has represented the interests of coal miners and other
workers in the United States and Canada for more than 114 years. We
appreciate the opportunity to appear before the Subcommittee to discuss
the Abandoned Mine Land Reclamation Fund (AML Fund) and its vital
relationship to the Coal Act. Representing people who live and work in
the nation's coal fields, the UMWA has a strong interest in both the
reclamation of abandoned mine lands and the preservation of health care
for UMWA retirees who worked hard all their lives to provide the nation
with energy. We strongly support the extension of the AML program in a
way that accomplishes both these goals.
The UMWA supports the goals of the Surface Mining Act and the
Abandoned Mine Lands program. When enacting the Surface Mining Control
and Reclamation Act of 1977 (SMCRA), Congress found that ``surface and
underground coal mining operations affect interstate commerce,
contribute to the economic well-being, security, and general welfare of
the Nation and should be conducted in an environmentally sound
manner.'' That statement is as true today as it was in 1977. Coal
mining contributes significantly to our national economy by providing
the fuel for over half of our nation's electricity generation. Coal
miners are proud to play their part in supplying our nation with
domestically-produced, cost-effective, reliable energy. We also live in
the communities most impacted by mining and support the intent of
Congress that coal mining must be conducted in an environmentally sound
manner.
The AML program, financed by production fees levied on the coal
industry, was designed to provide the means to reclaim lands that had
been mined in previous years and abandoned before reclamation had been
done. The law was amended in 1991 to permit the investment of monies
held in the AML Fund to earn interest. In 1992, the Energy Policy Act
extended the AML fees until 2004 and authorized the use of AML interest
to pay for the cost of benefits for certain eligible retirees under the
Coal Act.
The UMWA believes that when Congress authorized the use of AML
interest to finance the cost of health care for retired coal miners
under the Coal Act, it was a logical extension of the original intent
of Congress when the AML Fund was established. Congress joined these
two programs together for a specific reason--they both represent legacy
costs of the coal industry that compelled a national response. When
Congress created the AML Fund in 1977, it found that abandoned mine
lands imposed ``social and economic costs on residents in nearby and
adjoining areas.'' When Congress enacted the Coal Act in 1992, it also
had in mind how to avoid unacceptable social and economic costs
associated with the loss of health benefits for retired coal miners and
widows.
The UMWA Combined Benefit Fund (CBF) was created by Congress to
provide health benefits to retired coal miners and their widows. Today,
the Combined Benefit Fund provides health benefits to nearly 50,000
elderly beneficiaries who reside in nearly every state in the nation.
The average age of the CBF beneficiary population is about 80 years,
about two-thirds of them are widows and their total estimated annual
health cost is about $360 million. Congress intended for the financial
mechanisms it put in place to provide self-sustaining financing of the
cost of those benefits. However, rapidly rising health costs, a series
of adverse court decisions, bankruptcies of major contributing
employers (particularly in the steel industry), and recent low interest
earnings at the AML Fund have eroded those financing mechanisms and
placed the CBF in financial jeopardy. The bankruptcies have also added
thousands of new orphan retirees to the UMWA 1992 Benefit Fund and the
UMWA 1993 Benefit Fund, placing serious strains on the financial
operations of those two plans. These continuing financial difficulties
highlight the need to include Coal Act reforms in the AML re-
authorization.
Congress has intervened three times in the past five years to shore
up the financial condition of the CBF through emergency appropriations
of interest money from the AML Fund. In December 1999, Congress
provided $68 million to cover shortfalls in CBF premiums. In October
2000, Congress appropriated up to $96.8 million to cover deficits in
the CBF's net assets through August 31, 2001. And most recently, in
January 2003, Congress appropriated $34 million from the AML interest
account to the Combined Benefit Fund. In addition, the UMWA Funds and
the Center for Medicare and Medicaid Services (CMS) expanded their
existing nationwide, risk-sharing Medicare Demonstration project in
January 2001 to include a new prescription drug component. That project
was scheduled to run three years, until mid-2004, and to reimburse the
Funds for 27% of its Medicare prescription drug expenditures. It is a
pilot project designed to demonstrate the efficacy of providing
prescription drugs under Medicare, a timely project that we believe
will prove useful to CMS and Congress as we expand prescription drug
coverage to the Medicare population.
I am pleased to report that the Administration, with bipartisan
support from members of Congress, recently announced an extension of
the prescription drug demonstration program that will increase the
percentage reimbursement and extend the program until September 30,
2005. This infusion of additional cash is certainly welcome news, as it
will prevent what otherwise would have been a disastrous benefit cut.
This, however, is only a temporary reprieve. There is a clear and
growing bipartisan consensus that there must be a long-term solution to
the financial problems of the Coal Act.
The need for a long-term solution for the Coal Act coincides with
the need to re-authorize the AML Fund. We believe the re-authorization
effort can, and should, meet four broad policy objectives:
Provide sufficient duration and level of tax to fund the
reclamation needs;
Focus on Priority 1 and 2 public health and safety
projects;
Resolve the long-standing dispute between states and OSM
over the state share of collections; and,
Provide long-term financial security for the Coal Act
benefit plans.
Two primary AML re-authorization bills have been introduced in the
House of Representatives. The Administration proposal (H.R. 3778) has
been introduced by Representatives John Peterson and Don Sherwood of
Pennsylvania. In addition, a comprehensive AML reform bill (H.R. 3796,
the Abandoned Mine Lands Reclamation Reform Act of 2004) has been
introduced by Representatives Barbara Cubin of Wyoming and Nick Rahall
of West Virginia. Both AML proposals extend the authority of the AML to
collect the reclamation fees at a lower rate than current law mandates.
Both bills appear to raise about the same amount in cumulative revenue,
although there are slight differences in fee amounts and duration.
However, H.R. 3778 does not provide for a long-term financial solution
for the continued provision of benefits under the Coal Act. Only H.R.
3796 accomplishes that goal.
The UMWA strongly urges Congress to enact a re-authorization bill
modeled on H.R. 3796, a proposal with broad bipartisan support in the
coal states. Wyoming, West Virginia and Kentucky are the nation's top
three coal-producing states, producing about 60% of the nation's coal
output. Almost every member of the House of Representatives from these
three essential coal-producing states have co-sponsored H.R. 3796. If
enacted, the Abandoned Mine Lands Reclamation Reform Act of 2004 would
extend OSM fees for 15 years, lower the rate paid by coal producers,
target greater resources to high priority reclamation sites that
threaten human health and safety, resolve the long-standing dispute
between the states and OSM about the state share of fee collections and
provide for the long-term financial stability of the Coal Act benefit
plans.
The UMWA supports this legislative effort because we know that a
promise was made by the federal government and by the coal industry
that these retirees would have lifetime health benefits. Today we need
the help of Congress to ensure that the promise is kept, and the
reforms embodied in H.R. 3796 will accomplish that. We are not alone in
urging Congress to act. Over the past few years, a number of state
legislatures in coal field states (Alabama, Illinois, Indiana,
Kentucky, Pennsylvania and West Virginia), along with dozens of county
and city governments, have adopted resolutions urging Congress and the
Administration to ensure that retired miners continue to receive the
health benefits they were promised. These state and local political
authorities know how important the UMWA Funds is to their state's
medical infrastructure and how vitally necessary the health benefits
are to the retirees and their families.
Given the need to re-authorize the Abandoned Mine lands program,
and the growing bipartisan consensus that we need a long-term fix to
the problems of the Coal Act, now is the time to act.
GAO Study
In 2002, the U.S. General Accounting Office (GAO) issued its most
recent report on the Coal Act, entitled ``Retired Coal Miners' Health
Benefit Funds: Financial Challenges Continue.'' Among the findings of
the GAO were that:
the Combined Benefit Fund (CBF) faces continuing
financial challenges which have been exacerbated by various adverse
court decisions that have reduced the per beneficiary premiums paid to
the CBF and relieved some companies of responsibility for paying for
their beneficiaries;
CBF beneficiaries traded lower pensions over the years
for the promise of their health benefits and have engaged in
considerable cost sharing by contributing $210 million of their pension
assets to help finance the CBF;
the benefits provided to Coal Act beneficiaries are
generally comparable to coverage provided by major manufacturing
companies and companies with unionized work forces;
CBF beneficiaries tend to be sicker, and therefore use
more health care, than the average Medicare population; and
the CBF trustees have adopted numerous managed care
initiatives and have a history of achieving savings against their
Medicare targets in demonstration projects, thus saving money not only
for the Funds but for Medicare and the U.S. Treasury.
The most recent GAO report clearly supports the positions we have
taken before Congress and the need for additional legislation. A
promise made in the White House in 1946 was reaffirmed in 1992.
Congress intended the Coal Act to be self-sustaining and self-
financing, but subsequent court decisions have eroded that financing.
There is no question that this is an elderly, frail population that is
sicker than the general Medicare population and deserves the benefits
they were promised. There is also no question that the Funds have
aggressively managed the benefit plans and instituted state-of-the-art
managed care programs that aim to improve the quality of care and
reduce costs. Unfortunately, there is also no question that the
nation's promise to retired coal miners will be violated if we do not
enact a long-term financial solution to the Coal Act funding crisis.
This is a unique population and a unique situation. We are unaware
of any other case in which a major industry-wide health and welfare
plan in the private sector was created in a contract between the
federal government and the workers. All three branches of our
government have played substantial roles in creating, shaping and
determining the fate of the UMWA Funds. The General Accounting Office
clearly laid out the financial difficulties facing the Funds and more
recent actuarial projections show that Congress must act in order to
shore up the financial structure. Again, we encourage members of
Congress to enact legislation modeled on H.R. 3796, the Abandoned Mine
Lands Reclamation Reform Act of 2004.
The UMWA Health and Retirement Funds and the U.S. Government
The UMWA Health and Retirement Funds (the Funds) was created in
1946 in a contract between the United Mine Workers of America and the
federal government during a time of government seizure of the mines.
The contract was signed in the White House with President Harry Truman
witnessing the historic occasion.
The UMWA first began proposing a health and welfare fund for coal
miners in the late-1930s but met strident opposition from the coal
industry. During World War II, the federal government urged the union
to postpone its demands to ensure coal production for the war effort.
When the National Bituminous Wage Conference convened in early 1946,
immediately following the end of the war, a health and welfare fund for
miners was the union's top priority. The operators rejected the
proposal and miners walked off the job on April 1, 1946. Negotiations
under the auspices of the U.S. Department of Labor continued
sporadically through April. On May 10, 1946, President Truman summoned
John L. Lewis and the operators to the White House. The stalemate
appeared to break when the White House announced an agreement in
principle on a health and welfare fund.
Despite the White House announcement, the coal operators still
refused to agree to the creation of a medical fund. Another conference
at the White House failed to forge an agreement and the negotiations
again collapsed. Faced with the prospect of a long strike that could
hamper post-war economic recovery, President Truman issued an Executive
Order directing the Secretary of the Interior to take possession of all
bituminous coal mines in the United States and to negotiate with the
union ``appropriate changes in the terms and conditions of
employment.'' Secretary of the Interior Julius Krug seized the mines
the next day. Negotiations between representatives of the UMWA and the
federal government continued, first at the Interior Department and then
at the White House, with President Truman participating in several
conferences.
After a week of negotiations, the historic Krug-Lewis agreement was
announced and the strike ended. It created a welfare and retirement
fund to make payments to miners and their dependents and survivors in
cases of sickness, permanent disability, death or retirement, and other
welfare purposes determined by the trustees. The fund was to be managed
by three trustees, one to be appointed by the federal government, one
by the UMWA and the third to be chosen by the other two. Financing for
the new fund was to be derived from a royalty of 5 cents per ton of
coal produced.
The Krug-Lewis agreement also created a separate medical and
hospital fund to be managed by trustees appointed by the UMWA. The
purpose of the fund was to provide for medical, hospital, and related
services for the miners and their dependents. The Krug-Lewis agreement
also committed the federal government to undertake ``a comprehensive
survey and study of the hospital and medical facilities, medical
treatment, sanitary and housing conditions in coal mining areas.'' The
expressed purpose was to determine what improvements were necessary to
bring coal field communities in conformity with ``recognized American
standards.''
To conduct the study, the Secretary chose Rear Admiral Joel T.
Boone of the U.S. Navy Medical Corps. Government medical specialists
spent nearly a year exploring the existing medical care system in the
nation's coal fields. Their report, ``A Medical Survey of the
Bituminous Coal Industry,'' found that in coal field communities,
``provisions range from excellent, on a par with America's most
progressive communities, to very poor, their tolerance a disgrace to a
nation to which the world looks for pattern and guidance.'' The survey
team discovered that ``three-fourths of the hospitals are inadequate
with regard to one or more of the following: surgical rooms, delivery
rooms, labor rooms, nurseries and x-ray facilities.'' The study
concluded that ``the present practice of medicine in the coal fields on
a contract basis cannot be supported. They are synonymous with many
abuses. They are undesirable and in many instances deplorable.''
Thus the Boone report not only confirmed earlier reports of
conditions in the coal mining communities, but also established a
strong federal government interest in correcting long-standing
inadequacies in medical care delivery. Perhaps most important, it
provided a road map for the newly created UMWA Fund to begin the
process of reform.
The Funds established ten regional offices throughout the coal
fields with the direction to make arrangements with local doctors and
hospitals for the provision of ``the highest standard of medical
service at the lowest possible cost.'' One of the first programs
initiated by the Funds was a rehabilitation program for severely
disabled miners. Under this program, more than 1,200 severely disabled
miners were rehabilitated. The Funds searched the coal fields to locate
disabled miners and sent them to the finest rehabilitation centers in
the United States. At those centers, they received the best treatment
that modern medicine and surgery had to offer, including artificial
limbs and extensive physical therapy to teach them how to walk again.
After a period of physical restoration, the miners received
occupational therapy so they could provide for their families.
The Funds also made great strides in improving overall medical care
in coal mining communities, especially in Appalachia where the greatest
inadequacies existed. Recognizing the need for modern hospital and
clinic facilities, the Funds constructed ten hospitals in Kentucky,
Virginia and West Virginia. The hospitals, known as Miners Memorial
Hospitals, provided intern and residency programs and training for
professional and practical nurses. Thus, because of the Funds, young
doctors were drawn to areas of the country that were sorely lacking in
medical professionals. A 1978 Presidential Coal Commission found that
medical care in the coal field communities had greatly improved, not
only for miners but for the entire community, as a result of the UMWA
Funds. ``Conditions since the Boone Report have changed dramatically,
largely because of the miners and their Union--but also because of the
Federal Government, State, and coal companies.'' The Commission
concluded that ``both union and non-union miners have gained better
health care from the systems developed for the UMWA.''
The Coal Commission
In the 1980s, medical benefits for retired miners became a sorely
disputed issue between labor and management, as companies sought to
avoid their obligations to retirees and dump those obligations onto the
UMWA Funds, thereby shifting their costs to other signatory employers.
Courts had issued conflicting decisions in the 1980s, holding that
retiree health benefits were indeed benefits for life, but allowing
individual employers to evade the obligation to fund those benefits.
The issue came to a critical impasse in 1989 during the UMWA-Pittston
Company negotiations. Pittston had refused to continue participation in
the UMWA Funds, while the union insisted that Pittston had an
obligation to the retirees.
Once again the government intervened in a coal industry dispute
over health benefits for miners. Secretary of Labor Elizabeth Dole
appointed a special ``super-mediator,'' Bill Usery, also a former
Secretary of Labor. Ultimately the parties, with the assistance of
Usery and Secretary Dole, came to an agreement. As part of that
agreement, Secretary Dole announced the formation of an Advisory
Commission on United Mine Workers of America Retiree Health Benefits,
which became known as the ``Coal Commission.'' The commission,
including representatives from the coal industry, coal labor, the
health insurance industry, the medical profession, academia, and the
government, made recommendations to the Secretary and the Congress for
a comprehensive resolution of the crisis facing the UMWA Funds. The
recommendation was based on a simple, yet powerful, finding of the
commission:
``Retired miners have legitimate expectations of health care
benefits for life; that was the promise they received during
their working lives, and that is how they planned their
retirement years. That commitment should be honored.''
The underlying Coal Commission recommendation was that every
company should pay for its own retirees. The Commission recommended
that Congress enact federal legislation that would place a statutory
obligation on current and former signatories to the National Bituminous
Coal Wage Agreement (NBCWA) to pay for the health care of their former
employees. The Commission recommended that mechanisms be enacted that
would prevent employers from ``dumping'' their retiree health care
obligations on the UMWA Funds. Finally, the Commission urged Congress
to provide an alternative means of financing the cost of ``orphan
retirees'' whose companies no longer existed.
The Coal Act
Recognizing the crisis that was unfolding in the nation's coal
fields, Congress acted on the Coal Commission's recommendations. The
original bill introduced by Senator Rockefeller sought to impose a
statutory obligation on current and former signatories to pay for the
cost of their retirees in the UMWA Funds, require them to maintain
their individual employer plans for retired miners, and levy a small
tax on all coal production to pay for the cost of orphan retirees.
Although the bill was passed by both houses of Congress, it was vetoed
as part of the Tax Fairness and Economic Growth Act of 1992.
In the legislative debate that followed, much of the underlying
structure of the Coal Commission's recommendations was maintained, but
there was strong opposition to a general coal tax to finance the
benefits of orphan retirees. A compromise was developed that would
finance orphans through the use of interest on monies held in the AML
Fund. In addition, the Union accepted a legislative compromise that
included the transfer of $210 million of pension assets from the UMWA
1950 Pension Plan. With these compromises in place, the legislation was
passed by Congress and signed into law by President Bush as part of the
Energy Policy Act.
Under the Coal Act, two new statutory funds were created--the UMWA
Combined Benefit Fund (CBF) and the UMWA 1992 Benefit Fund. The former
UMWA 1950 and 1974 Benefit Funds were merged into the CBF, which was
charged with providing health care and death benefits to retirees who
were receiving benefits from the UMWA 1950 and 1974 Benefit Plans on or
before July 20, 1992. The CBF was essentially closed to new
beneficiaries. The Coal Act also mandated that employers who were
maintaining employer benefit plans under UMWA contracts at the time of
passage would be required to continue those plans under Section 9711 of
the Coal Act. Section 9711 was enacted to prevent future ``dumping'' of
retiree health care obligations by companies that remain in business.
To provide for future orphans not eligible for benefits from the CBF,
Congress established the UMWA 1992 Benefit Fund to provide health care
to miners who retired prior to October 1, 1994, and whose employers are
no longer providing benefits under their 9711 plans.
The CBF is financed by per-beneficiary premiums paid by employers
with retirees in the fund. The premium is set by the Social Security
Administration and is escalated each year by the medical component of
the Consumer Price Index. Interest earned by the AML Fund is made
available to finance the cost of orphan retirees. The remainder of CBF
income derives from Medicare capitation and risk sharing arrangements,
DOL Black Lung payments, investment income and miscellaneous court
settlements. The benefits for orphans covered by the UMWA 1992 Fund are
financed solely by operators that were signatory to the NBCWA of 1988.
In passing the Coal Act, Congress recognized the legitimacy of the
Coal Commission's finding that ``retired miners are entitled to the
health care benefits that were promised and guaranteed them.'' Congress
specifically had three policy purposes in mind in passing the Coal Act:
``(1) to remedy problems with the provision and funding of
health care benefits with respect to the beneficiaries of
multi-employer benefit plans that provide health care benefits
to retirees in the coal industry;
(2) to allow for sufficient operating assets for such plans;
and
(3) to provide for the continuation of a privately financed
self-sufficient program for the delivery of health care
benefits to the beneficiaries of such plans.''
Without question, Congress intended that the Coal Act should
provide ``sufficient operating assets'' to ensure the continuation of
health care to retired coal miners. However, the financial mechanisms
have been eroded and have placed the Coal Act in continuing financial
crises.
Recent Court Decisions
The 2002 GAO study found that a number of court decisions have
eroded the financial condition of the Combined Fund--and the legal
onslaught on the Coal Act continues. While Congress clearly intended
that the Coal Act be financially self-sustaining, various court
decisions have undercut Congressional intent. A 1995 decision by a
federal court in Alabama in NCA v. Chater overturned the premium
determination by the Social Security Administration (SSA) and reduced
the premium paid by employers by about 10%. Over time, the effect of
this decision was to remove hundreds of millions of dollars from the
financing structure of the Coal Act. A 1999 decision by the same court
ordered the CBF to return about $40 million in contributions to the
employers, representing the difference between the original SSA premium
rate actually paid and the rate established in NCA. The trustees of the
CBF filed suit against the Social Security Administration in the
District of Columbia in an attempt to set aside the NCA decision. In
late-2002, the D.C. Court struck down the Social Security
Administration's nationwide application of the NCA decision and ordered
SSA to report to the Court what premium rate should apply to companies
not covered by the NCA decision. In June 2003, SSA notified the Court
it would apply a higher premium to companies not covered by the earlier
decision. However, over 200 companies have filed another action in
Alabama asking to avoid paying the higher rate.
In 1998, the Supreme Court rendered a decision in Eastern
Enterprises that struck down the obligation to contribute to the CBF
for companies that were signatory to earlier NBCWAs but did not sign
the 1974 or later contracts. Those employers were relieved of their
contribution obligations in the future and the CBF returned millions of
dollars in prior contributions. Most of these retirees are now part of
the unassigned beneficiary pool whose benefits are funded from other
sources. Since that time, a number of other companies who signed the
1974 or later NBCWAs have also attempted to convince the courts that
they, too, should be relieved of their responsibility. I am pleased to
report that most of these cases have now completed their appeals
process, with the courts holding that the companies cannot walk away
from their Coal Act obligations.
The cumulative effect of these court decisions threatened a
repetition of the problems and re-creation of the crisis of the 1980s
that led to the creation of the Coal Act, meaning employers have been
relieved of liability for their retirees and revenues have been
significantly reduced from the employers that remain obligated.
Compounding the revenue loss stemming from these court decisions is the
fact that the escalator used to adjust the premium for inflation (the
medical component of the Consumer Price Index) is inadequate to measure
the health care cost increases in a closed group of aging beneficiaries
who experience annual increases in utilization. The combination of loss
of income, an increasing orphan population and an inadequate escalator
have led to an imminent financial crisis for Coal Act beneficiaries.
I mentioned earlier the bankruptcies of a number of steel companies
that had retirees covered by the Coal Act. Recent bankruptcies at LTV,
Bethlehem Steel and other integrated steel companies that operated coal
mines under UMWA contracts have further reduced the premiums paid to
the CBF, increased orphan costs for the AML Fund, and added thousands
of 9711 plan beneficiaries to the 1992 Plan. The growth in the orphan
population has forced a dwindling number of employers to fund a growing
burden of health care expenses for retirees who did not work for them.
The magnitude of these bankruptcies, which we believe that Congress did
not anticipate when it passed the Coal Act, has exacerbated the
problems of the Coal Act and reinforce the call for a long-term
solution.
Now is the Time For a Long-Term Solution
Madam Chairman, there is a growing bipartisan consensus that
Congress must forge a long-term solution to the financial problems of
the Coal Act. We believe that the re-authorization of the AML Fund
provides the best opportunity to do so. Over their working lives, these
retirees traded lower wages and pensions for the promise of retiree
health care that began in the White House in 1946. In 1992, they
willingly contributed $210 million of their pension money to ensure
that the promise would be kept. Everything that this nation has asked
of them--in war and in peace--they have done. They are part of what has
come to be called the ``Greatest Generation'' and deservedly so. They
have certainly kept their end of the bargain that was struck with
President Truman. But now they find that the promise they worked for
and depended on is in jeopardy of being broken. We must stand up and
say that this promise will be kept. We can do so by enacting H.R. 3796.
Madam Chairman, we thank you and the Subcommittee for the
opportunity to add our support to the effort to re-authorize the AML
program and to provide a long-term solution to the financial problems
of the Coal Act. I would be happy to answer any questions you may have.
______
Mrs. Cubin. Thank you. I appreciate your testimony.
I want to start with Mr. Young. Could you respond to
Director Jarrett's statement that the AML fund currently earns
4.1 percent?
Mr. Young. I think, Madam Chairman, that Mr. Jarrett was
correct on the $1.3 billion, which he spoke to under the trust
fund. I think about 60 percent of the money is invested over 4
percent. That process was started in October, with about half
of the 1.3, and then again the remaining half in January--
Mrs. Cubin. In October of 2003?
Mr. Young. Yes.
Mrs. Cubin. So it hasn't even been a full year.
Mr. Young. It's been less than 6 months. And the remainder,
the $700 million, to my understanding, is on an overnight
basis, with about, I think, less than a 1-percent interest
return at the moment.
Mrs. Cubin. Thank you.
Your testimony calls for the Committee to extend the orphan
provisions of the CBF to the orphan retirees in 1992 and 1993.
What would likely be the ballpark cost of an addition over the
15 authorization of this bill, using CBO figures if you have
them.
Mr. Young. I do not have CBO figures, but I have some
figures that I will share with you from the health funds, and
their actuary is fairly accurate and I think the CBO uses his
numbers as a whole.
The expense is limited basically by the interest that is
returned to the AML fund. If you use an estimate of 4 percent
interest, as we're getting at the moment--I would like to see
that be higher, but 4 percent--that would be limited. The '92
fund would be approximately $149 million over the next 10
years, and the '93 fund would be slightly less at $132 million
over the 10 year period.
Mrs. Cubin. Thank you.
You called for a fresh approach to maintaining the Coal
Act's goals in light of the steel industry's bankruptcies.
Could you elaborate on what you view as a ``fresh approach''?
Mr. Young. A fresh approach is not the ``last man
standing'', where we have fewer coal companies as we get
smaller and smaller, paying more and more expenses for more
people. I think the funding mechanism needs to be replaced by
the interest approach of AML and working in that scenario.
On the reclamation side, we support the Cubin/Rahall
approach. That's our thinking, I think, Madam Chairman.
Mrs. Cubin. Thank you.
Mr. Rahall?
Mr. Rahall. Thank you, Madam Chair.
Gentlemen, thank you very much for your testimony today. I
don't have any specific questions, other than to make a couple
of comments.
It has been said often back home, especially at this time
of year, as we enter the political season--charges have been
leveled against me that I'm a Congressman from the UMWA,
charges I say, or that I'm a representative of special
interests in Washington. I can only respond to those charges,
President Roberts, by saying if fighting for equality, justice
and human rights and trying to keep promises made to our coal
miners is fighting for special interests, then I plead guilty.
I plead guilty, guilty, guilty as charged.
Anyway, Dave, I appreciate your comments about the '92 and
'93 plans as well. They certainly need to be addressed. It
appears here that we're creating a whole new class of orphans,
those that are being primarily orphaned as a result of the
steel industry bankruptcies that we're seeing today. I'm afraid
we may soon see ourselves back in the situation we had in the
late eighties and early nineties, which gave rise to the Dole
Commission, to which you referred, and subsequently the Coal
Act of 1992.
It is a matter of equity that we address these two plans,
the '92 and '93, as well as the CBF. It doesn't matter to a
retired person one iota, who faces health care cuts, which box
they fit into, the CBF or any of the other plans. They just
know they're going to have some rough times in their elderly
years.
I conclude by again thanking both of you for your help to
our staffs and this Committee in drafting this legislation,
your understanding of the complexities involved, your
understanding of the realities of the legislative process, and
what is doable and what is not doable here in the halls of
Congress. You both represent your memberships superbly and I
salute you for that.
President Roberts, you, for one, have never forgotten the
place from whence you come, from West Virginia. Your parents
live in Cabin Creek. Your membership that is here today with
you knows full well your daily and dedicated efforts on their
behalf, whether it's here in Washington or whether it's the
hills and hollows of West Virginia, Pennsylvania, or whatever
part of this Nation. As I said, you have never forgotten the
place from whence you come. We appreciate your leadership here
in the Congress.
Mr. Cecil Roberts. Thank you very much.
Mr. Rahall. Thank you, Madam Chair.
Mrs. Cubin. Thank you very much.
I would like to remind the witnesses that there may be
further questions we would like to submit in writing.
I want to thank you for your testimony and thank all of you
for being here today.
Mr. Rahall. Madam Chair, before we conclude, may I ask
unanimous consent that a statement of the Citizens Coal Council
be made a part of the record today, their testimony?
Mrs. Cubin. Without objection, so ordered.
[The prepared statement of the Citizens Coal Council
follows:]
Statement of Citizens Coal Council, 110 Maryland Avenue N.E. #408,
Washington, D.C. 20002, on H.R.3796 and H.R. 3778
Madame Chairwoman and Members of the Committee:
This statement is submitted on behalf of Citizens Coal Council to
the House Resources Committee on the issue of the reauthorization of
the Abandoned Mine Lands program. CCC appreciates the opportunity to
present its views and respectfully requests that this statement be
included as part of the hearing record.
Identity and Interest
Citizens Coal Council (CCC) is a federation of 47 coalfields
citizens groups in 20 states. Our members live near abandoned mine
sites and have been deeply involved in the struggle to clean them up.
They restore watersheds from mine drainage, work to identify AML
hazards, and get funding for their cleanup, cleanup abandoned mines
themselves, and work to protect their communities from drinking water
contamination from abandoned mines by working for AML-sponsored
waterlines.
CCC and its members care deeply about this program--it makes a
direct impact on our families' health and safety and the well-being of
our communities. We have worked for several years both in Washington
and in the coalfields to bring attention to its importance and the need
for reauthorization.
CCC's Position on the AML program
Abandoned mines are not just one state or another's problem. Our
entire country has benefitted from these old mines--they fueled our
country's industry for over a hundred years, making possible cross-
country railroads and cities of steel. Every coal company, regardless
of where they are located, has benefitted from the utilities' longtime
dependence on coal, and thus has a responsibility to pay for the
cleanup of these old mines.
Now, having waited 25 years to get these hazards cleaned up and
with more than 3.6 million people living within one mile of abandoned
mines, we urge the Committee to realize that this is a critical health
and safety matter and to come together to write a reauthorization bill
to solve this issue once and for all.
We ask that the Committee focus on one simple question--How can we
structure this reauthorization to clean up as many mines and protect as
many people as possible?
With that question in mind, Citizens Coal Council has not endorsed
any of the bills currently proposed in their entirety. Our members from
across the coalfields have established that certain things should be in
an AML reauthorization bill if it is truly going to cleanup these
hazards. In addition to the following, we support continued funding of
the UMWA Combined Benefits Fund through AML interest.
1. Extend the collection of the AML fee and the AML program long enough
to finish the job: 25 years.
At current levels of reclamation, 16 states will not be done the 15
years called for in H.R. 3796, including Alaska, Alabama, Colorado,
Iowa, Kansas, Kentucky, Missouri, North Dakota, Ohio, Oklahoma,
Pennsylvania, Tennessee, Utah, Virginia, and West Virginia.
Based on current funding levels, projected future production, and
estimated cost of cleaning up inventoried sites, it will take 25 years
to address AML problems in the country. Extending the program another
25 years would honor the intentions of the program created by the 1977
surface mining law--that communities which provided natural resources
and labor which fueled the nation for many years before federal
regulation of surface mining would not have to forever be burdened by
unreclaimed coal mines.
2. Increase the level of funding allocated to areas where pre-1977
mining occurred.
The primary purpose of the AML program is to reclaim land mined
before 1977. Though many of the areas that mined coal before 1977
currently have low coal production, these areas are the ones in most
desperate need and are the states that fueled the nation prior to
enactment of surface mining laws. Funding should be directed there.
3. Don't undermine the financial basis of the AML program by cutting
the fee.
The 20% fee cut called for in both bills is a waste of money that
could be spent cleaning up dangerous hazards. It is also irresponsible
in this time of deficits. Savings from the fee cut are not economically
significant and will not be passed on to the consumer--but it will cost
the AML fund $50 million a year. This is money that the AML fund
desperately needs.
4. Do not use AML moneys to subsidize coal company reclamation bonds
H.R. 3778 calls for the federal government to develop regulations
to use AML money for ``financial assurance for remining operations in
lieu of all or part of the performance bond required under Section 509
of this Act.'' This is a misappropriation of AML funds, which should be
spent on threats to our health and safety. Our communities live daily
with orange streams, subsidence, and safety hazards because there is
not enough AML money to go around. In contrast, remining usually does
not address the most hazardous sites.
Subsidizing mining bonds encourages irresponsibility. One of the
key reforms of the 1977 Surface Mining Act was to make coal companies
put up the money beforehand to reclaim their mine. If a company decides
not to reclaim, it forfeits its bond and loses that money. Without a
financial stake in the reclamation bonds, a company has no incentive
not to forfeit the bond--or not to mine recklessly before it forfeits.
In addition, remining AML sites always has the potential to
increase the size and scope of the problem, causing slides from
unstable high walls, new acid mine drainage, new subsidence, or
underground flooding. This is not something the federal government
should become financially responsible for. Remining is already
encouraged with exceptions from water quality standards.
5. Continue to recognize clean water as a health priority.
H.R. 3796 removes ``general welfare'' as a category for Priority 2
funding, meaning many stream restoration and water projects will no
longer be funded. Polluted water is a health threat and cleaning it up
should be funded that way. Restoring headwater streams, a ``general
welfare'' activity, has a direct impact on the availability of clean
drinking water and the health of the rivers downstream.
Retaining this provision does not deprive any other states of their
share of funding. It provides states with more flexibility to address
the most important hazards as they perceive them. Living with the
problems provides them with the insight to choose where this funding
should be spent to address health and safety issues.
6. Increase minimum program funding level from $2 million to $4 million
annually.
States which have significant AML problems but which have small AML
programs are supposed to be guaranteed minimum funding of their
programs by statutory mandate. Since 1977, this minimum program funding
has been set at $2 million. 25 years later, that is not enough money,
even if it was fully funded, to address the serious problems in these
states.
7. Include non-primacy state programs as minimum programs.
States which do not have their own coal regulatory programs are not
eligible for a 50% share of AML money collected in the state or funding
based on historic production. These states do not have the same minimum
program funding guarantee afforded to states with regulatory primacy.
These states are also limited in what types of AML problems they can
receive funding to address. If a state demonstrates the ability to
operate an effective abandoned mine reclamation program and funds it
accordingly, like Tennessee, it should be granted federally managed
(non-primacy state) minimum program funding.
Conclusion
Madame Chairwoman and Members of the Committee, CCC respectfully
encourages you to consider the above issues and to remember that the
purpose of the AML program is to clean up America's abandoned coal mine
hazards. Please pass out of committee a bill that will do that, once
and for all. We appreciate this opportunity to present our views.
______
[A statement submitted for the record by Congressman Cantor
follows:]
Statement of The Honorable Eric Cantor, a Representative in Congress
from the State of Virginia
I commend the Committee for considering important legislation to
reauthorize the Abandoned Mine Lands (AML) program. Reclamation of
abandoned mine lands should remain a priority to help ensure that
health and safety issues are properly addressed.
As the Committee considers AML reauthorization legislation,
however, it is vital that the critical problems relating to the Coal
Industry Retiree Health Benefit Act of 1992 (the ``Coal Act'') be
addressed in a comprehensive manner to ensure that beneficiaries of the
Combined Benefit Fund (CBF) as well as companies paying into the Fund
are not seriously jeopardized by unintended consequences of the Coal
Act provisions.
As this Committee is aware, the Coal Act allows the transfer of up
to $70 million in interest earned by the AML Fund to the Combined
Benefit Fund (``CBF'') to cover the health care expenses of coal miner
retiree ``unassigned beneficiaries''. The pool of these unassigned
beneficiaries is growing as several of the assigned operators,
including some major steel companies, have gone bankrupt. Combine this
with increased health costs and low interest earnings of the AML fund
and the result is a financing shortfall for the CBF. These factors
demonstrate the need for a comprehensive reform of the Coal Act as part
of the AML reauthorization.
On several occasions, the Congress has relied on ad hoc
appropriations or other measures to provide short-term fixes to the
funding problems of the CBF rather than enact comprehensive and
bipartisan solutions to the Coal Act. Now is the time for a long-term
solution to ensure that the beneficiaries receive the benefits due to
them and that companies subject to the Coal Act are able to meet their
financial obligations.
I, along with eleven of my House colleagues, have introduced H.R.
3586, the Coal Industry Retiree Health Benefit Stability and Fairness
Act, to comprehensively address and provide a long-term solution to the
problems of the Coal Act. It would address two primary issues: 1) the
ability of companies to pre-fund their coal miner retiree health
obligations while eliminating the joint and several liabilities on the
related entities (not the parent company) of companies subject to the
Coal Act; and 2) the reachback tax, which imposes a retroactive burden
on companies that have been out of the coal mining business.
Problems stemming from the Coal Act threaten the ability of sound
companies to meet their obligations. In particular, the joint and
several liabilities created by the Coal Act severely impair the ability
of companies to engage in value maximizing asset sales and to
efficiently access the capital markets necessary for growing their
businesses. Such liabilities unfairly extend to every subsidiary and
related company in the corporate family, whether they were ever in the
coal mining business or not.
In addition, for more than a decade a group of companies--referred
to as reachback companies--have been burdened with an inequitable tax
imposed on them by the Coal Act of 1992. In that legislation, Congress
mandated that the reachback companies, most of which had been out of
the coal mining business for decades, step in and subsidize the
financing of such benefits. This financial burden being placed on the
reachback companies has driven many into bankruptcy and put others on
the brink of financial ruin.
H.R. 3586 proposes a fair solution to these problems by allowing
companies to prepay the actuarial value of the total premium
liabilities if certain conditions are met, and providing prospective
relief to reachback companies saddled with this insidious tax. The
legislation would release related companies from the joint and several
nature of the liabilities; however, it would hold the parent company
jointly and severally liable for the premiums.
Importantly, these provisions would allow a related company to
engage in value-added asset sales without the Coal Act liability being
attached to the asset. Instead, the liability would remain with the
parent company. This would allow the subsidiaries and related entities
to expand their businesses and create additional jobs, while also
ensuring that the obligations to the CBF are met.
It is vital that the issues relating to the Coal Act be addressed
to provide for a comprehensive and long-term solution. I appreciate the
Committee's attention to these very important matters. I look forward
to working with the Committee to resolve the critical problems faced by
both the CBF beneficiaries and the companies caught up in the
unintended consequences of the Coal Act.
______
Mrs. Cubin. Having no more business before the Committee,
the Subcommittee is adjourned.
[Whereupon, at 12:30 p.m., the Subcommittee adjourned.]