[Survey Report on State Reclamation and Regulatory Grant Programs, Office of Surface Mining Reclamation and Enforcement]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 97-I-56

Title: Survey Report on State Reclamation and Regulatory Grant
       Programs, Office of Surface Mining Reclamation and Enforcement

Date: October 29, 1996

                  **********DISCLAIMER**********

This file contains an ASCII representation of an OIG report.  No attempt has been made to display
graphic images or illustrations.  Some tables may be included, but may not resemble those in the
printed version.

A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
of Inspector General, Division of Acquisition and Management Operations at (202) 208-4599.
                  ******************************

United States Department of the Interior
OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240

TO:                 The Secretary

FROM:               Wilma A. Lewis
                    Inspector General

SUBJECT SUMMARY:    Final Survey Report for Your Information - "State Reclamation and
                    Regulatory Grant Programs, Office of Surface Mining Reclamation
                              and Enforcement" (No. 97-I-56)

Attached for your information is a copy of the subject final survey report. The objective of the audit
was to determine whether the Office of Surface Mining Reclamation and Enforcement was
administering the grant programs efficiently and effectively.

We were unable to determine whether Surface Mining grant programs were administered efficiently
and effectively because Surface Mining was still adjusting to a reorganization that occurred at the
end of fiscal year 1995 and the downsizing that was begun in fiscal year 1996. However, in a review
of regulatory grants, we found that 27 grants in 19 states had not been closed out in a timely manner
and that 12 states had unsupported drawdowns of grant funds totaling $11 million on 14 of 27 open
grants. We recommended that Surface Mining improve controls over the monitoring of regulatory
grant funds and the timely closure of grant agreements.

Surface Mining concurred with the report's recommendation, which will be referred to the Assistant
Secretary for Policy, Management and Budget for tracking of implementation.

If you have any questions concerning this matter, please contact me at (202) 208-5745 or
Mr. Robert J. Williams, Acting Assistant Inspector General for Audits, at (202) 208-4252.

Attachment

E-IN-OSM-003-96

United States Department of the Interior
OFFICE OF THE INSPECTOR GENERAL

SURVEY REPORT

Memorandum

To:  Assistant Secretary for Land and Minerals Management

From:  Acting Assistant Inspector General for Audits

Subject:  Survey Report on State Reclamation and Regulatory Grant Programs,
Office of Surface Mining Reclamation and Enforcement (No. 97-I-56)

INTRODUCTION

This report presents the results of our survey of the state reclamation and regulatory
grant programs administered by the Office of Surface Mining Reclamation and
Enforcement. The review was requested by Surface Mining to ensure that its
streamlining efforts did not "decrease controls over grant award, monitoring,
closeout, and auditing functions." Our objective was to determine whether Surface
Mining was administering the grant programs efficiently and effectively.

BACKGROUND

The Office of Surface Mining Reclamation and Enforcement was established by the
Surface Mining Control and Reclamation Act of 1977 to administer programs to
control the environmental effects of coal mining operations and to reclaim
abandoned mine lands. These programs are generally carried out by providing grants
to states and Indian tribes that develop and implement regulatory and reclamation
programs approved by Surface Mining.

The Act authorizes Surface Mining to award grants to eligible states and Indian
tribes in amounts not to exceed 50 percent of the cost of each state's or tribe's
regulatory program. The grant funds are used to operate regulatory programs that
include reviewing mine permit applications, inspecting current surface mining
operations, maintaining an enforcement program designed to correct violations of the
Act of 1977, designating lands as unsuitable for mining, administering bonding and
bond release programs, and administering small operator assistance programs. In

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fiscal years 1993, 1994, and 1995, Surface Mining awarded regulatory program grants
totaling about $51.5 million each year to 23 states.

The Act also authorizes Surface Mining to award grants to eligible states and Indian
tribes to reclaim lands affected by past mining operations.  Funding for the
reclamation grants is derived from reclamation fees paid by coal operators on coal
produced after September 30, 1977, and deposited into the Abandoned Mine
Reclamation Fund. Surface Mining awarded grants totaling $192.6 million, $205.8
million, and $162.5 million in fiscal years 1993, 1994, and 1995, respectively, to 23
states and 3 Indian tribes.

SCOPE OF SURVEY

Our survey was conducted at Surface Mining Headquarters in Washington, D. C.; the
Appalachian Regional Coordinating Center in Pittsburgh, Pennsylvania; the
Harrisburg Field Office in Harrisburg, Pennsylvania; and the Lexington Field Office
in Lexington, Kentucky. We interviewed Surface Mining personnel to determine how
regulatory and reclamation grants are initiated, processed, and closed out within the
Appalachian Region.  In addition, we reviewed the status of reclamation and
regulatory grants that were open as of February 15, 1996. Because we did not
continue our audit beyond the survey phase, we limited our tests of records and
other procedures to those necessary to become familiar with program requirements
and administrative procedures and practices.

We also reviewed the Department of the Interior's Annual Statement and Report
to the President and the Congress, required by the Federal Managers' Financial
Integrity Act, for fiscal years 1993 through 1995 and determined that there were no
reported weaknesses related to the objective and scope of our survey.

PRIOR AUDIT COVERAGE

In the past 5 years, the General Accounting Office has not issued any reports
specifically related to Surface Mining's regulatory or reclamation grants programs.
However, in July 1993, the Office of Inspector General issued the report "Selected
Grant Oversight Activities, Office of Surface Mining Reclamation and Enforcement"
(No. 93-1-1198), which stated that the State of Ohio charged salary and equipment
costs that were not specifically related to Abandoned Mine Land or Regulatory
Program grants. During our current review, we found that Surface Mining had
implemented the recommendation relating to the salary costs but that the
recommendation relating to motor vehicle costs was still under review.

RESULTS OF SURVEY

We found that Surface Mining was still adjusting to the reorganization that occurred
at the end of fiscal year 1995 and to the downsizing that was begun in fiscal year
1996. Personnel at the sites we visited were adapting to their new duties and

2

 
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responsibilities, as well as to different titles and position descriptions. Because of
this situation, we concluded that Surface Mining had not operated long enough
under its new organization to allow us to fully determine whether its current grant
administration was effective and efficient. Therefore, we did not extend our review
beyond the survey phase. Our survey did not identify any deficiencies regarding the
state reclamation grants; however, we did note that improvements could be made
regarding the monitoring of regulatory grant funds.

Our review identified 27 regulatory grants in 19 states that had not been closed out,
even though the grant periods had expired from 1 1/2 months to about 2 years ago,
as of our February 15, 1996, review. Surface Mining's Federal Assistance Manual
requires that states submit expenditure reports semiannually for regulatory grants to
support their drawdowns of grant funds. However, we identified 12 states that had
unsupported drawdowns totaling $11.0 million on 14 of the 27 open regulatory grants
(see Appendix 1). For example, one state had not provided expenditure reports to
support any of its drawdowns totaling $443,864 for a regulatory grant whose activities
had been completed on September 30, 1994. The untimely reporting of expenditures
by states results in Surface Mining's delaying the closeout of grants and the
subsequent return of grant funds to the U.S. Treasury. In addition, 23 of the 27
grants had outstanding balances totaling $6.4 million, which also should have been
returned to the U.S. Treasury (see Appendix 2).

During our survey, we also noted that the Harrisburg Field Office had instituted an
innovative and efficient approach for monitoring a state's regulatory grant activity
that may be appropriate for use in other states. At this field office, information in
the database of the State of Pennsylvania's automated Land Use Management
Information System could be read but not modified. With this type of access, the
Field Office could provide oversight of its grants by using the System to review the
State's inspection and enforcement activity and also to plan and select mines for
Surface Mining's oversight inspections. We believe that other Surface Mining field
offices could benefit from this approach, since states probably would not be reluctant
to provide Surface Mining inspectors access to their databases if they were assured
that the information in the database could not be modified.

Recommendation

We recommend that the Director, Office of Surface Mining Reclamation and
Enforcement, improve controls over the monitoring of regulatory grant funds to
ensure that expenditure reports are submitted by the states to support all drawdowns
of grant funds, completed grants are closed out in a timely manner, and unused
funds are returned promptly to the U.S. Treasury.

 
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Office of Surface Mining Reclamation and Enforcement Response and
Office of Inspector General Reply

The September 30, 1996, response (Appendix 3) from the Acting Director, Office of
Surface Mining Reclamation and Enforcement, concurred with the recommendation.
Based on the response, we consider the recommendation resolved but not
implemented. Accordingly, the recommendation will be referred to the Assistant
Secretary for Policy, Management and Budget for tracking of implementation.

Since the report's recommendation is considered resolved, no further response to the
Office of Inspector General is required (see Appendix 4).

The legislation, as amended, creating the Office of Inspector General requires
semiannual reporting to the Congress on all audit reports issued, actions taken to
implement audit recommendations, and identification of each significant
recommendation on which corrective action has not been taken.

We appreciate the cooperation of Surface Mining personnel in the conduct of our
audit.

 
STATUS OF OPEN OFFICE OF SURFACE MINING REGULATORY GRANTS
       WITH COMPLETED GRANT PERIODS

             Grant    Total   Total Costs  Unsupported
Grantee    Grant No.    Amount   Drawdowns   Reported  Drawdownsl

   Alabama
   Alaska
   Arkansas
   Colorado
   Illinois
   Indiana
   Iowa
   Kansas
   Kentucky

   Maryland
   Missouri
   Montana
   New Mexico
   Ohio
   Oklahoma
   Pennsylvania
   Texas
   Virginia
   West Virginia
     Totals

GR593013
GR493023
GR593053
GR493083
GR593083
GR393173
GR493173
GR493183
GR493193
GR493203
GR393213
GR493213
GR593213
GR493243
GR593243
GR493293
GR493303
GR493353
GR393393
GR493393
GR593403
GR493423
GR593423
GR593483
GR493514
GR593513
GR593543

$1,204,372
196,428
173,151
1,469,791
1,502,111
2,147,478
2,421,723
1,708,235
156,468
116,069
12,118,352
12,204,711
12,412,454
443,864
446,308
406,255
741,636
681,718
2,964,699
2,494,927
848,494
10,512,400
10,559,476
1,195,607
225,846
3,061,835
7,469,870

$1,051,601
187,792
172,601
1,469,325 0
2,125,374
2,366,274
1,708,235
143,109
91,725
12,073,804
11,966,696
12,146,652
443,864
288,661
335,138
741,636
551,799
2,629,709
2,188,078
847,351
9,045,355
9,792,603
1,195,607
202,312
2,861,718
6,850,783

$493,643
75,731
76,462
1,469,748 0
2,147,478
2,094,877
1,708,235
71,695
91,725
12,062,680
11,963,476
11,890,421 0
288,661
335,138
741,636
551,799
2,634,624
2,195,338
802,594
9,271,675
8,409,082 0
202,312 0
3,126,825

$557,958
112,061
96,139 0 0 0
271,397 0
71,414 0
11,124
3,220
256,231
443,864 0 0 0 0 0 0
44,757 0
1,383,521
1,195,607 0
2,861,718
3,723,958

Balance
Remaining2
$152,771
  8,636
  550
  466
1,502,111
22,104
55,449 0
13,359
24,344
44,548
238,015
265,802 0
157,647
71,117 0
129,919
334,990
306,849
  1,143
1,467,045
766,873 0
23,534
200,117
619,087

$89,884,278  $83,477,802  $72,705,855  $11,032,969  $6,406,476

Completion
Date

9/30/95
6/30/95
9/30/95
12/31/94
12/31/95
6/30/94
6/30/95
6/30/95
6/30/95
6/30/95
12/31/93
12/31/94
12/31/95
9/30/94
9/30/95
6/30/95
6/30/95
6/30/95
9/30/93
9/30/94
9/30/95
9/30/94
9/30/95
11/30/95
8/31/95
12/31/95
10/31/95

1 Total drawdowns minus total costs reported.
2 Grant amount minus total drawdowns.



 
SUMMARY OF OPEN REGULATORY GRANTS BY YEAR OF COMPLETION

Calendar   No. of    Grant    Total   Total Costs Unsupported  Balance
Year   Grants   Amount   Drawdowns  Reported  Drawdownsl  Remaining2

1993     2   $15,083,051 $14,703,513 $14,697,304   $11.124   $379,538

1994     6    29,273,171  27,238,692  27,047,715   447,084  2,034,479

1995     19    45,528,056  41,535,597  30,960,836  10,574,761  3,992,459

Totals    27   $89,884,278 $83,477,802 $72,705,855 $11,032,969 $6,406,476

1 Total drawdowns minus total costs reported.
2 Grant amount minus total drawdowns.

  




 
APPENDIX 3
Page 1 of 2

United States Department of the Interior

OFFICE OF SURFACE MINING
Reclamation and Enforcement
Washington, D.C. 20240

Memorandum

To:     Acting

From:    Acting

Subject:   Response to Draft Survey Report on State Reclamation and Regulatory
     Grant Programs, Office of Surface Mining Reclamation and Enforcement
     (Assignment No. E-IN-OSM-O03-96)

This is in response to your August 30, 1996 memorandum and draft survey report
entitled "State Reclamation and Regulatory Grant Programs, Office of Surface Mining
Reclamation and Enforcement (Assignment No. E-IN-OSM-003-96). We appreciate
the opportunity to review the draft survey and to provide our comments.

We have completed our review of the draft survey and concur with its findings and
recommendations. Our specific plans for implementing your recommendations are
explained in the attachment. The Assistant Director for Finance and Administration,
and the Assistant Director for Program Support will be the responsible officials for
carrying out the implementation plan.

If you have any questions concerning our response, please contact George Stone,
Audit Coordinator, Office of Strategic Planning and Budget, at (202) 208-7840.



Attachment

 
Planned Action on

                      APPENDIX 3
                      Page 2 of 2


Recommendation in OIG Draft Survey Report-

  State Reclamation and Regulatory Grant Programs (E-IN-OSM-003-96)

The table below reflects the actions planned to implement the recommendations and
a projected target date for completion of those actions. The officials responsible for
plan implementation are the Assistant Director for Finance and Administration, and
the Assistant Director for Program Support.

                         Projected   Action
  Recommendation      Planned Action    Completion  Official
                          Date
Improve controls over the   Modify the "Past Due Grant 03/31/97   AD/FA
monitoring of regulatory   Close-Out" tracking report
grant funds to ensure that  to provide for system
expenditure and closeout   generated explanations
reports are submitted in a   regarding the status of
timely manner, which will   open grants.
ensure that unused funds
are returned promptly to the  Send the tracking report   03/31/97   AD/FA
U.S. Treasury.       to the Regional
            Coordinating Centers
            periodically (monthly or
            quarterly) for update.

            Schedule an annual review  03/31/97   AD/PS
            of the status of open
            grants as part of oversight
            of the grants program.



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APPENDIX 4

STATUS OF AUDIT REPORT RECOMMENDATION

Finding/Recommendation
   Reference       Status       Action Required

1        Resolved; not   No further response to the
        implemented.   Office of Inspector General is
                required. The recommendation
               will be referred to the Assistant
                Secretary for Policy,
                Management and Budget for
                tracking of implementation.

 
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ILLEGAL OR WASTEFUL ACTIVITIES
   SHOULD BE REPORTED TO
THE OFFICE OF INSPECTOR GENERAL BY:

Sending written documents to:             Calling:

Within the Continental United States

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Office of Inspector General           Telephone HOTLINE
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Suite 402                  (703) 235-9399
Arlington, Virginia 22210

TDD for hearing impaired
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Outside the Continental United States

Caribbean Region

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Office of Inspector General
Eastern Division - Investigations
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Suite 410
Arlington, Virginia 22209

North Pacific Region

U.S. Department of the Interior
Office of Inspector General
North Pacific Region
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Suite 807, PDN Building
Agana, Guam 96910

(700) 550-7279 or
COMM 9-011-671-472-7279