KRC DISCUSSES ABANDONED MINE LAND PROGRAM REAUTHORIZATION

Remarks of Tom FitzGerald, Director

Kentucky Resources Council to the

National Association of Abandoned Mine Land Programs

September 30, 2003

I appreciate the invitation from Steve Hohmann to participate in this panel.

Let me preface my comments in the interest of full disclosure. As with most of you, particularly those of you working with emergency AML programs, no one calls me when they're having a good day. I direct a non-profit, environmental advocacy organization providing legal and technical assistance without charge to low-income individuals and communities in the Commonwealth, on a range of issues ? from water quality and supply, air, planning and zoning, and coal and non-coal mining. Our work providing legal support to groups on coal mining issues is national in scope, and KRC has provided assistance and representation in Montana, Texas, Pennsylvania, West Virginia, Illinois, Indiana, Virginia and Tennessee, as well as Kentucky.

I have worked on the regulatory side of surface mining issues since 1972, and in 1973 began lobbying for surface mining reform. As an environmental specialist with APPALRED from 1980 – 1984 and since 1984 as Director of KRC, I have remained more focused on regulatory issues than AML allocation matters. I have been one of the citizen/environmental litigators on almost every regulatory appeal involving the permanent program regulations, and have been active in individual cases in seeking emergency and non-emergency AML funding for water supply loss, landslides, blowouts, subsidence and other damage associated with pre-law mining. It gives me a somewhat jaundiced perspective, since KRC represents the folks downhill, downstream and downwind of abandoned and active mining.

Along with the other panel members, I was sent a list of questions to consider and on which to comment today, mostly focusing on the reauthorization of the AML program and any suggestions we might have concerning reform.

Initially, KRC favors the extension of the AML fee program for reclamation of abandoned mine lands. There remains a need of over 3.5 billion dollars in bona fide Priority I and 2 sites alone, with an unfunded need in the range of 2 billion dollars just to meet those sites. As Dan mentioned, the cost for reclamation of the other priority sites ranges into billions more.

The AML fee collection will not end in 2004. Instead, pursuant to the 1992 amendments, after September 30, 2004, the fee collection will continue with the rate pegged at the cost of funding the UMW Combined Benefit Fund orphan share. The question is not whether the fee will sunset in 2004, but whether there will be an extension in the fee collection and allocation for AML reclamation, to meet the additional 2 billion in unfunded reclamation needs in Priority 1 and 2 categories and beyond that, to meet other priority needs.

In this political environment, it is of critical importance that the states and tribal governments work with potential allies, including citizen organizations such as the Citizens Coal Council, to iron out differences and to identify common ground principles for reauthorization. The Congressional plate is full, and time is too short for conflict over the reauthorization. There is, from observing the NAAMLP and Citizens Coal Council proposals and H.297, one proposal from Rep. Rahall, some common ground – the need for program extension, the need to increase federal share allocation based on historic production, the need to protect minimum program funding. There are differences – in whether to provide minimum program funding for non-primacy states such as Tennessee, as would the CCC proposal, whether fund interest should continue to support the Combined Benefits Fund, on which I understand the NAAMLP proposal is silent, and whether to refocus on Priority 1 and 2 sites and to downplay or remove Priority 3 sites from eligibility and the inventory, or to retain them.

Each of these issues has the potential to cause division and dissention. Yet I would suggest that dialogue and realism is the order of the day in securing reauthorization, and that the differences concerning these individual issues should not eclipse the need to secure timely reauthorization. I strongly encourage you to communicate with the Citizens Coal Council, with Committee staff, and among the natural allies of AML reauthorization – labor, environmental and conservation organizations, fish and wildlife agencies, infrastructure and public health agencies, in conveying a unified message to Congress on the need for reauthorization.

The three critical issues that will need to be resolved in order to see the AML program reauthorized are these:

One of these is that the reauthorization bill must be a clean bill. There are few areas of environmental protection in which there is less dialogue and less trust than in the area of coal mining regulation, and the reasons for that are many and beyond the scope of today's discussion. It is in the interests of all concerned, states, tribes, industry and OSM, that reauthorization of the collection of fees and expenditure on AML sites occur. The lack of trust delayed and came close to dooming the Rahall Amendment to the effluent standards for remining, and while EPA's regulatory proposal implementing that amendment has for the moment significantly compromised the utility of that alternative method for establishing effluent limitations, it was the restraint of all parties that allowed the amendment to pass as part of the Water Quality Act of 1987. Similar restraint is needed to prevent the reauthorization from becoming mired in other amendments to SMCRA.

The second issue is the use of AML fund interest. Standing at the foot of an AML landslide, it may be difficult to believe that extension of this program and increasing the state share allocation would not be a national priority, but it has and remains the case that it is always easier to get along with someone else's problems, and that AML reclamation is not a national priority.

Our legislature, like many in this nation, has pieced together structurally unsound budgets through the use of supposedly-dedicated funds for recurring needs. We in Kentucky, for example, took over $90 million from a dedicated underground storage tank fund to meet general fund needs, while those seeking reimbursement for cleaning up tanks were told they must wait for funding. While for some states, the allocation of the supposedly dedicated interest from the fund to fund the orphan share of the Combined Benefits Fund (which merged the 1950 and 1974 plans) was a bitter pill, yet it was that political judgment that helped secure the last reauthorization of the AML program over the objection of western states and the industry in 1992.

In 2003, the political and economic forces have aligned somewhat differently, and understanding them is essential to achieving the goal of extending AML fee collection and providing funding sufficient to assure reclamation of AML priority sites in each state.

The first factor is the burgeoning "orphan" population under the Coal Act 1992 plan. The 1992 plan under the Coal Act will present some of the major industry participants, Peabody, CONSOL, and to a lesser extent Arch, Kennecott and others, with some substantial costs in miner benefits in upcoming years. Due to steel company bankruptcies and shifting of burdens among industry participants, there will be some 10,700 beneficiaries that will be "orphans," and as early as 2007, I understand that there will be a substantial bloom in the orphan share population. Under the 1992 Plan remaining companies must pay an unassigned beneficiary premium. The major industry participants would have a real interest in seeing reauthorization of the AML program with no reduction in fees if the orphan share of the 1992 plan can be funded, in whole or part, through AML fund interest.

The second factor is the concern of Wyoming with the state's contribution to the fund relative to the rate at which the state share is being appropriated.

If reauthorization will occur, a formula for inclusion of and assurance of stability of the Combined Benefits Fund and the 1992 Plan, a mechanism for satisfying the concerns of Wyoming without adversely affecting the timing or amount of allocations to other states and tribes, and at a minimum a reauthorization that assures the generation of and allocation to the states of sufficient funds to reclaim bona fide Priority 1 and 2 sites on the inventory during this next reauthorization cycle, will be needed.

Achieving reauthorization will not be an easy task in the current political climate. I encourage you to be realistic, be flexible, but be driven by a goal of assuring that the fee collection timeframe, the amount and allocation to the states and tribal governments, and the scope of eligible projects is sufficient to achieve the Congressional goal of reclaiming the legacy of blighted land and water resources and reinvesting some hope in coalfield communities.