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92-803 PS 2004

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 

or 

Committee address: http://resourcescommittee.house.gov 

(II)

COMMITTEE ON RESOURCES 

RICHARD W. POMBO, California, Chairman 

NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska 

W.J. ‘‘Billy’’ Tauzin, Louisiana 

Jim Saxton, New Jersey 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Wayne T. Gilchrest, Maryland 

Ken Calvert, California 

Scott McInnis, Colorado 

Barbara Cubin, Wyoming 

George Radanovich, California 

Walter B. Jones, Jr., North Carolina 

Chris Cannon, Utah 

John E. Peterson, Pennsylvania 

Jim Gibbons, Nevada, 

Vice Chairman 

Mark E. Souder, Indiana 

Greg Walden, Oregon 

Thomas G. Tancredo, Colorado 

J.D. Hayworth, Arizona 

Tom Osborne, Nebraska 

Jeff Flake, Arizona 

Dennis R. Rehberg, Montana 

Rick Renzi, Arizona 

Tom Cole, Oklahoma 

Stevan Pearce, New Mexico 

Rob Bishop, Utah 

Devin Nunes, California 

Randy Neugebauer, Texas 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Solomon P. Ortiz, Texas 

Frank Pallone, Jr., New Jersey 

Calvin M. Dooley, California 

Donna M. Christensen, Virgin Islands 

Ron Kind, Wisconsin 

Jay Inslee, Washington 

Grace F. Napolitano, California 

Tom Udall, New Mexico 

Mark Udall, Colorado 

Anı ́bal Acevedo-Vila ́, Puerto Rico 

Brad Carson, Oklahoma 

Rau ́l M. Grijalva, Arizona 

Dennis A. Cardoza, California 

Madeleine Z. Bordallo, Guam 

George Miller, California 

Edward J. Markey, Massachusetts 

Rube ́n Hinojosa, Texas 

Ciro D. Rodriguez, Texas 

Joe Baca, California 

Betty McCollum, Minnesota

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 

Chris Cannon, Utah 

Jim Gibbons, Nevada 

Mark E. Souder, Indiana 

Dennis R. Rehberg, Montana 

Tom Cole, Oklahoma 

Stevan Pearce, New Mexico 

Rob Bishop, Utah 

Devin Nunes, California 

Randy Neugebauer, Texas 

Richard W. Pombo, California, ex officio 

Eni F.H. Faleomavaega, American Samoa 

Solomon P. Ortiz, Texas 

Grace F. Napolitano, California 

Tom Udall, New Mexico 

Brad Carson, Oklahoma 

Edward J. Markey, Massachusetts 

VACANCY 

VACANCY 

Nick J. Rahall II, West Virginia, ex officio 

(III)

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

(1)

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. 

2

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 in- ception, 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 

3

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. 

4

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 

5

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 reauthorization. 

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 

6

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, onthe-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. 

7

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:]

8

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. 

9

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 

10

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:]

11

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. 

12

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. 

13

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 

14

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 safetyrelated 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. 

15

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 

16

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 

17

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. 

18

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 

19

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. 

20

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? 

21

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 

22

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. 

23

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 

24

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 

25

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. 

26

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. 

27

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—

28

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. 

29

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. 

30

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 

31

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: 

32

• 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 

33

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 

34

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 be- hind 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 

35

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. 

36

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:]


92803.003
37


92803.004
38

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 


92803.005
39

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, 

40

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 

41

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 

42

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, 

43

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 

44

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 

45

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. 

46

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. 

47

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. 

48

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. 

49

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 

50

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 

51

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 

52

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:]

53


92803.001
54

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. 


92803.002
55

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 

56

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 

57

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 

58

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. 

59

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 

60

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, risksharing 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 

61

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 reauthorize 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. 

62

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 selfsustaining 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 longterm 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, ‘‘proVerDate 0ct 09 2002 11:45 Aug 26, 2004 Jkt 088533 PO 00000 Frm 00066 Fmt 6633 Sfmt 6621 J:\DOCS\92803.TXT HRESOUR1 PsN: KATHY
63

visions 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 

64

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 

65

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? 

66

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 

67

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. 

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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. 

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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 adVerDate 0ct 09 2002 11:45 Aug 26, 2004 Jkt 088533 PO 00000 Frm 00073 Fmt 6633 Sfmt 6621 J:\DOCS\92803.TXT HRESOUR1 PsN: KATHY
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dress 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 valueadded 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.]

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