Abandoned Mine Reclamation Fee on Coal

Congressional research reportAug 31, 2006

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Order Code RL32993

CRS Report for Congress

Received through the CRS Web

Abandoned Mine Reclamation Fee on Coal

Updated August 31, 2006

Nonna A. Noto

Specialist in Public Finance

Government and Finance Division

Congressional Research Service ˜ The Library of Congress

Abandoned Mine Reclamation Fee on Coal

Summary

The Abandoned Mine Reclamation Fund, also known as the Abandoned Mine

Land (AML) Fund, is financed by fees levied per ton of domestically produced coal.

The fee is 35 cents per ton for surface-mined coal, 15 cents per ton for undergroundmined coal, and 10 cents per ton for lignite. The fund and the fees were established

by the Surface Mining Control and Reclamation Act of 1977 (SMCRA) to finance

restoration of land abandoned or inadequately restored by mining companies before

August 3, 1977. The fees were originally scheduled to expire in 1992, but Congress

has extended them seven times. The FY2006 Interior, Environment, and Related

Agencies Appropriations Act (H.R. 2361; P.L. 109-54) enacted on August 2, 2005,

extended the fees for nine months, until June 30, 2006. The Bush Administration’s

FY2007 budget requested that the AML fees be extended through September 30,

2007, at their current levels. This interim extension was intended to provide time for

the Administration to work with Congress to change the rules governing expenditures

from the AML Fund. The FY2006 Emergency Supplemental Appropriations Act

(H.R. 4939, as amended; P.L. 109-234), enacted on June 15, 2006, extended the fees

through FY2007, as the Administration had requested.

In the 109th Congress, there are proposals to extend the AML fees longer term

as part of bills to reauthorize the abandoned mine reclamation program. H.R. 5970

(Thomas), passed by the House on July 29,2006, as well as S. 2616 (Santorum) and

S. 3829 (Stabenow), would lower the fees by 20%, in two stages, and extend them

through FY2021. H.R. 2721 (John Peterson) and S. 961 (Rockefeller) would extend

the fees at their current rates through FY2019. H.R. 1600 (Cubin) would lower all

of the fees by 20% and extend them through FY2020. S. 1701 (Thomas) would

lower all of the fees by 20%, in different stages, and extend them through FY2015.

The AML Fund has a balance of $2.1 billion which earns interest. Since

FY1996, most of the annual interest earnings of the fund have been transferred to the

United Mine Workers of America (UMWA) Combined Benefit Fund (CBF) to help

pay the medical expenses of “orphan” retirees, their spouses, and dependents. From

FY1996 through FY2005, $746 million in interest was transferred. The law provides

that if the regular AML fees sunset, special fees should be established solely to

provide for the annual transfer to the CBF.

Under current law, 50% of the AML fees collected are allocated back to the

state or Indian tribe that collected them (known as the state share). Since 1977, when

SMCRA was enacted, the production of coal has shifted westward, mostly to

Wyoming, while most of the remaining high priority reclamation sites are in eastern

states, the location of historic (pre-1978) coal production. The Office of Surface

Mining estimates that at least $3 billion in additional reclamation expenditures is

needed to clean up remaining Priority 1 and 2 sites. AML fees could be lower, or

collected for fewer years, if the state share allocation were eliminated and the AML

Fund focused on reclaiming these high priority sites. However, western states would

have less interest in supporting the AML Fund if they received nothing in return for

their producers’ contributions. This report will be updated when legislative events

warrant.

Contents

History of Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Fee Levels and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Relationship to the UMWA Combined Benefit Fund . . . . . . . . . . . . . . . . . . . . . . 4

Economic Burden of the Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Proposals to Extend the Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Bills Introduced in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

H.R. 1600 (Cubin) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

H.R. 2721 (John Peterson) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

H.R. 5970 (Thomas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Senate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

S. 961 (Rockefeller) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

S. 1701 (Thomas) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

S. 2616 (Santorum) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

S. 3829 (Stabenow) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

List of Tables

Table 1. AML Fees vs. Coal Prices, by Mine Type . . . . . . . . . . . . . . . . . . . . . . . 7

Abandoned Mine Reclamation Fee on Coal

History of Authorizations

The Abandoned Mine Reclamation Fund — also known as the Abandoned Mine

Land or AML Fund — was established by the Surface Mining Control and

Reclamation Act of 1977 (SMCRA).1 Its purpose is to finance restoration for land

abandoned or inadequately restored by mining companies before August 3, 1977.

The AML Fund is supported by fees levied per ton of domestically produced coal.

The AML fees were originally scheduled to expire in 1992, but Congress has

extended them seven times.2 The Omnibus Budget Reconciliation Act of 1990

extended the fees from 1992 through FY1995.3 The Energy Policy Act of 1992

extended the fees from 1995 through FY2004.4 The Continuing Resolution for

FY2005 extended the fees for 51 days until November 20, 2004.5 The Consolidated

Appropriations Act for 2005 extended the authorization to collect the fees for nine

months, until June 30, 2005.6 The Emergency Supplemental Appropriations Act for

FY2005 extended the fees for three months, until September 30, 2005.7 The

Department of the Interior, Environment, and Related Agencies Appropriations Act,

2006 extended the AML fees for nine months, until June 30, 2006.8 The Emergency

P.L. 95-87, Title IV; 30 U.S.C. 1231 et seq.

The expiration date of the fees is specified in Section 402(b) of SMCRA; 25 U.S.C.

1232(b).

P.L. 101-508, Section 6003(a).

P.L. 102-486, Section 2515.

P.L. 108-309, Making continuing appropriations for the fiscal year 2005, and for other

purposes, enacted Sept. 30, 2004, Section 125.

P.L. 108-447, enacted Dec. 8, 2004, Division E, Title I, Section 135. This provision

originated in S. 2084, Section 123. See U.S. Congress, Senate, Department of the Interior

and Related Agencies Appropriations Bill, 2005, Report to accompany S. 2084, Report 108341, Calendar No. 695, 108th Cong., 2nd Sess., Sept. 14, 2004, p. 47.

P.L. 109-13, An act making Emergency Supplemental Appropriations for Defense, the

Global War on Terror and Tsunami Relief, for the fiscal year ending September 30, 2005,

and for other purposes, enacted May 11, 2005, Section 6035.

P.L. 109-54, Title I, General Provisions, Department of the Interior, Section 129. The AML

fee extension was included in the version of H.R. 2361 approved by the Senate in Title I,

General Provisions, Department of the Interior, Section 127. The counterpart bill approved

by the House (also H.R. 2361) did not contain a similar provision. See CRS Report

RL32893, Interior, Environment, and Related Agencies: FY2006 Appropriations, by Carol

Hardy Vincent and Susan Boren.

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Supplemental Appropriations Act for FY2006, enacted on June 15, 2006, extended

the fees for 15 months, until September 30, 2007.9

A longer-term extension of the AML fees is likely to be linked to the

reauthorization of the abandoned mine reclamation program10 and to plans for federal

assistance to the United Mine Workers of America (UMWA) Combined Benefit

Fund (CBF) for orphan retiree health benefits. An example is Title III of H.R. 5970,

the Estate Tax and Extension of Tax Relief Act of 2006, passed by the House on July

29, 2006. Title III is named the Surface Mining Control and Reclamation Act

Amendments of 2006. Sections 312(a) and (b) of H.R. 5970 would lower the AML

fees by 20%, in two stages: by 10% on October 1, 2007, and by the remaining 10%

on October 1, 2012. The fees would be extended for 14 years, through FY2021.

Fee Levels and Collections

Under section 402(a) of SMCRA11 the AML fees were set at the rate of 35 cents

per ton for surface-mined coal and 15 cents per ton for underground-mined coal (or

10% of the value of the coal at the mine, whichever is less). The fee was set at 10

cents per ton for lignite (or 2% of the value of coal at the mine, whichever is less).12

These same rates continued each time the fees were extended.

According to the legislative history of section 402(a) of SMCRA, the lower fee

set for underground mining compared with surface mining reflects the

“... disproportionately high social costs incurred by underground coal mine operators

in meeting responsibilities under the Coal Mine Safety and Health Act of 1969, as

amended.”13 The fee for lignite coal was agreed to by the conference committee.

“The compromise reached on the reclamation fee for lignite reflects the conferees

P.L. 109-234, the Emergency Supplemental Appropriations Act for Defense, the Global

War on Terror, and Hurricane Recovery, 2006, Section 7007. The provision was not

included in the version of H.R. 4939 passed by the House. It was included as Section 9016

of H.R. 4939, as amended, passed by the Senate.

For further discussion, see CRS Report RL32373, Abandoned Mine Land Fund

Reauthorization: Selected Issues, by Robert L. Bamberger.

30 U.S.C. 1232.

There is also a federal excise tax on coal that funds the Black Lung Disability Trust Fund.

The black lung tax is currently levied at the rate of $1.10 per ton of underground-mined coal

and $.55 per ton of surface-mined coal, not to exceed 4.4% of the price at which the ton is

sold by the producer. There is no black lung tax on lignite, or on imported or exported coal.

See Section 4121 of the Internal Revenue Code and CRS Report RS21935, The Black Lung

Excise Tax on Coal, by Salvatore Lazzari. For more information on the expenditures

financed by this tax on coal, see CRS Report RS21239, The Black Lung Benefits Program,

by Edward Rappaport.

U.S. Congress, House Committee on Interior and Insular Affairs, Surface Mining Control

and Reclamation Act of 1976, report to accompany H.R. 13950, 94th Cong., 2d sess., H.Rept.

94-1445, (Washington: GPO, Aug. 31, 1976), p. 85. Cited in 69 Federal Register 56912,

Sept. 22, 2004.

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balancing two factors. First, lignite generally has had a lower value than coal and

thus a 10 percent fee could be onerous. Second, many recent long-term contracts for

lignite have had prices in the same range as subbituminous coal.”14 Thus the

disparity in rates was not linked to differences in the estimated cost of repairing

damage done to the environment by the alternative methods of coal removal.

The AML reclamation fee is collected quarterly from coal operators, commonly

referred to as producers. It is levied on each ton of coal produced domestically.

From its outset in 1977, the fee was not levied on imported coal. Recently the issue

of whether the fee applies to exported coal has been in litigation. In an April 2005

decision, the Federal Claims Court ruled that applying the fee to exported coal is

unconstitutional. The government still has the option to appeal the decision.

Approximately $100 million in refunds of AML fees are at stake.15

The fee is administered and collected by the Office of Surface Mining (OSM)

in the Interior Department.16 OSM was successful in collecting an estimated 99.9%

of AML fees due in FY2005.17 In FY2004 AML fee collections were $287 million

while total distributions for AML programs were $159 million.18 In FY2005 fee

collections were $293 million and total distributions for AML programs were $148

million.19 Cumulatively over the life of the fund, from January 30, 1978, when the

first AML fees were paid, through September 30, 2005, the AML Fund has collected

$7.4 billion. Appropriations from the fund were $5.7 billion. As of September 30,

U.S. Congress, Joint Explanatory Statement of the Committee of Conference [To

accompany H.R. 2], 95th Cong., 1st Sess., House Conference Report No. 95-493, July 12,

1977, p. 98.

The application of the AML fee to coal destined for export was declared to be

unconstitutional in Consolidation Coal Company, et al. v. U. S., 54 Fed. Cl. 14 (2002),

reversed, 351 F.3d 1374 (Fed. Cir. 2003), remanded, (64 Fed. Cl. 718, Apr. 4, 2005). The

Consolidation Coal case followed in the wake of a 1998 federal district court ruling in

Ranger Fuel (33 F. Supp. 2d at 468) which found that levying the black lung excise tax on

the sale of coal for export was unconstitutional under the Export Clause of the U.S.

Constitution. The IRS accepted that decision in Notice 2000-28, issued May 20, 2000. See

CRS Report RS21935, The Black Lung Excise Tax on Coal, by Salvatore Lazzari, pp. 4-5.

The Bush Administration has advanced a proposal that the black lung excise tax, currently

collected by the IRS, also be collected by OSM. In the 108th Congress, this provision was

included in H.R. 3778 and S. 2049, in proposed amendments to section 414(b) of SMCRA.

In the 109th Congress, this proposal is included in H.R. 2721.

U.S. Department of the Interior, Office of Surface Mining (Reclamation and

Enforcement), Annual Report 2005: Abandoned Mine Land Reclamation, pp. 5-6. Available

at [http://www.osmre.gov/annualreports/05SMCRA2AbandMineLandReclam.pdf]. See also

Annual Report 2005: Administration and Finance, Table 14: Collections Management, p.

3. Available at [http://www.osmre.gov/annualreports/05SMCRA5AdminFinance.pdf],

visited Aug. 23, 2006.

U.S. Department of the Interior, Office of Surface Mining, Abandoned Mine Land Fee

Collections and Funding: 2004, updated Dec. 8, 2004. Available at [http://www.osmre.gov/

amlfunding04.htm].

U.S. Office of Surface Mining, Annual Report 2005: Abandoned Mine Land Reclamation,

Table 1: Abandoned Mine Lands Fee Collections and Funding, p. 2.

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2005, the balance of the fund was $2.1 billion;20 the unappropriated balance of the

fund was $1.8 billion.21 The unappropriated balance represents 24% of cumulative

collections.

OSM estimates that about $3 billion in additional reclamation expenditures is

needed to clean up remaining Priority 1 and 2 sites. Another $3.6 billion of high

priority coal problems affecting the general welfare of individuals and the

environment have been identified.22 Under the current SMCRA law, 50% of the fees

collected are allocated back to the state or Indian tribe that collected them (known as

the state and tribal shares). Ten percent are allocated to the Rural Abandoned Mine

Land Program (RAMP) which has received no appropriation since FY1995. Twenty

percent are allocated to sites ranked Priority 1 and 2 for reclamation, based on

historic coal production. And 20% go to other reclamation projects and

administrative costs.23 Since 1977 when SMCRA was enacted, the production of

coal has shifted westward, primarily to Wyoming, while most (94%) of the remaining

high priority reclamation sites are in eastern states, the location of historic (pre-1978)

production. Consequently, the state share program now results in high allocations

to western states while the greater reclamation needs are in eastern states.

AML fees could be lower, or collected for fewer years, if the state share

allocation were eliminated and the AML Fund focused on reclaiming high priority

sites. However, western states would have less interest in supporting the AML Fund

if they received nothing in return for their producers’ contributions.

Relationship to the UMWA Combined Benefit Fund

The AML Fund first began to earn interest on its unappropriated balance in

FY1992, as the result of legislation enacted in 1990.24 Under provisions of the Coal

Industry Retiree Health Benefit Act (the Coal Act, part of the Energy Policy Act of

1992), up to $70 million of the interest earned on the balance in the AML Fund may

be transferred each year to the UMWA Combined Benefit Fund. This is to help pay

for the health care expenses of certain “orphan” or “unassigned” retirees whose

former employers have gone out of business, and of their spouses and dependents.

The total amount of interest earnings transferred from the AML Fund to the CBF

U.S. Office of Surface Mining, Annual Report 2005: Abandoned Mine Land Reclamation,

Table 2: Abandoned Mine Land Reclamation Fund Status, p. 5.

U.S. Department of the Interior, Office of Surface Mining Reclamation and Enforcement,

Abandoned Mine Land Fund: Status, updated July 26, 2006. Available online at

[http://www.osmre.gov/fundstat.htm].

U.S. Office of Surface Mining, Annual Report 2005: Abandoned Mine Land Reclamation,

p. 1-2.

U.S. Office of Surface Mining, Annual Report 2005: Abandoned Mine Land Reclamation,

p. 3-4.

P.L. 101-508, Omnibus Budget Reconciliation Act of 1990, Section 6002(c). 30 U.S.C.

1231(e).

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from FY1996 through FY2004 was $679 million.25 Another $67 million was

transferred in FY2005,26 for a total of $746 million.

To guarantee this funding source, the Energy Policy Act contained a proviso that

after the regular AML fees sunset on September 30, 2004, the AML fee should be

established at a rate to continue to provide for the deposit of funds to the CBF.27 In

preparation for this possibility, on September 17, 2004, OSM published a final rule

to permit the collection of a special AML fee in the event that Congress allowed the

regular fee to expire.28 OSM noted that Section 402(b) of SMCRA did not address

whether the same differences in rates should continue to apply to coal produced after

the regular fees expired.29 In its September 17, 2004 rule, OSM stated its intention

to maintain the same ratios among the per ton fees that were originally established

by SMCRA. The fee per ton of coal produced by underground methods would be

43% of the fee per ton of coal produced by surface methods. The fee per ton of

lignite coal produced would be 29% of the fee per ton of coal produced by surface

methods.30 OSM proposed AML fees for FY2005 of 8.8 cents per ton for surfacemined coal, 3.8 cents per ton for underground-mined coal, and 2.5 cents per ton for

lignite coal.31 These fees were based on estimates of coal production by type of

mining and were set with the intention of raising $69 million, the estimated interest

earnings of the AML Fund in FY2005. The exact level of the fees was projected to

change each year from FY2006 through FY2015 in relation to estimated interest

earnings and coal production, but the ratios among the fees were to remain the same.

Because the existing fee levels were extended by Congress, the lower fees proposed

by OSM never took effect.

OSM, Annual Report 2004, p. 79. This includes interest earned by the AML Fund during

fiscal years 1992-1995, but transferred in subsequent years.

U.S. Executive Office of the President, Office of Management and Budget, Appendix,

Budget of the United States Government, Fiscal Year 2007, p. 604. Also reported in U.S.

Office of Surface Mining, Annual Report 2005: Abandoned Mine Land Reclamation, pp. 56.

P.L. 102-486, Section 2515.

30 CFR Parts 870 and 872, Coal Production Fees and Fee Allocations, 69 Federal

proposed rule was republished at 69 FR 56908-56920, Sept. 22, 2004, because of a blank

page printing error in the Sept. 17 print edition.

69 Federal Register 56126, Sept. 17, 2004.

Referring to 30 CFR Paragraph 870.13(b)(3)(ii). 69 Federal Register 56126, Sept. 17,

2004.

69 Federal Register 56124, Sept. 17, 2004, Table 1. Because the regular AML fees were

extended through FY2005, and now through June 2006, these special rates did not take

effect.

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Economic Burden of the Fee32

For some time, AML fees have been below the statutory percent-of-price limits

of 10% of value for surface- and underground-mined coal and 2% for lignite. Steep

increases in coal prices in late 2003 and in 2004 further reduced the relative burden

of the fee, measured as a percent of price. In the last year, coal prices have fallen

somewhat, raising the relative burden, but it is still below the low points of 2004 in

most cases. Judging by spot prices, the price of coal in mid-August 2006 is as much

as 85% higher than in 2003, and the relative burden of the AML fee in the categories

examined in Table 1 consequently is only between half and two-thirds of what it was

in 2003.

It should be noted that spot prices in recent years have been noticeably higher

than likely contract prices, which apply to the predominant share of U.S. coal

production. Consequently, the actual burden of the AML fee in 2006 probably is

somewhat greater than indicated by the percentages reported in the following text and

table.

The $0.35 AML fee equaled 1.4% of the estimated average U.S. price of

surface-mined bituminous coal in mid-August 2006 ($25.00), compared with 2.6%

in 2003 ($13.42). The $0.15 fee equaled 0.3% of the estimated average U.S. price of

underground-mined bituminous coal in mid-August 2006 ($45.00) compared with

0.6% in 2003 ($26.71). The $0.10 fee was at 0.9% of the average U.S. price of

lignite in 2003; no lignite price data are available yet for 2006. For the AML fees to

be at the percent-of-price limits, the price of surface-mined coal would need to be

$3.50 per ton or less, underground-mined coal $1.50 per ton or less, and lignite $5.00

per ton or less.

In contrast, the black lung excise tax (BLET) runs closer to its limit of 4.4% of

price in most cases. The BLET of $0.55 per ton of surface-mined coal equaled 2.2%

of the estimated mid-August 2006 average U.S. spot price of surface-mined

bituminous coal ($25.00) but is 5.0% of the spot price of Powder River Basin coal

($10.90). The twice as high tax of $1.10 per ton on underground-mined coal equals

2.4% of the estimated mid-August 2006 average U.S. spot price of undergroundmined coal ($45.00).

The relative AML fee generally is higher on surface-mined coal than on

underground-mined coal — both because the absolute fee is higher and because the

price of surface-mined coal is lower. However, the relative burden of the fee can

differ by specific type of coal within those categories. For example, the $0.35 AML

fee in mid-August 2006 equaled 3.2% of the estimated average spot price of

bituminous coal surface-mined in the Powder River Basin, which has a lower heat

content than most other bituminous coals. It was 0.8% for surface-mined bituminous

coal from other geographic basins. This compares with an average 0.3% burden of

the $0.15 fee for underground-mined bituminous coal.

Bernard A. Gelb, Specialist in Industry Economics in the Resources, Science, and Industry

Division of CRS, contributed this section.

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Table 1. AML Fees vs. Coal Prices, by Mine Type

Price per tona

Mine type or coal

rank

AML fee

per ton

2003

MidAugust

2006

AML fee as % of price

2003

MidAugust

2006

5.2

3.2

1.6

0.8

Powder River Basin

$6.74

$10.90

Other Basins

Surface (bituminous)

$0.35

$22.00b

$43.00b

Total United Statesc

13.42

$25.00b

2.6

1.4

Underground

(bituminous), total U.S.

$0.15

$26.71

$45.00b

0.6

0.3

Lignite, total U.S.

$0.10

$11.20

n.a.

0.9

n.a.

Sources: Energy Information Administration, Annual Coal Report 2004, November 2005; Coal

News and Markets, week of August 20, 2006 [http://www.eia.doe.gov/cneaf/coal/page/coalnews/

coalmar.html] visited August 30, 2006. Percentage of price calculated by CRS.

a. Price data are per short ton — at mine mouth for 2003, spot prices for 2006.

b. Price approximated by CRS.

c. Because of wide differences in the specific types of coal mined by surface methods, the average

U.S. price of surface-mined coal is not representative of prices in individual states.

Proposals to Extend the Fees

In its FY2005 budget, the Bush Administration proposed returning unobligated

state share balances to the states over a 10-year period and henceforth eliminating the

state share allocation so that more of future AML fee collections could be spent on

the reclamation of high priority sites. AML fees could also then be lowered. The

Administration proposed to reduce the fees in three stages, by 15%, 20%, and finally

25%, over the period FY2005-FY2018.33 In contrast, in its FY2006 budget, the

Administration proposed extending the AML fees at their current rates. The

Administration again proposed to allocate more of the AML receipts to the

restoration of the most serious abandoned mine land. The Administration again

expressed its commitment to addressing the financial viability of the UMWA

The Administration’s FY2005 proposal was included in H.R. 3778 (John Peterson) and

S. 2049 (Specter) in the 108th Congress. See also U.S. Executive Office of the President,

Office of Management and Budget, Appendix, Budget of the United States Government,

Fiscal Year 2005 (Washington: GPO, 2004), p. 588.

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Combined Benefit Fund.34 The Administration’s FY2006 position on the AML

program reauthorization and the extension of the AML fees is represented by H.R.

2721 (John Peterson) introduced in the first session of the 109th Congress.

In its FY2007 budget, the Bush Administration proposed a temporary extension

of the current AML fees through September 30, 2007. This was to provide time for

the Administration to negotiate with Congress about changes in the rules for AML

Fund expenditures previously proposed in the Administration’s FY2005 and FY2006

budgets.35

In the first session of the 109th Congress, Congress passed the Department of the

Interior, Environment, and Related Agencies Appropriations Act, 2006 (H.R. 2361

P.L. 109-54), which extended the current AML fees for nine months, until June 30,

2006. In the second session, Congress approved the Emergency Supplemental

Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery,

2006 (H.R. 4939 as amended, P.L. 109-234), enacted June 15, 2006. This law

extended the current AML fees for 15 months, until September 30, 2007, as the

Administration had requested.

Other proposals would extend the fees longer term as part of bills to reauthorize

the abandoned mine reclamation program. H.R. 5970 (Thomas), the Estate Tax and

Extension of Tax Relief Act of 2006, was approved by the House on July 29, 2006.

Sections 312(a) and (b) of that bill would lower the AML fees by 20%, in two stages.

The first reduction of 10% would take effect October 1, 2007. For five fiscal years

the fees would be 31.5 cents per ton on surface-mined coal, 13.5 cents per ton on

underground-mined coal, and 9 cents per ton on lignite. The second reduction of

10% would take effect October 1, 2012. The rates would be 28 cents per ton on

surface-mined coal, 12 cents per ton of underground-mined coal, and 8 cents per ton

for lignite. Those fees would remain in effect for nine years, through September 30,

2021. This fee-reduction schedule is identical to that previously proposed in Sections

102(a) and (b) of S. 2616 (Santorum). It is also identical to that subsequently

proposed in Sections 312(a) and (b) of S. 3829 (Stabenow). (Title III of S. 3829 is

identical to Title III of H.R. 5970. Like S. 2616, both of these titles are named the

Surface Mining Control and Reclamation Act Amendments of 2006.)

In addition, H.R. 2721 (John Peterson) and S. 961 (Rockefeller) would extend

the fees at their current rates through FY2019. H.R. 1600 (Cubin) would lower all

of the fees by 20% and extend them through FY2020. S. 1701 (Thomas) would also

U.S. Executive Office of the President, Office of Management and Budget, Budget of the

United States Government, Fiscal Year 2006 (Washington: GPO, 2005), Analytical

Perspectives, pp. 296, 298; Appendix, pp. 597-598.

U.S. Department of the Interior, Office of Surface Mining, Office of Surface Mining

Reclamation and Enforcement, Bureau Highlights, AML Reauthorization, p. BH - 28,

available at [http://www.osmre.gov/news/OSM%20FY07%20Budget%20Highlights.pdf],

visited Apr. 18, 2006. Also, “OSM Budget Calls for Reauthorization of AML Fee

Collection Authority, Increases Funding for State and Tribal Regulatory Programs,” Office

of Surface Mining News Release, Feb. 6, 2006, available at [http://www.osmre.gov/

news/020606.htm], visited Apr. 18, 2006.

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lower all of the fees by 20%, but in different stages; it would extend the fees through

FY2016.

Bills Introduced in the 109th Congress

The following descriptions of other bills introduced in the 109th Congress

concentrate on the positions each takes regarding long-term extension of the

abandoned mine reclamation fees. The descriptions also note when a bill largely

replicates a bill introduced in the 108th Congress or contains provisions similar to

another bill introduced in the 109th Congress.

Seven of the bills also address the reauthorization of the abandoned mine

reclamation program and six address the transfer of interest earned by the AML Fund

to UMWA retiree health benefit plans. Both of these topics are beyond the scope of

this report.36 A Senate hearing was held on S. 961 and S. 1701 in September 2005.37

House

H.R. 1600 (Cubin). Abandoned Mine Lands Reclamation Reform Act of

2005. H.R. 1600 would lower all of the AML fees by 20% and extend them through

FY2020.

H.R. 1600 would amend SMCRA to reauthorize and reform the abandoned mine

reclamation program. H.R. 1600 replicates H.R. 3796 (Cubin and Rahall) introduced

in the 108th Congress, with one exception. H.R. 1600 contains a new Section 3

which gives detailed instructions for the transfers of interest earned by the AML

Fund to three UMWA health benefit plans. This is in place of Section 2(b)(10) of

H.R. 3796.

H.R. 1600 shares many elements in common with S. 961 (Rockefeller) but has

some differences. H.R. 1600 would lower the AML fees by 20% while S. 961 would

leave them at current levels. H.R. 1600 would extend the fees through FY2020 while

S. 961 would extend them through FY2019. H.R. 1600 includes provisions not

found in S. 961 regarding the payment of state shares to qualified states. H.R. 1600

differs slightly from S. 961 in the provisions regarding the transfer of the interest

earnings of the AML Fund to the three UMWA retiree health benefit plans.

Introduced April 13, 2005; referred to the Committee on Resources; referred to

the Subcommittee on Energy and Mineral Resources on April 22, 2005.

For further discussion of these issues, see CRS Report RL32373, Abandoned Mine Land

Fund Reauthorization: Selected Issues, by Robert L. Bamberger.

U.S. Congress, Senate Committee on Energy and Natural Resources, Amend the Surface

Mining Control and Reclamation Act of 1977, hearing on S. 961 and S. 1701, 109th Cong.,

1st sess., S.Hrg. 109-256, Sept. 27, 2005 (Washington: GPO, 2006).

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H.R. 2721 (John Peterson). Abandoned Mine Reclamation Program

Extension and Reform Act of 2005. H.R. 2721 would extend the AML fees at their

current rates through FY2019. H.R. 2721 would amend SMCRA to reauthorize the

collection of the reclamation fees, revise the abandoned mine reclamation program,

promote remining, authorize the Office of Surface Mining to collect the black lung

excise tax, and make sundry other changes. The bill does not make any changes to

the transfer of AML interest earnings to the CBF.

H.R. 2721 represents the Bush Administration’s FY2006 proposal. It replicates

the Administration’s bills introduced in the 108th Congress — H.R. 3778 (John

Peterson) and S. 2049 (Specter) — with just a few differences. The Administration’s

bills in the 108th Congress had proposed lowering the fees in three stages, by 15%,

20%, and finally 25%. H.R. 2721 would raise the proposed minimum allocation to

a state or Indian tribe from $2 million to $3 million. It also includes a new provision

that Tennessee receive an allocation of not less than $3 million. It includes another

new provision regarding the priority to be given by the Secretary of the Interior in

awarding certain grants.

Introduced May 26, 2005; referred to the Committee on Resources; referred to

the Subcommittee on Energy and Mineral Resources on May 31, 2005.

H.R. 5970 (Thomas). Estate Tax and Extension of Tax Relief Act of 2006.

Title III is named the Surface Mining Control and Reclamation Act Amendments of

2006. (Title I is the Reform and Extension of Estate Tax After 2009. Title II is the

Extension of Expansion of Certain Tax Relief Provisions. Title IV is the Increase in

the Minimum Wage. From these three titles comes the reference to the “trifecta

bill.”)

Sections 312(a) and (b) of H.R. 5970 would lower all three AML fees by 20%,

in two equal stages, and extend them for 14 years. The first stage would be in effect

for fiscal years 2008-2012. The second stage would be in effect for fiscal years 20132021. The fee on surface-mined coal would drop by 10% from 35 cents to 31.5 cents

on October 1, 2007, and to 28 cents on October 1, 2012. The fee on undergroundmined coal would drop from 15 cents to 13.5 cents and then to 12 cents. The fee on

lignite would drop from 10 cents to 9 cents and then to 8 cents.

Title III of H.R. 5970 would make numerous other changes to SMCRA

governing the expenditure of moneys from the Abandoned Mine Reclamation Fund.

It would also amend both SMCRA and the Internal Revenue Code regarding the

financing of the United Mine Workers of America (UMWA) Combined Benefit

Fund, as well as the 1992 UMWA Benefit Plan and the 1993 Plan.

Title III of H.R. 5970 has many elements in common with S. 2616 (Santorum),

including the 20% reduction in AML fees and their extension through FY2021.

Among the major differences, H.R. 5970 drops the provisions of S. 2616 that would

make a portion of revenues received from coal leases under the Mineral Leasing Act

(MLA) available to the three UMWA retiree health benefit plans named above.

(Title III of H.R. 5970 drops all of Title II and other references to the MLA in Title

III of S. 2616). It includes a new section (Sec. 319) on tribal regulation of surface

coal mining and reclamation operations.

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Introduced July 28, 2006; referred to and discharged by the Committees on

Ways and Means; Energy and Commerce; Education and the Workforce; and

Resources on the same day. Passed in the House on July 29, 2006, by a vote of 230

to 180. On August 3, 2006, cloture on the motion to proceed to consideration of H.R.

5970 failed in the Senate by a vote of 56 to 42, four short of the 60 votes needed.

Title III of H.R. 5970 was reintroduced on August 3, 2006, as Title III of S.

3829.

The Congressional Budget Office estimated that Title III of H.R. 5970 would

have a net budget cost of $3.88 billion over the 10-year period FYs 2007-2016. This

includes an increase in outlays of $4.91 billion offset by an increase in revenues of

$1.03 billion.38

Senate

S. 961 (Rockefeller). Abandoned Mine Land Reclamation Reform Act of

2005. S. 961 would extend the AML fees at their current rates through FY2019. S.

961 would amend SMCRA to reauthorize and reform the abandoned mine

reclamation program.

S. 961 shares many elements in common with H.R. 1600 but has some

differences as noted in the description of H.R. 1600 above. S. 961 is identical to S.

2211 (Rockefeller) in the 108th Congress, with two exceptions. S. 2211 would have

lowered the AML fees by 20%, as H.R. 1600 now does. S. 2211 included the

provisions now found in H.R. 1600 but absent from S. 961 regarding the state share

for qualified states.

Introduced April 28, 2005; referred to the Committee on Energy and Natural

Resources. Hearings were held September 27, 2005.

S. 1701 (Thomas). Abandoned Mine Land Reclamation Reform Act of 2005.

S. 1701 would lower all three fees by 20%, in different stages. The fee on surfacemind coal would be lowered in three stages. For the period beginning July 1, 2006,

through October 1, 2009, the fee would be lowered from 35 cents to 32 cents per ton;

for October 1, 2009, through October 1, 2013, it would drop to 30 cents; for October

1, 2013, through October 1, 2016, it would drop to 28 cents. The fee on

underground-mined coal would remain at 15 cents per ton through October 1, 2009;

it would drop to 12 cents for the period October 1, 2009, through October 1, 2016.

The fee on lignite would remain at 10 cents per ton through October 1, 2009; it

would drop to 8 cents for the period October 1, 2009, through October 1, 2016. S.

1701 addresses the transfer of interest earnings of the AML Fund to the UMWA

Combined Benefit Fund. S. 1701 would make other changes to the AML program,

including the payment of unappropriated state share balances to states and Indian

tribes over several years and promoting remining, among others.

U.S. Congress, Joint Committee on Taxation, Estimated Budget Effects of H.R. 5970, the

“Estate Tax and Extension of Tax Relief Act of 2006(‘ETETRA’),” as Introduced in the

House of Representatives on July 28, 2006 (JCX-34-06), July 28, 2006, p. 4.

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Introduced September 14, 2005; referred to the Committee on Energy and

Natural Resources. Hearings were held September 27, 2005.

S. 2616 (Santorum). Surface Mining Control and Reclamation Act

Amendments of 2006. S. 2616 would lower all three AML fees by 20%, in two equal

stages. The first stage would be in effect for fiscal years 2008-2012. The second

stage would be in effect for fiscal years 2013-2021. The fee on surface-mined coal

would drop by 10% from 35 cents to 31.5 cents on October 1, 2007, and to 28 cents

on October 1, 2012. The fee on underground-mined coal would drop from 15 cents

to 13.5 cents and then to 12 cents. The fee on lignite would drop from 10 cents to 9

cents and then to 8 cents.

S. 2616 also would reauthorize the AML program, modify the AML allocation

formulas to provide more funding to historic production states with high priority

reclamation problems, and use Mineral Leasing Act revenues from coal to pay the

states their unappropriated balance of past state share collections over a 10-year

period as well as pay for future state share allocations. S. 2616 would make

substantial changes to the financing of UMWA retiree health benefits protected under

the Coal Act of 1992. It would provide federal funding to the 1993 Multiemployer

Health Benefit Plan, in addition to the Combined Benefit Fund and 1992 Benefit

Plan, to pay for “orphan” retirees whose employers have gone out of business.

Funding would continue to come from the interest earnings of the AML Fund.

Additional funding would now come from coal-related revenues from lease sales,

rents, royalties, and bonuses paid under the Mineral Leasing Act. Still other monies

for the three UMWA health plans would come from amounts allocated but not

appropriated for the Rural Abandoned Mine Land Program (RAMP). The

unassigned beneficiaries premium would be eliminated if possible. Relief from

future premium payments would be provided to “reachback” companies, those

companies that had not signed the 1988 bargaining agreement but were assigned

beneficiaries. Reimbursements, with interest, would be made for health premiums

paid by companies whose assignment of beneficiaries has been revoked by court

decisions but have not yet been repaid (“final judgement” companies).

Introduced April 7, 2006; referred to the Committee on Finance.

S. 3829 (Stabenow). Tax Relief and Minimum Wage Act of 2006. Title III

is named the Surface Mining Control and Reclamation Act Amendments of 2006.

This title is identical to Title III of H.R. 5970, which passed in the House on July 29,

2006. S. 3829 drops the estate tax provisions of H.R. 5970 (Title I) but retains the

other three titles. In addition to the SMCRA amendments, S. 3829 includes the title

addressing the extension and expansion of certain tax relief provisions, again with

wording identical to H.R. 5970. S. 3829 also includes the title that would increase

the federal minimum wage, but replaces the second section.

Sections 312(a) and (b) of S. 3829 would lower all three AML fees by 20%, in

two equal stages. The first stage would be in effect for fiscal years 2008-2012. The

second stage would be in effect for fiscal years 2013-2021. The fee on surface-mined

coal would drop by 10% from 35 cents to 31.5 cents on October 1, 2007, and by an

equal amount, to 28 cents on October 1, 2012. The fee on underground-mined coal

would drop from 15 cents to 13.5 cents and then to 12 cents. The fee on lignite

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would drop from 10 cents to 9 cents and then to 8 cents. This is identical to the fee

reduction proposal in S. 2616 and H.R. 5970. For a brief description of other

provisions of Title III, see the entries for H.R. 5970 and S. 2616 above.

Introduced August 3, 2006; referred to the Committee on Finance.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.