CHEYENNE, Wyo. – The Obama administration on Thursday renewed its proposal to cut more than a billion dollars in coal-tax payments to states like Wyoming and Montana from the federal budget.
The White House is calling on Congress to cut $142 million in Abandoned Mine Lands payments to certain coal states next year and $1.5 billion over 10 years. The termination of AML payments is part of $17 billion the administration wants to eliminate from programs it considers wasteful or obsolete.
The Abandoned Mine Land program taxes coal production to raise money for cleaning abandoned coal mines and other projects. Along with coal reclamation, Wyoming has used AML money for other projects such as research on coal gasification and to fund the University of Wyoming School of Energy Resources.
In its proposal, the White House said the original purpose of the AML fees was for the coal industry to pay for cleaning up mines that cannot be attributed to a particular producer.
“Coal production has shifted over time, however, so most current production is in the West and most abandoned mines are in the East,” the White House document said. “Therefore, the AML fee is intended for the industry as a whole to take responsibility for reclamation, regardless of where the fees are collected or where the mines are located.”
The change would affect “certified” states in the AML program, or those that have either completed or made plans to complete their remaining coal reclamation work. That includes Wyoming, Montana, Texas and Louisiana, and the Navajo, Hopi and Crow American Indian tribes.
Wyoming, the nation’s leading coal producer, has received about $600 million in AML funds and Montana about $117 million since Congress initiated the program in 1977 with passage of the Surface Mining Control and Reclamation Act. The federal government still collects a 35-cent tax on each ton of coal produced for the AML fund.
Rick Chancellor, administrator of the Abandoned Mine Land Division at the Wyoming Department of Environmental Quality, said any AML cuts would have the greatest effect on Wyoming, because of the amount of coal mined in the state.
“The other states are magnitudes smaller than we get back, so yes it does effect them, but not to the magnitude that it effects Wyoming,” Chancellor said.
In 2006, Congress renewed the act with a promise that the federal government would pay back AML funds it collected but never appropriated to the states, according to Wyoming’s congressional delegation.
Wyoming has expected to receive at least $82.7 million in AML payments for each of the next five years, or more than $400 million, in addition to payments on future coal taxes through 2021.
Wyoming still has about $100 million worth of coal reclamation work to complete, Chancellor has said. That work is scheduled to be done by 2012, leaving hundreds of millions of AML dollars left over for other projects.
Montana officials have said their state could lose $121 million over the next 12 years if Obama’s budget proposal were enacted.
Obama’s February budget proposal also targeted Abandoned Mine Land payments to coal-producing states that no longer need funds to clean up old coal mines. That proposal didn’t make either House or Senate versions of the federal budget bill.
Ryan Taylor, spokesman for Rep. Cynthia Lummis, said Thursday the delegation would again fight to stop Obama’s proposal.
“The president is looking for savings after their massive spending spree in the first five months, and so he seems to be picking on Wyoming’s money,” Taylor said. “We’re going to make sure that Wyoming continues to see that money and that it’s protected.”