In 1983, an Inspector General's report found that, "the [AML] project selection process did not always result in the most serious reclamation problem[s] being addressed first."
Three years later, the National Academy of Sciences reported that "the selection process in all states allows enough latitude to define projects in a way that will get them funded if that is the desire of the state AML office."
A problem with priorities
In 1866 in Illinois, teams of horses pulled scrapers across the land to remove rock and soil to expose coal seams. It was the first commercial strip-mining operation.
Coal is abundant in Illinois, underlying two-thirds of the state and stretching next door, into a triangular section in the southern part of Indiana.
Midwestern coal production soared in the late 1800s and early 1900s to fuel the industrial revolution. Later in the 20th century, tougher air pollution rules reduced demand for the region's high-sulfur coal.
Early mining in the Illinois Basin left a scarred legacy. In July, Illinois still listed 20,000 acres of subsidence, 10 miles of highwalls and more than 100 open mine shafts.
Through the end of December, more than $215 million was spent in Illinois and nearly $132 million in Indiana on abandoned mine cleanups.
Illinois, though, spent more than a third of its money - $75 million - on low-priority projects. That's more than Illinois spent to reclaim mines that posed serious public safety threats, according to OSM data.
Indiana spent a similar share of its AML money, about $50 million, on P3 projects.
At the same time, the two states listed millions of dollars of unreclaimed high-priority sites. Illinois and Indiana aren't alone. At least 19 states have spent more than $1 million each on P3 projects.
"We're allowed to do it," said Al Clayborne, director of abandoned mine lands for the state of Illinois. "It is within the program parameters."
Steve Herbert, Clayborne's counterpart in Indiana, said, "It's not a requirement that the highest priority projects be done and the next highest and so on."
In Kentucky, abandoned mine land director Steve Hohmann says he does not approve many low-priority projects. If he does, Hohmann says, they are projects that are near a high-priority site and can be done cheaper "in conjunction" with that site.
OSM officials believe that most states follow this "in conjunction with" policy. But, the federal AML database does not track this issue, and OSM has not published an analysis of the matter.
Rewriting the rules
Almost from the start, OSM and its parent agency, the Department of Interior, worked to undermine the congressional priority list.
In 1982, Interior Department lawyers told OSM that just because Congress said spending should "reflect" the priorities, that didn't mean states really had to follow the list.
"The word 'reflect' does not represent a command on condition requiring a mirror image, but rather indicates that [OSM] or a state has a certain amount of discretion in selecting projects based on a wide range of qualitative and quantitative data," the legal opinion said.
A decade later, OSM issued a formal policy that repeated this view.
By August 1992, OSM had made sure that it would not notice - or at least not object - if states bumped lower priority projects up into high-priority slots.
Then-OSM Director Harry Snyder, an appointee of the first President Bush, told agency field offices not to question state priority rankings.
States, Snyder said in a memo, "have full authority and responsibility for making priority determinations on the AML problems within their jurisdiction and affecting their citizens."
Snyder's successor, Clinton appointee Robert Uram, rewrote the procedures OSM field offices used to approve state abandoned mine cleanup spending.
Under the old system, OSM field offices reviewed all state reclamation projects before giving states money for them.
"It was, quite honestly, a nightmare," said Fred Sherfy, who monitors the Pennsylvania reclamation program for the OSM field office in Harrisburg. "It turned into a very time-consuming process, so we went to a process called simplified grants."
Under the new system, states were given a block of money up front, based on a much more general description of what they planned to do with it. OSM still examines each state AML project. But it's done separately from the approval of annual reclamation budgets.
In West Virginia, OSM staffers used to do three inspections on every state AML project: one before it started, one during the work and one after reclamation. Now, they're lucky to do one inspection on one of every 10 AML projects.
"The Office of Surface Mining is no longer involved in cumbersome and detailed pre-award scrutiny of state grant applications," OSM said in its 1994 annual report.
'Hemorrhaging' of the fund
In 1977, Nick J. Rahall II, D-W.Va., was a 27-year-old rookie congressman, representing the coalfields of Southern West Virginia in Washington.
Rep. Morris K. Udall, an Arizona Democrat who was then chairman of the Interior Committee, put Rahall on the panel charged to work out House and Senate differences over the strip-mining bill
On Aug. 3, 1977, Rahall stood in the White House Rose Garden while President Carter signed the bill into law.
Since then, Rahall has been the AML program's champion in Congress. Twice, he has pushed through legislation to extend the AML tax beyond its original expiration date in 1992.
Frequently, though, Rahall has complained that AML money has been "siphoned" away from the program's main purpose.
"Simply put, in my view, over the years there has been a hemorrhaging of some of the funding made available under this program to lower priority projects," Rahall said.
When Congress extended the AML program the first time in 1990, Rahall tried to fix things. He amended the law to require OSM to give a larger share of AML spending to states with more health-and-safety threats.
Four years later, when OSM wrote the rules to implement this legislation, agency officials did something quite different.
Originally, OSM proposed to allow low-priority projects only in conjunction with high-priority cleanups, or when states had finished with their high-priority sites.
In the final rule in March 1994, OSM added an important word.
"Generally," the agency said, low-priority projects would have to wait or be done in conjunction with a high-priority site.
OSM explained that, "This was done to expand the original proposed language to allow greater flexibility in performing lower priority reclamation work."
Another of Rahall's reform efforts was more successful.
Originally, the law allowed states to funnel coal tax money to reclamation of non-coal mines only if the non-coal sites were ranked as P1 or P2 projects. During the program's first 15 years, more than $214 million was spend on non-coal reclamation.
In the 1990 legislation, Rahall limited non-coal reclamation to P1 projects. Since the change, only $60 million has been spent on non-coal sites, according to OSM data.
Still, Rahall's second reauthorization bill in 1992 allowed the single biggest transfer of AML money
That bill ordered OSM to use AML fund interest to offset growing shortfalls in the UMW retiree health-care plan. So far, $665 million from the AML fund has been used for this purpose.
Rahall tapped AML's coal tax money as a source for that bailout only after then-President George H.W. Bush vetoed 1992 legislation for a separate coal tax to fund the UMW benefits.
"The thought was that this shouldn't fall on the general taxpayer," said Mike Buckner, the UMW's research director. "This is a coal industry problem."
Since 2001, Rahall has tried to pass additional reforms. The most significant of them would require OSM to strictly enforce the priority rankings when it approves state spending.
In its reauthorization bill, the Bush administration proposed instead to rewrite the formula OSM uses to allocate reclamation money among states. OSM officials say this proposal would direct more AML cash to states with the greatest needs.
OSM proposed no requirement that states strictly follow the priority list. "In our look at the data we had available, we didn't find a major problem," said said Danny Lytton, OSM's AML administrator.
In Monday's Gazette: The nation's largest coal producing state is diverting mine cleanup money to build schools, hospitals and highways.
To contact staff writer Ken Ward Jr., use e-mail or call 348-1702.