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.

Why?

"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.

For years, water seeped out of an old, underground coal-mine portal along Speed Branch in Raleigh County.

Charles Withrow lives about a mile down the hollow. So does his 92-year-old mother. Gladys Withrow has lived in the area, east of Whitesville, since the 1940s.

During a heavy rain in early April, the trickle turned into a torrent. Underground mine voids filled with water. The hillside gave way, and slid down the valley toward a public road and a couple of nearby homes.

"It just fell in," Charlie Withrow recalled. "It was mined years ago back in there, and the water just filled up and came out."

Neighbors called the state Department of Environmental Protection. They wanted the mess cleaned up and stabilized.

DEP officials came out and looked. They decided that the problem was not an emergency. They added the site to their list, and told residents to wait their turn for cleanup money.

Speed Branch residents joined a long line. The state has more than 2,400 abandoned mine sites waiting to be reclaimed, and the wait is not getting any shorter.

Nationwide, a backlog of more than 9,500 abandoned mines compete for federal Abandoned Mine Land, or AML, program money. More than $3 billion of cleanups are needed to protect the health and safety of coalfield residents.

At the same time, lawmakers and regulators have allowed more than $1.3 billion of AML money to be diverted to other projects.

A Sunday Gazette-Mail investigation has found that:

In all, less than half of all the money appropriated by Congress for abandoned mine cleanups is "finding its way to on-the-ground reclamation of the inventory of coal and non-coal projects," the National Mining Association told a House committee last year.

"Placed in the context of the high-priority coal inventory - the principal mission of the program - about one of every three dollars appropriated from the AML fund reached that objective," testified David Finkenbinder, the group's vice president for congressional affairs.

Some of these diversions are perfectly legal, loopholes written by powerful coal state lawmakers who see AML as a major cash cow.

Others have occurred because of lax oversight by the federal Office of Surface Mining, which has repeatedly scaled back its policing of how states use AML money.

A growing problem

Every year, West Virginia spends about $25 million in federal coal tax money to clean up abandoned mines. Over the last 20 years, the state has spent more than $375 million on such projects.

Thousands of acres of scarred land have been regraded and replanted. More than 40 miles of hazardous highwalls have been eliminated, 500 acres of dangerous slides stabilized and 300 acres of subsided lands reinforced.

The money has hardly made a dent.

Measured by estimated cleanup costs, less than one-quarter of the currently inventoried abandoned mine problems in West Virginia have been reclaimed. Just one-third of the high-priority problems that threaten public safety have been fixed, according to OSM data.

As of June 30, nearly $1.2 billion worth of work remains. That's more than 600 abandoned impoundments, 750 acres of subsidence damage and more than 265 miles of dangerous highwalls.

Across the nation's coalfields, the story is much the same: Virginia, Kentucky and Alabama each list more than $400 million in unfunded abandoned mine cleanups. Pennsylvania alone lists nearly $5 billion.

Overall, nearly $8.7 billion of known abandoned mine reclamation waits for federal money, according to an analysis OSM's inventory database. Nationwide, less than one-fourth of the sites listed as public safety threats have been reclaimed, the analysis found.

In addition, tens of billions of dollars of un-inventoried environmental cleanups - nobody really knows how much - are believed to be out there.

Now, time and money are running out on the AML program.

The authority for OSM to tax the industry to fund these cleanups will expire on Sept. 30. Competing proposals to extend the program appear stalled.

The AML program boasts many successes. Because of it, coalfield communities are safer and cleaner. Nationwide, more than 260,000 acres of abandoned coal mine sites have been reclaimed.

Still, the 27-year-old program remains far from its goal of "reclamation and restoration of land and water resources adversely affected by past coal mining."

Meanwhile, state officials and environmentalists are eager to reroute even more AML money. Instead of fixing a dangerous mudslide behind some isolated homes in McDowell County, they want to clean up acid mine drainage in popular trout streams.

In Pennsylvania, officials doubled the size of the entire nationwide AML inventory in 1999 when they added $3.6 billion of such projects.

"The greatest injustice in the whole world is what has happened with that abandoned mine land program over the years," said David C. Callaghan, who was West Virginia's environmental protection director for the Rockefeller and Caperton administrations.

"They used it for miners' pensions and every other damned thing, and that wasn't what that money was for."

'This longstanding blight'

When Congress passed the Surface Mining Control and Reclamation Act, or SMCRA, in 1977, lawmakers estimated that the coal industry had left 1.5 million acres of land scarred and 11,500 miles of streams polluted.

That's an area the size of Kanawha, Putnam, Boone and Fayette counties combined. It's a polluted stream that would stretch from Charleston to Myrtle Beach, S.C., and back a dozen times.

In its report endorsing the new law, the House Interior Committee described the problem:

"Giant dumps of burning mine waste often containing waste water and constituting a threat to downstream communities; rivers, clogged with coal fines from coal treatment plants; streams, devoid of aquatic life as a result of acid drainage, derelict tipples and mine buildings; black roads spreading coal dust; the tumbledown shanties of company towns; surface subsidence of land due to caving of abandoned underground mines and underground mine fires - all too often, this has been the heritage of coal mining in America."

"It was assumed implicitly that the permanent degrading of the local surroundings and the pollution of streams was the inevitable price which the community had paid in return for jobs and tax revenue generated by the coal industry," the House committee reported.

Congress concluded that the federal government, "has a responsibility to remove this longstanding blight from regions which fueled the industrial growth of America and later the large thermal plants for generation of electricity."

Further, lawmakers declared that, "the burden of paying for reclamation is rightfully assessed against the coal industry."

Under the law, surface mine operators pay 35 cents per ton of coal and underground operators 15 cents per ton to reclaim abandoned mines.

Every year, the tax generates about $280 million.

As with SMCRA's program to regulate active mining, states were given the authority to handle mine cleanups within their borders. OSM is charged to make sure states do a good job.

Remembering Buffalo Creek

On Feb. 26, 1972, a series of coal-waste dams operated by Pittston Coal along Buffalo Creek in Logan County gave way. A wall of water and coal refuse poured down the hollow, destroying everything in its path. The disaster killed 125 people, injured more than 1,000 and left 4,000 homeless.

Lawmakers didn't want another Buffalo Creek. So, the new mining law created stability and reclamation requirements for active mines.

In the AML program, lawmakers also put public health and safety first. Congress spelled out a list of priorities for the use of AML money.

Listed first were abandoned mines that threaten public health and safety with "extreme danger of adverse effects" from coal mining. These are now known as P1 sites. Next in line were sites with the potential to cause "adverse effects" on public health and safety. These sites, which differ from P1s because they don't pose "extreme danger," are called P2s.

After that, lawmakers ranked sites that involved strictly environmental degradation. These are called P3s.

Lawmakers ordered that AML spending "reflect" those priorities "in the order stated."

During the early days of the AML program, it appears that most states complied.

In a February 1987 report, the U.S. General Accounting Office examined mine cleanup programs in five major coal states. Of 702 projects reviewed, the GAO found only 44 low-priority projects. Two of the states examined, West Virginia and Pennsylvania, had performed only high-priority projects.

Still, there were early warnings of trouble.

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.

Why?

"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.