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F I S C A L I M P A C T R E P O R T

SPONSOR King

DATE TYPED 2/17/05

HB HM 14

SHORT TITLE Abandoned Mine Reclamation Trust Funds

SB

ANALYST Hanika-Ortiz

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative See Narrative Recurring

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals and Natural Resources Department (EMNRD)

New Mexico Environment Department (NMED)

SUMMARY

Synopsis of Bill

House Memorial 14 requests Congress pass legislation to reauthorize the abandoned mine recla-

mation fee and return state share balances of the abandoned mine reclamation trust fund.

Significant Issues

Congress authorized the states to develop abandoned mine land reclamation programs that pose a

threat to public health, safety or the environment, and provided funding for these programs

through a fee on coal production. New Mexico’s program receives an average of $1.8 million a

year in grants. The coal production fee is scheduled to sunset June 20, 2005. HM 14 requests that

Congress reauthorize the fee.

An average of five million dollars per year in fees is paid into federal abandoned mine reclama-

tion fund by coal producers in New Mexico. One half of these fees are allocated to the state

where the fees are collected. Mining and Minerals Division of the Energy Minerals and Natural

Resources Department receives approximately one million eight hundred thousand dollars per

year in federal grants.

House Memorial 14 -- Page 2

The abandoned mine land fee was scheduled to expire on September 30, 2004. Congress failed

to agree on legislation to reauthorize the fee, but extended the abandoned mine land fee until

June 30, 2005.

PERFORMANCE IMPLICATIONS

New Mexico has worked with the national governors association, the western governors associa-

tion, the interstate mining compact commission, Indian tribes and other states to urge congress to

pass legislation to reauthorize the abandoned mine land fee. The western governors association

adopted a resolution last June supporting the reauthorization of the fee and the return of the state

share balances to the states.

FISCAL IMPLICATIONS

Fees are paid into the federal Abandoned Mine Reclamation Trust Fund. Congress has every

year appropriated less money to the states than has been collected, resulting in an increasing fund

balance currently at $1.6 billion. Fifty percent of the collected fees are allocated to the state

where the fee was collected. Therefore, included in the fund balance is $20 million allocated to

New Mexico’s share. HM 14 requests that Congress appropriate to the states the current state

share balances in the Fund.

The sunset of the fee would eventually lead to a loss of federal funding for the AML Program.

AML projects could end, and so would private contracts for construction and reclamation.

OTHER SUBSTANTIVE ISSUES

NMED reports New Mexico’s AML program is 100% federally funded through the fee. New

Mexico’s AML program has closed over 2 thousand mines, but there still is 15 thousand aban-

doned mine openings and hazards that remain.

NMED report that abandoned mines present a significant health and safety hazard and have the

potential to pose threats to ground water, surface water and the environment. Reauthorization of

the abandoned mine reclamation fee and the return of unappropriated state share balances of the

abandoned mine reclamation trust fund will allow New Mexico to continue important work in

safeguarding hazardous mine openings and reclaiming areas disturbed by abandoned mines.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

The House of Representatives will not provide a memorial on behalf of the New Mexico State

Legislature to encourage the Congressional delegation to move forward on AML fee reauthoriza-

tion.

AHO/yr