FEDERAL ASSISTANCE MANUAL: CHAPTER 4-01

	Federal Assistance Manual Chapter 4-01

The Office of Surface Mining uses this Financial Assistance Manual to show how OSM and its grantees manage Federal grants. This chapter describes OSM's assistance programs funded from the Abandoned Mine Land (AML) Reclamation fund.

CHAPTER 4-01
CHARACTERISTICS OF AMLR FEDERAL ASSISTANCE

4-01-00 Background
4-01-05 Definition
4-01-10 Eligibility
4-01-20 Extraction of Coal as an Incidental Part of an AML Reclamation Project
4-01-30 Site Eligibility for AMLR Projects
4-01-40 Processing Requests for Reclamation of Eligible Noncoal Problems
4-01-50 Use of the AML Fund to Pay Certain Expenses or Claims Associated with AML Reclamation
4-01-60 Water Supply Projects
4-01-70 Award of Funds
4-01-80 Allowable Costs
4-01-90 Unallowable Costs

4-01-00 BACKGROUND

Funds from the AML Reclamation (AMLR) Fund will be used to award monies to recipient organizations to prepare State Reclamation Plans, and annual submission of reclamation projects, and to fund administrative, construction, subsidence insurance, set-aside and emergency program activities.
Procedures outlining the day-to-day responsibilities of the AMLR State/Indian recipient organization and the RCC/FO are presented in this manual for application review and approval, reports, monitoring and revisions.
Procedures outlined in this chapter are to be used in conjunction with the various Federal circulars and guides as indicated.

4-01-05 DEFINITION

The following definition is critical to the understanding of this chapter:

Distribution - The process by which OSM assigns specific amounts of the AML grant appropriation to each program State/Tribe based on a formula using the State/Tribal share balance and historical coal production.

4-01-10 ELIGIBILITY

Lands and water eligible for reclamation or drainage abatement expenditures under AMLR are those which were mined for coal or which were affected by such mining or processing, and abandoned or left in an inadequate reclamation status prior to August 3, 1977, and for which there is no continuing reclamation responsibility under State or other Federal laws.
Lands and water in which the surface mining operation occurred between August 4, 1977, and the date on which the Secretary approved a State program under Section 503, and any funds for reclamation or abatement which are available pursuant to a bond or other form of financial guarantee or from any other source are not sufficient to provide for adequate reclamation or abatement at the site, and which qualify as a priority 1 or 2 problem under section 403(a) of SMCRA are eligible.
Lands mined and abandoned between August 4, 1977, and November 5, 1990, where the surety of the mining operator became insolvent and, as of November 5, 1990, funds immediately available from other proceedings or sources were not sufficient to provide for adequate reclamation or abatement at the site, and which qualify as a priority 1 or 2 problem under Section 403(a) are eligible.
Also eligible are lands, waters and facilities which were mined and abandoned or processed for minerals other than coal or which were affected by such mining or processes and abandoned or left in an inadequate reclamation status prior to August 3, 1977, and for which there is no continuing reclamation responsibility under State or other Federal laws.

In determining the eligibility under this subsection of Federal lands, water and facilities under the jurisdiction of the Forest Service or Bureau of Land Management, in lieu of August 3, 1977, the applicable dates would be August 28, 1974, and November 26, 1980, respectively.

4-01-20 EXTRACTION OF COAL AS AN INCIDENTAL PART OF AN AML RECLAMATION PROJECT

Background. Removing coal incidental to an AML reclamation project has been recognized as a means of ensuring that sites reclaimed with monies from the AML Fund will not be remined after reclamation. Moreover, coal removal rather than coal burial minimizes the possibility of future environmental degradation due to problems associated with combustion or formation of acid mine drainage. In addition, it can be more cost effective for the reclamation agency (State/Tribe or Federal) to remove the accessible coal during reclamation, dispose of it (use or sell), and thereby offset part of the costs of reclamation.
Policy. The policy of OSM regarding this issue is addressed in the Abandoned Mine Land Reclamation Program Guidelines (61 Federal Register 68777-68785, December 30, 1996). These guidelines require that the administering agency determine whether coal removal in conjunction with an AML project is exempt from Title V regulations under the provisions of section 528 of SMCRA and 30 CFR707. If coal recovery is not incidental to the AML reclamation, the necessary permits must be obtained before reclamation activities begin.
Responsibilities When the administering agency is separate from the regulatory authority, the above determination will be made by the administering agency in conjunction with the regulatory authority. If the exemption applies, the administering agency will prepare a finding, as part of the project narrative, to be submitted with the grant application package.
Procedures. Where it is anticipated that coal will be extracted incidental to an AML-financed construction project, the project narrative will include, in addition to any other required documentation, the following information regarding the proposed project:
1. That the administering agency has made a finding and determination that the coal to be recovered in conjunction with the proposed AML-financed construction project is an incidental part of the reclamation project and is integral to the construction to be accomplished.
2. That the primary purpose of the project is to reclaim eligible abandoned mine lands.
3. That the revenues to be received from the sale of coal or the market value of the coal, if it is to be used and not sold, are less than the total cost of the reclamation project, including the costs of coal recovery activities.
4. That the consents clearly authorize extraction of coal and that, if the mineral estate is severed from the surface estate, the administering agency has the consent of the surface coal owner for right of entry and the consent of the mineral owner for extraction of the coal, except for the entry by exercise of police powers. The administering agency has the responsibility to ensure that the reclamation work, including the extraction of coal, is not initiated without such consents.
5. That the coal recovery project(s) proceeds will be returned to the AML Fund or used to offset the cost of the project.

4-01-30 SITE ELIGIBILITY FOR AMLR PROJECTS

Policy. It is OSM's policy that eligibility determinations are the primary responsibility of the State/Tribe under an approved AMLR Plan. (Note: If an ineligible project is funded, the appropriate procedures will be initiated to recover such funds.) Eligibility determinations shall be signed by the State/Tribal Attorney General's Office or by the agency's legal counsel and submitted as part of the project-specific documentation required by the authorization to proceed process.
Active Mining. Whenever it is necessary, as part of an AML reclamation project, to gain access across or to affect property which is not otherwise eligible for AML reclamation, reclamation on these sites will be confined to repairing the damage caused by the use of these sites to support AML reclamation activities.

If further reclamation activities are necessary to repair damages caused by accessing an eligible site, such activities must be fully documented and justified in the project narrative prior to the authorization of funds.
Bond Forfeiture. Pre-SMCRA State/Tribal reclamation bonds will render a site ineligible only if the amount forfeited is sufficient to pay the total cost of the necessary reclamation. In cases where the forfeited bond is insufficient to pay the total cost of reclamation, additional monies from the AML Fund may be sought. (See Preamble to 30 CFR Part 870.)

When assets have been recovered or obtained from all parties responsible for the reclamation, and the assets obtained are insufficient to meet all reclamation costs, the property in question will remain eligible for reclamation to the extent that additional funds are required.

When all assets of the responsible parties are identified and legal proceedings instituted to recover such assets, and the monies, if recovered, are not sufficient to cover all the reclamation costs, the properties will remain eligible as long as the administering agency enters into a binding contract with the State/Tribal Attorney General's Office or appropriate State/Tribal office, providing that any recovered funds will be turned over to the appropriate AMLR Fund account.
Eligible Sites Reaffected by Post-SMCRA Activities. When a site (e.g., coal refuse pile, slurry pond or wildcat) meets the eligibility criteria in sections 402(g)(4)(B)(I) and (ii), 404 or 411 of SMCRA, and has been reaffected by mining after August 3, 1977, this site will remain eligible for AMLR funding despite such post-SMCRA mining if the following conditions are met:
1. The post-SMCRA mining did not substantially increase or alter the environmental damage presented by the pre-SMCRA mining;
2. The total costs of the reclamation activities are not increased by the post-SMCRA mining; and
3. There is no known responsible party, or, if the responsible party is known, monies that are or may be recovered are insufficient to pay the total cost of reclamation.
  
  Recovered monies, where and when available, must either be used as part of the reclamation activities or be deposited in the appropriate AMLR Fund account.
  
  If these conditions are not met, that portion of the site unaffected by the post-SMCRA mining activities will still remain eligible. If this situation occurs, the project can be altered to include only the eligible portion, if feasible, or funds from non-AMLR sources may be used to pay for the percentage of the project deemed to be ineligible.
Hazardous Substances. If the proposed project involves the transfer, removal or reclamation of any hazardous substances, the eligibility opinion should provide a statement that the State/Tribal Attorney General's Office or the Agency's chief legal counsel has reviewed the proposed project plans and that they comply with all applicable State/Tribal and Federal laws concerning removal or reclamation of such substances.
Multi-Use Sites. Multi-use sites are sites on which the land or other property was adversely affected by mining prior to August 3, 1977, and which was subsequently used in whole or in part for some non-mining activity. Such properties remain eligible for AMLR funding only to the extent that mining related problems exist, and that they have not been altered or increased by non-mining activities. Under certain circumstances, the intervening use may shift reclamation responsibility away from the AMLR program.
Public Use Facilities. Projects for the repair or replacement of public facilities (Priority 5), such as roads or bridges, which were damaged as a result of mining activities, may be eligible if the legal opinion confirms that the damage is a result of past mining activities and not from normal deterioration or lack of repair by local authorities.

4-01-40 PROCESSING REQUESTS FOR RECLAMATION OF ELIGIBLE NONCOAL PROBLEMS

Requests for reclamation of eligible noncoal problems, as provided in section 409 of SMCRA and 30 CFR 875, must be made by the Governor of a State or the head of a Tribal body. The following procedures will implement the requirements of the law and the regulations.

When a State or Tribe that has not certified completion of all coal related reclamation wishes to conduct eligible noncoal reclamation, the request signed by the Governor or Tribal head shall be submitted as part of a complete grant application even though it may be addressed to the Secretary or the Director.
Since action on the grant application constitutes action on the request, no response beyond final grant action is required on such requests.

4-01-50 USE OF THE AML FUND TO PAY CERTAIN EXPENSES OR CLAIMS ASSOCIATED WITH AML RECLAMATION

Policy. Over a period of time, various issues and questions concerning the appropriate use of AML funds for miscellaneous uses have been raised. OSM policy regarding these issues is brought together in this section of the Federal Assistance Manual.

Procedures

Repairs to Structures. There is no specific authorization in Title IV to justify expenditures for repairs to structures damaged by subsidence or other adverse effects of past mining. In fact, Congress went so far as to prohibit the use of Title IV funds to pay the actual construction costs of housing (Section 407(h) of SMCRA). The intent is that Title IV funds should not be diverted to private needs, as opposed to what are considered to be public needs. Therefore, the repair of structures should not be authorized unless the repairs are a direct and necessary part of the cost-effective abatement plan for the project as a whole, such as foundation reinforcement, and only to the extent that it is necessary to support the foundation during construction activities to prevent damage to the structure or harm to the construction workers (Section 412 of SMCRA).

Asbestos Removal from Structures. A State requested an AML grant to remove asbestos insulation from hot water pipes in houses that were originally built by a mining company for its employees. Houses built for company employees were not directly connected to coal extracting or processing. Therefore, the proposed removal of asbestos insulation from the houses is not eligible for AML funding under section 404 of SMCRA.

Moving or Relocating Structures. Subsidence or other hazards, on occasion, may make it necessary to move a structure in order to prevent further damage or conduct effective reclamation at the site. In such situations, State/Tribal employees will:

Take all necessary steps to prevent the structures from sustaining further damage, including shoring up the structure and restoration of the site so as to achieve the previous load bearing capacity. Some minimal corrective action in the foundation may be appropriate if the damage is not attributable to other problems. The objective is to leave the site in as safe a condition as possible, given the circumstances.

Advise occupants that the structure may be unsafe or borderline but do not order occupants to vacate. Instead, inform local authorities of the conditions.

Make all reasonable efforts to reclaim the site without moving the structure. If there is no other way to reclaim the site, the structure may be moved, but only after written justification is approved by the RD/FOD. Structures will be moved only as a last resort and only if the option is cost-effective.

Temporary Lodging Expenses. Reclamation activities will be limited to abating, preventing or controlling the primary cause of the hazard. The costs to treat secondary or tertiary effects of past coal mining go beyond the scope and intent of Title IV. Temporary lodging expenses may be appropriate, on a case-by-case basis, only where the reclamation effort directly necessitates the removal of the residents and for a limited time, until other arrangements can be made. Payment of temporary lodging expenses must be approved in writing by the RD/FOD.

Claims for Damages resulting from AML Reclamation. Where damages occur to adjacent property as a result of AML reclamation or where claims are made for loss of business, damages to personal property, or where there are other claims relating to the negligence of parties involved in the AML reclamation, the claims may not be settled by State/Tribal personnel. Instead, a factual, chronological record of the investigation of the claim should be made and immediately transmitted to the Division of Surface Mining, Office of the Solicitor, for definitive action or advice. The rationale for this procedure is that claims may be covered under the Tort Claims Act, contractor liability insurance, subsidence insurance or other means and could therefore result in litigation.

4-01-60 WATER SUPPLY PROJECTS

The Abandoned Mine Reclamation Act of 1990 (P.L.101-508) states at section 403(b)(1), Utilities and Other Facilities, that:

"Any State or Indian tribe not certified under section 411(a) may expend up to 30 percent of the funds allocated to such State or Indian tribe in any year through the grants made available under paragraphs (1) and (5) of section 402(g) for the purpose of protecting, repairing, replacing, constructing, or enhancing facilities related to water supply, including water distribution facilities and treatment plants, to replace water supplies adversely affected by coal mining practices."

Projects eligible for funding under the 30 percent spending limitation referred to above include:

Those impacted by coal mining prior to August 4, 1977.

Those impacted by coal mining during the period beginning on August 4, 1977, and ending on or before the date on which the Secretary approved a State program pursuant to section 503 of SMCRA.

Those impacted by coal mining during the period beginning on August 4, 1977, and ending on or before November 5, 1990, and that the surety of the mining operator became insolvent during this period.

The adverse effects of coal mining practices need not have occurred entirely within these periods so long as the State or Tribe determines that they occurred predominately in one of the above periods.

The 30 percent spending limitation referred to above includes any water supply facility, regardless of the priority of the problem the facility is designed to address. Thus it applies to facilities that may be constructed to address a Priority 1, 2, or 5 problem.

4-01-70 AWARD OF FUNDS

RCCs/FOs shall award the full amount requested in the grantee's revised and actual budgets, provided that the amount is justified and available.

If the funds available to the Director for financial assistance are insufficient to cover the total grant needs, the Director or an authorized representative shall award the funds available according to project priority and need.

Allocation of a specific amount of funds to an agency does not assure that grant requests for that amount will be approved. Each grantee must apply to OSM and secure approval for grants in accordance with the requirements set forth in the Act, implementing regulations and this Manual.

Funds distributed to a State/Tribe that remain unrequested at the end of the fiscal year remain available solely for the use of that State or Tribe, with the exception of the emergency distribution which returns to the emergency account for distribution to other States.

Funds deobligated during the current fiscal year from a State/Tribe's AML grants remain available solely for that State/Tribe, with the exception of emergency grant deobligations which return to the emergency account for distribution toother States.

Funds distributed to a State/Tribe from the Federal Expense share (section 402(g)(3)) and the Historic Coal share (section 402(g)(5)) shall be used only for coal-related expenses.

4-01-80 ALLOWABLE COSTS

Costs shall be allowable in accordance with 30 CFR 886.21. Costs must be allocated to the grant to the extent of actual benefits properly attributable to the period covered by the grant. Costs must be in conformity with OMB Circular A-87, and any limitations, conditions, or exclusions set forth in the grant.

Costs must not be allocated or included as a cost of any other Federally assisted program.

4-01-90 UNALLOWABLE COSTS

Costs not in accordance with the Surface Mining Control and Reclamation Act, OMB Circular A-87, and 30 CFR 886;

Construction activities for States/Indian tribes without approved plans; and

Costs for activities which significantly alter the approved program and were not approved through appropriate revisions.

FEDERAL ASSISTANCE MANUAL
January 2, 1998

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Page Master: Marie Sibrell
Office of Surface Mining
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