A Public Choice Exploration of the Surface Mining Control and Reclamation Act

Abstract

Recent bankruptcies in the coal industry have stoked concerns regarding the efficacy of the Surface Mining Control and Reclamation Act of 1977 (SMCRA). We review the history of SMCRA through a public choice lens focusing on bonding and the Abandoned Mine Land fund (AML). Overall, SMCRA can be considered a success, but important problems persist that demand attention. For example, bond valuation is improperly handled and the AML is used for political purposes by state governments. We propose these problems could be mitigated with binding guidelines for bond release and by putting valuation in the hands of independent third parties.

Keywords: Reclamation, Mining, Coal, SMCRA, AML, Bonds, Public Choice, Bureaucracy

JEL Classification: Q38, Q48, K20, K32