Washington (Platts)--21Feb2013/653 pm EST/2353 GMT

The US Office of Surface Mining said Thursday that $305 million will be available for abandoned coal mine cleanup.

The announcement comes two months after the Abandoned Mine Lands grant distribution is typically announced and is only 90% of the $339 million available because of the impending federal sequestration, the agency said in a statement.

Sequestration refers to the automatic, across-the-board spending cuts of about 8% scheduled to go into effect on March 1.

The Abandoned Mine Lands program is funded, in part, by a per-ton fee charged on each state's coal production and is used to reclaim mine sites, including restoring streams affected by acid mine drainage. OSM usually announces the amount available for AML grants by mid-December.

"OSM has worked with states and tribes to provide as much assistance as possible in advance of the release of AML funding, and the bureau will continue to offer support to AML programs nationwide," the agency said in the statement.

In addition to a delay in the distribution because of preparations for sequestration, the agency is holding back 10% of the money available in anticipation of sequestration.

As a result, 50 abandoned mine land projects will not be completed, OSM said. The reduction in the number of projects completed means that more than 1,800 acres of abandoned mine lands will not be cleaned up and more than $4.3 million will not be set aside for the water pollution cleanup, according to OSM. The agency estimated that 22,500 people will continue to be exposed to mine-related hazards as a result of the 10% reduction in funds available.

Greg Conrad, executive director of the Interstate Mining Compact Commission, said despite the reduction, Thursday's announcement was a "significantly positive direction." Not knowing the amount of funding available or when it would be available was a growing concern for states and tribes as the construction season approached, he said.

"That 10% won't be easy to absorb, but that's something we can live with for a period of time," he said. "This will be very helpful and will facilitate some of the projects."

Conrad said it's possible the White House's Office of Management and Budget could find that mandatory payments under the AML program are exempt from sequestration.

--Beth Ward, beth_ward@platts.com --Edited by Kevin Saville, kevin_saville@platts.com