[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
EFFECT OF THE PRESIDENT'S FY 2013 BUDGET AND LEGISLATIVE PROPOSALS FOR 
THE OFFICE OF SURFACE MINING ON PRIVATE SECTOR JOB CREATION, DOMESTIC 
        ENERGY PRODUCTION, STATE PROGRAMS AND DEFICIT REDUCTION

=======================================================================



                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND

                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES

                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                         Tuesday, March 6, 2012

                               __________

                           Serial No. 112-99

                               __________

       Printed for the use of the Committee on Natural Resources



         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov





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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
            EDWARD J. MARKEY, MA, Ranking Democratic Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Paul Tonko, NY
Andy Harris, MD
Jeffrey M. Landry, LA
Jon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

                       Todd Young, Chief of Staff
                Lisa Pittman, Chief Legislative Counsel
               Jeffrey Duncan, Democratic Staff Director
                David Watkins, Democratic Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                       DOUG LAMBORN, CO, Chairman
              RUSH D. HOLT, NJ, Ranking Democratic Member

Louie Gohmert, TX                    Peter A. DeFazio, OR
Paul C. Broun, GA                    Madeleine Z. Bordallo, GU
John Fleming, LA                     Jim Costa, CA
Mike Coffman, CO                     Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Dan Benishek, MI                         CNMI
David Rivera, FL                     Martin Heinrich, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Paul A. Gosar, AZ                    Betty Sutton, OH
Bill Flores, TX                      Niki Tsongas, MA
Jeffrey M. Landry, LA                Paul Tonko, NY
Bill Johnson, OH                     Edward J. Markey, MA, ex officio
Mark Amodei, NV
Doc Hastings, WA, ex officio
                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, March 6, 2012...........................     1

Statement of Members:
    Coffman, Hon. Mike, a Representative in Congress from the 
      State of Colorado, Prepared statement of...................    69
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................    12
        Prepared statement of....................................    13
    Holt, Hon. Rush D., a Representative in Congress from the 
      State of New Jersey........................................     3
        Prepared statement of....................................     4
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Conrad, Gregory E., Executive Director, Interstate Mining 
      Compact Commission.........................................    44
        Prepared statement of....................................    46
        Resolution--Interstate Mining Compact Commission.........    49
        Questions re OSM's Proposed FY 2013 Budget...............    50
    Pizarchik, Hon. Joseph, Director, Office of Surface Mining 
      Reclamation and Enforcement, U.S. Department of the 
      Interior...................................................     5
        Prepared statement of....................................     7
        Response to questions submitted for the record...........     9
    Roanhorse, Madeline, President, National Association of 
      Abandoned Mine Land Programs...............................    33
        Prepared statement of....................................    35
        Questions and Concerns re the AML Legislative Proposal in 
          OSM's FY 2013 Budget...................................    39
        Resolution of the National Association of Abandoned Mine 
          Land Programs..........................................    43
    Wasson, Matthew F., Director of Programs, Appalachian Voices.    55
        Prepared statement of....................................    56

                                     



  OVERSIGHT HEARING ON ``EFFECT OF THE PRESIDENT'S FY 2013 BUDGET AND 
   LEGISLATIVE PROPOSALS FOR THE OFFICE OF SURFACE MINING ON PRIVATE 
  SECTOR JOB CREATION, DOMESTIC ENERGY PRODUCTION, STATE PROGRAMS AND 
                          DEFICIT REDUCTION.''

                              ----------                              


                         Tuesday, March 6, 2012

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:07 a.m., in 
Room 1324, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Thompson, Benishek, 
Flores, Johnson, Amodei, Hastings; Holt, Tonko, and Markey.
    Mr. Lamborn. The Committee will come to order. The Chairman 
notes the presence of a quorum, which under Committee Rule 3(e) 
is two Members. The Subcommittee on Energy and Mineral 
Resources is meeting today to hear testimony in an oversight 
hearing on the effect of the President's Fiscal Year 2013 
budget and legislative proposals for the Office of Surface 
Mining on private sector job creation, domestic energy 
production, state programs, and deficit reduction.
    Under Committee Rule 4(f), opening statements are limited 
to the Chairman and Ranking Member of the Committee. However, I 
ask unanimous consent to include any other Members' opening 
statements in the hearing record, if submitted to the Clerk by 
close of business today.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered. I now 
recognize myself for five minutes.

    STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. During today's hearing, we will hear from the 
Administration justification for the President's proposed 
Fiscal Year 2013 budget for the Office of Surface Mining, 
including legislative proposals to change the 2006 amendments 
to Title IV of SMCRA (Surface Mining Reclamation and Control 
Act) amendments that took 10 years to negotiate and pass, and 
to impose an abandoned mine lands fee on hard rock mines on 
each ton of material moved, including non-mineralized rock and 
soil, frequently referred to as the dirt tax.
    Just prior to last year's budget hearing, documents related 
to the Administration's rewrite of the Stream Buffer Zone Rule 
had been released to the press. Subsequently, the Natural 
Resources Committee initiated an investigation of OSM's rewrite 
of the rule and their relationship to the contractor. As part 
of the investigation, the Committee has requested information 
from Secretary Salazar regarding communications between the 
Interior Department, OSM, and the contractor, and held several 
oversight hearings on the matter. I anticipate that some 
Members will ask questions today relating to this ongoing 
rulemaking.
    The budget proposal before us proposes to decrease and/or 
eliminate funding to the States and Tribes, specifically to the 
certified States and Tribes, and at the same time advocates for 
a significant increase in funding for OSM so that you can add 
an additional 25 employees, full-time equivalents.
    So I'm puzzled as to why you would include this statement: 
``Of the almost 2,400 employees involved in carrying out these 
two responsibilities on a daily basis, less than 25 percent are 
employed by OSM. The rest are State and Tribal employees who 
implement programs approved by the Secretary of the Interior 
with assistance from OSM. States permit and regulate 97 percent 
of the Nation's coal production. States and Tribes also 
complete well over 90 percent of the abandoned mine land 
reclamation projects.''
    With the States and Tribes responsible for 97 and 90 
percent of the workload created by SMCRA, why does the Federal 
Government have 25 percent of the personnel? And why does it 
have the audacity to come before Congress asking us to cut 
state funding and increase Federal funding so that you can add 
additional people to conduct the 3 and 10 percent Federal part 
of those program? This makes absolutely no sense in cost, 
productivity or function.
    That being said, I look forward to hearing from our 
witnesses today. And I now recognize the Ranking Member from 
New Jersey, Representative Holt, for his opening statement.
    [The prepared statement of Mr. Lamborn follows:]

          Statement of The Honorable Doug Lamborn, Chairman, 
              Subcommittee on Energy and Mineral Resources

    During today's hearing we will hear from the Administration 
justification for the President's proposed FY-2013 budget for the 
Office of Surface Mining including legislative proposals to change the 
2006 amendments to Title IV of the Surface Mining Reclamation and 
Control Act or SMCRA--amendments that took 10 years to negotiate and 
pass, and to impose an AML fee on hard rock mines on each ton of 
material moved including non-mineralized rock and soil--frequently 
referred to as the dirt tax.
    Just prior to last year's budget hearing, documents related to the 
Administration's rewrite of the Stream Buffer Zone Rule had been 
released to the press. Subsequently, the Natural Resources Committee 
initiated an investigation of OSM's rewrite of the rule and their 
relationship to the contractor.
    As part of the investigation the Committee has requested 
information from Secretary Salazar regarding communications between the 
Interior Department, OSM and the contractor and held several oversight 
hearings on the matter. I anticipate that some Members will ask 
questions today relating to this ongoing rulemaking.
    The budget proposal before us proposes to decrease and or eliminate 
funding to the States and Tribes specifically to the certified States 
and Tribes (overturn the 2006 Amendments to SMCRA), and at the same 
time advocates for a significant increase in funding for OSM so you can 
add an additional 25 FTEs (full time employees).
    So I'm puzzled as to why you would include this statement; ``Of the 
almost 2,400 employees involved in carrying out these two 
responsibilities on a daily basis, less than 25 percent are employed by 
OSM. The rest are State and Tribal employees who implement programs 
approved by the Secretary of the Interior with assistance from OSM. 
States permit and regulate 97 percent of the Nation's coal production. 
States and Tribes also complete well over 90 percent of the abandoned 
mine land reclamation projects.''
    With the states and tribes responsible for 97 and 90 percent of the 
workload created by SMCRA why does the federal government have 25 
percent of the personnel and have the audacity to come before Congress 
asking us to cut state funding and increase federal funding so you can 
add additional people to conduct the 3 and 10 percent federal part of 
the program. This makes absolutely no sense in cost, productivity or 
function.
    Thant being said, I look forward to hearing from our witnesses 
today.
                                 ______
                                 

 STATEMENT OF THE HON. RUSH HOLT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. Holt. Thank you, Mr. Chairman. Ostensibly, this hearing 
is to review the President's proposed budget for surface 
mining. However, it is apparent that the Majority wants to 
divert this hearing to another issue. And so I wanted to say a 
few words about that, because I think their move strikes at the 
heart of the surface mining law and regulations here in the 
United States.
    The Office of Surface Mining is charged with ensuring that 
coal mining across the Nation is conducted in a way that 
protects local communities and the environment. However, at the 
tail end of the last Administration, the OSM weakened 
regulations on some of the most destructive mining practices.
    During the final days in office, the Bush Administration 
issued what has come to be known as a Midnight Regulation that 
revised a regulation known as the Stream Buffer Zone Rule, and 
removed key protections for streams and rivers threatened by 
the dumping of mining waste. The Administration's rule then was 
challenged in court, and the current Administration is now 
going through a process of issuing a new stream protection 
rule.
    Now, to be clear, mountaintop removal mining has 
significant adverse impacts on communities and the environment 
in the Appalachian region. Over the last 30 years, nearly 2,000 
miles of Appalachian streams have been filled or spoiled as a 
result of mountaintop removal activities. The practice has 
deforested an area the size of Delaware.
    An EPA study found that mountaintop removal mining 
adversely affected aquatic life downstream in 9 out of every 10 
streams in the region. And despite these impacts, the Majority 
has sought to prevent the Obama Administration from issuing new 
regulations to protect streams and communities in the 
Appalachian region. The Majority has launched an investigation 
into OSM's relationship with the contractor, Polu Kai Services, 
PKS, that was hired in June of 2010 to prepare an environmental 
impact statement for the rule.
    OSM and the contractor mutually agreed to end their 
relationship in March 2011, before the EIS was complete. Yet 
the Committee Majority has alleged that the Obama 
Administration and OSM acted improperly in seeking this 
separation agreement and in managing the contract. This 
investigation, it seems to me, is intended only to interfere 
with the work of OSM.
    The Natural Resources Committee Democratic staff has 
reviewed more than 12,000 pages of documents provided to the 
Committee by the Interior Department, and today is releasing 
the findings of its review in a staff report. This report 
concludes that the allegations from the Majority are baseless.
    Committee Republicans initially asserted that OSM ended its 
relationship with the contractor because of job loss estimates 
in the draft EIS, well before any job estimates were done. What 
is more, mining officials and technical experts from Virginia, 
West Virginia, Wyoming, and other States were harshly critical 
of the contractor's work, characterizing draft EIS chapters as 
``inaccurate, incomplete, erroneous, incorrect,'' and 
``insufficient.''
    The Majority then alleged that OSM provided inappropriate 
and contradictory instructions to the contractor. However, a 
review of the materials showed that the facts just do not 
support the allegations. In fact, the Statement of Work 
document governing the contractor's work specifically 
instructed the contractor not to disseminate deliberative 
documents without prior approval of the OSM contracting 
officer.
    Democratic staff report that this instruction was 
consistent not only with the Statement of Work, but with 
longstanding rulemaking practice under the Administrative 
Procedure Act.
    It seems clear that the investigation is nothing more than 
an attempt by the Majority to stop a regulation that is 
intended to protect Appalachian communities and the 
environment. In fact, in an attempt to block the stream 
protection rule, the Majority passed legislation out of this 
Committee last week that would completely paralyze the Office 
of Surface Mining.
    Any legislation drafted so broadly that it would prevent 
OSM from issuing any regulation under the Surface Mining 
Control and Reclamation Act through December of next year, if 
the regulation would prohibit coal mining in any area, reduce 
employment in mines, or reduce coal production, is clearly 
excessive. This means that the law would have an impact well 
beyond the stream protection rule, could compromise the safety 
of mining operations, and threatens public health in Appalachia 
by preventing OSM from issuing or revising numerous 
regulations.
    I look forward to hearing from the director and our 
witnesses today. Thank you.
    [The prepared statement of Mr. Holt follows:]

         Statement of The Honorable Rush Holt, Ranking Member, 
              Subcommittee on Energy and Mineral Resources

    In 2011, American crude oil production reached the highest level in 
nearly a decade. Natural gas production was once again at an all-time 
high. Some have claimed that this is in spite of, not because of, the 
Obama Administration.
    Yet, the Obama Administration has continued to increase domestic 
oil and gas production on federal land. Over the first three years of 
the Obama Administration, oil production from all offshore and onshore 
federal land has been 13 percent higher than during the last three 
years of the Bush administration.
    Some have claimed that oil production on federal lands is down this 
year because of the Obama Administration. Well, oil production in 2011 
was slightly lower than 2010 as a result of the aftermath of the BP 
Deepwater Horizon disaster when oil and gas companies were not able to 
demonstrate that they had the capability to actually respond to and 
contain a deepwater blowout. And even with that slight dip in offshore 
production, overall federal oil production in 2011 under President 
Obama was still higher than each of the last three years of the Bush 
Administration.
    According to a recent Department of Energy report that examined 
energy production between 2003 and 2011, onshore, oil production from 
federal land in 2011 was higher than at any point under the Bush 
Administration.. Over the first three years of the Obama 
Administration, natural gas production onshore was 6 percent higher 
than during the last three years of the Bush Administration.
    The Department of the Interior has approved more permits to drill, 
and industry has begun drilling more wells in the first three years of 
the Obama Administration than in the first three years of the Bush 
Administration. Yet these companies are sitting on more than 7,200 
approved drilling permits on which they have not begun drilling. Oil 
and gas companies hold more than 25 million acres of public land 
onshore on which they are not producing oil and gas. The Obama 
administration isn't holding up production on these leases, the oil and 
gas companies who hold these permits are holding up production.
    The Administration has once again proposed establishing a fee on 
these nonproducing leases. Ranking Member Markey and I have introduced 
legislation to establish an escalating fee on oil and gas leases, 
providing a strong incentive for oil companies to either start drilling 
in a timely fashion or relinquish this land so that another company can 
develop it. If the majority is interested in increasing production on 
federal lands they should support this legislation to get these 
companies to stop just sitting on the thousands of approved permits to 
drill and the tens of millions of acres of public lands they already 
hold.
    And last year there was a 50 percent increase in industry 
nominations to lease federal land onshore for oil and gas drilling. The 
oil and gas industry wouldn't be expanding the areas it wanted to drill 
in if it thought the Obama Administration was not allowing oil and gas 
development to go forward.
    And as part of its real ``all of the above'' energy strategy, the 
Obama Administration is also developing renewable energy on public 
lands, with the goal of permitting 11,000 megawatts by the end of 2013. 
This would be more than 5 times the amount of renewable energy 
permitted by all previous administrations combined. Yet the Republican 
Majority is threatening to raise taxes on the wind industry at the end 
of this year, which would jeopardize those projects and could kill 
37,000 permanent and existing clean energy jobs.
    I look forward to the testimony of our witnesses today and I yield 
back.
                                 ______
                                 
    Mr. Lamborn. OK. I now invite forward The Honorable Joseph 
Pizarchik, Director of the Office of Surface Mining Reclamation 
and Enforcement.
    Your written testimony will appear in full in the hearing 
record, so I ask that you keep your oral statements to five 
minutes, as outlined in our invitation to you, and under 
Committee Rule 4(a).
    I know you know how the microphones and the lights work; 
you have been here before. So you may begin. Thank you for 
being here.

  STATEMENT OF JOSEPH PIZARCHIK, DIRECTOR, OFFICE OF SURFACE 
               MINING RECLAMATION AND ENFORCEMENT

    Mr. Pizarchik. Thank you, Chairman Lamborn, Ranking Member 
Holt. I appreciate the opportunity to be here to testify. Thank 
you all to other Members of Congress who are here as well. I 
appreciate the interest that this Committee has shown in the 
Office of Surface Mining and Reclamation and Enforcement, in 
our budget, and in our rulemaking. We certainly experience a 
heightened awareness of the adverse impacts of coal mining that 
is occurring around the country, and the opportunities to 
improve the protection of the public and the environment.
    The Fiscal Year 2013 budget request has a number of high 
points. It is a focus budget, it is fiscally responsible, and 
it is a budget that reflects tough choices and efforts to 
reduce the Federal deficit.
    Some of the discretionary budget highlights include a 
reduction in funding to the Office of Surface Mining 
Reclamation and Enforcement for its Federal programs, and on 
the Indian lands by $3.4 million, for the review and 
administration and enforcement of permits. We intend to offset 
that reduction with collection for services provided to the 
industry. The cost recovery will occur after OSM promulgates 
regulations through the rulemaking process to update its fee 
structure.
    There is also a $10.9 million reduction in regulatory 
grants to the States. The States are, again, encouraged to 
recover their costs from the industry for services they 
provided to the industry.
    Mr. Chairman, you had asked a question earlier as to why we 
would propose those types of reductions. Those reductions, both 
to the States and to OSM, are designed to lower the Federal 
spending, to reduce the deficit of this country, by recovering 
from the industry more of the cost of the services that we 
provide to the industry. To eliminate those, reduce those 
subsidies to the industry.
    These two reductions are also a part of the larger 
governmentwide effort to lower the Federal spending elsewhere. 
The budget proposal for OSM also includes administrative cost 
savings and management efficiencies to support the President's 
governmentwide campaign to cut waste, primarily in the areas of 
travel, strategic sourcing of supplies and materials, and other 
goods and services. It provides for fully funded fixed costs, 
which includes a one-half of one percent pay increase for the 
employees, as well as costs to pay for the higher insurance 
costs for our employees and other related employer costs.
    As regards your question about the additional staff to OSM, 
as you may have heard over the past 10 years, not including 
this current fiscal year, OSM staff has been reduced by 17 
percent. If you include the cut from last year, this current 
fiscal year is down about 18 percent. Over the last 20 years, 
we have almost 48 percent fewer employees, and we are still 
doing the same work. The additional staff is needed to be able 
to carry out our statutory obligations, our obligations to 
provide technical support and training and assistance to the 
States, our obligation to conduct oversight to provide 
assurances to the public, to Congress, to everybody, that we 
have an incredible oversight program to make sure that the laws 
are being implemented, as required across the country. Without 
the additional staff, we do not have the resources to be able 
to do all of the tasks assigned to this agency by Congress.
    In regards to other reductions, for example in the 
mandatory spending program, the Administration's 2013 budget 
proposal for OSM includes a legislative proposal similar to 
last year's to reduce unnecessary spending, and that includes 
the three components: the termination of payments to the 
certified States and Tribes who certified they have completed 
their coal reclamation, as well as a change to the program to 
provide for a more directed spending of those funds to address 
the most dangerous sites in the country.
    It also creates a proposal for a parallel program to 
reclaim abandoned hardrock mines. There are States interested, 
many of which have very dangerous problems in their areas. We 
believe that the best approach is to provide for a 
comprehensive solution to address those abandoned mine land 
problems in the hardrock area with the fees being paid by the 
hardrock industry.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pizarchik follows:]

 Statement of Joseph G. Pizarchik, Director, Office of Surface Mining 
      Reclamation and Enforcement, U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify on the Fiscal Year 2013 budget request for the 
Office of Surface Mining Reclamation and Enforcement (OSM).
    The Surface Mining Control and Reclamation Act of 1977 (SMCRA) 
established the Office of Surface Mining Reclamation and Enforcement 
for two basic purposes: First, to assure that the Nation's coal mines 
operate in a manner that protects citizens and the environment during 
mining operations and restores the land to productive use following 
mining; and second, to implement an Abandoned Mine Lands (AML) program 
to address the hazards and environmental degradation remaining from two 
centuries of unregulated mining. These tasks are vital to public health 
and safety, and the environmental and economic well-being of the United 
States.
    Congress charged OSM through SMCRA to ensure that the Nation 
strikes a balance between the protection of the environment and the 
Nation's need for coal energy. Nearly 35 years after the passage of 
SMCRA, coal remains an important fuel source for our country, providing 
about half of our Nation's electricity. In the continued drive to 
decrease our Nation's dependence on foreign oil, coal will continue to 
be part of our domestic supply of energy for the foreseeable future.
    While new energy frontiers are being explored, including the 
development of clean coal, the coal supply (conventional coal 
production) is essential to the Nation's energy requirements. In order 
to ensure that coal is produced in an environmentally conscious and 
responsible way, OSM is committed to carrying out the requirements of 
SMCRA in cooperation with States and Tribes. Of the almost 2,400 
employees involved in carrying out these two responsibilities on a 
daily basis, less than 25 percent are employed by OSM. The rest are 
State and Tribal employees who implement programs approved by the 
Secretary of the Interior with assistance from OSM. States permit and 
regulate 97 percent of the Nation's coal production. States and Tribes 
also complete well over 90 percent of the abandoned mine land 
reclamation projects.
    The major tasks for OSM are to ensure that States and Tribes 
successfully address coal mining activities by ensuring they have high-
quality regulatory and AML frameworks and to oversee implementation of 
their programs. Importantly, OSM also provides technical assistance, 
funding, training, and technical tools to the States to support their 
regulatory and reclamation programs.
    Currently, 24 States have approved regulatory programs in place 
pursuant to Title V of SMCRA. There are 25 States and three Tribes that 
administer approved AML programs pursuant to Title IV of SMCRA.
    Since enactment of SMCRA in 1977, OSM has provided more than $3 
billion in grants to States and Tribes to clean up mine sites abandoned 
before passage of SMCRA. In the course of addressing health, safety and 
environmental hazards, about 265,000 acres of Priority 1 and 2 
abandoned coal mine sites have been reclaimed under OSM's AML Program, 
though many sites still remain.
    The authority to collect and distribute the AML reclamation fee was 
revised by the Tax Relief and Health Care Act of 2006, which included 
the 2006 Amendments to SMCRA (Public Law 109-432). Among other things, 
these amendments extended the authority for fee collection on mined 
coal through September 30, 2021, and changed the way that State and 
Tribal reclamation grants are funded, beginning in FY 2008. State and 
Tribal grants are funded by permanent appropriations that are derived 
from current AML fee collections and the general fund of the U.S. 
Treasury. With these amendments, funding to States and Tribes increased 
from $145.3 million in FY 2007 to the most recent distribution made 
available of $485.5 million for FY 2012.
    The budget includes a legislative proposal to reform the AML 
reclamation program to reduce unnecessary spending and ensure the 
Nation's highest priority abandoned sites are reclaimed. First, the 
budget proposes to eliminate the unrestricted payments to certified 
States and Tribes that have completed their abandoned coal mine 
reclamation. Terminating these payments will save taxpayers $1.1 
billion over the next decade. Second, the budget proposes to reform the 
allocation of grants for coal AML reclamation to a competitive process. 
The current production-based formula allocates funding to States that 
have the most coal production and not necessarily States with the most 
critical reclamation needs. A competitive process would ensure that 
funding addresses the highest priority and the most environmentally 
damaging AML coal sites across the Nation, regardless of which State 
they are located in and how much coal is currently produced.
    Third, the budget proposes to create a parallel hardrock AML 
program, with fees collected by OSM and distributed competitively by 
the Bureau of Land Management.
    The coal AML reclamation program would operate in parallel to the 
proposed hardrock AML fee and reclamation program, as part of a larger 
effort to ensure that the Nation's most dangerous coal and hardrock AML 
sites are addressed by the industries that created the problems. The 
mandatory distribution to the United Mine Workers of America (UMWA) 
health benefit plans, estimated at $230.6 million in FY 2013, will not 
be affected by this proposal.
Fiscal Year 2013 Budget Request Overview
    The FY 2013 budget request for OSM totals $140.7 million in 
discretionary spending and supports 528 equivalent full-time positions. 
Compared with the 2012 enacted level of $150.2 million, this represents 
a net decrease of $9.5 million. The budget request contains a 
programmatic increase of $4.2 million for improved implementation of 
existing laws and support to States and Tribes, and monitoring of AML 
projects. Reductions include $10.9 million in discretionary spending 
for State regulatory program grants to be offset with increased user 
fees for services provided to the coal industry; $3.4 million in 
Federal programs, including the Federal program for Indian lands, to be 
offset with cost recovery of fees for services, and $0.3 million for 
watershed cooperative agreements. The budget includes a net increase of 
$0.9 million for fixed costs and continues to support administrative 
savings and efficiencies.
    OSM's budget also contains an estimated $537.2 million in permanent 
appropriations. This spending includes $306.6 million for reclamation 
grants to non-certified States and Tribes (those with remaining 
abandoned coal mine problems); and $230.6 million for the UMWA for 
specified health benefits plans. This spending is derived from both the 
AML and U.S. Treasury funds. The estimates, as contained in the budget 
submission, are projections based on information current as of the end 
of the 2011 calendar year and subject to change since they are based on 
fee collections and requests from the UMWA.
Regulation and Technology Appropriation
    The OSM's overall FY 2013 request includes $113.1 million for the 
Regulation and Technology appropriation, $9.7 million below the 2012 
enacted level. This includes an increase in funding and staff to 
support improved implementation of existing laws and support to States 
and Tribes, and reductions for regulatory grants, and Federal programs 
where OSM is the regulatory authority. The FY 2013 budget request will 
enable OSM to provide financial and technical support, and training to 
the 24 States with approved regulatory programs. It will also enable 
OSM to continue to administer Federal regulatory programs in States 
that do not operate their own programs and on Federal and Indian lands.
    The requested programmatic increase of almost $4.0 million and 25 
FTE will support improved implementation of existing laws and support 
to the States and Tribes. Scientific developments have identified areas 
in need of improvement to more completely implement SMCRA. Annual 
performance agreements developed for each State, with stakeholder 
input, outline the responsibilities and activities of both the State 
and OSM. The increase in funding and FTE will strengthen OSM's skill 
base to assist in resolving issues, while continuing to provide the 
technical support and training that States and Tribes need to maintain 
program effectiveness.
    A large portion of the regulatory and technology funding 
appropriated to OSM is distributed to the States and Tribes in the form 
of regulatory grants. These grants account for 51 percent of this 
proposed appropriation. For FY 2013, the request includes $57.7 million 
for regulatory grants, $10.9 million below the 2012 enacted level. 
States are encouraged to offset the decrease in Federal funding by 
increasing cost recovery fees for services to the coal industry, 
therefore there should be no reduction in regulatory performance. The 
decrease supports the Administration's commitment to reduce subsidies 
to fossil-fuel industries.
    In addition, a decrease of $3.4 million for Federal regulatory 
programs where OSM is the regulatory authority is proposed, which will 
be covered by an equal amount of proposed offsetting collections for 
the review, administration and enforcement of coal mining permits.
    The remaining portion of the budget provides funding for OSM's 
regulatory operations on Federal and Indian lands, evaluation and 
oversight of State regulatory programs, technical training and other 
technical assistance to the States and Tribes as well as administrative 
and executive activities.
Abandoned Mine Reclamation Fund Appropriation
    The request includes $27.5 million for the AML appropriation, which 
is a net increase of $149,000 from the 2012 enacted level. The budget 
supports OSM's program evaluations and reclamation operations, 
watershed cooperative agreement projects, fee compliance and audits, 
technical training and other technical assistance to the States and 
Tribes as well as administrative and executive activities. Increases 
are proposed for project monitoring of AML projects. Reductions are 
proposed for watershed cooperative agreements due to the anticipated 
number of projects in FY 2013 and available carryover funding to 
support them.
Permanent Appropriations
    The OSM will continue to distribute mandatory funding to States and 
Tribes under the AML program and make payments to the UMWA health 
benefit plans. The budget request includes a legislative proposal 
discussed earlier to eliminate payments to certified States and Tribes 
and restructure AML coal payments from a production-based formula to a 
competitive process, allocating $306.6 million in 2013 for reclamation 
of the highest priority coal AML sites in the Nation. This proposal 
will save an estimated $1.1 billion over the next decade while ensuring 
that the Nation's highest priority abandoned coal mines are addressed.
Offsetting Collections and Fees
    OSM's budget continues an offsetting collection initiated in FY 
2012, allowing OSM to retain coal mine permit application and other 
fees for the work performed as a service to the coal industry. The fee 
will help ensure the efficient processing, review, and enforcement of 
the permits issued, while recovering some of the regulatory operations 
costs from the industry that benefits from this service. Section 507 of 
SMCRA authorizes this fee. It is estimated that $3.4 million will be 
generated in offsetting collections.
Conclusion
    The FY 2013 budget is a disciplined, fiscally responsible request 
that lowers the cost to the American taxpayer while ensuring coal 
production occurs in an environmentally responsible way.
    Thank you for the opportunity to appear before the Committee today 
and testify on the FY 2013 budget request for OSM. This concludes my 
written statement. I am happy to answer questions that you may have on 
the budget proposal.
                                 ______
                                 

Response to questions submitted for the record by The Honorable Joseph 
     Pizarchik, Director, Office of Surface Mining Reclamation and 
              Enforcement, U.S. Department of the Interior

Subcommittee Chairman Doug Lamborn
1.  Can you tell this Committee specifically how much money OSM has 
        spent on the rewrite of the 2008 Stream Buffer Zone Rule?
    Answer: The Office of Surface Mining Reclamation and Enforcement 
(OSM) has been developing improvements of its regulations to more 
completely implement the Surface Mining Control and Reclamation Act by 
better protecting streams from the adverse impacts of coal mining while 
helping meet the nation's energy needs. Since 2009, OSM has spent about 
$7.7 million to develop this rulemaking.
2.  Can you tell us how much more money will be needed to finish the 
        rule?
    Answer: No. There are too many factors that will impact future 
costs such as the number and complexity of public comments received, 
the number of public hearings held, etc.
3.  How much more money will it cost the government to renegotiate a 
        second settlement and does that include paying attorney fees to 
        the plaintiffs?
    Answer: The government has no current plans to negotiate a second 
settlement.
Specific Questions re: Cost Recovery/User Fees
    OSM has requested an amount for state Title V regulatory program 
grants in FY 2013 that reflects an $11 million decrease from FY 2012. 
While OSM does not dispute that the states are in need of an amount far 
greater than this, the agency has suggested once again that the states 
should be able to make up the difference between what OSM has budgeted 
and what states actually need by increasing cost recovery fees for 
services to the coal industry.
1.  What exactly will it take to accomplish this task?
    Answer: Each state has the legal authority to collect a fee from 
the applicant to cover up to the actual or anticipated cost of 
reviewing, administering, and enforcing the permit. How that would be 
accomplished would depend on the circumstance and processes of the 
individual states.
2.  Assuming the states take on this task, will amendments to their 
        regulatory programs be required?
    Answer: It depends on the individual state. Federal law did not 
require states to develop programs that require a program amendment to 
modify their fee structure. Those states that chose to include such a 
constraint on their authority may need to amend their program and those 
states that did not elect to include such a constraint on their 
authority can adjust their fees without a program amendment.
3.  How long, in general, does it take OSM to approve a state program 
        amendment?
    Answer: The amount of time that it takes to process a state program 
amendment varies depending on the number of issues in each amendment. 
In addition to internal review and clearance within OSM and the 
Department, all state program amendments require publication of a 
proposed rule in the Federal Register, an opportunity for public 
comment, and then publication of a final rule in the Federal Register. 
Between 2007 and 2010, OSM processed three state program amendments 
dealing with fees; the average number of days for processing was 237.
    The state of Alabama submitted a program amendment to OSM in May of 
2010 to raise current permit fees and authorize new, additional fees. 
It took OSM a full year to approve this amendment, resulting in lost 
fees of over $50,000 to the state.
1.  If OSM is unable to approve requested state program amendments for 
        permit fee increases in less than a year, how does the agency 
        expect to handle mandated permit increases for all of the 
        primacy states within a single fiscal year?
    Answer: The proposed FY 2013 budget for OSM does not mandate permit 
fee increases for any state. Section 507(a) of the Surface Mining 
Control and Reclamation Act (SMCRA) specifies that ``[e]ach application 
for a surface coal mining and reclamation permit pursuant to an 
approved State program. . .shall be accompanied by a fee as determined 
by the regulatory authority.'' The amount charged is left to the state, 
however. In addition, states are encouragedto recover the cost of other 
services they provide. How individual states choose to recover the cost 
of services they provide to the industry is a matter of the state's 
discretion. Some state programs specify the permit fee amounts in the 
state program. Any change to the fee amounts, therefore, requires a 
state program amendment. Other states have set out permit fees 
according to a schedule that is separate and apart from the state 
program, in which case fee changes do not require a state program 
amendment.
2.  If OSM is not expecting to pursue this initiative in fiscal year 
        2013, why include such a proposal in the budget until OSM has 
        worked out all of the details with the states in the first 
        instance?
    Answer: As early as February 2010, states have been encouraged to 
adjust their fees to recover more of the cost of the services they 
provide to industry. The FY 2011, FY 2012, and FY 2013 budget proposals 
for OSM have all included the proposed reduction in Federal spending. 
The FY 2013 proposal includes a similar reduction of $3.4 million for 
OSM's regulatory programs. OSM is pursuing a rulemaking to adjust its 
fees to recover the costs of reviewing, administering and enforcing 
permits for Federal programs. OSM anticipates that this rulemaking will 
become effective in fiscal year 2013. Moreover, in response to requests 
from the states and in order to reduce Federal spending, OSM is 
exploring all available options to assist primacy states in the 
collection of fees.
3.  What types of complexities is OSM anticipating with its proposal at 
        the state level? Many of the states have already indicated to 
        OSM that it will be next to impossible to advance a fee 
        increase proposal given the political and fiscal climate they 
        are facing.
    Answer: States are encouraged to follow OSM's example and recover 
more of the cost of the services provided to industry and reduce state 
spending as OSM will reduce Federal spending.
    OSM's solution seems to be that the agency will propose a rule to 
require states to increase permit fees nationwide.
1.  Won't this still require state program amendments to effectuate the 
        federal rule, as with all of OSM's rules?
    Answer: OSM has no plans to propose a rule requiring states to 
increase permit fees.
2.  How does OSM envision accomplishing this if the states are unable 
        to do it on their own?
    Answer: Beginning as early as February 2010, states were encouraged 
to adjust their fees to recover more of the cost of the services they 
provide to industry. The FY 2011, FY 2012, and FY 2013 budget proposals 
for OSM all included the proposed reduction in Federal spending. OSM 
stands ready to assist any States that elect to adjust their fees and 
request assistance in their efforts to do so.
3.  Even if a federal rulemaking requiring permit fee increase 
        nationwide were to succeed, how does OSM envision assuring that 
        these fees are returned to the states?
    Answer: OSM does not intend to propose a rulemaking to require 
permit fees be increased nationwide. Rather, states have asked OSM to 
collect fees on their behalf. OSM is exploring all legal and practical 
options for providing such assistance to the states, including the 
remittance of such fees to the states.
4.  Will OSM retain a portion of these fees for administrative 
        purposes?
    Answer: Because OSM is still considering the resources and legal 
authorities it has to address the request from the states to assist in 
the collection of fees, we do not yet know how we will accomplish this 
objective. Many options are under consideration.
Congressman Glenn `GT' Thompson
1.  What is OSM's current costs for administering the programs in the 
        two federal program States, Tennessee and Washington, and on 
        Indian lands for which you will be seeking reimbursement? And 
        what does this amount to on a per-ton of coal basis?
    Answer: OSM spends about $4.7 million per year of Federal taxpayer 
funds to review permit applications and administer and enforce coal 
mining permits in two Federal program states (Tennessee and Washington) 
and on Indian lands where OSM is the regulator. The $4.7 million is 
based on the best available actual cost data. The actual cost will vary 
based upon the number of permits, revisions, etc., that are processed, 
administered, and inspected in any given year.
    It is difficult to calculate and fairly assign the cost on a per-
ton basis. Each permit's cost per-ton changes through the lifecycle and 
circumstances of the permit.
Congressman Mike Coffman
1.  You stated in your testimony that we must rely on domestic supply 
        of coal in order to reduce our dependence on foreign oil but 
        how will increasing fees on coal production increase our 
        supply? Won't the effect of these increased fees be a reduction 
        of production and supply? Therefore, increasing the cost of 
        energy for families?
    Answer: OSM plans to revise its rules to recover from the coal 
industry much of the cost that OSM incurs in reviewing, administering, 
and enforcing mining permits on lands where OSM is the regulatory 
authority. OSM intends to recover its costs for these activities in 
Federal Program States and on Indian Lands. OSM's proposal neither 
increases fees on coal production nor mandates permit fee increases for 
any state that has assumed primary responsibility for regulating 
surface coal mining operations within its borders. Those states are 
encouraged to recover from the permitted mine operator the cost of the 
services that the states provide. How individual states choose to 
recover those costs, however, is a matter left to each state's 
discretion.
    OSM does not believe that a cost recovery rulemaking will lead to a 
reduction in the Nation's supply of coal.
2.  Your budget states that the FY 2013 budget is a disciplined, 
        fiscally responsible request that lowers the cost to the 
        American taxpayer while ensuring coal production occurs in an 
        environmentally responsible way. However, isn't the reality 
        that the increased ``fees'' will be passed onto the consumer?
    Answer: The proposed Fiscal Year 2013 budget for OSM does not 
mandate permit fee increases for any state. States are encouraged to 
recover the cost of services they provide from the permitted mine 
operator, but it is a matter left to the state's discretion.
    The Federal Government currently provides funding to States and 
Tribes to regulate the coal industry. To eliminate a de facto subsidy 
of the coal industry, the budget encourages States to increase their 
cost recovery fees for coal mine permits. With additional funding from 
fees, the States will need less Federal grant funding, so the budget 
reduces grant funding accordingly.
3.  OSM proposes to reduce the budget by ``$10.9 million in 
        discretionary spending for State regulatory program grants'' 
        and this is to be ``offset with increased user fees for 
        services provided to the coal industry''. Which states do you 
        anticipate will have to increase their fees to compensate for 
        the loss of this federal revenue? Also, how will these 
        increased fees (taxes) impact the economic viability of the 
        coal industry?
    Answer: The proposed FY 2013 budget for OSM does not specify how a 
state ought to offset its reduced regulatory grant amount. States are 
encouraged to recover the cost of services they provide from the 
permitted mine operator, but it is a matter left to the state's 
discretion.
                                 ______
                                 
    Mr. Lamborn. All right, thank you. We have also been joined 
by the Chairman of the Full Committee, and both for him and the 
Ranking Member of the Full Committee, we will give them the 
courtesy of a five-minute opening statement when they appear.
    So I would now like to recognize Representative Hastings of 
Washington.

    STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Hastings. Thank you very much, Mr. Chairman, for the 
courtesy.
    Over this past year, Chairman Lamborn and I have patiently 
and respectfully worked to conduct oversight into the sudden 
decision to reopen a multi-year stream buffer rulemaking, and 
push forward with new regulations in a rushed time frame. Since 
this oversight investigation started last February, the scope 
has expanded beyond just the decision to reopen rulemaking, but 
to broader actions that include contractor dismissals and how 
the rulemaking is being managed or mismanaged.
    This is a serious matter that impacts the livelihood of 
entire communities, the jobs of thousands of coal miners across 
the Nation, and the cost of life for Americans that depend on 
coal for electricity. Not only are real coal jobs and the cost 
of electricity at stake, but the agency is spending unknown 
sums of taxpayer dollars pursuing this rewrite. And the 
spending is climbing higher, due to the highly questionable way 
it is being managed.
    For more than a year, through a series of letters sent to 
you, Director Pizarchik, and Secretary Salazar, this Committee 
has sought information, communications, and documents. Not once 
over the last year has a single deadline been met, and the 
Administration continues to withhold the vast majority of 
requested materials. This occurs despite your pledge of 
transparency at your confirmation hearings for this post, for 
the Department of the Interior's promoting their commitment to 
transparency and open government, and President Obama's 
declaration that transparency would be a ``touchstone'' of his 
Administration.
    Congress and this Committee have an obligation to the 
American people to conduct oversight of the executive branch 
and get answers to questions that are asked. We take this 
charge very seriously. Great patience and diligence has been 
shown on our part for over a year, as we have asked for 
information and documents. But there comes a time when we are 
left with no other choice but to tell the Department to produce 
these documents. That time is just about upon us.
    It shouldn't take a subpoena to get straight answers and 
documents. But if that is what it takes to get the Obama 
Administration to comply, then I am prepared to take that step.
    With that, Mr. Chairman, I yield back my time.
    [The prepared statement of Mr. Hastings follows:]

          Statement of The Honorable Doc Hastings, Chairman, 
                     Committee on Natural Resources

    Over the past year, Chairman Lamborn and I have patiently and 
respectfully worked to conduct oversight into the sudden decision to 
reopen a multi-year Stream Buffer rulemaking and push forward with new 
regulations in a rushed timeframe. Since this oversight investigation 
started last February, the scope has expanded beyond just the decision 
to reopen the rulemaking, but to broader actions that include 
contractor dismissals and how the rulemaking is being managed or 
mismanaged.
    This is a serious matter that impacts the livelihood of entire 
communities, the jobs of thousands of coal miners across the nation, 
and the cost of life for Americans that depend on coal for electricity. 
Not only are coal jobs and cost of electricity at stake, but the agency 
is spending unknown sums of taxpayer dollars pursuing this rewrite, and 
the spending is climbing higher due to the highly questionable way it's 
being managed.
    Over more than a year, through a series letters sent to you (OSM 
Director Joseph Pizarchik) and Secretary Salazar, this Committee has 
sought information, communications and documents. Not once over the 
last year, has a single deadline been met, and the Administration 
continues to withhold the vast majority of requested materials. This 
occurs despite your pledge of transparency at your confirmation 
hearings for this post, the Department of Interior's promoting their 
commitment to transparency and open government, and President Obama's 
declaration that transparency would be a ``touchstone'' of his 
Administration.
    Congress and this Committee have an obligation to the American 
people to conduct oversight of the Executive Branch and get answers to 
the questions that are asked. We take this charge seriously. Great 
patience and diligence has been shown on our part, for over a year, as 
we've asked for information and documents, but there comes a time when 
we're left with no other choice but to compel the Department to produce 
these documents. That time is just about upon us. It shouldn't take a 
subpoena to get straight answers and documents, but if that is what it 
takes to get the Obama Administration to comply, then I'm prepared to 
take that step.
                                 ______
                                 
    Mr. Lamborn. All right, thank you. We will now have 
questions from the members of the Committee, and I will begin.
    Mr. Pizarchik, as you know, this Committee has been 
investigating the rewrite of the 2008 stream buffer zone rule, 
as was just mentioned by the Chairman, specifically why this 
rewrite was initiated, how the rulemaking process itself is 
being managed, whether the political implications of the rule 
are unduly influencing the process, and the impacts the 
proposed rule will have on jobs, the economy, and coal 
production. Those are the concerns that we have.
    OSM has admitted spending over $4.4 million on the 
Environmental Impact Statement for this rule alone by contract, 
and in 2005 several agents managed to produce a 5,000-page 
programmatic EIS, including 30 Federally funded studies on all 
aspects of surface mining for about the same amount.
    Can you tell this Committee specifically how much money OSM 
has spent on the rewrite of the 2008 stream buffer zone rule?
    Mr. Pizarchik. Mr. Chairman, in regards to the spending on 
the EIS, we hired a contractor, as you are aware. And of that 
contractor--if you bear with me--we had provided some numbers 
to you previously. And under the contract, the original amount 
was for $4.98 million that was awarded to PKS. The final amount 
that we paid to them was $3.7 million, leaving a balance of 
$1.28 million.
    After PKS and the Office of Surface Mining ended their 
contractual relationship, we hired Industrial Economics and 
awarded them a contract for $925,261. And there have been some 
modifications to that, I believe totaling about $569,000 on 
that. As far as the tracking on the amount of time that OSM has 
spent on it, and our costs, I don't have those figures for you, 
but I think we could provide, as best we can, information we 
have and a response to the question for the record.
    Mr. Lamborn. Yes, we would like more information on that, 
thank you.
    How much more money will be needed to finish the rule?
    Mr. Pizarchik. I don't know specifically how much more. I 
believe we have the provisions in place with the contract. It 
should complete the work, as I understand it. But again, I have 
to double-check on that to see if there is other work that is 
anticipated. And it is hard to estimate exactly how much more 
time would be involved for the staff, because once we were to 
publish the proposed rule and draft EIS, we expect that there 
will be significant input from the public, from industry, and 
from the citizens who are affected by mining with their 
comments. Dependent on the scope and the quantity of comments, 
that could have a direct relation to how much additional work 
would be necessary to complete the rule and finalize it.
    Mr. Lamborn. OK. Do you anticipate finalizing this new rule 
by June 29th of this year?
    Mr. Pizarchik. No.
    Mr. Lamborn. OK. What do you estimate the time frame to be?
    Mr. Pizarchik. I don't have an estimate on the time frame 
at this point. We are working on the rule. We do not yet have a 
proposed rule ready for publication. And we have to complete 
all of those matters, and we have the internal process we have 
to go through, the standard process, to get a published rule 
out. We have hopes of getting it out later this year, maybe 
this spring.
    Mr. Lamborn. OK. How much more money will it cost the 
government to renegotiate a second settlement? And does that 
include paying attorneys' fees to the plaintiffs?
    Mr. Pizarchik. I don't believe that there is a need for a 
second settlement, so I don't have any anticipation that any 
additional money would be necessary. Under the terms of the 
original settlement, we committed to making our best effort to 
get the proposed rule out, I believe it was, last year.
    Our best efforts have not been successful in meeting that. 
The litigation has not been resumed. There has not been any 
litigation. We are continuing to make our best efforts to 
proceed and get a proposed rule published, and to get a rule 
finalized.
    Mr. Lamborn. OK, thank you. At this point I would like to 
recognize the Ranking Member of the Full Committee for five 
minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much. Mr. 
Director, last week the Majority passed legislation that they 
claimed was aimed at the stream protection rule. Yet that 
legislation is drafted so broadly that it could likely prevent 
OSM from issuing almost any regulation.
    The legislation states, ``The Secretary of the Interior may 
not, before December 31, 2013, issue or approve any proposed or 
final regulations under the Surface Mining Control and 
Reclamation Act of 1977 that would adversely impact employment 
in coal mines in the United States, cause a reduction in 
revenue received by the Federal Government or any State, 
Tribal, or local government, by reducing, through regulation, 
the amount of coal in the United States that is available for 
mining, reduce the amount of coal available for domestic 
consumption, for export, or designate any area as unsuitable 
for surface coal mining and reclamation operations.''
    Do you believe, Mr. Director, that this legislation would 
have impacts for OSM that would extend well beyond the stream 
protection rule, and that could impair OSM's ability to protect 
safety and the environment?
    Mr. Pizarchik. Yes, I do, sir.
    Mr. Markey. And could you explain what you believe those 
impacts would be?
    Mr. Pizarchik. There is a number of them. We are beginning 
the process to modify regulations for the placement of coal ash 
at coal mine sites, both active and abandoned. That would 
adversely impact those regulations. We have an attempt to 
modify regulations on temporary cessations that have not been 
updated since 1979. We believe that would adversely impact our 
ability to address those as well.
    And in regards to States, if there are state program 
amendments, those need to come through for approval by OSM, and 
that would also adversely impact our ability to process those 
program amendments to carry out our statutory responsibilities.
    Mr. Markey. OK. Well, Mr. Director, the purposes of the 
Surface Mining Control and Reclamation Act, as outlined in 
section 102(f) of that law, is to ``strike a balance between 
protection of the environment and agricultural productivity and 
the nation's need for coal as an essential source of energy.'' 
Would prohibiting any rulemaking, based upon the criteria in 
H.R. 3409, be inconsistent with the purposes of the Surface 
Mining Control and Reclamation Act?
    Mr. Pizarchik. Yes. That would prohibit us from striking 
that balance to take into consideration all the purposes of the 
statute.
    Mr. Markey. Mr. Director, could H.R. 3409 prevent the 
Office of Surface Mining from approving state program 
amendments to improve mine reclamation bonding programs, which 
could adversely affect the ability of States to ensure that the 
necessary funds are available to reclaim mine sites?
    Mr. Pizarchik. Yes, that could have that impact. And, in 
fact, there are some States right now where there are some 
bonding issues that need to be addressed.
    Mr. Markey. And this law potentially could interfere with 
that.
    Mr. Pizarchik. Yes, it could.
    Mr. Markey. And what would the impact of that be?
    Mr. Pizarchik. The impact of that would be that there would 
be inadequate funds to reclaim the sites if the operator were 
to go into bond forfeiture, which would prohibit the land from 
being restored to productive use, adversely impacting the 
economies of those people and the livelihood of the people 
where those lands could not be restored.
    Mr. Markey. Which States are we talking about?
    Mr. Pizarchik. Primarily Kentucky right now, sir.
    Mr. Markey. And so the State of Kentucky would be limited, 
in terms of what it could do.
    Mr. Pizarchik. Yes, because changes that they would need to 
make would have to be approved by us, and that could not occur 
if this bill were passed.
    Mr. Markey. And could H.R. 3409 prohibit OSM from 
developing guidelines and requirements for the use of coal 
combustion residues for reclamation activities on active and 
abandoned coal mine sites? A regulation would actually reduce 
costs for the mining industry.
    Mr. Pizarchik. Yes, sir. It could do that, as well. We want 
to update our regulations to provide clear guidance to protect 
the environment and to allow coal ash to be beneficially used 
where it is appropriate.
    Mr. Markey. OK, great. Thank you so much, sir. Thank you, 
Mr. Chairman.
    Mr. Lamborn. All right, thank you. We will now continue 
with our questions by members of the Committee. I would note 
that Ranking Member Holt is at another hearing. There are a lot 
of hearings going on at this moment. If he gets back here 
before the end of the hearing, he will be able, obviously, to 
ask his questions.
    But I would now like to recognize Representative Johnson of 
Ohio.
    Mr. Johnson. Thank you, Mr. Chairman. Mr. Pizarchik, OSM's 
Federal Register notice in June of 2010 stated--and I quote--
``We had already decided that--to change the rule following the 
change of the Administration on January 20, 2009.'' 
Additionally, there are internal OSM documents that state, 
``OSM had already begun developing a revised rule, following 
the change of Administration on January 20, 2009.''
    So, according to internal OSM documents, not only was the 
decision made to change the rule upon the change of the 
Administration, work had begun on the rewrite when the 
Administration changed. While this decision to change the rule 
was made before you took your position as director, can you 
tell me when, precisely, was the decision made to throw out the 
2008 rule and significantly expand the scope of the 2008 rule?
    Mr. Pizarchik. My understanding, Congressman Johnson, is 
that the decision to revise the regulation was made after the 
courts denied the Administration's request to vacate the 2008 
rule. And instead, the court indicated if changes wanted to be 
made, they had to go through the rulemaking process. I believe 
that occurred in the summer of 2009.
    Mr. Johnson. But that conflicts with what is in the Federal 
Register.
    Mr. Pizarchik. Actually, it does not. If you read the rest 
of that sentence, that paragraph, and put it all in context, 
you clearly understand that there were other factors that came 
into place. I admit that that first sentence was probably 
inartfully drafted, in light of the current----
    Mr. Johnson. Because the truth hurts, doesn't it?
    Mr. Pizarchik. No, actually----
    Mr. Johnson. I will reclaim my time. Mr. Director, last 
year you testified and claimed that the numbers the original 
contractors used to arrive at the 7,000 job loss estimates were 
not based on any evidence, and had no basis in fact. A few 
short weeks later, one of the contractors testified that, in 
fact, the numbers that were used were based on assumptions 
given to them by OSM.
    First, do you want to recant your earlier testimony that 
the numbers the contractors used were based on no evidence?
    Mr. Pizarchik. My understanding is that----
    Mr. Johnson. That is a yes or no question. Did you say that 
it was based on no evidence?
    Mr. Pizarchik. What I said was that my understanding was 
that there was no basis, they could not provide the assumptions 
that they----
    Mr. Johnson. But they got the numbers from OSM.
    Mr. Pizarchik. And they used placeholder numbers in that, 
so----
    Mr. Johnson. They got the numbers from OSM, Mr. Pizarchik.
    Mr. Pizarchik. Well, we did not provide them the 
placeholder numbers, Mr.----
    Mr. Johnson. And that is your testimony today, is that you 
did not provide them the numbers?
    Mr. Pizarchik. My testimony is we did not provide them the 
placeholder numbers that they used in their calculations.
    Mr. Johnson. OK. Then I can only assume that the numbers 
that OSM gave the contractors, then, were not based in fact. 
The problem resides with OSM, not with the contractor. That is 
a valid assumption.
    So your testimony is that OSM and the contractors came to a 
mutual decision to end the contract, even though they were 
following OSM orders and using assumptions given to them by the 
OSM staff. Correct?
    Mr. Pizarchik. [No response.]
    Mr. Johnson. You guys set the guidelines for the rulemaking 
process.
    Mr. Pizarchik. It was a collaborative effort. We hired them 
as the experts to provide us with a National Environmental 
Policy Act compliant----
    Mr. Johnson. But OSM gave them the assumptions on the 
numbers, correct?
    Mr. Pizarchik. I don't know the answer to that.
    Mr. Johnson. You don't know.
    Mr. Pizarchik. I don't----
    Mr. Johnson. OK, I can accept that. Furthermore, the 
contractors were paid out the rest of the contract, even though 
they did not perform their responsibilities under the contract, 
at the cost of millions of dollars to taxpayers. And OSM hired 
another contractor to finish the job. Shouldn't OSM have ended 
the contract and not paid them a penny if their work was 
inadequate?
    Mr. Pizarchik. We did not pay them the entire contract 
amount. We paid----
    Mr. Johnson. Why pay them anything if their work was 
inadequate?
    Mr. Pizarchik. Because we paid them for the services that 
they provided. They did provide----
    Mr. Johnson. How much did you pay them, again?
    Mr. Pizarchik. Bear with me.
    [Pause.]
    Mr. Johnson. Well, we will come back to that. Finally on 
this subject, is it true that Morgan Worldwide is currently 
working on the rulemaking process, and that they were also 
working on the original contracting team?
    Mr. Pizarchik. They were a subcontractor for both prime 
contractors, yes.
    Mr. Johnson. That, to me, seems to undercut your logic that 
the original contracting team was so incompetent, if OSM has 
retained members of the original contracting team for the 
current rulemaking.
    When the representatives from ECSI, a subcontractor on the 
original team, testified last year, they testified that OSM 
staff members directed the contractors to change their baseline 
coal production level from what the actual coal production was 
for 2008, and to assume that the 2008 rule had been implemented 
and was in effect across the United States.
    I think I will come back to that question because my time 
has expired. I will yield back.
    Mr. Lamborn. Certainly we can ask that in the second round 
of questions.
    Representative Tonko of New York.
    Mr. Tonko. Thank you, Mr. Chair. Director Pizarchik, 
welcome.
    Republicans are charging that OSM has recklessly rushed the 
stream protection rulemaking, and that it has not provided 
opportunity for input from outside the agency. Yet, OSM has 
been evaluating this issue for two years, and still has not 
even issued a proposed rule. Moreover, OSM received more than 
32,000 comments on an advanced notice of proposed rulemaking, 
which the agency was under no requirement to publish, and has 
seen unprecedented outreach sessions with coal companies and 
other stakeholders.
    Do you think, Mr. Director, that this process has been 
rushed?
    Mr. Pizarchik. No, I do not. The previous rule they cite 
took five years. We are approaching about three years. And we 
have had more comments received on our attempt than was 
received in the entire 5-year process on the 2008 rule.
    Mr. Tonko. So you anticipate a lot more participation yet 
and interest shown?
    Mr. Pizarchik. Yes.
    Mr. Tonko. And Director, isn't it true that OSM has already 
received more public comments, as you indicated, than in the 
entire 2008 stream buffer zone rulemaking?
    Mr. Pizarchik. Yes. We have had, I believe, close to 50,000 
comments input. And I believe the 2008 rule, I think, was maybe 
in the 28,000 range.
    Mr. Tonko. And isn't it also true that OSM will again seek 
and consider public comments, once you issue a proposed rule?
    Mr. Pizarchik. Yes.
    Mr. Tonko. Can you tell the Committee about the outreach 
sessions you have held on this rule?
    Mr. Pizarchik. There have been several of them. It started 
with the advance notice of proposed rulemaking that was 
published in November of 2009. There were, I think, about 
32,000 comments received on that based on that input. We 
developed some concepts of changes to consider. We conducted 
over a dozen stakeholder outreach meetings with industry, 
citizens, the United Mine Workers, environmentalists, state 
regulators. And then we had two rounds of scoping on the draft 
EIS, where we received, I believe, about another 20,000 
comments on the scoping sessions.
    Mr. Tonko. Thank you. OSM instructed PKS not to share 
drafts of the proposed rule or Environmental Impact Statement 
with outside parties such as coal companies. The Majority has 
claimed this instruction violated OSM's Statement of Work rules 
for the contract because that document authorized contact with 
coal companies.
    However, according to documents reviewed by the Democratic 
staff, the Statement of Work specifically instructed that 
documents could not be disseminated without written approval of 
the OSM contracting officer. OSM wanted the contractor to 
obtain information from coal companies, but not to share 
deliberative documents prior to the publishing of a proposed 
rule.
    Mr. Director, isn't it true that this is standard 
rulemaking practice under the Administrative Procedure Act?
    Mr. Pizarchik. That is my understanding, yes.
    Mr. Tonko. And can you explain why it is done in that 
manner?
    Mr. Pizarchik. I believe the process provides for the 
regulatory official, the agency, to be the one promulgating the 
regulations, not the regulated industry, and that there is a 
process to get public input from the regulated industry, from 
the environmental groups, the public, from everybody, to 
provide for a balanced, transparent rulemaking process, once 
the appropriate deliberation and thought went into the process.
    And plus, under the statute that I am charged with 
effectuating and carrying out, I have to strike a balance 
between protecting the environment and the citizens while, 
helping meet the country's energy needs. And that is my job, 
that is not the industry's jobs or any other interest group.
    Mr. Tonko. Thank you. Committee Republicans have charged 
that OSM ended its relationship with PKS before the EIS was 
complete, because an unfinished draft EIS chapter projected job 
losses from a new rule. However, Democratic staff review of 
internal OSM documents provided to the Committee shows that OSM 
had concerns about the contractor's overall performance, and 
that these concerns were expressed well before the job 
estimates were done.
    What is more, state mining officials and technical experts 
from other Federal agencies and within OSM were all harshly 
critical of the contractor's work.
    Did the contractor's draft job estimates have anything to 
do with OSM's decision to seek a separation agreement? And 
isn't it true that OSM civil servants expressed concerns about 
the contractor's performance months before the job estimates 
were provided?
    Mr. Pizarchik. Yes, that is true. The numbers had nothing 
to do with that. And the concerns of the quality of work had 
been expressed by career civil servants months before the 
working relationship ended.
    Mr. Tonko. Thank you. And then, finally, at a recent 
hearing the Committee Republicans said that a new stream 
protection rule would cost more than 100,000 mining jobs, 
according to Environ International Corporation. The ENVIRON 
study is apparently just two pages long, with the numbers that 
come with the National Mining Association.
    Do you think this is a credible study?
    Mr. Pizarchik. No.
    Mr. Tonko. OK, could----
    Mr. Pizarchik. In fact, if you look at the actual numbers 
and compare it to the facts, according to the Energy 
Information Agency, nationwide in 2010 there were a little 
under 90,000 people working directly in the coal mine. And 
under the environment study, they indicated nationwide the 
direct employment in coal mining is 135,000, a very significant 
difference between the facts provided by the other agency. The 
Energy Information Agency gets their information directly from 
the industry.
    Mr. Tonko. So it is a huge discrepancy.
    Mr. Pizarchik. Huge.
    Mr. Tonko. Thank you.
    Mr. Lamborn. All right. Now we will recognize 
Representative and Dr. Benishek of Michigan.
    Dr. Benishek. Thank you, Mr. Chairman. Thank you, Director 
Pizarchik, for being here today. I am Dan Benishek, I represent 
Michigan's first district. It is the northern part of the 
State, along the Great Lakes. We don't have any coal mines, but 
we have a lot of mining history in my district. And, more 
importantly, coal provides two-thirds of the energy for the 
State of Michigan. So we have a strong interest in the supply 
of coal, and the cost.
    In your testimony you wrote that Congress tasked your 
office with striking a balance between protecting the 
environment and ensuring the Nation's need for coal energy. 
Providing energy means jobs in my district. Businesses rely on 
affordable power to grow, and new industry to locate there 
because of power constraints. There has been a lot of talk 
about this job situation.
    How many existing American jobs does the Department of the 
Interior expect will be eliminated as a result of the revisions 
to the stream buffer zone rule?
    Mr. Pizarchik. We are still working on the development of 
the revisions to our regulations, so we don't have any numbers 
on that----
    Dr. Benishek. You don't expect any job loss, then?
    Mr. Pizarchik. At this point we are still developing the 
regulations. We don't have our numbers completed in a 
finalized----
    Dr. Benishek. So you think there will be a job increase 
from doing this?
    Mr. Pizarchik. Some of it, yes. Because, for instance, if 
you have to transport the excess spoil to the bottom of the 
mountain, and to place it in a controlled fashion, as the 
statute prescribes, it takes more people to do that, than it 
does to shove it over the side of the mountain.
    Dr. Benishek. So, how many jobs do you think are going to 
be created by these rules?
    Mr. Pizarchik. At this point I can't give you a number on 
that, because we are still developing----
    Dr. Benishek. So you think there is going to be a net 
increase in jobs from this ruling. Is that what you are telling 
me today?
    Mr. Pizarchik. What I am saying is we are not fully 
finished with our regulations. And we have to strike that 
balance. There are going to be some jobs created with the 
concepts we have under consideration. There will be engineering 
jobs, there is likely to be more underground mining jobs, there 
is likely to be more biologist jobs and land reclamation jobs. 
At this point, though, it is premature to speculate what those 
job numbers would be.
    Dr. Benishek. I am just finding it hard to believe that if 
we are going to eliminate an industry, that we are going to 
create more jobs in the industry in and around the country. I 
just find that to be a remarkable answer.
    But with that, I will yield back my time.
    Mr. Lamborn. All right, thank you. Representative Flores of 
Texas.
    Mr. Flores. Thank you, Mr. Chairman. Thank you, Director 
Pizarchik, for joining us today.
    With regard to the stream buffer zone rule, this issue is 
being written to address a specific issue in the Appalachian 
region. Is that correct?
    Mr. Pizarchik. It is being addressed and written to protect 
streams everywhere.
    Mr. Flores. Well, in 2007, when you worked for the State of 
Pennsylvania, you wrote a letter to the OSM, and you objected 
to the scope of the stream buffer zone rule, stating that, 
``OSM's proposed major overhaul of its regulations, which, if 
adopted, will force States to make major changes to their 
primacy program regulations and statutes to fix a problem that 
doesn't exist in those states without mountaintop mining.''
    So, has OSM provided any documentation or any evidence 
suggesting that there is a nationwide problem arising from the 
current regulation that requires national rulemaking?
    Mr. Pizarchik. OSM has chosen, because of the litigation, 
and at the request of the States, not to ask the States to 
amend their programs to implement the 2008 rule.
    Mr. Flores. So how many States are you talking about 
affecting with this rule, outside of Appalachia?
    Mr. Pizarchik. The 2008 rule would affect all the states, 
all 24 primacy States. And the refinements to our existing 
regulations under the stream protection rule would also apply 
nationwide, as the statute requires us to create a level 
playing field and have uniform minimum standards across the 
country tailored to the region-specific geography and climate. 
And that is what we intend to do.
    Mr. Flores. My next question is, in 2010 there was a secret 
settlement agreement that was signed with some environmental 
group, where OSM agreed to pay fees and--to propose a new 
stream buffer zone rule by February of 2011. Can you tell me, 
remind me again, I think we have talked about it in past 
hearings, how much were the fees that you agreed to pay?
    Mr. Pizarchik. I don't have those numbers off the top of my 
head. I believe----
    Mr. Flores. Would you provide those for us? And also, when 
was that secret agreement signed?
    Mr. Pizarchik. I don't know of any secret agreements. There 
was a settlement agreement where the litigation was placed on 
hold. And I believe the settlement agreement was a matter of 
court record on that. I don't know of any secret agreements.
    Mr. Flores. When was it signed?
    Mr. Pizarchik. I don't recall.
    Mr. Flores. Can you provide that to----
    Mr. Pizarchik. We can get to that. I believe we had 
provided you the numbers on that, but yes, we can get you both 
the amount of the fees, as well as the date when that document 
was signed.
    Mr. Flores. OK, thank you. I am going to yield back to Mr. 
Johnson. He has probably got some great questions he would like 
to ask.
    Mr. Johnson. I thank the gentleman for yielding. Mr. 
Chairman, I find it interesting. I want to point out our 
Ranking Member, in his opening testimony, called the 2008 
buffer zone rule, stream buffer zone rule that was issued by 
the previous Administration, a ``midnight rulemaking process,'' 
yet both the Minority testimony or questions here today, as 
well as Mr. Pizarchik's comments, fully validated that that was 
a five-year process, with tens of thousands of pages of 
documentation and analysis that went into it. So that is a 
striking contrast to this current rulemaking process.
    I also want to point out--and I thank my colleague, Mr. 
Tonko, for acknowledging that in their evaluation of the 
materials provided by OSM, that they determined that, indeed, 
there were concerns about the contractor's performance. Months, 
I think, was what you said just a few minutes ago, Mr. 
Pizarchik, months before getting to the point of terminating 
that contract. Yet, with all of that concern about performance, 
you have got members of that contracting team in the current 
rulemaking process, and you still maintain that the termination 
of that contract was simply a mutual agreement.
    This Kabuki dance that OSM is doing, tap-dancing around 
this issue, is not going unnoticed by the American people. And 
I don't know who you think your Department is fooling, but I am 
not one of them.
    So, with that, Mr. Chairman, I am going to yield back, and 
I will come back for the second round of questions. I thank the 
gentleman for yielding.
    Mr. Lamborn. OK, thank you. Representative Thompson of 
Pennsylvania.
    Mr. Thompson. Thank you, Chairman. Thank you, Director, for 
being here today. It is good to see you. I apologize for being 
late. I was actually on the House Floor, talking about the cost 
of energy. So it was work-related tardiness.
    Director Pizarchik, the rule is being promulgated to 
address an issue specific to streams in the Appalachian region, 
which I know you are very familiar with. Yet the rule will 
affect every mine throughout the country.
    In 2007, when you worked for the Commonwealth of 
Pennsylvania, you signed a letter to OSM objecting to the scope 
of the stream buffer zone rule, saying--and a quote from your 
letter--``OSM's proposed major overhaul of its regulation, 
which, if adopted, will force States to make major changes to 
their primacy program regulations and statutes to fix a problem 
that does not occur in those states without mountaintop 
mining.''
    So, my first question for you, has OSM provided any 
documentation or evidence suggesting a nationwide problem 
arising from the current regulation that requires a national 
rulemaking?
    Mr. Pizarchik. The 2008 rule dealt with the burying of 
streams with excess spoil, and that was occurring primarily in 
Central Appalachia, and States like Pennsylvania did not allow 
its streams to be buried with excess spoil, did not allow its 
streams to be mined through. So there really wasn't a need for 
that change in Pennsylvania and other states who were not 
burying streams with excess spoil.
    Regarding the revisions to the regulations that we are 
working on to refine our existing regulations to more 
completely implement the statute, there will be information in 
the draft EIS, as well as in the preamble, that explains the 
need and the purpose for that rulemaking, to better protect 
streams to more completely implement the statute.
    Mr. Thompson. Now, you recently notified industry of your 
intentions to revise regulations related to fees that OSM 
charges for the review, Administration, and enforcement of 
mining permits in Federal program states and on Indian lands.
    Now, what is OSM's current costs for administering the 
programs in the two Federal program States, Tennessee and 
Washington, and on Indian lands for which you will be seeking 
reimbursement? And what does this amount to on a per-ton-of-
coal-mine basis?
    Mr. Pizarchik. I can't give you that cost here today, I 
don't know what those costs are. Our projections in the budget 
is that we want to recover about $3.4 million on an annual 
basis for the services that we provide. And that, I believe, is 
a significant portion of the cost. The statute puts an upper 
limit on the cost. We cannot charge more than our actual cost, 
so we are working to recover more of those to reduce the 
spending and the Federal deficit.
    And on a per-ton basis, I haven't done that analysis, I 
can't provide you an answer to that.
    Mr. Thompson. OK. A recent ENVIRON study found that more 
than 220,003 jobs in the Appalachian region alone are at risk 
of going away. How many existing Pennsylvania jobs does the 
Department of the Interior expect will be eliminated as a 
result of revisions to the stream buffer zone rule? Has that 
analysis been done?
    Mr. Pizarchik. We don't have a rule proposed yet. And until 
we have a rule that is published, that is when the analysis 
will come out, as to what the potential impacts of that rule 
could have on jobs.
    Mr. Thompson. Well, in development of the rule, what 
consideration will be given to the economic impacts for those 
communities, and specifically jobs that may be put at risk, as 
a result of the rulemaking that will be promulgated?
    Mr. Pizarchik. We will be examining both the cost and the 
benefits of the proposed rule, once we get to the point we have 
a proposed rule. As I understand the requirement, the benefits 
of the rule protecting the environment, the streams, the 
public, the people living where the coal is mining has to 
outweigh the cost of the rule.
    Mr. Thompson. How is that measured? I mean that sounds 
good, but I have seen so many rules come out of this 
Administration, and not just your agency, but different 
agencies where, in the end, I mean, it is sort of like, you 
know, they say you can manipulate statistics any way you want, 
just whatever kind of argument--that is what I found in my 
life.
    And so, I really look forward to seeing that analysis. And 
hopefully it just--it provides just significant clarity of what 
the risks and the benefits are, the costs and the benefits. 
So----
    Mr. Pizarchik. And that is what we are trying to 
accomplish. And we believe--our goal is to have something much 
more detailed, so that people and so Congress can look at the 
analysis, understand the basis for the numbers and the 
analysis, and how they were derived, so that everybody can 
provide an informed assessment, and provide us their informed 
comments.
    Mr. Lamborn. OK, thank you. And for the second round I will 
recognize myself.
    Mr. Pizarchik, when proposing this budget, you are calling 
for higher fees for the State programs to be offset with user 
fees for services provided to the coal industry. Those are the 
higher fees that you would propose.
    Have you analyzed what higher fees would do to the supply 
and the production of coal?
    Mr. Pizarchik. I personally have not. No, sir.
    Mr. Lamborn. Do you believe that higher fees will affect 
the production of coal?
    Mr. Pizarchik. It depends on the area and the cost 
competitiveness of the area. I think some parts of the country, 
where the coal is economical to mine, I doubt that it will have 
much of an effect, if anything, or it will be inconsequential, 
in the context of it.
    In regards to the amount of fees, you know, considering 
that there is over a billion tons of coal mined annually, I 
would expect that it would not have a major impact on the coal 
being produced, nationwide.
    Mr. Lamborn. But if you think that in some areas it would 
not have a measurable impact, you are implying that in other 
areas it would.
    Mr. Pizarchik. No, I don't want to make that implication at 
all. I think there may be more of an impact, but I don't 
believe it would be a major impact. Because again, if you look 
at the amount of fees that we are talking about here, which 
currently is coming from the average taxpayer through general 
revenues appropriated to provide these services--pay for these 
services that are provided to the industry, it seems to me that 
it is only fair that the people who get the benefit of these 
government services ought to pay a larger share of those.
    Mr. Lamborn. That may or may not be, but the impact of 
higher fees will affect production. Or, if not, it will be 
passed on to the consumer, won't it?
    Mr. Pizarchik. Again, it depends on the magnitude of the 
fees. As I understand the basic economics of this, due to the 
large scale of production and the minimal amount of these fees 
in regards to the overall cost of production, I doubt that they 
would have a significant impact or--on costs----
    Mr. Lamborn. So, if I get this right, you are saying you 
don't think higher fees will affect the supply and the 
production of coal, and you don't think that it will be passed 
on to and affect the cost of energy to the ultimate consumer?
    Mr. Pizarchik. It----
    Mr. Lamborn. I find that curious. Let me change subjects in 
my last few minutes here. And you have stated more than once 
today before this Committee that companies just push the 
overburden off the side of the hill and off the side of the 
mountain. But under current law and regulation since SMCRA has 
been enacted, doesn't the placement of material have to be 
considered in a mine plan?
    And so, if people are reviewing and enforcing the mine 
plans, this should not be happening, unless someone is not 
doing their job. Wouldn't that be correct?
    Mr. Pizarchik. That would be a logical assumption.
    Mr. Lamborn. All right, thank you. I would now like to 
recognize Representative Johnson.
    Mr. Johnson. Thank you, Mr. Chairman. I would like to pick 
up where I left off before, Mr. Director. When the 
representatives from ECSI, a subcontractor on the original 
team, testified last year, they testified that OSM staff 
members directed the contractors to change their baseline coal 
production level from what the actual coal production was for 
2008, and to assume that the 2008 rule had been implemented, 
and was in effect across the United States. The contractors 
testified they were asked to do this because, contrary to your 
testimony from last year, the 2008 rule was not a rollback, but 
would have actually caused coal production in the United States 
to drop. This would have made the 7,000 job loss number look 
even smaller.
    Did you or anyone on staff at OSM direct the contractors 
and the subcontractors to change their baseline assumption?
    Mr. Pizarchik. I did not direct them, and I don't--I am not 
aware of anybody on the staff directing to do that.
    My understanding on the baseline assumptions they were 
using, they used a 2008 rule, it appeared in chapter 1 and 2 in 
the fall of 2009. But the numbers that they used to come up 
with the 7,000 that you are referring to did not use the 2008 
rule as the baseline. Instead, it wanted to take it back----
    Mr. Johnson. So you were not aware of any direction from 
you or your Department requiring the contractors to change 
their assumption?
    Mr. Pizarchik. I don't recall----
    Mr. Johnson. OK, thank you. Would you like to recant your 
testimony that the 2008 rule was a rollback of the original 
stream buffer zone rule? Because that is what you told us last 
fall.
    Mr. Pizarchik. I am--have to get that in context. I don't 
recall that statement.
    Mr. Johnson. OK, all right. As a result of the settlement 
OSM entered into, the 2008 rule was never implemented in States 
with primacy. Without any implementation in the vast majority 
of impacted territory, it seems that there is no way for OSM to 
justify the need for this regulation, when there is no evidence 
that the existing regulations are inadequate.
    Since the decision to change the rule occurred prior to 
January 20, 2009, and we have seen that in the Register, there 
was never an opportunity for any actual analysis on the alleged 
inadequacies of the 2008 rule. Correct? I mean if it wasn't 
implemented, you had no basis upon which to do a valid 
analysis.
    Mr. Pizarchik. It is being implemented in Tennessee.
    Mr. Johnson. That is one place. This is a big country. So 
it hasn't been fully implemented, right?
    Mr. Pizarchik. That is correct.
    Mr. Johnson. OK. It has not been fully implemented. There 
has been no science, scientific analysis, on the implementation 
of the 2008 rule, because it was never implemented. Correct? 
Has your Department done any scientific analysis on the 2008 
rule?
    Mr. Pizarchik. I am not familiar with all the scientific 
analysis----
    Mr. Johnson. You direct the Department, Mr. Pizarchik. Has 
your Department conducted any scientific analysis? You are 
talking about setting aside a five-year in-the-making rule. And 
you don't know whether your Department has conducted analysis 
of that rule before going and spending millions of taxpayer 
dollars to rewrite it?
    Mr. Pizarchik. We know that the practices that that rule 
provides in place have a deleterious effect on the 
environment----
    Mr. Johnson. So have you conducted any scientific analysis 
on that rule?
    Mr. Pizarchik. There have been scientific----
    Mr. Johnson. Well, you just said no just a minute ago. And 
so now you are saying that there is. What is the answer? Has 
there been scientific analysis on the 2008 rule?
    Mr. Pizarchik. There has been scientific analysis on the 
practices that are codified in the 2008 rule.
    Mr. Johnson. How could it be so, because it hasn't been 
implemented?
    Mr. Pizarchik. Because a number of those practices that the 
2008 codifies were being done under a guidance policy before. 
Now there is a regulation. So it is, in essence, codifying a 
practice that was inconsistent with a statute that has been 
going on for years, as I believe Chairman Lamborn had mentioned 
earlier, that many of these practices go back--and it seems to 
be, if you look at it from a logical standpoint, is 
inconsistent with the statutory requirements.
    Mr. Johnson. OK. I am not sure I understood what you just 
said. Maybe some of my colleagues can explain it to me later. 
But I don't know how you can do scientific analysis on a rule 
that hasn't yet been implemented.
    Yes, and the guidance, the guidance policy, was shot down 
by the court. So I am not sure I understand, but let's move on.
    Two weeks ago I asked Secretary Salazar if threatening 
extreme consequences for following an agreed-upon Statement of 
Work was something that is a normal practice at the Department 
of the Interior. As you well know, I was referring to the 
threat of extreme consequences that you made through an OSM 
employee to the contracting team.
    First, will you confirm that you made that statement?
    Mr. Pizarchik. I don't believe I made that----
    Mr. Johnson. All right. Well, let's see a chart here. We 
have got a slide. Maybe I can refresh your memory. Take a look 
at the pink section of that slide there, Mr. Pizarchik.
    Mr. Pizarchik. I am sorry, but I can't read it from here.
    Mr. Johnson. OK. I will read it for you.
    Mr. Lamborn. Representative Johnson, while he looks at that 
maybe someone could yield time to you in a----
    Mr. Johnson. Go ahead.
    Mr. Lamborn. At the--before the----
    Mr. Johnson. I yield back.
    Mr. Lamborn [continuing]. Finish of this round. OK, thank 
you.
    Representative Tonko of New York.
    Mr. Tonko. Thank you, Mr. Chair. One of the witnesses, Mr. 
Director, on our second panel is expressing strong objections 
to the Administration's proposal to terminate the Abandoned 
Mine Land emergency fund in the Fiscal Year 2013 budget. Why is 
the Administration eliminating this funding stream?
    Mr. Pizarchik. Are you referring to the----
    Mr. Tonko. The AML emergency fund.
    Mr. Pizarchik. Well, actually, the AML emergency Federal--
OSM emergency program was eliminated in 2012 and it is not 
included in the 2013. The 2013 proposes to change how the AML 
funds are distributed from the certified States, to eliminate 
funding to them.
    Mr. Tonko. Well, the Administration, then, is proposing to 
move AML reclamation--the reclamation program to a competitive 
grant process?
    Mr. Pizarchik. Yes, yes. That is not the emergency, that--
well, I guess it would be the emergency--yes. The 
Administration has proposed to do that, in order to provide for 
the most dangerous sites to be reclaimed.
    Mr. Tonko. OK. Now, did the Administration consider other 
possible allocation mechanisms for focusing these funds on 
high-priority sites?
    Mr. Pizarchik. As I understand it, they were basing it on 
the experience and practice that they had with BLM, and we are 
looking at the competitive process as being the best one suited 
for that. I don't know if other processes were considered.
    Mr. Tonko. And in your view, is there any risk that this 
new process would slow the pace of reclamation?
    Mr. Pizarchik. In my view, if it is implemented the way I 
think it should be, it should not, because it would be based on 
the work that the States have already begun, because it usually 
takes several years from the time they want to do a project to 
complete it. And the most efficient way to do that is to use, 
as the basis, this work that the States have already completed, 
the emergency projects that they are working on, and they are 
already working on the most dangerous sites.
    So now, by using that work, we could find out which is the 
most dangerous of all the State ones and get those done first.
    Mr. Tonko. Thank you. I yield back, Mr. Chair.
    Mr. Lamborn. All right, thank you. Representative Benishek?
    Dr. Benishek. Well, I was enjoying Mr. Johnson's testimony 
there, and I would like to yield my time to him.
    Mr. Johnson. I thank the gentleman for yielding.
    Mr. Pizarchik, I gave you a copy of a document there. Would 
you please read the part that is highlighted that page?
    Mr. Pizarchik. Yes. It is John Craynon, Wednesday, December 
15, 2010, at 3:17 p.m. And there is another part that is 
highlighted. It says, ``As per my meeting with OSM Director Joe 
Pizarchik, no part of the SPR rule text or the EIS are to be 
sent to any parties for the purposes of the EIS preparation at 
any time. He indicated that this direction is non-negotiable, 
and that violations would have extreme consequences.''
    Mr. Johnson. What exactly did you mean when you threatened 
``extreme consequences''?
    Mr. Pizarchik. I did not threaten extreme consequences. I--
--
    Mr. Johnson. That is what this email says.
    Mr. Pizarchik. Yes, and I----
    Mr. Johnson. One of your employees testified to this.
    Mr. Pizarchik [continuing]. Copied on that email, and I 
just----
    Mr. Johnson. Hold on. Either your employee has lied, or you 
said this. So which is it?
    Mr. Pizarchik. I don't believe it is either of those, sir. 
I believe the employee----
    Mr. Johnson. Wait a minute, Mr. Pizarchik. We are looking 
at a piece of paper from your Department in an email from one 
of your employees where you threatened extreme consequences. 
And you are saying that is not true?
    First you ask us to believe what we can't see. I mean what 
we can't hear. Now you are asking us to believe what we see--or 
disbelieve what we see.
    Mr. Pizarchik. Well, as I said, I didn't write that email. 
I don't believe I ever made that----
    Mr. Johnson. OK.
    Mr. Pizarchik. I am certainly experiencing the severe 
consequences.
    Mr. Johnson. Is it safe to say that the extreme 
consequences that you were referring to would be to fire the 
contractors and to pay them the full price at the cost of 
millions of taxpayer dollars?
    Mr. Pizarchik. No.
    Mr. Johnson. OK, thank you. Mr. Chairman, I want to get to 
one other question.
    Earlier, when the Ranking Member of the Full Committee was 
questioning you, he asked you questions about how the 
legislation that was passed by the Committee last week would 
affect your ability to release and issue regulations. And you 
said that it would adversely affect your ability to issue 
regulations as they related to--and I think one of the areas 
was something to do with ash. Would you restate that?
    Mr. Pizarchik. I am sorry, I----
    Mr. Johnson. He was talking about H.R. 3409, and the fact 
that you maintain that it would impede your ability to issue 
any regulation. And you gave several examples, and one of those 
had to do with ash, or placement of ash, or something like 
that.
    Mr. Pizarchik. Right.
    Mr. Johnson. OK. Restate that, please.
    Mr. Pizarchik. I am not understanding----
    Mr. Johnson. OK. Then let's go back. How would H.R. 3409 
impede your ability to implement any regulation?
    Mr. Pizarchik. As I understand it, from how it has been 
portrayed, is that that bill would prohibit us from doing any 
regulations that could impact coal jobs, that could impact 
lands' unsuitable designation, like a petition we have in 
Tennessee right now, and that would have any adverse impact on, 
as I understood it, coal being available. And if we are not 
able to proceed with regulations in this particular area, it 
could have an impact on how the ash is used on the site that 
could adversely affect the economics of----
    Mr. Johnson. OK. How ash is used on site. OK? How would 
``how ash is used on site'' adversely impact employment in coal 
mines? Because you said just a few minutes ago that it was 
going to increase jobs, because it would take more people to do 
that work. Right? If you had to----
    Mr. Pizarchik. No, I didn't say that at all.
    Mr. Johnson. OK. Explain to me, then.
    Mr. Pizarchik. Well, as I understand it, in some instances, 
instead of disposing of ash at a landfill, the ash can be 
beneficially used on the mine site, and that they pay an 
operator to take the ash to use it on the mine site. If the 
operator is not able to be paid to use the ash on its mine 
site, that could affect their economics of that particular 
mine.
    Similarly, if the operator cannot sell its coal to a power 
plant because the power plant requires the ash to go back to 
the coal company, and the coal company has no place to place 
the ash, they would not have a market for their coal. They 
don't have a market for their coal, they don't have jobs for 
their employees.
    Mr. Johnson. Mr. Chairman, I am going to summarize, I 
think. You know, I want to commend you and the chairman of the 
Full Committee, Mr. Hastings, for digging deep for the answers 
to this important issue, and the questions we are asking.
    We are clearly not getting direct or timely answers from 
OSM. And Director Pizarchik's testimony today only confirms 
that we need to keep digging deeper.
    As I said before, where there is smoke there is fire. And 
there is a ton of smoke coming from this rulemaking process. In 
another bow by this President to extreme environmentalists, OSM 
has undertaken this massive rewrite of the stream buffer zone 
rule that could cost hundreds of thousands direct and indirect 
jobs in the coal industry as we know it, and stop any economic 
recovery in its tracks with skyrocketing electricity prices.
    Until we get all of the answers from OSM on this rulemaking 
process, it would seem to me to be irresponsible for the 
Administration to go forward with the rule. However, it is 
clear that the President is only interested in this year's 
reelection this November, and is not worried about protecting 
the jobs of hardworking men and women that go to work every day 
in the coal industry and the many related industries. That is 
why my legislation is so important, because it would simply 
stop the President from going forward with a new stream buffer 
zone rule until the end of 2013.
    And as you know, my legislation received bipartisan support 
in Committee, and I expect it will receive bipartisan support 
once it comes to the full House for consideration later this 
year.
    Thank you again, Mr. Chairman. And with that, I yield back 
the balance of my time.
    Mr. Lamborn. OK, thank you. Mr. Amodei of Nevada.
    Mr. Amodei. Thank you, Mr. Chairman. Mr. Director, I am a 
new guy here, so I am sure you aren't intimately familiar with 
me. But I come from this place where we do a little bit of 
minerals extraction and the hardrock process in Nevada.
    And so, my questions are going to be just focused on the 
proposed merger. Can you tell me what your knowledge is of the 
reclamation programs of the Nevada Division of Environmental 
Protection, as they presently exist?
    Mr. Pizarchik. I am not familiar with that at all, sir.
    Mr. Amodei. OK, I appreciate that. So when we talk about 
merger with BLM and OSM, obviously BLM is a major Federal land 
manager in the State of Nevada. They have been involved in 
permitting and things like that in partnership with the State 
Division of Environmental Protection out there. And some of us 
happen to think that they are doing a pretty good job regarding 
reclamation and surety requirements and all those things 
associated with surface mining in the State of Nevada.
    So, when I hear about the merger of your entity with BLM 
for purposes of that in a State that I happen to think is doing 
a pretty good job of evolving through the years, making 
environmentally responsible decisions and policies about 
reclamation and sureties and things to make sure that happens, 
I am just wondering if there is anything on your radar screen 
in the context of the proposed merger that indicates there is a 
problem in Nevada with reclamation of surface operations there 
that the merger would--puts you in a unique--your organization 
in a unique opportunity to address.
    Mr. Pizarchik. Congressman Amodei, I am not aware of that. 
My understanding of the proposal to consolidate OSM and BLM was 
for efficiencies, and to try to get a different way to lower 
the cost of government, to be more efficient. But I am not 
personally aware of any issues in Nevada on how the----
    Mr. Amodei. OK.
    Mr. Pizarchik [continuing]. Program is implemented by BLM.
    Mr. Amodei. Thank you very much. Appreciate that. Yield 
back, Mr. Chairman.
    Mr. Lamborn. All right, thank you. And finally, unless 
someone else shows up, Representative Thompson.
    Mr. Thompson. Thank you, Chairman. Director Pizarchik, in 
your testimony you suggested as the U.S. continues to reduce 
our reliance on foreign oil, coal will continue to play an 
important role in meeting our domestic demand. Now, there was a 
stark contrast to that. As a result of the President's 
policies, we had a terrible announcement last week about a 
coal-fired power plant that has been producing affordable and 
reliable energy for many years--and, frankly, some really good 
jobs, direct and indirect jobs--plans for that plant to close 
under the crushing pressure of the regulations and the 
bureaucracy that have been layered on it by this 
Administration.
    But that said, I appreciate your testimony, where you 
acknowledge that. I know you have been involved in the coal 
industry throughout your life and that your observation will 
continue to play a role in meeting our domestic demand. With 
that in mind, does the Obama Administration support coal-to-
liquid technology and facilities, or clean coal technology, 
or----
    Mr. Pizarchik. I believe that the Obama Administration has 
put more money into clean coal technology than any previous 
Administration. In fact, I believe we--the Obama 
Administration--has put more money in the clean coal technology 
than any country in the world has. I think it was in the 
neighborhood of $3.5 billion that has been put into clean coal 
technology. And you don't make that kind of an investment into 
coal if you have the belief that coal won't be around.
    I don't know all the ins and outs of it. I am not a clean 
coal engineer, or expert in that, but I do understand that 
there has been more money put into clean coal technology by the 
Obama Administration than anybody else.
    Mr. Thompson. Yes. Well, unfortunately, that announcement 
last week, and that was not the only one that was announced, 
that was the one that obviously struck home for me, in my 
congressional district. It is not having an impact of moving 
us, I think, away from what is a very affordable and reliable 
energy, in terms of coal.
    In your discussion of the AML reclamation program reform 
proposals, you talked about eliminating the unrestricted 
payments to certify States and Tribes that have completed 
reclamation. Have you performed any kind of analysis on how 
this change might impact the overall reclamation efforts? I 
mean obviously we have lots of abandoned mine lands yet to be 
addressed.
    Mr. Pizarchik. We have looked into that a bit. Most of that 
certified money is coming out of the general treasury, so it 
would not be a reduction in money that was being used for 
abandoned mine lands. And for example, some of the certified 
states who have been receiving funds in--let's take Wyoming. 
They have received, I believe, over $322 million that they 
haven't spent on anything yet, as I understand it, and another 
$150 million from last year.
    So, I don't know how they plan to use it. The law gives 
them a great deal of flexibility to use it. But from that 
standpoint, it is clear that some of this money is just 
accumulating, it is not being utilized by the certified States.
    Now, in regards to some of the other ones, I know in 
Montana there has been an interest to be able to use the 
certified money and some other monies for reclamation of 
abandoned hardrock mines, and to have limited liability 
protection. And the Secretary had just informed Senator Tester, 
I believe last week, that we are going to go forward with a 
rulemaking to modify our regulations so that the State of 
Montana and others who have AML monies, that they could use 
that for the reclamation of the abandoned hardrock mines.
    But we still think that the best approach is not to take 
money from the coal industry to use to reclaim hardrock mines, 
but to create a comprehensive program for the reclamation of 
abandoned hardrock mines, to provide an adequate and sustained 
funding level from the hardrock mining industry to deal with 
those thousands of abandoned underground mines, and the 
polluted water, and the pollution from all of those abandoned 
hardrock mines.
    Mr. Thompson. The monies that we are talking about weren't 
part of the 2006 amendments to SMCRA. Frankly, it is the 
States' and the Tribes' money that we are talking about? I mean 
the 2006 amendments to SMCRA, didn't it clearly designate that?
    Mr. Pizarchik. As I understand what precipitated the 2006 
amendments was the collection of the AML monies, and the money 
not being appropriated under the old formula to the States and 
Tribes. And as part of the compromise in 2006--again, it is 
just my understanding of it--was that in lieu of getting that 
money that had not been appropriated to those States, certified 
States and Tribes, that that money was going to be used by 
other States who still had abandoned coal problems to reclaim. 
And to offset that, there would be appropriations, or money 
coming out of the general treasury, to go to those certified 
States and Tribes.
    It is a matter of perspective. Some of those folks believe 
it was their money. Some other folks, it wasn't. And I think 
you could reach either answer, depending on where you stand and 
look at the issue. It was a compromise, as I understand it, in 
order to allow for the reauthorization, and to address the 
money that hadn't been appropriated.
    That was also what led to the mandatory distribution so 
that the money that had accumulated would not be sitting in 
Washington, but would be actually dispensed to the States to 
use for what it was intended. And that has carried over, and 
that mandatory provision provides for non-discretion on our 
part. Every year we distribute what we collect out to the 
States, pursuant to the new formula.
    Mr. Thompson. Well, I appreciate your explanation. But, I 
mean, I can see where there is confusion and controversy, just 
given your explanation of what was supposed to be funded, what 
wasn't funded, who--what money was taken from where.
    Mr. Pizarchik. It is very complex.
    Mr. Thompson. Well, thank you, Mr. Chairman.
    Mr. Lamborn. OK, thank you. I want to thank the Director 
for being here. These are serious issues. We appreciate your 
time before the Subcommittee.
    Members of the Subcommittee may have additional questions 
for the record, and I would ask that you respond to those in 
writing. Thank you for being here.
    Mr. Pizarchik. You are welcome. And thank you for inviting 
me. I appreciate your interest in OSM and our budget and 
rulemaking. You have certainly heightened the public awareness 
of our work. I appreciate that.
    Mr. Lamborn. You are welcome. Thank you.
    OK, I would now like to ask unanimous consent to submit for 
the record a report by ENVIRON on the impacts of the proposed 
stream buffer zone rulemaking into the record of today's 
hearing.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered.
    [The ENVIRON report submitted for the record by Mr. Lamborn 
has been retained in the Committee's official files.]
    Mr. Lamborn. And now I would like to invite our second 
panel to come forward. It consists of Ms. Madeline Roanhorse, 
President of the National Association of Abandoned Mine Land 
Programs; Mr. Gregory Conrad, Executive Director of the 
Interstate Mining Compact Commission; and Mr. Matt Wasson, 
Director of Programs for Appalachian Voices.
    Your written testimony will appear in full in the hearing 
record, so I ask that you keep your oral statements to five 
minutes, as outlined in our invitation letter to you, and under 
Committee Rule 4(a). Our microphones are not automatic, so you 
need to turn them on when you are ready to begin.
    And here is how our timing lights work. When you begin to 
speak, a timer and a green light will come on. After four 
minutes, a yellow light will appear. And at that time you 
should conclude your statement, begin to conclude your 
statement. And at five minutes the red light comes on.
    And I will be giving the gavel momentarily to 
Representative Johnson, but we will begin the testimony. Thank 
you all for being here.
    And, Ms. Roanhorse, you may begin.

     STATEMENT OF MADELINE ROANHORSE, PRESIDENT, NATIONAL 
          ASSOCIATION OF ABANDONED MINE LAND PROGRAMS

    Ms. Roanhorse. My name is Madeline Roanhorse. I am the 
manager of the AML reclamation/UMTRA Department for the Navajo 
Nation. I am appearing here today on behalf of the National 
Association of Abandoned Mine Lands Program [sic], referred to 
as AML Association.
    AML Association represents 30 States and Tribes Federally 
approved abandoned mine lands program authorized under the 
Surface Mining Control and Reclamation Act. Based on the SMCRA 
fee collections, the Fiscal Year 2013 mandatory appropriation 
for State and Tribal AML grants should be $480 million. 
Instead, OSM has only budgeted $307 million, a reduction of 
$180 million. This reduction would primarily be accomplished by 
eliminating funding for those States and Tribes that have 
successfully certified completion of their highest-priority 
coal reclamation sites.
    From the beginning of SMCRA in 1977 to the latest--to 2006, 
Congress promised that at least half of the money generated 
from the fees collected within the boundaries of a State or 
Tribe--referred to as State or Tribal share--would be returned 
for use as described in the Act.
    For certified States and Tribes, the Tribes' share funds 
can be used for environmental stewardship. Cleaning up 
abandoned coal and hardrock mines, sustainable development, 
infrastructure improvements, alternative energy projects all 
stimulate economic activity, protecting public health and 
safety, creating green jobs, and improving the environment.
    Each of these specific goals have been embraced by the 
Administration. Breaking the promise of the State and Tribal 
share funding will upset 10 years on negotiation that resulted 
in the balanced compromise achieved in the 2006 amendments to 
SMCRA. We, therefore, respectfully request the Committee to 
continue funding for certified States and Tribes at the 
statutory authorized level, and turn back any efforts to amend 
SMCRA in this regard.
    The proposed budget would also provide no funding for the 
Federal AML emergency program. Section 410 of SMCRA was 
unchanged by the 2006 amendments. It requires OSM to fund the 
emergency AML program.
    Additionally, the Act does not allow States and Tribes to 
fund an emergency program from their own AML grants. On the 
contrary, it requires strict compliance with non-emergency 
funding priorities. If Congress allows the elimination of the 
emergency program, States and Tribes will have to set aside 
large portions of their non-emergency AML grant funds to be 
prepared for future emergencies. This will result in the funds 
being diverted from other high-priority projects. It will also 
present special challenges for program States, since they have 
to have to save multiple years of funding in order to address a 
single emergency, thereby delaying work on other projects. For 
these reasons and many others, we urge the Committee to restore 
funding for the AML emergency program in 2013.
    Finally, we oppose OSM's proposal to drastically remove the 
distribution process for AML funds to non-certified States 
through a competitive grant program. This proposal will 
completely undermine the balance of interest, and objectives 
achieved by the 2006 amendments. Among other things, the 
proposal will cede authority for both emergency and non-
emergency funding decisions to an advisory council.
    Aside from time delays associated with this approach, it 
leaves many unanswered questions regarding the continued 
ability of State and Tribal AML programs where they do not win 
in the bidding process. It also upsets the predictability of 
AML funding for long-term project planning. We urge the 
Subcommittee to reject this unjustified proposal. Delete it 
from the budget. Restore the full mandatory funding amount of 
$480 million.
    A resolution to this effect adopted by the Association is 
attached to my testimony, as is a comprehensive list of 
questions regarding the legislative proposal. I respectfully 
request that they include in the record of this hearing.
    Thank you for the opportunity to present our views this 
morning. I would be happy to answer any questions that you may 
have. Thank you.
    [The prepared statement of Ms. Roanhorse follows:]

    Statement of Madeline Roanhorse, Manager, AML Reclamation/UMTRA 
  Department, Navajo Nation, on Behalf of the National Association of 
                      Abandoned Mine Land Programs

    My name is Madeline Roanhorse and I serve as the Manager of the AML 
Reclamation/UMTRA Department with the Navajo Nation. I am appearing 
today on behalf of the National Association of Abandoned Mine Land 
Programs (NAAMLP) The NAAMLP represents 30 states and tribes with 
federally approved abandoned mine land reclamation (AML) programs 
authorized under Title IV of the Surface Mining Control and Reclamation 
Act (SMCRA). My testimony today will focus primarily on the Title IV 
AML program under SMCRA.
    Title IV of SMCRA was amended in 2006 and significantly changed how 
state and tribal AML grants are funded. These grants are still based on 
receipts from a fee on coal production, but beginning in FY 2008, the 
grants are funded primarily by mandatory appropriations. As a result, 
the states and tribes should receive $488 million in FY 2013. In its FY 
2013 budget, OSM is requesting $307 million for state and tribal AML 
grants, a reduction of $180 million. OSM's budget also includes a 
legislative proposal for the establishment of a competitive grant 
process that would allegedly improve AML program efficiency. The 
legislative proposal would also eliminate funding to states and tribes 
that have ``certified'' completion of their highest priority coal 
reclamation sites. I appreciate the opportunity to testify before the 
Subcommittee and outline some of the reasons why NAAMLP adamantly 
opposes OSM's proposed FY 2013 budget.
    Over the past 30 years, the accomplishments of the states and 
tribes under the AML program has resulted in tens of thousands of acres 
of abandoned mine lands having been reclaimed, thousands of mine 
openings having been closed, and safeguards for people, property and 
the environment having been put in place. Be assured that states and 
tribes continue to be committed to address the unabated hazards at both 
coal and non-coal abandoned mines. We are all united to play an 
important role in achieving the goals and objectives as set forth by 
Congress when SMCRA was first enacted--including protecting public 
health and safety, enhancing the environment, providing employment, and 
adding to the economies of communities impacted by past coal and 
noncoal mining.
    SMCRA was passed in 1977 and set national regulatory and 
reclamation standards for coal mining. The Act also established a 
Reclamation Fund to work towards eliminating the innumerable health, 
safety and environmental problems that exist throughout the Nation from 
the mines that were abandoned prior to the Act. The Fund generates 
revenue through a fee on current coal production. This fee is collected 
by OSM and distributed to states and tribes that have federally 
approved regulatory and AML programs. The promise Congress made in 
1977, and with every subsequent amendment to the Act, was that, at a 
minimum, half the money generated from fees collected by OSM on coal 
mined within the boundaries of a state or tribe, referred to as ``State 
Share'', would be returned for the uses described in Title IV of the 
Act if the state or tribe assumed responsibility for regulating active 
coal mining operations pursuant to Title V of SMCRA. The 2006 
Amendments clarified the scope of what the State Share funds could be 
used for and reaffirmed the promise made by Congress in 1977.
    If a state or tribe was successful in completing reclamation of 
abandoned coal mines and was able to ``certify'' under Section 411 of 
SMCRA, then the State Share funds could be used to address a myriad of 
other abandoned mine issues as defined under each state's or tribe's 
approved Abandoned Mine Reclamation Plan. These Abandoned Mine 
Reclamation Plans are approved by the Office of Surface Mining and they 
ensure that the work is in accordance with the intent of SMCRA. Like 
all abandoned mine reclamation, the work of certified states and tribes 
eliminates health and safety problems, cleans up the environment, and 
creates jobs in rural areas impacted by mining.
    The elimination of funding for certified state and tribal AML 
grants not only breaks the promise of State and Tribal Share funding, 
but upsets the balance and compromise that was achieved in the 
comprehensive restructuring of SMCRA accomplished by the 2006 
Amendments following more than ten years of discussion and negotiation 
by all affected parties. The funding reduction is inconsistent with the 
Administration's stated goals regarding jobs and environmental 
protection. We therefore respectively ask the Subcommittee to support 
continued funding for certified states and tribes at the statutorily 
authorized levels, and turn back any efforts to amend SMCRA in this 
regard.
    In addition to the $180 million reduction for certified states and 
tribes, the proposed FY 2013 budget perpetuates the termination of 
federal funding for the AML emergency program, leaving the states and 
tribes to rely on funds received through their non-emergency AML grant 
funds. This contradicts the 2006 amendments, which require the states 
and tribes to maintain ``strict compliance'' with the non-emergency 
funding priorities described in Section 403(a), while leaving Section 
410, Emergency Powers, unchanged. Section 410 of SMCRA requires OSM to 
fund the emergency AML program using OSM's ``discretionary share'' 
under Section (402)(g)(3)(B), which is entirely separate from state and 
tribal non-emergency AML grant funding under Sections (402)(g)(1), 
(g)(2), and (g)(5). SMCRA does not allow states and tribes to 
administer or fund an AML emergency program from their non-emergency 
AML grants, although, since 1989, fifteen states have agreed to 
implement the emergency program on behalf of OSM contingent upon OSM 
providing full funding for the work. As a result, OSM has been able to 
fulfill their mandated obligation more cost effectively and 
efficiently.
    Regardless of whether a state/tribe or OSM operates the emergency 
program, only OSM has the authority to ``declare'' the emergency and 
clear the way for the expedited procedures to be implemented. In FY 
2011, OSM issued guidance to the states that the agency ``will no 
longer declare emergencies.'' OSM provided no legal or statutory 
support for its position. Instead, OSM has ``transitioned'' 
responsibility for emergencies to the states and tribes with the 
expectation that they will utilize non-emergency AML funding to address 
them. OSM will simply ``assist the states and tribes with the projects, 
as needed''. Of course, given that OSM has proposed to eliminate all 
funding for certified states and tribes, it begs the question of how 
and to what extent OSM will continue to assist these states and tribes.
    If Congress continues to allow the elimination of emergency program 
funding, states and tribes will have to adjust to their new role by 
setting aside a large portion of their non-emergency AML funds so that 
they can be prepared for any emergency that may arise. Emergency 
projects come in all shapes and sizes, vary in number from year to year 
and range in cost from thousands of dollars to millions of dollars. 
Requiring states and tribes to fund emergencies will result in funds 
being diverted from other high priority projects and delay 
certification under Section 411, thereby increasing the backlog of 
projects on the Abandoned Mine Land Inventory System (AMLIS). For 
minimum program states and states with small AML programs, large 
emergency projects will require the states to redirect all or most of 
their AML resources to address the emergency, thereby delaying other 
high-priority reclamation. With the loss of stable emergency program 
funding, minimum program states will have a difficult, if not 
impossible, time planning, budgeting, and prosecuting the abatement of 
their high priority AML problems. In a worst-case scenario, a minimum 
program state would not be able to address a costly emergency in a 
timely fashion, and would have to ``save up'' multiple years of funding 
before even initiating the work to abate the emergency, in the meantime 
ignoring all other high priority work.
    OSM's proposed budget suggests addressing emergencies, and all 
other projects, as part of a competitive grant process whereby states 
and tribes compete for funding based on the findings of the proposed 
AML Advisory Council. OSM believes that a competitive grant process 
would concentrate funds on the highest priority projects. While a 
competitive grant process may seem to make sense at first blush, 
further reflection reveals that the entire premise is faulty and can 
only undermine and upend the deliberate funding mechanism established 
by Congress in the 2006 Amendments. Since the inception of SMCRA, high 
priority problems have always taken precedence over other projects. The 
focus on high priorities was further clarified in the 2006 Amendments 
by removing the lower priority problems from the Act and requiring 
``strict compliance'' with high priority funding requirements. OSM 
already approves projects as meeting the definition of high priority 
under its current review process and therefore an AML Advisory Council 
would only add redundancy and bureaucracy instead of improving 
efficiency.
    Based on our understanding of OSM's legislative proposal, there are 
a myriad of potential problems and implications for the entire AML 
program. They include the following:
          Has anyone alleged or confirmed that the states/
        tribes are NOT already addressing the highest priority sites? 
        Where have the 2006 Amendments faltered in terms of high 
        priority sites being addressed as envisioned by Congress? What 
        would remain unchanged in the 2006 Amendments under OSM's 
        proposal?
          If the current AML funding formula is scrapped, what 
        amount will be paid out to the non-certified AML states and 
        tribes over the remainder of the program? What does OSM mean by 
        the term ``remaining funds'' in its proposal? Is it only the 
        AML fees yet to be collected? What happens to the historic 
        share balances in the Fund, including those that were supposed 
        to be re-directed to the Fund based on an equivalent amount of 
        funding being paid to certified states and tribes each year? 
        Would the ``remaining funds'' include the unappropriated/prior 
        balance amounts that have not yet been paid out over the seven-
        year installment period?
          Will this new competitive grant process introduce an 
        additional level of bureaucracy and result in more funds being 
        spent formulating proposals and less on actual AML reclamation? 
        The present funding formula allows states and tribes to 
        undertake long-term strategic planning and efficiently use 
        available funds.
          How long will OSM fund a state's/tribe's 
        administrative costs if it does not successfully compete for a 
        construction grant, even though the state/tribe has eligible 
        high priority projects? How will OSM calculate administrative 
        grant funding levels, especially since salaries and benefits 
        for AML project managers and inspectors predominantly derive 
        from construction funds? Would funding cover current staffing 
        levels? If not, how will OSM determine the funding criteria for 
        administrative program grants?
          How does OSM expect the states and tribes to handle 
        emergency projects under the legislative proposal? Must these 
        projects undergo review by the Advisory Council? Will there be 
        special, expedited procedures? If a state/tribe has to cut back 
        on staff, how does it manage emergencies when they arise? If 
        emergency programs do compete for AML funds, considerable time 
        and effort could be spent preparing these projects for review 
        by the Advisory Council rather than abating the immediate 
        hazard. Again, how can we be assured that emergencies will be 
        addressed expeditiously?
          One of the greatest benefits of reauthorization under 
        the 2006 Amendments to SMCRA was the predictability of funding 
        levels through the end of the AML program. Because states and 
        tribes were provided with hypothetical funding levels from OSM, 
        long-term project planning, along with the establishment of 
        appropriate staffing levels and project assignments, could be 
        made accurately and efficiently. How can states/tribes plan for 
        future projects given the inherent uncertainty associated with 
        having to annually bid for AML funds?
    Given these uncertainties and the negative implications for the 
accomplishment of AML work under Title IV of SMCRA, Congress should 
reject the proposed amendments to SMCRA as being counterproductive to 
the purposes of SMCRA and an inefficient use of funds. We request that 
Congress continue mandatory funding for certified states and tribes and 
provide funding for AML emergencies. A resolution to this effect 
adopted by NAAMLP last year is attached, as is a more comprehensive 
list of questions concerning the legislative proposal. We ask that they 
be included in the record of the hearing.
    On a somewhat related matter, there appears to be increasing 
concern by some in Washington that the states and tribes are not 
spending the increased AML grant moneys that they have received under 
the 2006 Amendments in a more expeditious manner, thus resulting in 
what the Administration has characterized as unacceptable levels of 
``undelivered orders''. What these figures and statements fail to 
reflect is the degree to which AML grant moneys are obligated or 
otherwise committed for AML reclamation work as part of the normal 
grant process. Most AML grants are either three or five years in length 
and over that course of time, the states and tribes are in a continual 
process of planning, bidding and contracting for specific AML projects. 
Some projects are multi-layered and require extended periods of time to 
complete this process before a shovel is turned at the AML site. And 
where federal funding is concerned, additional time is necessary to 
complete the myriad statutory approvals for AML work to begin, 
including compliance with the National Environmental Policy Act and the 
National Historic Preservation Act.
    In almost every case, however, based on the extensive planning that 
the states and tribes undertake, AML grant funds are committed to 
specific projects even while clearances and bidding are underway. While 
funds may not technically be ``obligated'' because they are not yet 
``drawn down'', these funds are committed for specific purposes. Once 
committed, states and tribes consider this grant money to be obligated 
to the respective project, even though the ``order'' had not been 
``delivered'' and the funds actually ``drawn down''. The latter can 
only occur once the project is completed, which will often be several 
years later, depending on the size and complexity of the project. We 
would be happy to provide the Subcommittee with more detailed 
information about our grant expenditures and project planning in order 
to answer any questions you may have about how we account for and spend 
our AML grant moneys. Given the confusion that often attends the 
various terms used to describe the grant expenditure process, we 
believe it is critical that Congress hear directly from the states and 
tribes on this matter and not rely solely on the Administration's 
statements and analyses. We welcome the opportunity to brief your 
Subcommittee in more detail regarding this issue should you so desire.
    One of the more effective mechanisms for accomplishing AML 
restoration work is through leveraging or matching other grant 
programs, such as EPA's 319 program. Until FY 2009, language was always 
included in OSM's appropriation that encouraged the use of these types 
of matching funds, particularly for the purpose of environmental 
restoration related to treatment or abatement of acid mind drainage 
(AMD) from abandoned mines. This is an ongoing, and often expensive, 
problem, especially in Appalachia. NAAMLP therefore requests the 
Subcommittee to support the inclusion of language in the FY 2013 
appropriations bill that would allow the use of AML funds for any non-
Federal cost-share required by the Federal government for AMD treatment 
or abatement.
    We also urge the Subcommittee to support funding for OSM's training 
program and TIPS, including moneys for state/tribal travel. These 
programs are central to the effective implementation of state and 
tribal AML programs as they provide necessary training and continuing 
education for state/tribal agency personnel, as well as critical 
technical assistance. Finally, we support funding for the Watershed 
Cooperative Agreements in the amount of $1.2 million because it 
facilitates and enhances state and local partnerships by providing 
direct financial assistance to watershed organizations for acid mine 
drainage remediation.
    To the extent that the Subcommittee desires to pursue changes to 
SMCRA to improve or clarify the operation of the AML program, the 
states and tribes would recommend looking at three areas: 1) the use of 
unappropriated state and tribal share balances to address noncoal AML 
and acid mine drainage (AMD) projects; 2) the limited liability 
protections for noncoal AML work at section 405(l) of SMCRA; and 3) an 
amendment to Section 413(d) regarding liability under the Clean Water 
Act for acid mine drainage projects. In this regard, Mr. Chairman, we 
were very encouraged that the full House Committee on Natural Resources 
last week passed S. 897, which is identical to H.R. 785 introduced by 
Rep. Pearce of New Mexico. As we noted in testimony presented to the 
Subcommittee on February 17 at a legislative hearing on H.R. 785, the 
bill will return states and tribes to their longstanding role under 
SMCRA of directing abandoned mine grant funds to the highest priority 
needs at either coal or non-coal abandoned mines and allow us to 
designate additional moneys to address acid mine drainage concerns. It 
will also correct a misinterpretation by the Interior Department in its 
final rules implementing the 2006 Amendments to SMCRA that barred the 
states and tribes from using AML monies for these valid and worthy 
purposes.
    States and Tribes are very familiar with the highest priority non-
coal problems within their borders and also have limited reclamation 
dollars to protect public health and safety or protect the environment 
from significant harm. States and tribes work closely with various 
federal agencies, including the Environmental Protection Agency, the 
Bureau of Land Management, the U.S. Forest Service, and the U.S. Army 
Corps of Engineers, all of whom have provided some funding for non-coal 
mine remediation projects. For states with coal mining, the most 
consistent source of AML funding has been the Title IV grants received 
under SMCRA. Section 409 of SMCRA allows states to use these grants at 
high priority non-coal AML sites. The funding is generally limited to 
safeguarding hazards to public safety (e.g., closing mine openings) at 
non-coal sites.
    The urgency of advancing the legislation passed by the full 
Committee has been heightened by statements in OSM's proposed budget 
for Fiscal Year 2013. Therein, OSM is proposing to further restrict the 
ability of states to expend AML funds on noncoal reclamation projects. 
This will apparently occur as part of a legislative proposal that the 
Administration intends to aggressively pursue in the 112th Congress. 
While the primary focus of that proposal will be the elimination of 
future AML funding for states and tribes that are certified under Title 
IV of SMCRA (which we adamantly oppose), OSM's proposal will also 
substantially restructure the method by which AML funds are distributed 
to the states in an effort to ``direct the available reclamation funds 
to the highest priority coal AML sites across the Nation.''
    S. 897 would also address a similar restriction on the use of the 
unappropriated state and tribal share balances for the Acid Mine 
Drainage (AMD) set-aside program under SMCRA. Congress expanded this 
program in the 2006 Amendments to allow states and tribes to set-aside 
up to 30% of their grants funds for treating AMD now and into the 
future. AMD has ravaged many streams throughout the country, but 
especially in Appalachia. The states need the ability to set aside as 
much funding as possible to deal with these problems over the long 
term. Again, OSM has acted arbitrarily in their interpretation of the 
reauthorizing language by limiting the types of funds the state may use 
for the set-aside program. S. 897 includes language that would correct 
this misinterpretation and allow the states to apply the 30% set-aside 
to their prior balance replacement funds and as such we strongly 
support it. We are hopeful that the full House of Representatives will 
act on S. 897 in the near future.
    Another suggested amendment is needed to clarify a further 
misinterpretation of SMCRA contained in OSM's final rules of November 
14, 2008. Section 405(l) of SMCRA provides that, except for acts of 
gross negligence or intentional misconduct, ``no state (or tribe) shall 
be liable under any provisions of Federal law for any costs or damages 
as a result of action taken or omitted in the course of carrying out a 
state abandoned mine reclamation plan approved under this section.'' In 
its rules, OSM concluded that because of the language of SMCRA, 
including the generally unrestricted nature of the Title IV funds 
provided to certified states and tribes in Sections 411(h)(1) and (2), 
certified states and tribes can no longer conduct noncoal reclamation 
or other projects under Title IV of SMCRA (73 Fed. Reg. 67613). Thus, 
to the extent that certified states and tribes choose to conduct 
noncoal reclamation, OSM asserts that they do so outside of SMCRA and 
OSM's regulations, including the limited liability provisions of 
Section 405(l) of the Act.
    This strained reading of the 2006 Amendments is having severe 
consequences for certified states and tribes conducting AML work 
pursuant to their otherwise-approved state programs. Without this 
limited liability protection, these states and tribes potentially 
subject themselves to liability under the Clean Water Act and CERCLA 
for their AML reclamation work. Nothing in the 2006 Amendments 
suggested that there was a desire or intent to remove these liability 
protections, and without them in place, certified states and tribes 
will need to potentially reconsider at least some of their more 
critical AML projects. We therefore recommend that the Subcommittee 
consider an amendment to SMCRA that would clarify that the 2006 
Amendments were not intended to affect the applicability of section 
405(l) to AML projects undertaken by certified states and tribes. We 
would welcome an opportunity to work with you to craft appropriate 
legislative language at an appropriate time to accomplish this.
    Finally, we recommend an adjustment to Section 413(d) of SMCRA to 
clarify that acid mine drainage projects which are eligible for AML 
funding under Section 404 of the Act, including systems for the control 
or treatment of AMD, are not subject to the water quality provisions of 
the Federal Water Pollution Control Act. This amendment is necessary to 
address a November 8, 2010 decision by the U.S. Court of Appeals for 
the Fourth Circuit, which decreed that the Clean Water Act's NPDES 
permitting requirements apply to anyone who discharges pollutants into 
the waters of the United States, regardless of whether that entity is 
private or public in nature. More specifically, the court noted that 
``the statute contains no exceptions for state agencies engaging in 
reclamation efforts; to the contrary, it explicitly includes them 
within its scope.''
    The result of this far-reaching decision by the Fourth Circuit will 
be to require some, if not all, state and tribal AML reclamation 
projects to obtain NPDES permits before work can commence. This will be 
particularly problematic for acid mine drainage control and treatment 
projects where water quality is already significantly degraded and is 
unlikely to ever meet effluent limitation guidelines under the Clean 
Water Act. Essentially, efforts by state agencies and tribes, and the 
watershed groups who work cooperatively with the states and tribes, 
will be stymied. In some cases, existing water treatment systems could 
be turned off and abandoned to the inability to obtain NPDES permits. 
We do not believe that this result was intended by either Congress or 
the courts, and thus believe that an immediate legislative 
clarification should be pursued. Again, we would welcome the 
opportunity to work with this Subcommittee to craft appropriate 
legislative solutions to address this conflict of laws situation at 
some time in the near future.
    Thank you for the opportunity to testify today. I would be happy to 
answer any questions you may have.
                                 ______
                                 

        Questions and Concerns re the AML Legislative Proposal 
                        in OSM's FY 2013 Budget

The Proposed Competitive Allocation Process
      What is the potential for this new review and ranking 
process to reduce expenditures and increase efficiency without being 
counter-productive? Will it introduce an additional level of 
bureaucracy and result in more time being spent formulating proposals 
and less on actual AML reclamation? The present funding formula, while 
not perfect, at least provides some direction on which to base long 
term strategic planning and efficient use of available funds. The 
closest analogy to what OSM is proposing by way of its competitive 
allocation process is the way BLM and the Forest Service currently 
allocate their AML funds through competitive proposals to various state 
offices and regions. Because of the uncertainties of funding, neither 
agency has been able to develop significant in-house expertise, but 
instead often rely on SMCRA-funded states like MT, NM, UT and CO to do 
a good portion of their AML work. Why would OSM want to duplicate a 
system that has proven problematic for other agencies?
      Who would be the ``other parties'' potentially bidding on 
AML grant funds? Would this include federal agencies such as BLM, FS, 
NPS, etc? If so, in many cases, those agencies already rely on the 
states to conduct their reclamation work and also determine priorities 
based on state input or guidance.
      What do the state project managers and inspectors do if a 
state does not win a competitive bid for AML funds? How does a state 
gear up if it receives funding for more projects than it can handle 
with present staffing? Each state and tribe has different grant cycles. 
Unless all are brought into one uniform cycle, how will everyone 
compete for the same dollars? In this regard, how can the competitive 
allocation process and the use of the Advisory Council be more 
efficient and simple than what we already have in place?
      How long will OSM fund a state's/tribe's administrative 
costs if it does not successfully compete for a construction grant, 
even though the state/tribe has eligible high priority projects on 
AMLIS? How will OSM calculate administrative grant funding levels, 
especially since salaries and benefits for AML project managers and 
inspectors predominantly derive from construction funds? Would funding 
cover current staffing levels? If not, how will OSM determine the 
funding criteria for administrative program grants?
      How do the states and tribes handle emergency projects 
under the legislative proposal? Must these projects undergo review by 
the Advisory Council? Will there be special, expedited procedures? If a 
state/tribe has to cut back on staff, how does it manage emergencies 
when they arise? If emergency programs do compete for AML funds, 
considerable time and effort could be spent preparing these projects 
for review by the Advisory Council rather than abating the immediate 
hazard. Again, how can we be assured that emergencies will be addressed 
expeditiously?
      What ranking criteria will be used to determine the 
priority of submitted AML project grant requests? The number of people 
potentially affected? The current priority ranking on AMLIS? How would 
the Council determine whether a burning gob pile near a city presents a 
greater hazard than a surface mine near a highway or an underground 
mine beneath a residential area? Would the winning bid be the ``most 
convincing'' proposal? The one with the most signatures on a petition? 
The one with the most influential legislative delegation? Will AMLIS 
continue to serve as the primary mechanism for identifying sites and 
their priority status?
      If the current AML funding formula is scrapped, what 
amount will be paid out to the non-certified AML states and tribes over 
the remainder of the program? What does OSM mean by the term 
``remaining funds'' in its proposal? Is it only the AML fees yet to be 
collected? What happens to the historic share balances in the Fund, 
including those that were supposed to be re-directed to the Fund based 
on an equivalent amount of funding being paid to certified states and 
tribes each year? Would the ``remaining funds'' include the 
unappropriated/prior balance amounts that have not yet been paid out 
over the seven-year installment period? What about the amounts due and 
owing to certified states and tribes that were phased in during FY 
2009--2011?
      Has anyone alleged or confirmed that the states/tribes 
are NOT already addressing the highest priority sites for reclamation 
within the context of the current AML program structure under the 2006 
Amendments? Where have the 2006 Amendments faltered in terms of high 
priority sites being addressed as envisioned by Congress? What would 
remain unchanged in the 2006 Amendments under OSM's proposal?
The Nature and Purpose of the Advisory Council
      Who would be on the AML Advisory Council and how could 
they collectively have better decision-making knowledge about hazardous 
AML sites than the state and tribal project managers and administrators 
who work with these sites on a daily basis?
      What will be the criteria to serve on the Advisory 
Council? Will the Federal Advisory Committee Act (FACA) requirements 
apply to the formation and deliberations of the Council? How long does 
OSM envision it will take to establish the Council and when will it 
become operational?
      Will the Advisory Council be providing recommendations to 
OSM or will OSM make all final decisions? Will these decisions by 
appealable? If so, to who? Does OSM envision needing to develop 
internal guidance for its own review process? If so, how long will it 
potentially take from Advisory Council review and recommendation to 
final OSM decision in order to complete the grant process so a state 
can begin a project?
      What degree of detail will be required in order to review 
and approve competitive grant applications? Will the Council review 
each project? What type of time constraints will be placed on their 
review?
      Will the Advisory Council consider partial grants for 
projects that may exceed the allocation for a single year? Would 
minimum program states be authorized to apply for a grant that would 
exceed $3 million?
      Will grant applications be based on an individual project 
or will the grant be based on a project year? How will cost overruns be 
handled?
Planning for AML Work
      One of the greatest benefits of reauthorization under the 
2006 Amendments to SMCRA was the predictability of funding through the 
end of the AML program. Because state and tribes were provided with 
hypothetical funding levels from OSM (which to date have proven to be 
quite accurate), long-term project planning, along with the 
establishment of appropriate staffing levels and project assignments, 
could be made more accurately and efficiently. How can states/tribes 
plan for future projects given the uncertainty associated with having 
to annually bid for AML funds? NEPA compliance issues alone can take 
years of planning. One state recently asked its State Historic 
Preservation Office for initial consultation regarding project sites 
that may be reclaimed over the next five years. This process will also 
have significant impacts on those states that utilize multi-year 
construction contracts that are paid for with annual AML grants.
      State and tribal AML projects are often planned 18 months 
to two years in advance of actually receiving construction funds, based 
on anticipated funding under the 2006 Amendments. During that time, 
states and tribes are performing environmental assessments, conducting 
archeology reviews, completing real estate work and doing NEPA 
analyses. There could be considerable effort and money wasted if a 
project does not get approved during the competitive allocation 
process.
      At what point does a State or Tribe seek approval from 
the advisory council? Considerable investigation must take place prior 
to developing most projects, whether they be acid mine drainage 
projects or health and safety projects. How much time should be spent 
in design prior to proceeding to the Council? How accurate must a cost 
estimate be prior to taking a project before the Council? The greater 
the accuracy, the greater the design time expended, possibly for a 
project that will be rejected.
      State and tribes often seek and obtain valuable matching 
funds from watershed groups, which take considerable lead time to 
acquire. It will be difficult to commit to partners if we don't know 
what level of funding, if any, will be made available from OSM.
      Several states have committed significant amounts of 
money to waterline projects across the coalfields. Local governmental 
entities have started designs and applied for additional funds from 
other agencies to match AML funds in order to make these projects a 
reality. Ending all AML funding for these projects (assuming they are 
not considered ``high priority'') could have significant consequences 
for local communities. Our understanding is that these projects were 
excluded under the 2006 Amendments from the priority scheme contained 
in section 403(a) of SMCRA.
      Does OSM's proposal allow acid mine drainage (AMD) 
projects to be undertaken? Can these be designated as high priority? 
(Our understanding is that those AMD projects undertaken pursuant to 
the ``AMD set-aside program'' are not subject to the priority scheme 
under Section 403(a) and that those AMD projects done ``in conjunction 
with'' a priority 1 or 2 project are considered ``high priority''.) How 
do states handle ongoing engineering, operating and maintenance costs 
for existing AMD treatment systems? As the Administration works 
diligently to develop a new rule to protect streams nationwide, why 
would it advance a proposal to essentially halt the cleanup of streams 
funded by the AML program?
Overarching Concerns
      Given the original design of SMCRA by its framers that 
AML funds will only be allocated to those states who agree to implement 
Title V regulatory programs for active mining operations, to what 
extent can we expect that states will continue to implement and fund 
their Title V programs if Title IV funding is drastically cut or 
eliminated under the proposal? Furthermore, since states and tribes 
will not know what level of AML program staffing to maintain from year 
to year under the proposal, who would desire to work for a program that 
is in a constant state of flux?
      The SMCRA 2006 Amendments were the result of roughly ten 
years of negotiations, discussions, and debates in Congress. Since the 
legislative process to enact these new proposed changes could take 
years, why didn't OSM begin with the legislation and then follow up 
with an appropriate budget proposal? Why weren't the states/tribes or 
the NAAMLP included in discussions that led to this legislative 
proposal?
      As OSM develops the legislative proposal for a 
competitive bidding process, the agency should consider the impacts on 
minimum programs and consider maintaining the minimum allocation of $3 
million for minimum program states.
      What type of state AML plan amendments does OSM foresee 
as a result of this new process?
Proposed Elimination of Funding for AML Emergencies
      While amendments to Title IV of SMCRA in 2006 (P.L. 109-
432) adjusted several provisions of the Act, no changes were made to 
OSM's emergency powers in Section 410. Quite to the contrary, Section 
402(g)(1)(D)(2) states that the Secretary shall ensure ``strict 
compliance'' with regard to the states' and tribes' use of non-
emergency grant funds for the priorities listed in Section 403(a), none 
of which include emergencies. The funding for the emergency program 
comes from the Secretary's discretionary share, pursuant to Section 
402(g)(3) of the Act. This share currently stands at $416 million. 
OSM's elimination of funding for the emergency program will result in 
the shift of approximately $20 million annually that will have to be 
absorbed by the states. This is money that cannot be spent on high 
priority AML work (as required by SMCRA) and will require the 
realignment of state AML program operations in terms of personnel, 
project design and development, and construction capabilities. In most 
cases, depending on the nature and extent of an emergency project, it 
could preclude a state's ability to undertake any other AML work during 
the grant year (and even following years), especially for minimum 
program states. How does OSM envision states and tribes being able to 
meet their statutory responsibility to address high priority AML sites 
in light of the elimination of federal funding for AML emergencies? How 
does OSM reconcile this proposal with the intentions of Congress 
expressed in the 2006 amendments to move more money out of the AML Fund 
sooner to address the backlog of AML problems that continue to linger?
Proposed Elimination of Funding to Certified States and Tribes
      From what we can ascertain, OSM proposes to eliminate all 
payments to certified states and tribes--in lieu of funds; prior 
balance replacement funds; and monies that are due and owing in FY 2018 
and 2019 from the phase-in during fiscal years 2008 and 2009. Is this 
accurate? OSM says nothing of what the impact will be on non-certified 
states as a result of eliminating these payments to certified states 
and tribes--especially the equivalent payments that would otherwise be 
made to the historic production share that directly relate to ``in lieu 
of'' payments to certified states and tribes under section 411(h)(4). 
Previously, OSM has stated that ``the amounts that would have been 
allocated to certified states and tribes under section 402(g)(1) of 
SMCRA will be transferred to the historical production allocation on an 
annual basis to the extent that those states and tribes receive in lieu 
payments from the Treasury (through the Secretary of the Interior) 
under section 402(i) and 411(h)(2) of SMCRA.'' By OSM's own admission 
in its FY 2013 proposed budget, this will amount to $1.2 billion over 
ten years. If the in lieu payments are not made (as proposed), how can 
the transfer to historic production occur? The result, of course, would 
be a drastic impact on the historic production allocation otherwise 
available to uncertified states. Will OSM address this matter in its 
proposed legislation? If so, how?
      Has OSM considered the fiscal and programmatic impacts 
that could result if the certified states and tribes, who no longer 
receive AML monies, choose to return their Title V regulatory programs 
to OSM (especially given the severe reductions being proposed for FY 
2013 in Title V grants)?
      Finally, how do the cuts in the Title IV program line up 
with the Administration's other economic, fiscal and environmental 
objectives as articulated in the deficit reduction and jobs bills that 
have been considered by Congress? These objectives include 
environmental stewardship, cleaning up abandoned mines (coal and 
noncoal) nationwide, creating green jobs, pumping dollars into local 
communities, putting money to work on the ground in an expeditious 
manner, sustainable development, infrastructure improvements, 
alternative energy projects, protecting public health and safety, and 
improving the environment. It seems to us that there is a serious 
disconnect here and we remain mystified as to how these laudable 
objectives and OSM's budget proposal can be reconciled.
                                 ______
                                 

                               RESOLUTION

                                   OF

        THE NATIONAL ASSOCIATION OF ABANDONED MINE LAND PROGRAMS

    WHEREAS, Title IV of the Surface Mining Control and Reclamation Act 
of 1977 (SMCRA) established the Abandoned Mine Land (AML) reclamation 
program; and
    WHEREAS, the National Association of Abandoned Mine Land Programs 
(NAAMLP) was established as a nonprofit corporation to accomplish the 
objectives of its thirty member tribes and states to eliminate health 
and safety hazards and reclaim land and water resources adversely 
affected by past mining and left in an abandoned or inadequately 
restored condition; and
    WHEREAS, NAAMLP members administer AML programs funded and overseen 
by the Office of Surface Mining Reclamation and Enforcement (OSM), U.S. 
Department of the Interior; and
    WHEREAS, pursuant to the cooperative federalism approach contained 
in SMCRA, all tribes and states who are members of NAAMLP have 
federally approved abandoned mine reclamation plans; and
    WHEREAS, SMCRA, Title IV, establishes a reclamation fee on each ton 
of coal mined in the United States to pay for abandoned mine land 
reclamation; and
    WHEREAS, SMCRA, Title IV, mandates that fifty percent (50%) of the 
reclamation fees collected annually are designated as state/tribal 
share funds to be returned to the states and tribes from which coal was 
mined to pay for reclamation programs administered by the states and 
tribes; and
    WHEREAS, SMCRA Title IV also mandates that a minimum level of 
funding should be provided to ensure effective state program 
implementation; and
    WHEREAS, Congress enacted amendments to SMCRA in 2006 to address, 
among other things, funding for state and tribal programs and fee 
collection to address existing and future AML reclamation; and
    WHEREAS, the 2006 Amendments established new, strict criteria that 
ensures states and tribes expend funds on high priority AML sites; and
    WHEREAS, the proposed 2012 budget for the Office of Surface Mining 
Reclamation and Enforcement within the U.S. Department of the Interior 
would abandon the 50/50 state-federal partnership established under 
SMCRA and renege on the funding formula under the 2006 amendments by, 
among other things, eliminating mandatory funding for those states and 
tribes who have certified the completion of their coal reclamation work 
and adjusting the mechanism by which non-certified states receive their 
mandatory funding through a competitive bidding process; and
    WHEREAS, if statutory changes are approved by Congress as suggested 
by the proposed FY 2012 budget for OSMRE, reclamation of abandoned mine 
lands within certified states and tribes would halt; reclamation of 
abandoned mine lands in all states would be jeopardized; employment of 
contractors, suppliers, technicians and others currently engaged in the 
reclamation of abandoned mine lands would be endangered; the cleanup of 
polluted lands and waters across the United States would be threatened 
by failing to fund reclamation of abandoned mine lands in some states; 
minimum program state funding would be usurped; the AML water supply 
replacement program would be terminated, leaving coalfield citizens 
without potable water; and the intent of Congress as contained in the 
2006 amendments to SMCRA and its 2006 Amendments would be undermined
    NOW, THEREFORE:
    BE IT RESOLVED BY THE NATIONAL ASSOCIATION OF ABANDONED MINE LAND 
PROGRAMS THAT ITS MEMBER TRIBES AND STATES:
    Opposes the legislative proposal terminating funding for certified 
states and tribes and altering the receipt of mandatory AML funding for 
non-certified states contained in the FY 2012 budget proposal for the 
Office of Surface Mining Reclamation and Enforcement and instead 
supports the AML funding mechanism contained in current law.

                        ISSUED THIS 22nd DAY OF FEBRUARY, 2011
                        ATTEST:
                        Michael P. Garner
                        PRESIDENT, NAAMLP
 ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CROW HOPI ILLINOIS 
        INDIANA IOWA KANSAS KENTUCKY, LOUISIANA MARYLAND,, MISSISSIPPI, 
        MISSOURI MONTANA NAVAJO NEVADA, NEW MEXICO NORTH DAKOTA OHIO 
        OKLAHOMA PENNSYLVANIA TENNESSEE TEXAS UTAH VIRGINIA WEST 
        VIRGINIA WYOMING
                                 ______
                                 
    Mr. Johnson [presiding]. Thank you, Ms. Roanhorse. Mr. 
Conrad, you may now begin.

STATEMENT OF GREGORY E. CONRAD, EXECUTIVE DIRECTOR, INTERSTATE 
                   MINING COMPACT COMMISSION

    Mr. Conrad. Good morning. My name is Greg Conrad, and I 
serve as Executive Director of the Interstate Mining Compact 
Commission, on whose behalf I am appearing today to present the 
views of the compact's 24 member States concerning the Fiscal 
Year 2013 budget request for the Office of Surface Mining, and 
its impacts on state programs.
    In its proposed budget, OSM is requesting $57.3 million to 
fund Title V grants to States for the implementation of the 
regulatory programs, a reduction of $11 million, or 15 percent 
below the 2012-enacted level. Mr. Chairman, these are 
admittedly tough times for State and Federal budgets. We 
realize that deficit reduction and spending cuts are the order 
of the day for both the Nation and our respective States. As a 
result, some hard choices need to be made about how we spend 
limited dollars in an efficient and effective way.
    Environmental protection associated with mining operations 
is no exception. One of the tough choices that has to be made 
with respect to programs under the Surface Mining Control and 
Reclamation Act is who will take the lead in implementing the 
Act's requirements.
    Once we agree upon that, it is incumbent on both state and 
Federal Governments to prioritize funding decisions to support 
the lead agencies. Congress crafted a state primacy approach 
under SMCRA, whereby state governments were vested with 
exclusive regulatory authority to operate programs for active 
mining operations and abandoned mine land reclamation. The Act 
also provides for grants to States that meet 50 percent of 
their program operating costs under Title V, and 100 percent 
for AML projects under Title IV.
    Once again, in Fiscal Year 2013, we are faced with a 
decision about the extent to which the Federal Government will 
support these funding commitments under SMCRA, and the State-
led concept for program implementation. OSM's budget proposes 
to move us away from those commitments and concepts. The 
Administration would have us believe that the Federal 
Government is in a better position to decide how the state 
programs should be run, and that the States should do so with 
less money and more oversight.
    At the very same time, additional mandates and program 
requirements are being placed upon the States through new 
rules, directives, guidelines, and agreements among Federal 
agencies. Something has to give, Mr. Chairman. Either we 
support the States, as envisioned by SMCRA, or we change the 
rules of the game. States are struggling to match Federal 
dollars, and signals from the Federal Government that it is 
wavering in its support concerning both dollars and confidence 
in the States' ability to run effectively regulatory and AML 
programs will do little to build trust.
    This is not the time to reverse the course that Congress 
has set for its support of state programs over the past several 
years. In this regard, it should be kept in mind that a 15 
percent cut in Federal funding translates to an additional 15 
percent cut for overall program funding for many states, since 
these states can only match what they receive in Federal money.
    We, therefore, urge the Subcommittee to reject OSM's 
proposed cut of $11 million for state Title V grants, and 
restore the grant level to $70 million, as supported by state 
funding requests. It is important to note that OSM does not 
disagree with the States' demonstrated need for the requested 
amount of funding for Title V regulatory grants. Instead, OSM's 
solution for the drastic cut comes in the way of an unrealistic 
assumption that the States can simply increase user fees.
    OSM's proposal is completely out of touch with the 
realities associated with establishing or enhancing user fees. 
IMCC's polling of its member States confirmed that it will be 
difficult, if not impossible, for most States to accomplish 
this feat at all, let alone in one fiscal year. As an example, 
it took the State of Alabama one year of concerted effort to 
secure a program amendment to increase its permit fees with 
approval from OSM. We strongly urge the Subcommittee to reject 
this approach.
    If Congress is seeking to restrain OSM's budget, we suggest 
that the Subcommittee look seriously at OSM's proposal to 
increase its own budget by almost $4 million and 25 FTEs for 
Federal oversight of State programs. In making the case for its 
funding increase, OSM's budget justification document contains 
vague references to the need to ``improve the implementation of 
existing laws,'' and to ``strengthen OSM's skill base.''
    In our view, this is code language for enhanced and 
expanded Federal oversight of State programs. However, without 
more to justify the need for enhanced oversight, Congress 
should reject this proposed increase for Federal operations. 
The overall performance of the States, as detailed in OSM's 
annual State program evaluation reports, demonstrates that the 
States are implementing their programs effectively, and in 
accordance with the purposes and objectives of SMCRA.
    The States also have serious concerns with several aspects 
of OSM's enhanced oversight initiative, especially three 
directives on annual oversight procedures, corrective actions, 
and the issuance of 10-day notices. We are particularly 
concerned about the potential for these Federal actions to 
duplicate and/or second-guess State permitting decisions. Aside 
from the impact on limited State and Federal resources, these 
actions undermine the principles of primacy that underscore 
SMCRA, and are likely to have debilitating impacts on the 
State-Federal partnership envisioned by the Act.
    Thank you for the opportunity to appear today; I would be 
happy to answer any questions.
    [The prepared statement of Mr. Conrad follows:]

 Statement of Gregory E. Conrad, Executive Director, Interstate Mining 
    Compact Commission, on Behalf of the Interstate Mining Compact 
                               Commission

    My name is Gregory E. Conrad and I serve as Executive Director of 
the Interstate Mining Compact Commission, on whose behalf I am 
appearing today. I appreciate the opportunity to present this statement 
to the Subcommittee regarding the views of the Compact's 24 member 
states on the Fiscal Year (FY) 2013 Budget Request for the Office of 
Surface Mining Reclamation and Enforcement (OSM) within the U.S. 
Department of the Interior. In its proposed budget, OSM is requesting 
$57.3 million to fund Title V grants to states and Indian tribes for 
the implementation of their regulatory programs, a reduction of $11 
million or 15% below the FY 2012 enacted level. OSM also proposes to 
reduce mandatory spending for abandoned mine lands (AML) program by 
$180 million pursuant to a legislative proposal to eliminate all AML 
funding for certified states and tribes.
    The Compact is comprised of 24 states that together produce some 
95% of the Nation's coal, as well as important noncoal minerals. The 
Compact's purposes are to advance the protection and restoration of 
land, water and other resources affected by mining through the 
encouragement of programs in each of the party states that will achieve 
comparable results in protecting, conserving and improving the 
usefulness of natural resources and to assist in achieving and 
maintaining an efficient, productive and economically viable mining 
industry.
    OSM has projected an amount of $57.3 million for Title V grants to 
states and tribes in FY 2012, an amount which is matched by the states 
each year. These grants support the implementation of state and tribal 
regulatory programs under the Surface Mining Control and Reclamation 
Act (SMCRA) and as such are essential to the full and effective 
operation of those programs. Pursuant to these primacy programs, the 
states have the most direct and critical responsibilities for 
conducting regulatory operations to minimize the impact of coal 
extraction operations on people and the environment. The states 
accomplish this through a combination of permitting, inspection and 
enforcement duties, designating lands as unsuitable for mining 
operations, and ensuring that timely reclamation occurs after mining.
    In Fiscal Year 2012, Congress approved $68.6 million for state 
Title V grants. This continued a much-needed trend whereby the amount 
appropriated for these regulatory grants aligned with the demonstrated 
needs of the states and tribes. The states are greatly encouraged by 
the significant increases in Title V funding approved by Congress over 
the past three fiscal years. Even with mandated rescissions and the 
allocations for tribal primacy programs, the states saw a $12 million 
increase for our regulatory programs over FY 2007 levels. State Title V 
grants had been stagnant for over 12 years and the gap between the 
states' requests and what they received was widening. This debilitating 
trend was compounding the problems caused by inflation and 
uncontrollable costs, thus undermining our efforts to realize needed 
program improvements and enhancements and jeopardizing our efforts to 
minimize the potential adverse impacts of coal extraction operations on 
people and the environment.
    In its FY 2013 budget, OSM has once again attempted to reverse 
course and essentially unravel and undermine the progress made by 
Congress in supporting state programs with adequate funding. As states 
prepare their future budgets, we trust that the recent increases 
approved by Congress will remain the new base on which we build our 
programs. Otherwise, we find ourselves backpedaling and creating a 
situation where those who were just hired face layoffs and purchases of 
much needed equipment are canceled or delayed. Furthermore, a clear 
message from Congress that reliable, consistent funding will continue 
into the future will do much to stimulate support for these programs by 
state legislatures and budget officers who each year, in the face of 
difficult fiscal climates and constraints, are also dealing with the 
challenge of matching federal grant dollars with state funds. In this 
regard, it should be kept in mind that a 15% cut in federal funding 
generally translates to an additional 15% cut for overall program 
funding for many states, especially those without federal lands, since 
these states can generally only match what they receive in federal 
money.
    OSM's solution to the drastic cuts for state regulatory programs 
comes in the way of an unrealistic assumption that the states can 
simply increase user fees in an effort to ``eliminate a de facto 
subsidy of the coal industry.'' No specifics on how the states are to 
accomplish this far-reaching proposal are set forth, other than an 
expectation that they will do so in the course of a single fiscal year. 
OSM's proposal is completely out of touch with the realities associated 
with establishing or enhancing user fees, especially given the need for 
approvals by state legislatures. IMCC's polling of its member states 
confirmed that, given the current fiscal and political implications of 
such an initiative, it will be difficult, if not impossible, for most 
states to accomplish this feat at all, let alone in less than one year. 
OSM is well aware of this, and yet has every intention of aggressively 
moving forward with a proposal that was poorly conceived from its 
inception. We strongly urge the Subcommittee to reject this approach 
and mandate that OSM work through the complexities associated with any 
future user fees proposal in close cooperation with the states and 
tribes before proposing cuts to federal funding for state Title V 
grants.
    At the same time that OSM is proposing significant cuts for state 
programs, the agency is proposing sizeable increases for its own 
program operations ($4 million) for federal oversight of state 
programs, including an increase of 25 FTEs. In making the case for its 
funding increase, OSM's budget justification document contains vague 
references to the need ``to improve the implementation of existing 
laws'' and to ``strengthen OSM's skills base.'' More specifically, OSM 
states in its budget justification document (on page 60) that ``with 
greater technical skills, OSM anticipates improved evaluation of 
permit-related actions and resolution of issues to prevent 
unanticipated situations that otherwise may occur as operations 
progress, thereby improving implementation of existing laws''. In our 
view, this is code language for enhanced and expanded federal oversight 
of state programs. However, without more to justify the need for more 
oversight and the concomitant increase in funding for federal 
operations related thereto, Congress should reject this request. The 
overall performance of the states as detailed in OSM's annual state 
program evaluation reports demonstrates that the states are 
implementing their programs effectively and in accordance with the 
purposes and objectives of SMCRA.\1\
---------------------------------------------------------------------------
    \1\ While not alluded to or fully addressed in OSM's budget 
justification document, there are myriad statutory, policy and legal 
issues associated with several aspects of the agency's enhanced 
oversight initiative, especially three recently adopted directives on 
annual oversight procedures (REG-8), corrective actions (REG-23) and 
Ten-Day Notices (INE-35). IMCC submitted extensive comments regarding 
the issues associated with these directives and related oversight 
actions (including federal inspections) on January 19, 2010, July 8, 
2010 and January 7, 2011.
---------------------------------------------------------------------------
    In our view, this suggests that OSM is adequately accomplishing its 
statutory oversight obligations with current federal program funding 
and that any increased workloads are likely to fall upon the states, 
which have primary responsibility for implementing appropriate 
adjustments to their programs identified during federal oversight. In 
this regard, we note that the federal courts have made it abundantly 
clear that SMCRA's allocation of exclusive jurisdiction was ``careful 
and deliberate'' and that Congress provided for ``mutually exclusive 
regulation by either the Secretary or state, but not both.'' Bragg v. 
West Virginia Coal Ass'n, 248 F. 3d 275, 293-4 (4th Cir. 2001), cert. 
Denied, 534 U.S. 1113 (2002). While the courts have ruled consistently 
on this matter, the question remains for Congress and the 
Administration to determine, in light of deficit reduction and spending 
cuts, how the limited amount of federal funding for the regulation of 
surface coal mining and reclamation operations under SMCRA will be 
directed--to OSM or the states. For all the above reasons, we urge 
Congress to approve not less than $70 million for state and tribal 
Title V regulatory grants, as fully documented in the states' and 
tribes' estimates for actual program operating costs.\2\
---------------------------------------------------------------------------
    \2\ We are particularly concerned about recent OSM initiatives, 
primarily by policy directive, to duplicate and/or second-guess state 
permitting decisions through the reflexive use of ``Ten-Day Notices'' 
as part of increased federal oversight or through federal responses to 
citizen complaints. OSM specifically addresses this matter in its 
budget justification document (on page 69) where it states that ``OSM 
has an obligation under section 521 of SMCRA to take steps to ensure 
that all types of violations, including violations of performance 
standards or permit conditions and violations of permitting 
requirements, are corrected if the state does not take action to do so. 
Aside from the impact on limited state and federal resources, these 
actions undermine the principles of primacy that underscore SMCRA and 
are likely to have debilitating impacts on the state-federal 
partnership envisioned by the Act.
---------------------------------------------------------------------------
    With regard to funding for state Title IV Abandoned Mine Land (AML) 
program grants, Congressional action in 2006 to reauthorize Title IV of 
SMCRA has significantly changed the method by which state reclamation 
grants are funded. Beginning with FY 2008, state Title IV grants are 
funded primarily by mandatory appropriations. As a result, the states 
should have received a total of $488 million in FY 2013. Instead, OSM 
has budgeted an amount of $307 million based on an ill-conceived 
proposal to eliminate mandatory AML funding to states and tribes that 
have been certified as completing their abandoned coal reclamation 
programs. This $180 million reduction flies in the face of the 
comprehensive restructuring of the AML program that was passed by 
Congress in 2006, following over 10 years of Congressional debate and 
hard fought compromise among the affected parties. In addition to the 
elimination of funding for certified states and tribes, OSM is also 
proposing to reform the distribution process for the remaining 
reclamation funding to allocate available resources to the highest 
priority coal AML sites through a competitive grant program, whereby an 
Advisory Council will review and rank AML sites each year. The 
proposal, which will require adjustments to SMCRA, will clearly 
undermine the delicate balance of interests and objectives achieved by 
the 2006 Amendments. It is also inconsistent with many of the goals and 
objectives articulated by the Administration concerning both jobs and 
environmental protection. We urge the Congress to reject this 
unjustified proposal, delete it from the budget and restore the full 
mandatory funding amount of $488 million. A resolution adopted by IMCC 
last year concerning these matters is attached. We also endorse the 
testimony of the National Association of Abandoned Mine Land Programs 
(NAAMLP) which goes into greater detail regarding the implications of 
OSM's legislative proposal for the states.
    We also urge Congress to approve continued funding for the AML 
emergency program. In a continuing effort to ignore congressional 
direction, OSM's budget would completely eliminate funding for state-
run emergency programs and also for federal emergency projects (in 
those states that do not administer their own emergency programs). When 
combined with the great uncertainty about the availability of remaining 
carryover funds, it appears that the program has been decimated. 
Funding the OSM emergency program should be a top priority for OSM's 
discretionary spending. This funding has allowed the states and OSM to 
address the unanticipated AML emergencies that inevitably occur each 
year. In states that have federally-operated emergency programs, the 
state AML programs are not structured or staffed to move quickly to 
address these dangers and safeguard the coalfield citizens whose lives 
and property are threatened by these unforeseen and often debilitating 
events. And for minimum program states, emergency funding is critical 
to preserve the limited resources available to them under the current 
funding formula. We therefore request that Congress restore funding for 
the AML emergency program in OSM's FY 2013 budget.
    On a somewhat related matter, there appears to be increasing 
concern by some in Washington that the states and tribes are not 
spending the increased AML grant moneys that they have received under 
the 2006 Amendments in a more expeditious manner, thus resulting in 
what the Administration has characterized as unacceptable levels of 
``undelivered orders''. What these figures and statements fail to 
reflect is the degree to which AML grant moneys are obligated or 
otherwise committed for AML reclamation work as part of the normal 
grant process. Most AML grants are either three or five years in length 
and over that course of time, the states and tribes are in a continual 
process of planning, bidding and contracting for specific AML projects. 
Some projects are multi-layered and require extended periods of time to 
complete this process before a shovel is turned at the AML site. And 
where federal funding is concerned, additional time is necessary to 
complete the myriad statutory approvals for AML work to begin, 
including compliance with the National Environmental Policy Act and the 
National Historic Preservation Act.
    In almost every case, however, based on the extensive planning that 
the states and tribes undertake, AML grant funds are committed to 
specific projects even while clearances and bidding are underway. While 
funds may not technically be ``obligated'' because they are not yet 
``drawn down'', these funds are committed for specific purposes. Once 
committed, states and tribes consider this grant money to be obligated 
to the respective project, even though the ``order'' had not been 
``delivered'' and the funds actually ``drawn down''. The latter can 
only occur once the project is completed, which will often be several 
years later, depending on the size and complexity of the project. We 
would be happy to provide the Subcommittee with more detailed 
information about our grant expenditures and project planning in order 
to answer any questions you may have about how we account for and spend 
our AML grant moneys. Given the confusion that often attends the 
various terms used to describe the grant expenditure process, we 
believe it is critical that Congress hear directly from the states and 
tribes on this matter and not rely solely on the Administration's 
statements and analyses. We welcome the opportunity to brief your 
Subcommittee in more detail regarding this issue should you so desire.
    One of the more effective mechanisms for accomplishing AML 
restoration work is through leveraging or matching other grant 
programs, such as EPA's 319 program. Until FY 2009, language was always 
included in OSM's appropriation that encouraged the use of these types 
of matching funds, particularly for the purpose of environmental 
restoration related to treatment or abatement of AMD from abandoned 
mines. This is a perennial, and often expensive, problem, especially in 
Appalachia. IMCC therefore requests the Committee to once again include 
language in the FY 2013 appropriations bill that would allow the use of 
AML funds for any required non-Federal share of the cost of projects by 
the Federal government for AMD treatment or abatement.
    We also urge the Committee to support funding for OSM's training 
program, including moneys for state travel. These programs are central 
to the effective implementation of state regulatory programs as they 
provide necessary training and continuing education for state agency 
personnel. In this regard, it should be noted that the states provide 
nearly half of the instructors for OSM's training course and, through 
IMCC, sponsor and staff benchmarking workshops on key regulatory 
program topics. IMCC also urges the Committee to support funding for 
TIPS, a program that directly benefits the states by providing critical 
technical assistance. Finally, we support funding for the Watershed 
Cooperative Agreements in the amount of $1.2 million.
    Attached to our testimony today is a list of questions concerning 
OSM's budget that we request be included in the record for the hearing. 
The questions go into further detail concerning several aspects of the 
budget that we believe should be answered before Congress approves 
funding for the agency or considers advancing the legislative proposals 
contained in the budget.
    Thank you for the opportunity to present this statement. I would be 
happy to answer any questions you may have or provide additional 
information to the Subcommittee.
                                 ______
                                 

                               Resolution

                  Interstate Mining Compact Commission

BE IT KNOWN THAT:
    WHEREAS, Title IV of the Surface Mining Control and Reclamation Act 
of 1977 (SMCRA) established the Abandoned Mine Land (AML) reclamation 
program; and
    WHEREAS, the Interstate Mining Compact Commission (IMCC) is a 
multi-state organization representing the natural resource and 
environmental protection interests of its 24 member states, including 
the elimination of health and safety hazards and the reclamation of 
land and water resources adversely affected by past mining and left in 
an abandoned or inadequately restored condition; and
    WHEREAS, pursuant to the cooperative federalism approach contained 
in SMCRA, several IMCC member states administer AML programs approved, 
funded and overseen by the Office of Surface Mining Reclamation and 
Enforcement (OSM) within the U.S. Department of the Interior; and
    WHEREAS, SMCRA, Title IV establishes a reclamation fee on each ton 
of coal mined in the United States to pay for abandoned mine land 
reclamation; and
    WHEREAS, SMCRA, Title IV mandates that fifty percent (50%) of the 
reclamation fees collected annually are designated as state share funds 
to be returned to the states from which coal was mined to pay for 
reclamation projects pursuant to programs administered by the states; 
and
    WHEREAS, SMCRA, Title IV also mandates that a minimum level of 
funding should be provided to ensure effective state program 
implementation; and
    WHEREAS, Congress enacted amendments to SMCRA in 2006 to address, 
among other things, continued collection of AML fees and funding for 
state programs to address existing and future AML reclamation; and
    WHEREAS, the 2006 Amendments established new, strict criteria that 
ensure states expend funds on high priority AML sites; and
    WHEREAS, the proposed 2012 budget for the Office of Surface Mining 
Reclamation and Enforcement within the U.S. Department of the Interior 
would disregard the state-federal partnership established under SMCRA 
and renege on the funding formula under the 2006 Amendments by, among 
other things, eliminating mandatory funding for states who have 
certified the completion of their coal reclamation work and adjusting 
the mechanism by which non-certified states receive their mandatory 
funding through a competitive bidding process; and
    WHEREAS, if statutory changes are approved by Congress as suggested 
by the proposed FY 2012 budget for OSM, reclamation of abandoned mine 
lands within certified states would halt; reclamation of abandoned mine 
lands in all states would be jeopardized; employment of contractors, 
suppliers, technicians and others currently engaged in the reclamation 
of abandoned mine lands would be endangered; the cleanup of polluted 
lands and waters across the United States would be threatened by 
failing to fund reclamation of abandoned mine lands; minimum program 
state funding would be usurped; the AML water supply replacement 
program would be terminated, leaving coalfield citizens without potable 
water; and the intent of Congress as contained in the 2006 Amendments 
to SMCRA would be undermined
    NOW THEREFORE BE IT RESOLVED:
    That the Interstate Mining Compact Commission opposes the 
legislative proposal terminating funding for certified states and 
altering the receipt of mandatory AML funding for non-certified states 
contained in the FY 2012 budget proposal for the Office of Surface 
Mining Reclamation and Enforcement and instead supports the AML funding 
mechanism contained in current law.

                                        Issued this 10th day of March, 
                                        2011
                                        ATTEST:
                                        Gregory E. Conrad
                                        Executive Director
                                 ______
                                 

               Questions re OSM's Proposed FY 2013 Budget

    What does OSM plan to do with the additional $4 million that has 
been budgeted for ``enhanced federal oversight of state regulatory 
programs''? How does OSM justify an increase in money for federal 
oversight while decreasing money for state Title V grants?
    What is the demonstrated need for an additional 25 FTEs to perform 
federal oversight of state programs? Will this not simply lead to 
duplication of effort, second-guessing of state decision-making, 
undermining of state primacy and wasted resources?
    If pressed by Congress, how expeditiously does OSM intend to push 
the states to recover more of their regulatory costs from the coal 
industry through user fees? Has OSM undertaken a full analysis of the 
administrative and rulemaking complexities inherent in such an 
undertaking?
    OSM's newest AML legislative proposal (to eliminate payments to 
certified states and tribes and to utilize a competitive bidding 
process for the allocation of remaining AML reclamation funds for non-
certified states) is the fourth time that the agency has put forth 
potential legislative adjustments to the 2006 amendments to SMCRA in 
its proposed budgets. Based on the legislative proposal we have seen to 
date, there are many more questions than answers about how this process 
will work. (See attached list) Does OSM intend to seek input from the 
states and tribes, especially given the role that the states and tribes 
will play in the bidding/selection process and the significant impact 
this will have on current program administration? What is the basis for 
OSM's proposal to essentially upend the carefully crafted legislative 
resolution related to future AML program funding and AML reclamation 
work approved by Congress in 2006? Has OSM thought and worked through 
the implications for AML program management and administration that 
would result from its legislative proposal?
    Why has OSM chosen to advocate for a hardrock AML reclamation fee 
to be collected by OSM but not distributed by OSM? Why bring another 
federal agency (BLM) into the mix when OSM has the greater expertise in 
this area?
Specific Questions re Cost Recovery/User Fees
    OSM has requested an amount for state Title V regulatory program 
grants in FY 2013 that reflects an $11 million decrease from FY 2012. 
And while OSM does not dispute that the states are in need of an amount 
far greater than this, the agency has suggested once again that the 
states should be able to make up the difference between what OSM has 
budgeted and what states actually need by increasing cost recovery fees 
for services to the coal industry. What exactly will it take to 
accomplish this task?
    Assuming the states take on this task, will amendments to their 
regulatory programs be required?
    How long, in general, does it take OSM to approve a state program 
amendment?
    The state of Alabama submitted a program amendment to OSM in May of 
2010 to raise current permit fees and authorize new, additional fees. 
It took OSM a full year to approve this amendment, resulting in lost 
fees of over $50,000 to the state. If OSM is unable to approve 
requested state program amendments for permit fee increases in less 
than a year, how does the agency expect to handle mandated permit 
increases for all of the primacy states within a single fiscal year?
    If OSM is not expecting to pursue this initiative in fiscal year 
2013, why include such a proposal in the budget until OSM has worked 
out all of the details with the states in the first instance?
    Speaking of which, what types of complexities is OSM anticipating 
with its proposal at the state level? Many of the states have already 
indicated to OSM that it will be next to impossible to advance a fee 
increase proposal given the political and fiscal climate they are 
facing.
    OSM's solution seems to be that the agency will propose a rule to 
require states to increase permit fees nationwide. Won't this still 
require state program amendments to effectuate the federal rule, as 
with all of OSM's rules? How does OSM envision accomplishing this if 
the states are unable to do it on their own?
    Even if a federal rulemaking requiring permit fee increase 
nationwide were to succeed, how does OSM envision assuring that these 
fees are returned to the states? Will OSM retain a portion of these 
fees for administrative purposes?
Specific Questions re Federal Program Increases
    In OSM's budget justification document, the agency also notes that 
the states permit and regulate 97 percent of the Nation's coal 
production and that OSM provides technical assistance, funding, 
training and technical tools to the states to support their programs. 
And yet OSM proposes in its budget to cut funding to the states by $11 
million while increasing OSM's own federal operations budget by nearly 
$4 million and 25 FTEs. How does OSM reconcile these seemingly 
contradictory positions?
    OSM's budget justification document points out in more detail why 
it believes additional federal resources will be needed based on its 
recent federal oversight actions during FY 2011, which included 
increased federal inspections. Was OSM not in fact able to accomplish 
this enhanced oversight with its current resources? If not, where were 
resources found wanting? How much of the strain on the agency's 
resources was actually due to the stream protection rulemaking and EIS 
process?
    In light of recent annual oversight reports over the past five 
years which demonstrate high levels of state performance, what is the 
justification for OSM's enhanced oversight initiatives and hence its 
federal program increase?
    Something has to give here--no doubt. There is only so much money 
that we can make available for the surface mining program under SMCRA. 
Both Congress and the courts have made it clear that the states are to 
exercise exclusive jurisdiction for the regulation of surface coal 
mining operations pursuant to the primacy regime under the law. It begs 
the questions of whether OSM has made the case for moving away from 
supporting the states and instead beefing up the federal program. 
Unless the agency can come up with a better, more detailed 
justification for this realignment of resources, how can Congress 
support its budget proposal?
Specific Questions re OSM Oversight Initiative
    OSM has recently finalized a Ten-Day Notice directive (INE-35) that 
had previously been withdrawn in 2006 based on a decision by then 
Assistant Secretary of the Interior Rebecca Watson. The basis for 
terminating the previous directive was several court decisions that 
clarified the respective roles of state and federal governments 
pursuant to the primacy regime contained in SMCRA. The Secretary's 
decision also focused on the inappropriate and unauthorized use of Ten-
Day Notices under SMCRA to second-guess state permitting decisions. 
OSM's new TDN directive flies in the face of both this Secretarial 
decision and federal court decisions. Does OSM have a new Secretarial 
decision on this matter? If not, how can its recent action overrule 
this prior decision? Has the Solicitor's office weighed in on this 
matter? If so, does OSM have an opinion supporting the agency's new TDN 
directive? Will OSM provide that to the Committee?
    In light of limited funding for the implementation of SMCRA, how 
does OSM justify the state and federal expenses that will necessarily 
follow from reviewing and second-guessing state permitting decisions? 
States have complained that responding to a single OSM TDN, especially 
with respect to state permitting decisions, can require the investment 
of 2--3 FTE's for upwards of a week. How do you justify this?
Questions and Concerns re the AML Legislative Proposal in OSM's FY 2013 
        Budget
    The Proposed Competitive Allocation Process
          What is the potential for this new review and ranking 
        process to reduce expenditures and increase efficiency without 
        being counter-productive? Will it introduce an additional level 
        of bureaucracy and result in more time being spent formulating 
        proposals and less on actual AML reclamation? The present 
        funding formula, while not perfect, at least provides some 
        direction on which to base long term strategic planning and 
        efficient use of available funds. The closest analogy to what 
        OSM is proposing by way of its competitive allocation process 
        is the way BLM and the Forest Service currently allocate their 
        AML funds through competitive proposals to various state 
        offices and regions. Because of the uncertainties of funding, 
        neither agency has been able to develop significant in-house 
        expertise, but instead often rely on SMCRA-funded states like 
        MT, NM, UT and CO to do a good portion of their AML work. Why 
        would OSM want to duplicate a system that has proven 
        problematic for other agencies?
          Who would be the ``other parties'' potentially 
        bidding on AML grant funds? Would this include federal agencies 
        such as BLM, FS, NPS, etc? If so, in many cases, those agencies 
        already rely on the states to conduct their reclamation work 
        and also determine priorities based on state input or guidance.
          What do the state project managers and inspectors do 
        if a state does not win a competitive bid for AML funds? How 
        does a state gear up if it receives funding for more projects 
        than it can handle with present staffing? Each state and tribe 
        has different grant cycles. Unless all are brought into one 
        uniform cycle, how will everyone compete for the same dollars? 
        In this regard, how can the competitive allocation process and 
        the use of the Advisory Council be more efficient and simple 
        than what we already have in place?
          How long will OSM fund a state's/tribe's 
        administrative costs if it does not successfully compete for a 
        construction grant, even though the state/tribe has eligible 
        high priority projects on AMLIS? How will OSM calculate 
        administrative grant funding levels, especially since salaries 
        and benefits for AML project managers and inspectors 
        predominantly derive from construction funds? Would funding 
        cover current staffing levels? If not, how will OSM determine 
        the funding criteria for administrative program grants?
          How do the states and tribes handle emergency 
        projects under the legislative proposal? Must these projects 
        undergo review by the Advisory Council? Will there be special, 
        expedited procedures? If a state/tribe has to cut back on 
        staff, how does it manage emergencies when they arise? If 
        emergency programs do compete for AML funds, considerable time 
        and effort could be spent preparing these projects for review 
        by the Advisory Council rather than abating the immediate 
        hazard. Again, how can we be assured that emergencies will be 
        addressed expeditiously?
          What ranking criteria will be used to determine the 
        priority of submitted AML project grant requests? The number of 
        people potentially affected? The current priority ranking on 
        AMLIS? How would the Council determine whether a burning gob 
        pile near a city presents a greater hazard than a surface mine 
        near a highway or an underground mine beneath a residential 
        area? Would the winning bid be the ``most convincing'' 
        proposal? The one with the most signatures on a petition? The 
        one with the most influential legislative delegation? Will 
        AMLIS continue to serve as the primary mechanism for 
        identifying sites and their priority status?
          If the current AML funding formula is scrapped, what 
        amount will be paid out to the non-certified AML states and 
        tribes over the remainder of the program? What does OSM mean by 
        the term ``remaining funds'' in its proposal? Is it only the 
        AML fees yet to be collected? What happens to the historic 
        share balances in the Fund, including those that were supposed 
        to be re-directed to the Fund based on an equivalent amount of 
        funding being paid to certified states and tribes each year? 
        Would the ``remaining funds'' include the unappropriated/prior 
        balance amounts that have not yet been paid out over the seven-
        year installment period? What about the amounts due and owing 
        to certified states and tribes that were phased in during FY 
        2009--2011?
          Has anyone alleged or confirmed that the states/
        tribes are NOT already addressing the highest priority sites 
        for reclamation within the context of the current AML program 
        structure under the 2006 Amendments? Where have the 2006 
        Amendments faltered in terms of high priority sites being 
        addressed as envisioned by Congress? What would remain 
        unchanged in the 2006 Amendments under OSM's proposal?
The Nature and Purpose of the Advisory Council
          Who would be on the AML Advisory Council and how 
        could they collectively have better decision-making knowledge 
        about hazardous AML sites than the state and tribal project 
        managers and administrators who work with these sites on a 
        daily basis?
          What will be the criteria to serve on the Advisory 
        Council? Will the Federal Advisory Committee Act (FACA) 
        requirements apply to the formation and deliberations of the 
        Council? How long does OSM envision it will take to establish 
        the Council and when will it become operational?
          Will the Advisory Council be providing 
        recommendations to OSM or will OSM make all final decisions? 
        Will these decisions by appealable? If so, to who? Does OSM 
        envision needing to develop internal guidance for its own 
        review process? If so, how long will it potentially take from 
        Advisory Council review and recommendation to final OSM 
        decision in order to complete the grant process so a state can 
        begin a project?
          What degree of detail will be required in order to 
        review and approve competitive grant applications? Will the 
        Council review each project? What type of time constraints will 
        be placed on their review?
          Will the Advisory Council consider partial grants for 
        projects that may exceed the allocation for a single year? 
        Would minimum program states be authorized to apply for a grant 
        that would exceed $3 million?
          Will grant applications be based on an individual 
        project or will the grant be based on a project year? How will 
        cost overruns be handled?
Planning for AML Work
          One of the greatest benefits of reauthorization under 
        the 2006 Amendments to SMCRA was the predictability of funding 
        through the end of the AML program. Because state and tribes 
        were provided with hypothetical funding levels from OSM (which 
        to date have proven to be quite accurate), long-term project 
        planning, along with the establishment of appropriate staffing 
        levels and project assignments, could be made more accurately 
        and efficiently. How can states/tribes plan for future projects 
        given the uncertainty associated with having to annually bid 
        for AML funds? NEPA compliance issues alone can take years of 
        planning. One state recently asked its State Historic 
        Preservation Office for initial consultation regarding project 
        sites that may be reclaimed over the next five years. This 
        process will also have significant impacts on those states that 
        utilize multi-year construction contracts that are paid for 
        with annual AML grants.
          State and tribal AML projects are often planned 18 
        months to two years in advance of actually receiving 
        construction funds, based on anticipated funding under the 2006 
        Amendments. During that time, states and tribes are performing 
        environmental assessments, conducting archeology reviews, 
        completing real estate work and doing NEPA analyses. There 
        could be considerable effort and money wasted if a project does 
        not get approved during the competitive allocation process.
          At what point does a State or Tribe seek approval 
        from the advisory council? Considerable investigation must take 
        place prior to developing most projects, whether they be acid 
        mine drainage projects or health and safety projects. How much 
        time should be spent in design prior to proceeding to the 
        Council? How accurate must a cost estimate be prior to taking a 
        project before the Council? The greater the accuracy, the 
        greater the design time expended, possibly for a project that 
        will be rejected.
          State and tribes often seek and obtain valuable 
        matching funds from watershed groups, which take considerable 
        lead time to acquire. It will be difficult to commit to 
        partners if we don't know what level of funding, if any, will 
        be made available from OSM.
          Several states have committed significant amounts of 
        money to waterline projects across the coalfields. Local 
        governmental entities have started designs and applied for 
        additional funds from other agencies to match AML funds in 
        order to make these projects a reality. Ending all AML funding 
        for these projects (assuming they are not considered ``high 
        priority'') could have significant consequences for local 
        communities. Our understanding is that these projects were 
        excluded under the 2006 Amendments from the priority scheme 
        contained in section 403(a) of SMCRA.
          Does OSM's proposal allow acid mine drainage (AMD) 
        projects to be undertaken? Can these be designated as high 
        priority? (Our understanding is that those AMD projects 
        undertaken pursuant to the ``AMD set-aside program'' are not 
        subject to the priority scheme under Section 403(a) and that 
        those AMD projects done ``in conjunction with'' a priority 1 or 
        2 project are considered ``high priority''.) How do states 
        handle ongoing engineering, operating and maintenance costs for 
        existing AMD treatment systems? As the Administration works 
        diligently to develop a new rule to protect streams nationwide, 
        why would it advance a proposal to essentially halt the cleanup 
        of streams funded by the AML program?
Overarching Concerns
          Given the original design of SMCRA by its framers 
        that AML funds will only be allocated to those states who agree 
        to implement Title V regulatory programs for active mining 
        operations, to what extent can we expect that states will 
        continue to implement and fund their Title V programs if Title 
        IV funding is drastically cut or eliminated under the proposal? 
        Furthermore, since states and tribes will not know what level 
        of AML program staffing to maintain from year to year under the 
        proposal, who would desire to work for a program that is in a 
        constant state of flux?
          The SMCRA 2006 Amendments were the result of roughly 
        ten years of negotiations, discussions, and debates in 
        Congress. Since the legislative process to enact these new 
        proposed changes could take years, why didn't OSM begin with 
        the legislation and then follow up with an appropriate budget 
        proposal? Why weren't the states/tribes or the NAAMLP included 
        in discussions that led to this legislative proposal?
          As OSM develops the legislative proposal for a 
        competitive bidding process, the agency should consider the 
        impacts on minimum programs and consider maintaining the 
        minimum allocation of $3 million for minimum program states.
          What type of state AML plan amendments does OSM 
        foresee as a result of this new process?
Proposed Elimination of Funding for AML Emergencies
          While amendments to Title IV of SMCRA in 2006 (P.L. 
        109-432) adjusted several provisions of the Act, no changes 
        were made to OSM's emergency powers in Section 410. Quite to 
        the contrary, Section 402(g)(1)(D)(2) states that the Secretary 
        shall ensure ``strict compliance'' with regard to the states' 
        and tribes' use of non-emergency grant funds for the priorities 
        listed in Section 403(a), none of which include emergencies. 
        The funding for the emergency program comes from the 
        Secretary's discretionary share, pursuant to Section 402(g)(3) 
        of the Act. This share currently stands at $416 million. OSM's 
        elimination of funding for the emergency program will result in 
        the shift of approximately $20 million annually that will have 
        to be absorbed by the states. This is money that cannot be 
        spent on high priority AML work (as required by SMCRA) and will 
        require the realignment of state AML program operations in 
        terms of personnel, project design and development, and 
        construction capabilities. In most cases, depending on the 
        nature and extent of an emergency project, it could preclude a 
        state's ability to undertake any other AML work during the 
        grant year (and even following years), especially for minimum 
        program states. How does OSM envision states and tribes being 
        able to meet their statutory responsibility to address high 
        priority AML sites in light of the elimination of federal 
        funding for AML emergencies? How does OSM reconcile this 
        proposal with the intentions of Congress expressed in the 2006 
        amendments to move more money out of the AML Fund sooner to 
        address the backlog of AML problems that continue to linger?
Proposed Elimination of Funding to Certified States and Tribes
          From what we can ascertain, OSM proposes to eliminate 
        all payments to certified states and tribes--in lieu of funds; 
        prior balance replacement funds; and monies that are due and 
        owing in FY 2018 and 2019 from the phase-in during fiscal years 
        2008 and 2009. Is this accurate? OSM says nothing of what the 
        impact will be on non-certified states as a result of 
        eliminating these payments to certified states and tribes--
        especially the equivalent payments that would otherwise be made 
        to the historic production share that directly relate to ``in 
        lieu of'' payments to certified states and tribes under section 
        411(h)(4). Previously, OSM has stated that ``the amounts that 
        would have been allocated to certified states and tribes under 
        section 402(g)(1) of SMCRA will be transferred to the 
        historical production allocation on an annual basis to the 
        extent that those states and tribes receive in lieu payments 
        from the Treasury (through the Secretary of the Interior) under 
        section 402(i) and 411(h)(2) of SMCRA.'' By OSM's own admission 
        in its FY 2013 proposed budget, this will amount to $1.2 
        billion over ten years. If the in lieu payments are not made 
        (as proposed), how can the transfer to historic production 
        occur? The result, of course, would be a drastic impact on the 
        historic production allocation otherwise available to 
        uncertified states. Will OSM address this matter in its 
        proposed legislation? If so, how?
          Has OSM considered the fiscal and programmatic 
        impacts that could result if the certified states and tribes, 
        who no longer receive AML monies, choose to return their Title 
        V regulatory programs to OSM (especially given the severe 
        reductions being proposed for FY 2013 in Title V grants)?
          Finally, how do the cuts in the Title IV program line 
        up with the Administration's other economic, fiscal and 
        environmental objectives as articulated in the deficit 
        reduction and jobs bills that have been considered by Congress? 
        These objectives include environmental stewardship, cleaning up 
        abandoned mines (coal and noncoal) nationwide, creating green 
        jobs, pumping dollars into local communities, putting money to 
        work on the ground in an expeditious manner, sustainable 
        development, infrastructure improvements, alternative energy 
        projects, protecting public health and safety, and improving 
        the environment. It seems to us that there is a serious 
        disconnect here and we remain mystified as to how these 
        laudable objectives and OSM's budget proposal can be 
        reconciled.
                                 ______
                                 
    Mr. Johnson. Thank you, Mr. Conrad.
    Mr. Wasson, you may now begin.

  STATEMENT OF MATT WASSON, DIRECTOR OF PROGRAMS, APPALACHIAN 
                             VOICES

    Mr. Wasson. Thank you, Congressman Johnson, to the 
Committee, and to the staff, for the opportunity to speak about 
OSM's work and responsibility to protect people and the 
environment from mining practices that have demonstrably been 
poorly regulated in the past. My name is Matt Wasson, and I am 
the Director of Programs at Appalachian Voices. We are a non-
profit environmental organization dedicated to addressing the 
greatest threats to the Southern and Central Appalachian 
Region.
    I first want to address the development of the stream 
protection rule, and the air of misinformation and alarmism 
about the rule's purported threats to jobs, domestic energy 
production, and the economy.
    Make no mistake that the controversy over OSM's actions on 
the stream protection rule is all about mountaintop removal, a 
mining practice in Appalachia that involves blasting the tops 
off of mountains to access coal, and dumping the resulting 
waste and debris down into valleys below.
    Last year, the discussion draft of the Environmental Impact 
Statement that was leaked to coal company employees and the 
media provided mountaintop removal supporters like the National 
Mining Association with the opportunity to spread fear and 
misinformation, suggesting that the rule would all but abolish 
mining, and especially in Western surface mining areas, as well 
as in terms of underground longwall mining in the East.
    To demonstrate just how disconnected this rhetoric has been 
from reality, if you actually look at the document that was 
leaked, for what it is worth, the three most restrictive 
alternatives they put out were predicted to actually increase 
underground coal mining in the East. And I am guessing that 
this important fact has not been brought up by coal industry 
witnesses in this Committee.
    But the most important thing I want to impress on this 
Committee is how much is at stake for people whose health, 
homes, communities are at risk from poorly regulated mining 
practices in Appalachia and beyond. Recently, 18 different 
studies published in peer-reviewed scientific journals and 
authored by nearly 40 different researchers have demonstrated 
pervasive impacts on the health, well-being, and life 
expectancy of people living near mountaintop removal and other 
types of coal mines in Appalachia.
    Last year, the overwhelming evidence that coal mining was 
leading to a public health crisis in the coal-bearing regions 
of their State led the Kentucky Medical Association to pass a 
resolution pledging support for laws, rules, and regulations to 
protect people's health from the impacts of coal. As reasons 
for adopting the policy, the KMA made the following 
statements--and I quote--``Loss of stream integrity from valley 
fills associated with mountaintop removal coal mining is 
related to increased cancer mortality.'' And they cite elevated 
birth defect rates in mountaintop removal areas of Central 
Appalachia compared with other mining areas and non-mining 
areas.
    The result of all of these health impacts is that life 
expectancy for both men and women actually declined between 
1997 and 2007 in Appalachian counties with the most strip 
mining. In 2007, life expectancy in these counties was 
comparable to that in developing countries like Iran, Syria, El 
Salvador, and Vietnam.
    I last want to address some of the false assumptions being 
made about the impact of OSM's rulemaking on jobs, domestic 
energy production, and the economy. Supporters of mountaintop 
removal mining have been issuing sky-is-falling predictions 
ever since the EPA announced its plans to give greater scrutiny 
to mountaintop removal mine permits in March of 2009. This 
gives us since then three years to evaluate the quality of 
those predictions.
    As it turns out, those predictions that the 
Administration's actions would destroy jobs and put America's 
energy supply at risk failed to occur. The number of mining 
jobs in Appalachia has increased substantially since 2009. 
Employment in this last quarter was up six percent since the 
Administration first announced its new mountaintop removal 
permitting policies. It is up 9 percent since the EPA issued a 
new guidance on surface mine permitting in April of 2010. 2011 
saw the highest level of employment in Appalachian coal mines 
in 15 years.
    And, in terms of domestic energy production, according to 
the Federal Reserve, the productive capacity of actively 
producing coal mines in the U.S. in 2011 is the highest it has 
ever been in the 26 years they have been keeping those data. 
And the utilization of that capacity is the lowest it has been 
over that time frame, largely because of competition from 
natural gas.
    The problem facing the coal industry is low gas prices. It 
is not permitting. And I encourage this Committee to use its 
power to help end mountaintop removal, and create a just a 
sustainable future for the people of Appalachia.
    Thank you for the opportunity.
    [The prepared statement of Mr. Wasson follows:]

     Statement of Matthew F. Wasson, Ph.D., Director of Programs, 
                           Appalachian Voices

    Thank you Chairman Lamborn and members of the Subcommittee for the 
opportunity to speak about the need for OSM to implement an effective 
Stream Protection Rule. I also appreciate the opportunity to counter 
the alarmist misinformation that has surrounded the debate about the 
SPR in regard to the rule's purported threats to jobs and the economy.
    My name is Matt Wasson and I am the Director of Programs at 
Appalachian Voices, a non-profit organization dedicated to addressing 
the greatest environmental threats to the Southern and Central 
Appalachian Region. Appalachian Voices is a member of the Alliance for 
Appalachia, which is an alliance of 13 grassroots organizations working 
to end mountaintop removal coal mining and bring a just and sustainable 
future to Central Appalachia.
    Beginning with my doctoral research at Cornell University on the 
impacts of acid rain on birds, I have spent the last 17 years involved 
in research on the mining, processing and combustion of coal. Despite 
my extensive research on stream ecology and coal, I can't offer the 
subcommittee the type of testimony that would be most salient to the 
topic of today's hearing--the tragic personal stories of what it is 
like to bathe your children in polluted water or to wake up one day to 
find your tap water looks like tomato soup and smells like rotten eggs. 
But through my work with the Alliance for Appalachia I have had the 
privilege of working with many people who have experienced precisely 
those circumstances. On their behalf, I will try to provide my best 
summary of the myriad and devastating impacts that poorly regulated 
coal mining can have on nearby families and communities.
    The most damaging form of poorly regulated coal mining is 
mountaintop removal, a technique that involves blasting off the tops 
off mountains to access thin seams of coal and then generally dumping 
the waste and debris into nearby valleys. Not only has this practice 
obliterated more than 500 of the oldest and most biologically diverse 
mountains on the continent, but it has buried more than 2,000 miles of 
streams and polluted the headwaters of the drinking water supply of 
millions of Americans.
    More importantly, 18 peer-reviewed scientific studies have linked 
mountaintop removal and other forms of coal mining to a host of medical 
conditions including increased rates of birth defects, cancer and 
cardiovascular disease in nearby communities, resulting in life 
expectancies comparable to those in developing countries like Syria, 
Iran and Viet Nam.
    Despite what you may have heard, the controversy over the Stream 
Protection Rule is all about mountaintop removal. The atmosphere of 
confusion, misinformation and near hysteria surrounding OSM's 
development of that rule was initiated and fueled by those with a 
vested interest in continuing and even expanding the practice.
    As the chairman and members of this committee know well, an early 
discussion draft of the environmental impact statement for the Stream 
Protection Rule was leaked to coal company employees and the media just 
over a year ago. While mountaintop removal supporters quickly took 
advantage of the opportunity to spread fear and misinformation about 
the rule (i.e., asserting that it would abolish western surface mining 
and longwall mining in the East), the actual content of the leaked EIS 
provides no indication that OSM has any such intentions. To provide 
some perspective, the three most restrictive regulatory alternatives 
evaluated in the draft EIS were predicted to lead to increased 
underground coal mining in the East, while the fourth alternative would 
have no impact. I would guess that this fact has not been brought up by 
coal industry witnesses in this committee.
    Like most advocates for a strong Stream Protection Rule, I 
recognize that America needs coal to power our homes, factories and 
economy. Moreover, we will continue to rely on the hard work and 
sacrifice of American miners to supply coal for years, perhaps decades, 
into the future. While demand for coal is in long-term decline due to 
competition from other energy sources, there is no immediate 
alternative that can replace the 42% of our electricity and 20% of our 
overall energy supply that coal currently provides. The best way to 
ensure a reliable supply of coal, as well as to honor the men and women 
that mine it, is to give agencies the authority and resources they need 
to ensure coal is mined in a manner that does not destroy the land, 
water and health of nearby residents and that clearly complies with 
laws passed by Congress to protect our natural resources.
    On behalf of the thousands of people whose health, homes and 
communities are at risk from poorly regulated mining practices in 
Appalachia and beyond, I implore the members of this committee to allow 
OSM to do its job to promulgate common sense rules that will protect 
the people and mountains of Appalachia as well as the streams that are 
the headwaters of the drinking water supply of millions of Americans.
Why a Strong Stream Protection Rule is Necessary
Environmental Considerations
    The fact that surface coal mining, and mountaintop removal mining 
in particular, is causing massive and irreversible impacts to 
Appalachian streams is beyond question. According to a groundbreaking 
study published by 13 leading aquatic ecologists in 2010 in Science, 
the nation's premier scientific journal:
        ``Our analyses of current peer-reviewed studies and of new 
        water-quality data from WV streams revealed serious 
        environmental impacts that mitigation practices cannot 
        successfully address. Published studies also show a high 
        potential for human health impacts... Clearly, current attempts 
        to regulate [mountaintop removal mining] practices are 
        inadequate. Mining permits are being issued despite the 
        preponderance of scientific evidence that impacts are pervasive 
        and irreversible and that mitigation cannot compensate for 
        losses.''
    In addition to the impact on streams, mountaintop removal has 
obliterated 500 of the oldest mountains on the continent and caused 
widespread destruction and fragmentation of Appalachian forests. 
According to the 2010 Science article, ``The extensive tracts of 
deciduous forests destroyed by [mountaintop removal] support some of 
the highest biodiversity in North America, including several endangered 
species.''
Impacts on the Health and Well-Being of People
    There's a common saying in Appalachia: what we do to the land, we 
do to the people. A host of recent peer-reviewed scientific studies 
have demonstrated the truth of these words. Evidence of pervasive 
impacts on the health, well-being and life-expectancy of people living 
near mountaintop removal and other types of coal mines in Appalachia 
has been published over the last five years in 18 different scientific 
studies authored by nearly 40 different researchers. This overwhelming 
evidence led the Kentucky Medical Association to pass a resolution in 
2011 pledging to ``educate the public and make publicly visible its 
support for national and state laws, rules and regulations that protect 
individual health and public health from the impact of the extraction, 
transportation, processing and combustion of coal.'' As reasons for 
adopting the policy, the KMA made the following statements
          ``A recent study found that the loss of stream 
        integrity from valley fills associated with mountaintop removal 
        (MTR) coal mining is related to increased cancer mortality;''
          ``A recent study found elevated birth defect rates in 
        MTR areas of central Appalachia compared with other coal mining 
        areas and non-mining areas;''
          ``MTR areas are also associated with the greatest 
        reductions in health-related quality of life even when compared 
        with counties with other forms of coal mining;''
          ``Considering the value of life lost, a 2009 study 
        concluded that the human cost of the Appalachian coal mining 
        economy outweighs its economic benefits.''
    In addition to the health impacts cited by the Kentucky Medical 
Association, recently published studies have associated mountaintop 
removal and other forms of coal mining in Appalachia with increased 
rates of:
          Chronic respiratory and kidney disease,
          Low birth weight,
          Deaths from cardiopulmonary disease,
          Hypertension,
          Lung cancer,
          Hospitalizations
          Unhealthy days (poor physical or mental health or 
        activity limitation)
    The net result of these health impacts is illustrated in an 
analysis of data published by the Institute for Health Metrics and 
Evaluation in 2011. Life expectancy for both men and women actually 
declined between 1997 and 2007 in Appalachian counties with the most 
strip mining, even as life expectancy in the U.S. as a whole increased 
by more than a year. In 2007, life expectancy in the five Appalachian 
counties with the most strip mining was comparable to that in 
developing countries like Iran, Syria, El Salvador and Viet Nam.

[GRAPHIC] [TIFF OMITTED] 73227.001


    .epsMountaintop removal coal mining is also associated with poor 
emotional health. In surveys conducted by Gallup in 2010 across all 435 
Congressional districts, those where mountaintop removal occurs ranked 
dead last in both physical and emotional well-being.
[GRAPHIC] [TIFF OMITTED] 73227.002


    .epsGiven that mountaintop removal frequently forces Appalachians 
to leave homes and land that have been in their family for as many as 
five, six, or seven generations, severe impacts on emotional well-being 
are not surprising--it's not just mountains, streams, or even homes 
that are at stake, it's people's culture, identity and sense of place. 
These factors could also help explain the dramatic declines in 
population that have occurred over the past 30 years in counties where 
mountaintop removal occurs. The correlation between mountaintop removal 
mining and population declines is unmistakable in the map of county 
population trends between 1980 and 2010 shown below.
    Beyond its association with poor physical and emotional health, 
mountaintop removal is associated just as strongly with poor 
socioeconomic conditions. Not only do the Central Appalachian counties 
where mountaintop removal occurs have among the highest poverty rates 
in the country, but a study of ``persistent economic distress'' 
published by the Appalachian Regional Commission in 2005 showed that 
those counties are far more likely to remain economically distressed 
compared to nearby counties where mining is less prevalent. According 
to the ARC study:
        ``Of all the regions in this analysis, Central Appalachia has 
        been one of the poorest performers in relation to the ARC's 
        economic distress measure over time. Furthermore, and unlike 
        all other regions in the U.S., current and persistent economic 
        distress within the Central Appalachian Region has been 
        associated with employment in the mining industry, particularly 
        coal mining.''
        [GRAPHIC] [TIFF OMITTED] 73227.003
        

    .epsIronically, the high poverty rates in Appalachian counties are 
frequently cited as reasons for streamlining the permitting of 
mountaintop removal mines, despite the fact that more than 50 years of 
poorly regulated strip mining has failed to improve the economic 
situation. A study published in 2011 in the Annals of the Association 
of American Geographers took on the question of the relationship 
between mountaintop removal and unemployment rates directly. Based on 
their analysis, the authors of the study concluded:
        ``Although policymakers are aware of the negative environmental 
        effects of MTR, its continued use is primarily rationalized 
        using the argument that it contributes to local economies, 
        especially job retention and development... Contrary to pro-MTR 
        arguments, we found no supporting evidence suggesting MTR 
        contributed positively to nearby communities' employment.''
    To make matters worse, a series of new studies that quantify coal-
related revenues and expenditures to state treasuries have shown that 
the coal industries in West Virginia, Kentucky and Tennessee operate at 
a net loss to tax-payers, even accounting for the indirect impacts of 
coal mine employment while ignoring the ``externalized costs'' of the 
industry on the health and environment of communities where coal is 
mined. According to the West Virginia study:
        ``While every job and every dollar of revenue generated by the 
        coal industry provides an economic benefit for the state of 
        West Virginia and the counties where the coal is produced, the 
        net impact of the West Virginia coal industry, when taking all 
        revenues and expenditures into account, amounted to a net cost 
        to the state of $97.5 million in Fiscal Year 2009.''
    One might wonder why, with all of the evidence that mountaintop 
removal has detrimental impacts on the health and well-being or nearby 
residents, the practice continues to occur and is supported by 
virtually every elected representative of the region to state and 
Congressional offices. The question becomes even more puzzling when one 
looks at recent polls showing that likely voters in Central Appalachian 
coal counties oppose the practice and, by an overwhelming margin, 
oppose the destruction and pollution of streams that results from 
mountaintop removal coal mining. According to a recent poll conducted 
by Lake Research Partners and Bellweather Research, ``Voters across 
Kentucky, West Virginia, Tennessee, and Virginia solidly oppose 
mountaintop removal coal mining, by wide margins and across a host of 
demographic and political divides.'' The poll also found that:
          ``Three-quarters support fully enforcing--and even 
        increasing protections in--the Clean Water Act to safeguard 
        streams, rivers, and lakes in their states from mountaintop 
        removal coal mining... Just 8% of voters oppose it.''
          ``...fully 57% oppose mountaintop removal and with 
        noticeable intensity (42% strongly oppose), compared to just 
        20% who support it (10% strongly).''
          ``solid majorities of voters in these Appalachian 
        states believe either that ``environmental protections are 
        often good for the economy'' (40%) or ``have little or no 
        impact on the economy'' (20%). Just one-quarter of voters (25%) 
        believes that ``environmental protections are often bad for the 
        economy''.''
How Will the Stream Protection Rule impact Jobs, Domestic Energy 
        Production and the Price of Electricity?
    Supporters of mountaintop removal mining like the National Mining 
Association have been issuing sky-is-falling predictions of devastating 
impacts on jobs and national security ever since the EPA announced its 
plans to give greater scrutiny to mountaintop removal mine permits in 
March of 2009. The industry sounded similar warnings when the 
memorandum of understanding was signed by EPA, OSM and the Army Corps 
of Engineers in June, 2009, and when EPA released a new guidance for 
reviewing Clean Water Act permits for Appalachian surface mines in 
April, 2010.
    With three years of coal production and employment data now 
available since enhanced EPA oversight of mine permitting began, the 
validity of those predictions can be put to the test. Testing these 
claims should also shed some light on the validity and integrity of 
predictions now being made by those same companies and trade 
associations in regard to the Stream Protection Rule.
    As it turns out, the prediction that EPA's actions would destroy 
jobs, increase electricity rates and put America's energy supply at 
risk not only failed to occur, but was precisely the opposite of what 
actually occurred. The discrepancy between coal industry predictions 
and reality is probably attributable to the fact that every statement 
and analysis that has been made by mountaintop removal supporters about 
the impact of more stringent mine permitting has been predicated on one 
common false assumption: that permits are the limiting factor for coal 
production and that simply permitting and developing new coal mines 
will increase overall production and employment. In reality, declining 
demand for coal is the bottleneck for production.
    What coal industry representatives have consistently glossed over 
is the fact that demand for coal is declining across most of the U.S. 
for the simple reason that it is unable to compete with alternative 
sources of electricity generation. A story published by the Energy 
Information Administration in its Feb 29th edition of the ``Electricity 
Monthly Update'' provides a concise illustration of the point. The 
story is about how three natural gas plants in Ohio are supplying an 
increasing proportion of the state's electricity at the expense of 
seven older coal-fired plants that rely on Central Appalachian coal. 
According to the EIA:
        ``The increased generation from these three [gas-fired] plants 
        is coming at the expense of less efficient coal plants. Seven 
        coal plants in Ohio (with a combined capacity of 7,113 
        megawatts and an average heat rate around 10,500 Btu/kWh) have 
        experienced a significant drop in generation in recent years. 
        In the chart below, the generation share of these seven sample 
        coal plants, expressed as its share of total generation from 
        both sample coal and natural gas plants, is compared to the 
        corresponding share of the three combined cycle plants. As 
        illustrated in the chart, natural gas generation went from 3 
        percent of total sample plant generation in January 2008 to 47 
        percent in December 2011.
        [GRAPHIC] [TIFF OMITTED] 73227.004
        

        .eps``As shown with the lines on the chart, relative Henry Hub 
        and Central Appalachian coal prices appear to have a 
        significant role in these gas-fired power plants being 
        dispatched more often. The fuel prices have been adjusted to 
        account for the average heat rate of natural gas or coal plants 
        consuming that fuel in Ohio.''
    A similar story could be told in states all across the eastern U.S. 
that have traditionally relied on Appalachian coal. Across the region, 
natural gas prices have fallen below the level where Appalachian coal 
can compete. Moreover, the declining role of coal in U.S. electricity 
markets is not the result of any new regulations, but is the 
continuation of a decades-long trend that began in the mid 80s, when 
coal supplied nearly 60% of U.S electricity and is expected to continue 
at least through 2015, when EIA projects in its 2012 Annual Energy 
Outlook that coal will account for just 39% of U.S. generation.
No impact of previous EPA and OSM actions on jobs
    In contrast to the dire predictions from mountaintop removal 
supporters, the number of mining jobs in Appalachia has increased 
substantially since 2009. In fact, 2011 saw the highest level of 
employment at Appalachian coal mines since 1997. Employment in the 4th 
quarter of 2011 was up 6% since the MOU was signed in June, 2009, and 
it was up 9% since EPA issued a new guidance on surface mine permitting 
in April, 2010 (see chart on next page).
[GRAPHIC] [TIFF OMITTED] 73227.005


    .epsOf course, if demand for Appalachian coal continues on its 
expected downward trajectory then the number of jobs will ultimately 
decline as well. In fact, it appears that may already be occurring, as 
the enormous surge in international demand for metallurgical coal that 
began in 2009, which partially compensated for the sharp drop in demand 
for thermal coal from domestic power producers, has begun to fall off. 
As a result, Appalachian coal production is down 8% compared to the 
first quarter of 2011 and an increasing number of layoffs have occurred 
recently due to companies' decisions to idle or curtail production at 
certain mines. The fact that these layoffs are the result of falling 
demand, as opposed to difficulty in obtaining mining permits, is 
demonstrated by a press release issued by Alpha Natural Resources in 
February announcing their intention to idle six Appalachian mines and 
reduce production at four others. Alpha's CEO Kevin Crutchfield 
explained in the press release that ``Several mines are encountering 
weak demand for their products,'' and that ``... adverse market 
conditions left us no choice.''
    The press release goes on to explain that ``Alpha's Central 
Appalachian businesses are seeing more electric utilities switch from 
thermal coal to natural gas to take advantage of gas prices at 10-year 
lows.'' The company also attributes some of the drop in demand to the 
fact that utilities are ``shutting down a number of generating stations 
that have traditionally run on coals sourced from Central Appalachia.'' 
Unsurprisingly, the
No impact of previous EPA and OSM actions on energy supply and 
        electricity prices
    According to the Federal Reserve, the productive capacity of 
actively producing coal mines in the U.S. in 2011 was the highest it 
has ever been since they began supplying such estimates in 1986. The 
Fed estimates that productive capacity increased by 1.6% since 2009, 
when more stringent review of Appalachian mine permits began. The 
Federal Reserve data also show that the utilization of the productive 
capacity of active U.S. coal mines was an anemic 77% in 2011--the 
lowest it's been since the Fed began supplying such estimates. The 
capacity utilization of U.S. mines has averaged 85% since 1986.
    To put those numbers in perspective, mines that have already been 
permitted could have produced an additional 138 million tons in 2011 if 
they were operating at the historic average level of capacity 
utilization. Notably, that is somewhat more than the 119 million tons 
produced by all strip mines in Appalachia combined. There could be no 
clearer evidence that the reason U.S. mines are operating at such a low 
capacity is because there is insufficient demand for the coal they 
could produce, and has nothing to do with difficulties companies might 
face in obtaining new permits for mountaintop removal mines.
    Finally, an update on natural gas supplies in the Federal Energy 
Regulatory Commission's recent ``Winter Market Assessment'' highlights 
the absurdity of any contention that permitting requirements for 
mountaintop removal coal mines threaten national security and domestic 
energy supply. In their report, FERC makes clear that natural gas 
supplies are likely to remain more than adequate for two reasons: the 
rapid increase in unconventional gas drilling in the Marcellus Shale 
and the enormous increase in domestic oil drilling resulting from high 
oil prices. According to FERC:
        ``Natural gas production continued to grow in 2011, setting 
        records throughout the year ... Shale gas now accounts for more 
        than 25% of U.S. production, up from 5% in 2007. There has also 
        been an increase in production of associated gas from oil shale 
        wells, as high oil prices led to the acceleration in drilling 
        for shale oil... In some regions, the rush to extract oil from 
        oil rich shale formations has also resulted in high levels of 
        flaring, or burning of natural gas. In the Bakken shale 
        formation in North Dakota, for example, the natural gas 
        gathering system is struggling to keep pace with growing 
        production, and an estimated 25% of the natural gas produced, 
        as much as 100 MMcfd, has been flared this year.''
    In regard to electricity rates, the average retail cost of 
electricity across the U.S. has increased by 1.7% since 2009, when the 
MOU on mountaintop removal went into effect. That translates into an 
annual rate of increase of less than 1%--below the rate of inflation. 
More importantly, the price of electricity in the South Atlantic--the 
region where most Central Appalachian coal is consumed--has actually 
fallen by 0.6% since 2009.
Predictions of the impact of the Stream Protection Rule are based on 
        faulty assumptions and non-existent data
    The most important thing to understand about any prediction of 
economic impacts of the Stream Protection rule is that, at this point, 
there is simply nothing valid to base those predictions on. OSM hasn't 
even proposed a draft rule. In the mean time, studies based on 
unrealistic assumptions and worst-case scenarios only serve to 
obfuscate the important issues the rule is designed to address.
    Some studies claim to be based on an early version of the draft EIS 
for the rule that was leaked to coal companies and the media last year. 
The EIS analyzed 5 different alternatives that included ``no action'' 
(Alternative 1), three regulatory approaches presented in descending 
order of their relative impact on current mining practices 
(Alternatives 2,3 and 4), and a hybrid that was identified as OSM's 
preferred approach (Alternative 5). Even assuming that these 
alternatives are representative of OSM's current thinking, however, the 
analyses released by industry groups have no relationship to the actual 
content of the document that was leaked and appear to be based on data 
that was simply made up.
    Even the original analysis conducted by the contractors that 
produced the draft EIS was problematic, as it was based on demonstrably 
unrealistic assumptions of coal demand. For instance, the headline in 
the media--that 7,000 jobs in Appalachia are projected to be lost if 
OSM's ``preferred alternative'' were implemented--was based on the 
assumption that demand for Appalachian coal would remain roughly 
constant at 2008 levels. As a result, the production levels at 
Appalachian mines that were forecast under all five regulatory 
scenarios were higher than what the Energy Information Administration 
is forecasting in its 2012 Annual Energy Outlook (see figure below).
[GRAPHIC] [TIFF OMITTED] 73227.006


    .epsIn other words, if the same analysis were applied to more 
realistic levels of coal demand it would presumable predict there would 
be no reduction in Appalachian coal production and employment under any 
of the alternative rules considered in the EIS.
Conclusion
    Starving the agency of the funds it needs to promulgate the Stream 
Protection Rule would be irresponsible and it would be unethical given 
the enormous amount of evidence in recent peer-reviewed scientific 
literature showing that poorly regulated mining is causing irreparable 
damage to streams that are the headwaters of the drinking water supply 
of millions of Americans, and is the key factor implicated in what 
amounts to a public health crisis in Appalachia.
    In terms of EPA's and OSM's actions around mountaintop removal, 
many environmental and Appalachian community advocates are also 
concerned about the approach these agencies are taking, but for very 
different reasons than those of the coal industry representatives that 
have testified repeatedly to this committee. I believe that EPA and OSM 
have erred in vainly pursuing a coherent approach to regulating 
mountaintop removal coal mining because mountaintop removal simply 
can't be done in a manner that complies with the Clean Water Act, much 
less that protects the health and welfare of people living nearby. 
Mountaintop removal doesn't need to be regulated, it needs to be ended. 
Even if there were an economic justification for neglecting clean water 
safeguards and the welfare of the Appalachian people, every rationale 
that has been put forward to continue mountaintop removal is 
contradicted by readily available facts which I have provided 
throughout this testimony.
    I thank the committee and Chairman Lamborn again for the 
opportunity to speak on behalf of the thousands of people suffering 
from the impacts of poorly regulated coal mining practices. I sincerely 
hope that my testimony will help this committee better understand the 
pressing need for OSM to develop an effective set of rules to ensure 
that coal mining can continue to supply our country with much needed 
energy without the devastating impacts to public health, the 
environment and the economy of the regions where coal is mined.
                                 ______
                                 
    Mr. Johnson. Thank you, Mr. Wasson. We will now begin 
questioning. Members are limited to five minutes for their 
questions, but we may have additional rounds, time permitting. 
I now recognize myself for five minutes.
    Mr. Wasson, you did not provide references for the studies 
that you referred to. Do you have references that you can 
provide to this Committee?
    Mr. Wasson. I do, and I would be happy to furnish those.
    Mr. Johnson. OK. If you would furnish those, I would 
appreciate it.
    You testified that you and your organization's goal is 
working to end mountaintop removal coal mining. Is that a 
correct statement?
    Mr. Wasson. That is correct.
    Mr. Johnson. OK. Well, clearly, as the invited witness of 
the Minority, it is clear that the Minority members of the 
Committee--by the way, who are all present here today we see, 
they are so interested in this important topic--it is clear 
that the Minority members of the Committee share this goal as 
well: Working to end mountaintop coal mining in America.
    Former Chairman, Nick Rahall, frequently stated that SMCRA 
was written to establish guidelines for mining to permit the 
development of the resource and the protection of worker 
safety, at the same time understanding the environmental 
impacts and promoting reclamation of these areas. Clearly, 
Democrats on this Committee no longer believe in this premise.
    If you want to talk about costing tens of thousands of 
direct and indirect coal jobs, and causing electricity rates to 
go higher, then we should go forward with that goal. 
Unfortunately, since President Obama has taken office, 
Americans are paying $300 more per year in electricity rates.
    And I might point out you gave all of these stats, Mr. 
Wasson, about coal production increases and coal production 
utilization. I have a hard time drawing a connection, then, 
with the dichotomy of the 150 or so people in my community at 
the Muskingum coal-fired power plants as a result of many of 
the utility companies closing down their coal-fired power 
plants.
    If we go forward with this radical rewrite of the stream 
buffer zone rule, then that number, that $300 per year, will 
only increase. It is a simple supply and demand issue. If you 
cut down the amount of coal we produce, then the cost of coal 
will increase, leading to higher utility rates.
    Furthermore, in Mr. Wasson's testimony he stated that the 
preferred rule of OSM would not impact Western States or 
underground coal mining. That is simply not true. The preferred 
rule of OSM would cut down on underground coal mining by as 
much as 50 percent, and cost tens of thousands of direct and 
indirect jobs, if it goes forward.
    I would also like to enter into the record a recent study 
by four Ph.D.'s at Yale University, and that was peer-reviewed 
by the scientific community, that concluded, among other 
things, coal mining is not, per se, an independent risk factor 
for increased mortality in Appalachia.
    Finally, I would like to remind everyone that this is a 
budget hearing on OSM, and their use of taxpayer money to, 
amongst other things, unnecessarily rewrite a rule to forward a 
political agenda, regardless of the amount of jobs it would 
cost.
    With that, I yield back my time. And seeing no Minority 
Members, I yield to my colleague, Mr. Thompson.
    Mr. Thompson. Thank you, Mr. Johnson. I appreciate that. I 
thank the panel for coming and being a part of this important 
discussion.
    Ms. Roanhorse, you raised your objections to OSM's proposal 
to eliminate unrestricted funds for certified States. How might 
this impact overall reclamation efforts and coal mining 
regulations, as a whole?
    Ms. Roanhorse. It will definitely impact our funding. We 
don't have other funding sources available, for example, for 
the Navajo Nation. We only get Federal funds from AML. We would 
not have any funds to do the reclamation of abandoned coal and 
abandoned uranium mine sites.
    We do continue to find new sites in our areas. We do have a 
large area, and we have to do all the work that is necessary to 
do the planning, and also to--just to finish the work, to do 
reclamation.
    And the uranium sites, we still have to revisit about 520 
sites because of major environmental problems in those areas. 
In the meantime, we have to monitor those areas because of 
major erosion problems.
    And we also do fund, with the little funds that we get, we 
do fund community projects. These projects are impacted by 
mining activities. It is under section 411 of SMCRA. It allows 
us to do project funding, more leverage funding for these 
projects. We have great need for that. We lack about 50 percent 
overall with the Navajo Nation. A lot of folks in the remote 
areas do not even have running water, do not have utilities, 
don't even have communication lines or paved roads.
    And with whatever we receive, although it is limited, we do 
provide leverage funding for those projects. And all the other 
States, that would also impact their AML program, as well, 
especially all the abandoned non-coal sites. That funding is 
needed for the States.
    Mr. Thompson. You had discussed in your testimony the 
possibility of States and Tribes having obtained NPDES permits 
for reclamation projects, as a result of the fourth circuit. 
Can you elaborate on this?
    Ms. Roanhorse. I will have Greg here respond to the 
question.
    Mr. Thompson. OK, thank you.
    Mr. Conrad. Congressman, if you don't mind.
    Mr. Thompson. Please.
    Mr. Conrad. The fourth circuit decision was primarily 
focused on bond forfeiture sites in the State of West Virginia. 
But the decision was structured so broadly that there is 
concern that the fourth circuit's decision, which does require 
NPDES permits for States that are doing bond forfeiture work, 
could extend to States that are doing abandoned mine land 
reclamation work. And for that reason we have had a concern 
about just how broadly that decision might reach into our work 
for AML.
    Mr. Thompson. Well, Mr. Conrad, you made the point that 
OSM's ``solution to the drastic cuts for state regulatory 
programs comes in the way of an unrealistic assumption of user 
fee increases.'' Can you elaborate on that point?
    Mr. Conrad. Yes, thank you. The idea behind this proposal 
from OSM is that the States would increase permit fees that we 
charge to the industry, and that those permit fees should be 
structured to capture all of the costs associated not only with 
permitting mining sites, but also for inspection and 
enforcement.
    These would be substantial fees, and substantial fee 
increases that would be faced by the States. Our assessment, 
based upon our discussions with the States, is that the concept 
of fees is not particularly well received in most of the state 
legislatures at this point in time, and that to move in that 
direction would be exceedingly difficult. There is also a 
question about how those fees should be structured, whether we 
could do that with our own statutory authorities, or whether 
this would require a Federal rule to support and allow us to 
even move forward with these kinds of increases in the States.
    So, it is an inherently complex and intricate process, 
certainly not something that could happen in the course of a 
single fiscal year.
    Mr. Thompson. Mr. Conrad, how specifically can Congress or 
OSM improve and make more efficient the grant process and 
obligation of funding for reclamation purposes?
    Mr. Conrad. Certainly not by using or utilizing an advisory 
committee, as has been suggested in the legislative proposal.
    Frankly, we believe that the process that we currently have 
in place works well, and that it is an efficient and an 
effective process. We don't see a need to completely retool and 
reorder that process. To the extent that we need to make any 
enhancements to that process, it would likely be in the area of 
pursuing the way that the States are currently working in the 
context of some of their partnerships, so that we can 
effectuate greater degrees of money that might be available to 
us in the AML world. But going in the direction of the 
legislative proposal, in our view, would be disastrous.
    Mr. Thompson. Well, thank you, Mr. Conrad. Mr. Chairman, if 
I had any time remaining, I would yield it to the Members of 
the Minority Party to weigh in on this important topic that we 
have been addressing here, but I have neither time nor 
Democratic colleagues present. So thank you.
    Mr. Johnson. Thank you, Mr. Thompson. I appreciate you 
yielding back.
    I want to thank the panel for being here today, as well. I 
have to excuse myself, because I have a Subcommittee that I 
have to chair at noon. And so I am going to turn the gavel over 
to Mr. Thompson. You have no further questions?
    OK. Well, in that case, then, thank you all for being here 
today, and providing your testimony. Members of the Committee 
may have additional questions for the record, and I ask you to 
respond to these in writing.
    If there is no further business, without objection, the 
Committee stands adjourned.
    [Whereupon, at 11:53 a.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [The prepared statement of Mr. Coffman follows:]

       Statement of The Honorable Mike Coffman, a Representative 
                 in Congress from the State of Colorado

    I want to thank Chairman Lamborn and the Sub-Committee for holding 
this hearing today. It is important to discuss the how the President's 
budget request will affect the Office of Surface Mining and its mission 
to productively and responsibly utilize our coal resources.
    I also would like to thank all the panelists here today. Your 
testimony and insights on these matters is greatly appreciated.
    As a Member from Colorado, I understand the importance of having a 
sound and effective mining policy. The Colorado mining industry 
generates over $3 billion in sales annually, employs more than 5,000 
workers and creates over $8 billion in total economic activity for the 
state.
    Although coal is no longer the only means to produce energy in this 
country, it is still an important factor in addressing our domestic 
needs. The policy direction laid out by OSM and the President's Budget 
take major steps to restrict the mining industry by not only re-writing 
a previously negotiated stream buffer rule from 2006 but also forces 
states to make up budget shortfalls with increased fee collection on 
industry.
    I am concerned the President's budget proposal is focused on 
executing onerous federal regulations under the Surface Mining Control 
and Reclamation Act and forcing states to increase fee collection 
directly from mining companies to make up the lost funding--both of 
which will have a detrimental impact on mining production in Colorado 
and in the United States.
    Coal is the most widely used, inexpensive source of electricity, 
which provides approximately 72% of Colorado's electricity needs and 
nearly half the needs of the entire country. The proposed budget and 
legislative proposals, including the new stream-buffer rule, will 
reduce access to affordable energy for many Americans by harming the 
ability of the coal industry to be a major part of our energy 
production.
    Although the President hopes that renewables will run our country 
tomorrow, if energy supply from coal is greatly reduced through federal 
regulation the production cannot yet be replaced by renewables.
    During a time when all energy production should be encouraged the 
President's budget and policy direction seems to be clearly pointed at 
greatly reducing our coal capacity. The President claims an all of the 
above approach, but under this budget, coal production is clearly not 
being supported by the Administration. It should not be the policy of 
OSM to make production of this affordable and readily accessible energy 
become even more restricted.
    It is my hope as the Representative of the 6th District of Colorado 
that the Office of Surface Mining will look closely at the effects 
their policy decisions will have on job creation and energy costs for 
families. However, after hearing your testimony Mr. Pizarchik, I am 
convinced this Administration is dead-set on chasing impossible 
environmental goals by imposing regulations that are costing American 
jobs and blocking American energy production.

                                 
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