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






OBAMA ADMINISTRATION'S ACTIONS AGAINST THE SPRUCE COAL MINE: CANCELED 
                    PERMITS, LAWSUITS AND LOST JOBS

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

                           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

                               __________

                          Friday, June 1, 2012

                               __________

                           Serial No. 112-113

                               __________

       Printed for the use of the Committee on Natural Resources



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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                      Betty Sutton, OH
Scott R. Tipton, CO                  Niki Tsongas, MA
Paul A. Gosar, AZ                    Pedro R. Pierluisi, PR
Raul R. Labrador, ID                 John Garamendi, CA
Kristi L. Noem, SD                   Colleen W. Hanabusa, HI
Steve Southerland II, FL             Paul Tonko, NY
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Jon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief 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                      Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Bill Flores, TX                      Paul Tonko, NY
Jeffrey M. Landry, LA                Vacancy
Bill Johnson, OH                     Edward J. Markey, MA, ex officio
Mark Amodei, NV
Doc Hastings, WA, ex officio
                                 ------                                











                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Friday, June 1, 2012.............................     1

Statement of Members:
    Benishek, Hon. Dan, a Representative in Congress from the 
      State of Michigan, Prepared statement of...................    47
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington I606...................................
        Prepared statement of I607...............................
    Holt, Hon. Rush D., a Representative in Congress from the 
      State of New Jersey........................................     3
        Prepared statement of....................................     5
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     3
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................    32
        Prepared statement of....................................    34

Statement of Witnesses:
    Darcy, Hon. Jo-Ellen, Assistant Secretary of the Army (Civil 
      Works), U.S. Army Corps of Engineers--Invited--did not 
      testify....................................................
    Eisenberg, Ross, Vice President, Energy and Resources Policy, 
      National Association of Manufacturers......................    17
        Prepared statement of....................................    19
    Gunnoe, Maria, Organizer, Boone County, West Virginia........    24
        Prepared statement of....................................    25
    Harbert, Karen A., President & CEO, Institute for 21st 
      Century Energy, U.S. Chamber of Commerce...................    12
        Prepared statement of....................................    14
    Jackson, Hon. Lisa P., Administrator, U.S. Environmental 
      Protection Agency--Invited--did not testify................
    Kirkendoll, Hon. Art, Senator, West Virginia State Senate....     8
        Prepared statement of....................................    10
    Pizarchik, Hon. Joseph, Director, Office of Surface Mining 
      Reclamation and Enforcement--Invited--did not testify......

                                     


 
 OVERSIGHT HEARING ON THE ``OBAMA ADMINISTRATION'S ACTIONS AGAINST THE 
     SPRUCE COAL MINE: CANCELED PERMITS, LAWSUITS AND LOST JOBS.''

                              ----------                              


                          Friday, June 1, 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 10:09 a.m. in 
Room 1324, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Broun, Thompson, 
Benishek, Duncan of South Carolina, Flores, Johnson, Hastings, 
Holt, Tonko, and Markey.
    Also Present: Representative McKinley.
    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 on the ``Obama Administration's Actions 
Against the Spruce Coal Mine: Canceled Permits, Lawsuits, and 
Lost Jobs.''
    Under Committee Rule 4(f), opening statements are limited 
to the Chairman and Ranking Member of the Subcommittee.
    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. Hearing no objection, so 
ordered.
    Mr. Lamborn. I also ask unanimous consent to have 
Congressman David McKinley of West Virginia's First District 
with us on the dais today and to participate in today's 
hearing. 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. Today we will hear an update on the ongoing 
legacy, that is the Spruce Coal Mine in Logan County, West 
Virginia. This saga is one of the most disappointing legacies 
of Federal bureaucracy in American history.
    This is the story of how one agency, the Obama 
Administration's Environmental Protection Agency, can attempt 
to single-handedly decide to retroactively pull permits, which 
destroys jobs and cripples our economy, and try to do this 
without consequence.
    At the heart of this issue is the lack of confidence in 
permitting by the Federal Government.
    If without cause an agency can retroactively veto issued 
permits, then how can any company, contractor or concessioner 
have confidence to invest in America when their permit is not 
worth the paper it is written on?
    Fortunately, U.S. District Judge Amy Jackson found that the 
EPA's actions in this matter were essentially a stunning power 
grab, not justified by the statute.
    Yet, even with such a staunch rejection by the Court, the 
Obama Administration is committed to a war on coal and is 
appealing this clear decision.
    This appeal will consume tax dollars and time in our courts 
and for what? To destroy good and important jobs for Americans. 
Yes, that is the goal of this Administration's appeal. They 
want to destroy jobs and expand the power of the EPA to have 
extra legal new power to revoke permits.
    This Subcommittee frequently hears discussion about 
certainty, how domestic investment requires certainty in order 
for investors to create jobs.
    Should the Administration win this case and grant EPA the 
power to retroactively revoke permits, it would destroy all 
certainty in permitting for projects across the United States. 
This would be terribly destructive for the American economy.
    Unfortunately, this permit is not the only one the EPA has 
withdrawn that has cost jobs and destroyed the livelihood of 
hard working Americans.
    In 2009, the EPA withdrew the permit issued to the Desert 
Rock Energy Plant on the Navajo Nation. That $4 billion 
investment would have created thousands of jobs, generated tens 
of millions in revenues for the Navajo Nation, and supplied 
power to the hundreds of thousands of homes in the West.
    One added bonus would have been the electrification of a 
broad section of the Navajo Nation where people currently live 
without electricity.
    That permit, after being issued, was withdrawn by the EPA.
    The Obama Administration's war on coal can be felt 
throughout the country, East, West, Appalachia, Rocky 
Mountains, Logan County, West Virginia, and Farmington, New 
Mexico.
    Americans should be deeply concerned with this trend and 
the Administration's ongoing effort to retroactively pull 
permits, destroy jobs and hurt the economy.
    Today we will hear from folks who are interested in talking 
about other topics then the reckless disregard for the law, as 
demonstrated by the EPA in this instance.
    There will be discussions about selenium, water quality, 
and the general process of mining. None of that is the topic of 
today's hearing.
    Today is about a reckless Administration and an agency that 
believes it is above the law as they crusade against domestic 
jobs and domestic energy. I will now recognize the Ranking 
Member from New Jersey, Representative Holt, for five minutes 
for his opening statement.
    [The prepared statement of Mr. Lamborn follows:]

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

    Today we will hear an update on the ongoing legacy that is the 
Spruce Coal Mine in Logan County West Virginia. This saga is one of the 
most disappointing legacies of federal bureaucracy in American history. 
This is the story of how one agency--the Obama Administration's 
Environmental Protection Agency--can attempt to singlehandedly decide 
to retroactively pull permits, destroy jobs, and cripple our economy 
without consequence.
    At the heart of this issue is the lack of confidence in permitting 
by the federal government. If without cause an agency can retroactively 
veto issued permits, then how can any company, contractor or 
concessionaire have confidence to invest in America when their permit 
is not worth the paper it is written on. Fortunately, U.S. District 
Judge Amy Jackson found that the EPAs actions in this matter were 
essentially a stunning power grab not justified by the statute.
    And yet, even with such a staunch rejection by the courts, the 
Obama Administration is committed to their ``war on coal'' by appealing 
this clear decision. This appeal will consume tax dollars and time in 
our courts and for what? To destroy good, important jobs for Americans. 
Yes that is the goal of this Administration's appeal, they want to 
destroy jobs and expand the power of the EPA to have ``extra-legal new 
power'' to revoke permits.
    This subcommittee frequently hears discussion about certainty, how 
domestic investment requires certainty for investors to create jobs. 
Should the Administration win this case and grant EPA the power to 
retroactively revoke permits, it would destroy all certainty in 
permitting for projects across the country. This would be terribly 
destructive for the American economy.
    Unfortunately,this permit isn't the only one the EPA has withdrawn 
that has cost jobs and destroyed the livelihood of hard working 
Americans. In 2009 the EPA withdrew the permit issued to the Desert 
Rock Energy Plant on the Navajo Nation. That $4 billion investment 
would have created thousands of jobs, generated tens of millions in 
revenues for the Navajo Nation, and supplied power to the hundreds of 
thousands of homes in the West. One added bonus would have been the 
electrification of a broad section of the Navajo nation were people 
currently live without electricity. But that permit, after being issued 
was withdrawn by the EPA. The Obama Administration's ``war on coal'' 
can be felt throughout the country, east--west, Appalachia-Rocky 
Mountains, Logan County, West Virginia and Farmington, New Mexico.
    Americans should be deeply concerned with this trend and the 
Administration's ongoing effort to retroactively pull permits, destroy 
jobs and our economy.
    Today we will hear from folks who are interested in talking about 
other topics than the reckless disregard for the law as demonstrated by 
the EPA in this case. There will be distractions about selenium (sa-LE-
ne-um), water quality, and the general process of mining. None of that 
is the topic of today's hearing. Today is about a reckless 
Administration and an agency that believes they are above the law as 
they crusade against domestic jobs and domestic energy.
                                 ______
                                 

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

    Mr. Holt. Thank you, Mr. Chairman. Mountaintop removal 
mining can be one of the most destructive practices on earth 
for the health of local communities, our climate, and our 
environment.
    According to the Environmental Protection Agency, since 
1992, nearly 2,000 miles of Appalachian streams have been 
filled with debris resulting from mountaintop removal mining.
    Streams in Appalachia are being buried at a rate of 120 
miles per year. Mountaintop removal mining has also de-forested 
an area the size of Delaware.
    The proposed Spruce No. 1 Mine in West Virginia would cover 
an area roughly seven times the area of the National Mall, just 
to give you a sense of the scale.
    It would be one of the largest individual surface mines 
ever authorized in West Virginia, and waste from the mining 
operation would bury more than six-and-a-half miles of a couple 
of streams that according to the EPA ``represent some of the 
last remaining, least disturbed, high quality stream and 
riparian resources'' in the region.
    The EPA has concluded that this mine will ``transform these 
headwater streams from high quality habitat into sources of 
pollutants.''
    Since the Bush Administration approved the permit for 
Spruce Mine in 2007, which may have been unwise then, 
additional peer-reviewed scientific information has become 
available, which according to the EPA, ``reflect a growing 
consensus of the importance of headwater streams and a growing 
concern about the adverse ecological effects of mountaintop 
removal mining.''
    We increasingly understand the effects, the impact, that 
this sort of mining has on our environment and on the health of 
local communities.
    This morning, scientific understanding of the impacts of 
this mine and others like it--I beg your pardon--this mounting 
scientific understanding of the impacts led the EPA to withdraw 
the permit for filling these streams with mining waste under 
the Clean Water Act.
    The coal company, a subsidiary of Arch Coal, challenged the 
EPA decision, and a District Court sided with the coal company 
by ruling that the EPA's interpretation was illogical.
    In reading the Clean Water Act text, it seems clear that 
what is really illogical is the Court's interpretation of the 
statute and EPA's authority.
    EPA has appealed this decision and agreed to an expedited 
schedule to resolve the appeal and remove any uncertainty, for 
example, that the Chair refers to.
    The Majority may claim that EPA's effort to protect the 
environment and the health of communities in Appalachia from 
mountaintop removal mining are somehow evidence of a larger 
attack on the coal industry, but the reality is that the threat 
to coal use right now in today's economy is not coming from the 
Administration, it is coming from the market.
    Surging domestic natural gas production, including from 
shale formations, has caused U.S. natural gas prices to 
plummet, low natural gas prices are good for American 
consumers. They are good for American manufacturing and for 
other American industries, such as agriculture and steel.
    Fallen natural gas prices have, as one might expect, had an 
impact on our electricity mix. Over the last four years, the 
amount of electricity produced from coal has fallen from 
roughly half to a little more than a third.
    Meanwhile, over the last five years, we have added more 
than 41,000 megawatts of natural gas generation as a nation. We 
have added more than 36,000 megawatts of wind. The shift is not 
the result of the EPA or anyone else in the Administration, it 
is simple economics.
    Indeed, just this week, American Electric Power abandoned 
plans to ask state regulators in Kentucky to approve a 30 
percent increase in electricity rates from consumers to pay for 
a $1 billion retrofit to keep a coal plant that is nearly 50 
years old in operation.
    Our domestic natural gas production is at an all time high. 
That is a fact, and that is what is going on here.
    Utilities are increasingly moving to natural gas and 
renewables to generate electricity, yet the majority continues 
to support destructive mountaintop removal mining, a process 
that produces a product that companies are not choosing at this 
time, and it makes no sense.
    I yield back.
    [The prepared statement of Mr. Holt follows:]

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

    Thank you, Mr. Chairman.
    Mountaintop removal mining is one of the most destructive practices 
on Earth for the health of local communities, our climate and our 
environment. According to the Environmental Protection Agency, since 
1992, nearly 2,000 miles of Appalachian streams have been filled with 
debris resulting from mountaintop removal mining. Streams in Appalachia 
are being buried at a rate of 120 miles per year. Mountaintop removal 
mining has also deforested an area the size of Delaware in the 
Appalachian region.
    The proposed Spruce No. 1 Mine in West Virginia would cover an area 
roughly seven times the size of the National Mall. It would be one of 
the largest individual surface mines ever authorized in West Virginia. 
Waste from the mining operation would bury more than 6.5 miles of two 
streams that according to the EPA ``represent some of the last 
remaining, least disturbed, high quality stream and riparian 
resources'' in the region. The EPA has concluded that this mine ``will 
transform these headwater streams from high quality habitat into 
sources of pollutants.''
    Since the Bush Administration approved the permit for the Spruce 
Mine in 2007, additional peer-reviewed scientific information has 
become available which ``reflect a growing consensus of the importance 
of headwater streams'' and ``a growing concern about the adverse 
ecological effects of mountaintop removal mining.'' We increasingly 
understand the impacts that this sort of mining has on our environment 
and the health of local communities in the region.
    This mounting scientific understanding of the impacts of this mine 
and others like it led the EPA to withdraw the permit for filling these 
streams with mining waste under the Clean Water Act. The coal company--
a subsidiary of Arch Coal--challenged the EPA's decision, and a 
District Court sided with the coal company by ruling that the EPA's 
interpretation was illogical. But in reading the Clean Water Act text, 
it seems clear that what is really illogical is the court's 
interpretation of the statute and EPA's authority. EPA has appealed 
this decision and agreed to an expedited schedule to resolve the 
appeal.
    The Majority may claim that the EPA's efforts to protect the 
environment and the health of communities in the region from 
mountaintop removal mining is somehow evidence of a larger attack on 
the coal industry. But the reality is that the threat to coal use in 
our country is not coming from the Administration, it is coming from 
the free market.
    Indeed, surging domestic natural gas production, largely from shale 
formations, has caused U.S. natural gas prices to plummet. Low natural 
gas prices are good for American consumers, for American manufacturing, 
and for other American industries such as agriculture and steel. 
Falling natural gas prices have also had an impact on our electricity 
mix. Over the last four years, the amount of electricity we produce 
from coal has fallen from roughly half to a little more than one-third. 
Meanwhile, over the last five years we have added more than 41,000 
megawatts of natural gas generation. We have added nearly 36,000 
megawatts of wind. That shift is not the result of the EPA, it is the 
result of economics.
    Indeed, just this week, American Electric Power abandoned plans to 
ask state regulators in Kentucky to approve a 30 percent increase in 
electricity rates from consumers to pay for a $1 billion retrofit to 
keep a coal plant that is nearly 50 years old in operation.
    Our domestic natural gas production is at an all-time high. 
Utilities are increasingly moving to natural gas and renewables to 
generate electricity, yet the Majority continues to support destructive 
mountain top removal mining--a process that produces a product that 
fewer and fewer energy and power companies are choosing to invest in. 
This makes no sense.
    I yield back.
                                 ______
                                 
    Mr. Lamborn. Thank you. Also, as is our practice, whenever 
the Chairman or Ranking Member of the Full Committee are here, 
they are invited to give a five minute statement also, so I 
will now recognize the Chairman of the Full Committee, 
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. Thank you 
for your courtesy as you have given that to me several times 
this year.
    There is no question that over the course of President 
Obama's term in office, he and his Administration have taken 
aim at shutting down coal production and coal fired electricity 
plants across the country.
    These direct attacks on America's hard working coal 
families have threatened tens of thousands of jobs and promise 
to increase the cost of energy for millions of Americans at a 
time when they can least afford it.
    While some of the Administration's action against coal 
mining have been deliberately slow to develop, such as the 
unnecessary rewrite of coal regulations known as the ``Stream 
Buffer Zone Rules,'' others have been more bold and direct.
    The Obama Administration's EPA decision to retroactively 
withdraw a previously issued permit was certainly a bold and 
direct assault on American coal production.
    In fact, a Federal Court ruled, and I quote, ``EPA exceeded 
its authority,'' under the Clean Water Act to revoke an already 
issued coal permit, and such action required ``Magical 
thinking.''
    Yet, after such a strong rebuke from the EPA's reckless 
decision making, the Obama Administration is appealing the 
Judge's ruling and once again trying to inflict economic damage 
on an already struggling region.
    The Spruce Coal Mine in Logan County, West Virginia is a 
great opportunity for coal mining families who are desperate 
for job creation. It is also an opportunity for more American 
energy production that will help support other American 
industries.
    Unfortunately, this Administration has tried everything to 
take this opportunity away from these hard working American 
families.
    This hearing was supposed to give Committee members an 
opportunity to question Obama officials about the ``magical 
thinking'' and better understand their decision making process.
    Unfortunately, the Obama Administration officials that were 
invited to testify refused the invitation and refused to send 
anyone in their place.
    We have heard a lot about openness and transparency from 
this Administration. To me, it is very disappointing to see 
high ranking officials or any officials for that matter from 
his Administration ignore the opportunity to keep the public 
informed.
    I would like to thank the second panel that will be called 
for taking time out of their busy lives and busy schedules to 
be here today to answer questions about this important topic.
    I just wish that the Obama Administration had shown the 
same courtesy.
    Mr. Chairman, I would like to take a moment to express how 
saddened we were to hear of the passing of your father, Mr. 
Robert Lamborn, on Tuesday.
    I understand your father served with honor in the Second 
World War and was one of the five guards that participated in 
the Nuremberg trials. Clearly, his public service was passed on 
to the second generation. Know that our thoughts and prayers 
are with you and your family as you go through this difficult 
time.
    I yield back my time.
    [The prepared statement of Mr. Hastings follows:]

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

    There is no question that over the course of President Obama's term 
in office, he and his Administration have taken aim at shutting down 
coal production and coal fired electricity plants across the country. 
These direct attacks on America's hardworking coal families have 
threatened tens of thousands of jobs and promise to increase the cost 
of energy for millions of Americans at a time when they can least 
afford it.
    While some of the Administration's actions against coal mining have 
been deliberately slow to develop, such as the unnecessary rewrite of a 
coal regulation known as the Stream Buffer Zone Rule, others have been 
more bold and direct. The Obama Administration's EPA's decision to 
retroactively withdraw a previously issued permit was certainly a bold 
and direct assault on American coal production.
    In fact, a Federal Court ruled that the EPA ``exceeded its 
authority'' under the Clean Water Act to revoke an already issued coal 
permit and that such an action required ``magical thinking.'' Yet, even 
after such a strong rebuke of the EPA's reckless decision making, the 
Obama Administration is appealing the judge's ruling and once again 
trying to inflict economic damage on an already struggling region.
    The Spruce Coal Mine in Logan County West Virginia is a great 
opportunity for coal mining families who are desperate for job 
creation. It's also an opportunity for more American energy production 
that will help support other American industries, small businesses, 
family farms and jobs creators through affordable energy. 
Unfortunately, the Obama Administration has tried at every turn to take 
this opportunity away from these hardworking American families.
    This hearing was supposed to give Committee Members an opportunity 
to question Obama Administration officials about the ``magical 
thinking'' and better understand their decision making process. 
Unfortunately, the Obama Administration officials that were invited to 
testify refused the invitation and refused to send anyone in their 
place. We've heard a lot about openness and transparency from President 
Obama, so it's very disappointing to see high ranking officials, or any 
officials, from his Administration ignore the opportunity to keep the 
public informed.
    I would like to thank our second panel for taking the time out of 
their lives and busy schedules to be here today to answer questions 
about this important topic--I only wish the Obama Administration had 
shown the same courtesy.
                                 ______
                                 
    Mr. Lamborn. Thank you, Mr. Chairman.
    Moving on, at this point I would like to introduce the 
invited first panel, which was The Honorable Lisa Jackson, 
Administrator of the Environmental Protection Agency, The 
Honorable Joseph Pizarchik, Director of the Office of Surface 
Mining Reclamation and Enforcement, and The Honorable Jo-Ellen 
Darcy, Assistant Secretary of the Army for Civil Works 
representing the U.S. Army Corps of Engineers.
    Unfortunately, it appears that not a single individual from 
the Obama Administration could take the time out from their 
ongoing work of laying burdens on the American economy to 
attend our hearing today.
    It is extremely disappointing that they declined our 
invitation to speak and answer questions on an important issue 
that directly impacts the jobs and livelihood of many 
Americans.
    Even if they are extremely busy today, which I would 
understand, they could have sent someone in their place.
    Since the Obama Administration has no time for us today to 
answer questions, we will call forward the second panel.
    State Senator Art Kirkendoll, a West Virginia State 
Senator, The Honorable Karen Harbert, President and CEO, 
Institute for 21st Century Energy of the U.S. Chamber of 
Commerce, Mr. Ross Eisenberg, National Association of 
Manufacturers and VP for Energy and Resources Policy, and Ms. 
Maria Gunnoe, Boone County, West Virginia organizer.
    As you come forward, I will lay out the ground rules. Like 
all our witnesses, 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, and 
under Committee Rule 4(a).
    Our microphones are not automatic so you have to press the 
button to start. I also will explain how the timing light 
works. You see the clock in front of you that starts at five 
minutes. When it is down to one minute, a yellow light appears, 
and after the five minutes are all up, the red light comes on.
    Senator Kirkendoll, you may begin. Thank you for being 
here.

             STATEMENT OF THE HON. ART KIRKENDOLL, 
             STATE SENATOR, STATE OF WEST VIRGINIA

    Mr. Kirkendoll. Mr. Chairman, I want to thank you and the 
Committee for the opportunity. My name is Art Kirkendoll. I am 
a Senator from West Virginia representing the 7th Senatorial 
District, which is in the deep south, including Logan, Boone, 
Lincoln, Mingo and Wayne Counties.
    Prior to being nominated to the Senate, appointed to the 
Senate, and I am the Democrat nominee this year, I was on the 
County Commission of Logan for 30 years.
    So disturbing, regarding the law permit back in 1998, we 
had a real tussle about the opportunity to mine coal. As a 
Commissioner, you set the budget for all the constitutional 
office holders in the county. The Sheriff, everybody else, all 
the public depends on you, the school kids, everybody depends 
on the ability to have life in a rural county.
    When this permit was disbanded, Dal-Tex shut down, and we 
lost 400 quality jobs, $29 million back in 1998 in direct 
payroll.
    If you take into account the other jobs that support the 
coal industry, we probably lost $100 million total in that 
particular area.
    Our coal severance at that time was about $400,000 a 
quarter. I had to start cutting the budget and tighten things 
up because we got down to $72,000 one quarter.
    When 20 percent of your budget is derived from coal tax in 
an energy producing county, it is pretty, pretty tough.
    During the years--we are in almost the 14th year, we are 
still not mining coal. There are still 230 jobs today in 
question that would be mining the surface mine.
    When we talk about the devastation of surface mining, let's 
look at the plus side of surface mining. We are in a challenged 
terrain in Logan County. I think they say 20 degrees slopes. We 
have no flat land.
    By having post-mined land, some of the parcels where we 
extracted the coal, we now have a jail, an industrial park, an 
airport, a shopping mall, and other things that give us a 
little diversification and ability to be something other than 
just coal.
    I want to tell you, I do not know about some of the other 
counties, but Logan has done a pretty good job with parcels of 
post-mined land.
    Being also on the Commission, we set up what they called a 
master land usage program. What that meant was we could put in 
language in a mine permit to where we could take people out of 
flooded areas and put them upon a surface mine and leave the 
power and sewage there instead of taking it all out and 
starting over.
    That is where you need to get when you mine coal in areas 
that need to be surface mined.
    Take care of people's livelihood. Let these people have a 
life. We have gone through two tremendous floods in Logan 
County in the last few months. Millions of your dollars come 
into our area, Army Corps, everybody, the troops, cleaning up 
our area. If those people had been on some of these surface 
mined areas that we have, that would not have happened.
    If you think you cannot get killed, go back to the Buffalo 
Creek flood a few years ago, 124 people.
    What we are talking about today is the ability to (1) 
produce energy that keeps America safe; (2) gives us the 
ability to compete with other markets financially.
    When you cannot get a permit, guess what happens? A lot of 
people do not understand. A few years from now, it is going to 
be supply and demand.
    When we start depending on coal coming across the Atlantic 
and Pacific like we do oil, they are going to have the supply 
and we are going to have the demand. We are 20 years away from 
alternative energy and fuel to where we do not need coal. We 
may not have domestic coal, that is the problem.
    We are going to sit back and watch the rest of the world 
flourish economically. They laugh at what we do. We are sitting 
here putting our own selves out of business.
    We know how to do it environmentally sound. I am an 
environmentalist, too. I want to do it the right way.
    It used to be AOC. That is original contour. Plan out what 
you want to do with that property after extraction of the coal. 
Beautify it. Put a school on it. Put a community on it.
    What people do not realize, if we mined all the coal in 
Southern West Virginia mountaintop removal that needs to be 
mined, it would be three percent. I am telling you we could 
make it on 97 percent of the mountains.
    Second fact, I chair one of the most instrumental groups in 
America, the ATV Hatfield-McCoy Trail System. We occupy that 
trail system in the same mountains that we mine coal on a daily 
basis.
    If it is so devastating, then why have we had visitors from 
all 50 states and almost 30 foreign countries.
    We are trying to diversify. We want to be a tourist area 
and mine coal, too. The way we do it, with the environmental 
soundness we are doing it with now, we can do both.
    Do not be duped. Come down to West Virginia and see how we 
can do it and what we do. Do not take data and get in a 
committee and put the onus back on us where we cannot compete.
    Bring that committee down. Let me take you to some post-
mined land that has been redone, the beauty of it.
    I had the 60 Minutes crew in a helicopter. They asked me 
where is the reclaimed area, and I said you have been over it 
for 12 minutes. They still would not believe what I told them.
    The deer, the life and everything is better on post-mined 
land than the land before.
    With that, thank you for the opportunity, and let's be 
sensible and put America back to work. Thank you very much.
    [The prepared statement of Mr. Kirkendoll follows:]

          Statement of The Honorable Art Kirkendoll, Senator,
                       West Virginia State Senate

    Good morning and thank you for the opportunity to address this 
Committee. My name is Art Kirkendoll and for the past 30 years I've had 
the distinct pleasure of serving the people of Logan County, West 
Virginia first as a county commissioner and now as state senator. I am 
also here on behalf of 63,000 men and women that show up every day at a 
working mine in West Virginia as well as the Legislative and Executive 
branches of state government. Logan County has been called the `heart 
of the coalfields'' and it is that. Coal and Logan County are almost 
synonymous. I honestly don't know how you could separate the two.
    I've had the responsibility and pleasure of administering a county 
budget based on coal tax revenues for schools and important government 
services for the seniors and less fortunate. I've also had the daunting 
task of preparing that same budget when coal revenue disappeared due to 
arbitrary judicial and administrative actions that affected the 
continued viability of a coal mining operation in my county such as 
EPA's post-issuance veto of the Spruce permit.
    As a lifelong resident and a public servant, I am uniquely aware of 
the importance of coal to our community, and I am well aware that coal 
mining depends on a stable and predictable regulatory environment.
    EPA's revocation of a legal, valid permit three years after it was 
issued by the Corps of Engineers shatters the trust that must underlie 
the relationship between citizens, businesses and their government.
    Not only has the EPA's actions shattered that essential 
relationship between the people and their government, but in their 
politically motivated zeal to invalidate an existing, legal permit, the 
agency trampled on the relationship of the states to their federal 
government, destroying the very spirit of the Federal Clean Water Act 
so much so that a federal judge was inspired to characterize EPA's 
actions as ``magical thinking.''
    Ladies and gentlemen, it is important that you understand this 
issue isn't just about a single mine permit--nor is it about a single 
community. Some of you may believe this is just a ``regulatory matter'' 
but it is not. It is about real people and the impact these decisions 
by EPA and others like them are having on families and their 
communities in Logan County. . .my home. . .my state and across this 
nation. So concerning are EPA's actions to the citizens of West 
Virginia that the West Virginia Legislature has twice adopted 
resolutions condemning EPA's behavior with respect to the Spruce mine 
permit. By disregarding 13 years of environmental analysis that went 
into the Spruce mine permit with the stroke of its veto pen, EPA has 
essentially chilled the permitting process not only for mining 
operations but any development that needs Clean Water Act authorization 
from the Corps of Engineers.
    Each year, more than 13 million tons of coal is mined in our 
county. There are a bit more than 1,500 coal miners working in the 
county, and using the standard economic multiplier, that means the 
industry provides employment for about 5,000 Logan County residents. 
Consider that for a moment--5,000 out of a total population of a little 
more than 35,000. To put that into a bit better perspective, most of 
those coal miners and service industry employees are married and are in 
their prime family years--so it is safe to say that those 5,000 people 
represent 5,000 families--about 20,000 people out of 35,000 -something 
like 70 percent.
    Now, the average West Virginia coal miner makes about $70,000 a 
year, which means that the coal industry pays out about $105 million in 
wages each year in our county alone. The average salary of our coal 
miners is almost twice that of the average per capita income across the 
state. In fact, mining jobs are some of the best jobs people can have 
in our state.
    Historically coal and the coal-related industries have provided 
higher paying jobs resulting in a higher standard of living and greater 
access to a better education. Consider the impact on Logan County 
School System and our families.
          The property tax on coal and coal-related industries 
        in Logan County generates approximately $7.5 million in excess 
        levy tax revenue for Logan County Schools.
          This revenue provide over a million dollars for 
        textbooks, academic travel for students, and school libraries;
          $260,000 for bands, groups, student accident 
        insurance policies and mini grants;
          $300,000 for technology equipment, wiring and 
        supplies; over a million in construction, security, and 
        repairs;
          $360,000 of playgrounds, public libraries, county 
        health departments;
          $4,981,000 in service and professional salaries.
    Not only do the coal industries pay these taxes, employees of these 
industries work and live in our communities, and they support our 
schools with their personal property taxes as well. What cannot be 
overlooked when we discuss the financial impact of levy tax revenue is 
the personal dimension to this discussion for our school system, the 
emotional devastation that occurs when coal and the families who are 
dependent on coal no longer have a viable income.
    We understand the importance of the coal industry to our county--
just in terms of the economic impact alone--but it goes far beyond 
that.
    I can remember back in 1981 when we began to take a longer view of 
what our county needed, thank goodness we had coal companies that 
provided the taxes and revenue and jobs that enabled us to do that.
    When I first started, 15 percent of the people in Logan County had 
potable water. As we speak today, 99 percent have it. We recently 
started our second phase, our main sewers in southern West Virginia, 
and Logan County.
    We're making great strides but we remain way behind the rest of the 
nation, I am asking that you don't allow the EPA to destroy the 
industry that provides us the revenue to get to that next level.
    I often hear the opponents of coal talk about the land that is left 
once mining is finished. They claim we don't do anything with it.
    Well, I don't know what they do in the rest of the country, but in 
Logan one of our biggest problems is a lack of readily developable 
land. The development and diversification of our economy is severely 
limited by the lack of flat, readily developable land. Our people try 
to make a living, build homes and businesses on the only flat land 
available--the valley floors--but the problem is that these valley 
floors are also often 20-year flood plains. Who would make a 
significant investment on a 20-year flood plain? Who would build a home 
or business?
    Coal mining--particularly surface mining such as proposed at 
Spruce--can provide us jobs today and possibilities for tomorrow. It 
can do so even as it dramatically reduces the cost of site preparation 
for major projects--something that is one of the most important 
limiting factors.
    Today, we have an airport, an industrial park, a regional jail, a 
wood products plant, a conference and recreation center among other 
things in Logan County, because we took this land and did the right 
thing with it after the extraction of coal.
    As I stated earlier, this is about more than a single permit or a 
single mining operation but it is important to understand the impact 
that even a single mine has on a community and county like Logan 
County. Unfortunately, we've been here before--in 1999 a federal Judge 
halted mining at the Dal-Tex site where the Spruce permit is located. 
The mine closed, jobs were lost and communities and families were 
ripped apart. That decision, which was reversed on appeal, set in 
motion the 13-year permitting process that led to the issuance of the 
Spruce mine permit in 2007. When the permit was finally issued, the 
company mobilized investment to initiate coal production, restoring 
life and economic vitality to these previously-decimated areas. All of 
that promise and potential is now threatened by an EPA that is willing 
to reach beyond its statutory authority to target an industry and a 
region without regard for impacts to real people.
    This EPA claims its dedication to the concept of environmental 
justice, that no single community or group should unequally bear the 
burden of public policy decision with respect to environmental 
protection. In the case of the Spruce permit and coal mining in West 
Virginia and Appalachia, EPA has warped this concept of environmental 
justice to one of environmental injustice--where jobs, lives and 
communities are targeted and ultimately destroyed in the blind pursuit 
of a purely political agenda. In EPA's distorted world of environmental 
injustice, unelected bureaucrats in office buildings in Philadelphia 
and Washington substitute their judgment for the will of the elected 
West Virginia Legislature and the Congress.
    I come to you today seeking nothing more than true justice for my 
county and my state. As two federal Judges have recently observed, EPA 
is an agency that begs for Congressional intervention. As Judge Amy 
Berman Jackson observed, EPA's actions on the Spruce permit represent 
``stunning power'' for an agency to assume when there is no mention of 
it in the authorizing statute. The House has taken appropriate measures 
to restore balance and rationality to EPA and force them to respect the 
lines of federal and state responsibility with the passage of H.R. 
2018, the Clean Water Cooperative Federalism Act. This same body should 
immediately begin consideration of H.R. 457, which will forever prevent 
EPA from revoking an issued and operating permit.
    As I said, I am asking for nothing more than justice. . .and for 
fairness. I am asking you, our elected representatives, to stand beside 
the working coal miners of my state and, indeed, this nation. They have 
given so much and by their hard work, we have built an economy that is 
the envy of the world.
    Please don't turn your backs on the proud, hard-working, devoted 
West Virginia coal miner and outsource their jobs as we have so many 
others. God forbid that ever happens. I never thought that in 2012, as 
State Senator, I would spend 80 percent of my time focusing on the 
uncertainty of whether people know on Monday if they have a job next 
week. That's not America.
    Thank you for your time. . .
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony, Senator 
Kirkendoll.
    Ms. Harbert, you may begin.

 STATEMENT OF KAREN HARBERT, PRESIDENT AND CEO, INSTITUTE FOR 
         21ST CENTURY ENERGY, U.S. CHAMBER OF COMMERCE

    Ms. Harbert. Thank you, Chairman Lamborn and Ranking Member 
Holt, members of the Committee.
    I am Karen Harbert, President and CEO of the Institute for 
21st Century Energy, an affiliate of the U.S. Chamber of 
Commerce, which is the nation's largest business federation.
    First, let's be clear what the Spruce Mine discussion is 
not about. It is not about mountaintop mining. It is not about 
whether coal should or should not be part of our energy mix.
    It is about the rule of law and whether America is a safe 
place for long term investment. It is about the integrity of 
our regulatory process. It is about whether America is open for 
business. That is why this hearing is so important.
    One of our great strengths as a country is that we hold the 
rule of law sacrosanct. If we move to a system embodied by the 
stance taken by the EPA in the Spruce Mine case, commerce as we 
know it would grind to a halt. Hundreds of businesses would be 
questioning if they, too, could have their permits 
retroactively rejected.
    New investments would dry up because there would be no way 
to accurately calculate risks associated with the regulatory 
agency that can simply change its mind at will.
    The U.S. Chamber supports environmental safeguards and we 
recognize the clear, transparent and predictable regulatory 
system is valuable to both business and to the environment.
    We also believe that Government must honor the decisions it 
makes and operate within the law.
    In the case of Spruce Mine No. 1, a Federal Judge has 
clearly demonstrated that the EPA did not.
    To give a sense of scale and magnitude put at risk by EPA's 
actions, it should be noted that the Army Corps of Engineers 
issues approximately 60,000 discharge permits annually under 
Section 404, and estimates that covers about $220 billion of 
annual investments conditioned on those permits.
    It is not just a matter of mining or energy projects, it is 
for industry broadly. It covers a significant component of our 
economy, including residential and commercial buildings, roads, 
renewable energy and other projects.
    A reduction or constriction on investment in these key 
infrastructure areas will limit job growth.
    In fact, a study by the Brattle Group estimates that for 
every billion dollars of construction spending, we generate 
18,000 jobs. With today's unemployment rate at 8.2 percent, we 
cannot afford our Government to restrict job growth.
    With after ten years of review, EPA did not even identify 
need to withhold the approval for Spruce Mine No. 1 when it had 
the opportunity and legal ability to do so.
    Attempting to withdraw their approval retroactively, veto 
the permit almost two years after issuance, would not only 
cause immediate economic loss to the mine owner, the State of 
West Virginia, and the workers, but it would really create a 
substantial negative and economic chilling impact on the 
economy as a whole, setting a precedent that Section 404 
permits can be revoked or changed at will.
    If permits become subject to arbitrary treatment, the 
result will be significantly reduced capital investments, fewer 
jobs, and more expensive infrastructure.
    The United States is still an attractive market for 
investments, but to the extent the Government increases risks, 
the United States becomes less attractive.
    According to the World Economic Forum's global competitive 
report, the U.S., which long held the top global position, has 
continued its three year decline, and now holds fifth place.
    Two of the factors cited for this decline were a reduction 
in the transparency of Government policy making and second, the 
increase in burdensome regulations.
    When a Government agency takes unprecedented action to 
attempt to revoke a legal permit issued by another agency, this 
action sends a message to the entire business community that it 
cannot count on the Government permits.
    Businesses of all sizes are not asking for no regulations, 
they are asking for transparent and enduring regulations upon 
which they can make decisions on investments.
    It would require a process that makes sense, a process that 
has clear time frames, and a process where once a decision is 
made, it is honored and its investments can go forward and hire 
people.
    Without such confidence, capital will go elsewhere, and 
that undermines not only our competitiveness but the ability to 
get America back on its feet and Americans back to work.
    Fortunately, the U.S. system still has checks and balances, 
and in this case, the system worked.
    Judge Amy Jackson issued a striking rebuke to the EPA's 
overreach. She called the EPA's interpretation illogical, 
impractical, refers to the logic as ``magical thinking,'' and 
noted ``It is unreasonable to sew a lack of certainty into a 
system that was expressly intended to provide finality.''
    At the onset of this case, the EPA sought to silence its 
critics, including the Chamber, by objecting to the very filing 
of our brief. Now the Court has ruled against EPA but EPA 
continues, and it is troubling to waste the taxpayers' dollars 
to defend an indefensible policy that is transparently bad for 
the economy and inconsistent with the principles of law.
    Business can and should adhere to laws and regulations 
governing its industry, but we need to know the rules of the 
road and the regulators have an obligation to provide a clear 
and transparent process to follow.
    Congress and the judicial system must ensure that EPA 
exercises only the authority it has and not the authority it 
wishes it has, nothing less, or the integrity of our commercial 
economy is at stake.
    Thank you.
    [The prepared statement of Ms. Harbert follows:]

  Statement of Karen A. Harbert, President & Chief Executive Officer, 
      Institute for 21st Century Energy, U.S. Chamber of Commerce

    Thank you, Chairman Lamborn, Ranking Member Holt, and members of 
the Committee. I am Karen Harbert, President and CEO of the Institute 
for 21st Century Energy (Institute), an affiliate of the U.S. Chamber 
of Commerce. The U.S. Chamber of Commerce is the world's largest 
business federation, representing the interests of more than three 
million businesses and organizations of every size, sector and region.
    The mission of the Institute is to unify policymakers, regulators, 
business leaders, and the American public behind common sense energy 
strategy to help keep America secure, prosperous, and clean. In that 
regard we hope to be of service to this Committee, this Congress as a 
whole, and the administration.
    I appreciate this opportunity to discuss the Spruce No. 1 mine 
(Spruce Mine) permit revocation and the potential impact to capital 
investment and jobs. First, I would like to clarify that this is not 
about mining, and specifically whether strip mining should be permitted 
under federal law. This is not about whether coal which supplies 40 
percent of our electricity should or shouldn't be part of our energy 
mix. This case is about the rule of law and regulatory certainty and 
the type of regulatory regime that the law allows for and that we wish 
to have in the United States. Even more fundamentally, the outcome of 
this case will signal whether America is open for business and safe for 
long term investment.
    One of our great strengths as a country is how we hold the rule of 
law sacrosanct coupled with a regulatory system with appropriate checks 
and balances to protect the regulated. If we were to move to a system 
embodied by the Environmental Protection Agency's (EPA) action in the 
Spruce Mine case, hundreds of projects and businesses in America today 
could question whether they too might retroactively have their lawful 
permits revoked or recaptured. New projects will have to determine how 
to calculate risks associated with changing viewpoints at a future 
point from a regulatory agency. This will reduce and delay a broad 
range of projects, increase the cost of doing business, and reduce the 
number of jobs at a time when job creation is most critical. The 
Chamber supports environmental safeguards and clear standards that are 
applied consistently to all businesses. But just as businesses must be 
accountable for the decisions they make, government must honor the 
decisions that it makes and operate within the laws established by 
Congress.
    Furthermore, a clear, transparent, and predictable regulatory 
system is not only valuable to business, but furthers the protection of 
the environment. When business is provided with the certainty to know 
what is necessary for compliance, it can be a valuable partner in 
environmental stewardship.
Background and Timeline
    The Spruce Creek mine was granted a surface mining permit in 1998 
by the State of West Virginia under the Surface Mining Control and 
Reclamation Act (SMCRA). At the same time permits were pursued under 
section 402 of the Clean Water Act (NPDES) and under section 404 of the 
Clean Water Act (dredge and fill). The initial section 404 permit was 
withdrawn by the Army Corps of Engineers (Corps) because a Federal 
Court found that an Environmental Impact Statement (EIS) was required. 
EPA commented on a preliminary draft EIS in August 2001 and the draft 
EIS in August 2002. In both cases EPA expressed concerns, but committed 
to work with the Corps to develop an environmentally acceptable 
project. In 2006, the Corps published the draft EIS and final EIS, and 
EPA submitted comments in both processes. After further consultation 
with EPA, the Corps issued the section 404 permit for the Spruce Mine 
in January 2007.
    Please note that the section 404 permit, which is required to begin 
operations at the Spruce Mine, was issued eight years after the initial 
mining permit. Before the initial mining permit was issued, the owner 
made significant investments to acquire the rights to develop the mine 
and the necessary engineering work to determine the feasibility of the 
project. Significant investment was also required to complete the 
permitting process which ultimately took 10 years to complete. Much of 
this investment remains stranded today as the company battles in court 
to defend its right to use the very permit one agency of this 
government issued and another agency of the same government 
subsequently revoked.
    Almost two years after the Corps granted the section 404 permit, 
EPA requested the Corps suspend, revoke, or modify the permit in such a 
way that would prevent the discharge of dredge or fill as allowed by 
the permit. The Corps declined EPA's request. In March 2010, EPA took 
the unprecedented action of withdrawing or restricting specifications 
in the section 404 permit which would have the impact of revoking, or 
retroactively vetoing, the lawful permit issued by the Corps.
    This is a very short summary of a long and complex regulatory 
record. The key point is that even with the current regulatory process, 
there is significant investment risk because of the complexity, long 
permit processing times, and potential challenges and litigation. 
Adding an arbitrary and capricious and completely unpredictable risk of 
a permit being revoked or withdrawn after it is issued, greatly 
increases the challenge of securing capital for any project subject to 
this process.
Economic Impact of Greater Regulatory Uncertainty
    When the risks of a project increase, investors expect a higher 
return. Therefore, fewer projects meet the return on investment 
criteria to support funding. These risks can be in the form of many 
different project impacts, but regulatory risk is clearly one of those 
criteria. An economic analysis of the Spruce Mine and the broader 
economic impact of EPA's action was prepared by Professor David Sunding 
of UC Berkley and The Brattle Group to support a multi-industry amicus 
curiae brief filed in support of the lawsuit challenging EPA's action. 
The analysis is attached as an appendix. The conclusion of that 
analysis provides a good summary of the economic impact:
        Conclusions
        The EPA's precedential decision to revoke a valid discharge 
        permit will have a chilling effect on investment across a broad 
        swath of the American economy. Activities ranging from 
        residential and commercial development, roads, renewable 
        energy, and other projects rely on discharge authorization 
        under Section 404 of the Clean Water Act. These activities 
        provide needed infrastructure, housing, and other services, and 
        are a significant part of the annual value of economic activity 
        in the country. They also generate hundreds of thousands of 
        jobs nationwide, and stimulate economic activities in support 
        sectors.

        The types of projects that require discharge permits are 
        usually capital intensive and involve irreversible investments, 
        meaning that the project proponent cannot recoup costs if the 
        necessary authorization is revoked by the EPA. Revoking 
        discharge permits introduces two essential market distortions: 
        (i) revoking permits raises hurdle rates among private 
        investors; and (ii) revoking permits reduces the expected 
        benefit-cost ratio of new projects. These effects are likely to 
        dampen investment rates in industries relying on discharge 
        permits, both by delaying and by deterring new projects from 
        being built. Importantly, I show that even small changes in the 
        probability of ex post revocation can have a large effect on 
        project investment.
    To give a sense of the scale and magnitude of industries that are 
put at risk by this EPA action, the Army Corps of Engineers issues 
approximately 60,000 discharge permits annually under section 404 of 
the CWA, and estimates that over $220 billion of investment annually is 
conditioned on the issuance of these permits. If the investment is 
conditioned on the permit and the permit is subjected to potential 
future arbitrary and capricious treatment, it is clear that the result 
will be significantly reduced capital investment. It is because of 
actions like EPA's that regulatory uncertainty has risen to a level 
that many economists estimate some $2 trillion dollars have been 
``sidelined'' instead of being invested and catalyzing economic growth 
and job creation.
    While it is never a good time to unnecessarily restrict investment, 
it is doubly so during a time when the economy is struggling. We need 
productive, effective, and environmentally sound investments to create 
jobs. In almost ten years of review, EPA did not identify a need to 
withhold approval of the Spruce No. 1 mine when it had the opportunity 
and legal ability to do so. Attempting to withdraw their approval and 
retroactively veto the permit almost two years after issuance not only 
causes immediate economic loss to the mine owner and workers employed 
to support the mine, but also creates a substantial negative economic 
and chilling impact on the economy by setting a precedent that section 
404 permits can be revoked post hoc or changed at will. This 
uncertainty has a direct and lasting impact of increasing the risk for 
all projects that require a section 404 permit.
    This is not just a matter for mining or energy projects, but 
impacts industry broadly including both public infrastructure projects 
and private industry. As noted by Dr. Sunding, these impacts touch a 
significant component of the economy; including, residential and 
commercial development, roads, renewable energy and other projects. A 
reduction or constriction on investment has a direct impact in limiting 
job growth. With an unemployment rate of 8.1 percent, we must ensure 
that government is not restricting job growth.
Will the U.S. remain a low risk investment destination?
    According to the World Economic Forum's Global Competitiveness 
Report 2011-12, the U.S., which long held the top global position as an 
attractive investment destination, has continued its three year decline 
and now holds fifth place. Two of the factors cited as reasons for this 
decline were a reduction in the transparency of government policymaking 
and the increase in burdensome regulation.
    Some of the risks and uncertainties evaluated as part of an 
investment decision process include risks regarding the business 
opportunity, commodity prices, and cost management risks. These are 
just a few of the considerations. Components of risk analysis also 
include legal, regulatory and government related risks. Historically, 
the U.S. has had low government or sovereign risk because of the strong 
rule of law and consistent regulatory systems. This is in contrast to 
many countries around the world in which the regulatory processes and 
contract terms are subject to change when the government changes or 
when one government or bureaucrat changes its mind. The United States 
is still an attractive market for investment, but to the extent that 
government increases risk, the United States becomes less attractive 
than other potential investment markets.
    It is not just the regulatory risk but the accumulation of risks 
for a given project, including other issues such as tax policy, which 
can increase the perception of sovereign risk. When a U.S. government 
agency takes unprecedented action to revoke a lawful permit issued by 
another government agency, this action sends a message to all 
businesses that government approvals may not be honored.
    Businesses of all sizes are not asking for no regulation, they are 
asking for transparent and enduring regulations upon which they can 
make decisions and investments against a backdrop of certainty. Simply 
put, a process that makes sense. A process that has clear time frames. 
A process where once a decision is made a business and its investors 
can trust the decision will be honored. Without such confidence, 
capital will go elsewhere and that undermines not only our 
competitiveness but the ability to get Americans back to work and the 
economy on its feet. This is not a one-off problem but a long term 
challenge to our economic system that we must face head on.
Spruce Mine Case--United States District Court
    Fortunately the legal system has provided review and emphatically 
stopped EPA's unprecedented attempt to retroactively veto a legally 
issued section 404 permit. On March 23, 2012, Judge Amy Berman Jackson 
of the United States District Court for the District of Columbia issued 
a holding that EPA exceeded its authority by issuing its Final 
Determination on January 13, 2010, purporting to modify Mingo Logan's 
section 404 permit for the Spruce Mine.
    Judge Jackson specifically states: ``First and foremost, EPA's 
interpretation fails because it is illogical and impractical. . ..EPA 
resorts to magical thinking. . ..Not only is this non-revocation 
revocation logically complicated, but the possibility that it could 
happen would leave permittees in the untenable position of being unable 
to rely upon the sole statutory touchstone for measuring Clean Water 
Act compliance: the permit.''
    Judge Jackson also states: ``It is further unreasonable to sow a 
lack of certainty into a system that was expressly intended to provide 
finality. . .the concerns the amici raise supply additional grounds for 
finding EPA's interpretation to be unreasonable.''
    Judge Jackson also makes specific reference to the importance of 
the broad implications of the EPA action. This reference acknowledges 
the concerns and impacts presented by the broad based coalition of 
business groups presented in our amicus brief.
    The Administration went so far to avoid having these broader 
implications considered that they petitioned the court to preclude this 
information from consideration by objecting to the filing of the brief. 
Judge Jackson rightfully denied EPA's attempt to squelch the voice of 
the broader business community.
    Judge Jackson's opinion is unlikely to be the final word on this 
issue. The EPA has already notified the court that it intends to appeal 
the decision. It is troubling that the EPA intends to devote even more 
resources further defending an indefensible policy that is so 
transparently bad for the economy and so inconsistent with the 
principles of rule of law and regulatory consistency. And defending 
that policy after such a strong rebuke from Judge Jackson.
Summary
    Again, I would like to highlight that this issue is not about 
whether one is for or against mountain top mining. This is about an 
Agency abusing its authority. This action has sent signals to the 
broadest set of industries that build the things in this country that 
keep our economy moving. The issue is regulatory certainty--ensuring 
that the United States maintains a clear, transparent, and predictable 
regulatory system for a permitting process that is essential for almost 
every significant project and a large part of the economy. This is a 
system that Congress envisioned would provide finality to the 
regulatory process so business can move forward to make investments and 
grow the economy.
    In conclusion, I cannot over estimate the potential impact if EPA's 
unlawful action remains. As stated earlier, the Corps estimates that 
approximately $220 billion in annual investment is contingent on 
section 404 permits. The Brattle Group in their economic analysis 
estimates that every billion dollars of construction spending generates 
16,000 to 18,000 jobs. The process that resulted in the permit of the 
Spruce Mine adhered to the law even if it took eight long years. If 
that lawful process can be upended, the reverberations through the 
economy will be real: restricting, postponing or eliminating investment 
and jobs. Making infrastructure projects riskier in the U.S. makes them 
less likely to happen and more costly to the consumer and taxpayer. 
That is not the foundation for a competitive 21st century economy.
    Business can and should adhere to laws and regulations governing 
its industry. Business needs to know the rules of the road and 
regulators need to provide a clear, transparent, timely, and fair 
regulatory process to follow. America's private sector needs the type 
of clarity to make investment decisions that EPA's retroactive veto of 
the Spruce Mine just undercut.
    Effective and consistent environmentally regulatory management is 
good for business and good for the environment. In the case of section 
404 permits, Congress provided clear direction to EPA. EPA must follow 
that direction and Congress and our judicial system must ensure they 
do.
    [NOTE: The attachment has been retained in the Committee's official 
files.]
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony, Ms. Harbert. Mr. 
Eisenberg, you may begin.

    STATEMENT OF ROSS EISENBERG, VICE PRESIDENT, ENERGY AND 
    RESOURCES POLICY, NATIONAL ASSOCIATION OF MANUFACTURERS

    Mr. Eisenberg. Good morning, Chairman Lamborn, Ranking 
Member Holt, and members of the Subcommittee.
    My name is Ross Eisenberg. I am Vice President of Energy 
and Resources Policy at the National Association of 
Manufacturers.
    I am very pleased to come before the Subcommittee today to 
discuss Mingo Logan Coal Company's Spruce Mine, and a Section 
404 permit, and what the retroactive veto of that permit did 
and the impact that had on manufacturers.
    In order to drive our nation's economic recovery, 
manufacturers really need predictability from the regulatory 
process. They must understand the rules of the road so they can 
make responsible, informed investment decisions.
    This lack of predictability is precisely the problem with 
the Spruce Mine case that we are here discussing today, and it 
is the main reason that the NAM and other organizations found 
it so necessary to enter this litigation against EPA and in 
support of Mingo Logan.
    The Spruce Mine veto was at its core a $250 million 
decision by EPA that created a $220 billion problem. Let's talk 
first about the $250 million.
    Arch Coal, the parent of Mingo Logan, planned to commit 
more than $250 million and create at least 250 new well paying 
jobs in Logan County, West Virginia.
    Obviously, this project matters there, and you have heard 
that today from the State Senator.
    About that $220 billion problem, as Ms. Harbert noted 
before me, the Corps estimates that it issues roughly 60,000 
discharge permits annually under Section 404, and more than 
$220 billion of investment annually conditioned on the issuance 
of these permits.
    This includes pipelines, transmission lines, construction, 
renewable energy, transportation infrastructure, agriculture, 
and many other sectors.
    For as long as the Clean Water Act has been in existence, 
the exclusive framework under which Section 404 permits might 
be modified has been the Army Corps' regulations.
    EPA's retroactive veto of the Spruce Mine permit introduced 
for each of these sectors a completely new and undefined threat 
to their permits.
    EPA's decision would have made it significantly more 
difficult for project developers to rely on essential 404 
permits when making investment, hiring or development 
decisions. Project developers would now have to account for the 
possibility of having the rug pulled out from under them after 
work on the project had been initiated.
    EPA's retroactive veto brought with it significant 
investment uncertainty that would inevitably translate into 
higher risk of borrowing, less investment, lost jobs, and 
slower growth throughout the U.S. economy.
    The precedent set by the Spruce Mine case is a serious 
threat to manufacturers in its own right. It is only a small 
part of a broader new set of water policies being pursued by 
the EPA that have manufacturers concerned.
    EPA appears to be testing the outer boundaries of its 
authority under the Clean Water Act. For instance, EPA right 
now is on the verge of issuing final guidance that drastically 
expands its jurisdiction under the Clean Water Act.
    Manufacturers are concerned that the guidance is 
legislative in nature and could significantly impact regulatory 
certainty by suggesting a wide range of traditionally 
intrastate waters to Clean Water Act jurisdiction and 
permitting.
    Moreover, by doing this dramatic policy shift through 
guidance rather than by regulations or the regulatory process, 
manufacturers feel that EPA is circumventing a lot of the built 
in regulatory safeguards in the regulatory process to protect 
the regulatory community, such as economic impact statements, 
job loss analyses, and considerations of impacts to small 
businesses.
    In addition, EPA is also on the verge of taking another 404 
veto action on the heels of its loss in this, the Spruce Mine 
case.
    This time, EPA actually appears likely to issue a 
preemptive veto for the Pebble Project, a proposed copper and 
gold mine in Alaska.
    If that project were to move forward, it could attract 
several billion dollars of investment and countless 
manufacturing jobs. EPA has taken the position that it can say 
no to this project even before the application for a permit has 
been filed.
    I would like to conclude by saying that it is very clear 
from this case and other water cases that EPA is involved in 
that it is uncomfortable with the scope of its authority under 
the Clean Water Act. It clearly wants more.
    By trying to get more through questionable regulatory 
decisions such as this one, EPA is causing a great deal of 
uncertainty that goes well beyond the specific project or 
projects that it seeks to regulate.
    It is also ensuring frankly that most of its decisions will 
be subject to litigation and like Spruce Mine, potentially 
overturned.
    EPA's goal should not be to issue the most aggressive 
possible water regulations that might theoretically survive 
judicial scrutiny, it should be to carry out the intent of 
Congress to restore and maintain the chemical, physical and 
biological integrity of the nation's waters, as set forth in 
the plain language of the Clean Water Act.
    If EPA wants or needs additional regulatory authority, 
well, is that not why we have Congress?
    EPA should be here asking Congress for this authority and 
Congress should debate the merits of such a decision.
    Manufacturers need predictability from the regulatory 
process, a proper system of checks and balances will ensure 
that the Spruce Mine veto and the uncertainty it caused will 
not happen again.
    Thank you for allowing me to testify here today. I look 
forward to any questions you might have.
    [The prepared statement of Mr. Eisenberg follows:]

             Statement of Ross Eisenberg, Vice President, 
   Energy and Resources Policy, National Association of Manufacturers

    Good morning, Chairman Lamborn, Ranking Member Holt, and members of 
the Subcommittee on Energy and Mineral Resources. My name is Ross 
Eisenberg, and I am vice president of energy and resources policy at 
the National Association of Manufacturers (NAM). I am pleased to come 
before the Subcommittee today to discuss Mingo Logan Coal Company's 
Spruce Mine No. 1, its Clean Water Act (CWA) Section 404 permit, and 
the impact the Environmental Protection Agency's (EPA) retroactive veto 
of that permit had on manufacturers. On behalf of the NAM and its 
members, I thank you for the opportunity to testify here today.
    The NAM is the nation's largest industrial trade association, 
representing small and large manufacturers in every industrial sector 
and in all 50 states. Its membership includes both large multinational 
corporations and small and medium-sized manufacturers. Manufacturers 
are major energy consumers, using one-third of the energy consumed in 
the United States. Manufacturers, therefore, strongly support an ``all-
of-the-above'' energy strategy that embraces all forms of domestic 
energy production, including oil, gas, nuclear, energy efficiency, 
alternative fuels, renewable energy sources and the natural resource at 
the center of the Spruce Mine controversy: coal.
    Coal is one of the nation's most abundant energy resources and a 
vital part of our efforts to meet our energy and transportation needs. 
Coal generates a significant percentage of our nation's electricity, 
and maintaining coal in a diverse national energy portfolio is in the 
national economic interest. The NAM believes environmental policies 
should be reviewed and applied in a manner that balances reasonable 
environmental objectives with the need to have a diverse fuel 
portfolio, including continued cost-effective coal use.
    It is no secret that the past few years have brought with them a 
flurry of new regulations on the coal industry. These regulations 
impose new controls on virtually every part of the coal-fired 
electricity supply chain, from mining to use to waste disposal. They 
each bring with them a cost, which mining companies, electric utilities 
and end users (and employees of each) must absorb. While the costs of 
many of these new regulations have been substantial, equally difficult 
has been the uncertainty that each potential new regulation brings, 
along with concerns over what might be next and whether proposed or 
existing requirements will change.
    In order to drive our nation's economic recovery, manufacturers 
need predictability from the regulatory process. They must understand 
the ``rules of the road'' so they can make responsible, informed 
investment decisions. Lack of predictability is precisely the problem 
with the Spruce Mine case and is the main reason the NAM and so many 
other organizations found it necessary to enter the litigation against 
the EPA and in support of Mingo Logan.
I. History of the Spruce Mine Section 404 Permit
    The Spruce Mine controversy dates back to 1997, when Mingo Logan 
applied with the West Virginia Department of the Environment (WVDEP) 
for a permit under the Surface Mining Control and Reclamation Act. 
WVDEP issued the permit on November 4, 1998. Mingo Logan also applied 
to WVDEP in late 1997 for a National Pollutant Discharge Elimination 
System (NPDES) permit under Section 402 of the CWA. The EPA opposed 
issuance of the NPDES permit unless certain conditions were met, one of 
which being that Mingo Logan secure a dredge-and-fill permit from the 
Army Corps of Engineers (Corps) under Section 404 of the CWA.
    Mingo Logan first applied for its Section 404 permit in 1998, as 
part of Nationwide Permit 21. In 1999, the Corps found that Mingo Logan 
had satisfied Section 404 as part of its Nationwide Permit application. 
However, before the Corps could issue its final approval, a federal 
court enjoined the approval as part of a series of legal challenges to 
Nationwide Permit 21. On June 18, 1999, Mingo Logan decided to apply 
instead for an individual permit under Section 404(a). The Corps 
commenced a full environmental impact statement (EIS) under the 
National Environmental Policy Act (NEPA). WVDEP issued a Section 401 
water quality certification for the Spruce Mine Section 404 permit on 
December 19, 2005. The Corps issued a 1,600-page Draft EIS for the 
project on March 31, 2006. Mingo Logan, WVDEP and the Corps conducted 
extensive environmental analysis throughout the permitting process, 
including volumes of documents analyzing the impact on macro-
invertebrates, fish, birds, salamanders and other wildlife.
    The Corps issued Mingo Logan a final Section 404 permit for the 
Spruce Mine on January 22, 2007. The permit authorizes Mingo Logan to 
discharge dredged or fill material into 8.11 acres of ephemeral and 
intermittent streams within the mine site in exchange for significant 
on-site mitigation measures.
    On the assumption the project would move forward, Arch Coal, parent 
of Mingo Logan, planned to commit more than $250 million and create at 
least 250 new, well-paying jobs in Logan County, West Virginia. These 
are 250 badly needed jobs in Logan County, where only 39.5 percent of 
the county's 36,743 residents are employed and 56.6 percent are what 
the U.S. Census considers ``not in the labor force.'' Median household 
income in Logan County is $35,465, and 21.8 percent of the people 
residing there live below the poverty level. About 15 percent of Logan 
County's workforce is employed in agriculture, forestry, fishing, 
hunting and mining industries. Add the 250 employees from the Spruce 
Mine project, and that number grows to 17 percent.
    Prior to issuance of the Section 404 permit, the EPA took no steps 
under CWA Section 404(c) to prohibit the specification of disposal 
sites in the proposed permit. The EPA wrote to the Corps: ``We have no 
intention of taking our Spruce Mine concerns any further from a Section 
404 standpoint.'' The mitigation plan required by the permit included 
comments by the EPA. The permit itself mentioned nothing about the 
EPA's ability to suspend, modify or revoke it.
    As has become common practice for any large project with a federal 
nexus, several groups challenged the Corps' issuance of a final permit 
in 2007. It was only after this litigation had been resolved by the 
U.S. Court of Appeals for the Fourth Circuit--in Mingo Logan's favor, 
no less--the EPA first asked the Corps to revoke, suspend or modify the 
Section 404 permit, claiming concerns about ``the project's potential 
to degrade downstream water quality.'' The Corps asked WVDEP for 
comment, and WVDEP replied that it saw no reason to take such action as 
the project was in compliance. On September 30, 2009, the Corps 
announced that it would not revoke, suspend or modify Spruce Mine's 
Section 404 permit.
    It was at this point that the EPA did something highly unusual--
something, in fact, it had never done before in the history of the CWA. 
The EPA retroactively vetoed Spruce Mine's Section 404 permit. The EPA 
announced its notice of intent to veto the permit on March 26, 2010; on 
January 13, 2011, the EPA issued the final veto. Because the Corps is 
the only agency with statutory authority to revoke, suspend or modify a 
Section 404 permit, the EPA instead withdrew the specification of 
certain areas defined by the Corps as disposal sites under Section 
404(c), something the EPA viewed as available to it by language 
contained in the statute. But the EPA admitted that by withdrawing the 
specification, it was in effect vetoing the Section 404 permit.
    Mingo Logan challenged the EPA's retroactive veto in the U.S. 
District Court for the District of Columbia. The NAM and several other 
industry associations filed amicus curiae briefs in support of Mingo 
Logan. On March 23, 2012, Judge Amy Berman Jackson held the EPA 
exceeded its authority under Section 404(c) and vacated the EPA's 
retroactive veto decision. The EPA recently announced its intent to 
appeal the decision to the U.S. Court of Appeals for the District of 
Columbia Circuit.
II. Impact of the EPA's Retroactive Veto on Manufacturing
    The NAM filed an amicus curiae brief in support of Mingo Logan's 
legal challenge to the EPA's Section 404 permit veto. The NAM made the 
decision to enter the case because the EPA's retroactive veto sent 
shockwaves through a wide range of manufacturing sectors, many of whom 
are members of the NAM.
    The Corps estimates it issues roughly 60,000 discharge permits 
annually under Section 404, and that more than $220 billion of 
investment annually is conditioned on the issuance of these discharge 
permits. Projects permitted under Section 404 include pipeline and 
electric transmission and distribution; housing and commercial 
development; renewable energy projects like wind, solar and biomass; 
transportation infrastructure including roads and rail; agriculture; 
and many others.
    For as long as the CWA has been in existence, the exclusive 
framework under which Section 404 permits might be altered or amended 
has been the Corps' regulations governing suspension, modification and 
revocation (33 C.F.R. Sec. 325.7). The EPA's retroactive veto of the 
Spruce Mine permit introduced for each of those sectors a completely 
new and undefined threat to their permits. As Judge Berman Jackson 
wrote:
        EPA claims that it is not revoking a permit--something it does 
        not have the authority to do--because it is only withdrawing a 
        specification. Yet EPA simultaneously insists that its 
        withdrawal of the specification effectively nullifies the 
        permit. To explain how this would be accomplished in the 
        absence of any statutory provision or even any regulation that 
        details the effect that EPA's belated action would have on an 
        existing permit, EPA resorts to magical thinking. It posits a 
        scenario involving the automatic self-destruction of a written 
        permit issued by an entirely separate federal agency after 
        years of study and consideration. Poof! Not only is this 
        nonrevocation revocation logistically complicated, but the 
        possibility that it could happen would leave permittees in the 
        untenable position of being unable to rely upon the sole 
        statutory touchstone for measuring their Clean Water Act 
        compliance: the permit.
Judge Berman Jackson found this argument particularly persuasive when 
made by the NAM and other amici. She continued:
        It is further unreasonable to sow a lack of certainty into a 
        system that was expressly intended to provide finality. Indeed, 
        this concern prompted a number of amici to take up their pens 
        and submit briefs to the Court. They argued that eliminating 
        finality from the permitting process would have a significant 
        economic impact on the construction industry, the mining 
        industry, and other ``aggregate operators,'' because lenders 
        and investors would be less willing to extend credit and 
        capital if every construction project involving waterways could 
        be subject to an open-ended risk of cancellation. See Brief of 
        Amicus Curiae The National Stone, Sand and Gravel Association 
        in Supp. of Pl. Mingo Logan Coal Co., Inc. at 5-13; Brief of 
        Amici Curiae the Chamber of Commerce of the United States et 
        al. in Support of Pl. at 7-14. EPA brushed these objections 
        away by characterizing them as hyperbole, Tr. at 66, but even 
        if the gloomy prophesies are somewhat overstated, the concerns 
        the amici raise supply additional grounds for a finding EPA's 
        interpretation to be unreasonable.
For the vast majority of these industries, there is no way to 
reconfigure a project to avoid the need for a Section 404 permit. The 
EPA's retroactive veto brought with it significant investment 
uncertainty with respect to currently held permits and permits to be 
acquired in the future. Inevitably, that uncertainty would translate 
into higher risks in borrowing, less investment, lost jobs and slower 
growth throughout the U.S. economy.
    The NAM documented the effect of this uncertainty on investment in 
an exhibit to its amicus curiae brief, a report by Dr. David Sunding, 
Professor in the Department of Agricultural and Resource Economics at 
the University of California, Berkeley. Dr. Sunding concluded that the 
EPA's after-the-fact veto of the Spruce Mine permit makes it more 
difficult for project developers to rely on essential 404 permits when 
making investment, hiring or development decisions, and project 
developers must now account for the possibility of losing essential 
discharge authorization after work on the project has been initiated. 
Dr. Sunding wrote:
        The EPA's precedential decision to revoke a valid discharge 
        authorization alters the incentives to invest in projects 
        requiring a permit under Section 404. Project development 
        usually requires significant capital expenditure over a 
        sustained period of time, after which the project generates 
        some return. Actions like the EPA's that increase uncertainty, 
        raise the threshold for any private or public entity to 
        undertake the required early-stage investment. For this reason, 
        the EPA's action has a chilling effect on investment in 
        activities requiring a 404 authorization across a broad range 
        of markets. Increasing the level of uncertainty can also reduce 
        investment by making it more difficult to obtain project 
        financing. Land development activities, infrastructure projects 
        and the like often require a significant level of capital 
        formation. Reducing the reliability of the Section 404 permit 
        will make it harder for project proponents to find financing at 
        attractive rates as lenders and bondholders will require higher 
        interest rates to compensate for increased risk, and some 
        credit rationing may also result.
    Dr. Sunding explained that economically rational investors will not 
merely make investment decisions based on a simple benefit-cost ratio 
but will instead calculate the ``hurdle rate,'' the expected rate of 
return necessary for the project's benefits to exceed its actual costs. 
The greater the risk, the higher the hurdle rate; the higher the hurdle 
rate, the more likely the project will be delayed or deterred. Prior to 
the Spruce Mine veto, Section 404 applicants did not need to include in 
their hurdle rate calculations the possibility the EPA will revoke 
their permit. By retroactively vetoing Spruce Mine, the EPA introduced 
a new risk that causes a distortion in the benefit-cost ratio for new 
investment projects.
    Because the court vacated the EPA's Spruce Mine veto, the fallout 
from its decision has been avoided--temporarily. The EPA recently 
decided to appeal Judge Berman Jackson's decision to vacate its 
retroactive veto. In doing so, the EPA has decided that continuing the 
battle on Spruce Mine is worth causing regulatory uncertainty for the 
$220 billion in annual investment that relies on Section 404 permits.
III. Spruce Mine as an Indicator of Future EPA Water Policy
    The precedent set by the Spruce Mine case is a serious threat to 
manufacturers on its own. However, it is only a small part of a broad 
new set of water policies being pursued by the EPA that have 
manufacturers concerned. The EPA appears to be testing the boundaries 
of its regulatory authority under the CWA.
A. Waters of the United States
    On May 2, 2011, the EPA and the Corps issued ``Guidance Regarding 
Identification of Waters Protected by the Clean Water Act.'' The 39-
page guidance was prepared for agency field staff to use in identifying 
``waters of the United States'' subject to CWA regulation. The EPA and 
the Corps routinely lament that recent Supreme Court jurisprudence has 
made it difficult for the agencies to determine what rivers and streams 
are subject to their jurisdiction. The 110th and 111th Congresses 
debated, but did not pass, legislation that would delete the term 
``navigable'' from the phrase ``navigable waters'' as that phrase is 
used to define CWA jurisdiction.
    When the 112th Congress began, the EPA chose to forego legislation 
and instead issued the aforementioned ``waters of the United States'' 
guidance. The EPA's guidance, among other things:
          Expands the scope of the term ``traditional navigable 
        waters'' to now cover any body of water that can support 
        waterborne recreational use, even if such use only occurred one 
        time for the sole purpose of demonstrating that the water could 
        be used for recreation;
          Regulates all roadside and agricultural ditches that 
        have a channel, have an ordinary high watermark and can meet 
        one of five characteristics (two of the five characteristics 
        include a ditch that has ``standing water,'' or a ditch that 
        drains a ``natural water body'');
          Applies a broadened view of Justice Kennedy's 
        significant nexus standard not only to wetlands (as Kennedy 
        did) but also to tributaries and isolated waters;
          Finds that a hydrological connection is not necessary 
        to establish a significant nexus;
          Allows the agencies to ``aggregate'' the 
        contributions of all similar waters (small streams, adjacent 
        wetlands, ditches or certain otherwise isolated waters) within 
        an entire watershed, thus making it far easier to establish a 
        significant nexus between these small intrastate waters and 
        traditional navigable waters;
          Gives new and expanded regulatory status to 
        ``interstate waters,'' equating them with traditional navigable 
        waters, thus making it easier to find jurisdiction for adjacent 
        wetlands and waters judged by the significant nexus test; and,
          Makes all waters not in any of the other categories 
        (also known as the ``other waters'') subject to the significant 
        nexus standard. According to the agencies' economic analysis, 
        these other waters were previously assumed ``non-
        jurisdictional.''
    The EPA has sent final ``waters of the United States'' guidance to 
the White House Office of Management and Budget for review and 
approval. Manufacturers are concerned that the guidance is legislative 
in nature and could reduce regulatory certainty by subjecting a wide 
range of traditionally intrastate waters to CWA jurisdiction and 
permitting. Moreover, by issuing this dramatic policy shift as guidance 
instead of a regulation, the EPA and the Corps are circumventing many 
safeguards built into the regulatory process to protect the regulated 
community, such as economic impact statements, job loss analyses and 
considerations of impacts to small businesses.
B. Preemptive 404 Veto Threats
    The EPA argued in the Spruce Mine case that the phrase ``whenever'' 
in CWA Section 404(c) gives it the freedom to withdraw a specification 
at any given time. Unless the Spruce Mine case is reversed, the law now 
holds that ``whenever'' does not include an after-the-fact, retroactive 
veto. However, the EPA is in the midst of lining up its first 
preemptive veto under Section 404(c), based again on the Agency's 
controversial interpretation of the word ``whenever.'' This preemptive 
veto appears likely for the Pebble Project, a proposed copper and gold 
mine in southwestern Alaska. In that case, investors have spent nearly 
$500 million defining a copper deposit, engineering a possible mine and 
collecting scientific information to try to comply with all of the 
federal environmental laws so that the Pebble Project can begin the 
federal NEPA process. If the project were to move forward, it could 
attract several billions of dollars in investment and countless 
manufacturing jobs.
    However, the EPA appears poised to issue a preemptive 404(c) veto, 
taking the position that it can withdraw certain areas from being 
specified for dredge-and-fill permits even before a permit application 
has been filed. While the EPA has not yet taken this step, it is 
performing a watershed assessment of ecological risk for the area 
surrounding the Pebble Project and has not closed the door to a 
possible preemptive veto of CWA permits for the mine. Environmental 
groups have already begun calling for a similar assessment of mining 
activity in the Great Lakes region.
IV. Conclusion: The EPA and the Corps Should Look to Congress to Solve 
        Water Policy Challenges
    It is clear from the Spruce Mine case and other recent water 
actions that the EPA is uncomfortable with the scope of its authority 
under the CWA. However, by testing the boundaries of this authority 
through preemptive and retroactive permit decisions and jurisdictional 
guidance, the EPA is causing a great deal of uncertainty for 
manufacturers. It is changing the aforementioned ``hurdle rate'' 
substantially, distorting the cost-benefit ratio for new projects and 
creating additional risks to investment for the wide range of sectors 
subject to the CWA. It is also virtually ensuring every single one of 
its decisions will be subject to litigation (and, like Spruce Mine, 
potentially overturned).
    The EPA should not strive to issue the most aggressive possible 
water regulations that could survive judicial scrutiny. Rather, it 
should be to carry out the intent of Congress to restore and maintain 
the chemical, physical and biological integrity of the nation's waters, 
as set forth in plain language of the CWA. To the extent the EPA wants 
or needs additional regulatory authority, it should request that 
Congress enact legislation to provide this authority, and Congress 
should debate the merits of such a decision. Manufacturers need 
predictability from the regulatory process. A proper system of checks 
and balances will ensure the Spruce Mine veto and the uncertainty it 
caused will not happen again.
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony, Mr. Eisenberg.
    We will now hear from Ms. Gunnoe.

           STATEMENT OF MARIA GUNNOE, BOONE COUNTY, 
                    WEST VIRGINIA ORGANIZER

    Ms. Gunnoe. I am Maria Gunnoe. I am from Boone County, West 
Virginia, and I help to represent the Appalachian communities 
where coal mining impacts are killing people and de-populating 
our mountain culture.
    I thank each of you for allowing me the opportunity to 
speak to you again today.
    I appreciate your obligations and responsibilities in 
protecting and serving all U.S. citizens. My hope is that you 
listen and hear the pleas for our lives in Southern Appalachia 
where these atrocious mountaintop removal permits are 
permitted.
    The Spruce No. 1 permit is in the headwaters of Pigeon 
Roost Creek, the stream and the people seem unimportant to most 
people in this room, but to me and the people of Blair, this 
stream is a part of our home.
    When mountaintop removal is permitted near your home, you 
will soon be forced to leave what is the birth place of your 
family and your children's birth rights as heirs to your family 
land. You are forced by destruction to leave the American dream 
that our forefathers prepared and fought for.
    Why is it acceptable to de-populate the communities and 
culture, poison our water and air and leave us to die in a 
post-mining wasteland for temporary jobs and energy?
    You should ask yourselves are we knowingly and willingly 
flipping on our lights and lining our pockets at the expense of 
the lives, livelihood and health of the people in Appalachia.
    The answer to this in my opinion is yes, you are.
    The Spruce No. 1 permit is one of the first examples of the 
steps that the EPA has taken to stop irresponsible mining 
practices which were ignored during the Bush Administration.
    People from all over Appalachia have lobbied the EPA for 
these protections for the past 15 years. The coal industry was 
allowed to do as they pleased during the eight years of the 
Bush Administration.
    In 2009, the Obama Administration took steps trying to fix 
the problems that the Bush Administration created and then 
ignored.
    The coal industry has said that the EPA and the Obama 
Administration are trying to shut down coal. The coal industry 
is perpetuating a lie, that there is a war on coal, and that 
coal mining jobs are under attack.
    This is the same false crisis that is created by this 
industry each time they do not get what they want.
    According to recent reports by Ken Ward of the Charleston 
Gazette, coal mining jobs have actually increased by 7.4 
percent since 2009, when the Obama Administration took office. 
Ted Boettner with the West Virginia Center of Budget and Policy 
looked at mining jobs over the last two decades, annual West 
Virginia coal mining jobs were higher in 2011 than any other 
time in the last 17 years.
    Quoting the title of Daniel Weiss' article on 
Climateprogress.com, the ``War on Coal is a lie invented by the 
coal industry. It is a multimillion misinformation campaign 
funded by big coal polluters to distract Americans from the 
deadly effects of coal's pollution on public health.''
    There is a war in Appalachia, believe this. This war is not 
on coal. This war is on the people of Appalachia. Coal is not 
our king, God is. Coal is only the dictator of some.
    Expanding any mountaintop removal including the Spruce No. 
1 permit means the de-population of yet another mountain 
community and sickening of the people who live in this 
community.
    How will this affect our culture? We will die as a culture 
as we suffer with the inability to pass this mountain culture 
onto our children.
    Not even our historic mountain cemeteries are left intact 
and accessible.
    It is not as if this Committee, Congress, the coal 
industry, and the Obama Administration does not know what 
mountaintop removal is doing to people. They not only know 
about it, but they are supporting it and allowing it by not 
ending it.
    After visiting the Central Appalachian communities, the 
U.N. Women's Tribunal on Climate Change jurist recommendations 
for Rio+20 included that mountaintop removal should immediately 
be stopped with a moratorium on any mountaintop removal 
operations until a full investigation can be undertaken.
    Mountaintop removal cannot be silenced. The more people 
that are impacted, the more that we will continue to stand up 
to protect all that makes Appalachians free. We will not back 
down. We know we are doing the right thing in ending this evil 
that has come in to destroy our very existence.
    We Appalachians for many years have lobbied the EPA to 
enforce the laws that are intended to protect our lives.
    The coal industry in Appalachia is anti-life and the 
enforcement of laws is the only chance that we have to survive 
as a culture.
    My family first settled in this area during the forced 
removal of the Cherokee known as the ``Trail of Tears.''
    What the coal industry and our Government is doing to our 
native communities in Southern Appalachia feels much like the 
second silent forced removal of our people.
    [The prepared statement of Ms. Gunnoe follows:]

             Statement of Maria Gunnoe, Van, West Virginia

    I am Maria Gunnoe from Boone County WV and I (like 100's of others) 
help to represent the stories of the Appalachian Communities where coal 
mining impacts are killing the people and depopulating our mountain 
culture. Thank each of you for again allowing me the opportunity to 
speak to you. I appreciate your obligations and responsibilities in 
protecting and serving all US citizens. My hope is that you listen and 
hear these pleas for our lives from the Southern Mountains of 
Appalachia where these atrocious mountaintop removal permits are 
operating.
    The Spruce No. 1 permit is in the headwaters of Pigeon Roost creek. 
This stream and the people of Blair seem unimportant to most people in 
this room but to me and the people of Blair this stream is a part of 
our home. When mountaintop removal is permitted near your home, you 
will soon be forced to leave what is the birthplace of your family and 
your children's birthrights as heirs to your family's land. You are 
forced (by destruction) to leave the American dream that our 
forefathers prepared and fought for. Why is it acceptable to depopulate 
our communities and culture, poison our water and air and leave us to 
die in a post mining waste land for temporary jobs and energy? You 
should ask yourselves: are we knowingly and willingly flipping on our 
lights and lining our pockets at the expense of the lives, livelihoods 
and the health of the people in Appalachia? The answer to this in my 
opinion is YES you are!
    The Spruce No. 1 permit is one of the first examples of steps that 
the EPA has taken to STOP irresponsible mining practices which were 
ignored during the Bush Administration. People from all over Appalachia 
have lobbied the EPA for these protections for the past 15 years. 
During the Bush Administration the oversight of mountaintop removal 
permits was non-existent. The Bush Administration sent word to W.Va 
state Department of Environmental Protection Secretary Stephanie 
Timmermyer to get these permits pushed through as quickly as possible, 
In George Bush's words ``We need this coal, our homeland security 
depends on it.'' The coal industry was allowed to do as they please 
during the 8 years of the Bush Administration. Then in 2009, in steps 
the Obama administration's EPA trying to fix the problems that the Bush 
administration created and then ignored. One of the biggest problems 
was the lack of enforcement of current regulations on mountaintop 
removal operation in Appalachia. The coal industry was allowed to run 
out of control in our mountains and depopulate many of our local 
communities during this rush to get the coal. In response to this 
insurgence by the coal industry, impacted community members organized 
to stop the attack of this industry on us in our homes. The EPA heard 
from us often and we appreciate that they are listening to the science. 
We have organized meetings with the impacted community members so that 
the representatives within the government agencies can see and hear the 
people's pleas. Still, most of these decision makers walked away 
thinking that there is some sort of balance to be found in blowing up 
the mountains over our homes and shoving them into our streams. In 
reality the fact is mountaintop removal is killing people. These facts 
are out and available to anyone who wants to see them. Please 
understand that the majority of people in Appalachia are against 
mountaintop removal coal mining. The only ones who support it are the 
ones who are making money from it. These are the ones that should be 
made to live in our communities and suffer the consequences of their 
actions. If you support mountaintop removal and what it is doing to us, 
you are supporting the murder of the people of the Appalachian culture 
that depends on these mountains and their waters for our very lives.
    The coal industry has said that the EPA and the Obama 
administration are ``trying to shut down coal.'' The coal industry is 
perpetuating a lie that there is a ``war on coal'' and that coal mining 
jobs are under attack. This is the same false crisis that is created by 
this industry every time they don't get what they want. According to 
recent reports by Ken Ward of the Charleston Gazette coal mining jobs 
have increased by 7.4 percent since 2009 when the Obama Administration 
took office. Ted Boettner with the WV Center for Budget and Policy 
looked at mining jobs over the last two decades; annual West Virginia 
coal mining employment was higher in 2011 than at any time over the 
last 17 years, according to Workforce West Virginia. Quoting the title 
and text of Daniel Weis's article on climateprogress.com ``The War on 
Coal is a Lie invented by the coal industry. It is a multimillion 
dollar misinformation campaign funded by big coal polluters to distract 
Americans from the deadly effects of coals pollution on public 
health.'' There is a war in Appalachia, do believe this. This war is 
not on coal, coal jobs, or the coal industry. This war is on these 
mountains, our water and the people who depend on it all. Coal is not 
our King, God is! Coal is only the dictator of some.
    Mountaintop removal is not only killing the people who work these 
jobs but it is also killing the people who live in the surrounding 
communities. Jobs in any region are important; however ALL of those 
jobs need to be safe for the workers and for the communities that they 
operate in. Mountaintop removal is NOT safe for anyone. Science has 
repeatedly proven this. The facts that mountaintop removal is killing 
us are in the 19 health studies that have been compiled. This 
committee, Congress, the coal industry and the Obama administration 
continue to ignore these studies and continue to allow the blowing up 
of our mountains and poisoning of our waters and air to get to the coal 
that currently powers about 44% of America's electricity.
    Expanding any mtr mining including the Spruce No. 1 permit means 
the depopulation of yet another mountain community and the sickening of 
the people who live in these communities. Living this depopulation has 
made me more aware of the large-scale impact of this ousting and 
killing of people on the culture that I love. We will die as a culture 
as we suffer with the inability to pass this mountain culture on to our 
children. Not even our historic mountain cemeteries are left intact and 
accessible. Our people are being mortally impacted by the fallout from 
mountaintop removal coal mining in our water and air in our native 
homes. Do we really need to prove that blowing up mountains over our 
homes and pushing them into our streams is NOT good for us? It is not 
as if this Committee, Congress and the coal industry doesn't know what 
mountaintop removal does to people. They not only know about it but 
they are supporting and allowing it and by not ending it. After 
visiting the central Appalachian communities The UN Women's Tribunal on 
climate change jurist recommendation will include that mountain removal 
should be immediately stopped--an immediate moratorium on any removal 
operations until a full investigation including health related disease 
incidence rates can be undertaken.
    I had hoped that the last time that I came to speak to this 
committee that someone would have heard our pleas for our lives in 
Appalachia but our pleas fell on the deaf ears of coal supporters. We 
had to request that this committee post our comments on their website 
for others to view days after the industry's comments were posted. We 
were timed to the second on our comments, while pro coal supporters 
were allowed to go minutes over their allotted time to speak. 
Mountaintop removal cannot be silenced. The more people that are 
impacted, the more that will continue to stand up to protect all that 
makes us Appalachians FREE! We will not back down. We know we are doing 
the right thing in ending this evil that has came in to destroy our 
very existence. We Appalachians have for many years lobbied the EPA to 
enforce the laws that are intended to protect our lives in our homes. 
The coal industry in Appalachia is anti-life and the FIRM enforcement 
of the laws are the only chance that we have of surviving as a culture 
after this industry is gone.
    Parts of my family first settled this area during the forced 
removal of the Cherokee known as the ``Trail of Tears.'' What the coal 
industry and our government is doing to our native communities in 
Southern Appalachia feels much like the second silent forced removal of 
our people.
    A few notes from community members:
      Selenium discharges downstream from Spruce No 1 are 
already much higher than EPA standards according to recent water 
testing. The Spruce 1 permit will allow more selenium to be released 
into this stream. This is the making for life threatening levels of 
selenium.
      The community of Blair has NO municipal drinking water 
available to them. The only water in these communities is the well 
water which in some cases has already been polluted. The community of 
Blair needs water infrastructure to supply their homes with healthy 
water before any area permits are even discussed.
      From what we see on the ground the coal companies have 
already moved forward in preparing the permit area as if they had an 
approved permit.
      The Spruce permit is in the Coal River watershed. 
Mountaintop removal is why American Rivers placed the Coal River on our 
America's Most Endangered Rivers list this year--because the river is 
at a decision point--not because it's the most polluted. We can save 
these precious headwater streams that also serve as drinking water to 
our communities but we must act now before it is too late.
    [NOTE: Attachments have been retained in the Committee's official 
files.]
                                 ______
                                 
    Mr. Lamborn. Thank you. Thank all of you for your testimony 
here this morning. Members of the Committee may have additional 
questions for the record, and I would ask that you respond to 
these in writing.
    We will now begin questioning. Members are limited to five 
minutes in their questions but we may have additional rounds.
    I now recognize myself for five minutes for the first set 
of questions.
    Senator Kirkendoll, in your testimony, you discussed the 
financial benefits to Boone County and West Virginia more 
broadly.
    Did I hear you right that there is a $29 million direct 
payroll and a total $100 million direct and indirect payroll 
that is being lost by the non-operation of the Spruce Coal 
Mine?
    Mr. Kirkendoll. Mr. Chairman, those are numbers I reflected 
back in 1998, when Dal-Tex shut down. Loss of revenue that--we 
could not make it up. We never made it up. We made cuts.
    The $29 million was direct payroll to 400 employees that 
were at Dal-Tex when the permit was no longer there for them to 
continue to operate and work.
    You can systematically do the math. The people that bring 
the supplies to the mines, for example, tires for the trucks, 
the bolts, this and that, whatever they do, all the materials, 
you can estimate it. We have done estimated numbers that it was 
between $90 million and $100 million of lost revenue for what 
they call ``support vendors.''
    Mr. Lamborn. Senator, how many jobs do you think that 
represents? You said 400 direct. Direct and indirect, how many 
jobs are we talking about?
    Mr. Kirkendoll. We have looked at different statistics. 
Some people say a qualified coal mining job, if a person works 
his normal hours, is about $65,000 to $70,000 a year. It is 
between five and seven additional jobs in the surrounding area 
of activity. Two hundred qualified coal mining jobs could be 
anywhere between 1,000 to 1,200 jobs of activity with that kind 
of revenue there to be split among different type needs and 
services; yes.
    Mr. Lamborn. With the money that would come to the county 
or the state, is the county or the state able to make water 
quality and stream quality improvements?
    Mr. Kirkendoll. Here is the thing. In Logan, I was 
Commissioner for 30 years starting in 1980, and when I got 
there, I think we had less than 20 percent of the people who 
had potable water. It was a coal mining area. Most of the water 
lines back then were two inch lines.
    We formed a PSD, very aggressive in request for funding. 
When I left the County Commission in 2010, we were over 90 
percent of the people in our county, Logan, that had potable 
water.
    We do have a policy and a program now about stream 
restoration. You simply cannot get in a stream any more from 
Federal regulations. I do not care what you have in the middle 
of that stream.
    The Guyandotte River just recently had flooding which--the 
water will flow from upper counties down there. You will have 
trees and debris lodged in on the connectors of your bridges, 
from one side of the waterway to the other. You get in that 
stream and muddy the water to kill a crawdad, you are going to 
jail.
    What we had to do as a Commission is make application to 
what they call the Soil Conservation Agency in Charleston, and 
they would come in, send engineers, study how to bring the 
stream back to what they call ``bedrock,'' bring the water back 
to the center of the stream and let it restore itself 
naturally.
    We were OK with that. We worked with it. There are avenues 
to restore streams, but some of the interpretation of 
``streams'' is what the problem is now. A dry ditch is not a 
stream. A stream is something that flows 70 percent of the year 
due to annual rainfall. That is a stream.
    Mr. Lamborn. All right. Thank you.
    Ms. Harbert, do people working in regulatory agencies have 
a clear enough understanding in your opinion of the problems 
caused in our economy by increasing uncertainty?
    Ms. Harbert. In our opinion, absolutely not. The 
reverberations of decisions like this are not just in one 
county or one state. They are across the country. They are 
affecting industries unrelated to mining, unrelated to energy. 
It is building. It is transportation. It is roads. It is 
bridges.
    These decisions that are taken should not be taken so 
lightly. We have to understand that these are billions of 
dollars that are at stake, boards of directors have to make 
decisions and hire people, and they cannot do it if they think 
some time down the road somebody might change their mind and 
revoke their permit.
    Mr. Lamborn. Will this have the result of driving American 
jobs overseas, with this kind of uncertainty?
    Ms. Harbert. It most definitely has a chilling effect on 
investment. We have to want investment in the United States. We 
have to attract it. We have to be inviting, rather than say to 
capital markets and capital investors take your money elsewhere 
because you are going to have that type of certainty somewhere 
else.
    Decisions like these look more like Hugo Chavez than George 
Washington. What do we want to be as a country? Do we want to 
be some place where we want investment, where it is comfortable 
and happy here, or do we actually want to scare it to other 
markets?
    Mr. Lamborn. Thank you. I now recognize the Ranking Member.
    Mr. Holt. Thank you. Let me begin with a comment. This 
little side show earlier just confirms in my mind that indeed, 
the officials at the Environmental Protection Agency had 
important and better things to do with their time this morning 
than to engage in political theater.
    Mr. Chairman, you knew days ago they were not coming. You 
did not have to print cards to establish a little skit here, to 
ask where the officials were. As I say, this confirms they 
indeed have much more important things to be doing this 
morning.
    Ms. Gunnoe, we have, I think, a chart available that is a 
map of the area. The red in the center, I guess, is the 
mountaintop area in question. All of the other gray areas are 
permitted areas.
    It is not as if this is the only opportunity in the tri-
state region.
    Ms. Gunnoe, according to the EPA, there are 257 past and 
present surface mining permits in the area that collectively 
occupy 13 percent of the entire land area.
    As you can see in the gray, the mines really blanket the 
region.
    Do you think the level of mining that is already occurring 
in this area means there is more to be done to protect the 
streams that would be affected by the Spruce Mine?
    Ms. Gunnoe. I do. The streams in that area are already 
above EPA standards on selenium. We know that through recent 
water testing that has been done.
    I need to say that when you look at this mountain, 
recognizing that the dark gray areas are peaks that have been 
permitted or proposed, and the people that live in the low 
lying valleys, when you blow off the mountains, basically what 
happens is the people in the valley get flooded, and FEMA comes 
in and helps to clean up the flooded communities.
    There are many reasons to not allow this permit. The Spruce 
River watershed has an astronomical amount of mining in it 
already. It has heavily impacted those communities.
    These jobs will never benefit the community of Blair. The 
community of Blair will be de-populated because of the Spruce 
No. 1 jobs.
    Mr. Holt. Thank you, Ms. Gunnoe.
    Mr. Eisenberg, we have heard this has some effect on the 
people locally. Ms. Gunnoe talked about it. You talk about the 
need for this coal.
    Do you know what happens to the coal from Logan County? How 
much of that coal is sent to other countries?
    Mr. Eisenberg. Off the top of my head, I do not know the 
answer to that.
    Mr. Holt. I can help you, a third. A question we have to 
ask ourselves is what are we doing to ourselves. Ms. Harbert 
said do we want a country that--you described the country where 
we would want to live in--I think yes, you are getting right at 
the heart of this question.
    Do we want a country that is despoiled and contaminated so 
that we can send the coal to China and India, and yes, to 
Venezuela.
    There is not much time. Ms. Gunnoe, let me ask you quickly 
if you think it sounds like the EPA should be using new science 
as it comes forward to make the best decisions for protecting 
the streams.
    Ms. Gunnoe. Absolutely they should be. I need to say the 
citizens from Southern Appalachia have lobbied the EPA for 
these protections. These protections, our lives depend on these 
protections.
    The EPA is doing what they need to do to protect the lives 
of citizens in our communities.
    Mr. Lamborn. Thank you. The representative from 
Pennsylvania.
    Mr. Thompson. Thank you, Chairman. Let me say I am very 
disappointed in the Obama Administration, even with notice, 
refusing to come.
    I happen to believe that we live in a constitutional 
republic. This is not a dictatorship. Congress has an oversight 
function as part of the checks and balances, and just to 
blatantly refuse, I think raises questions, what are they 
hiding.
    Senator Kirkendoll, what would the potential be for states 
to expend resources, and I know at this time the economies are 
not good for the Federal Government or states, but to expend 
resources permitting mines contemplated by Section 404 permits 
that were then after the fact essentially vetoed by the EPA?
    Mr. Kirkendoll. I'm sorry?
    Mr. Thompson. The impact on the states who are 
contemplating permitting only to have it vetoed.
    Mr. Kirkendoll. I can tell you the economic impact, the 
jobs, number one, but number two, I worked 11 years 
underground, so I am not a novice to the coal industry, but I 
can remember back when I worked, when I was getting ready to go 
to college, we worked, called red hats back then. Jobs were 
tough to get but we got some.
    Nowadays, it takes $2- to $3 million to qualify permits. To 
get companies to come in now and put a permit together and 
spend $2- to $3 million not even knowing if it is approved, it 
could still be pulled, that is what is throwing everybody off 
the curve of the road.
    If you approve something, you approve it. There is a rule 
and law that we all have to abide by. As Mr. Holt said, these 
people had better things to do. I think they should have been 
here.
    We are talking about people's lives, income, and everything 
else, and that is the reason I am here, I care about people 
having the ability to wake up on Monday morning as an American 
and have a job.
    We are putting ourselves in a position now to where the 
next generation is not going to be working.
    You see the bottom of the Appalachian power bill where it 
says you can volunteer money if you choose, to help somebody 
who cannot afford their electric bill, if we do not use 
domestic energy inside this country, you are going to pay an 
energy tax in the next few years and it is going to be 
mandatory.
    They were making conversation about shipping the coal to 
foreign countries, it is exactly right. We should be using our 
own coal, our own steel, our own workers, and we should be 
operating inside of America, and that is what the people in 
this country need, want, and they think we ought to have.
    Why are we exporting coal? Because of the rules and 
regulations that we have. If we had the right set up, we would 
be retrofitting these powerplants and making them 
environmentally sound to burn the coal and do it right.
    We are missing the boat on every opportunity, and that is 
why we are having these types of hearings this morning.
    I believe we can mine coal environmentally sound. I do not 
want the waters to be run to where they are not useable. We are 
not talking about streams.
    Come to Southern Appalachia, any of the panelists up here, 
and I will take you. I want you to see all those streams we are 
talking about. They are dry ditches. They only have water when 
it rains. All these miles of streams are not streams.
    On 20 degree slopes, how many streams can you have on a 
mountain? The water will seek its lowest level.
    Let's be very honest about things that are just sensible. 
Quit listening to all this rhetoric and come yourself and look. 
I will take you on a tour of post-mined land, before and after. 
I will talk to you about the good, the bad, yes, we can do 
things better. We need to do things better.
    We sit up here and people's lives are in jeopardy, needing 
the ability to have a job because we are having committee 
discussion.
    Send people from D.C. down to these regions. You are 
talking about multimillion and billions of dollars and lives 
and the daily living of American people that are waiting on a 
committee to take data.
    Come see for yourself. You will find out. We can do it both 
ways, gentlemen and ladies. Let's be Americans and do it inside 
the borders of America.
    Mr. Thompson. Just quickly a follow up question because I 
do not have that much time left.
    What impact has the litigation had on mining in your 
region?
    Mr. Kirkendoll. Talking about how many people are working, 
come to Logan. We have had massive layoff's in numerous mines 
in Boone County. My county has not had as many because we have 
a deep mine over there that employs a lot of people, Mountain 
Laurel, which is actually the owner of said property in 
question for the surface mine.
    It is getting to where when you talk to people, and I 
always did as a Commissioner, the CEOs of these companies, they 
are ready to start going to Illinois, Wyoming and other places 
where they can get permits and mine. They are going to leave 
the Appalachia region.
    It is a question now of do young people buy homes and spend 
money, take a chance on making a living in an area so volatile 
to just permits being pulled? If you can pull this permit, you 
can pull any permits in any job, manufacturing, textiles, 
anything else where the EPA has any jurisdiction.
    Are we going to get to that point?
    Mr. Thompson. Thanks, Senator. Thank you, Chairman.
    Mr. Lamborn. All right. Thank you. Senator Kirkendoll, let 
me remind you that in September, this last September, this 
Subcommittee did go to Charleston and had a field hearing on 
stream quality issues.
    Mr. Kirkendoll. That is right.
    Mr. Lamborn. The Acting Governor, now Governor, was there. 
U.S. Senator Manchin was there. Other witnesses, including Ms. 
Gunnoe and others testified as well. That was a very good 
hearing.
    We did see some mine operations and reclaimed land later in 
the day as well.
    Mr. Kirkendoll. Did you see the golf course?
    Mr. Lamborn. We did not see the golf course.
    I would now like to recognize the Ranking Member of the 
Full Committee, Representative Markey of Massachusetts.

  STATEMENT OF THE HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Thank you, Mr. Chairman. The reason that coal 
has been on a massive decline in recent years has less to do 
with President Obama than with the inability of the coal 
industry to innovate and its inability to compete.
    There are more than 500 coal fired power generation units 
operating in this country, 500.
    How many of those are more than 50 years old? More than 200 
of them are more than 50 years old. How many are at least 60 
years old of that 500? Seventy-four. We actually have ten coal 
units that are at least 70 years old.
    Here is a picture of the Perry K powerplant in Indianapolis 
built in 1925. It is an 87 year old coal fired powerplant. 
Thomas Edison was alive when this plant was built. The 
television had just been invented. Air travel was in its 
infancy. The first transatlantic flight was still two years 
away when this plant was built, and still operating today.
    We have improved on all the other technologies. We have 
figured out how to do the same thing but for less money, all 
with greater speed and with reliability. It is the American 
way.
    New replaces old. Efficient replaces wasteful. Clean 
replaces dirty. High tech replaces low tech. Our country 
benefits when this happens.
    The 87 year old Perry K powerplant is switching to natural 
gas beginning in 2014. This is a growing trend in the power 
sector. Natural gas is cheaper. It burns cleaner.
    You are less likely to get asthma or have a baby with birth 
defects. If you live near a plant that burns it, you are 
feeling better about the health of your own children because 
you know there are more dangerous elements coming out of coal 
than out of natural gas.
    You can get natural gas without blowing the tops off 
mountains and destroying the environment.
    Right now, 36 percent of America's electricity is currently 
generated by coal, 36 percent today, first three months of 
2012.
    Six years ago, coal was producing half of America's 
electricity. In six years, it has gone from 50 percent down to 
36 percent of electricity.
    At the same time, electricity from natural gas has grown 
from 18 percent of U.S. generation to 27 percent. Wind has gone 
from producing virtually none of our power to three percent of 
our power in the last six years.
    Newer, cheaper, cleaner technologies are beating coal. The 
free market is beating coal. Adam Smith is spinning in his 
grave as we are listening to the Republicans talk about the 
need to prop up the coal industry against competing 
technologies like natural gas, like wind.
    As a matter of fact, he is spinning so fast in his grave 
that he would actually qualify as a new energy source. That is 
how much energy he is giving off right now in his grave 
listening to the Republicans bleeding about the rise of natural 
gas and wind as competition to coal, especially with these 
plants that are 50, 60, 70, and 87 years old.
    Here is the interesting thing. In the Waxman-Markey bill 
that the House of Representatives passed in 2009, we built in 
$60 billion for the coal industry, $60 billion between now and 
2030, for them to be able to install carbon capture and 
sequestration technology.
    The electric utility industry supported it, but the coal 
industry said no. They said no, we do not want the money. By 
the way, it was $200 billion up to the year 2050. That is a lot 
of money.
    That is a lot of investment in new technology that the 
Democrats built into their legislation, so they could innovate, 
so they could improve, so it could become more competitive with 
the natural gas industry. The coal industry said no, we are not 
going to move.
    That is $60 billion of funding coming from the Federal 
Government, $200 billion by the year 2050, so they could 
innovate. They said no. They said no. They said no over and 
over again to innovation.
    There are now 200 coal plants over the age of 50 that need 
to be renovated at the cost of billions of dollars.
    Natural gas is cheaper. Wind is on the move. Who wants to 
pay now in the private sector to rehabilitate dinosaur coal 
units with cleaner, cheaper options available?
    Now the free market says if the coal industry did not want 
that funding, then we look at the cost and we just say we are 
moving to natural gas, we are moving to wind. You innovate or 
you die.
    Just ask the auto industry. That is what is happening to 
the coal industry. They refuse to innovate. They refuse to even 
accept the funding that would have made it possible for them to 
innovate.
    I just hope that the record is clear out there and this 
gets reported as the real story, that the coal industry refused 
to move, to help their own people, to be able to compete in 
this modern marketplace.
    I yield back the balance of my time. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Markey follows:]

     Statement of The Honorable Edward J. Markey, Ranking Member, 
                     Committee on Natural Resources

    The reason coal has been on a massive decline in recent years has 
less to do with President Obama and more to do with the inability of 
coal to innovate and compete.
    There are more than 500 coal-fired power generation units operating 
in this country. More than 200 of those are more than 50 years old.
    74 are at least 60 years old.
    We actually have 10 coal units that are at least 70 years old.
    Here's a picture of the Perry K power plant in Indianapolis, built 
in 1925. It's an 87-year-old, coal-fired power plant! Thomas Edison was 
alive when this plant was built. The television had just been invented. 
Air travel was in its infancy, and the first trans-Atlantic flight was 
still 2 years away.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    .epsWe've improved on these technologies. We've figured out how to 
do the same thing, but for less money. Or with greater speed and 
reliability. Or with fewer casualties.
    It's the American way. New replaces old, efficient replaces 
wasteful, clean replaces dirty, high-tech replaces low-tech. And our 
country benefits when this happens.
    The 87-year-old Perry K power plant is switching to natural gas 
beginning in 2014. This is a growing trend in the power sector. Natural 
gas is cheaper. It burns cleaner. You're less likely to get asthma or 
have a baby with birth defects if you live near a plant that burns it. 
And you can get natural gas without blowing the tops off of mountains 
and destroying the environment.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    .epsRight now, 36 percent of America's electricity is currently 
generated by coal. A little over a third. Six years ago, coal was 
producing half of America's electricity.
    At the same time, electricity from natural gas has grown from 18 
percent of US generation to 27 percent. Wind has gone from producing 
virtually none of our power, to 3 percent of our power.
    Newer, cheaper, cleaner technologies are beating coal. The free 
market is beating coal.
    I would just like to say, for the record, that Democrats saw this 
coming. In 2009, the Waxman-Markey bill allocated $60 BILLION to coal. 
We said ``Here, you don't want to use your own money to innovate? No 
problem, we think a future for coal is important, here's $60 billion to 
figure out carbon capture and sequestration. Go make clean coal a 
reality.'' Waxman-Markey was the single largest investment in coal in 
the history of Congress.
    Democrats from coal country said YES. Utility companies across 
America said YES. But the coal industry said NO. And Republicans said 
NO. They said NO to innovation.
    And now, there are 200 coal plants over the age of 50 that need to 
be renovated at a cost of billions of dollars. But today, natural gas 
is cheaper than coal. Wind is competitive with coal. Who wants to pay 
to rehabilitate dinosaur coal units with cleaner, cheaper options 
available? The free market is working its will.
    You innovate or you die. Just ask the U.S. auto industry. They 
fought fuel efficiency for 30 years. They refused to invest money in 
making vehicles more efficient. Republicans defended them right into 
bankruptcy.
    Democrats saved those jobs in the Midwest. We said ``America will 
partner with you if you start innovating again.''
    What's happened? We're heading towards 54.5 mile per gallon 
vehicles and the American auto industry is back on top.
    You innovate or you die. That's the bottom line. That's the real 
story with what's going on with coal right now.
                                 ______
                                 
    Mr. Lamborn. OK. I am glad to hear you do not like old coal 
plants. Let's work on getting some new ones out there.
    I would like to recognize the gentleman from Michigan.
    Dr. Benishek. Thank you, Mr. Chairman. I represent 
Michigan's First District. We have a lot of minerals in our 
district, nickel, copper, iron, gold.
    I would like to ask Mr. Eisenberg, this regulation here 
where a permit is going to be revoked, can you expound a little 
further on what is going to happen to the rest of the 
harvesting of minerals in my District, for example? What am I 
going to tell people who are looking forward to a resurgence in 
mining?
    We just had a new mine permitted. I would just like to have 
you expound a little more about that.
    Mr. Eisenberg. Sure. You are talking about the Pebble case 
up in Alaska. That is an interesting case. I urge the Committee 
to look at that a little bit closer.
    EPA is using the exact same part of Section 404, 404(c). In 
the Spruce Mine case, what they said was the term ``whenever'' 
in 404(c) means they can change a specification whenever. Now 
they cannot because the decision says you cannot do it 
retroactively, so EPA is now taking the position that they can 
do it preemptively, which means before the EIS is done, before 
NEPA is commenced, before anything.
    That has a lot of folks worried about it, the same 
companies and the same industries that were impacted by the 
Spruce Mine decision.
    Right now, EPA has not done this. They are performing a 
watershed assessment, but they seem increasingly likely to do 
it at the conclusion of this assessment.
    I noted in my testimony that environmental groups have 
already started asking for a watershed assessment similar to 
that for the Great Lakes region.
    It is the same thing as what happened in Spruce Mine. If 
you take away the specification, then you cannot do it. EPA 
admitted this in the case, you are essentially vetoing the 
project, which really is the responsibility of the Army Corps.
    It could have wide ranging application, and I certainly 
urge the Committee to look at it.
    Dr. Benishek. Do you think we are going to need less 
copper, nickel, iron in the next 20 years in this country?
    Mr. Eisenberg. Speaking on behalf of NAM, absolutely not. 
We are going to need more of it.
    Dr. Benishek. Do you think we harvest our minerals in this 
country at a higher standard than around the world as far as 
the environmental impact of the global environment?
    Mr. Eisenberg. I am certain that we do.
    Dr. Benishek. It just seems to me keeping the jobs here in 
America and better environmental quality for the globe is our 
goal here in this country. I think we should be harvesting our 
materials here at home in a better fashion than occurs in 
China.
    Ms. Harbert, do you have any comments on that analysis that 
I think is true?
    Ms. Harbert. If you look at the world's appetite for energy 
and the type of economic growth we hope we are going to see 
around the world, there is no doubt we are going to need more 
minerals. We are going to need more infrastructure.
    We as a country are going to have to decide whether we are 
going to be complaisant and import those things or whether we 
are going to actually cultivate our own resources and have a 
comparative advantage.
    We have a lot of resources here in this country and those 
resources and the technology to take those resources to market 
advances every year.
    We have the opportunity to use coal, use oil, use gas, all 
of our resources, including wind and renewables, really 
effectively in our country, but the EPA is standing in the way.
    I would like to address the comment about natural gas. The 
Sierra Club launched a ``Beyond Coal'' campaign. They have been 
successful. Now they have launched a ``Beyond Gas'' campaign.
    We have a movement here that is completely against American 
resources. We have to be able to figure out who is complaisant 
in that, and we cannot let the regulatory overreach of EPA 
stand in the way of getting our economy back on its feet.
    Dr. Benishek. In order to harvest solar energy and wind 
energy, we are going to need minerals, it seems to me.
    Ms. Harbert. Absolutely. Certainly, China has that memo. 
They are seeking rights to those minerals all around the world.
    Dr. Benishek. Do we have the ability to harvest those 
minerals needed for those renewable technologies here in this 
country?
    Ms. Harbert. We certainly have a great deal of minerals. As 
you referenced in your own District, you have a great deal of 
them. We have a very prohibitive policy to be able to access 
those minerals.
    If we want to have a domestic, a very vibrant domestic 
economy, all those inputs are needed for all sources of energy, 
and we are going to need to be able to have a regulatory regime 
in place that allows us access to those resources.
    Dr. Benishek. Thank you very much. I yield back the 
remainder of my time.
    Mr. Johnson [presiding]. The gentleman yields back. I think 
it is my turn. I am going to yield myself question time.
    I am sure we were all entertained by the political theater 
of our Ranking Member and his comments. It is shocking to me to 
hear comments about the coal industry's--his perception--
inability to innovate and compete.
    I do not know how we could possibly think the coal industry 
could innovate and compete up against the massive burden and 
costly burden of activists, regulatory agencies like the EPA, 
and the Department of the Interior.
    I would remind this Committee and the Ranking Member that 
those old coal fired powerplants that you are talking about, 
they provide about 45 percent or 50 percent of America's energy 
needs today.
    In the State of Ohio, they provide 87 percent of the 
energy, and thousands and thousands of jobs across the country.
    I am glad Chairman Lamborn hosted this important hearing 
today on the Obama Administration's abuse of executive power, 
particularly in the case of the Spruce Mine and the broader 
effects this abuse of power could have on the economy as a 
whole.
    The Obama Administration's war on coal is most clearly 
exemplified in the Spruce Mine case, and that is the reason for 
this hearing.
    However, as Ms. Harbert and Mr. Eisenberg have testified 
today, the actions taken by the EPA to veto a valid permit by 
the U.S. Army Corps of Engineers has potentially crippling 
effects to the rest of the economy if it is allowed to stand.
    America's businesses are already being crushed by the 
uncertainty of regulations coming from Obamacare, other EPA and 
Interior regulations, and if the EPA suddenly had the power to 
veto permits justly issued by other Federal agencies, companies 
could start to move their investments overseas, where they at 
least have the certainty and finality they need to invest their 
money.
    Ms. Harbert, in your testimony, you cite a Brattle study 
that says over $200 billion are contingent on Section 404 
permits. When EPA asserted the right to withdraw the 
specification of a disposal site for a Section 404 permit after 
issuance of it by the U.S. Army Corps of Engineers, U.S. 
District Judge Amy Berman Jackson, who was in fact appointed to 
the Bench by President Obama, asked the EPA, ``What are the 
permittees supposed to do tomorrow?''
    Specifically under EPA's reasoning, she asked, ``So, 
everybody with a permit has to on a daily basis compare their 
permit to your list of specified sites. They cannot do what 
they have been permitted to do by the United States?''
    My question to you is what would the practical effect be on 
a company having their Section 404 permits be subject to EPA's 
potentially ever changing list of acceptable disposal sites?
    Ms. Harbert. I used to be an infrastructure project 
developer, and the one thing you do is you look at all of your 
risks, technological risks, sovereign risks, political risks.
    What this introduces into the mix is a whole other level of 
risk that you have to find a way over, a hurdle.
    What does that do? It either causes you to cancel the 
project because the hurdle is too high, or it causes you to 
increase the cost of the infrastructure project because you 
have to take that cost into account, or you take that money and 
you go elsewhere.
    All of those things make it very impractical and a very 
impactful impact on American infrastructure.
    We know we have a crumbling infrastructure in this country 
and we know we need a lot of investment. Those people who will 
make those investments now see those investments at risk.
    It has a very real, practical, timely impact.
    Mr. Johnson. Mr. Eisenberg, in your testimony, you talked 
about a hurdle cost that companies would have to account for in 
their planning of projects if this EPA action is allowed to 
stand.
    Would many of the members of the National Association of 
Manufacturers have this same hurdle cost in markets overseas?
    Mr. Eisenberg. Probably not. This is a case of duplicative 
regulations. EPA does not have the authority to do this. The 
Corps has the authority to modify this permit. EPA just tried 
to get at the one thing they could, which is where you drop the 
fill.
    It introduces duplicative regulations. It distorts this 
hurdle rate, which is the calculation that an investor makes 
when they are going to decide whether or not to invest in a 
project.
    No, certainly not. It gets to the core of my testimony 
which is if EPA wants more authority, they need to come here 
and try to get it. If they do not feel comfortable with the 
bounds of their authority, Congress is the place they need to 
go to try to get more.
    Mr. Johnson. OK. Thank you. My time has expired. I will 
yield now to my colleague from Massachusetts, Mr. Markey. Do 
you have additional questions?
    Mr. Markey. I do. It is only to make this point again. For 
the first three months of 2012, coal only produced 36 percent 
of the electricity in the country. That is my point, it is 
declining rapidly because of natural gas and because of wind.
    Just in the last five years, just so we get the numbers 
right in terms of this trend, there were 16,000 new megawatts 
of coal installed in the last five years in the United States. 
There were 36,000 new megawatts of wind installed in the United 
States, and 41,000 new megawatts of natural gas installed in 
the United States.
    In other words, to put it another way, over the last five 
years, 17 percent of our new electrical generation came from 
coal, 39 percent came from wind, and 44 percent came from 
natural gas.
    That trend is very clear. You might want to keep looking in 
the rear view mirror at some numbers from ten years ago or 20 
years ago, but it is down to 36 percent of all electrical 
generation. The market has moved clearly to wind and natural 
gas. Wind is now totally competitive with new coal as a 
generating source.
    These are numbers that go to free market decisions made by 
utility executives all across the United States of America in 
terms of where the new electricity is being generated from.
    These are just numbers--I know people want to blame Obama 
for the free market moving against a technology which is not 
competitive, but I just think it is unfair and inaccurate 
historically, and I yield to the gentleman from New Jersey.
    Mr. Holt. I thank the gentleman for his very good 
statement. He describes very well that market conditions are 
changing. We want the coal companies to innovate. We do not 
wish the miners ill by any means.
    If they refuse to innovate, they are going to be left 
behind. I think the Ranking Member has made that point very 
clearly.
    Meanwhile, we have an ongoing obligation to look after the 
environment. What is not changing is that obligation that we 
have to provide oversight, to see that the Environmental 
Protection Agency and the environmental protection laws of this 
country are working. That is what this is about.
    I thank the gentleman for yielding.
    Mr. Markey. I thank the gentleman very much. This is not 
unlike the auto industry. The auto industry fought innovation 
for a generation. Their fuel economy standards just kept 
getting more and more uncompetitive with the rest of the 
planet, until they reached a point where their product was not 
selling, and they neared bankruptcy, and required Federal 
Government intervention in order to ensure they did not go 
under.
    That was not anything that I wanted to vote for. I am one 
of the few people that can say I voted twice to bail out 
Chrysler, 1979 and in 2010.
    We were offering the same opportunity to the coal industry 
in the Waxman-Markey bill. We were saying we will provide the 
funding for the innovation. We will provide the help for the 
coal industry. We will give you a bridge to make a transition 
so you can stay within the competitive framework of new energy 
sources within the country. The coal industry, in the same way 
the auto industry did, said absolutely no.
    Where is the auto industry today? Well, they have come 
through their mess and now they are embracing the goal of 54.5 
miles per gallon by the year 2026, and they are advertising 
every 20 minutes on every television show about their new, more 
fuel efficient and safer vehicles they are selling.
    The coal industry said no, let's just keep getting at this. 
Peabody Coal said no, and in the same way the auto industry did 
a disservice to its workers, Peabody Coal has done a disservice 
to its workers. Same disservice. Pretending that they could not 
innovate, that they could not improve, they could not make 
themselves more competitive.
    Trying to blame some outside source, whether it be the auto 
industry or the coal industry, is just to defy an analysis of 
the reality of the marketplace.
    The auto industry was losing to international competitors 
because they were no longer meeting the goals of what the 
consumer expected, and the coal industry clearly in the last 
five years, down to only 17 percent of new electrical 
generation, wind is at 39 percent and new gas is at 44 percent, 
the coal industry is suffering inevitably because of the bad 
decisions of the coal industry executives who should be 
questioned----
    Mr. Johnson. The gentleman's time has expired. We will now 
go to Mr. Flores.
    Mr. Flores. Thank you, Mr. Chairman. The only side show 
here has been the comments by the other side to try to change 
the subject.
    This hearing is not about auto mileage. It is not about 
coal. It is not about natural gas. It is not about the Waxman-
Markey bill or capping tax or capping trade or anything else.
    It is about out of control bureaucrats that change the 
rules after the rules have been passed. It is about out of 
control bureaucrats that are not following what the law says 
passed by the people that elected the Congress. That is what 
this hearing is about. That is clearly what it is about.
    I have firsthand experience with this. Before I came here 
to fantasy land where people can just change the rules whenever 
they see fit, I worked in the real world. I helped create jobs.
    I set up operations all over the world. When I did it, I 
used to enjoy getting on a plane to come back to the United 
States of America because I knew we had a clear, transparent, 
fair and stable regulatory structure.
    We have become a Third World banana republic like Ms. 
Harbert said. That is not what this is about.
    We have bureaucrats who invent junk science and bogus 
analyses and then change the rules to fit whatever their whim 
is that day. They do it because you have environmentalists that 
want to move beyond coal and now they want to move beyond 
natural gas that the other side waxes so politically about.
    You have environmentalists that want to attack crop 
insurance. Pretty soon, we will not be able to eat because of 
the environmentalists. We will not be able to heat our homes 
because of the environmentalists. We will darn sure have no 
jobs because of environmentalists.
    This is out of control. This is not what America is 
supposed to be. This is a region that has 60 percent 
unemployment. The unemployment number came out today. The 
unemployment rate is 14.8 percent. We have one out of every six 
Americans out of work, and now you have out of control 
bureaucrats that want to put more people out of work because 
businesses that hire these employees, that create these jobs, 
do not know what regulators are going to do when they wake up 
each morning.
    That is an issue for me. That is an issue for the American 
people. That is the reason we had a big change in this 
Congress, in this House, in November 2010.
    We have to move on and talk about why we are here. Ms. 
Harbert, the first question is for you. First of all, I agree 
with your comment that--I will come back to your comment in a 
minute.
    I have a question for you, and that is when you get a 
permit, you assume that as long as you fulfill the 
responsibilities under that permit, that permit should stay in 
existence. Is that correct?
    Ms. Harbert. Absolutely.
    Mr. Flores. What happens if you are an employer or a 
business and you cannot count on that permit to be in effect or 
that it can be revoked at a whim, even though you are 
fulfilling the rules of that permit?
    Ms. Harbert. If it happens before you have made the 
investment, you give second thought to making the investment. 
If it happens while something is under construction, do you 
halt construction and lay off your workers or do you continue 
at a great deal of risk in the regulatory process?
    This is all new territory. I think that is why we are 
having this hearing, which is the business community was set 
back by this decision by the EPA.
    They were overjoyed to see the justice system step in and 
say they were overreaching their authority, but at the same 
time, now we have EPA overreaching their authority in Alaska 
and preemptively perhaps rejecting a project that has not even 
gone to final decision.
    We are seeing some very scary signs on the wall to the 
business community and they want to figure a way out of this.
    Mr. Flores. This question is for Mr. Eisenberg. Is there 
any statutory authority that the EPA has to retroactively 
revoke permits?
    Mr. Eisenberg. Absolutely not. They do not even have the 
authority to issue the permits. They can only deal with the 
specification of where to put the fill under 404.
    Mr. Flores. Senator Kirkendoll, I have been to Appalachia. 
I have helped go and repair and renovate homes for economically 
disadvantaged people in your part of the world.
    I can tell you, it is an economically depressed area. The 
last thing I would think would be appropriate is to have EPA 
bureaucrats that are unaccountable and now irresponsible, to 
have them controlling the life blood of your community, how do 
you feel about that?
    Mr. Kirkendoll. In my area, we do have a lot of people that 
have some under privileged situations. We worked on that 
through the years. We tried to diversify the economy with 
tourism. It is working.
    To get to the next level, you have to have your main source 
of income and your taxation to diversify with. You can have 
visions and dreams and hopes and desires. If you have no money 
to get there--for somebody to simply put yourself in a 
position--how do you attract business if one day they can 
operate and the next day they are pulled, they are pulled 
before they get to operate.
    It is a scary situation. Like I said before, I talked to 
the CEOs of some of those companies that have been long-
standing in my particular region. They do not want to be in the 
Appalachia region, not because of the ability to mine some of 
the best coal in the world which is----
    Mr. Flores. Let me interrupt you for a minute. Would the 
folks in your community rather have paychecks or welfare 
payments?
    Mr. Kirkendoll. The ones I deal with would rather work. In 
fact, some of the rallies we have had, when this stimulus money 
was handed out in Washington for the auto industry and 
everybody else, the cry of the people in the coal fields was we 
do not want the stimulus money, give us work permits. Yes, sir.
    Mr. Flores. Thank you very much. I yield back.
    Mr. Johnson. I thank the gentleman for yielding back. We 
will go now to Mr. McKinley.
    Mr. McKinley. Thank you, Mr. Chairman. Thank you for the 
opportunity to participate with this Committee.
    I think the previous speaker said it all, what we are here 
for. There is always electricity in the air when people try to 
divert our attention for what we are supposed to be talking 
about here today, because that is what they do a lot in 
Washington.
    I would just like to start by I am one of maybe three or 
four people in Congress that have a construction background, 
and I have dealt with permitting agencies for 40 some years.
    When they grant a permit, you work with that permit. If the 
science changes and you change the requirements----
    Mr. Johnson. Would the gentleman suspend? I am going to ask 
all Committee members to respect the time that other Committee 
members have. If we need to have side bar meetings, we have a 
room or a hallway. I would appreciate that. Thank you. Go 
ahead, sir.
    Mr. McKinley. When they change the rules, on the next 
permit, you make that apply. You do not go back retroactively.
    That is one of the reasons I came here particularly to 
learn from the EPA what was their grounds for this 
justification? If it were science, then let's build on the 
science.
    They unfortunately chose not to be here or not to send any 
representatives within their organization. I am a little 
surprised by that.
    Let's stay focused on why we are here, about a permit. The 
permit was given. I am told they said they wanted to revoke it 
because of the science, they felt there was more science that 
caused that to be considered.
    I would like to ask, I suppose, Ms. Gunnoe, to try to give 
an analogy. In your house, you probably have plywood in your 
house, you have drywall in your house. Are you aware that the 
EPA is considering changing the standard on the resin use in 
plywood to such a level, a tenth of a part per million, and if 
they do make that change, how would you feel after you have 
been given a permit to own and build or locate in your house, 
they knock on your door and say you have to leave your home 
because we have changed the standard and your house is no 
longer within the standard?
    Would you leave your house willingly?
    Ms. Gunnoe. I absolutely would. If I thought my house was 
making me sick, I would leave.
    Mr. McKinley. If I can reclaim my time, the same thing with 
concrete. In your house, you have fly ash in your concrete. The 
EPA is now adopting standards that will say that is a hazardous 
material.
    I suppose what you are willing to say in a very humble way, 
that you are willing to face bankruptcy for your standards and 
your principles, and I admire you for that, but the bank 
probably is not going to like that after they have loaned you 
the money----
    Ms. Gunnoe. Can I respond to what you are saying or are you 
just talking at me?
    Mr. McKinley. If I can continue with my time, you may lose 
your home and the bank may have to foreclose on it because your 
house does not meet the standards of the EPA.
    That is a real threat, when we keep moving the goal post, 
for people to be able to make a decision.
    Ms. Harbert, I like your comments. I wonder whether or not 
you have any other comments about the report. Before we get to 
this report, in a real short time frame, I want people to 
understand that I will play in this court for a little bit, 
when they will not acknowledge that in the other committee, but 
let's go back to carbon capture and sequestration.
    I have asked time and time again of the EPA, if you are 
going to set the standard for carbon capture and sequestration, 
that is under the new source standards, show me one facility 
that has carbon capture, commercially available technology. 
There is not one.
    We cannot do it in America today, even in a laboratory 
setting. Yet, the EPA has set that as being the standard of 
where we need to be. They know very well this is a war on coal. 
There is no question about it.
    When we look at fly ash being called a hazardous material, 
greenhouse gases, climate change, new source standard, utility 
act, train act, we can go on and on.
    We understand they do not want all of the above energy 
sources.
    Could you say is there anything more on this study that we 
need to review that was done by Dr. Sunding?
    Ms. Harbert. I think the take away from that report is the 
impact on the broader business community and the investment 
community will be huge, and it changes the business model for 
infrastructure in America, and was that the intention of the 
Clean Water Act?
    It certainly was not the intention of Congress to change 
the business model for the American economy, and that is 
ultimately what this could mean.
    Mr. McKinley. Thank you. Apparently, I have run over my 
time. I did want to ask our Senator from West Virginia about 
the fact that Longview Coal Company in West Virginia is 
actually producing power notwithstanding the remarks from our 
representative from Massachusetts, at a rate lower than the gas 
production.
    The innovation is there.
    Mr. Johnson. Would the gentleman like to ask unanimous 
consent for another minute to pursue that?
    Mr. McKinley. If he could expand that, I would ask for 
another minute.
    Mr. Johnson. Without objection, so ordered.
    Mr. McKinley. He is aware of the fact that there are coal 
companies that are providing innovation but they are being held 
back because of the threats of over regulation.
    Are you aware of the Longview Mine?
    Mr. Kirkendoll. Yes.
    Mr. McKinley. It is producing at a heat rate of 8,700 Btu 
per kilowatt. For those on the other side of the aisle that are 
not aware of that, what would you say to that? The coal 
companies are innovating?
    Mr. Kirkendoll. I think they are innovating to the best of 
their ability, utilities, as far as the economic ability to do 
so; yes.
    Mr. McKinley. Thank you very much.
    Mr. Johnson. I thank the gentleman for yielding back. We 
will go to Mr. Duncan from South Carolina.
    Mr. Duncan of South Carolina. Thank you, Mr. Chairman. I 
just want to make the point, I was going to ask some of the 
Administration officials on panel one some questions. They are 
not here because they did not want to delve into this subject.
    We cannot say we were not warned by the Obama 
Administration about their intent on fighting the coal industry 
because the President himself said as a candidate in 2008 if 
someone wants to build a new coal fired powerplant, they can, 
but it will bankrupt them because they will be charged a huge 
sum for all the greenhouse gases being emitted. That is the 
dynamic that is driving the policies of this Administration. We 
cannot say we were not warned.
    With that, I yield to the gentleman from Ohio.
    Mr. Johnson. I thank the gentleman for yielding. I do have 
a couple more questions but I would like to point out that we 
talk about the decrease in the amount of energy being provided 
by the coal industry.
    When we have an Administration, the President of whom 
acknowledged before he was elected he was going to make it 
economically infeasible to build new coal fired powerplants, 
and he has done so. We have a Vice President who in 2007 said 
coal is more dangerous than high fructose corn syrup and 
terrorists.
    It is no wonder that Americans today are paying $300 more 
on the average per year to power their homes.
    If that is acceptable to the American people, than maybe we 
are on the right track. I submit we are not.
    I want to say that I applaud the coal industry for turning 
down the opportunity to receive a bail out from the Federal 
Government in an attempt to choose winners and losers.
    We have certainly seen the Federal Government's ability to 
choose winners and losers, with failed projects like Solyndra.
    I think I have made the point.
    Ms. Harbert and/or Mr. Eisenberg, is it safe to say we 
would start to see some of that $200 billion that we talked 
about earlier start to move overseas where companies can rely 
on finality of payments?
    Ms. Harbert. Sanctity of contracts is extremely important 
in any business model. To the extent that the ability to rely 
on your contracts or your rule of law, that would certainly 
send a signal for capital to go where it feels more 
comfortable. If that is overseas, then it is overseas, or it 
just will not happen at all.
    Mr. Johnson. Thank you. I find it quite ironic that Vice 
President Biden was in my District in Ohio just a few weeks ago 
talking about the resurgence of manufacturing in America when 
the Administration is taking actions that will only push jobs 
overseas and attack the very energy sources that are providing 
that surge in manufacturing today.
    Senator Kirkendoll, many states have primacy over their 
SMCRA permitting programs and as such, many states expend a 
great deal of time and resources in the mine permitting 
process.
    What effect would a lack of finality in CWA Section 404 
context have on West Virginia's SMCRA permitting scheme?
    Mr. Kirkendoll. The Secretary has gone on record many times 
that states should have the right in the Clean Water Act, and I 
think it just creates an entirely different atmosphere when you 
are talking about the permit process, which states do not have 
the solvent rights over the Clean Water Act regarding their own 
permitting process, and it is overridden by the Federal 
regulators.
    I think it just challenges the permit process totally.
    Mr. Johnson. Thank you. I was afraid that was what you were 
going to say. As I said at the beginning of my questioning, 
although this is an egregious case of President Obama's 
Administration carrying out the war on coal, we have heard 
today from witnesses that the EPA's actions have major 
ramifications for all American businesses if the EPA's actions 
are allowed to stand.
    With that, that concludes my questioning.
    Mr. Duncan of South Carolina. I reclaim my time.
    Mr. Johnson. Without objection----
    Mr. Duncan of South Carolina. Reclaiming my time real 
quick. I just want to make a point, Denmark is held out as this 
epitome of alternative fuels and wind power. They have reduced 
their carbon footprint that much (indicating). They are still 
relying on their baseload 24/7 power supply from coal.
    It is an important resource. I like wind power. The 
gentleman from Massachusetts was talking about that earlier.
    We cannot continue to talk about wind only. We have to 
support what works for that 24/7 baseload always on power 
supply and coal provides that in this country.
    I think about what coal technology could do for the African 
Continent or for Latin America where they use charcoal, which 
is taken from the wood harvested in the forests that we love.
    If we provided coal fired powerplants in other countries, 
especially Third World, and lessened their dependence on the 
charcoal, just think about the quality of life issues.
    Coal works. It is proven in this country. It can be proven 
worldwide.
    I yield back.
    Mr. Johnson. I thank the gentleman for yielding back. Votes 
have been called. Without objection, I am going to yield the 
final two minutes to our colleague, Mr. Holt.
    Mr. Holt. Thank you, Mr. Chair. Many of the questions that 
the Committee seemed to want to ask of the EPA are better 
resolved in court dealing with a particular case.
    There have been some general statements made that I think 
really should be addressed, that have to do with the Clean 
Water Act and what it actually says.
    It actually says that the Administrator is authorized to 
prohibit the specification including withdrawal of 
specification of any defined area, and he is authorized to deny 
or restrict the use of any defined area for specification as a 
disposal site, including withdrawal, whenever he determines, 
after notice and opportunity for public hearings, that the 
discharge will have an unacceptable adverse effect on water 
supplies, fisheries, wild life, and recreation areas.
    It goes on to say that the Administrator must consult with 
the Secretary and the Corps of Engineers.
    The Corps expressed some surprise that Congress would do 
this, but Congress did that. Our witnesses today seem to 
disbelieve that Congress did this, but Congress did this.
    I think it is worth making that clear. I will yield my 
remaining time to the Ranking Member.
    Mr. Markey. I thank the gentleman. Earlier this week, the 
New York Times reported that the American Electric Power 
Company was planning to transition a plant in Kentucky from 
coal to natural gas. The coal companies objected. They 
organized. They insisted that rate payers should pay 30 percent 
more so that the plant could continue burning coal instead of 
much cheaper natural gas.
    They actually got the American Electric Power Company to 
submit that proposal to state public utility commissioners.
    Let's be honest. That is welfare for coal executives making 
rate payers----
    Mr. Johnson. I hate to call----
    Mr. Markey. I ask for 30 additional seconds.
    Mr. Johnson. Without objection.
    Mr. Markey. I thank you, sir. That is welfare for coal 
executives making rate payers pay 30 percent more. That is just 
wrong. That is not free market.
    The company finally withdrew this ridiculous proposal after 
it gained attention.
    I would also like to respond to the gentleman's comments 
about electricity rates being increased. In New England, they 
are declining rapidly after thousands of new megawatts 
constructed of gas, solar, and wind in New England over the 
last decade.
    We just across the board had a 15 percent reduction in our 
electricity rates. That is without coal.
    Again, the coal industry now has 75,000 workers, but the 
wind industry has 75,000 workers and the solar industry has 
100,000 workers.
    We just have to say the market is now moving away from coal 
because the coal industry refused to accept the $60 billion in 
the Waxman-Markey bill that would have helped them to make the 
transition.
    Mr. Johnson. I thank the panel for their testimony today. 
Members of this Committee may have additional questions for the 
record, and I ask you to respond to these in writing.
    If there is no further business, the Committee stands 
adjourned.
    [Whereupon, at 11:48 a.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

       Statement of The Honorable Dan Benishek, a Representative 
                 in Congress from the State of Michigan

    Mr. Chairman, I appreciate you taking the time to explore this very 
important topic today. As you may be aware, mining is one of the 
leading industries in Michigan's First District. The Upper Peninsula in 
particular has a rich mining heritage and serves as a central driver of 
the local economy. Just last week, the New York Times highlighted the 
``mining rush in the Upper Peninsula.''
    As the representative for Michigan's First District and the son of 
a miner, I am truly proud of the new investments being made in the 
area--from small businesses to global corporations. These investments 
bring jobs to the area. Mining companies invest in our tax base, 
helping local schools and libraries. Mining is an investment in the 
future of the First District.
    Like all industries, mines are highly regulated by the 
Environmental Protection Agency (EPA). Many companies in my district 
have been working with the EPA for years to receive permits to operate. 
I fear many of these regulations are unnecessary and will cost Northern 
Michiganders their jobs. Under the current climate, mining companies 
are required to invest heavily in the area before they pull one ounce 
of product out of the ground. In 2010, the EPA revoked an active mining 
permit at the Spruce No. 1 Mine in West Virginia. This action is quite 
worrisome due to the precedent it sets. While the EPA has stated that 
they do not intend to pursue this route with other mines or industries 
around the country, it sends a signal to our nation's job creators that 
investing in America may not be a safe bet.
    Mr. Chairman, I thank you for holding this hearing, and ask that 
Congress pursue all options to restrict the EPA from pursuing this type 
of arbitrary action in the future.

                                 
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