prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: Since 2001, DOD’s total workforce has changed in size and composition  DOD’s military, civilian, and contractor workforces peaked around 2011 and have since decreased in size, as shown in figure 1  Several factors have contributed to changes in the size of the workforces including varying levels of U S  involvement in the conflicts in Iraq and Afghanistan, military to civilian and contractor conversions, contractor insourcing, and the growth in certain workforces such as acquisition and cyber  DOD’s management of its workforce is governed by several workforce management statutes, including sections 129, 129a, and 2463 of Title 10 of the United States Code  Section 129 directs that DOD civilian personnel be managed each fiscal year on the basis of, and consistent with, total-force management policies and procedures established under section 129a, the workload required to carry out the functions and activities of the department, and the funds made available to the department each fiscal year  Section 129a directs the Secretary of Defense to establish policies and procedures for determining the most appropriate and cost-efficient mix of military, civilian, and contracted services to perform the mission of the department  Finally, Section 2463 directs the Under Secretary of Defense for Personnel and Readiness to devise and implement guidelines and procedures to ensure that consideration is given to using, on a regular basis, DOD civilian employees to perform new functions and functions performed by contractors that could be performed by DOD civilian employees  DOD Instruction 1100 22, Policy and Procedures for Determining Workforce Mix (April 12, 2010) (Change 1, Dec  1, 2017) establishes policy, assigns responsibilities, and prescribes procedures for determining the appropriate workforce mix of the military, civilian, and contracted services  The instruction provides criteria for workforce-mix decisions and directs DOD components to conduct a cost comparison to determine the low-cost provider for all new or expanding mission requirements and for functions that have been contracted but could be performed by DOD civilian employees  In addition, over the past 10 years DOD has taken steps to better understand the costs associated with its workforces  For example, we found in September 2013 that DOD had improved its methodology for estimating and comparing the full cost of work performed by military and civilian personnel and contractor support, but the methodology continued to have certain limitations, such as the lack of guidance for certain cost elements related to overhead  We made five recommendations, including for DOD to assess the advantages and disadvantages of allowing the continued use of different cost-estimation tools across the department or directing department-wide application of one tool, and revise its guidance in accordance with the findings of its assessment  DOD implemented this recommendation but has not yet implemented the other four recommendations although it concurred or generally concurred with them  DOD’s Cost-Comparison Report addressed three elements and partially addressed one element concerning the accounting for the fully-burdened, or full, cost of federal civilian and service contractor personnel performing functions at the selected installations, as shown in table 1  DOD concluded that for the 21,000 federal civilians and service contractors compared, neither federal civilians nor service contractors were predominately more or less expensive, with the costs being dependent upon the function being performed, location, and level of expertise  DOD noted that the results were not generalizable across the department  Each of the elements and our assessment are discussed below  We believe that DOD addressed the reporting element to assess performance of functions performed by civilian and contractor personnel by developing a methodology to assess performance of functions performed by federal civilians and service contractors at organizations within nine geographic regions including two locations outside the continental United States  Organizations included in DOD’s methodology include the following: Fort Belvoir Community Hospital Defense Threat Reduction Agency US Army Intelligence and Security Command Aviation and Missile Research, Development, and Engineering Center Naval Medical Center San Diego Space and Naval Warfare Systems Command Ogden Air Logistics Complex 75th Air Base Wing Naval Facilities Engineering Command Tripler Army Medical Center DOD’s methodology included the following: Selecting installations and organizations: DOD used data from the Defense Civilian Personnel Data System to identify military installations with large reported numbers of federal civilians  According to DOD officials, they eliminated from consideration those installations that had no reported contractors  From this subset of installations, DOD selected organizations to represent all three military departments and diverse geographical locations, to include two locations outside the continental United States  Assessing the functions performed by civilians and contractors to identify federal civilians and service contractors performing similar functions: DOD assessed the performance of functions at these selected locations to identify federal civilians and service contractors performing similar functions as there is no direct mapping or perfect match between existing taxonomies used to quantify federal civilian positions and contracted services  Further, DOD reported that the day-to-day functions performed by federal civilian employees do not always directly correlate to the designated occupational series or the job title for their position  For example, an individual with an occupational series assigned as an accountant may actually perform work more consistent with that of a financial analyst  According to DOD’s Cost-Comparison Report, DOD did not rely on occupational series names or job titles alone to determine the actual work being performed by federal civilians  Specifically, DOD conducted site visits with each organization and relied on local managers’ direct knowledge of the actual tasks that their federal civilians and service contractor personnel performed  According to DOD’s Cost-Comparison Report, DOD determined that personnel need to perform at least 80 percent common tasks to be able to make a comparison  For the organizations selected, DOD compared the costs of all federal civilians and service contractors identified as performing similar functions  The challenges DOD identified in DOD’s Cost-Comparison Report on determining the functions performed by contractor personnel are similar to those we encountered in our prior work on DOD’s efforts to compile and review of an inventory of contracted services  Section 2330a of Title 10 of the U S  Code directs the Secretary of Defense to annually prepare an inventory of activities performed during the preceding fiscal year pursuant to staff augmentation contracts  Section 2330a also directs the secretary of each military department and head of each defense agency responsible for activities in the inventory to, within 90 days after the Secretary of Defense submits the inventory, review the contracts and activities in the inventory for which that secretary or agency head is responsible, in part to identify activities that should be considered for conversion  Our prior work has identified, among other issues, that the absence of a complete and accurate inventory of contracted services hinders DOD’s management of these services  According to DOD officials, the Office of the Under Secretary of Defense (Personnel and Readiness) has also recognized the challenges associated with the various taxonomies and lexicons associated with articulating the size and composition of federal civilian, military, and contracted services workforces, and has efforts underway with the goal of better aligning those to enable more holistic total force management of all sources of labor  According to DOD officials, by improving available workforce data, DOD can support better-informed leadership decisions, improve accuracy of analyses, and provide consistent explanations of the department’s workforce resources  DOD officials told us that this effort has an estimated completion of December 2018  We believe that DOD partially addressed the reporting element to account for the full cost of civilian and contractor personnel by providing an accounting of the labor costs of selected federal civilian and service contractor full-time equivalents for personnel performing similar functions at government-owned facilities during calendar year 2015, but excluding certain non-labor costs from its cost calculations  According to DOD officials, 2015 was the last year for which complete data were available  DOD developed a methodology for identifying labor costs associated with federal civilian and service contractor full-time equivalents during calendar year 2015 at government-owned facilities for its cost comparisons  Based on reviews of applicable guidance and consultations with the Office of the Under Secretary of Defense – Comptroller, DOD included numerous federal civilian costs collected from several sources in DOD’s Cost Comparison Report, as shown in table 2  In addition, to assure data quality, DOD officials told us that they took steps to identify data errors in the data collected including identifying missing data fields and data entries that might indicate data errors  For example, DOD officials told us that they verified that they had pay records for every pay period in calendar year 2015 by identifying potential errors and outliers and sharing these with the Defense Finance and Accounting Service and the selected DOD organizations for review  Officials also stated that DOD sent its complete calculated data sets to each organization for review against their own pay records and that all errors were corrected or outliers were explained  Additionally, according to our analysis, DOD excluded overtime from its costs related to federal civilians in accordance with Office of Management and Budget Circular A-11  However, DOD included overtime pay in its report separately for context and noted that overtime pay is a significant part of civilian compensation for some organizations  Officials noted that those funded via a working capital fund arrangements, such as depots, use overtime to handle surges in demand throughout the year  DOD noted in its report that selected service contracts at government facilities and developed three methodologies to identify labor costs associated with service contractor full-time equivalents during calendar year 2015, as shown in table 3  DOD stated in its report that identifying service contractor full-time equivalents is a significant challenge because the level of detail available in each contract varied such that DOD could not employ a single methodology, and unlike federal civilian pay data, there is no centralized database on service-contractor pay  DOD reported that contracts are rarely written to address the cost-per-contractor as a full-time equivalent, and some contracts do not differentiate between labor and non-labor costs  DOD noted in its report that the negotiated price of the contract includes direct costs, including labor and non-labor costs, and indirect costs such as overhead  Further, the contract costs include service contractor profit  Based on our review of DOD’s Cost-Comparison Report, DOD used non- excludable contract costs as a basis in two of its methodologies  These costs to DOD are associated with labor, and include pay and benefits provided to service contractor personnel, contractor profit, and overhead the contractor included in the cost of the contract  When the number of service contractor full-time equivalents and full costs for a contract was known, DOD used the first method, dividing contract costs by the number of service contractor full-time equivalents to arrive at the cost per service contractor full-time equivalent  When the number of billable hours was known, DOD used the second method, multiplying the ratio of contract costs divided by billable hours by a standard number of annual billable hours  For contracts in which the labor rate was known but costs could not be disaggregated, DOD multiplied the labor rate by a standard 1,880 annual billable hours unless a contract specified the labor rate as a number of annual billable hours  For example, Defense Logistics Agency contractor-labor rates for wage grade equivalent contractor full-time equivalents are based on 2,080 annual labor hours  We assessed DOD’s report as partially addressing the reporting element to account for the full cost of federal civilian and contractor personnel because DOD excluded certain non-labor costs from its costs calculations—(1) direct non-labor costs for government owned facilities and government provided supplies, (2) indirect costs for general and administrative and overhead for civilians, and (3) costs to manage contracts—from its costs calculations  Senate Report 114-49 stated that DOD is to include an accounting of the full cost of DOD federal civilian and service contractors performing similar functions, including facility overhead  DOD stated in its report that the methodology utilized to compare the costs of federal civilian and service contractor full-time equivalents was consistent with DOD Instruction (DODI) 7041 04, Estimating and Comparing the Full Costs of Civilian and Active Duty Military Manpower and Contract Support (July 3, 2013), hereafter referred to DODI 7041 04  However, DODI 7041 04 states that the full cost of personnel should include direct and indirect non-labor costs, such as those referenced previously  DOD officials stated that they considered including non-labor costs in their calculations but did not because they believe these costs would add approximately the same to both federal civilian and service contractor costs  DODI 7041 04 instructs that if a function is performed on government property, the costs of goods, services, and benefits that are common costs may be excluded provided the number of government and contactor personnel is equivalent  DODI 7041 04 further instructs that when the number of government and contractor personnel differs, adjustments must be made to the cost estimates to account for the difference in number of government and contractor personnel  While there were some instances where it was the case that DOD’s cost estimates involved an equal number of civilian and contractor personnel performing functions on government property, there were many instances in where the personnel numbers differed and common costs should not have been excluded  For example, in DOD’s comparisons of federal civilians and service contractors at Fort Belvoir Community Hospital, DOD conducted comparisons of 19 functions where 2 functions had equal numbers of federal civilian and service contractors and 17 functions had differing numbers of federal civilian and service contractors  In one comparison, the number of contractors was over three times the number of civilians  DOD officials also stated that they believe their methodology is in accordance with DODI 7041 04 because DODI 7041 04 states that the cost elements in the instruction can be modified or augmented in each specific case as necessary, but DOD components should be prepared to support such decisions with sufficient justification  We acknowledge that DODI 7041 04 states that the cost elements can be modified, but by excluding non-labor costs in its cost comparisons, DOD did not account for the full cost of federal civilians and service contractors as requested in the mandate  We believe that DOD addressed the reporting element to compare costs by comparing its calculated costs of selected federal civilians and service contractors performing similar functions at selected installations  DOD reported that its results represent selected personnel performing functions within selected organizations and are not generalizable across the department  DOD concluded that for the federal civilian and contractor full-time equivalents included in the study, the costs varied by organization, location, and function being performed  DOD presented comparisons of federal civilian and service contractor full-time equivalents costs and expressed these results as a cost ratio  However, it is not clear how the results would be different if all costs that encompass full costs of personnel would have been included in DOD’s comparisons  See tables 4 and 5 below for examples of greater costs for the performance of functions by federal civilians or service contractors at Fort Belvoir Community Hospital in Fort Belvoir, Virginia  We believe that DOD addressed the reporting element by assessing the flexible employment authorities for the employment and retention of federal civilian employees at the same 17 organizations used for the cost comparison  Specifically, DOD sent questionnaires to DOD hiring officials and human resource professionals to collect information on flexible employment authorities  DOD included a broad spectrum of organizational missions in its query of management and human resource officials regarding the use and availability of flexible hiring authorities  Noting that this assessment is more subjective than the others in DOD’s Cost-Comparison Report, DOD queried senior leaders, middle managers, front-line supervisors and human resource professionals regarding which authorities are being used and the effectiveness of each  According to DOD’s report, in this way, DOD was able to gauge the extent to which each type of authority was used as well as the satisfaction with and effectiveness of each  DOD’s Cost-Comparison Report made several conclusions regarding flexible hiring authorities and made one recommendation
Report 2:  Furthermore, as previously discussed, the Secretary of Defense has established an 80-percent mission capability goal for critical aviation assets, including the F-35  Due to current low availability and numerous sustainment issues, the F-35 fleet will be challenged in meeting the goal  In sum, the Navy’s and Marine Corps’ significant readiness challenges have developed over more than a decade of conflict, budget uncertainty, and reductions in force structure  Both services have made encouraging progress identifying the causes of their readiness decline and have begun efforts to arrest and reverse it; however, our prior work shows that fully addressing the persistent readiness challenges will require years of sustained management attention  Our work cited today contains 25 specific recommendations to the Navy and the Marine Corps and an additional 20 recommendations to various other DOD components to assist these services in rebuilding the readiness of their forces and in modernizing for the future  Attention to these recommendations can assist the Navy and the Marine Corps as they seek to rebuild the readiness of their forces  Chairmen Wicker and Sullivan, Ranking Members Hirono and Kaine, and Members of the Subcommittees, this concludes my prepared statement  I would be pleased to respond to any questions you may have at this time  If you or your staff have questions about this testimony, please contact John H  Pendleton, Director, Defense Capabilities and Management at (202) 512-3489 or pendletonj@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement  GAO staff who made key contributions to this testimony are Suzanne Wren, Assistant Director; Clarine Allen; Steven Banovac; John Bumgarner; Chris Cronin; Benjamin Emmel; Cynthia Grant; Mae Jones; Amie Lesser; Tobin McMurdie; Shahrzad Nikoo; Carol Petersen; Cody Raysinger; Michael Silver; John E  “Jet” Trubey; and Chris Watson  Over the past 4 years, we have issued a number of reports related to Navy and Marine Corps readiness and we used them to develop this statement  Table 1 summarizes the recommendations in these reports  The Department of Defense (DOD) concurred with most of the 45 recommendations and has many actions underway  However, DOD has not fully implemented any of the recommendations to date  For each of the reports, the specific recommendations and any progress made in implementing them are summarized in tables 2 through 16  Report numbers with a C or RC suffix are classified  Report numbers with a SU suffix are sensitive but unclassified  Classified and sensitive but unclassified reports are available to personnel with the proper clearances and need to know, upon request  Navy Readiness: Actions Needed to Address Costly Maintenance Delays Facing the Attack Submarine Fleet  GAO-19-229  Washington, D C : November 19, 2018  Air Force Readiness: Actions Needed to Rebuild Readiness and Prepare for the Future  GAO-19-120T  Washington, D C : October 10, 2018  Weapon System Sustainment: Selected Air Force and Navy Aircraft Generally Have Not Met Availability Goals, and DOD and Navy Guidance Need to Be Clarified  GAO-18-678  Washington, D C : September 10, 2018  Weapon System Sustainment: Selected Air Force and Navy Aircraft Generally Have Not Met Availability Goals, and DOD and Navy Guidance Need Clarification  GAO-18-146SU  Washington, D C : April 25, 2018  Military Readiness: Update on DOD’s Progress in Developing a Readiness Rebuilding Plan  GAO-18-441RC  Washington, D C : August 10, 2018  (SECRET) Military Personnel: Collecting Additional Data Could Enhance Pilot Retention Efforts  GAO-18-439  Washington, D C : June 21, 2018  F-35 Joint Strike Fighter: Development Is Nearly Complete, but Deficiencies Found in Testing Need to Be Resolved  GAO-18-321  Washington, D C : June 5, 2018  Warfighter Support: DOD Needs to Share F-35 Operational Lessons Across the Military Services  GAO-18-464R  Washington, D C : April 25, 2018  Military Readiness: Clear Policy and Reliable Data Would Help DOD Better Manage Service Members’ Time Away from Home  GAO-18-253  Washington, D C : April 25, 2018  Military Personnel: DOD Needs to Reevaluate Fighter Pilot Workforce Requirements  GAO-18-113  Washington, D C : April 11, 2018  Military Aircraft: F-35 Brings Increased Capabilities, but the Marine Corps Needs to Assess Challenges Associated with Operating in the Pacific  GAO-18-79C  Washington, D C : March 28, 2018  (SECRET) Navy and Marine Corps Training: Further Planning Needed for Amphibious Operations Training  GAO-18-212T  Washington, DC : December 1, 2017  F-35 Aircraft Sustainment: DOD Needs to Address Challenges Affecting Readiness and Cost Transparency  GAO-18-75  Washington, D C : October 26, 2017  Defense Supply Chain: DOD Needs Complete Information on Single Sources of Supply to Proactively Manage the Risks  GAO-17-768  Washington, D C : September 28, 2017  Navy and Marine Corps Training: Further Planning Needed for Amphibious Operations Training  GAO-17-789  Washington, D C : September 26, 2017  Navy Readiness: Actions Needed to Address Persistent Maintenance, Training, and Other Challenges Facing the Fleet  GAO-17-809T  Washington, D C : September 19, 2017  Naval Shipyards: Actions Needed to Improve Poor Conditions That Affect Operation  GAO-17-548  Washington, D C : September 12, 2017  Navy Readiness: Actions Needed to Address Persistent Maintenance, Training, and Other Challenges Facing the Fleet  GAO-17-798T  Washington, D C : September 7, 2017  Navy Readiness: Actions Needed to Maintain Viable Surge Sealift and Combat Logistics Fleets GAO-17-503  Washington, D C : August 22, 2017 (reissued on Oct 31, 2017)  Department of Defense: Actions Needed to Address Five Key Mission Challenges  GAO-17-369  Washington, D C : June 13, 2017  Military Readiness: Coastal Riverine Force Challenges  GAO-17-462C  Washington, D C : June 13, 2017  (SECRET) Navy Shipbuilding: Policy Changes Needed to Improve the Post-Delivery Process and Ship Quality  GAO-17-418  Washington, D C : July 13, 2017 Offshore Petroleum Discharge System: The Navy Has Not Mitigated Risk Associated with System Limitations  GAO-17-531C  Washington, D C : June 22, 2017  (SECRET) Navy Force Structure: Actions Needed to Ensure Proper Size and Composition of Ship Crews  GAO-17-413  Washington, D C : May 18, 2017  Military Readiness: DOD’s Readiness Rebuilding Efforts May Be at Risk without a Comprehensive Plan  GAO-16-841  Washington, D C : September 7, 2016  Military Readiness: DOD’s Readiness Rebuilding Efforts May Be at Risk without a Comprehensive Plan  GAO-16-534C  Washington, D C : June 30, 2016  (SECRET) Defense Inventory: Further Analysis and Enhanced Metrics Could Improve Service Supply and Depot Operations  GAO-16-450  Washington, D C : June 9, 2016  Navy and Marine Corps: Services Face Challenges to Rebuilding Readiness  GAO-16-481RC  Washington, D C : May 25, 2016  (SECRET//NOFORN) Military Readiness: Progress and Challenges in Implementing the Navy’s Optimized Fleet Response Plan  GAO-16-466R  Washington, D C : May 2, 2016  F-35 Sustainment: DOD Needs a Plan to Address Risks Related to Its Central Logistics System  GAO-16-439  Washington, D C : April 14, 2016  Navy Force Structure: Sustainable Plan and Comprehensive Assessment Needed to Mitigate Long-Term Risks to Ships Assigned to Overseas Homeports  GAO-15-329  Washington, D C : May 29, 2015  This is a work of the U S  government and is not subject to copyright protection in the United States  The published product may be reproduced and distributed in its entirety without further permission from GAO  However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately 

ground_truth: Coal accounts for 17 percent of domestic energy production. SMCRA requires coal mine operators to reclaim lands that were disturbed during mining and to submit a financial assurance in an amount sufficient to ensure that adequate funds will be available to complete reclamation if the operator does not do so. Recent coal company bankruptcies have drawn attention to whether financial assurances obtained by OSMRE and state agencies will be adequate to reclaim land once coal mining operations have ceased. GAO was asked to review management of financial assurances for coal mine reclamation. This report describes, among other things, the amounts and types of financial assurances held for coal mine reclamation in 2017 and the challenges that OSMRE and state agencies face in managing these financial assurances. GAO collected and analyzed data from OSMRE and 23 state agencies; reviewed federal laws, regulations, and directives; and interviewed OSMRE and state agency officials and representatives from organizations associated with the mining and financial assurance industries and environmental organizations. State agencies and the Department of the Interior's Office of Surface Mining Reclamation and Enforcement (OSMRE) reported holding approximately $10.2 billion in surety bonds (guaranteed by a third party), collateral bonds (guaranteed by a tangible asset, such as a certificate of deposit), and self-bonds (guaranteed on the basis of a coal operator's own finances) as financial assurances for coal mine reclamation. OSMRE and state agencies face several challenges in managing financial assurances, according to the stakeholders GAO interviewed. Specifically, Obtaining additional financial assurances from operators for unanticipated reclamation costs, such as long-term treatment for water pollution, can be difficult. Determining the financial stability of surety companies has been challenging in certain instances. Self-bonding presents a risk to the government because it is difficult to (1) ascertain the financial health of an operator, (2) determine whether the operator qualifies for self-bonding, and (3) obtain a replacement for existing self-bonds when an operator no longer qualifies. In addition, some stakeholders said that the risk from self-bonding is greater now than when the practice was first authorized under the Surface Mining Control and Reclamation Act (SMCRA). GAO's previous work examining environmental cleanup found that the financial risk to government and the amount of oversight needed for self-bonds are relatively high compared to other forms of financial assurances. GAO also previously reviewed federal financial assurance requirements for various energy and mineral extraction sectors and found that coal mining is the only one where self-bonding was allowed. However, because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonds pose to the federal government and states would require SMCRA be amended. GAO recommends that Congress consider amending SMCRA to eliminate self-bonding. Interior neither agreed nor disagreed with GAO's recommendation.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: Coal accounted for 17 percent of energy production (30 percent of electricity production) in the United States in 2016  To generate this energy, approximately 730 million tons of coal were mined domestically in 2016, according to the U S  Energy Information Administration, approximately 40 percent of which was produced on federal lands  As of 2016, state regulatory authorities and OSMRE had received financial assurances associated with coal mines that had been permitted to disturb approximately 2 3 million acres, according to OSMRE data  Coal is mined in two different ways: surface mining and underground mining  In surface coal mining, before the underlying coal can be extracted, the land is cleared of forests and other vegetation and topsoil is removed and stored for later use  Explosives or other techniques are then used to break up the overlying solid rock, creating dislodged earth, rock, and other materials known as spoil  Surface coal mines can cover an area of many square miles  In underground coal mining, tunnels are dug to access coal that is too deep for surface mining methods  In some cases, underground coal mines are designed to leave sufficient coal in the mine to support the overlying surface, and in other cases, they are designed to extract higher quantities of coal that results in subsidence of the overlying surface as mining progresses  In addition to disturbing the land surface, coal mining can affect water quality, according to the Environmental Protection Agency, the National Academies, and others  For example, mining can increase sediments in rivers or streams, which may negatively affect aquatic species  Moreover, mining can expose minerals and heavy metals to air and water, leading to a condition known as acid mine drainage, which can lead to long-term water pollution and harm some fish and wildlife species  Mining can also lower the water table or change surface drainage patterns  The surface effects of coal mining in the United States are regulated under SMCRA, which also created OSMRE to administer the act  SMCRA allows an individual state or Indian tribe to develop its own program to implement the act if the Secretary of the Interior finds that the program is in accordance with federal law  A state with an approved program is said to have “primacy” for that program  To obtain primacy, a state or Indian tribe submits to the Secretary of the Interior for approval a program that demonstrates that the state or tribe has the capability of carrying out the requirements of SMCRA  The program must demonstrate that the state or Indian tribe has, among other things, a law that provides for the regulation of the surface effects of coal mining and reclamation in accordance with the requirements of SMCRA, and a regulatory authority with sufficient personnel and funding to do so  Of the 25 states and four Indian tribes that OSMRE identified as having active coal mining in 2017, 23 states had primacy, and OSMRE manages the coal program in 2 states and for the four Indian tribes  SMCRA requires a mine operator to obtain a permit before starting to mine  The permit process requires operators to submit plans describing the extent of proposed mining operations and how and on what timeline the mine sites will be reclaimed  In general, an operator must reclaim the land to a use it was capable of supporting before mining or to an alternative postmining land use that OSMRE or the state regulatory authority deems higher or better than the premining land use  In reclaiming the mine site, operators must comply with regulatory standards that govern, among other things, how the reclaimed area is regraded, replanting of the site, and the quality of water flowing from the site  Specifically: Operators are generally required to return mine sites to their approximate original contour unless the operator receives a variance from the regulatory authority  To return to this contour, the surface configuration achieved by backfilling and grading of the mined area must closely resemble the general surface configuration of the land before mining and blend into and complement the drainage pattern of the surrounding terrain, with all highwalls and spoil piles eliminated  Operators are required to demonstrate successful revegetation of the mine site for 5 years (in locations that receive more than 26 inches of rain annually) or 10 years (in drier areas)  States have requirements for what vegetation may be planted depending on the approved postmining land use  For example, West Virginia’s regulations call for sites with a postmining land use of forest land to be planted with at least 500 woody plants per acre  The state specifies that at least five species of trees be used, including at least three of the species being higher value hardwoods, such as oak, ash, or maple  SMCRA requires that financial assurances be sufficient to ensure reclamation compliant with water quality standards, including those established by the Environmental Protection Agency or the states under the Clean Water Act  SMCRA’s implementing regulations also contain additional water protection requirements  For example, the regulations require that all surface mining and reclamation activities be conducted to minimize disturbance of the hydrologic balance within the permit and adjacent areas and to prevent material damage to the hydrologic balance outside the permit area  The federal government also enacted SMCRA, in part, to implement an abandoned mine land program to promote the reclamation of mined areas left without adequate reclamation prior to 1977, when SMCRA was enacted, and that continue to substantially degrade the quality of the environment, prevent or damage the beneficial use of land or water resources, or endanger the health or safety of the public  Specifically, Congress found that a substantial number of acres of land throughout the United States had been disturbed by surface and underground coal mining on which little or no reclamation was conducted  Further, it found that the impacts from these unreclaimed lands imposed social and economic costs on residents in nearby areas as well as impaired environmental quality  Since the abandoned mine land program was created, approximately $3 9 billion has been spent to reclaim abandoned mine lands, and there is at least $10 2 billion in remaining reclamation costs for coal mines abandoned prior to 1977, as of September 30, 2017, according to OSMRE  SMCRA generally requires operators to submit a financial assurance in an amount sufficient to ensure that adequate funds will be available for OSMRE or the state regulatory authority to complete the reclamation if the operator does not do so  The amount of financial assurance required is determined by the regulatory authority—OSMRE or the state—and is based on its calculation of the estimated cost to complete the reclamation plan it approved as part of the mining permit  Financial assurance amounts can be adjusted as the size of the permit area or the projected cost of reclamation changes  SMCRA also authorizes states to enact an OSMRE-approved alternative bonding system as long as the alternative achieves the same objectives  One kind of alternative bonding system is known as a bond pool  Under this type of system, the operator may post a financial assurance for an amount determined by multiplying the number of acres in the permit area by a per-acre assessment  The per-acre assessment may vary depending on the site-specific characteristics of the planned mining operation and the operator’s history of compliance with state regulations  However, the per-acre bond amount may be less than the estimated cost of reclamation  To supplement the per-acre bond, the operator generally must pay a fee for each ton of mined coal and may also be required to pay other types of fees  These funds are pooled and can be used to reclaim sites that participants in the alternative bonding system do not reclaim  Under OSMRE regulations, all alternative bonding systems must provide a substantial economic incentive for the operator to comply with reclamation requirements and must ensure that the regulatory authority has adequate resources to complete the reclamation plan for any sites that may be in default at any time  OSMRE regulations implementing SMCRA recognize three major types of financial assurances: surety bonds, collateral bonds, and self-bonds  A surety bond is a bond in which the operator pays a surety company to guarantee the operator’s obligation to reclaim the mine site  If the operator does not reclaim the site, the surety company must pay the bond amount to the regulatory authority, or the regulatory authority may allow the surety company to perform the reclamation instead of paying the bond amount  Collateral bonds include cash; certificates of deposit; liens on real estate; letters of credit; federal, state, or municipal bonds; and investment-grade rated securities deposited directly with the regulatory authority  A self-bond is a bond in which the operator promises to pay reclamation costs itself  Self-bonds are available only to operators with a history of financial solvency and continuous operation  To remain qualified for self-bonding, operators must, among other requirements, do one of the following: have an “A” or higher bond rating, maintain a net worth of at least $10 million, or possess fixed assets in the United States of at least $20 million  In addition, the total amount of self-bonds any single operator can provide shall not exceed 25 percent of its tangible net worth in the United States  Primacy states have the discretion on whether to accept self-bonds  State regulatory authorities and OSMRE reported holding a total of approximately $10 2 billion in surety bonds, collateral bonds, and self- bonds as financial assurances for coal mine reclamation in 2017  Of the total amount of financial assurances, approximately 76 percent ($7 8 billion) were in the form of surety bonds, 12 percent ($1 2 billion) in collateral bonds, and 12 percent ($1 2 billion) in self-bonds (see fig  1)  Twenty-four states reported holding surety bonds, 20 states reported holding collateral bonds, and 8 states reported holding self-bonds (see table 1)  In addition, OSMRE officials identified 6 states—Indiana, Kentucky, Maryland, Ohio, Virginia, and West Virginia—that have also established alternative bonding systems, such as bond pools  In a state with a bond pool, the operator may generally post a financial assurance for less than the full estimated cost of reclamation; in addition, the operator must pay into a bond pool  The pooled funds can be used to supplement forfeited financial assurances to reclaim sites that operators participating in the bond pool do not reclaim  States and OSMRE reported that operators forfeited more than 450 financial assurances for reclaiming coal mines between July 2007 and June 2016, with 13 of the 25 states reporting at least one forfeiture  States and OSMRE reported that the amount of financial assurance forfeited was sufficient to cover the cost of required reclamation in about 52 percent of the cases and did not cover the cost of required reclamation in about 22 percent of the cases  In the remainder of the cases (26 percent), the state or OSMRE reported that it had not yet determined if the financial assurance amount covered the reclamation costs that it was intended to cover  State and OSMRE officials said that it can take many years to fully reclaim a site and that it may take time for them to identify the extent of reclamation needed and to determine if the amount of financial assurance forfeited was sufficient to cover reclamation costs  State and OSMRE officials said there were several reasons why the amount of financial assurance obtained might not be sufficient to cover reclamation costs  For example, officials said the amount of financial assurance might not be sufficient if an operator mined in a manner inconsistent with the approved mining plan upon which the amount of financial assurance was calculated or if mining activity resulted in water pollution that was not considered when the amount of financial assurance was calculated  In cases where the amount of financial assurance does not cover the cost of reclamation, the operator remains responsible for reclaiming the mine site  However, OSMRE officials said that in those cases where the operator may be experiencing financial difficulties, it might be difficult for the states or OSMRE to compel the operator to complete the reclamation or provide additional funds to do so without having the operator go out of business or into bankruptcy  If the operator does not reclaim the site, the regulatory authority must use the forfeited financial assurance to do so  If the forfeited funds are not adequate, the site may not be fully reclaimed unless the regulatory authority either successfully sues the operator for more funds or provides any additional funds needed for reclamation  One other source of funds states can use to reclaim forfeited mines is civil penalties that the United States government collects from operators that violate conditions of their mining permits  OSMRE obligated approximately $2 8 million in civil penalties from fiscal years 2012 through 2017 for states to use to perform reclamation in cases where the financial assurance was not sufficient, according to agency officials  OSMRE has taken steps—including periodically reviewing financial assurance amounts, inspecting mine sites, and reviewing state programs that implement SMCRA—to oversee financial assurances and aspects of the mining and reclamation process that can affect whether the amount of financial assurances obtained will cover the cost of required reclamation  SMCRA requires OSMRE or the primacy state regulatory authority to calculate the amount of financial assurance required for each mine and to adjust the amount when the area requiring bond coverage increases or decreases or when the cost of future reclamation changes  OSMRE officials and state regulatory authority officials from four of the six states we interviewed said they generally review the amount of financial assurance at least every 2 1/2 years or when the mining plan has been modified in a way that may affect the amount of financial assurance required  Such periodic reviews are in part to help ensure that OSMRE and state regulatory authorities continue to hold an amount sufficient to complete required reclamation as conditions change  These reviews can lead to OSMRE or the state regulatory authority changing the amount of financial assurance required for a mine  For example: A state regulatory authority official in Utah said that the regulatory authority reviewed an existing mine permit in 2014, which led to it recalculating the estimated cost of reclamation on the basis of current costs  The state regulatory authority requested that the operator provide a financial assurance to cover the difference (approximately $195,000), in addition to the $445,000 financial assurance already in place  However, the official said that the operator—which had stopped mining the site in 2012 and filed for bankruptcy in 2013—did not provide the additional financial assurance amount  As a result, in 2017 the state regulatory authority collected the financial assurance that was in place (i e , the operator forfeited its assurance)  The official said in December 2017 that the state regulatory authority is determining the steps it will take to reclaim the site and expects that the forfeited amount will be sufficient to cover reclamation costs  OSMRE officials said that the agency reviewed a permit for a mine on Navajo tribal lands and determined that it needed to ask the operator to provide an additional financial assurance in the amount of $5 7 million  The increase was due to inflation and to include certain costs, such as the cost of mobilizing equipment needed for reclamation, that had inadvertently been excluded from the earlier calculation of the financial assurance required  The officials said that the operator provided the additional financial assurance amount  State regulatory authority officials in Wyoming said they review financial assurance amounts annually, and in 2017 they reduced the financial assurance for one mine by almost $35 million because of a substantial decline in fuel costs and the mine’s ability to share the cost of needed reclamation equipment with a neighboring mine  SMCRA requires OSMRE to make an average of at least one complete inspection per calendar quarter and one partial inspection per month for each active permit for which it is the regulatory authority to ensure that mines are in compliance with SMCRA and federal regulations  Complete inspections cover all inspection elements in OSMRE’s directive, while partial inspections may instead focus on issues that most frequently result in violations or a specific topic identified for oversight, according to OSMRE officials  In addition, OSMRE’s directive instructs the agency to inspect a sample of mines annually in states that have primacy to monitor and evaluate approved state programs’ compliance with SMCRA  The total number of inspections OSMRE is directed to conduct in primacy states is based on the number of inspectable units in each state  Complete inspections are to be done on 33 percent of those sites selected for inspection  Overall, OSMRE completed more inspections in primacy states than directed each year for evaluation years 2013 through 2016, according to agency data  For example, in evaluation year 2016, OSMRE’s directive called for it to conduct 1,225 inspections and OSMRE completed 1,388  As part of a complete inspection, OSMRE confirms that the operator is following the mining and reclamation plans to assure that the amount of financial assurance in place is adequate, according to OSMRE officials  If a violation is identified during an inspection, SMCRA requires OSMRE to issue a ten-day notice to the state regulatory authority or an immediate cessation order to the operator  If the violation increases the estimated cost of reclamation (e g , if the operator disturbed more land than it was approved for) or an adequate financial assurance had not been collected, OSMRE or the state regulatory authority can request that the operator provide an additional financial assurance  For example: OSMRE issued a ten-day notice to the Pennsylvania regulatory authority in 2015 because a water treatment system for a mine in that state did not have a financial assurance  According to OSMRE officials, the state regulatory authority took appropriate action to resolve the situation by issuing an order for the operator to post a financial assurance within 7 days  During an inspection of a mine in Tennessee, a nonprimacy state, OSMRE determined that the operator had not correctly reclaimed a portion of the mine because the slope of the regraded area was too steep, according to an OSMRE official  For the reclamation work that would be needed to regrade that area, OSMRE determined that the operator needed to provide an additional financial assurance of $272,000  Under SMCRA, OSMRE is required to evaluate each primacy state’s coal program annually to ensure that it complies with SMCRA  SMCRA includes a requirement that the regulatory authority secure necessary financial assurances to assure the reclamation of each permitted mine site  While OSMRE’s directive on oversight of state and tribal regulatory programs does not instruct the agency to review state regulatory authority calculations of financial assurance amounts, it instructs OSMRE to focus on the state programs’ success in achieving the overall purposes of SMCRA  For example, OSMRE, in conducting its oversight, is to evaluate the states’ effectiveness in successfully reclaiming lands affected by mining and in avoiding negative effects outside of areas authorized for mining activities  If OSMRE’s review of a state program identifies an issue that could result in the state not effectively implementing, administering, enforcing, or maintaining all or any portion of its approved coal program, OSMRE can work with the state regulatory authority to develop an action plan to correct the issue  If a state regulatory authority does not take the necessary corrective action, OSMRE may begin the process of withdrawing approval for a part or all of the state’s primacy  In addition to annually evaluating state programs, OSMRE can conduct national or regional reviews on specific topics  For example, OSMRE conducted a national review in 2010 that examined how state regulatory authorities calculated the required amount of financial assurances for coal mine reclamation  The review examined financial assurance practices in 23 states and reported that on the basis of the sample of mining permits reviewed, OSMRE was unable to determine if the amount of financial assurances was adequate for at least one of the permits it reviewed in 10 of the 23 states  Among the potential issues OSMRE identified were errors in the methods state regulatory authorities used to calculate financial assurance amounts and insufficient information in the reclamation plan upon which to calculate reclamation costs  OSMRE has worked with the 10 state regulatory authorities to address the financial assurance issues identified in the 2010 review  For example, OSMRE’s review found that the regulatory authority in Pennsylvania did not secure sufficient financial assurances to complete reclamation plans, in part because amounts were not calculated based on the actual sizes of the areas excavated for mining  In August 2014, OSMRE and Pennsylvania’s regulatory authority agreed to an action plan to ensure that the financial assurances for all active and new permits would be calculated using the actual sizes of the excavated areas  According to an OSMRE official, as of February 2017, the state regulatory authority had recalculated the financial assurance amount for all mines and had secured the additional financial assurances needed from operators of all but two of the mines  State officials said in October 2017 that they were continuing to work to obtain the assurances required for the two mines  OSMRE’s 2010 review also found that financial assurances in Kentucky were not always sufficient to cover required reclamation costs, in part because the method Kentucky’s regulatory authority used to calculate financial assurance amounts did not factor in all costs, such as the cost of moving equipment to and from the reclamation site  In February 2011, OSMRE and Kentucky’s regulatory authority signed an action plan identifying steps needed to address the issues OSMRE had identified  However, in May 2012, OSMRE determined that the state regulatory authority’s proposed changes to its method for calculating financial assurance amounts was an improvement but would not result in the authority obtaining sufficient funds to cover required reclamation  As a result, OSMRE initiated the process of revoking Kentucky’s primacy for this aspect of its program  In response, Kentucky implemented regulations to increase the minimum financial assurance required  The regulations also required the state regulatory authority to evaluate financial assurance amounts every 2 years to determine whether they need to be increased, among other things  The state regulatory authority sent a set of program amendments to OSMRE designed to address the identified deficiencies, some of which OSMRE is currently reviewing  OSMRE and state regulatory authorities face a number of challenges in managing financial assurances for coal mine reclamation—including those related to self-bonding, unanticipated reclamation costs, and the financial stability of surety companies—according to federal and selected state regulatory authority officials, representatives from organizations associated with the mining and financial assurance industries, and representatives from environmental nongovernmental organizations whom we interviewed  Challenges facing OSMRE and state regulatory authorities related to self- bonding include the following: Not knowing the complete financial health of an operator  The information federal regulations require operators to provide to regulatory authorities may provide an incomplete picture of the financial health of an operator, according to some parties we interviewed  For example, the financial information that operators provide reflects their past financial health, which may not reflect the operators’ current financial position, according to OSMRE’s response to the 2016 petition seeking revisions to its self-bonding regulations  In addition, if an operator applying for a self-bond is a subsidiary of another company, the operator is not required by regulation to submit information on the financial health of its parent company  While the operator applying may have sufficient financial assets to qualify for self-bonding, if its parent company experiences financial difficulties, the operator’s assets may be drawn on to meet the parent’s obligations, which could worsen the financial health of the self-bonded operator  In addition, according to OSMRE officials, even if OSMRE or a state regulatory authority were to become aware that an operator’s parent company was at financial risk, it would be difficult for the agency to deny the operator’s request for a self-bond because eligibility is specific to the entity applying for the self-bond, according to regulations  OSMRE could change its self-bonding regulations to require more information, according to OSMRE officials  However, the financial relationships between parent and subsidiary companies have become increasingly complex, making it difficult to ascertain an operator’s financial health on the basis of information reported in company financial and accounting documents, according to officials  When OSMRE first approved its self-bonding regulations in 1983, it noted that it was attempting to provide rules that would allow self-bonding without necessitating regulatory authorities to employ financial experts to determine which companies should be allowed to self-bond  However, according to OSMRE officials, financial expertise is now often needed to evaluate the current complex financial structures of large coal companies, which was not envisioned when the regulations were developed  Difficulty in determining whether an operator qualifies for self- bonding  The regulatory authority in a given state may not be aware that an operator had self-bonded in other states, making it difficult for the agency to determine whether the operator qualifies for self- bonding, according to some parties we interviewed  Operators are only allowed to self-bond for up to 25 percent of their net worth in the United States, according to regulations  Regulatory authority decisions on accepting self-bonds generally focus on assessing activities occurring in a specific state, not nationwide, according to the Interstate Mining Compact Commission  As a result, the state regulatory authority or OSMRE may know whether an operator has applied for self-bonds in other states that if approved would exceed 25 percent of its net worth in total  Difficulty in replacing existing self-bonds with other assurances if needed  OSMRE and state regulatory authorities may find it difficult to get operators to replace existing self-bonds with another type of financial assurance when needed, according to some parties we interviewed  If an operator no longer qualifies for self-bonding (e g , if it has declared bankruptcy), federal regulations require it to either replace self-bonds with other types of financial assurances or stop mining and reclaim the site  In either case, however, some parties noted that such actions could lead to a worsening of the operator’s financial condition, which could make it less likely that the operator will successfully reclaim the site  Some parties we interviewed have noted that regulatory authorities may be reluctant to direct the operator to replace a self-bond with another type of financial assurance and may instead allow the operator to keep mining so that any generated revenue could help the operator reclaim the site  For example, in 2015 the Wyoming regulatory authority determined that an operator no longer qualified for self-bonding and ordered it to replace a $411 million self-bond  However, the operator entered into bankruptcy without having replaced the self-bond  In this case, the state regulatory authority determined that reclamation was more likely to occur if the operator continued mining and allowed the operator to do so without a valid financial assurance  The operator replaced its self-bond as a part of its bankruptcy settlement approximately 17 months after the state regulatory authority’s order to replace the self-bond, according to OSMRE officials  However, if a self-bonded operator were to enter bankruptcy and did not secure a financial assurance to replace the self-bond or complete the required reclamation, the state regulatory authority would have to work through the bankruptcy proceedings to obtain funds for reclamation, according to OSMRE’s preamble to its 1983 self-bonding regulations  As a result, the state may recover only some, or possibly none, of the funds promised through the self- bond, and the cost of reclamation could fall on taxpayers  Difficulty in managing the risk associated with self-bonding  The risk associated with self-bonding is greater now than when the practice was first authorized under SMCRA, according to some parties we interviewed  According to SMCRA, the purpose of financial assurances is to ensure that regulatory authorities have sufficient funds to complete required reclamation if the operator does not do so  While SMCRA allows self-bonding in certain circumstances, when OSMRE first approved its self-bonding regulations, the agency did so noting that at the time there were companies financially sound enough that the probability of bankruptcy was small  Furthermore, the regulations stated that the intent was to avoid, to the extent reasonably possible, the acceptance of a self-bond from a company that would enter bankruptcy  However, as previously mentioned, three of the largest coal companies in the United States declared bankruptcy in 2015 and 2016, and these companies held approximately $2 billion in self-bonds at the time, according to an OSMRE August 2016 policy advisory, making it a very different risk landscape than originally envisioned  Following these bankruptcies—and recognizing that the coal industry was likely to continue to face economic challenges for several more years— OSMRE initiated steps in 2016 to reexamine the role of self-bonding for coal mine reclamation  Specifically, as previously mentioned, OSMRE issued a policy advisory in August 2016 noting that given these circumstances, state regulatory authorities should exercise their discretion under SMCRA and not accept new or additional self-bonds for any permit until coal production and consumption market conditions reach equilibrium  OSMRE has reported that it is not likely for that to occur until at least 2021  OSMRE also announced in September 2016 that the agency planned to examine changes to its bonding regulations that would, among other things, help ensure that reclamation is completed if a self-bonded operator does not do so  However, following a review of department actions that could affect domestic energy production, Interior announced in October 2017 that it was reconsidering the need for and scope of potential changes to its bonding regulations  OSMRE officials said that they did not have a timeline for finalizing a decision on potential changes in its bonding regulations  In addition, OSMRE rescinded its August 2016 policy advisory that states take steps to assess whether operators currently using self-bonds can still quality to do so and that states not accept any new self-bonds  Similar issues involving bankruptcies of hardrock mining operators led the Bureau of Land Management to implement regulations in 2001 eliminating the use of self-bonding for hardrock mining  In doing so, the Bureau of Land Management determined that a self-bond is less secure than other types of financial assurances, especially in cases where commodity prices fluctuate  The agency also noted that operators that would otherwise be eligible to self-bond should not have a significant problem obtaining another type of financial assurance  In our previous work examining other types of environmental cleanup, we found that the financial risk to the government and the amount of oversight needed for self-bonds are relatively high compared to other forms of financial assurances  Furthermore, we also previously reviewed federal financial assurance requirements for coal mining, hardrock mining, onshore oil and gas extraction, and wind and solar energy production and found that of these activities coal mining is the only one where self-bonding was allowed  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses to the federal government and states would require that SMCRA be amended  Unanticipated reclamation costs, such as those related to long-term treatment for water pollution, may arise late in a mine’s projected lifespan, and the operator may not have the financial means to cover the additional costs, according to OSMRE officials  Under SMCRA, OSMRE and state regulatory authorities are not to approve a permit for a coal mine if the regulatory authority expects the mine to result in long-term water pollution  As a result, since long-term water pollution is not anticipated to occur, the cost of addressing it would not be included in the initial financial assurance that the operator provides  If the regulatory authority later determines that long-term water treatment is needed, the regulatory authority must adjust the amount of financial assurance that the operator is required to provide  Some parties we interviewed have also noted that the costs and duration of long-term water treatment are not well defined and that surety bonds are not well-suited to provide assurance for such indefinite long-term costs  For example, according to the Interstate Mining Compact Commission, surety bonds are designed for shorter-term, defined obligations that have a high certainty for bond release following the completion of reclamation  To help address this challenge, some states have established, or allowed operators to establish, trust funds to help cover such unanticipated reclamation costs  For example, West Virginia established a fund, primarily supported through a tax on the amount of coal mined, to operate water treatment systems on forfeited sites  West Virginia’s regulatory authority is also working to evaluate permits for sites with water pollution to estimate water treatment costs within the state more precisely  Similarly, Pennsylvania allows operators to establish trust funds that are maintained by foundations and monitored by the state regulatory authority and are intended to ensure that there are sufficient funds to cover the costs of long-term water treatment, according to state regulatory authority officials  In addition, the OSMRE-run coal program in Tennessee allows trust funds for water treatment, in part because an assurance system that provides an income stream may be better suited to ensuring the treatment of long-term water pollution than conventional financial assurances, according to an OSMRE notice in the Federal Register  The utility of surety bonds in providing a financial assurance depends on the surety company’s ability to pay the amount pledged if the operator forfeits  OSMRE regulations require that a surety company be licensed to do business in the state where a mine is located  Some parties we interviewed noted that surety companies have declared bankruptcy or experienced financial difficulties in the past and could experience similar difficulties in the future  In addition, two states reported recent issues related to surety companies  For example, state regulatory authority officials in Alabama said that a surety company that had provided surety bonds totaling $760,000 for four mines in that state had gone bankrupt or was insolvent  As of May 2017, the state had collected only $127,000  Similarly, state regulatory authority officials in Alaska said that as of August 2017, the state had not collected any part of a forfeited $150,000 surety bond because the surety company had gone bankrupt  In our previous work examining other types of environmental cleanup, we have found that the financial risk to the government and the amount of oversight needed for surety bonds are relatively low to moderate compared to other forms of financial assurances  Billions have been spent to reclaim mines abandoned prior to the financial assurance requirements SMCRA put in place, and billions more remain  Under SMCRA, self-bonding is allowed for coal mine operators with a history of financial solvency and continuous operation—the only type of energy production or mineral extraction activity we have reviewed for which this is allowed  Bankruptcies of coal mine operators in 2015 and 2016 have highlighted risks that OSMRE and state regulatory authorities face in managing self-bonding—a risk that may be greater today than when self-bonding was first authorized under SMCRA  If a self-bonded operator were to enter bankruptcy and does not provide a different type of financial assurance or complete the required reclamation, the regulatory authority and the taxpayer potentially assume the risk of paying for the reclamation  Although OSMRE said it would examine changes to its self- bonding regulations following recent bankruptcies, Interior recently said that it is reconsidering the need to do so  Because SMCRA explicitly allows states to decide whether to accept self-bonds, eliminating the risk that self-bonding poses would require amending SMCRA  Until such a change is made, the government will remain potentially at financial risk for future reclamation costs resulting from coal mines with unsecured financial assurances  Congress should consider amending SMCRA to eliminate the use of self- bonding as a type of financial assurance for coal mine reclamation  (Matter for Consideration 1) We provided a draft of this report to the Department of the Interior for review and comment  Interior did not provide written comments on our findings and matter for congressional consideration  OSMRE provided technical comments in an e-mail, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the appropriate congressional committees, the Secretary of the Interior, the Acting Director of OSMRE, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions, please contact Anne-Marie Fennell at (202) 512-3841 or fennella@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  Major contributors to this report are listed in appendix II  We selected a nonprobability sample of states to examine the Office of Surface Mining Reclamation and Enforcement’s (OSMRE) oversight activities in more detail  We generally selected states that produced the most coal in 2015 but also selected states in order to achieve some variation in factors such as geographic location, the dominant type of coal mining conducted (e g , surface or underground mining), whether the state had primacy, and whether the state allowed self-bonding (see table 2)  In addition to the contact named above, Elizabeth Erdmann (Assistant Director), Antoinette Capaccio, Jonathan Dent, Cynthia Grant, Marya Link, Anne Rhodes-Kline, Sheryl Stein, Guiovany Venegas, and Jack Wang made key contributions to this report 


Report 2:  The findings included that there was a variance in the authorities used between organizations, management unfamiliarity with all available authorities, and a belief among managers that expanded use of some authorities is needed to produce more quality hires  DOD’s Cost- Comparison Report recommended DOD and OPM should explore opportunities to refine, consolidate, or reduce unused, inefficient, or cumbersome hiring authorities  We provided a draft of this report to DOD for review and comment  In written comments, DOD non-concurred with our assessment that DOD partially addressed the mandated reporting element to provide an accounting of the fully-burdened cost of federal civilian and service contractor personnel performing functions at the selected installations to include training, benefits, reimbursable costs, and facility overhead  DOD’s comments are reproduced in their entirely in appendix I  DOD also provided technical comments, which we incorporated as appropriate  DOD stated that we presented the three reporting elements identified in the congressional mandate absent the full context and congressional intent  Specifically, DOD stated that in the congressional mandate, the list of elements to be included in the report is not a stand-alone list and DOD stated that we present the elements as a stand-alone list  DOD further stated that the list of elements in the mandate is preceded by a paragraph that we did not reproduce in our report, but which provides context and congressional intent for the reporting elements  We do not believe that the language omitted from our report changes the meaning of the reporting elements to be included in DOD’s cost comparison report because the paragraph omitted clearly states that the purpose of the report is to provide the results of a study that includes a comparison of the fully-burdened cost of the performance of functions by DOD civilian personnel with the fully-burdened cost of the performance by DOD contractors  The paragraph preceding the reporting elements and the elements reads as follows: The committee directs the Secretary of Defense to submit to the Committees on Armed Services of the Senate and the House of Representatives, and to the Comptroller General of the United States, a report setting forth the results of a study, conducted by the Secretary for the purposes of the report, of a comparison of the fully-burdened cost of performance of functions by Department of Defense (DOD) civilian personnel with the fully-burdened cost of the performance of functions by DOD contractors by no later the February 1, 2016  The study shall include: (1) An assessment of performance of such functions at six DOD installations selected by the Secretary for purposes of the study from among DOD installations at which functions are performed by an appropriate mix of civilian personnel and contractors, with four such installations to be located in the continental United States and two such installations to be located outside the continental United States; (2) An accounting of the fully-burdened cost of DOD civilian personnel and contractors performing functions for DOD (including costs associated with training, benefits, reimbursable costs under chapter 43 of title 41, United States Code, and facility overhead) in order to permit a direct comparison between the cost of performance of functions by DOD civilian personnel and the cost of the performance of functions by contractors; (3) A comparison of the cost of performance of the full range of functions, required expertise, and managerial qualities required to adequately perform the function to be compared, including: a  Secretarial, clerical, or administrative duties, including data entry; b  Mid-level managers and other personnel possessing special expertise or professional qualifications; c  Managers and other leadership; and d  Personnel responsible for producing congressionally-directed reports  The committee recommends that, in conducting the study, the Secretary should take into account the policy that inherently governmental functions vital to the national security of the United States may not be performed by contractor personnel  The report required shall include an assessment of the flexible employment authorities available to the Secretary for the employment and retention of civilian employees of the DOD, including an identification of such additional flexible employment authorities as the Secretary considers appropriate to shape the civilian personnel workforce of the DOD  Not later than 120 days after receipt of such report, the Comptroller General shall submit to Congress a report that includes an assessment of the adequacy and sufficiency of the report submitted by the Secretary, including any recommendations for policy or statutory change as the Comptroller deems appropriate  As we reported, DOD noted in its cost comparison report that it identified labor costs used in its comparisons  However, DOD did not include direct and indirect non-labor costs and DODI 7041 04 states that the full cost of personnel should include these non-labor costs as we discussed earlier in the report  Therefore, DOD only partially addressed the reporting provision  In addition, DOD stated that we omit relevant language related to congressional intent for the second reporting element (i e , an accounting of the fully-burdened cost of DOD civilian personnel and contractors)  DOD stated that the text, “      in order to permit a direct comparison between the cost of performance of functions by DOD civilian personnel and the cost of the performance of the function by contractors,” conveys the congressional intent that the study is for comparison and our exclusion of the text in our restatement of the element omitted language indicating relevant Congressional intent  We do not believe that the language omitted in our report changed the meaning of the reporting element, which is that DOD was to include an accounting of the fully- burdened costs of federal civilians and service contractors in its cost comparisons  DOD further stated that we did not assess the second reporting element (i e , an accounting of the fully-burdened cost of DOD civilian personnel and contractors) as it is directly stated but rather that we assessed the element by redefining it and then asserting that DOD partially addressed it  DOD noted that the direct language of the second reporting element is for DOD to include an “accounting” of the fully burdened cost of DOD civilian personnel and contractors  DOD asserted that we misinterpreted the meaning of “accounting” when we determined that DOD partially addressed the mandate because it did not “calculate” certain non-labor costs  We disagree  As we discuss in our report, DOD did account for the labor costs associated with federal civilian and service contractors by gathering labor cost data from several sources, but it did not include non- labor costs in its cost calculations  In order to account for the fully burdened costs of federal civilians and service contractors, as directed to do so by the preamble to the reporting elements, as well as the second reporting element, DOD should have included all labor and non-labor costs in the cost calculations  DOD also stated that our assessment incorrectly implies that to “account” for costs is equivalent to “calculating” costs as evidenced by the following quote from our draft report, "We acknowledge that DODI 7041 04 states that the cost elements can be modified, but by excluding non-labor costs in its cost comparisons, DOD did not account for the full cost of federal civilians and service contractors as requested in the mandate " DOD stated that although DOD did not “calculate” some non-labor costs, they did “account” for them in accordance with DODI 7041 04 and as directed in the congressional mandate  DOD asserted that in multiple places, DODI 7041 04 states that common costs "are excluded" and "may be excluded" from cost comparisons  DOD provided facility costs as an example of non-labor costs accounted for but not calculated in its cost comparisons  DOD stated that in its report, all of the civilian positions and contractor functions are performed at government-owned facilities  Thus, facility costs are common costs and may be excluded  DOD stated that their report accounted for facility costs by recognizing that such costs exist and are common costs, thus, DOD properly excluded such costs in accordance with DODI 7041 04, and their report satisfied the Congressional mandate  We disagree  As mentioned above, the preamble to the mandated reporting elements and the second reporting element specifically directed that DOD account for the fully-burdened cost of DOD civilian and contractor personnel  Because there are multiple costs associated with civilian and contractor personnel, calculations are necessary in order to account for the full cost of these workforces  DODI 7041 04 instructs that if a function is performed on government property, the costs of goods, services, and benefits that are common costs may be excluded provided the number of government and contactor personnel is equivalent  While there were some instances where it was the case that DOD’s cost estimates involved an equal number of civilian and contractor personnel performing functions on government property, there were many instances where the personnel numbers differed and common costs should not have been excluded  For example, in DOD’s comparisons of federal civilians and service contractors at Fort Belvoir Community Hospital, DOD conducted comparisons of 19 functions where 2 functions had equal numbers of federal civilian and service contractors and 17 functions had differing numbers of federal civilian and service contractors  In one comparison, the number of contractors was over three times the number of civilians  DODI 7041 04 further instructs that when the number of government and contractor personnel differs, adjustments must be made to the cost estimates to account for the difference in number of government and contractor personnel  DOD did not make these adjustments in is calculations and as result non-labor costs should not have been excluded; therefore, DOD did not account for the fully- burdened costs, as directed by Congress  We are sending copies of this report to the appropriate congressional committees  We are also sending copies to the Secretary of Defense, the Director of the Office of Cost assessment and Program Evaluation and other interested parties  This report will also be available at no charge on our Web site at http://www gao gov  Should you or your staff have any questions concerning this report, please contact Brenda S  Farrell at (202) 512-3604 or farrellb@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix II  In addition to the contact named above, Vincent Balloon, Assistant Director; Timothy Carr, Felicia Lopez, Clarice Ransom, Michael Silver, and Norris “Traye” Smith made key contributions to this report  Department of Defense: Actions Needed to Address Five Key Mission Challenges, GAO-17-369 (Washington, D C : June 13, 2017) DOD Civilian and Contractor Workforces: Additional Cost Savings Data and Efficiencies Plan Are Needed, GAO-17-128 (Washington, D C : October 12, 2016) Federal Hiring: OPM Needs to Improve Management and Oversight of Hiring Authorities, GAO-16-521 (Washington, D C : August 2, 2016) DOD Service Acquisition: Improved Use of Available Data Needed to Better Manage and Forecast Service Contract Requirements, GAO-16-119 (Washington, D C : February 18, 2016) Civilian and Contractor Workforces: Complete Information Needed to Assess DOD’s Progress for Reductions and Associated Savings, GAO-16-172 (Washington, D C : December 23, 2015) DOD Inventory of Contracted Services: Actions Needed to Help Ensure Inventory Data Are Complete and Accurate, GAO-16-46 (Washington, D C : November 18, 2015) Sequestration: Comprehensive and Updated Cost Savings Would Better Inform DOD Decision Makers if Future Civilian Furloughs Occur, GAO-14-529 (Washington, D C : June 17, 2014) Human Capital: Opportunities Exist to Further Improve DOD’s Methodology for Estimating the Costs of Its Workforces, GAO-13-792 (Washington, D C : September 25, 2013) Human Capital: Additional Steps Needed to Help Determine the Right Size and Composition of DOD’s Total Workforce, GAO-13-470 (Washington, D C : May 29, 2013) Defense Outsourcing: Better Data Needed to Support Overhead Rates for A-76 Studies, GAO/NSIAD-98-62 (Washington, D C : Feb  27, 1998)

ground_truth: In addition to more than 2.2 million active duty and reserve personnel, DOD employs about 760,000 federal civilians and more than 560,000 contractors. In the Senate Report 114-49 accompanying a bill for the National Defense Authorization Act for Fiscal Year 2016 included a provision for DOD to issue a report (1) assessing functions performed by federal civilian and service contractor personnel, (2) accounting for the full costs of federal civilian and service contractor personnel performing these functions, (3) comparing these costs, and (4) assessing available hiring and retention authorities for federal civilians. The Senate report also included a provision for GAO to assess DOD's report, which DOD submitted to Congress in April 2017. This report examines the extent to which DOD's report addressed the prescribed congressional elements. GAO reviewed DOD's report and compared it to the prescribed elements, examined documents relevant to DOD's cost estimating and comparison methodology, and interviewed DOD officials, including those in its Office of Cost Assessment and Program Evaluation responsible for the calculations in DOD's report. In response to Congressional direction, the Department of Defense (DOD) issued a report in April 2017 comparing the costs of federal civilian and service contractor personnel at select installations. The report addressed three out of four provision elements and partially addressed one, as discussed below. DOD concluded that neither federal civilians nor service contractors were predominately more or less expensive, with costs being dependent on position, location, and level of seniority. DOD noted that it used a non-probability based sample of personnel for its report, and the results are not generalizable. An assessment of performance of functions being performed by federal civilian and service contractor personnel at six military installations, with four being in the continental United States and two being outside the continental United States. GAO believes that DOD addressed this requirement because it developed a methodology to assess performance of functions performed by federal civilians and service contractors at 17 organizations within nine geographic regions including two locations outside the continental United States. DOD used data from the Defense Civilian Personnel Data System to identify military installations with large reported numbers of federal civilians. DOD determined that personnel need to perform at least 80 percent common tasks to be able to make a comparison. An accounting of the fully-burdened, or full, cost of federal civilian and service contractor personnel performing functions at the selected installations including training, benefits, reimbursable costs, and facility overhead. GAO believes that DOD partially addressed this requirement because while it calculated the labor costs of selected federal civilian and service contractor full-time equivalents performing similar functions for organizations at government-owned facilities, it excluded certain non-labor costs from its calculations. A comparison of the costs of performance of these functions by federal civilians and service contractor personnel at the selected installations. GAO believes that DOD addressed this requirement because it compared calculated costs for selected federal civilians and service contractors performing similar functions at selected installations and included those comparisons in its report. An assessment of the flexible employment authorities for the employment and retention of federal civilian employees. GAO believes that DOD addressed this requirement because it sent questionnaires to DOD hiring officials and human resource professionals to collect information on flexible employment authorities and conducted interviews with these and human resource professionals at the same 17 organizations used for the cost comparison. Based on an analysis of the information collected, DOD's report included several conclusions regarding flexible hiring authorities and made one recommendation. GAO is not making any recommendations; however, DOD non-concurred with GAO's assessment that DOD partially addressed the element to account for the full cost of personnel. GAO believes the assessment is correct as discussed in the report.