```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
     THE PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST FOR THE U.S. 
   GEOLOGICAL SURVEY; THE OFFICE OF SURFACE MINING, RECLAMATION AND 
           ENFORCEMENT; AND THE MINERALS MANAGEMENT SERVICE
=======================================================================

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             March 14, 2002

                               __________

                           Serial No. 107-94

                               __________

           Printed for the use of the Committee on Resources

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
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____________________________________________________________________________
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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                      Tim Stewart, Chief of Staff
           Lisa Pittman, Chief Counsel/Deputy Chief of Staff
                Steven T. Petersen, Deputy Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    BARBARA CUBIN, Wyoming, Chairman
              RON KIND, Wisconsin, Ranking Democrat Member

W.J. ``Billy'' Tauzin, Louisiana     Nick J. Rahall II, West Virginia
Mac Thornberry, Texas                Edward J. Markey, Massachusetts
Chris Cannon, Utah                   Solomon P. Ortiz, Texas
Jim Gibbons, Nevada,                 Calvin M. Dooley, California
  Vice Chairman                      Jay Inslee, Washington
Thomas G. Tancredo, Colorado         Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho          Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
                                 ------                                
                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 14, 2002...................................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement of....................................     3
    Kind, Hon. Ron, a Representative in Congress from the State 
      of Wisconsin...............................................     4
    Rahall, Hon. Nick J. II, a Representative in Congress from 
      the State of West Virginia.................................     5

Statement of Witnesses:
    Denett, Lucy Querques, Acting Director, Minerals Management 
      Service, U.S. Department of the Interior...................    16
        Prepared statement of....................................    18
        Response to questions submitted for the record...........    32
    Jarrett, Jeffrey D., Director, Office of Surface Mining, 
      Reclamation and Enforcement, U.S. Department of the 
      Interior...................................................     7
        Prepared statement of....................................     9
        Response to questions submitted for the record...........    38
    Leahy, Dr. P. Patrick, Associate Director for Geology, U.S. 
      Geological Survey, U.S. Department of the Interior.........    11
        Prepared statement of....................................    13
        Response to questions submitted for the record...........    45

 OVERSIGHT HEARING ON THE PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST 
 FOR THE U.S. GEOLOGICAL SURVEY (EXCEPT THE WATER RESOURCES DIVISION); 
  THE OFFICE OF SURFACE MINING, RECLAMATION AND ENFORCEMENT; AND THE 
                      MINERALS MANAGEMENT SERVICE

                              ----------                              

                        Thursday, March 14, 2002

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:11 a.m., in 
room 1310, Longworth House Office Building, Hon. Barbara Cubin 
[Chairman of the Subcommittee] presiding.

 STATEMENT OF THE HONORABLE BARBARA CUBIN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF WYOMING

    Mrs. Cubin. The Subcommittee is now called to order. We 
meet today to review the program budgets for the coming fiscal 
year for three agencies within our jurisdiction from which we 
have not already heard. These are the U.S. Geological Survey 
(USGS), the Office of Surface Mining Reclamation and 
Enforcement (OSM), and the Minerals Management Service (MMS), 
all of which are within the Department of Interior.
    The USGS, established in 1879, is the premier earth 
sciences agency in this country, and now does research in the 
biological sciences as well, in support of our public lands 
managers and for societal needs in general. Our water resources 
investigations are a large part of this agency's efforts, but 
oversight of those programs falls within our sister panel, the 
Subcommittee on Water and Power. Dr. P. Patrick Leahy, 
Associate Director for Geology at the USGS, is here today to 
outline the agency's proposed programs and the budget to 
support them.
    OSM was established under the Surface Mining Control and 
Reclamation Act of 1977, or as we fondly call it, SMCRA, to 
oversee State and tribal efforts to regulate the impacts of 
modern-day coal mining operations and reclaim the pre-1977 
abandoned mine lands. OSM is a relatively small bureau, in 
large measure because Congress wanted to ensure a consistency 
in State regulation of coal mining impacts by creating a 
Federal review of the adequacy of the State programs, but not 
by regulating the mines directly. Likewise, most reclamation 
efforts are conducted in response to State program-identified 
needs, where OSM's role is to administer grant monies, not to 
do the dirt-work per se.
    The newly sworn in Director of OSM, Mr. Jeffrey Jarrett, 
who most recently was the Deputy Secretary in the Commonwealth 
of Pennsylvania's coal mining regulatory and reclamation 
program, is here with us today. He will outline plans for the 
Federal agency and describe the 2003 budget proposal in which, 
by the way, he had no input because it was created well before 
he came. So I expect him to know every detail and reason for 
each line item.
    [Laughter.]
    Last, MMS is the Federal agency established by way of an 
appropriations law in 1982 from functions formerly in the 
Geological Survey and the Bureau of Land Management. MMS owes 
its birth actually to the mismanagement of Federal and Indian 
royalty collection efforts which prompted then Secretary of the 
Interior James Watt, who is from my State as well, to work with 
Congress to reform the program and establish this agency. MMS 
lacks an organic act but it has a big job to do in managing 
offshore leasing and operations for oil and gas beneath Federal 
waters of the Outer Continental Shelf and collecting Federal 
and Indian mineral lease revenues.
    I am proud to say that Ms. Johnnie Burton, currently the 
Director of Revenue for the great State of Wyoming, has been 
announced as the new Director of MMS effective mid-March this 
year, but today we are happy to have the Acting Director, Lucy 
Denett, with us to outline the MMS proposed budget. And she is 
here in spite of recent surgery, and we really appreciate the 
extra effort.
    Together, these three bureaus are proposing to spend over 
$2 billion, some from appropriated general funds and some from 
dedicated trust funds. On the other hand, the two regulatory 
agencies will collectively take in somewhere on the order of $6 
billion to be distributed to States, tribes, and individual 
Indian allottees, land and water conservation trust funds, 
reclamation funds, and the general fund.
    The USGS, in the conduct of sound science, will take in 
matching funds from State and local governments in support of 
its cooperative programs, and will part with some Federal 
dollars to State geological surveys to pay for peer-reviewed 
geological mapping grants.
    While not a part of this Subcommittee's jurisdiction, I 
would note that the administration is proposing to shift some 
$10 million in previous USGS funding for hydrologic research in 
toxic compounds to the National Science Foundation, and the 
National Science Foundation is to competitively grant to 
researchers in academic institutions throughout the country for 
the studies that will be done. Perhaps this is a sign of things 
to come--I don't really know--as government science goes down 
the ``contracting out'' route that industry takes lower costs 
into consideration, and makes efficiencies work and be shown 
that making efficiencies is as productive.
    Before I turn to our ranking member, let me give a 
collective welcome to all three of our witnesses, and thank you 
in advance for your testimony. We look forward to hearing from 
all of you.
    The Chair now recognizes the ranking member, Mr. Kind.
    [The prepared statement of Mrs. Cubin follows:]

  Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on 
                      Energy and Mineral Resources

    The Subcommittee meets today to review the program budgets for the 
coming fiscal year for the three agencies within our jurisdiction from 
which we have not already heard. These are the U.S. Geological Survey, 
the Office of Surface Mining, Reclamation and Enforcement, and the 
Minerals Management Service, all of which are within the Department of 
the Interior.
    The USGS, established in 1879, is the premier earth sciences agency 
in the country, and now does research in the biological sciences as 
well, in support of our public lands managers and for societal needs in 
general. Water resources investigations are a large part of this 
agency's efforts, but oversight of those programs falls within our 
sister panel, the Subcommittee on Water and Power. Dr. P. Patrick 
Leahy, Associate Director for Geology at the USGS, is here today to 
outline the agency's proposed programs and the budget to support them.
    OSM was established under the Surface Mining Control and 
Reclamation Act of 1977, (SMCRA), to oversee state and tribal efforts 
to regulate the impacts of modern-day coal mining operations and 
reclaim pre-1977 abandoned mined lands. OSM is a relatively small 
bureau in large measure because Congress wanted to insure a consistency 
in state regulation of coal mining impacts by creating a Federal review 
of the adequacy of the state programs, not by regulating mines 
directly. Likewise, most reclamation efforts are conducted in response 
to state program-identified needs where OSM's role is to administer 
grant monies, not to contract the dirt-work, per se. The newly sworn-in 
Director of OSM, Mr. Jeffrey Jarrett, who most recently was the Deputy 
Secretary in the Commonwealth of Pennsylvania's coal mining regulatory 
and reclamation program, is here with us today. He will outline plans 
for the Federal agency and describe the 2003 budget proposal in which, 
by the way, he had no input because it was created well before he took 
office.
    Lastly, MMS is the Federal agency established via appropriations 
law in 1982 from functions formerly in the Geological Survey and the 
Bureau of Land Management. MMS owes its birth to mismanagement of 
Federal and Indian royalty collection efforts which prompted then 
Secretary of the Interior Jim Watt to work with Congress to reform the 
program and establish this agency. MMS lacks an ``organic act'' but it 
has a big job to do managing offshore leasing and operations for oil 
and gas beneath Federal waters of the outer continental shelf, and 
collecting Federal and Indian mineral lease revenues. I'm proud to say 
that Ms. Johnnie Burton, currently the Director of Revenue for the 
great State of Wyoming, has been announced as the new Director of MMS, 
effective mid-March of this year. Today, the Acting Director, Ms. Lucy 
Dennett is with us to outline the MMS proposed budget.
    Together these three bureaus are proposing to spend over two 
billion dollars, some from appropriated general funds and some from 
dedicated trust funds. On the other hand, the two regulatory agencies 
will collectively take in on the order of six billion dollars to be 
distributed to states, tribes, individual Indian allottees, land and 
water conservation trust funds, reclamation trust funds, and the 
general fund.
    The USGS in the conduct of ``sound science'' will take in matching 
funds from state and local governments in support of its cooperative 
programs, and will part with some Federal dollars to state geological 
surveys with matching funds for peer-reviewed geologic mapping grants. 
While not a part of this Subcommittee's jurisdiction, I would note the 
Administration is proposing to shift some $10 million in previous USGS 
funding for hydrologic research in toxic compounds to the National 
Science Foundation to be competitively granted to researchers in 
academic institutions throughout the country. Perhaps this is a sign of 
things to come, as government science goes down the ``contracting out'' 
route that industry takes to lower its costs when and where 
efficiencies can be shown by doing so.
    Before I turn to our Ranking Member, Mr. Kind, let me give a 
collective welcome to our witnesses. Thank you in advance for your 
testimony. We look forward to working with all of you over the coming 
year.
                                 ______
                                 

   STATEMENT OF THE HONORABLE RON KIND, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Mr. Kind. Thank you, Madam Chair, and I too want to thank 
the witnesses for your presence today and the testimony you are 
about to give. Obviously we in the Subcommittee and the Full 
Committee as a whole have been very busy over the last year and 
3 months or so dealing with national energy policy, and there 
are still a lot of remaining questions in regards to where we 
go here in the 21st century in developing a sustainable and 
reasonable and logical energy policy that is going to not only 
meet our energy needs in this century but also deal with some 
very basic facts of life, one of which is we have roughly 3 
percent of the oil reserves in the world yet we are consuming 
about 25 percent of what is being produced today.
    In fact, if you just access the Department of Energy's web 
site, they too, taking into account the additional expenses of 
maintaining security interests in the Persian Gulf, have 
estimated that it cost our country roughly $57 billion last 
year alone in trying to maintain a continuous and reliable oil 
supply line from the Persian Gulf region. In fact, during the 
decade of 1980 to 1990 that cost, including the military 
expenditure in the region, was roughly $360 billion for the 
American taxpayer, which equates to roughly $100 a barrel of 
oil from the region or $5 for a gallon of gasoline in this 
country.
    So there are tremendous costs incurred in this country in 
trying to maintain the fossil fuel consumption or dependence 
that we are currently on. That is why so many of us have been 
working hard, and trying to work with the administration as 
well, in developing a much more sustainable energy policy, one 
that also recognizes the value of alternative and renewable 
energy sources, the potential of wind, solar, geothermal power, 
looking at the nuclear industry.
    But I appreciate the chance to be able to listen to the 
budget implications in your respective agencies, because you 
are going to be playing a very important and vital role in 
regards to the energy policy, whatever happens to pass this 
Congress. I am particularly concerned in regards to some areas 
of cutbacks being proposed in the President's budget and the 
impact on your areas.
    The USGS budget, and although we don't have direct 
jurisdiction over it, but the water resources aspect and the 
cutbacks in the water resources program, and I have a 
particular interest in that, along with a bipartisan coalition 
of Members, and we are hoping to be able to work with the 
administration to find out the reason for some of these program 
cutbacks, but the impact that is going to have on the type of 
data collection and water resource monitoring that is going on 
with the USGS, which I think is an incredibly important and 
vital role in regards to the management of the watershed areas 
and the water quality in this country.
    And for OSM, we are seeing a significant decrease in the 
Abandoned Mine Lands Fund which is used to reclaim the 
environment from past coal mining practices. I think that, too, 
is something we are going to have to take a closer look at and 
see what the real impact of the funding reductions in that 
program is going to be.
    And then with MMS, it is going to be losing some funding 
under the proposed budget provided last year for marine 
research, for instance.
    So these are, I think, some serious issues of concern that 
a lot of Members share with myself. We will be interested to 
hear your testimony, and perhaps some specific questions in 
those areas in particular. I just think we have so much 
potential in this country in developing the technology we need 
to really make the transition to a more sustainable energy 
policy that becomes more reliant, and understanding that we are 
going to be consuming a lot of fossil fuels and we are not 
going to make that transition quickly or easily, nonetheless I 
think more needs to be done in the research area to develop 
these alternative and renewable possibilities that exist in 
this country.
    Just quickly, I met again with the Ministry of Fisheries 
from Iceland yesterday and had a follow-up conversation that I 
had last year with them in regards to their hydrogen-powered 
program that they are implementing in Iceland, a 10-year 
program to have fuel cell powered vehicles and a bus fleet and 
their fishing fleet. And the technology that they are using to 
enable them to do that is being developed by Enable Fuel Cell 
Corporation, located in Middleton, Wisconsin, my home State. So 
it is not that we don't have the know-how or the potential to 
do it here, I think we are just lacking the will and the 
dedication of resources and really the vision and the 
leadership in order to help this country develop those type of 
alternative energy resources, as well.
    So thank you again for coming. We look forward to your 
testimony. Thank you, Madam Chair.
    Mrs. Cubin. The Chair would like to also recognize Mr. 
Rahall for an opening statement, but before I do that, I would 
like to compliment him on his appearance today, and I was 
wondering if his tie represented some of those AML dollars--
    [Laughter.]
    Mr. Rahall. Yes, Madam Chair, we wish we were rolling in 
the green that we ought to be in order to do the job that is 
necessary, but unfortunately we are not. My tie expresses that 
hope, you are correct.
    Mrs. Cubin. Mr. Rahall.

  STATEMENT OF THE HONORABLE NICK RAHALL, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mr. Rahall. Thank you, Madam Chair and distinguished 
ranking member, Mr. Kind, for allowing me to give an opening 
statement, and I salute you both for holding today's hearing.
    I would like to welcome the directors of the U.S. 
Geological Survey and OSM who are with us, as they attempt to 
justify their proposed Fiscal Year 2003 budgets. I would like 
to limit my remarks to matters pertaining to the Office of 
Surface Mining Reclamation and Enforcement, and I do so for a 
number of reasons.
    First, I do want to thank Director Jarrett for spending 
time with myself and my staff and allowing us to go over a 
number of these issues beforehand with you. The agency is very 
important not only to myself, but my home State of West 
Virginia. I was intimately involved with the establishment of 
SMCRA back in 1977 during my first year in this august body.
    It is one of those accomplishments, or lack thereof, that 
have a direct effect on the health and welfare of many of those 
that I have the true honor of representing in the Congress of 
the United States. And if for no other reason, OSM deserves our 
attention because it has often been treated, as I have said 
before, like a poor stepchild of the Department of Interior. 
That is unfortunate, but it is true.
    Director Jarrett, I do welcome you. I pray you recognize 
the challenges you face, that we all face, because these are 
trying times in our Nation's coal fields. As we continue our 
efforts to reclaim land that has been ravished by past mining 
practices, we witness a proposed cut in the Abandoned Mine 
Reclamation Program funds. The money is there. The unspent 
balance in the fund, as Madam Chair so well knows, is 
approaching $2 billion. It should be put to use improving the 
health and safety of our coal field residents and providing 
jobs.
    Our retired coal miners continue to see the stability of 
their health care system dealt severe blows time after time by 
the judiciary. Today the provision of health care for 50,000 
retirees whose average age is 78 years old may very well rest 
with this body and this administration. It may only be through 
increased AML interest transfers to their special health care 
fund that can avoid cruel cutbacks in their health care 
coverage--health care, I might add, that has been promised to 
them by our Federal Government, by administration after 
administration after administration.
    And our regulatory program, almost 25 years after the 
enactment of SMCRA, still remains unsettled. The mountaintop 
mining controversy that erupted in West Virginia a few years 
ago was a wake-up call to the regulatory authorities. The 
matter has yet to be fully put to rest.
    There are other challenges we face that you know that we 
must grapple with, as the Director of the Office of Surface 
Mining Reclamation and Enforcement, and you have that 
responsibility. A West Virginia coal miner once wrote to me, 
and I quote, ``Every law that has ever been enacted dealing 
with coal mining was penned in blood.''
    Indeed, the Farmington mine disaster gave rise to the 
enactment of the Federal Mine Safety Act in 1969, and the 
events that took place at Buffalo Creek, West Virginia, in my 
district, on that grim morning 30 years ago when a coal waste 
dam was breached, with the resulting torrent leaving 125 dead, 
over 1,000 injured, and wiping out almost 5,000 homes, that 
disaster gave rise to the enactment of SMCRA in 1977.
    As you go about your official duties, Director Jarrett, I 
urge you to keep the words of Psalm 23 close to your heart: 
``Yea, though I walk through the valley of the shadow of death, 
I will fear no evil.''
    Thank you, Madam Chair.
    Mrs. Cubin. I am having trouble finding the button. Amen.
    [Laughter.]
    Mr. Rahall. I was waiting for that.
    Mrs. Cubin. I would now like to introduce the panel. We 
have with us today, as I said in my opening statement, the 
Honorable Jeffrey Jarrett, Director of the Office of Surface 
Mining Reclamation and Enforcement; Dr. P. Patrick Leahy, the 
Director of the USGS; and Ms. Lucy Denett, Acting Director of 
Minerals Management Service.
    I now recognize Director Jarrett to testify for 5 minutes. 
Oh, you can go 10 minutes, the boss says. Oh, I said so in the 
letter of invitation. Excuse me. And if you don't have time for 
your whole testimony, then the entire testimony will be 
included in the record. Mr. Jarrett.

 STATEMENT OF JEFFREY D. JARRETT, DIRECTOR, OFFICE OF SURFACE 
  MINING RECLAMATION AND ENFORCEMENT, U.S. DEPARTMENT OF THE 
                            INTERIOR

    Mr. Jarrett. Thank you, Madam Chairwoman and members of the 
Committee. I think I can probably keep it under 5 minutes. I 
have prepared a written statement, opening statement for the 
record, that discusses OSM's proposed budget, so I will not 
discuss those budget issues in any detail in my opening 
comments.
    As you know, I have been on the job now for just a little 
over a month, and during that month I have been spending my 
time being briefed by my staff and meeting with various 
stakeholders of the OSM to learn about their concerns and 
impressions of the office. While I am continuing to learn, and 
clawing rapidly up the learning curve, I do have some initial 
impressions about some of the things that are going on within 
OSM.
    One of those issues has to do with the bonding programs 
that we oversee. As you know, Federal SMCRA requires operators 
to post bonds or other financial guarantees to ensure that the 
reclamation and the environment can be taken care of in the 
event of operator default.
    We have identified some fairly significant problems with 
the bonding program across this country, specifically the 
bonding mechanism established in Federal SMCRA. Our regulations 
are not very well suited to dealing with some of the perpetual 
environment obligations that we are encountering now. 
Specifically, within the mining industry it would be acid mine 
drainage. So we are going to be searching for better mechanisms 
available to the industry which could provide those required 
financial guarantees.
    At the same time, we have some renewed concerns about the 
adequacy of bonds for land reclamation across this country, I 
do not know enough at this point in time to say whether those 
concerns are legitimate or not. I just know that those concerns 
are such that I want to take a closer look at the issue.
    Having said that, the larger issue with bonds is that 
bonding capacity is severely reduced in this country, and 
whatever the bonding program is, I think it is incumbent upon 
us to make sure that we are not asking our industry to provide 
a financial guarantee that simply is not available in the 
marketplace. So we are going to be working with the insurance 
industry and the surety industry to explore ways of increasing 
the availability of adequate financial guarantees, not only for 
the coal mining industry, but for some of the other mineral and 
resource extraction industries as well.
    Overall, I think my impression is that one of the key 
themes of my tenure is going to be to create some stability 
within the Office of Surface Mining. I think stability is 
something that industry certainly needs. It is something that 
our citizenry needs. It is something that the State regulatory 
authorities need, because the projects that we work on and the 
job that we have to do requires us to think long term, and we 
can't think long term without adequate planning.
    So to have that adequate planning, we need a little bit of 
stability. We are going to be working in several areas to 
provide that stability, and I won't go into a great deal of 
detail, but some of the issues we are looking at is our 
rulemaking calendar, where we have to make some decisions about 
some of the proposed rulemakings to decide which ones we really 
want to proceed with and which ones we don't. My philosophy is 
that if a rule is not going to fix a problem, we probably 
shouldn't be doing it.
    On the other hand, we do have a lot of very serious 
problems out there that can only be fixed through rulemaking. 
We have other significant single issue problems that we need to 
get resolved. Mr. Rahall, you mentioned the mountaintop mining 
issue. That is certainly one of them. The 106 consultation 
review required by the National Historic Preservation Act is 
another issue.
    But ultimately I think all of the issues that we are 
struggling with right now because of the lack of stability in 
our regulatory programs can only be resolved through proper 
planning, and I think proper planning has to have two 
cornerstones to it. One is forecasting where we want to be in 
the future and where some externalities are going to force us 
to be in the future. The other is to work on defining what we 
are all about, answering the questions about why do we do all 
of the things that we do, looking at our performance outcomes 
as opposed to, checking off the list of numbers and the bean-
counting that we traditionally get accused of.
    So we are going to be working hard on those issues. I think 
that if we can do that forecasting, if we can accurately 
measure the things that we are trying to accomplish, that we 
will be able to do the one thing that I am committed to do, 
that I think is most important to create stability, and that is 
to be able to provide and achieve some level and fair budgets 
and grants to the States, not only for their Title V programs 
but also their Title IV programs. Having been responsible for 
managing a State regulatory authority for 7 years prior to this 
job, I know that even more critical than the level of funding 
is the stability and predictability of that funding. That is 
true in the Title V program and in the Title IV program.
    And of course one of the criticisms leveled against OSM by 
industry, is that we have spent a great deal of money on 
overhead in the AML program. As a former State regulator I can 
tell you that one of the contributing factors to overhead is 
not knowing what your grant is going to be next year and not 
having level grants. States simply can't staff up to handle 
large grants, and then lose the grant the next year and then 
have to staff back down.
    So we want to work real hard to develop the information 
that we think we need, and I will take the blame for this, but 
I think as an agency we need to do a much better job of making 
a case for those grants, both Title IV and Title V. We need to 
be able to debate, internally and up the line, about the 
importance of those programs, and we can only do that if we 
come up with better ways to measure what those programs are all 
about.
    Having said that, I will be glad to answer any questions 
that anyone has.
    [The prepared statement of Mr. Jarrett follows:]

  Statement of Jeffrey D. Jarrett, Director, Office of Surface Mining 
      Reclamation and Enforcement, U.S. Department of the Interior

    Madam Chairwoman and Distinguished Members of the Subcommittee, I 
am pleased to present to you the Fiscal Year (FY) 2003 budget request 
of the Office of Surface Mining Reclamation and Enforcement (OSM).
    In August, OSM will mark the 25th Anniversary of its creation. OSM 
was established with the passage of the Surface Mining Control and 
Reclamation Act of 1977 (SMCRA). Since then, working closely with the 
States and Tribes, OSM has been responsible for assuring that coal 
mines are operated in a manner that protects citizens and the 
environment and to assure that the land is restored to beneficial use 
following mining. Additionally, we are responsible for reclaiming and 
restoring lands and water degraded by past mining operations.
    In the last 25 years, OSM has provided nearly $1 billion in grants 
to the States and Indian Tribes to assist in funding the regulation of 
active coal mines. Since 1979, OSM has provided about $3 billion in 
grants to the States and Tribes to clean up mine sites abandoned before 
SMCRA's 1977 enactment.
    In fact, more than 180,000 acres of abandoned coal mine sites have 
been reclaimed under OSM's Abandoned Mine Land Program.
    Our record of consultation and cooperation with States, Tribes, 
local entities, industry and the public has been a key factor in 
achieving these results. In fact, we have been praised as ``Feds Who 
Get It'' by Governing Magazine. That same professional, cooperative 
approach must continue if, in the next few years, we hope to continue 
to match these past achievements.
    The United States possesses one-fourth of the world's coal 
resources, with over 275 billion tons of recoverable reserves. Because 
of these vast domestic coal resources and the fact that over one-half 
of electricity generated in our country comes from coal-fired 
utilities, coal must be an integral part of our Nation's energy policy. 
In Fiscal Year 2003, OSM will work to identify innovations it can 
implement that will help maintain environmental quality and protect 
public health and safety while enhancing domestic coal production.
Fiscal Year 2003 Budget Request
    To address some of the issues I have just outlined, I would like to 
present some highlights of our Fiscal Year 2003 budget proposal. OSM's 
Fiscal Year 2003 budget request totals $283.6 million in current 
authority, $70 million in permanent authority, and 637 FTE's. Included 
in this amount is $4.2 million to reflect a government-wide legislative 
proposal to shift the full cost of the government's pension system and 
employee health benefits program for current employees to their 
employing agencies. Without this proposal, OSM's Fiscal Year 2003 
request is $279.4 million, a decrease of $27.1 million below the Fiscal 
Year 2002 enacted level of $306.5 million. In addition, we have a 
continuing obligation under the Coal Act of 1992 to make payments from 
interest earned on the Abandoned Mine Land (AML) Fund to the United 
Mine Workers of America Combined Benefit Fund (UMWACBF). These payments 
help defray the health care costs of retired coal miners and their 
dependents where the employing company or related entity for which they 
worked have gone bankrupt or are no longer in business. As of January 
31, 2002, $574 million had been transferred to the UMWA since Fiscal 
Year 1996. I will discuss this transfer in more depth, but first let me 
describe the discretionary portion of our Fiscal Year 2003 request.
    Our Fiscal Year 2003 budget is a fiscally responsible proposal that 
enables OSM to effectively and efficiently implement its mission goals.
    OSM's net Fiscal Year 2003 request includes $105.4 million for the 
Regulation and Technology (R&T) appropriation and $174 million for the 
AML appropriation. This request represents an increase of $2.3 million 
for the R&T program and a decrease of $29.4 million for the AML 
program, thus accounting for a total decrease of $27.1 million from 
Fiscal Year 2002.
    The Fiscal Year 2003 request for the Regulation and Technology 
appropriation will enable OSM to provide sufficient financial support 
for the 24 State regulatory programs. OSM is requesting a net $1 
million increase in State regulatory grants. This is comprised of a $2 
million increase for West Virginia offset by a $1 million reduction to 
other States' grants. State regulatory funding was increased by over $6 
million during the period from Fiscal Year 2000 to Fiscal Year 2002, 
from $50.6 million to $56.6 million. OSM is also requesting $1.3 
million for uncontrollable cost increases.
    In the Abandoned Mine Lands Program, the budget proposes a $17 
million reduction for State reclamation grants. Additionally, the 
budget proposes to transfer $2 million in carryover for Federal 
emergencies to State reclamation grants, resulting in total grant 
funding of $144.1 million. It eliminates a $0.5 million grant to 
Pennsylvania for an acid mine drainage demonstration project. It 
provides a $10.9 million one-time reduction in funding for the Federal 
emergency program; this reduction should have no programmatic impact 
since OSM has sufficient carryover funds to operate the Federal 
emergency program for Fiscal Year 2003. The proposal also reduces 
funding for Federal high priority projects by $1.3 million. The budget 
identifies savings of $0.2 million in travel costs and $0.1 million in 
general services efficiencies. It requests $0.6 million for 
uncontrollable costs.
    OSM is also continuing its funding support for the Appalachian 
Clean Streams Initiative at the Fiscal Year 2002 level of $10.0 
million. This initiative supports local efforts to eliminate 
environmental, economic, and public health impacts of acid mine 
drainage from abandoned coal mines in Appalachia. OSM has partnered 
with over one hundred Government agencies and private groups to 
leverage our resources with other parties' resources to assure 
increased reclamation of streams polluted by acid mine drainage.
    Let me now address the other component to our budget--the annual 
transfer payment to the UMWACBF.
    The Coal Industry Retiree Health Benefit Act of 1992 (the ``Coal 
Act'') amended the Surface Mining Control and Reclamation Act (30 
U.S.C. section 1232) to provide for annual transfers of interest from 
the Abandoned Mine Reclamation Fund to the Combined Benefit Fund (CBF) 
to defray health care costs for unassigned beneficiaries. The CBF 
provides health care and death benefits for eligible union coal mine 
workers who retired on or before July 20, 1992, and their dependents.
    The Coal Act holds coal operators and related companies responsible 
for paying monthly premiums for the costs of health benefits related to 
their retired mine workers and dependents (known as ``assigned'' 
beneficiaries). Under the Coal Act, the Social Security Administration 
(SSA) is responsible for computing the per beneficiary health premium 
and for assigning retired mine workers to their former employers or 
related companies. Those for whom a responsible company cannot be 
identified, are considered ``orphans,'' or unassigned beneficiaries. 
For Fiscal Year 2003, we estimate the amount of this mandatory transfer 
will be $70 million.
Government Performance and Results Act
    OSM recognizes the importance that both the Administration and the 
Congress have placed on implementing the Government Performance and 
Results Act (GPRA). The Fiscal Year 2003 budget request fully addresses 
GPRA requirements. OSM has established a Strategic Plan to carry out 
its mission, vision, and goals and to implement a budget that relates 
resource requests to strategic goals in a more understandable way. OSM 
also has developed a business-line based accounting system to determine 
the cost of each program activity, provide a mechanism for linking 
costs to performance outputs, and enhance OSM's management decision-
making process. OSM's Business Lines are:
     LEnvironmental Restoration;
     LEnvironmental Protection;
     LTechnology Development and Transfer;
     LFinancial Management; and
     LExecutive Direction and Administration.
Government-wide Management Reforms
    This budget proposal also supports the President's Government-wide 
management reform agenda of:
     LIntegrating Budget and Performance Measures
     LImproving Strategic Management of Human Capital
     LIncreasing Competitive Sourcing
     LImproving Financial Performance
     LExpanding E-Government
    OSM's budget proposals have integrated strategic goals and 
associated measures with its budget structure for the past several 
fiscal years and in 2002, OSM is implementing activity based costing. 
OSM has already developed a succession plan to help strategically 
manage its human resources. Consistent with Administration guidance, 
OSM updated its Commercial Activity Inventory in Fiscal Year 2001 and 
has just completed another update for 2002. To address improved 
financial performance, OSM has made nearly one hundred percent of its 
financial transfers through electronic funds transfers. Because of 
OSM's expanded Electronic Government initiatives, such as electronic 
payment of reclamation fees and the new on-line Abandoned Mine Lands 
Survey, greater opportunities exist for citizens to access OSM provided 
information.
Proposed Appropriation Language
    OSM is also proposing an appropriation language change in its 
Fiscal Year 2003 budget proposal. This change will allow OSM to:
     LRemove the funding and twenty-five percent limitations on 
the amount of emergency program funding that can be spent in any one 
state; and
     LEliminate the earmarking of funds for the Pennsylvania 
demonstration project.
    Madam Chairwoman, I consider myself fortunate to have been given 
the opportunity to lead the Office of Surface Mining as it completes 
its first quarter century and prepares itself for the demands of the 
future. OSM began as an enforcement agency enforcing SMCRA directly. As 
states adopted their own regulatory programs, OSM evolved into a 
partner with the states--enabling, advising and providing much-needed 
technical assistance. Today, state programs are maturing and OSM will 
be called upon to adapt to the new needs of the states, intensifying 
its efforts to protect the American people and their environment and 
creatively using the great potential of our natural resources. I am 
pleased to be part of the OSM team at this important juncture.
    I thank the Subcommittee for providing this opportunity to present 
OSM's Fiscal Year 2003 budget request.
                                 ______
                                 
    Mrs. Cubin. Thank you, Director Jarrett.
    The Chair now recognizes Dr. Leahy to testify.

STATEMENT OF P. PATRICK LEAHY, ASSOCIATE DIRECTOR FOR GEOLOGY, 
                     U.S. GEOLOGICAL SURVEY

    Mr. Leahy. Thank you, Madam Chairman. It is a pleasure to 
be here and to discuss the administration's proposal for the 
U.S. Geological Survey's budget for 2003 with you and the 
members of the Subcommittee.
    The proposed budget requests $904 million, and this 
includes $37 million for a government-wide legislative proposal 
to shift to agencies the full cost of the Civil Service 
Retirement System and the Federal Employee Health Benefits 
Program. Without the legislative proposal, the request is $867 
million, which is a decrease of $47 million from the Fiscal 
Year 2002 enacted level. Although 2003 is less than the 2002 
enacted level, this request will enable us to maintain our core 
science and monitoring programs to continue to provide the 
Nation with relevant and impartial scientific information.
    Before I begin, Madam Chairman, I would like to thank the 
Subcommittee for its strong support of the USGS over the years. 
Your support for the scientific programs of the Survey has 
provided a wealth of valuable information to assist the 
citizens of this Nation in making sound decisions. As the 
science bureau in the Department of the Interior, USGS provides 
information and technologies that are critical to achieving the 
missions of the department's land management bureaus and 
research management bureaus.
    Let me take just a few moments to share with you a few of 
our accomplishments of the past year, which show that the 
taxpayer investment in the programs of the USGS has paid sound 
dividends.
    After the September 11th attacks on America, USGS staff 
provided critical geospatial data and coordination to many 
State and Federal agencies, helping them respond to the crisis. 
Well over 100,000 maps were distributed as part of this effort. 
The USGS topographic maps are the only complete nationwide 
coverage of the Nation's land surface and infrastructure. As 
part of the process of modernizing this topographic data, we 
are conducting eight national map pilot projects, and these 
pilots are the foundation upon which we will build future 
partnerships for data sharing and maintenance of this resource.
    In the water resources arena, a team of hydrologists in 
Nevada has conducted an intensive restudy of the ground water 
in the Fallon area, where 16 children have been diagnosed with 
two forms of leukemia, and unfortunately two have died since 
1997. This is a rate 100 times higher than expected for a 
community of this size. Earlier USGS reports document a broad 
spectrum of metals, organic compounds, and radioisotopes in the 
ground water of the area. The USGS has worked closely with 
State agencies and the Center for Disease Control to design the 
study that is ongoing, and the results of the study are 
expected soon.
    Finally, the Nisqually earthquake in Washington fortunately 
did not cause widespread death and destruction in the Seattle 
area. One reason certainly was the depth of the earthquake. The 
epicenter was more than 30 miles below the surface. But clearly 
another is the 15 years of work by USGS scientists to assess 
the seismic hazard in the area and to provide the information 
to local officials.
    USGS scientists have worked closely with the University of 
Washington, FEMA, and others to raise awareness of the 
earthquake risk among local businesses--including Boeing, 
Microsoft, and the Bank of America, to name a few--perhaps most 
importantly raising the consciousness in the general public, so 
that people could take effective action to mitigate their risk 
to the seismic events up there.
    The earthquake also provided the first major test of the 
Advanced National Seismic System stations that had recently 
been installed in and around Seattle, and I am pleased to 
report that all 20 instruments were active and provided 
valuable information on ground shaking for immediate data 
analysis and damage assessment that was critical in terms of 
the effort up there.
    The budget preserves a number of significant program 
increases received in recent years that provide science support 
to Interior bureaus and to other high priorities. For example, 
in the hazards area the request preserves the 2002 funding 
increase for continued implementation of the Advanced National 
Seismic System.
    Similarly, USGS will continue to provide scientific 
information that is vital to the President's national strategy 
for a sound energy policy. The 2003 budget request proposes an 
increase of $27 million for USGS to step up its efforts in 
support of the National Energy Policy. Of that $2.7 million, 
$1.2 million will enable USGS to more fully implement the 
requirements of Section 604 of the Energy Act of 2000, which 
requires USGS to conduct estimates of undiscovered oil and gas 
on Federal land.
    During 2002, with reimbursable funds provided by the Bureau 
of Land Management, the USGS will estimate volumes of oil and 
gas on Federal lands in five study areas in the Rocky 
Mountains. The 2003 increase will enable USGS to expand this 
work beyond these initial study areas. The budget also includes 
an additional $1 million to produce digital base maps in 
Alaska, with the work focused initially on the potential lease 
areas in the National Petroleum Reserve.
    The USGS proposal also supports alternative nonfossil fuel 
energy development, as well, with $500,000 for the USGS to 
begin the process of updating the Geothermal Energy Assessment. 
I believe in an earlier testimony to this Committee I pointed 
out that the last Geothermal Energy Assessment conducted was in 
1979, so it is quite out of date. Our initial efforts in terms 
of that energy assessment will focus on the Great Basin.
    The net funding decrease for 2003--and as I mentioned, it 
was a substantial one--reflects the elimination of unrequested 
funding increases, many of which were for short duration 
projects that are now complete, and it also includes reductions 
to lower priority programs.
    In closing, Madam Chairman, I know that the USGS will do 
its best to remain a strong, dynamic, and ready organization to 
meet the science needs of the Nation. I will be pleased to 
respond to any questions that the Subcommittee may have.
    [The prepared statement of Mr. Leahy follows:]

Statement of Dr. P. Patrick Leahy, Associate Director for Geology, U.S. 
                           Geological Survey

    Madam Chairman, and Members of the Subcommittee. I come before you 
today to present the Administration's proposal for the budget of the 
U.S. Geological Survey (USGS) for Fiscal Year 2003. The proposed budget 
requests $904 million, including $37 million for a government-wide 
legislative proposal to shift to agencies the full cost of the Civil 
Service Retirement System (CSRS) and the Federal Employee Health 
Benefits Program for current employees. Without the legislative 
proposal, the request is $867 million, a decrease of $47 million from 
the Fiscal Year 2002 enacted level. Although less than the 2002 enacted 
level, this request will enable us to maintain our core science and 
monitoring programs to continue to provide the Nation with relevant and 
impartial scientific information.
    Before I begin, Madam Chairman, I would like to thank the 
Subcommittee for its strong support of the USGS over the years. Your 
support for the scientific programs of the Survey has provided a wealth 
of valuable information to assist the citizens of this Nation in making 
sound decisions on environmental, resource, economic, agricultural, and 
social issues.
    The Survey's 123-year history of excellence in the earth and 
biological sciences is a solid foundation from which we provide 
scientific solutions to many national issues. The USGS, through its 
scientific activities--long-term monitoring and data collection, 
innovative research and process understanding, and informative 
assessments and interpretive studies--is well poised to provide the 
natural science information that society demands to address critical 
issues, such as
     Lmitigating the impacts of earthquakes,
     Ldeveloping strategies to detect and control harmful 
invasive species,
     Ldeveloping a better knowledge base for the sustained 
development of the Nation's water resources, and
     Lproviding information on the availability, quality, and 
development impacts of energy and mineral resources.
    As the science bureau of the Department of the Interior, USGS 
provides information and technologies that are critical to achieving 
the missions of the Department's land and resource management bureaus. 
Scientific support from the USGS to these bureaus ensures that the 
increasingly complex management decisions for Interior's vast resources 
are informed by relevant, impartial, credible science.
    Let me take just a moment to share a few of our accomplishments 
over the past year, which show that the taxpayer investment in the 
science and monitoring programs of the USGS has paid sound dividends 
for the Nation.
    After the September 11 attacks on America, USGS staff provided 
critical geospatial data and coordination to many State and Federal 
agencies, helping them respond to the crisis; well over 100,000 maps 
were distributed. The USGS topographic maps are the only complete, 
nation-wide coverage of the Nation's land surface and infrastructure. 
As part of the process of modernizing these topographic data, we are 
conducting eight National Map pilot projects in Delaware, Florida, the 
Lake Tahoe area, Missouri, Pennsylvania, Texas, Utah, and Washington-
Idaho. These pilots are the foundation upon which future partnerships 
for data sharing and maintenance will be built.
    Our science is respected and valued. In the December issue of 
Environmental Science and Technology, 10 papers were selected for high 
impact in the field of environmental research over the past 35 years. I 
am proud that three of those papers were authored by scientists who 
currently work at the USGS in our hydrology programs.
    We are using the Internet to maximize the availability of our 
information, so that taxpayers have easy access to the scientific 
results of their investment in our research and monitoring. The new 
National Water Information System online database provides 14 gigabytes 
of real-time and historical streamflow, ground-water, and water-quality 
data collected from 1.5 million sites in all 50 States, Puerto Rico, 
and the District of Columbia. Since the online database was formally 
launched last July, the number of pages served has continued to grow, 
and we have received many compliments praising USGS for the usefulness 
of this site. Furthermore, the website was selected as one of only 25 
finalists in the Federal Chief Information Officers Council 
Excellence.Gov Awards.
    Partnerships remain an essential component of how we do business, 
to ensure cost-effective operations. In the Tampa Bay region, USGS 
worked with the National Oceanographic and Atmospheric Administration 
to develop a seamless merged topographic/bathymetric elevation model of 
the Tampa Bay region. The new model is proving very useful to local 
planning, natural resource, and regulatory agencies. We continued to 
work with the Centers for Disease Control and other public health 
entities to provide biological and geospatial data about the spread of 
West Nile Virus. By the end of summer 2001, this disease had been found 
in birds in most States east of the Mississippi River. In addition, 
USGS research demonstrated that the disease can be transmitted bird-to-
bird, rather than only through mosquito bites. This is a critical 
advance in understanding how the disease moves between birds, 
mosquitoes, and humans.
    In Nevada, a team of hydrologists has been conducting an intensive 
re-study of the ground water in the Fallon area, where 16 children have 
been diagnosed with two forms of leukemia and 2 have died since 1997--a 
rate 100 times higher than expected for a community of this size. 
Earlier USGS reports document a broad spectrum of metals, organic 
compounds, and radioisotopes in the ground water; the samples collected 
this past summer indicated 10% of the samples have arsenic 
concentrations greater than 500 ``g/L (a maximum concentration of 2,900 
``g/L has been observed) and some uranium activities are greater than 
200 pCi/L. The USGS Nevada District office has worked closely with 
State agencies and the CDC to design the study, and results are 
expected soon.
    Finally, the Nisqually earthquake did NOT cause widespread death 
and destruction in the Seattle area. One reason certainly was the depth 
of the earthquake--30 miles below the surface--but another is the 15 
years of work by USGS scientists to assess the seismic hazard in the 
region and provide the information to local officials in ways that they 
could use to protect and prepare communities for such events. USGS 
scientists have worked closely with the University of Washington, the 
Federal Emergency Management Agency, and others to raise awareness of 
the earthquake risk among local businesses--including Boeing, 
Microsoft, and Bank of America--and the general public, so people can 
take effective action to mitigate their risk. The earthquake also 
provided the first major test of the 20 Advanced National Seismic 
System stations that had been recently installed in and around Seattle. 
All 20 instruments provided valuable information for immediate data 
analysis and damage assessments, as well as information on the effects 
of local soil conditions and geologic structures.
    The 2003 budget request focuses resources on our core mission 
programs of geology, mapping, biology, and water. The budget preserves 
a number of significant program increases received in recent years that 
provide science support to Interior land- and resource-management 
bureaus and other high priorities. In the area of hazards, the request 
preserves the 2002 funding increase for continued implementation of the 
Advanced National Seismic System, which provides both immediate 
information on the intensity of ground shaking, for use by emergency 
responders, and high-quality data on building response, used by 
engineers to improve building safety. The request also includes funding 
to address Administration priorities. The USGS will continue to provide 
the scientific information that is vital to the President's national 
strategy for a sound energy policy. In addition to ongoing national 
assessments of coal, oil, and natural gas, and other energy and mineral 
commodities, the 2003 budget request proposes an increase of $2.7 
million for USGS to step up its efforts in support of the National 
Energy Policy and the overall goal of increasing domestic energy 
production. Of that $2.7 million, $1.2 million will enable USGS to more 
fully implement the requirements of section 604 of the Energy Act of 
2000, which requires USGS to conduct estimates of undiscovered oil and 
natural gas resources on Federal lands in the continental United 
States. During 2002, with reimbursable funding provided by the Bureau 
of Land Management, the USGS will estimate volumes of oil and gas 
resources on Federal lands in five study areas in the Rocky Mountains. 
The 2003 increase will enable USGS to expand this work beyond the 
initial five study areas. The budget includes an additional $1.0 
million to produce digital base maps in Alaska, with work focused 
initially on potential lease areas in the National Petroleum Reserve. 
The mapping effort will provide resource managers with information they 
need to make timely and environmentally sound resource and management 
decisions. The USGS budget proposal supports alternative, non-fossil 
fuel energy development as well, with $500,000 for USGS to begin the 
process of updating geothermal energy assessments. The USGS will 
initiate this effort in the Great Basin region.
    Besides these energy-related budget increases, USGS is also 
proposing a $1.0 million initiative to utilize its core mission 
expertise to study the relationship between environmental change and 
human health issues in the U.S.-Mexico border region. The border area 
is a significant contributor to our economic vitality and encompasses 
important natural resources. In partnership with the National Institute 
of Environmental Health Sciences, USGS will bring its expertise in 
geologic, geochemical, and hydrologic processes to bear on these 
issues. The proposal aims to improve the understanding of naturally 
occurring and introduced disease-causing agents in the environment--
like radiation, pesticides, and pathogens--and their specific exposure 
pathways in water, air, and soil. For example, USGS will produce 
geologic maps showing the distribution of rock types likely to produce 
elevated levels of potentially toxic elements such as mercury, arsenic, 
and selenium.
    The budget maintains recent funding increases that have enabled 
USGS to undertake a multi-disciplinary coastal initiative, as requested 
by the Congress. Coastal regions are under enormous pressure due to 
population growth, and USGS science will lead to a better understanding 
of the impacts of natural and human-induced change on the coastal 
environment. In 2003, the current USGS pilot study in Tampa Bay, 
Florida, will focus on developing a comprehensive understanding of 
coastal and marine systems. The study will provide Internet-accessible 
data and decision support systems to inform the responsible use and 
management of the Nation's coastal and offshore resources.
    The budget proposes a $4.0 million increase for the Critical 
Ecosystems Science Initiative for the Everglades. This will enable USGS 
to provide the long-term science, analysis, monitoring, modeling, and 
decision support systems needed for the adaptive implementation of the 
Comprehensive Everglades Restoration Plan. The budget retains increases 
appropriated in 2001 and 2002 for base USGS biological science center 
operations and high-priority tactical science support for the Fish and 
Wildlife Service. It also retains funding increases that have 
accelerated the pace of the biological Gap Analysis Program and 
expanded the National Biological Information Infrastructure. These 
programs develop and disseminate data that are beneficial to land and 
resource managers at all levels of government.
    The 2003 budget also retains funding increases provided in Fiscal 
Year 2001 that expanded the Ground-Water Resources Program, in response 
to the Nation's growing reliance on these resources. There is a 
recognized need for more sophisticated knowledge to support sustainable 
development of complex aquifers and to protect inter-related surface 
waters and riparian habitat.
    The net funding decrease for Fiscal Year 2003 reflects the 
elimination of unrequested funding increases, many of which were for 
short-duration projects that are completed, and reductions to lower 
priority programs. The budget includes a 10% reduction to the National 
Water Quality Assessment Program. The budget proposes to offset this 
decrease with funding contributions from NAWQA customers and 
beneficiaries. Finally, the budget reflects a transfer of $10 million 
in Toxic Substances Hydrology Program funding to the National Science 
Foundation, where it will be used for a water-quality research grants 
program. This transfer reflects the Administration's goal of realigning 
the Federal Government's investment in research and development to give 
greater support and emphasis to competitive research.
    In closing, Madam Chairman, I know that the USGS will do its best 
to remain strong, dynamic, and ready to meet the science needs of the 
Nation. I will be pleased to respond to any questions you may have.
                                 ______
                                 
    Mrs. Cubin. Thank you, Dr. Leahy.
    I would like to now recognize Ms. Denett.

 STATEMENT OF LUCY QUERQUES DENETT, ACTING DIRECTOR, MINERALS 
                       MANAGEMENT SERVICE

    Ms. Denett. Thank you. Good morning, Madam Chairman and 
members of the Committee. Thank you for the opportunity to 
testify before your Committee. I would like to make a few 
remarks and then answer any questions you may have.
    First, I am pleased to say, as Madam Chairman indicated, 
tomorrow MMS will have a new director, Regine ``Johnnie'' 
Burton. Ms. Burton's background provides a solid mix of 
experience in State government, the oil and gas industry, and 
education. Since 1995 she served on the Governor of Wyoming's 
Cabinet as the Director of the Department of Revenue. Before 
that she served as Vice President of TCS, Inc., an oil and gas 
exploration company based in Casper, Wyoming. Her background, 
particularly in State government and industry, will be a good 
fit with our operations in the Minerals Management Service.
    I would like to spend a few minutes discussing some of our 
accomplishments. The MMS's Offshore Minerals Management Program 
saw recordbreaking activity in the Gulf of Mexico in Fiscal 
Year 2001. Deep water drilling reached an all-time high, with 
over 45 rigs drilling in water depths over 1,000 feet. That is 
compared to only nine in 1990. The number of wells drilled in a 
single year in water depths greater than 200 meters reached a 
record high of 302, and 1,408 new well starts were drilled in 
the Gulf of Mexico last fiscal year, another new record.
    The Minerals Revenue Management Program also reached a new 
milestone in Fiscal Year 2001, collecting over $11 billion in 
Federal receipts, with more than $1 billion in shared mineral 
revenue receipts being distributed to the States.
    In Fiscal 2003, MMS will account for a projected $4.2 
billion in Federal receipts, $200 million for American Indian 
tribes and individual American Indian owners, and $39 million 
in shared mineral revenue receipts with coastal States. The 
Federal receipts include $2.8 billion from OCS receipts and 
$1.4 billion from onshore receipts.
    From a taxpayer perspective, that converts to $1.9 billion 
deposited to the general fund of the U.S. Treasury, $674 
million in mineral revenue payments made to onshore States, 
$897 million transferred to the Land and Water Conservation 
Fund, $536 million credited to the Reclamation Fund, and $150 
million for the Historic Preservation Fund.
    There are challenges, however. While new sources of energy 
may be on the horizon, oil and gas will continue to be imported 
during the next 20 to 30 years. DOE estimates that dependence 
on oil and natural gas will increase significantly during that 
time. Because of this dependence, MMS programs are vitally 
important to the security of the Nation and the well-being of 
the national economy.
    Production from deepwater wells will continue to increase 
as compared to prior years, and drilling activities continue to 
reach record highs in the Gulf of Mexico. The continuing 
increase in production and drilling activities places 
additional work load demands on the MMS in the areas of field 
determinations, engineering, inspection, production, and 
deepwater operation plan reviews, as well as environmental 
assessments.
    Since the oil and gas resources of the OCS, though 
abundant, are ultimately exhaustible, MMS must manage these 
resources in the most prudent manner possible. To do this, MMS 
must impose data requests and reporting requirements on the oil 
and gas industry, and must also share information, analysis, 
data bases, with other government and public entities. 
Together, these management responsibilities create intense 
pressure for automation of many recurring processes.
    The Offshore Minerals Management Program has developed an 
e-government framework to address the need to facilitate the 
exchange of OCS-related information with a complex network of 
stakeholders. The MMS's reengineering initiatives in the 
Minerals Revenue Management Program have provided a new 
financial system, a robust data warehouse, and an array of new 
tools and applications for financial management and mineral 
revenue compliance. These new tools and capabilities will, 
however, require ongoing maintenance and support, including 
continuous upgrades to ensure a stable, secure computing and 
communication backbone for the new systems.
    The President's November 13, 2001 decision to fill the 
strategic petroleum reserve greatly expands the role of the 
royalty-in-kind in the Gulf of Mexico. When completed in 2005, 
MMS will have delivered approximately 120 million barrels of 
crude oil taken in kind from Federal leases in the Gulf to the 
onshore market centers for utilization by DOE in filling the 
SPR.
    MMS has requested additional funding for an automated oil 
RIK system in Fiscal Year 2003. However, there are associated 
transportation costs and a need to expedite the oil RIK system 
as a result of this decision of the President.
    Our budget request: The MMS is requesting $281 million, a 
net increase of $21.5 million above the MMS's enacted Fiscal 
2002 level. This includes $10.4 million for a government-wide 
legislative proposal to shift to the agencies the full cost of 
the CSRS and the FEHB program for current CSRS employees. That 
is a tongue-twister. Also included in the request are program 
decreases of $14.3 million.
    The increases that we are requesting are to manage the 
increased demand from the industry for drilling and production 
activities in the Gulf of Mexico region, which as I have 
indicated have reached record high levels; to initiate the 
first phase of the e-government initiative that will 
dramatically reform and streamline OMM's business operations; 
to provide ongoing maintenance and support for MRM's new 
mineral revenue compliance tools and capabilities; and, 
finally, to fund the development of the automated 
infrastructure needed to support the expanding of the oil RIK 
program.
    I appreciate the opportunity to talk to you, and will be 
happy to answer any questions you may have.
    [The prepared statement of Ms. Denett follows:]

Statement of Lucy Querques Denett, Acting Director, Minerals Management 
                Service, U.S. Department of the Interior

    Madam Chairman and Members of the Subcommittee, I appreciate the 
opportunity to testify today on the Fiscal Year (FY) 2003 budget 
request for the Minerals Management Service (MMS). We have looked 
closely at our ongoing operations and responsibilities and this request 
reflects our best assessment of the funds needed to carry out critical 
MMS programs during Fiscal Year 2003.
    The MMS is requesting $281.0 million, including $10.4 million for a 
government-wide legislative proposal to shift to agencies the full cost 
of the CSRS pension system and the Federal employee health benefits 
program for current CSRS employees. Without the legislative proposal, 
the request is $270.6 million, a net increase of $ 11.1 million above 
the 2002 enacted level, and includes both programmatic and 
uncontrollable cost increases.
    Our budget request is based upon our accomplishments in 
successfully implementing and completing past budget initiatives. It is 
also based upon the challenges confronting us during the next fiscal 
year and beyond, which are the reasons for the increases in budgetary 
requirements. The request includes funding to:
     Lmanage the increased workload and complicated industry 
requirements for drilling and production-related activities in the Gulf 
of Mexico Region,
     Lprovide additional resources to keep pace with the 
increased demand on our revenue management network and enterprise 
systems,
     Lacquire an automated liquids (oil) management system to 
support the pilot royalty-in-kind programs, and
     Lbegin a five year e-government initiative that will 
deliver web-based, paperless transactions and better manage data, 
resulting in reduced future costs and improved information delivery to 
citizens.
    The MMS manages the nation's oil, natural gas, and other mineral 
resources on the Outer Continental Shelf (OCS), and collects, accounts 
for, and disburses revenues from offshore Federal mineral leases and 
from onshore mineral leases on Federal and American Indian lands. To 
carry out this mission, MMS manages two very important programs--the 
Offshore Minerals Management (OMM) Program and the Minerals Revenue 
Management (MRM) Program. These programs provide major economic and 
energy benefits to the Nation, taxpayers, states and the American 
Indian community.
    The MMS has leased and currently manages more then 40 million acres 
of the OCS. More than 13.1 billion barrels of oil and 146.4 trillion 
cubic feet (tcf) of natural gas have been produced from the OCS since 
1953.
    From an economic standpoint, MMS will account for a projected $4.2 
billion in Federal receipts in Fiscal Year 2003. MMS will also account 
for an additional $200 million in receipts for American Indian tribes 
and individual American Indian owners, and $39 million in shared 
mineral revenue receipts with coastal states. The Federal receipts 
include $2.8 billion from OCS receipts and $1.4 billion from onshore 
receipts. From a taxpayer's perspective, that converts to:
     L$1.9 billion deposited to the General Fund of the U.S. 
Treasury;
     L$674 million in mineral revenue payments made to onshore 
states;
     L$897 million transferred to the Land and Water 
Conservation Fund;
     L$536 million credited to the Reclamation Fund; and
     L$150 million for the Historic Preservation Fund.
    The receipts I have described above are derived from the 
accomplishment of the Bureau's two program missions. MMS has recently 
celebrated its 20th anniversary, and during this relatively short time 
these two programs have experienced dramatic and profound changes in 
the business, energy and government climates in which they operate. 
These changes have challenged MMS to keep pace, and I believe that the 
bureau has risen to the challenge. I would now like to review a few of 
MMS's recent achievements and what MMS sees as its challenges for the 
future.
                        OMM Program Achievements
OCS and the Nation's Energy Supply
    The OCS continues to play a critical role in supplying the nation's 
energy needs. It is estimated that oil and gas production from the OCS 
will account for over 25 percent of the country's total production in 
Fiscal Year 2003. The average combined shallow and deepwater production 
in 2003 is estimated to be about 587 million barrels of oil and 5.1 tcf 
of gas.
Record Setting Activity in the Gulf of Mexico (GOM)
    Drilling in the GOM deep water has increased dramatically over the 
last decade. Today, deepwater drilling continues to be at an all time 
high with over 45 rigs drilling in water depths of over 1,000 feet, 
compared to just nine in 1990. The number of wells drilled in a single 
year in water depths greater than 200 meters reached a record high of 
302 in 2001, and a record 1,408 well starts were drilled in the GOM 
last fiscal year. This is a 52% increase from the 928 well starts 
drilled in Fiscal Year 1995.
Safety Remains a Top Priority.
    The MMS regards the safety of personnel, the environment, and 
operations as top priorities. Prevention is our most important safety 
strategy. The continued movement of industry into deeper waters and the 
overall increased industry activity in the GOM have increased both the 
level and complexity of monitoring and ensuring safe OCS operations. 
Likewise, there has been a significant rise in the number of operators 
on the OCS, some without the same level of experience as the more 
seasoned operators.
    MMS continues to work with industry and other agencies to ensure 
the continued safety of offshore operations. In 2002, the MMS will be 
authorized to inspect and enforce U.S. Coast Guard safety regulations 
on fixed OCS platforms. By authorizing MMS to also check for compliance 
with Coast Guard safety regulations, we avoid duplicating functions, 
reduce Federal costs, and increase the frequency of these critical 
safety inspections.
                         OMM Program Challenges
Meeting Future National Energy Needs
    The U.S. is the most mature petroleum-producing region in the 
world. Much of the Nation's easily located oil and gas has already been 
extracted. Despite this, domestic discoveries and reserve additions 
over the past decade have replaced 100 percent of the natural gas and 
79 percent of the crude oil produced during this period. Advanced 
technologies have allowed economical access to domestic resources that 
are concentrated in deeper formations, tighter zones, deeper water, 
more sensitive environments, and increasingly more unconventional 
settings. In 1998, the U.S. Department of Energy (DOE) estimated that 
two-thirds of the 603 billion barrels of known oil reserves in the U.S. 
remained untapped.
    While new sources of energy may be on the horizon, oil and gas will 
continue to be important during the next 20 to 30 years, and the DOE 
estimates that dependence on oil and gas will increase significantly 
during that time. Because of this dependence, MMS programs are vitally 
important to the security of the Nation and the well being of the 
national economy. One such example is our royalty-in-kind program that 
will enable MMS to meet the President's November 2001 directive to fill 
the Strategic Petroleum Reserve.
    Demand for oil and gas uncharacteristically declined in 2001. This 
is attributed mainly to the decline in air travel after September 11th 
and an unseasonably warm winter. Nevertheless, demand for oil is 
expected to increase once again in 2002. By 2003, DOE projects annual 
average petroleum demand to exceed 20 million barrels per day for the 
first time.
    While oil production on the OCS is projected to increase through 
2010, the long-term overall U.S. oil production is projected to 
decline. This decline is projected at an average annual rate of 0.7 
percent between 1999 and 2020, to 5.1 million barrels per day. The 
share of U.S. oil demand met by net imports is projected to increase 
from 56 percent in 1999 to 70 percent in 2020, an average annual 
increase of 2.5 percent
    U.S. demand for natural gas is projected to increase from 22 tcf in 
1998 to as high as 29 tcf by the year 2010 and 31.3 tcf by 2015. This 
is a 50 percent increase over what the Nation consumes today. If the 
OCS is expected to maintain the same percentage contribution towards 
future U.S. gas consumption, the annual gas production from Federal 
waters will have to increase 7 to 8 tcf. Natural gas is clearly the 
fuel of choice for the Nation's future energy use because it is a 
cleaner burning fuel.
Safety and Environmental Protection
    While development of offshore mineral resources has already meant 
billions of dollars in revenues to the United States, MMS is 
responsible for ensuring that those economic benefits are not made at 
the expense of safe operations and environmentally responsible 
development. The move into deeper water and the overall rise in 
activity have increased both the level and complexity of monitoring OCS 
operations. The number of operators drilling in the GOM has increased 
over the past several years by about 30 percent. Some of these new 
operators are not as experienced as those that have been working in the 
GOM for a longer time. There is also a much greater reliance by all 
operators on the use of contractors. In addition, the offshore industry 
downsized significantly throughout the 1980s and 1990s. All of these 
events have reduced the pool of skilled offshore workers. The presence 
of workers with a minimum of offshore experience is placing an added 
burden on the inspection and compliance program.
    One of MMS's top priorities is ensuring that industry maintains its 
excellent safety and environmental record as the level of activity 
increases in both amount and complexity. From a safety perspective, 
recent statistics indicate that the rate of injuries and illnesses for 
offshore workers is less than half the rate for the private sector as a 
whole. On the environmental front, since 1985, over 63 billion barrels 
of oil have been produced from the OCS with only 0.001% spilled. 
Natural seeps contribute more than 150 times this amount to the marine 
environment. Maintaining the OCS's good safety and environmental record 
is critical to preserving the public's confidence in the integrity of 
the program and to facilitating further OCS production. If a serious 
incident were to occur and we were prohibited from further development 
of these promising areas, the Nation would lose the significant 
contributions that the Offshore Program makes to the economy in the 
form of revenues and secure supplies of oil and natural gas.
Deepwater Production
    Production from deepwater wells continues to increase as compared 
to prior years. In 1985, for example, only six percent of the GOM's oil 
production came from deepwater wells as compared to over 50 percent in 
Fiscal Year 2001. Natural gas production from deepwater areas in the 
GOM increased from less than 1 percent of total gas production in 1985 
to over 20 percent in Fiscal Year 2001. As discussed earlier, drilling 
activities continue to reach record highs in the GOM.
    The continuing increase in production and drilling activities in 
the GOM places additional workload demands on MMS in the areas of 
environmental assessments, field determinations, engineering, 
inspection, and production and deepwater operation plan reviews.
Maintaining a Viable OCS Program
    One of the agency's core responsibilities in managing OCS leasing 
and development is to ensure that our leasing decisions fully consider 
the possible risks to coastal communities and environments of offshore 
development, and that our regulatory efforts ensure the highest degree 
of safety and protection possible in day-to-day operations.
    The MMS is entering the final stages in the development of its next 
OCS 5-Year Program covering the 2002-2007 timeframe. The comment period 
on the Proposed Program and the draft environmental impact statement 
closed in January 2002. A final EIS will be prepared and a proposed 
final program will be submitted to the President and Congress in April 
2002. Following a 60-day waiting period, the Secretary is scheduled to 
approve the new program in June with an effective date of July 1, 2002.
Expanding Electronic Government
    Since the oil and gas resources of the OCS, though abundant, are 
ultimately exhaustible, MMS must manage these resources in the most 
prudent manner possible. To do this, MMS must impose complex requests 
and reporting requirements on the oil and gas industry. It must also 
share information, analysis, and databases with other government and 
public entities. Together, these management responsibilities create 
intense pressure for automation of many recurring processes. To fulfill 
each of its mandated tasks, MMS must facilitate the exchange of OCS-
related information within a complex network of stakeholders (industry, 
other agencies, states, the public). That fact is the basis of OMM's e-
Government vision.
    OMM's e-Government framework consists of investment in core 
infrastructure, such as a regulatory data model, redesigned web-enabled 
corporate database, document management, security, and a data warehouse 
to support its business functions. A strong OMM infrastructure will 
support web-based, customer-responsive solutions; facilitate internal 
analysis; and set a foundation for future integrated systems. 
Additional investments will support processes such as permitting, 
inspections, Freedom of Information Act, public commenting, and 
industry reporting. To ensure that the foundation is flexible, 
capabilities will be built in a coordinated and modular fashion, using 
commercial off-the-shelf applications and outsourcing when feasible. 
MMS's approach is driven by customers and stakeholders, focused on 
mission and strategy, process-efficient, and technology-enabled.
    MMS will also work closely with the Bureau of Land Management to 
ensure data exchange compatibility with future onshore oil and gas 
program applications.
FY 2003 Budgetary Impact
    To address these challenges, we are requesting $5.0 million to 
accommodate the increased demand for services in the GOM region, and 
$8.7 million as first-year funding for development of OMM's E-
government initiative.
            Minerals Revenue Management Program Achievements
Reengineered Program, Processes, and Systems
    FY 2002 brought the culmination of many fundamental changes that 
were presented in the Roadmap to the Future published in November 1998. 
In Fiscal Year 2001, the MRM realigned its organizational structures 
and resources to support the reengineered business processes that will 
yield the significant and recurring benefits sought from the royalty 
reengineering initiative. In its realignment MRM also changed its name 
from Royalty Management Program to better reflect the program's 
mission. The new MRM organizational structures were developed based on 
extensive input from employees and in close consultation with industry, 
State, and tribal partners.
    In Fiscal Year 2002, MRM implemented a new systems infrastructure 
to support our reengineered business processes. These fundamental 
changes to organizations, infrastructures, and processes require 
significant new skill sets, bringing opportunities to build knowledge 
of new systems, understand relationships, develop expertise, and refine 
processes. The two reengineered end-to-end business processes support 
the continued emphasis on our Indian trust responsibilities as well as 
help us achieve our stretch goals.
     LThe Financial Management Process manages the information 
and money that flows through the MMS to program beneficiaries. The new 
process shortens the receipt and distribution cycle, providing 
beneficiaries with access to their funds sooner.
     LThe Compliance and Asset Management Process ensures that 
all revenues, whether received through in-kind or in-value royalties, 
are paid timely and accurately. This process introduces fundamental 
change to the way MMS has historically done compliance work. Instead of 
focusing on payors in evaluating royalty payments, the MRM now focuses 
on properties and producing areas. This new process introduces a 
significant reduction in business cycle time, with a goal of completing 
all compliance work, including audit, within 3 years or less after the 
payment was made. With the property and producing area focus, this 
process also well positions the MRM to support its royalty in-kind 
asset management strategies.
Consummate Asset Manager
    The asset management concepts developed through reengineering and 
demonstrated by the RIK pilots and operational model support MRM's 
mission to be ``the best in the business'', pursuing fair market value 
and cost-effective collection and disbursement of royalties whether 
collected in-kind or in-value. MMS is currently focusing its 
development of the RIK asset management strategy in the Gulf of Mexico. 
At present, about 84 percent of the Federal oil and gas revenues are 
produced from leases on the Outer Continental Shelf. Most of these 
revenues come from the Gulf of Mexico, which offers the following asset 
management advantages:
     LClose proximity to market centers
     LAccess to extensive systems for the delivery of mineral 
production to buyers
     LRelatively few lease contracts to administer
    In Fiscal Year 2002, MMS began the development of the automated 
infrastructure to support the gas RIK program. When complete, this 
development effort will provide the needed tools to support gas RIK 
business processes. MMS expects to complete implementation of the RIK 
gas automated infrastructure in early Fiscal Year 2003.
Indian Trust Responsibilities
    In accordance with the Department's American Indian trust 
responsibilities, MMS has a special dedication to the tribes and 
individual American Indian mineral owners. MMS serves American Indian 
tribes and individual American Indian mineral owners by ensuring that 
they receive accurate returns for mineral production on their land. 
Distribution of payments is made twice monthly for revenues collected 
for leasing and production activities on Indian lands.
    In response to feedback from the Indian community, MRM proposed a 
separate royalty valuation rule for crude oil produced from Indian 
leases. The new rule, when final, will add more certainty to the 
valuation of oil produced from Indian lands, eliminate reliance on 
posted oil prices, and address terms unique to Indian leases. The rule 
is expected to result in additional Indian oil royalties of 
approximately $4.7 million.
    In Farmington, New Mexico, MMS participates in a Departmental 
effort, implementing a new concept in serving our Navajo constituents. 
The Farmington Indian Minerals Office (FIMO) unites employees from the 
Bureau of Indian Affairs (BIA), Bureau of Land Management (BLM), and 
MMS, under one director for outreach, inspection, enforcement, and 
mineral revenue compliance services to industry and American Indian 
stakeholders. The FIMO office was established as a permanent DOI office 
on September 28, 2001. In addition, the Department's Indian Minerals 
Steering Committee, made up of representatives from BIA, BLM, MMS, and 
the Office of Special Trustee for American Indians (OST), is assessing 
the feasibility of expanding the program to other geographic areas 
having a significant population of Indian mineral leases and lessees.
             Minerals Revenue Management Program Challenges
Continuous Improvement
    MRM's reengineering initiative has provided a new financial system, 
a robust data warehouse, and an array of new tools and applications for 
financial management and mineral revenue compliance. When fully 
realized, the reengineering initiative will dramatically modernize both 
the financial and the compliance and asset management business 
processes and supporting systems. MRM plans to gradually introduce 
additional enhancements, especially in the area of mineral revenue 
compliance. As these changes are embraced and applied by the compliance 
staff, the environment will continue to allow for more and more changes 
and improvement. This phased approach was anticipated from the outset 
of the reengineering effort in order to allow for staged implementation 
as more knowledge is acquired and applied.
    These new processes and system enhancements address MRM's 
continuous improvement objectives for mineral revenue compliance. 
However, several offsetting factors contribute to the need for an 
overall increase in operations and support funds during Fiscal Year 
2003 to support MRM's new information technology environment:
     LRobust new tools and capabilities will improve MRM's 
ability to accomplish its mission and goals but will require ongoing 
maintenance and support.
     LThe new systems and tools, coupled with growing 
requirements for remote access, place an increased demand and a growing 
dependency on MRM's networks and enterprise systems. This requires 
continuous upgrades to ensure a stable, secure computing and 
communication backbone for the new systems.
     LIndustry is anticipating major cost increases for 
enterprise software systems (database, operating systems, office 
automation, etc.) upon which our new systems and networks rely. For the 
past 5 years, IT professionals' salaries have been increasing at a rate 
greater than 10% per year in the Denver area. The only way MRM has been 
able to maintain adequate funding for its primary IT providers is by 
reducing enhancement work performed on systems scheduled for 
replacement because of the reengineering effort. The cumulative effect 
of the increased costs of IT professionals and the implementation of 
the reengineered system prevent a similar approach in Fiscal Year 2003.
Expanding RIK Opportunities
    The President's November 13, 2001, decision to fill the SPR greatly 
expands the role of RIK in the Gulf of Mexico (Gulf). When completed in 
2005, MMS will have delivered approximately 120 million barrels of 
crude oil taken in-kind from Federal leases in the Gulf to onshore 
market centers for utilization by DOE in filling the SPR. There are 
associated transportation costs and a need to expedite the oil RIK 
system as a result of the President's decision to fill the SPR. MMS has 
requested funding for an automated oil RIK system in Fiscal Year 2003, 
which will enable the program to handle the added SPR effort. Timing 
for the implementation of the oil system depends on funding 
availability.
    The SPR RIK initiative at 130,000 barrels/day and the continuation 
of the Small Refiner Program at some 50,000 barrels/day, will result in 
much of the Gulf oil production royalties being taken in-kind.
FY 2003 Budgetary Impact
    To address these challenges while maintaining our accomplishments, 
we are requesting $2 million to cover increasing automated systems 
operations and maintenance costs. Additionally, we are requesting 
$6.015 million to fund development of the automated infrastructure to 
support the expanding oil RIK program.
           MMS's Fiscal Year 2003 Budget Request--Highlights
    The MMS budget request totals $281 million, a net increase of $21.5 
million or slightly more than 8 percent above the 2002 enacted level of 
$259.5 million. The $21.5 million increase combines program decreases 
of $14.3 million with $3.6 million for uncontrollable and related cost 
changes (primarily pay raises and GSA rent increases); $21.8 million 
for programmatic increases, and $10.4 million for a government-wide 
legislative proposal to shift to agencies the full cost of the CSRS and 
the FEHB Program for current CSRS employees. In addition to the 
programmatic increases described above for the OMM Program (+$13.7 
million) and the MRM Program (+$8 million), we are requesting the 
following decreases:
     La decrease of $0.8 million for the Center for Marine 
Resources and Environmental Technology which will be eliminated due to 
higher priorities for oil and gas exploration and extraction; and
     La decrease of $0.8 million for the Marine Minerals 
Technology Center which will be eliminated due to higher priorities for 
oil and gas exploration and extraction;
     La decrease of $0.5 million for the Offshore Technology 
Research Center that will have funding reduced due to higher priorities 
for oil and gas exploration and extraction;
     La decrease of $3.0 million for the Royalty Legacy System, 
which was replaced by the reengineered system in Fiscal Year 2002;
     La decrease of $2.2 million for the Environmental Studies 
Program that will allow for the continuation of existing projects and 
starts for limited but critical new projects;
     La decrease of $1 million in the Pacific OCS Regional 
office from a review of its operations; and
     La decrease of $6.0 million for the completed gas 
management system acquired in Fiscal Year 2002 in support of continuing 
RIK pilots and longer-term projects.
Revenue Sources

[GRAPHIC] [TIFF OMITTED] T8206.001

    The MMS receives funding for operations from three sources: the 
Royalty and Offshore Minerals Management (ROMM) appropriation, Oil 
Spill Research (OSR) appropriation, and offsetting collections 
(primarily from rental receipts from offshore leases). Since 1994, when 
MMS received authority to retain a portion of OCS rental receipts 
(offsetting collections) the share of the agency funded with 
appropriated funds has decreased substantially. The share of MMS's 
total budget funded from offsetting collections peaked in Fiscal Year 
2000 at 52 percent. In Fiscal Year 2003, approximately 37 percent of 
MMS's funding is proposed to come from offsetting collections.
    Several years ago, dramatic increases in leasing activity in the 
GOM made it possible to shift a larger portion of MMS funding from 
direct appropriations to offsetting collections. The increased GOM 
activity was made possible by new technologies that allowed exploration 
and development in very deep water. Examples of these new technologies 
included the rapid expansion in the availability of high quality 3-
dimensional seismic data, inexpensive geo-science workstations, and 
seismic processing advances that allowed geo-scientists to look below 
the previously impenetrable layers of salt. In addition to the 
technological advances, Congress enacted legislation (Deep Water 
Royalty Relief Act of 1995) that has encouraged deepwater exploration 
and production.
    The combination of very favorable geologic characteristics, 
technological advances, and economic incentives caused leasing in the 
GOM to increase almost ten-fold between 1992 and 1997. In 1998, 
however, the number of tracts leased in the two GOM sales declined by 
37 percent from the record levels of 1997. While 1998 marked the first 
time that the number of tracts leased in the GOM had declined in the 
past several years, the number of total active tracts actually 
increased in 1998 by over 12 percent. In 1999, the number of new tracts 
leased (333) fell 71 percent below the 1998 level and 81 percent below 
the peak level reached in 1997. In Fiscal Year 2000, the number of 
tracts leased (553) in the GOM increased by almost 70 percent over 
Fiscal Year 1999. In Fiscal Year 2001, the number of tracts leased grew 
again as 753 new leases were issued.
    While Fiscal Year 2000 and Fiscal Year 2001 saw the number of 
tracts leased increase, MMS does not expect new leasing activity to 
return to the Fiscal Year 1996--1998 level in the near future. Because 
of this lower level of new leasing activity, MMS is requesting the cap 
on currently authorized offsetting collections be lowered to $100.230 
million in Fiscal Year 2003.
    In addition to appropriations for operations, MMS receives 
appropriations for distribution of the states' share of onshore mineral 
receipts. In Fiscal Year 2003, MMS estimates that the states' share of 
these onshore mineral receipts will be approximately $674 million. This 
amount is slightly more than our Fiscal Year 2002 estimate of $670 
million.

[GRAPHIC] [TIFF OMITTED] T8206.002

                               Conclusion
    Mr. Chairman, that concludes my written testimony. At this time I 
would be happy to answer any questions you or other Members of the 
Subcommittee may have regarding any aspect of our budget request for 
Fiscal Year 2003.
                                 ______
                                 
    Mrs. Cubin. Thank you. We will now begin our questioning. I 
would like to remind the members that the Committee Rule 3(c) 
imposes a 5-minute limit on questions. I will begin the 
questioning.
    I want to make a little statement first, actually. It never 
ceases to amaze me that the Interior Department and the 
agencies that you work for are charged with--are probably the 
only agency in government that actually brings in a lot of 
money for the Treasury of the United States and for the States, 
and you are also charged with looking after the environment, 
doing it scientifically, doing it well, and yet every time the 
administration, this one or others, want to cut--whack--they 
cut the Department of Interior, and it just doesn't make sense 
to me.
    I really do relate to Mr. Rahall's opening statement, and 
want to point out, just to emphasize it, money that was paid 
into the AML by the State of Wyoming for 2001, $120,987,000, 
the 50 percent that Wyoming got was $28,820,000. West Virginia 
paid in $35,640,000. They got, their half was $23,490,000. 
Washington paid in $1,720,000. They got nothing. It is not 
right, and we have to work together to try to change that.
    But now that I have had my say, I will start the 
questioning with Director Jarrett. The authorization for fee 
collection under Title IV of SMCRA for the Abandoned Mine Land 
Trust Fund expires in September of 2004, as you know. I 
wondered, what is the position of the administration regarding 
the extension of this fee collection authority? Do you 
anticipate that the administration will seek any other 
adjustments to Title IV of SMCRA?
    But before you answer please be sure to take into 
consideration that my State alone pays nearly 42 percent of 
the--it pays 42 percent of the entire AML fee, and yet we 
receive 20 cents, roughly 23 cents back on the dollar. And then 
we find a way to spend the rest of it, even though the interest 
would meet the needs that we have, interest alone.
    So what is the administration planning on expiration of 
this fee?
    Mr. Jarrett. Currently the administration does not have a 
position on reauthorization. It is my plan to start identifying 
all of the various positions on reauthorization, and there are 
many splits on this issue, as you know. Some of the States, 
such as Wyoming, that have certified completion of the AML 
inventory, have a different position, I am sure, than States 
like Pennsylvania who have a lot of unreclaimed abandoned mine 
lands.
    But we want to identify all of those various positions on 
reauthorization, and at a minimum evaluate what the impact of 
those positions would be on our ability to complete at least 
all of the Priority 1 and Priority 2 AML projects throughout 
this country. We have done that evaluation assuming that there 
is no change other than an extension of the current system, but 
we want to do that evaluation for a lot of the other proposals 
and options that we have been hearing about. And of course that 
information we will make available to this Committee or to 
anyone, so that we can all make intelligent and wise decisions 
in the future based on what we think is best for the American 
people.
    At the same time, I think it is very important that we also 
explore ways to make that program more efficient and to learn 
ways to leverage the money a little bit better than we have in 
the past. And I can give you just one example from my 
experience in Pennsylvania.
    We got a little friendly competition going between our AML 
folks and our Title V folks over who could get the most AML 
reclamation done, the Title IV folks with their at the time $22 
million AML grant from OSM, or the Title V regulators through 
creating remining incentives with the industry. And that was a 
program we worked very hard on, and within a few years we were 
getting about $30 million worth of free reclamation through 
remining, compared to the $22 million we were getting from our 
AML. So I think it is very important that we also explore those 
options for leveraging those dollars better.
    Mrs. Cubin. Well, I hope that you will stay in touch with 
us throughout the process of the decisionmaking on what changes 
might be made, because it would really be better to be working 
together as we go rather than have something dumped on us that 
we will have trouble--
    Mr. Jarrett. OK. We will be glad to do that.
    Mrs. Cubin. Thank you. Funding for the implementation of 
State regulatory programs under Title V of SMCRA has been 
reduced this year by about $1 million in comparison to last 
year's amount, and is $6 million less than what the coal mining 
States had requested. While the proposed budget recognizes 
special needs in West Virginia that I don't disagree with, and 
probably because of the fierce debate over mountaintop mining, 
will OSM be prepared to assist other States that find 
themselves with additional funding needs, should they too 
require it to adequately comply?
    Mr. Jarrett. I think the Title V grants are actually $1 
million more, but $2 million extra was going to West Virginia 
to help us through some of the problems there. That did result 
in sort of a net $1 million decrease that is spread out among 
the other States.
    We are still in the process of identifying any problems 
that that cut will have in any of the other States, and we 
expect there to be some problems, but by and large we have had 
more concerns raised to us over the proposed cut in the Title 
IV grants than in the Title V grants. But we are prepared to 
work through that with all of the States and provide whatever 
assistance they need, should that become necessary.
    Mrs. Cubin. My time has expired. I would like to ask 
unanimous consent that each member be allowed to question 10 
minutes rather than doing two rounds.
    Mr. Kind. That is fine, Madam Chair.
    Mrs. Cubin. The next question is for Dr. Leahy. I am just 
going to go directly to homeland security, although we have 
other questions that certainly we hope that you will all answer 
in writing. What is the Department of Interior's involvement in 
homeland security?
    Mr. Leahy. As I pointed out in my testimony, we have 
supplied a number of topographic maps. We were also involved in 
an effort to provide spatial data focused on the 120 cities 
that are being looked at in detail, and we will be providing 
the information along with our partners in an organization 
called NEMA.
    So that is just one area. We are also looking at water 
resources areas in terms of ways to monitor water resources 
more effectively, particularly biologically as well as 
chemically. Also, we had involvement in terms of the World 
Trade Center collapse, in terms of using techniques that have 
traditionally been used in the mineral resources area to look 
at the composition of the collapsed piles up there.
    Mrs. Cubin. So how have your efforts been funded?
    Dr. Leahy. Basically, we have funded them through our 
existing appropriation. For example, in the 120 cities effort, 
one of our major efforts in the cooperative topographic mapping 
effort is to create more recent topographic maps, and clearly 
the priorities will be focused on the 120 cities initially.
    Mrs. Cubin. So we have appropriated from Congress a lot of 
money to help with that terrorist attack, and do you have any 
idea how much--I know you don't, so I won't even ask that right 
now, but it seems that there ought to be some money coming to 
you, as well.
    Dr. Leahy. In fact, we are in discussions with OMB in terms 
of a potential supplemental that they may push forward.
    Mrs. Cubin. Good. $500,000 has been budgeted to update the 
Geothermal Energy Assessment, which was last updated, as you 
said in your testimony, in 1979. When do you expect that 
assessment to be completed, and will you be working with the 
land management agencies, the BLM, within the Department?
    Dr. Leahy. Basically, the assessment is not a national 
assessment. It will focus specifically on the Great Basin 
region. To do a national assessment of geothermal would require 
significantly more resources than $500,000. We have decided to 
target on an area that has the highest potential initially. I 
believe that study will probably take on the order of 3 years. 
We are obviously in the process of planning that. Depending on 
the outcome of the budget, we will proceed.
    BLM also has funds in their budget request, but they, much 
like we are doing in NPRA, the survey will be looking at the 
resource base, whereas the BLM--which we will work closely 
with, by the way--will be looking more at the leasing issues 
associated with the development of geothermal.
    Mrs. Cubin. And that is certainly something that needs to 
be done, as well.
    Now to Ms. Denett. We anticipate that there will be 
increased interest in developing and producing renewable energy 
resources. In this light, the royalty calculation methods for 
geothermal energy production, particularly low temperature 
geothermal resources used for direct heating applications, are 
complicated and an administrative nightmare, frankly. Regarding 
low temperature geothermal resources, how much revenue does MMS 
collect annually for royalties?
    Ms. Denett. From geothermal?
    Mrs. Cubin. Low temperature. Do you know that?
    Ms. Denett. I don't have that number offhand. We can 
provide it to you.
    Mrs. Cubin. Do you think that the amount collected--well, I 
guess if you don't--
    Ms. Denett. It is only a couple million dollars.
    Mrs. Cubin. Yes, it isn't very much.
    Ms. Denett. It is not very high, but I would have to give 
you the breakout. I would have to check into that.
    Mrs. Cubin. OK, but I think we can agree that it is a real 
minimal amount.
    Ms. Denett. Very small, right.
    Mrs. Cubin. And do you think that the amount collected 
justifies the effort that is required to collect those low 
temperature geothermal resources? I personally think that the 
rate is discouraging and the process is discouraging to produce 
low temperature geothermal.
    Ms. Denett. I know that in 1999 there was interest from the 
California congressional delegation that we re-look at the 
geothermal evaluation regulations, and in fact the agency 
issued an Advance Notice for Proposed Rulemaking to see if 
there was an interest in reevaluating, or should we be making 
changes to the valuation regulations.
    The comments we received, and we also had a workshop, 
ultimately everyone from the congressional delegation as well 
as from industry and State representatives, it was decided that 
we should leave well enough alone, that the regulations that 
are there were working, and that in fact for unique situations 
within the framework of the regulations we could develop with a 
particular company, whichever the geothermal company is, and 
with the collaboration of the State--California, Utah, 
etcetera--that we could develop future valuation methodology 
through a settlement process, and we have done that in numerous 
cases.
    I will add one other thing, that there has recently--a 
couple of weeks ago there was a renewable conference, a meeting 
with the various agencies to develop what else can we do, and 
there were some companies from the geothermal industry that 
again put on the table or at this time put on the table, maybe 
we should re-look at the geothermal valuation regulations to 
simplify. We will be looking at all of those things.
    Mrs. Cubin. Thank you. My time has expired. I now recognize 
Mr. Kind.
    Mr. Kind. Thank you, Madam Chair. And thank you again for 
your testimony here today, and I do echo Ms. Cubin's sentiments 
that there seems to be a game in play that is played out every 
year with the administration's budgets, where the Department of 
Interior is always on the chopping block, where those of us who 
know what value comes of these very valuable programs 
understand that there is going to be an effort to try to 
restore the funds, and the administration is able to stand back 
and say, ``Well, it's just the spendthrift Congress. That's why 
we're in deficits and everything else.'' And I just think it is 
an unfair game. If they would just submit some more realistic 
budgeting, rather than this constant battle with the 
appropriators and trying to restore funding for crucial 
programs.
    Dr. Leahy, let me start with you. You indicated that 
$500,000 for the geothermal survey is going to be mainly for 
the Great Basin area. Are you going to be able to complete a 
complete survey of the Great Basin area with $500,000, or is 
more going to be required for that 3-year study?
    Mr. Leahy. I think the initial effort will focus primarily 
on reevaluation of the initial assessment and bringing it up to 
modern standards. We will have to look at what additional data 
is available out there to really determine if the resources are 
adequate.
    Mr. Kind. Do you have any cost estimate of what it would 
take to have a true national survey for geothermal potential in 
the country?
    Mr. Leahy. I would prefer to provide that for the record. 
We certainly know what it cost us the first go-round.
    Mr. Kind. Right. Well, I would be interested in working 
with you on that. Obviously we have some shared interests here. 
I know Mr. Gibbons from Nevada, too, has been a pretty strong 
proponent of developing the geothermal potential in this 
country, too. I think if we can get a good snapshot of what 
that potential actually looks like, we might have a better idea 
of how it can fit into the long-term energy policy in this 
Nation.
    Mr. Leahy, I will stay with you for a second. In the 
President's proposal he is calling for a $500,000 in the 
Central Great Lakes Mapping Coalition. As you are aware, this 
is binational. Canada is chipping in, as well as the States in 
the Upper Midwest area, the Great Lakes area. What would be the 
practical impact of that funding reduction as far as the 
mapping program?
    Mr. Leahy. OK. I don't think Canada is chipping into that 
effort, but it is a bi-state effort in terms of a partnership 
between the U.S. Geological Survey, the State of Ohio, the 
State of Indiana, the State of Illinois--and, let's see, who 
have I missed?--State of Michigan. So there are five partners 
in it.
    It is basically a recognition that traditional geologic 
mapping has tended to look at the bedrock. However, in that 
part of the world there is a very thick cover of glacial 
deposits that basically is where humans interact most with the 
environment, and it supplies the water resources for the area, 
it supplies the sand and gravel resources, it is what we farm 
on, so there are pathways for water quality issues and so 
forth.
    The focus of the effort is to provide modern, three-
dimensional geological maps of the glacial deposits of that 
area. There are an enormous number of maps, and it would be a 
25-year effort to basically map all the surficial areas of 
those States.
    There has been a prioritization to develop those new 
techniques, be they geophysical or even three-D visualization, 
to show this complex information. There are pilot efforts in 
terms of individual quadrangles in each of those States, and 
the elimination of that will eliminate the mapping activities 
to look at those surficial deposits.
    Mr. Kind. Could you do me a favor and just double-check 
your facts in regards to the Canadian role in what is taking 
place up there? I know they have some sort of involvement. I am 
just not sure of the extent of--
    Mr. Leahy. We have done a lot of collaboration with the 
Canadians in terms of geologic map standards, and in fact the 
State Geologist of Illinois is a former Geologic Survey of 
Canada employee. He is a U.S. citizen, actually. But certainly 
there have been many discussions with the Canadians, but I 
don't believe there has been any cost-sharing, but I will 
check.
    Mr. Kind. Thank you.
    Ms. Denett, it is nice to see you again. Thanks for your 
testimony, as well. Your testimony indicated you are 
anticipating about a $4.2 billion raise in regards to offshore/
onshore leasing and mineral development. In 2001 I believe it 
was over $6 billion or so, so it is roughly a $2 billion 
dropoff from just the previous year. Could you explain to us 
what factors are contributing to that $2 billion dropoff?
    Ms. Denett. Sure. A lot of it deals with prices and 
production, so it depends on level of production and the prices 
of the oil and the gas and the coal, and that has a direct 
impact on the revenues that we collect, and as well the bonus 
bids that come in from the offshore program, which we collect 
close to a couple billion or so dollars just from those type of 
activities.
    Mr. Kind. Thank you.
    Ms. Denett. We can give you a more detailed breakout if you 
would like.
    Mr. Kind. That would be great, yes, some type of breakdown, 
show us what factors are contributing to that. I would 
appreciate that.
    Director Jarrett, again in the proposed budget there is 
about a $17 million reduction, I believe, if I have got my 
facts right, for the Abandoned Mine Land reclamation grants 
that would be available. According to some quick calculations, 
that would leave roughly $144 million left which would provide 
a potential of roughly 6,900 to 7,000 acres or so of land that 
could be reclaimed under the proposed budget. What could $17 
million do in regards to the number of acres that potentially 
could be reclaimed? How many acres?
    Mr. Jarrett. I could get you that number, but from my 
perspective that is not an important number. The primary 
purpose of the AML program is to abate hazards to human health 
and safety, and that is one of the concerns that I have had.
    One of the things I think we need to do, that I addressed 
earlier, is come up with better ways to measure the value and 
answer the question, what are we buying with those dollars, 
because it is not reclaimed acres. We need to ask ourselves, 
why are we reclaiming those acres, and it is to save lives. It 
is to protect people and children. That is the reason that we 
want to spend dollars to reclaim an abandoned high wall that is 
near a highway or a school yard, as opposed to one that is many 
miles from a population center.
    Mr. Kind. Let me just rephrase that. What won't get done 
with a $17 million shortfall?
    Mr. Jarrett. I can't answer that question because we 
haven't measured it properly. If you want an answer to the 
question in terms of acres, it will be 6,900 acres versus 8,200 
acres that won't get done. But there are other programs out 
there that we are looking at to help get more problems 
corrected.
    One of the programs in the department's proposed budget is 
the CCI program, which looks to me like about $50 million would 
be available on a competitive basis for our State AML 
authorities, to use AML dollars to match against those dollars. 
I personally think that is a better delivery mechanism, because 
it covers environmental remediation projects that go beyond 
just those related to mining and allows the department to focus 
on the most important environmental problems, as opposed to 
just the important mining ones. And it also requires that you 
have some other participation from not just local governments 
but from citizens, and I think any time you can start building 
coalitions out there, you are going to end up with a better 
product.
    Mr. Kind. Let me also state, as you and your department get 
in a position to start taking a look at reauthorization of AML 
and that, we would be interested in working with you, and 
trying to get some feedback from you on some thoughts that we 
would like to share with the administration on where we need to 
take the program and whether it is worthy of reauthorizing when 
it is due to expire.
    Mr. Jarrett. OK. I would be more than happy to do that.
    Mr. Kind. Dr. Leahy, can I throw you a quick curve? I know 
we don't have specific jurisdiction over these water resource 
issues and that, but I am very concerned, there are quite a few 
of us in Congress that are very concerned in regards to the 
funding cutback for the National Stream Flow Information 
Program, you know, the stream gauging, in light of the flooding 
and the drought conditions we are facing.
    I think this is not the appropriate time to have a 
significant reduction in stream flow gauging information that 
USGS has been doing. There is a $2 million proposed cutback. 
What would be the impact of that on the work that is being done 
right now?
    Mr. Leahy. The impact would be the loss of 130 stream 
gauges nationally. And those 130 gauges have been identified on 
a State-by-State basis, and we have a priority order for our 
stream gauges. And currently the length of record is extremely 
important, so we don't want to lose that length of record, so 
they tend to be some of the ones that were added most recently. 
The priorities were established with our cooperators at the 
State level.
    Mr. Kind. Right.
    Mr. Leahy. Many of these, of course, are co-funded with the 
States, so it is particularly challenging.
    Mr. Kind. There is a lot of cost-sharing, and the data that 
is being collected I think is invaluable. And if we start 
seeing a significant dropoff or a discontinuation of the 
collection of the data, I think it is going to start throwing 
things out of whack. So we are going to need to get that word 
out, and I will be happy to work with you in regards to that 
program.
    And, finally, you know, you have the proposal on the Toxic 
Substances Hydrology Program of taking the money, shifting it 
over to the National Science Foundation competitive grant 
process. But again it seems to me, from personal experience in 
working with the experts at USGS and the fine work that they 
are doing, there is a certain amount of quality and expertise 
that has been built up now within USGS in order to conduct this 
important work that is being done under the hydrology program 
and that. Could you give us a little bit of insight as far as 
the reasoning or the justification in this shift away from USGS 
expertise?
    Mr. Leahy. Well, certainly the NSF is very capable of high 
quality science, and that is one of issues here, is to ensure 
that the water quality work in terms of toxics is done in the 
highest quality manner.
    Mr. Kind. I assume NSF is just turning around and 
contracting out this money to private entities.
    Mr. Leahy. There is a transition plan that is being 
developed between the USGS and NSF, that will take a period of 
3 years, I believe, to effect the transition. Clearly the toxic 
program, one of the benefits is, these are long-term field 
laboratories, so that the body of information that is collected 
is a research value that supports or is the foundation for the 
next research question that comes up. We are hoping, as part of 
the transition, that that capability is not lost, and 
discussions are underway.
    Mr. Kind. I think this is going to require more careful 
thought and study and that before we go down that road, because 
I can just think of a myriad of private property interests, 
too, and concerns that might be raised with private contracting 
doing this type of data collection, where safeguards are 
already built in with the work that USGS is doing.
    Well, thank you again. I have gone over my time. Thank you, 
Madam Chair.
    Mrs. Cubin. Thank you, Mr. Kind.
    Perhaps an answer to that would be to allow USGS scientists 
to compete with other scientists in whoever would get the 
grants. I don't know, but I agree with you that you hate to 
lose institutional knowledge that you have already built up and 
things that you have already paid for.
    I would like to thank the witnesses for their testimony, 
and thank Mr. Kind for his questions. I know that there will be 
more questions that will be submitted to you in writing, and we 
do ask you to respond to those. The hearing record will be held 
open for 10 days for the responses.
    So if there is no further business before the Committee, 
the Committee now stands adjourned.
    [Whereupon, at 11:17 a.m., the Subcommittee was adjourned.]

    [Responses to questions submitted for the record by the 
Minerals Management Service follow:]

                   Follow-up Questions for the Record

                      Minerals Management Service

                       House Resources Committee

              Subcommittee on Energy and Mineral Resources

                 March 14, 2002, Oversight Hearing on:

     FY 2003 U.S. Geological Survey; The Office of Surface Mining,

     Reclamation & Enforcement; and The Minerals Management Service

Questions from Chairman Cubin
Question 1. (a).
    We anticipate that there will be increased interest in developing 
and producing renewable energy resources. In this light, the royalty 
calculation methods for geothermal energy production, particularly low-
temperature geothermal resources used for direct heating applications, 
are complicated and an ``administrative nightmare.''
    Regarding low-temperature geothermal resources:
    a. LHow much revenue does the MMS collect annually for royalties on 
low-temperature geothermal resources?
    b. LDo you think the amount collected justifies effort required to 
collect royalties on low-temperature geothermal resources?
    c. LDo you think the royalty rate is discouraging use of low-
temperature resources?
Answer:
    a. LHow much revenue does MMS collect for royalties on low-
temperature geothermal resources?
    The Minerals Management Service does not require the reporting of 
low vs. high temperature geothermal royalties on our financial system. 
However, equating low-temperature with direct-use, we currently have 
seven geothermal leases in California, Nevada, and New Mexico that 
produce geothermal fluids for direct-use operations. MMS historically 
collects between about $30,000 and $70,000 per year in royalties for 
these resources, mostly from the Honey Lake project in northern 
California.
    b. LDo you think the amount collected justifies the effort required 
to collect royalties on low-temperature geothermal resources?
    Low-temperature geothermal resources have broad commercial 
applications (for example, aquaculture, greenhouse heating, vegetable 
dehydration) that displace large amounts of conventional fuels. As such 
they are a valuable public asset. MMS expends little additional effort 
in collecting royalties on these resources as opposed to conventional 
fuels, as they are reported in the same manner as oil and gas 
royalties.
    c. LDo you think the royalty rate is discouraging use of low-
temperature resources?
    To our knowledge, the royalty rate applied to direct-use resources, 
10 percent--the minimum allowed by statute--does not appear to be 
discouraging direct-use applications.
Question 1. (b).
    Regarding medium- and high-temperature geothermal resources, do you 
think that a simpler royalty calculation method, based on gross 
proceeds (similar to oil and gas royalty determination) would be 
equitable to the producers, while resulting in a net savings from what 
is currently devoted to the geothermal royalty management program?
Answer:
    MMS's current valuation rules do provide for royalties based on 
gross proceeds, providing the geothermal resource is actually sold. Few 
geothermal resources, however, are subject to sales transactions, thus 
requiring valuation by indirect methods such as a netback from the sale 
of electricity. (The Geothermal Steam Act, as amended, 30 U.S.C. 1001 
et seq., provides for royalty only on the produced resource itself and 
not on a created product, such as electricity. Thus, for value to be 
directly determined by gross proceeds, those proceeds must come from a 
sale of the resource.)
    There are simpler, less costly indirect methods than the one 
currently commonly used'the netback procedure'to value those medium- 
and high-temperature resources used to generate electricity. However, 
when MMS reopened its current valuation rules to public comment and 
potential revision in 1999, with one of our express purposes of finding 
an equitable alternative to netback valuation, the geothermal industry 
responded against any changes, indicating that the current netback 
procedure was working as intended. As a result, MMS withdrew its notice 
of proposed rulemaking. The MMS recognizes the difficulty in auditing 
royalties paid under netback valuation and is open to initiating 
discussions on the current rules if interest is expressed.
Question 2.
    Senator Boxer (D-CA) recently introduced S. 1952, the ``California 
Coastal Protection and Louisiana Energy Enhancement Act'' to buy out 
the interest of 40 non-producing leases on the OCS off the coast of 
California in exchange for credits that can be applied to bid on lease 
sales in the Western and Central Planning Areas of the Gulf of Mexico 
or to make royalty payments on existing production in those planning 
areas. If this legislation were to be enacted, what effect would there 
likely be on the U.S. Treasury?
Answer:
    Due to the way the language of the bill is constructed, there could 
be two possible scenarios with different associated costs. That is 
because the language of the bill requires that, for the lease credits 
to be offered, all eligible lessees must agree to the terms of the 
settlement offer as they relate to their individual leases. Under the 
first scenario, it is very likely that some of the lessees may not 
accept the settlement offer. If that were to be the case, the effect on 
the U.S. Treasury is zero.
    Under the second scenario, if all eligible lessees agreed to the 
terms of the settlement offer as they relate to their individual 
leases, then the language of the bill stipulates that the value of the 
credits is to be calculated in an amount equal to the sum of the amount 
of consideration paid the Federal government for the eligible lease; 
and the difference between the amount of direct expenditures made after 
the date of issuance of the eligible lease in connection with the 
exploration and development of the eligible lease, and the amount of 
revenues earned from the eligible lease before the date of 
cancellation.
    MMS has no way to accurately calculate the effect on the Federal 
Treasury based on the criteria above since we have no information on 
the amount of direct expenditures made on the leases by the current 
lease holders nor the amount of revenues earned from the eligible 
leases. However, MMS does have the data on bonus and rental amounts 
paid on the leases to the Federal government by the original lease 
holders. Specifically, the 40 undeveloped leases in the Pacific region 
are composed of 36, which were granted suspensions in late 1999 and 4 
which expired. For the 36 leases, the total amount of all cash bonuses 
paid to the Federal government was about $1.1 billion (current dollars 
at time of payment). The total bonuses paid the Federal government on 
the 4 leases that expired was about $144 million. Rentals paid on the 
40 leases were--about $6.5 million.
    It is MMS's understanding that the current lease holders paid the 
original lessees much less than the $1.1 billion.
Question 3.
    Recent news articles have reported that peer-reviewed studies 
commissioned over the past twenty years by MMS ``strongly suggest that 
oil and gas rigs in the Gulf amount to islands of intense mercury 
contamination...'' and that they may be poisoning seafood. Was MMS 
consulted prior to the publication of these stories? Can you comment on 
the accuracy of those claims?
Answer:
    The news articles mainly reference one study, the Gulf of Mexico 
Offshore Monitoring Experiment (GOOMEX), performed by Texas A& M 
University (TAMU) scientists with MMS funding in 1992 - 1995. MMS had 
received an anonymous information request, but was not consulted before 
the initial article was published. The lead scientist for the study, 
(Dr. Mahlon Kennicutt, TAMU) has explained to the Mobile Register that 
they had substantially misinterpreted the study's findings, but the 
newspaper fails to accept the scientific interpretation of data. In 
fact, the study demonstrated no differences in mercury levels found in 
fish and other organisms living near the three oil/gas platforms and 
those living far away from the platforms. Therefore, the study 
concluded that drilling operations at platforms do not contribute to 
mercury in marine organisms. This was also the conclusion of an article 
on the study in the scientifically peer reviewed Canadian Journal of 
Fisheries and Aquatic Sciences.
Question 4.
    Would you please describe MMS'' efforts to minimize and mitigate 
the impact of offshore drilling and production activities on the 
environment and the effect the proposed budget has on this aspect of 
MMS'' environmental and compliance program?
Answer:
    To minimize and mitigate impacts from offshore activities, MMS 
evaluates the potential effects during pre-lease and post-lease 
activities. The key products of this effort are identification and 
implementation of mitigation measures designed to protect sensitive 
biological communities and habitat, air quality, archaeological 
resources and protected species. MMS studies, in general, are designed 
to contribute to the knowledge base and enhance the MMS decision making 
process; and those efforts will continue. The less than 2 percent 
reduction of funds from the fiscal year 2002 enacted level should not 
limit our ability to address unforeseen or priority environmental 
issues.
Question 5.
    The royalty-in-kind (RIK) pilot programs have had their share of 
controversy. Would you describe MMS'' efforts to measure the success of 
both on-shore oil and off-shore gas RIK programs? Does MMS believe that 
the Federal Government is getting its fair share when royalty is 
collected in kind rather than in value? What effect, if any, will the 
recent circuit court decision styled IPAA v. DeWitt have upon in-kind 
versus in-value analyses?
Answer:
    Beginning in 1998, MMS commenced a series of royalty-in-kind (RIK) 
pilots to test and evaluate the viability of MMS taking its production 
royalty-in-kind and selling it through a competitive bid process. For 
the first pilot, the MMS and the State of Wyoming's Office of State 
Lands and Investments cooperatively developed an oil RIK sales 
initiative with first deliveries beginning October 1998 under six-month 
contracts. After four succeeding sales, the MMS conducted an assessment 
of the success of the initiative and published for comment its draft 
report of findings in March 2001. The following criteria were used for 
evaluation:
    1. LSimplicity, accuracy, certainty for lessees and government;
    2. LRevenue neutral (or better) for government; and
    3. LReduced administrative burden for lessees and government.
    The assessment concluded that:
    1. LThe RIK approach simplifies the royalty process and 
significantly reduces the period of uncertainty for lessees and 
government;
    2. LRIK receipts were at least revenue neutral compared to the in-
value approach; and
    3. LThe RIK approach can result in administrative savings for 
industry and government.
    Regarding natural gas, MMS initiated its first RIK pilot in a 
cooperative effort with the State of Texas General Land Office. The 
pilot was initiated in 1998, with first deliveries from Outer 
Continental Shelf Section 8(g) leases beginning in 1999. The MMS is 
nearing completion of its evaluation of this pilot and will be 
publishing its draft report for comment in Spring 2002. Initial 
assessment results indicate that for sales of RIK gas at robust market 
centers, under standard contract terms, we will get the same price as 
anyone else who sells that way.
    Based on its assessment results to date, MMS believes that, in its 
RIK Pilots, the Federal Government is receiving revenues at least 
equivalent to what would be received if royalties were collected in-
value.
    MMS is evaluating the impact of the circuit court decision in IPAA 
v. DeWitt on its royalty program. Currently, MMS believes that the 
court decision will have little, if any effect on MMS's economic 
analyses of royalty-in-kind versus royalty-in-value.
Question 6.
    In your statement, you say that ``...oil and gas will continue to 
be important during the next 20 to 30 years, and DOE estimates that 
dependence on oil and gas will increase significantly during that 
time.'' You also state that U.S. imports will increase from 56% in 1999 
to 70% in 2020. This is a significant increase. Does MMS have any 
suggestions on how to increase domestic production from the OCS to 
decrease our dependence on foreign oil?
Answer:
    There are several options available which can be taken to increase 
production from the OCS. These include: 1) continuation of 5-year 
leasing programs, perhaps with larger/more frontier sales, 2) 
development of economic incentives to encourage increased production 
from areas included in these programs, and 3) increased funding of 
hydrate exploration/production research.
Question 7.
    Will natural gas production from the OCS be able to keep pace with 
its same annual percentage contribution if the anticipated increase of 
50%, from 22 TCF to 32 TCF by 2015 occurs? Will MMS'' next five-year 
leasing plan help assure that the OCS can meet the forecasted demand 
for natural gas?
Answer:
    At present, about 25 percent of the Nation's natural gas is 
supplied from the OCS. With the anticipated 50 percent increase in 
demand, it is expected that, despite increased OCS production, the 
percentage supply contribution from the OCS will range from 20 to 22 
percent. The next 5-year leasing plan, together with deep water and 
deep drilling royalty suspension programs already in place, will help 
ensure that the OCS can meet its projected share of the forecasted 
demand.
Questions from Ranking Member Kind
Question 1.
    MMS collects the royalties from onshore federal and Indian and 
outer continental shelf mineral leases, and administers the OCS lease 
program. In 2003, you are projecting that MMS will collect about $4.2 
billion in revenues in 2003 from minerals produced from offshore and 
onshore Federal and Indian lands. This is about $2 billion less than 
MMS collected in 2001. Please explain the drop in revenues.
Answer:
    Actually the change from fiscal year 2001 receipts to fiscal year 
2003 projected receipts is even more dramatic. MMS collected over $10 
billion in fiscal year 2001. The change in receipts is a factor of 
declining oil and gas prices over the last three years, overall 
moderating production levels, and plans to transfer oil to the Nation's 
Strategic Petroleum Reserve.
[GRAPHIC] [TIFF OMITTED] T8206.003

    As can be seen from the above table oil and gas prices declined 
dramatically from fiscal year 2001 to the projections for fiscal year 
2003 (fiscal year 2002 and 2003 prices are estimates in the 2003 
budget). Oil prices are projected to decline by 27 percent and gas 
prices by more than 57 percent. Production levels are projected to 
climb moderately with oil production growing by 0.5 percent. Gas 
production is projected to increase at a higher rate, 8.1 percent, but 
not enough to overcome the more than 57 percent projected decline in 
prices.
    In addition, the decision to add oil to the Nation's Strategic 
Petroleum Reserve affects projected receipts. The SPR will be filled by 
taking in-kind Outer Continental Shelf royalties on oil production. 
This, of course, reduces the dollars collected in fiscal year 2002 and 
fiscal year 2003. The reduction of adding to the SPR on fiscal year 
2003 royalty collections is currently projected to be-$885 million 
based on OMB economic price assumptions used for preparing the fiscal 
year 2003 budget and a transfer of 47.5 million barrels of oil.
Question 2.
    In fiscal year 2003, the President is requesting an increase of 
$11.1 million in appropriated funds for MMS. One area you will spend 
this increase on is to develop software to allow greater royalty-in-
kind collection programs where warranted. What exactly do you expect to 
accomplish with this effort?
Answer:
    The requested funding for systems development is needed to support 
the MMS's royalty-in-kind program activity. With this funding, MMS will 
complete the development of the needed systems support to manage 
business activities that are unique to the in-kind approach versus the 
in-value approach. These royalty-in-kind business activities include 
the identification and management of oil and gas volumes from point of 
production to point of sale or other disposition; management of 
production imbalances from point of production receipt to production 
disposition; and contract management for sales, processing and 
transportation of production. Furthermore, this needed systems support 
will be integrated with MMS's financial and compliance systems 
infrastructure. With the completion of the royalty-in-kind development 
effort, MMS will have the needed systems support for efficiently and 
cost-effectively executing its asset management strategy of utilizing 
both the in-kind and in-value options in achieving its business 
objectives.
Question 3.
    MMS also plans to increase funding by $5.0 million for OCS 
activities in the Gulf of Mexico to increase oil and gas production in 
support of the President's energy policy. What exactly will these funds 
be used for?
Answer:
    The requested resources will be used to ensure that offshore 
operations are conducted in a safe and environmentally sound manner, to 
assure that the public receives fair value for its mineral resources, 
and to process industry plans.
    * $0.94 million for leasing and environmental assessment activities
         L$0.24M is for two FTE for lease administration. Lease 
        inventory grew 43 percent from 1995 through 2000. Bonding 
        issues are becoming more complex and more critical.
         L$0.60M is for five FTE to prepare environmental 
        reviews. Special environmental assessments are required for new 
        and unique proposals, such as pipelines for regassification of 
        LNG, commercial waste disposal into salt caverns, and complex 
        pipeline scenarios involving multiple projects and platforms. 
        NEPA and Coastal Zone Consistency workload continues to grow.
         L$0.10M will be used for a periodic journal of 
        Environmental Studies results.
    * $1.62 million for resource evaluation and decisions
         L$0.60M for five positions to handle field 
        determinations. Since the passage of the Deepwater Royalty 
        Relief Act of 1995, this has evolved into a resource-intensive 
        responsibility having a huge economic impact to both Government 
        and industry. One determination could result in $300M more 
        revenues to the U.S. Treasury. Decisions affect billions of 
        dollars of revenue to the U.S. Treasury. If there are about 340 
        new discoveries in the next 10 years, the impact to royalty 
        payments could be in the range of $45 billion.
         L$0.48M for four FTE to collect, process, distribute, 
        and archive technical data and records derived from new wells 
        that are drilled. New wells drilled increased 40 percent in 
        fiscal year 2000. A backlog in this work slows resource 
        assessments, tract evaluations, reserves inventory, and field 
        determinations--all of which affect revenues to the U.S. 
        Treasury.
         L$0.29M is needed to digitize well logs.
         L$0.25M will be used for regional sand resource 
        identification
    * $1.89 million for regulation of operations
         L$0.24M for two FTE to process deepwater operations 
        plans. Submittals increased by 36 percent from 2000 to 2001. 
        Billion dollar industry projects depend on timely review of 
        these plans. Approval delays cause production and revenue 
        delays.
         L$0.12M for a corrosion engineer. Aging infrastructure 
        presents a potential prospect of corrosion problems that could 
        result in premature abandonment of some platforms.
         L$0.12M for a position to deal with the 27 percent 
        increase in pipeline applications.
         L$0.36M for three inspectors for workplace safety on 
        fixed facilities. This function was previously handled by the 
        US Coast Guard.
         L$0.24M for two positions to review production 
        completions, and violations for flaring, maximum production 
        rates, and downhole commingling. This is essential to assure 
        ultimate recovery of oil and gas.
         L$0.15M for engineering and other technical training. 
        Changing technology requires increased training of the current 
        workforce.
         L$0.585 million for increased helicopter contract 
        costs.
         L$0.075 million for contractual accident and 
        prevention analysis. Accidents and pollution incidents 
        undermine confidence in program.
    * $0.25 million for contractual information technology support for 
the new fiscal year 02 and fiscal year 03 FTE
    * $0.30 million for one FTE and increased administrative services 
required for the expanding GOM workload.
Question 4.
    MMS proposes to reduce funding for environmental studies by $2.2 
million, the Center for Marine Resources and Environmental Technology 
(CMRET) in Mississippi by $800,000, the Marine Mineral Technology 
Center (MMTC) in Alaska by $800,000, and the Offshore Research and 
Technology Center $499,000. The Centers, in particular, were funded 
through Congressional add-ons last year. What will MMS not be able to 
accomplish if these decreases are maintained through the appropriations 
process?
Answer:
    Environmental studies allow us to study current issues and conduct 
environmental monitoring related to oil and gas activities and marine 
minerals development, as well as conduct research on evolving topics 
such as methane hydrates, biotechnology and invasive species. The 
proposed budget reduction should not limit our ability to address 
unforeseen or lower priority research.
    The Mississippi CMRET is constructing a methane hydrate monitoring 
station to be placed in the Green Canyon area of the Gulf of Mexico in 
2004. When completed, the facility will be the only one of its kind in 
the world. As such, many of the components of the station have to be 
specially designed and constructed. The station will monitor, on a 
continuing basis, changes in the stability of the seafloor and amounts 
of gas released to the sea and atmosphere. These conditions may result 
when man-induced activities such as drilling and production of oil and 
gas occur on or adjacent to methane hydrate deposits. The station will 
also monitor changes to environmentally-sensitive seafloor biological 
communities that depend upon methane hydrates for survival. The Green 
Canyon contains a number of methane hydrate deposits that are 
considered prime candidates for future gas production. Without 
additional funding CMRET's design and construction work on the 
monitoring station would be delayed or stopped.
    The MMTC at the University of Alaska plans to continue resource and 
environmental studies in support of future placer gold leasing in the 
outer continental shelf of the Norton Sound offshore Nome. The Norton 
Sound contains the largest known placer gold reserves in the U.S. and 
is one of the largest in the world. Included in this work is the design 
and testing of an unmanned, underwater mining machine that could work 
beneath the 6-month long ice cap in the Norton Sound. Another planned 
project is the location and testing of offshore sand and gravel 
deposits for use in building beach berms to protect the native fishing 
villages of Kivalina and Shishmaref, located on the Chukchi Sea. This 
project is unrelated to offshore minerals activity. Without additional 
funding in fiscal year 2003, these MMTC projects would be delayed or 
discontinued until future funds became available.
    MMS signed a Cooperative Agreement with the Offshore Technology 
Research Center (OTRC) in June 1999, which provides funds to support 
basic engineering research and test technologies for deepwater oil and 
gas production. The funds are allocated among three categories: (1) 
specific research applicable to MMS regulatory program 
responsibilities; (2) basic research projects jointly funded with 
industry sponsors focused upon new and innovative technologies 
applicable to deepwater oil and gas production; and (3) operational and 
administrative support of the Center. Reduction in the MMS funding 
level will shift to industry the obligation to increase funding for the 
basic research activities and operational and administrative costs of 
the Center. Currently, MMS has provided about 50 percent of the OTRC 
funding.
                                 ______
                                 
    [Responses to questions submitted for the record by the 
Office of Surface Mining follow:]

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 1

                    AUTHORIZATION OF FEE COLLECTION

    Mrs. Cubin. Authorizations for fee collection under Title IV of 
SMCRA for the Abandoned Mine Land Trust Fund will expire in September 
of 2004. What is the position of the Administration regarding extension 
of this fee collection authority? Do you anticipate that the 
Administration will seek other adjustments to Title IV of SMCRA? If so, 
what might they be? But, before you answer please consider carefully 
that coal producers in one state alone--Wyoming--pay nearly 42 percent 
of the fees collected nationwide, yet my state receives but 23 cents 
back on each dollar sent to Washington DC rather than the mandated 
minimum of 50 cents on the dollar.
    Mr. Jarrett. The Administration has not yet taken a position on 
extension of AML fee collection. Over the next several months, OSM 
staff plans to discuss the issue of possible fee extension with 
representatives of States and Tribes, industry, environmental groups, 
Members of Congress, and others to gain a better understanding of the 
various positions. Based on these discussions, the Department will work 
with the Administration in formulating a position. In addition to 
exploring the issue of fee collection, we will be looking at other 
possible issues in the AML program. We have not yet determined, 
however, what, if any potential statute changes might be sought.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 2

                        REGULATORY GRANT FUNDING

    Ms. Cubin. Funding for the implementation of state regulatory 
programs under Title V of SMCRA has been reduced this year by $1 
million in comparison to last year's amount and is almost $6 million 
less than what the coal mining states had requested. While the proposed 
budget recognizes special needs in West Virginia (perhaps because of 
the fierce debate over mountaintop mining and valley fill practices) 
will OSM be prepared to assist other states with additional funding 
should they too require it to adequately regulate current operations?
    Mr. Jarrett. Regulatory grants to primacy states have increased by 
approximately 10 percent over the last two years. OSM works 
cooperatively with the States throughout the year to avoid similar 
situations and to ensure that the States are able to continue operating 
viable programs. As with the state of West Virginia, OSM would work 
with the Congress to prevent the failure of a state regulatory program.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 3

            STATE ABANDONED MINE LAND PROGRAM GRANT FUNDING

    Mrs. Cubin. Funding for state AML programs has been reduced by $17 
million in comparison to last year's amount, and this is in the face of 
an increasing Fund balance and increased receipts to the Fund. Given 
that state and tribal share balances continue to increase (from a 
cumulative $881 million at the end of fiscal year 2001 to over $918 
million at the end of calendar year 2001, just three months later!) 
what plans does OSM have for future appropriations requests to insure 
that the states can gain access to these increasing balances and put 
the money to work on the ground to remediate outstanding AML 
priorities.
    Mr. Jarrett. The proposed reduction of $17 million for reclamation 
grants to states is partially offset by a $2 million request for 
transfer of prior-year carry over funding from the Federal emergency 
program. The resulting reduction of $15 million to state reclamation 
grants in no way signals a lessening of this Administration's support 
for the Abandoned Mine Land program. This is a valuable program that 
the participating States and Indian tribes carry out very effectively. 
The proposed reduction from the fiscal year 2001 grant level is a 
result of difficult budget choices. The Administration supports the 
Abandoned Mine Land program to the greatest extent possible within the 
context of existing budgetary constraints. Also, the President's Budget 
will result in an additional 6,900 acres reclaimed and will maintain 
the Clean Streams Program at the fiscal year 2002 level.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 4

                          MOST PRESSING ISSUES

    Ms. Cubin. What do you consider to be the most pressing issues that 
you will be called upon to handle during the early weeks and months of 
your term as Director of OSM?
    Mr. Jarrett. There are three issues on which I most want to focus 
at this. First, we need to create a stable regulatory framework to 
ensure responsible and environmentally sound energy production. One way 
to do this is to review our regulatory activities and set priorities to 
identify and work with other Federal and state agencies on a consistent 
approach for regulating coal mining and reclamation operations. We are 
in the process of analyzing this issue. Second, I want to continue 
moving toward resolution on several difficult surface and underground 
coal mining issues, particularly those related to longwall mining and 
mountaintop mining operations. For instance, we are continuing to work 
with other Federal and State agencies to resolve the many issues that 
surround mountaintop mining, in order to complete the programmatic 
Environmental Impact Statement that should provide a basis for 
coordinated decision making to minimize the adverse effects of excess 
spoil in valley fields. Third, I want us to pursue the means to 
encourage remining and recovery of coal from coal refuse piles by 
developing alternative regulatory approaches. Toward this end, we are 
examining options for providing financial incentives for remining.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 5

                       STATE-FEDERAL PARTNERSHIP

    Ms. Cubin. As a former State regulator, you bring a unique 
perspective to the job as OSM Director. What is your sense of how well 
OSM is doing to fulfill its mandate of ensuring an effective State/
Federal partnership under SMCRA? What, if anything, should be done to 
bolster the relationship between OSM and the States?
    Mr. Jarrett. My sense is that OSM supports and recognizes that 
States serve as front-line regulators performing the bulk of the 
required inspection, enforcement and permitting activities, while OSM 
provides monitoring, and technical and financial assistance. In effect, 
the States and OSM are working well together to co-implement SMCRA. As 
a result, I believe SMCRA has become one of the most effective 
regulatory programs in the country. The program is working well in 
large measure because of the stability that has gradually come to the 
Federal/State relationship, which is so integral to achieving the goals 
of SMCRA. I believe the program is operating at its most successful 
level where it counts - on the ground.
    OSM, the States and Tribes have developed several initiatives to 
enhance cooperation on a number of important issues concerning 
oversight, technical training, technical assistance, and enforcement of 
environmental laws. Examples of this cooperation include: making State 
program oversight more effective by measuring results and solving 
problems cooperatively; increasing technical knowledge and improving 
working relationships among Federal, State, and tribal personnel 
through technical training; making regulation more effective through 
advanced technology and data capabilities for hydrology and geology; 
and implementing the Endangered Species Act through cooperative 
efforts. To bolster the relationship, OSM will continue to further and 
enhance our partnerships with the States and Tribes on issues of mutual 
concern.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14,2002

                               QUESTION 6

               STATUS OF THE ABANDONED MINE LAND PROGRAM

    Ms. Cubin. Can you give us a quick summary of the status of the AML 
program? How many high priority sites have been reclaimed? How many 
high priority sites remain to be reclaimed? Where most of these sites 
are, etc.?
    Mr. Jarrett. The total inventory includes 18,252 sites, which have 
priority 1, 2, or 3 problems (both coal and non-coal). Of these, 12,487 
are high priority coal sites (priority 1 and 2, coal, health, safety 
and general welfare). OSM has completely reclaimed 6,064 high priority 
coal sites and partially reclaimed an additional 1,552 sites. Unfunded 
sites total 4,871. It is estimated it will cost $6.6 billion to reclaim 
all these unfunded and partially funded coal sites.
    The total number of sites is shown below by State and Indian tribe. 
Sites shown in the ``Partially Funded/Completed'' column represents 
locations where some reclamation problems have been addressed, but 
others remain to be reclaimed.
[GRAPHIC] [TIFF OMITTED] T8206.004

[GRAPHIC] [TIFF OMITTED] T8206.005

                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 7

                  APPALACHIAN CLEAN STREAMS INITIATIVE

    Ms. Cubin. Regarding the Appalachian Clean Stream Initiative, can 
you give us an idea of the extent of acid rock drainage in Appalachia 
before the initiative was undertaken versus the extent of acid rock 
drainage now? To what extent will the proposed fiscal year 2003 funding 
remediate the problem?
    Mr. Jarrett. According to a survey of State fisheries biologists 
(U.S. Environmental Protection Agency - 1995, 1997), 7,500 stream miles 
in Appalachia were adversely affected by acid rock drainage. According 
to State Abandoned Mine Land agencies, approximately 100 stream miles 
and 52 lake acres have been improved by Appalachian Clean Streams 
Program projects. An additional 400 miles of streams will be improved 
by projects currently in progress and new projects launched with fiscal 
year 2003 funding would improve about 150 stream miles.
                                 ______
                                 

                        QUESTION FOR THE RECORD

                       HOUSE RESOURCES COMMITTEE

               ENERGY AND MINERAL RESOURCES SUBCOMMITTEE

              PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST

                             MARCH 14, 2002

                               QUESTION 8

                  APPALACHIAN CLEAN STREAMS INITIATIVE

    Ms. Cubin. The media commonly says that 12,000 miles of streams in 
the United States are impacted by mining. This figure is at least 
several decades old, but I believe that OSM is the original source. Did 
this figure originate with OSM? If so how much of the impact is due to 
coal mining and where are these impacts? How much progress have we made 
in reducing those stream impacts due to coal mining since SMCRA was 
passed in 1977?
    Mr. Jarrett. The Office of Surface Mining did not originate the 
cited statistic on stream impacts. Of the12,000 miles of streams 
impacted by mining nationwide (U.S. Environmental Protection Agency, et 
al.), acid drainage from abandoned and active coal mines accounts for 
more than half of the total, predominantly in Appalachia and to a small 
extent in the Midwest and West. The most dramatic progress in dealing 
with mine drainage under the Surface Mining Control and Reclamation Act 
has to do with active mines. Because of concurrent reclamation and 
water treatment at active mining operations, mine drainage impacts have 
not increased since Congress promulgated national reclamation 
standards. The aggregate effects of 25 years of land and watershed 
restoration under the Abandoned Mine Land Program, coupled with 
targeted programs such as the Appalachian Clean Streams Program and 
State Ten Percent Acid Mine Drainage Set-Aside have made substantial 
but unquantified improvements to impacted streams.
                                 ______
                                 

                       House Resources Committee

               Energy and Mineral Resources Subcommittee

              President's Fiscal Year 2003 Budget Request

                             March 14, 2002

                               Question 1

                        Coal Waste Impoundments

    Mr. Rahall. What actions has OSMRE taken, or intend to take, in 
response to the recommendations contained in the National Research 
Council (NRC) report Coal Waste Impoundments: Risks, Responses, and 
Alternatives?
    Mr. Jarrett. Staffs from the Office of Surface Mining (OSM) and the 
Mine Safety and Health Administration (MSHA) have established a 
standing committee to work on areas of mutual concern, including the 
recommendations in the NRC report. The committee will focus its initial 
efforts on the recommendations relating to (1) improving engineering 
standards and practices, and (2) improving the accuracy of mine maps. 
In addition, OSM will encourage technology development including 
research to reduce coal waste such as slurry.
    Prior to release of the NRC report, OSM had initiated several 
actions relating to impoundments. In July 2001, we issued review 
criteria for the States to use in re-evaluating existing and proposed 
impoundments. We have just released our investigative report on the 
Martin County Coal impoundment breakthrough. Finally, OSM and the state 
regulatory authorities in the Appalachian region have largely completed 
an initial re-assessment of the breakthrough potential for all existing 
impoundments. As a part of this re-assessment, states have required 
corrective measures, e.g. geotechnical drilling, lowering the pool 
elevation, improved engineering analysis, etc., for impoundments 
identified with concerns. Joint efforts will continue on the structures 
with the highest risk for breakthrough. Finally, OSM is working on a 
proposed rule that would require an emergency action plan in the event 
of an impoundment failure such as the one in Martin County, Kentucky.
                                 ______
                                 

                       House Resources Committee

               Energy and Mineral Resources Subcommittee

              President's Fiscal Year 2003 Budget Request

                             March 14, 2002

                               Question 2

                           Mountaintop Mining

    Mr. Rahall. Has OSMRE modified its approach to conducting oversight 
of State regulatory programs since the mountaintop removal controversy 
erupted in West Virginia?
    Mr. Jarrett. The mountaintop mining issue in West Virginia 
apparently goes back several years to a time when Office of Surface 
Mining's (OSM's) oversight policy required a review of all aspects of 
state programs. For whatever reasons, OSM did not clearly identify the 
mountaintop mining issue for the problem it would become. In 1996, OSM 
made significant changes in its oversight strategy to evaluate primacy 
state regulatory programs. OSM's new regulatory approach focuses on end 
results and on-the-ground success of states meeting SMCRA's 
environmental protection goals. The approach relies on performance 
agreements with primacy states. The approach has been successful in 
general. The agreements have improved relationships, shared 
responsibilities, fostered interest in joint reviews, and achieved a 
more open discussion of difficult issues. I intend to review and, if 
necessary, refine OSM's current oversight policies.
    In response to the mountaintop mining controversy, OSM initiated 
technical assistance to West Virginia to improve the state's 
performance in permitting decisions and documentation. This effort is 
ongoing. Also, the mountaintop mining litigation in West Virginia 
identified permit findings documents as not being fully supportive of 
permitting decisions. In June 1999, OSM launched a national oversight 
objective that required each OSM field office to review state permit 
files to determine if those files provided adequate support for the 
required findings. Further, as part of its technical training program, 
OSM developed a Permit Findings Workshop in fiscal year 2000 to assist 
regulatory authority personnel in preparing permit findings that are 
technically and legally sufficient and appropriately documented. To 
date more than 100 state and federal permitting and program staffs have 
attended the training.House Resources Committee
                                 ______
                                 

               Energy and Mineral Resources Subcommittee

              President's Fiscal Year 2003 Budget Request

                             March 14, 2002

                               Question 3

                    Abandoned Mine Reclamation Fund

    Mr. Rahall. Does the Administration support extension of the 
reclamation fee which finances the Abandoned Mine beyond its current 
expiration date in order to raise the necessary revenues to address all 
priority 1 and 2 projects on the inventory?
    Mr. Jarrett. The Administration has not yet taken a position on the 
extension of the Abandoned Mine Land (AML) fee. I would be very 
interested in discussing your ideas about the extension of the fee.
                                 ______
                                 
    [Responses to questions submitted for the record by the 
U.S. Geological Survey follow:]

   Responses to follow-up questions submitted by the House Resources 
   Subcommittee on Energy and Minerals as a result of the oversight 
                hearing on USGS budget on March 14, 2002

 Questions from the House Resource Subcommittee - oversight hearing on 
                        fiscal year 2003 Budget

Questions from Chairwoman Cubin
    1.) Question: The Committee is concerned and wants to see that the 
Department's infrastructure is protected but two particular areas of 
interest are the EROS Data Center and the National Earthquake 
Information Center. The Federal government has quite an investment 
worth protecting at the EROS Data Center which holds the world's 
largest collection of civilian remotely sensed data covering the 
Earth's land masses and houses millions of satellite images and aerial 
photographs. The National Earthquake Information Center receives the 
seismic data nationwide critical to monitoring earthquake activity 
within the United States.
    Can you comment on the steps Interior has taken in securing its 
facilities?
    What measures have been taken to protect these two facilities?
    Have additional funds been provided for these facilities?
    Comment on steps DOI/USGS has taken to protect the National 
Earthquake Information Center? Have additional funds been provided for 
these facilities?
    Answer: DOI/USGS has taken two important steps to protect the 
security of the National Earthquake Information Center (NEIC). First, 
an employee-identification entry system was implemented to restrict 
access to the NEIC facility. Visitors must now schedule visits in 
advance and be escorted into and out of the building. Additionally, the 
master earth station--a large satellite dish that receives incoming 
seismic waveform data from sensors across the United States--was fenced 
off to protect it from vandalism. No additional funds have been 
provided for this purpose.
    The U.S. Geological Survey (USGS) EROS Data Center (EDC) in Sioux 
Falls, South Dakota, is the largest USGS-owned facility. The Data 
Center employs about 600 persons, both Federal employees and 
contractors and has over 20,000 visitors each year. The archives at EDC 
hold the world's largest collection of civilian remotely sensed data 
covering the Earth's landmasses, housing millions of satellite images 
and aerial photographs. Scientists, managers, and technical users from 
around the world use data from the archive for a variety of data 
applications and research programs, including those necessary for 
defense, intelligence, and disasters, natural and man-made (i.e. 
Nisqually earthquake, Houston floods, Desert Storm and acts of 
terrorism). Since the events of September 11, the Data Center has 
increased the number of security guards and added X-Ray equipment for 
mail and package handling in an effort to improve site security.
    There are no additional funds in the fiscal year 2003 Budget 
request to make other facility security upgrades.
    2.) Questions on Homeland Security
    2a) Question: What is the Department of the Interior's involvement 
in Homeland Security?
    Answer: Principally, DOI's work in Homeland Security covers five 
areas: 1) security of the Bureau of Reclamation's dams, power 
generation and transmission facilities, and water conveyance 
structures; 2) security of nationally significant historic, natural, 
archival and cultural sites and lands like the Washington Monument, 
Statue of Liberty, Mt. Rushmore, Yosemite and thousands of others; 3) 
physical protection of our 65,000 employees located in all fifty states 
and beyond; 4) coordination with major border protection agencies to 
ensure protection of our homeland from potential terrorists crossing 
into the United States over international borders--DOI lands adjacent 
to Canada and Mexico account for nearly half (including Alaska) of all 
borderlands; 5) coordination with homeland security authorities for 
appropriate dissemination of scientific information and analysis of 
relevant homeland security information and analysis of biologic events. 
DOI also has the third largest number of federal law enforcement 
officers, nearly 4,300 in the federal government (National Park 
Service, Bureau of Indian Affairs, Fish and Wildlife Service, Bureau of 
Land Management, Bureau of Reclamation). Homeland security is not these 
officers mission, but they can coordinate with and provide support for 
anti-terrorism efforts when called upon.
    2b) Question: Can you briefly describe what efforts are underway 
within the Department in support of Homeland Security?
    Answer: The Department of the Interior has worked closely with the 
Office of Homeland Security and the Defense, Intelligence, Law 
Enforcement and Civilian communities as a result of September 11th, and 
has contributed a great deal of information and expertise in direct 
support of homeland security. Also, DOI has greatly increased the 
physical security of nationally significant sites and lands as well as 
emphasizing further security measures for employees. It has done this 
through screening or limiting access to certain locations, addition of 
barriers, changes of operating hours and methods, addition of security 
staff or providing the means to cover more area with existing staff, 
and numerous other enhancements. If called upon, Interior law 
enforcement near international borders will coordinate with and provide 
support to the primary border security agencies.
    2c) Question: How are these efforts being funded? What other 
agencies are involved?
    Answer: Most of the physical security improvements have occurred as 
a result of receiving emergency supplemental appropriations funding 
during this fiscal year. Many others are the result of a 
reprioritization of projects in response to meeting the current 
national emergency. In some cases, funding has come from existing 
resources to date. Again, our partners have come from the Defense, 
Intelligence, Law Enforcement and Civilian communities, as well as 
State and local government.
    2d) Question: It is our understanding that the U. S. Geological 
Survey is involved in working with DOD to provide up-to-date mapping 
over the Nation's 120 most populous cities that have been identified as 
potential targets for terrorists.
    Can you comment on the roles of these two Departments related to 
this work?
    Answer: Current and accurate mapping and imagery is essential for 
informing decisions on topics ranging from natural resources and urban 
planning to security and emergency issues.
    Many state and local jurisdictions already collect geographic 
information in urban areas. USGS and the Federal Geographic Data 
Committee can promote cooperative investments in this type of mapping 
and geographic information, and ensure that the data is standardized, 
accessible, and capable of being shared across Federal, State, and 
local jurisdictions.
    The DOD has an international mapping mission.
    Questions: What is the status of this effort? Cost of the effort? 
Timeframe for completion?
    Did the Department receive supplemental funding for this work? Or 
is DOD funding the effort? If not, please explain how the work is being 
funded? Are additional funds needed to complete this effort?
    Answer: No, the administration has not requested or received 
supplemental funding for these activities. They are fully supported by 
resources that have been appropriated to date and are included in the 
fiscal year 2003 request. The USGS will concentrate on building 
cooperative partnerships with state and local government to guarantee 
that accurate, accessible and timely mapping and geographic information 
exists for urban areas.
    2e) Question: Is the Department working with the President's newly 
established Office of Homeland Security? Is the project on the largest 
120 U.S. cities being coordinated with the Office of Homeland Security?
    Answer: The Department of the Interior has met with senior managers 
of the Office of Homeland Security to discuss urban mapping and the key 
role of geospatial information establishing and maintaining homeland 
security. Our Deputy Secretary and Admiral Abbott, Deputy Director, 
Office of Homeland Security have discussed that mapping and imagery 
information that are timely, easily accessible, and capable of being 
shared across federal, state, and local political jurisdictions, are 
fundamental to the decision making capability of all first responders 
and threat assessors. The Deputy Secretary has further informed Admiral 
Abbott that in the immediate aftermath of the September 11 tragedies, 
the USGS supported first responders with over 115,000 maps, satellite 
imagery, aerial photographs, and other technical assistance.
    2f) Question: Are these other areas of expertise within the 
Geological Survey that can be utilized in the area of homeland 
security?
    Answer: While the U.S. Geological Survey is not a federal agency 
that would lead specific efforts to detect, mitigate or respond to 
terrorist threats, the USGS has a large cadre of experienced scientists 
with skills that could provide support on homeland security matters 
depending on the type of action or threat. For example, USGS has the 
ability to accomplish detailed spectrographic analyses of suspect 
materials, and is capable to complete detailed analyses of water 
samples. Other USGS skills include seismology, engineering geology (for 
a variety of ground response needs), surface and ground water resources 
and wildlife health.
    2g.) Question: Given the importance of having current accurate 
high-resolution geographic data and information to allow planning and 
rapid response to protect our cities and infrastructure, does your 
budget include any funding to purchase commercial imagery for homeland 
defense? What is the plan within the Survey to address such imagery 
needs? Can you assure me that the USGS can sufficiently respond to any 
homeland security issues that would need to be addressed by your 
agency?
    Answer: There is not funding in the USGS budget for the purchase of 
commercial imagery specifically for homeland defense. A role of the 
USGS is to develop the National Spatial Data infrastructure by 
establishing partnerships to co-invest in geographic information and 
make data easier to use. Many state and local governments and the 
private sector, already collect geographic data for cities and 
infrastructure. The best strategy to guarantee that high quality data 
exists for homeland security is to coordinate federal acquisitions of 
data with that of state and locals, based upon common data standards. A 
strong partnership between Federal, State and local governments, the 
private sector, and universities is essential to guarantee that current 
data of high quality is available, while making an effort to avoid 
duplication and the resulting inefficient use of government resources 
at all levels. However, to conduct this effort using USGS existing 
resources alone, the timeframe for completion will expand to a decade 
or more. Leveraging investments with state and local government for 
geographic information in urban areas is a faster and more efficient 
means to guaranteeing current quality information for supporting policy 
decisions, which can include homeland security.
    3) Question: An Interior Department appeals officer recently halted 
a seismic exploration operation northeast of Arches National Park in 
Utah, saying letting the project proceed could cause irreparable harm. 
A recent news article stated that a ``geophysical project outside 
Arches National Park in Utah was stopped recently because of 
environmental concerns by the U.S. Geological Survey.'' Among the 
concerns raised by the USGS biologist is that the traffic associated 
with the seismic survey could destroy a thin crust of bacteria that 
forms over the desert soil and prevents erosion and weed growth and 
could take up to 300 years for that crust to regenerate. Actually, the 
seismic survey would be conducted by ``vibroseis'', a very non-invasive 
(no-drilling and no blasting), environmentally sound method of 
subsurface exploration.
    3a.) Question: Was USGS formally consulted during the preparation 
of the environmental review by BLM? Do you know the total acres that 
may be disturbed by the operation?
    Answer: Prior to approving the proposed seismic exploration 
project, BLM prepared an environmental assessment (EA) on the project 
pursuant to the National Environmental Policy Act (NEPA). In this 
process, BLM: (1) prepared a draft EA that it made available for review 
and comment by federal and state agencies and members of the public; 
(2) prepared a final EA that took into account and responded to 
comments received on the draft EA; and (3) based on the analysis of the 
project in the final EA, issued a decision approving the project. BLM 
did not formally consult with USGS during this process. However, USGS 
comments on the draft EA, and BLM's incorporation of the information in 
the final EA were fully consistent with the role of federal agencies in 
the NEPA process. BLM considered comments submitted by USGS on the 
draft EA in BLM's preparation of the final EA and its decision to 
approve the proposed project. Based on its environmental review, BLM 
concluded that about 16.7 linear miles, or 35 acres of the 
approximately 23,000 acres in the project area would be disturbed by 
the seismic exploration operation.
    USGS does not disagree with BLM's conclusion about the acreage that 
would be disturbed by the project. However, as a matter of 
clarification, USGS is concerned that the above description of 
vibroseis as a non-invasive, environmentally sound method of subsurface 
exploration is not an accurate portrayal. This is because vibroseis 
causes surface impacts, including impacts to soils and biological 
crusts and other vegetative cover where present.
    3b.) Question: In your opinion is the impact significant 
considering that the area is also open to oil and gas leasing, in fact 
much of the area is already leased, as well as grazing, off road 
vehicle use, etc.?
    Answer: USGS's intent in submitting comments on the draft EA 
(referred to in answer 3a) was to point out text that needed 
clarification, make BLM aware of the most up-to-date studies on the 
disturbance and recovery of soils and biological crusts, and correct 
certain information presented in the document. For example, the draft 
EA indicated that soils and vegetation distributed by the project area 
would recover in one to three years. This conclusion differed from 
information in the Department's Technical Reference 1730-2 (2001), 
entitled ``Biological Soil Crusts: Ecology and Management'', which 
summarizes current research on human-caused impacts to soils and 
biological crusts and the rates of recovery from such disturbance. 
According to the Technical Reference, there are two general categories 
of recovery: visual and biological. Visual recovery can occur 
relatively quickly. On the other hand, biological recovery (recovery to 
pre-disturbance species composition, density, and physiological 
functioning) is highly site-specific, and more difficult to predict. 
This is because biological recovery is highly dependant on the pre-
disturbance successional stage of the crust, with early successional 
stages generally recovering more quickly than late successional stages, 
the intensity of the disturbance, with crusts that are compressed or 
crushed generally recovering more quickly than crusts that are scalped, 
and climate during and after disturbance. The Technical Reference also 
indicates that the rate of recovery of a disturbed site can be 
estimated by observing the site and the recovery that has taken place 
within a period of time. This observation-based estimation technique is 
described as linear extrapolation or linear assumption, and is commonly 
used when there are no fully recovered disturbances available for 
study. However, because linear extrapolations are based on limited 
data, estimated recovery rates by use of linear extrapolations may be 
over or under estimates. USGS's comments on the draft EA referred BLM 
to the Technical Reference and indicated that, for the Moab area, 
recovery of soil crusts after severe surface disturbance ranges from 50 
to 300 years. In the final EA, BLM acknowledged USGS's comments and the 
information on recovery rates in the Technical Reference, and revised 
the text of the document accordingly. The USGS comments on the draft 
EA, its referring BLM to current research on soils and biological 
crusts, and BLM's incorporation of the information in the final EA were 
fully consistent with the role of federal agencies in the NEPA process.
    In its environment review, BLM concluded that when viewed in light 
of the past and present impacts to the project area from various uses, 
and the relationship between the impacted acreage and the overall 
project area, the project's impacts would not be significant, as that 
term is used in NEPA. USGS believes that the project will degrade soils 
and biological crusts and other vegetative cover.
    It is important to emphasize that USGS's comments on the draft EA 
were technical in nature and not intended to opine on whether or not 
project impacts would be significant as that term is used in the NEPA 
process.
    4) Question: $500,000 has been budgeted to update the geothermal 
energy assessment that was last updated in 1979. When do you expect the 
assessment to be completed? Will you be working with the land 
management agencies, BLM and USFS, to prioritize assessed areas to 
assure that they have the necessary information to incorporate into 
their ``time sensitive land use plans''?
    Answer: The updated geothermal resource assessment of the Great 
Basin will be completed in three years assuming continuing funding for 
the activity. The USGS has excellent working relations with BLM and 
USFS and will continue to coordinate with them to provide timely, 
necessary information for their land-use planning.
    5) Question: In your testimony, you state ``Partnership remains an 
essential component of how we do business, to ensure cost-effective 
operations.'' Yet, I see that you propose a reduction of almost $6 
million in the National Cooperative Geologic Mapping Program, a 
partnership with the state geological surveys and, as you know, a 
product of this subcommittee's work beginning when Rep. Rahall chaired 
the panel in 1990 and continuing thru my tenure.
    5a.) Question: Isn't geologic mapping a vital component to our 
energy future, as well as all the benefits that detailed geologic 
mapping can provide for environmental considerations, such as geologic 
hazards, land use planning, etc.?
    Answer: The National Cooperative Geologic Mapping Program (NCGMP) 
does indeed play a significant role in a number of energy-related 
projects. Geologic maps and three-dimensional databases of the 
subsurface are a foundation for much geologic research including 
energy.
    In addition, a large percentage of the NCGMP budget supports 
geologic mapping projects engaged in discovering and protecting our 
Nation's water resources. A sand and gravel deposit that provides 
materials for road construction in one community may very well be the 
aquifer providing water for a neighboring community. Geologic maps are 
a very useful tool that allows land-use planners and local decision 
makers to use resources wisely and avoid unnecessary conflict.
    5b) Question: What is the rationale for this significant reduction 
in the geologic mapping partnership program with the states?
    Answer: The President's budget preserves a number of significant 
program increases received in recent years that provide science to 
support Interior land and resource management bureaus and other high 
priorities, including funding to enhance USGS support for the 
Administration's efforts to facilitate and stimulate domestic energy 
production. Because of these and other priorities, the increase that 
Congress provided to the National Cooperative Geologic Mapping Program 
in 2002 is not being requested in 2003. The USGS continues to recognize 
the growing need for geologic mapping across the Nation, and agrees 
that partnerships are a good mechanism to fund this work.
    6) Question: The USGS has been criticized in the past for not 
meeting the needs of her sister agencies in providing scientific data 
in a timely manner for land management plans, inventories, regional 
assessments, etc. What is USGS doing to improve or streamline process 
to assure that the agencies have the information necessary to make 
informed decisions?
    Answer: The USGS has the principal responsibility to provide the 
scientific information, research, and understanding needed by DOI 
Bureaus and others to manage and use optimally the Nation's biological, 
water, energy, and mineral resources.
    We recognize the criticism of the past and are working diligently 
at improving our service and timeliness for our sister agencies. This 
focus on knowing and meeting partners needs, establishing a goal for 
partner satisfaction and measuring performance toward reaching that 
goal has improved the quality and timeliness of USGS products and 
services. Recent customer surveys estimate that DOI customers are 
satisfied or are very satisfied with 97% of our biology products 
delivered to land or resource managers (65% very satisfied, 32% 
satisfied, 2% satisfied, 1% very dissatisfied). That survey provides 
important feedback to our programs, including very helpful specific 
suggestions for improvement.
    USGS is working closely with parks selected by NPS to develop long-
term proto-type ecological monitoring programs in those parks and has 
stationed scientists at those parks to work closely with NPS staff. 
Work is underway to improve monitoring methods and techniques to meet 
resource management needs identified by the parks.
    In fiscal year 2001 Congress provided $3,400,000 to the USGS for 
mission critical science support needs solely identified by the U.S. 
Fish and Wildlife Service (FWS). In fiscal year 2002, the USGS'' 
Species at Risk program funds were added bringing the total funding to 
$4,100,00. The FWS is particularly pleased with the Science Support 
Program (SSP) because it narrowly focused to address their specific 
management needs for science information. The FWS has the 
responsibility for identifying what science needs will be addressed, 
they can suggest to USGS which investigators they would like to conduct 
the work, and they are invited to provide input to the study plan 
developed by the USGS. The SSP program is particularly attractive to 
the FWS because it provides an immediate funding source to address 
unanticipated or emerging science needs of a tactical, applied nature, 
and the program is designed to provide this information in a relatively 
short period of time.
Questions from Ranking Member Kind
    1) Question: fiscal year 2003 funding for the National Cooperative 
Geologic Mapping Program would be reduced by almost $6 million. This 
reduction will decrease the number of cooperative grants for geologic 
mapping programs to State Geological Surveys by (30%) and universities 
(20%), (States match these grants). What will be the effect of these 
cuts if they are maintained?
    Answer: The decrease of almost $6 million would return funds to the 
fiscal year 2000 level. This will result in two changes in work focus 
for the program. First, in accordance with the National Geologic 
Mapping Act (P.P. 106-148), half of the reduction would reduce funding 
available for the Cooperative grants to partners in State geological 
surveys and universities. Secondly, half of the reduction would reduce 
funding for the FEDMAP project.
    2.) Question: The USGS 2003 budget request proposes an increase of 
$2.7 million for USGS to step up its efforts in support of the National 
Energy Policy and the overall goal of increasing domestic energy 
production. Of the $2.7 million, $1.2 million would be used by USGS to 
continue its efforts under section 604 of the Energy Act of 2000, which 
requires USGS to conduct estimates of undiscovered oil and natural gas 
resources on Federal lands in the continental United States. What 
exactly would this increase be spent on?
    Answer: The USGS role in Section 604 of the Energy Act of 2000 is 
to provide estimates of undiscovered oil and gas resources under 
Federal Lands in the U.S. The work involves analysis that is beyond the 
scope of our present funding. The increase in funding will be used for:
    1) LPartial payment of commercial oil and gas well and field 
databases,
    2) LHiring of contract GIS specialists, graphics specialists,
    3) LHiring of contract geologic specialists.
    These three items account for about 95% of the additional funding. 
The remainder is for travel, publication costs, and the purchase of 
data sets related to Federal lands.
    3.) Question: The USGS budget proposal supports alternative, non-
fossil fuel energy development with $500,000 for USGS to begin the 
process of updating geothermal energy assessments. The USGS will 
initiate this effort in the Great Basin region. Is this assessment 
going to be nationwide and regardless of land ownership? How much can 
you expect to accomplish with this amount in 2003?
    Answer: The USGS will begin its geothermal resource assessment 
efforts in the Great Basin of the western United States. Funding and 
staffing levels mandate that the assessment effort be conducted 
serially, that is, one area at a time rather than all areas with 
significant geothermal power generation potential at once. When the 
Great Basin assessment is complete, in approximately three years, the 
next area of significant geothermal resource potential will be chosen 
for assessment. Thus the assessment activity will be nationwide in the 
sense that assessments will be conducted in areas of the U.S. with 
significant geothermal power generation potential, assuming funding for 
the activity continues. USGS assessments are geologically based and 
thus cross-land ownership boundaries. Upon request, and in 
collaboration with the land managing agencies, USGS may allocate 
resource estimates on a Federal land basis.
    4.) Question: Also on the subject of geothermal assessments, BLM is 
proposing a similar appropriation ($500K) to assess geothermal 
resources on public lands. What steps will you take to assure that USGS 
and BLM do not duplicate efforts?
    Answer: The USGS has excellent working relations with the BLM and 
will continue to coordinate with BLM and the USFS to provide timely, 
necessary information for their land-use plans. USGS is responsible for 
assessing the remaining geothermal power generating potential of the 
Nation. BLM is the primary land managing agency in DOI and is 
responsible for facilitating multiple-use of the public lands. Also, in 
response to industry comments during the Secretary's Renewable Energy 
Summit, USGS and BLM have joined in a National Geothermal 
Collaborative, to insure coordination and eliminate duplication. USGS 
and BLM have had discussions about the nature of the geothermal 
assessment and the early thought is to follow the model of the EPCA 
study, where USGS will assess the resource potential of Federal lands 
and BLM will assess land use restrictions that may impede development 
of the resource. These data sets will be combined to produce an 
estimate of geothermal power generation potential of public lands in 
the U.S.
    5.) Question: In fiscal year 03, the President proposes to 
eliminate funding--$500,000-for the Central Great Lakes Mapping 
Coalition. This project is a multi year, bi-national effort to map the 
depth and shape of the lake bottom and to classify lakebeds materials. 
There is significant Congressional support for this program. What will 
not be accomplished if this cut is maintained?
    Answer: The 2003 budget assures continued emphasis on the USGS 
science programs that support the Department's role in the National 
Energy Strategy, land management, species management and the management 
of our national parks, refuges and public lands. At the same time, the 
budget continues funding to perform science functions that are inherent 
to the historical responsibilities of the USGS. The 2003 budget 
achieves these goals at the request level through a strategy that 
included reductions for certain lower priority programs, and also by 
scaling back funding for base programs that received increases in 2001 
and 2002. This strategy also assumes an increases reliance on cost 
sharing by USGS partners and beneficiaries of USGS programs. The 
decrease of $500,000 will discontinue the Central Great Lakes Geologic 
Coalition, a partnership that initiated in fiscal year 2000 with an 
unrequested funding increase between the USGS and the State geological 
surveys of Illinois, Indiana, Michigan and Ohio. The primary purpose of 
the coalition is to make three-dimensional geological maps of the 
complex glacial material that characterize the surface deposits and 
shallow aquifers of this region. Geologic mapping activities by the 
geological surveys of the States of the Coalition would be curtailed.
    6.) Question: USGS is proposing cuts in the Mineral Resources 
Program of approximately $4 million in fiscal year 2003 from the fiscal 
year 2002 level. This program provides and communicates current, 
impartial information on the occurrence, quality, quantity, and 
availability of mineral resources. This program produces useful 
publications and data including: Mineral Commodity Summaries; Mineral 
Industry Surveys; Minerals Yearbook; and Commodity Statistics and 
Information. Please explain exactly what effect the proposed cuts would 
have on the USGS minerals programs and what work will not be done as a 
result of the cuts.
    Answer: The budget for 2003 includes reductions for certain one 
time increases, lower priority programs, and also by scaling back some 
2002 increases not requested by the Administration or proposing 
alternative sources of funding, such as cost recovery from customers or 
transferring responsibilities to other organizations. Within the 
Minerals Resources Program, the 2003 President's budget includes three 
major reductions.
    A decrease of $1.3 million will discontinue three regional projects 
on aggregate materials. Among the study elements included in the 
projects to be discontinued is a study evaluating the suitability of 
alluvial fan deposits for use as high quality aggregate and development 
of a methodology for assessing the aggregate potential of individual 
alluvial fan deposits. A second study that will be discontinued is a 
study to examine the geology, geography and economics of megaquarries. 
The third regional project that will be discontinued is a study to use 
geophysical methods to characterize aggregate resources. Additionally, 
the continued implementation of mapping techniques and geographic 
information systems to estimate sand and grave resources in 
glaciofulvial systems and adaptation of detailed local methods to 
general large scale regional scale maps will also be discontinued.
    A $1.5 million decrease will discontinue USGS funding for the 
Alaska Minerals Information Project. The President's Budget proposes 
that state and/or energy partners in the project fund any further work 
on this project.
    The President's Budget proposes a $750,00 decrease in the Minerals 
Resources Program Minerals Information Team. This reduction will be 
focused on reducing the number of reports on the production, use, reuse 
and disposal of mineral commodities. The USGS can consult with the 
Department of Commerce, the Department of Defense, and other users of 
this information to gauge current demand and whether these users want 
to share in the costs of the program to maintain it at its current 
level.
    7.) Question: The President's budget proposes a reduction of $2.1 
million for the National Streamflow Information Program (NSIP). This 
would result in the loss of 129 stream-gauges across the United States, 
creating more gaps in the nation's gauging network and continuing a 
trend that seriously threatens the nation's information base for water 
management decisions and emergency warning systems. A 1999 report to 
Congress requested by the House Interior Appropriations Committee 
expressed concern about the decline of the stream-gauging network, 
stating that ``we have increasing demands for information and yet the 
infrastructure to supply the information is declining.'' Why is funding 
being reduced for the NSIP?
    Answer: The rationale of the 2003 budget is to ensure continued 
emphasis on USGS science programs that support the Department's role in 
the national energy strategy, land management, wildlife refuges, and 
public lands. At the same time, the budget continues funding to perform 
science functions that are inherent to the historical responsibilities 
of USGS. The 2003 USGS budget reflects a scaling back of recent base 
program funding increases that exceeded the President's budget request 
for these programs. For example, the 2003 budget retains $6.2 million 
of the $8.3 million base program increase received in 2001 for stream-
gauges.
    8.) Question: What will the consequences be of losing 129 stream 
gauges across the country?
    Answer: Operations at those stream-gauges will cease, and no 
further streamflow data will be collected at those sites. Historical 
streamflow information from these stream-gauges will continue to be 
available through the USGS National Water Information System (NWIS), 
which is accessible to everyone, free of charge, over the Internet. For 
those 90 stream-gauges (out of the total 129) that supply data for the 
National Weather Service's flood forecasting system, no new data will 
be available.
    9.) Question: Does the Administration support an adequate 
infrastructure to collect the information needed to make high quality 
and reliable water management systems? If so, then why are these 
funding reductions being proposed?
    Answer: The Administration remains committed to ensuring that there 
is adequate information to make good decisions about water management. 
However, the 2003 budget ensures continued emphasis on USGS science 
programs that support the Department's role in the National Energy 
Strategy, land management, wildlife refuges, and public lands. At the 
same time, the budget continues funding to perform science functions 
that are inherent to the historical responsibilities of the USGS. The 
2003 USGS budget achieves these goals at the request level through a 
strategy that includes reductions for certain lower priority programs 
and also by scaling back funding for base programs that received 
increases in 2001 and 2002. This strategy also assumes an increases 
reliance on cost-sharing with beneficiaries of the USGS programs.
    In the case of the National Water Quality Assessment Program, the 
budget assumed that less than ten percent of the total NAWQA budget can 
be offset from program partners and beneficiaries who gain significant 
benefit from the program. Again, in the case of the stream-gauging 
program, it is assumed that operations at 129 stream-gauges will be 
halted unless Federal or non-federal partners provide additional 
funding support to keep these stream-gauges operational.
    In the case of the toxics program, the budget reflects the 
Administration's goals of realigning the Federal government's 
investment in research and development to give greater support and 
emphasis to competitive, peer-reviewed research.
    In the case of the Water Resources Research Act Program, the State 
Water Research Institutes who receive grant funds through this program 
have been highly successful in leveraging their USGS grants with other 
federal funding. It is anticipated that most of the 54 institutes will 
be able to continue their work.
    10.) Question: The President's budget proposes a reduction of $5.8 
million for the National Water-Quality Assessment (NAWQA) in fiscal 
2003, a 9 percent reduction from the fiscal 2002 level. All 42 water-
quality assessment study units would be affected by these cuts, with an 
estimated 6 units eliminated from the program. NAWQA would be unable to 
initiate microbial sampling designed to identify possible bacteria and 
viruses in surface-water and ground water resources. In addition, the 
program would be forced to reduce its national focus on understanding 
the causative factors that affect water quality.
    11). Question: Why is a funding reduction being proposed for this 
important program?
    Answer: USGS conducts many scientific investigations that primarily 
benefit other Federal agencies, States, and local governments. These 
entities rely on USGS to provide information to help them fulfill their 
own mission-critical responsibilities. This is particularly the case 
with the NAWQA Program, which provides extensive data and information 
to State and Federal regulatory agencies such as the Environmental 
Protection Agency. The 2003 budget presents an opportunity for these 
environmental agencies to increase their partnership with USGS on this 
program. The Department and USGS will consult with the program's 
stakeholders in 2002 to develop increased reimbursable funding, so that 
most NAWQA activities can continue in fiscal year 2003.
    12.) Question: What will be the consequences of eliminating 6 water 
quality assessment study units from the program?
    Answer: In developing the NAWQA Program, USGS identified 59 study 
units to address the most important areas of the Nation's surface water 
and ground water resources. In aggregate, the 59 areas account for 
about 65 percent of the Nation's water use for municipal supply and 
irrigated agriculture. Further, NAWQA was designed to provide broad 
geographic coverage, with each State having a portion of a study unit 
within its boundary. In recent years, program funding has remained 
relatively flat; thus, to keep the level of scientific investigation 
high within the remaining study areas during its second decade of 
operation (Cycle II), USGS recently undertook a geographic redesign of 
NAWQA from 59 to 42 study areas. The approach to redesign was complex 
and resulted in a collection of study areas that still represent more 
than half the population served by municipal supply and irrigated 
agriculture.
    Reducing the program from 42 to 36 study units would require 
changes in planned activity unless cost sharing on the part of the 
beneficiaries becomes available.
    13.) Question: Does the Administration not support funding the 
NAWQA at a level adequate to support microbial sampling to identify 
bacteria and viruses in surface and ground water?
    Answer: The testing for bacterial and viral contamination carried 
out by the NAWQA program is one of a very few nationwide monitoring 
programs for microbial contamination conducted by a single agency using 
nationally consistent techniques.
    However, even the current level of this type of sampling is not 
adequate for complete coverage of public drinking water supplies across 
the Nation. Such national coverage would require significantly more 
resources than the Department of the Interior has available. USGS can 
provide limited assistance to States, localities, and public drinking 
water utilities for developing standard data collection and laboratory 
analysis techniques.
    14.) Question: If surface and ground water cannot be adequately 
tested for bacterial and virus contamination, what will be the impact 
to homeland security?
    Answer: Testing for public drinking water supplies is a 
responsibility of State and local governments and the public utilities 
who provide these drinking water supplies to the public. The USGS is 
not in a position to discuss the impact to homeland security.
    15.) Question: Is Homeland Security Director Tom Ridge aware of 
these proposed funding reductions? If not, are there plans to brief him 
on these reductions and possible impacts to homeland security?
    Answer: The Office of the Secretary has discussed the Department's 
role in homeland security with the Office of Homeland Security; 
however, the specifics of the funding reductions proposed for USGS were 
not addressed during this discussion.
    16.) Question: The State Water Resources Research Institutes 
Program was authorized in the Water Resources Research Act of 1984 to 
promote State, regional, and national coordination of water resources 
research and training through a network of Institutes at the nation's 
land grant universities. There are 54 Water Resources Research 
Institutes, one in each State, the District of Columbia, Puerto Rico, 
the U.S. Virgin Islands, and Guam. The President's budget proposes to 
eliminate $6 million in USGS grant funding. Under this proposal, all 54 
State Water Resources Research Institutes would lose their base Federal 
grants. Why is a funding reduction being proposed to this important 
cooperative program?
    Answer: Due to the constraints of funding limitations and high 
priority objectives, the Administration had to choose among many 
excellent and beneficial programs to fund the objectives that are the 
most important. In the case of the USGS, the 2003 budget maintains 
funding for the highest priority programs through a strategy that 
included reductions for certain one-time increases and lower priority 
programs, and scaling back some 2002 increases not requested by the 
Administration, and an increased reliance on cost-sharing by partners 
and beneficiaries of the USGS programs. Because the State Water 
Research Institutes who receive grant funds through this program have 
been highly successful in leveraging their Federal grants with non-
Federal funding, it is anticipated that most of the 54 Institutes will 
be able to continue their work, using other funding sources.
    17.) Question: Does the Administration not think it is important to 
continue the federal commitment to this program?
    Answer: The 2003 President's Budget proposes to discontinue USGS 
funding support for the Water Resources Research Institutes Program, 
not all Federal funding.
    In the Past, the Institutes have been very successful in leveraging 
their Federal grant shares with non-Federal funds; according to a 2001 
report of the National Institutes for Water Resources, in fiscal year 
2000, the Institutes collectively generated over $14 in support for 
each dollar they received through the USGS grant program, with $5 
coming from other Federal funds and $9 from non-Federal sources. The 
Department believes that this is an indication that most of the 
Institutes will continue to be able to attract funding for their 
research, even without the grant monies they receive from the USGS 
under the Water Resources Research Act.
    18.) Question: What will be the impact to the 54 State Water 
Resources Research Institutes if they lose their federal funding?
    Answer: Elimination of all Federal support for the State Water 
Resources Research Institutes is not proposed in the President's 2003 
budget request.
    According to a survey conducted by the National Institutes for 
Water Resources, whose members consist of the 54 Institutes receiving 
support under the Water Resources Research Act, 20 of the 54 institutes 
expect to be either closed or folded into another institute or 
department if they lose funding from the USGS program.
    19) Question: The President's budget proposes to eliminate funding 
in the amount of $13.9 million for the Toxic Substances Hydrology 
Program and to transfer the program's mission responsibilities to the 
National Science Foundation (NSF). What is the rationale for 
transferring this program's responsibilities to the NSF?
    Answer: The transfer of the Toxic Substances Hydrology Program to 
the National Science Foundation reflects the Administration's goal of 
aligning the Federal government's investment in research and 
development to give greater support and emphasis to competitive, peer-
reviewed research.
    20.) Question: Have there been problems with how the program has 
been administered by the USGS?
    Answer: USGS administration of the program has resulted in no 
problems.
    21.) Question: Is it realistic to assume that the academic research 
community to which most NSF grants are given will attend adequately to 
the applied research questions that the Toxics program currently 
addresses?
    Answer: The scientific and educational community funded by the 
proposed new water quality competitive grant program at NSF would be 
expected to work in close collaboration with numerous State and local 
governments, and non-governmental entities. Scientists and educators 
with a broad range of expertise in hydrology, ecology, geology, 
geochemistry, biology, and information technology would participate in 
these activities.
    22.) Question: If the program is transferred to the NSF how will 
the past databases and institutional memory of the program be 
maintained?
    Answer: Information from the Toxics Program that is currently 
available in the form of paper publications will continue to be 
available in this form until the supply of those publications has been 
exhausted. Otherwise, some publications will be available on our 
website. The USGS will work with NSF to determine maintenance of 
databases.

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