```

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

 
EFFECT OF THE PRESIDENT'S FY 2012 BUDGET AND LEGISLATIVE PROPOSALS FOR 
THE OFFICE OF SURFACE MINING ON PRIVATE SECTOR JOB CREATION, DOMESTIC 
        ENERGY PRODUCTION, STATE PROGRAMS AND DEFICIT REDUCTION 

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                        Thursday, April 7, 2011

                               __________

                           Serial No. 112-21

                               __________

       Printed for the use of the Committee on Natural Resources

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

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

65-624 PDF                       WASHINGTON : 2011 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 

                     COMMITTEE ON NATURAL RESOURCES

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

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

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

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

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

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

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, April 7, 2011..........................     1

Statement of Members:
    Holt, Hon. Rush D., a Representative in Congress from the 
      State of New Jersey........................................     4
        Prepared statement of....................................     5
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Kitts, Eugene, Senior Vice President, Mining Services, 
      International Coal Group, Inc., on behalf of the National 
      Mining Association.........................................    27
        Prepared statement of....................................    29
    Lambert, Bradley C., Deputy Director, Virginia Department of 
      Mines, Minerals and Energy.................................    40
        Prepared statement of....................................    42
    Lovett, Joe, Executive Director, Appalachian Center for the 
      Economy and Environment....................................    51
        Prepared statement of....................................    53
    Pineda, Loretta, Director, Division of Reclamation, Mining 
      and Safety, Colorado Department of Natural Resources.......    31
        Prepared statement of....................................    33
        Resolution of the Interstate Mining Compact Commission 
          submitted for the record...............................    38
        Resolution of National Association of Abandoned Mine Land 
          Programs submitted for the record......................    39
    Pizarchik, Joseph G., Director, Office of Surface Mining 
      Reclamation and Enforcement, U.S. Department of the 
      Interior...................................................     6
        Prepared statement of....................................     8

Additional materials supplied:
    Alabama Surface Mining Commission, Indiana Department of 
      Natural Resources, Kentucky Department for Natural 
      Resources, Railroad Commission of Texas, Utah Division of 
      Oil, Gas and Mining, Virginia Department of Mines, Minerals 
      and Energy, West Virginia Department of Environmental 
      Protection, and Wyoming Department of Environmental 
      Quality, Letter to The Honorable Joseph G. Pizarchik, 
      Office of Surface Mining Reclamation and Enforcement, dated 
      November 23, 2010, submitted for the record................    68
    Conrad, Gregory E., Executive Director, Interstate Mining 
      Compact Commission, and Douglas C. Larson, Executive 
      Director, Western Interstate Energy Board, on behalf of the 
      WIEB Reclamation Committee, Letter to The Honorable Joseph 
      G. Pizarchik, Director, Office of Surface Mining 
      Reclamation and Enforcement, dated January 7, 2011, 
      submitted for the record...................................    70
    Western Governors' Association, Letter to The Honorable Ken 
      Salazar, Secretary, U.S. Department of the Interior, dated 
      February 27, 2011, submitted for the record................    89
                                     

OVERSIGHT HEARING ON THE ``EFFECT OF THE PRESIDENT'S FY 2012 BUDGET AND 
   LEGISLATIVE PROPOSALS FOR THE OFFICE OF SURFACE MINING ON PRIVATE 
  SECTOR JOB CREATION, DOMESTIC ENERGY PRODUCTION, STATE PROGRAMS AND 
                          DEFICIT REDUCTION.''

                              ----------                              

                        Thursday, April 7, 2011

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:04 a.m. in 
Room 1324, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Benishek, Duncan, Gosar, 
Flores, Landry, Fleischmann, Johnson, and Holt.

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

    Mr. Lamborn. The Subcommittee will come to order. The 
Chairman notes the presence of a quorum, which under Committee 
Rule 3[e] is two Members, so we are over that 50 percent. The 
Subcommittee on Energy and Mineral Resources is meeting today 
to hear testimony on the effect of the President's Fiscal Year 
2012 budget and legislative proposals for the Office of Surface 
Mining on private sector job creation, domestic energy 
production, state programs and deficit reduction.
    Under Committee Rule 4[f], opening statements are limited 
to the Chairman and Ranking Member of the Subcommittee. 
However, I ask unanimous consent to include any other Members' 
opening statements in the hearing record if submitted to the 
clerk by close of business today. Hearing no objection, so 
ordered. I now recognize myself for five minutes.
    During today's hearing, we will hear from the 
Administration and witnesses on the President's proposed Fiscal 
Year 2012 budget for the Office of Surface Mining and 
associated legislative initiatives. Before I review the issues 
with the President's budget, I want to make one matter very 
clear. Chairman Hastings and I have initiated an investigation 
into the Office of Surface Mining's attempt to rewrite the 2008 
Stream Buffer Zone Rule and the ongoing fiasco resulting from 
the Administration's rushed effort to fast-track major changes 
to an existing and significant rule.
    I want to be very clear. This Committee expects the 
Administration and this agency to be forthcoming in response to 
Committee requests. Failing to respond to Committee requests in 
a timely manner is unacceptable. This Committee will hold this 
agency and the Department accountable for responding to our 
requests. As representatives of the American people, Congress 
has both the obligation and the responsibility to conduct 
oversight, and we cannot--and this Committee and this Chairman 
will not--accept stonewalling.
    Now moving on to the review of the President's budget, the 
President's budget includes legislative proposals to change the 
2006 amendments to Title IV of the Surface Mining Control and 
Reclamation Act, SMCRA for short, Amendments that took Congress 
10 years to negotiate and pass. The recent proposed changes to 
Title IV will have a devastating effect on the original deal 
that states made with the Federal Government and codified in 
SMCRA where 50 percent of the AML fees are returned to the 
state of origin.
    If the Administration amendments are adopted, those states 
that are significant donors to the Federal program will 
question what they got in return for their mandatory 
investment. As I mentioned above, even more egregious than this 
budget proposal is the agency's ongoing effort to rewrite the 
2008 Stream Buffer Zone Rule, a rule that an independent 
contractor hired by this Administration found will result in 
the loss of over 7,000 direct jobs nationwide and eliminate 
over 20,000 direct and indirect jobs in Appalachia. Over 29,000 
people will be driven into poverty.
    After the job loss estimates became public, this 
Administration ended the contract with this particular 
contractor. Once the information on the economic impact of the 
preferred alternative became public, the Administration 
immediately tried to distance itself from the contractor and to 
deny any knowledge of the forecasted job losses associated with 
the Administration's preferred alternative.
    Since the Administration took office, the Department of the 
Interior has taken steps to reduce access to domestic energy 
and mineral resources on Federal lands. With the President's 
proposed for the Office of Surface Mining and the rewrite of 
the 2008 Stream Buffer Zone Rule, the Department and this 
agency in particular is restricting access to private coal 
deposits. This is because SMCRA applies to all domestic coal 
mines regardless of surface or mineral ownership status.
    More than 130,000 Americans depend on coal production for 
their livelihood. Throughout America, there are places where 
the only industry in town is the coal mine. While this 
Administration may think it is a preferred alternative to 
displace tens of thousands of workers, destroying coal mining 
will kill these one-industry towns, push tens of thousands of 
American families into poverty and leave our nation poorer and 
drive energy costs higher, all counter to the original intent 
of SMCRA.
    SMCRA was designed to promote the development of the 
nation's largest resource of conventional fuel to help meet the 
energy needs of the American people while ensuring that the 
extraction of the coal resources is done in an environmentally 
responsible manner. Make no mistake about it. Coal is vital to 
the American economy, especially to the generation of 
electricity. Nothing can touch it for efficiency and savings. 
Unless and until someone comes up with commercially viable 
alternatives, it would be foolish to try to get rid of coal.
    America is a nation of excellence. Our achievements through 
the development of our abundant natural resources allowed us to 
become the richest country in the world, win world wars and 
raise our standard of living far above much of the world. 
Increasing access to these resources, yes including coal, will 
allow us to become less dependent on foreign sources of energy 
and mineral resources, create new private-sector jobs and add 
revenues to government coffers, reducing the national debt and 
thereby increasing our national and economic security.
    In closing, I am concerned that this budget makes cuts to 
programs that are important to states and citizens, proposed 
ending programs by fiat that are the result of tremendous 
negotiations in Congress and in the end reprogram money for a 
rushed and ill-advised rewrite of an important rule, the Stream 
Buffer Zone Rule. I look forward to hearing from our witnesses, 
and I now recognize the Ranking Member for five minutes for his 
opening statement.
    [The prepared statement of Mr. Lamborn follows:]

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

    During today's hearing we will hear from the Administration and 
witnesses on the President's proposed FY-2012 budget for the Office of 
Surface Mining and associated legislative initiatives.
    But before I review the issues with the President's budget, I want 
make one matter very clear.
    Chairman Hastings and I have initiated an investigation into the 
Office of Surface Mining's attempt to rewrite the 2008 stream buffer 
zone rule and the ongoing fiasco resulting from the Administration's 
rushed effort to fast track major changes to a significant rule.
    I want to be very clear, this Committee expects the Administration 
to be forthcoming in responses to Committee requests. While the 
Administration may be unfamiliar with the process of oversight from 
this Committee, failing to respond to Committee requests in a timely 
manner is unacceptable and this Committee will hold this agency and the 
Department accountable for responding to our requests. As 
Representatives of the American people, Congress has both the 
obligation and the responsibility, to conduct oversight and we cannot, 
and this Committee and this Chairman will not, accept stonewalling. 
Now, moving on to the review of the President's budget.
    The President's budget includes legislative proposals to change the 
2006 amendments to Title IV (4) of the Surface Mining Control and 
Reclamation Act, SMCRA for short--amendments that took this body 10 
years to negotiate and pass. The proposed changes to Title IV (4) will 
have a devastating effect on the original deal states made with the 
federal government and codified in SMCRA where fifty percent of the AML 
fees are returned to the state of origin. If the Administrations 
amendments are adopted those states that are significant donors to the 
federal program will question what they get in return for their 
mandatory investment.
    As I mentioned above, more egregious than this budget proposal, is 
the agency's ongoing effort to re-write the 2008 Stream Buffer Zone 
Rule. A rule that an independent contractor, hired by the 
Administration, found will result in the loss of over 7,000 direct jobs 
nationwide and eliminate over 20,000 direct and indirect jobs in 
Appalachia. After the job loss estimates became public, the 
Administration ended the contract with the contractor.
    Once the information on the economic impact of the preferred 
alternative became public the Administration immediately tried to 
distance themselves from the contractor and deny any knowledge of the 
forecasted job losses associated with the Administration's preferred 
alternative.
    There is a famous quote with a wry observation that applies to the 
Office of Surface Mining's treatment of SMCRA and their state partners.
        ``We trained hard, but it seemed that every time we were 
        beginning to form into teams, we would be reorganized.. . .I 
        was to learn that later in life we tend to meet any new 
        situation by reorganizing, and a wonderful method it can be for 
        creating the illusion of progress while producing confusion, 
        inefficiency and demoralization.''
    Let me repeat the last part of that quote because I believe it 
aptly describes the outcome of the Administration's actions in the re-
write of the 2008 Stream Buffer Zone Rule and the proposed legislative 
changes to SMCRA--``and a wonderful method it can be for creating the 
illusion of progress while producing confusion, inefficiency and 
demoralization.''
    Since the administration took office the Department of the Interior 
has taken steps to reduce access to domestic energy and mineral 
resources on federal lands including renewable resources like wind and 
solar. With the President's proposed budget for the Office of Surface 
Mining and the re-write of the 2008 Stream Buffer Zone Rule the 
Department and this agency in particular is restricting access to 
private coal deposits as SMCRA applies to all domestic coal mines 
regardless of surface or mineral ownership status.
    More than 130,000 Americans depend on coal production for their 
livelihood. Throughout America there are places where the only industry 
in town is the coal mine. While this Administration may think it is a 
``preferred alternative'' to displace tens of thousands of workers, 
destroying coal mining will kill these one industry towns, push tens of 
thousands of American families into poverty, and leave our nation 
poorer--all counter to the original intent of SMCRA.
    SMCRA was designed to promote the development of the Nation's 
largest resource of conventional fuel to help meet the energy needs of 
the American people while ensuring the extraction of the coal resources 
is done in an environmentally responsible manner.
    America is a nation of excellence. Our achievements through the 
development of our abundant natural resources allowed us to become the 
richest country in the world, win world wars, and raise our standard of 
living far above much of the world. Increasing access to those 
resources will allow us to become less dependent on foreign sources of 
energy and mineral resources, create new private sector jobs and add 
revenue to government coffers, reducing the national debt and thereby 
increasing our national and economic security.
    In closing, I am concerned that this budget makes cuts to programs 
that are important to states and citizens, proposes ending programs by 
fiat that are the result of tremendous negation in congress and in the 
end reprograms money for a rushed rewrite of an important rule.
                                 ______
                                 

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

    Mr. Holt. Thank you, Mr. Chairman. The Office of Surface 
Mining, Reclamation and Enforcement is charged with a number of 
important responsibilities, among them protecting citizens and 
the general environment from the harmful effects of surface 
coal mining operations, also for ensuring that land is restored 
following mining operations, and for addressing the effects of 
past mining operations by reclaiming and restoring abandoned 
mines.
    Under the Bush Administration, the Office of Surface Mining 
routinely allowed destructive practices to go unchecked, and in 
the final days in office, the Administration released what has 
come to be known as a midnight regulation revising the Stream 
Buffer Zone Rule to remove key protections for streams and 
rivers threatened by the dumping of mining waste. To me, this 
is an egregious rollback of protective responsibility.
    Yet, mountaintop removal mining does continue to have 
significant effects on people and places in Appalachia. 
According to the EPA, since 1992, nearly 2,000 miles of 
Appalachian streams have been filled, polluted, as a result of 
mountaintop removal activities. Mountaintop removal in 
Appalachia has deforested an area the size of the State of 
Delaware. A recent EPA study found that mountaintop removal 
mining has adversely affected aquatic life downstream in nine 
out of every 10 streams in the region. However, the Bush 
Administration's revised Stream Buffer Zone Rule loosened the 
restrictions on placing valley fill in or near streams. This 
rule was challenged in court, and the Obama Administration is 
now going through the process of issuing a new stream 
protection rule.
    Mr. Chairman, I note your call for an investigation or your 
announcement that you are undertaking a look at how the Office 
is administering that rule, and I ask that the minority have 
access to all the relevant documents on this matter. It is 
critical that the revised rule ensure that our environment and 
these communities are protected. That is why I am a cosponsor 
of the Clean Water Protection Act, H.R. 1375, a bill introduced 
by my colleague from New Jersey, Representative Pallone, a 
member of this Committee, to prohibit the dumping of waste from 
mountaintop removal coal mines into rivers and streams.
    The Administration is also requesting an additional nearly 
$4 million and 25 full-time employees to expand oversight of 
stream protection activities in Appalachia. Regarding the 
Abandoned Mine Land coal program, the AML program, the 
Administration is proposing reforms that would eliminate 
unnecessary spending and focus mine reclamation efforts on the 
most dangerous abandoned coal mines, and I would ask that the 
witness characterize what are the most dangerous abandoned 
mines.
    The proposal would do away with payments to states and 
Native American tribes that have completed their abandoned coal 
mine reclamation activities saving taxpayers something over a 
billion dollars over the next decade. It would institute a 
competitive process for AML grants so that the funds could go 
to the highest-priority abandoned coal mines. Currently, AML 
funds are allocated based on current and historic coal 
production as opposed to where the greatest need for 
reclamation actually exists, and I look forward to learning 
more about the merits of the proposal.
    The responsibility of OSM to our environment and to people 
in that region is tremendous, and it is imperative that 
Congress provide this agency with the tools it needs, the 
oversight that it deserves and the support that it deserves, 
and I thank the Chairman for holding this hearing and the 
witnesses for your testimony to come. Thank you.
    [The prepared statement of Mr. Holt follows:]

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

    Thank you, Mr. Chairman.
    The Office of Surface Mining Reclamation and Enforcement (OSM) is 
charged with protecting citizens and the environment from the harmful 
effects of surface coal mining operations, ensuring that land is 
restored following mining activities, and addressing the effects of 
past mining operations by reclaiming and restoring abandoned coal 
mines.
    Under the Bush Administration, the Office of Surface Mining 
routinely allowed some of the most destructive practices to go 
unchecked. During its final days in office, the Bush Administration 
issued a ``midnight regulation,'' revising the Stream Buffer Zone Rule 
to remove key protections for streams and rivers threatened by the 
dumping of mining waste.
    Yet mountaintop removal mining has significant impacts to the 
people and places of Appalachia. According to the Environmental 
Protection Agency, since 1992, nearly 2,000 miles of Appalachian 
streams have been filled as a result of mountaintop removal activities. 
Mountaintop removal in Appalachia has deforested an area the size of 
Delaware. A recent EPA study found that mountaintop removal mining 
adversely impacted aquatic life downstream in nine out of every 10 
streams in the region.
    However, the Bush Administration's revised stream buffer rule 
loosened the restrictions on placing valley fill--the waste byproduct 
of mountaintop removal mining--in or near streams. This rule was 
challenged in court and the Obama Administration is now going through 
the process of issuing a new Stream Protection Rule. It is critical 
that the revised rule ensure that our environment and these communities 
are properly protected. That is why I am a cosponsor of the Clean Water 
Protection Act (H.R. 1375), a bill introduced by my colleague from New 
Jersey, Rep. Pallone, to prohibit the dumping of waste from mountaintop 
removal coal mines into our precious rivers and streams.
    The Administration also is requesting an additional $3.9 million 
and 25 full time employees to expand oversight of stream protection 
activities in Appalachia. This commitment must be maintained.
    Regarding the Abandoned Mine Land (AML) coal program, the 
Administration is proposing reforms that would eliminate unnecessary 
spending and focus mine reclamation efforts on the most dangerous 
abandoned coal mines. The proposal would do away with payments to 
states and Native American Tribes that have completed their abandoned 
coal mine reclamation activities, saving taxpayers approximately $1.2 
billion over the next decade. It also would institute a competitive 
process for AML grants so that the funds could go the highest priority 
abandoned coal mines. Currently, AML funds are allocated based on 
current and historic coal production, as opposed to where the greatest 
need for reclamation activities exists. I look forward to learning more 
regarding the merits of this proposal.
    The responsibility of OSM to our environment and the American 
public is tremendous, and it is imperative that the Congress provide 
this agency with the tools it needs to do its job.
    I thank the Chairman for holding this hearing and the witnesses for 
their testimony today. I yield back.
                                 ______
                                 
    Mr. Lamborn. OK. And thank you. We will now hear from our 
first panel of witnesses, and this is Mr. Joseph Pizarchik, 
Director of the Office of Surface Mining with the Department of 
the Interior. Thank you for being here this morning, and we 
look forward to comments. As you probably already know, there 
are five minutes on the clock. The light after four minutes 
will turn yellow and then turn red after five minutes. Thank 
you for being here.

  STATEMENT OF JOSEPH PIZARCHIK, DIRECTOR, OFFICE OF SURFACE 
            MINING, U.S. DEPARTMENT OF THE INTERIOR

    Mr. Pizarchik. Thank you, Mr. Chairman, and members of the 
Subcommittee for inviting me here today to testify on behalf of 
the Administration's Fiscal Year 2012 budget request for the 
Office of Surface Mining, Reclamation and Enforcement. In 1977, 
Congress enacted the Surface Mining Control and Reclamation Act 
and created OSM for two basic purposes: First, to assure that 
the nation's coal mines operate in a manner that protects 
society and the environment during mining operations and 
restores the land to beneficial productive use following 
mining; second, to implement an abandoned mine land program to 
address the hazards and environmental degradation caused by 
pre-law unregulated mining.
    Now, as then, coal remains an important fuel for America 
and provides about half of the nation's electricity. Congress, 
when it enacted the Surface Mining Act, recognized a need to 
strike a balance between the nation's need for coal as an 
essential source of energy and the protection of society and 
the environment from the adverse effects of coal mining. OSM 
was charged with striking that balance. The 2012 budget is a 
focused budget. It is a budget that reflects tough choices that 
we have had to make in these difficult times.
    In overview, the Fiscal Year 2012 budget request for OSM 
totals $145.9 million in discretionary spending, a decrease of 
$16.9 million from the 2010 enacted level and what level we 
have been funded out through 2011 to this point. It supports 
528 full-time equivalent employees, which is down from about 
1,500 in 1994 and supports about 1,900 state and tribal 
employees that helps to support them. Some of the highlights in 
the discretionary spending include a regulatory funding program 
increase of $3.9 million for 25 additional staff to meet our 
statutory oversight obligations and to continue to fulfill the 
Administration's commitment to reduce the harmful environmental 
impacts of coal mining.
    However, most of these funds, $2.3 million, and 18 of the 
FTE's, Full-time Employees, are not really new but are offset 
from cuts that are proposed to the Federal Emergency Program. 
Those reductions amount to $3.5 million and 18 employees, and 
the work that they had been conducting is being picked up and 
handled by the states due to the significant increases that 
they have been receiving. We are also proposing to reduce $11 
million from the regulatory grants provided to the state and 
encourage the states to recover those costs from the industries 
for the services that they provide to the industry.
    We propose the reduction of $1 million of Federal high-
priority projects. There is a proposed reduction of $1.3 
million for funding for technical studies, mine map 
preservation. We also propose a cut of $500,000 to eliminating 
a funding for audit services that are no longer needed. We also 
are proposing cuts in administrative costs of $573,000 to OSM 
to be achieved through reductions in travel, information 
technology and strategic sourcing. There was a similar 
reduction for the current Fiscal Year that we are implementing.
    The Administrations's 2012 proposed budget for OSM also 
includes a legislative proposal to revamp the abandoned mine 
land program to reduce unnecessary spending and to ensure that 
the most dangers abandoned coal mine sites are addressed. Major 
components include the elimination of payments to states and 
tribes that have certified they have completed reclamation of 
all of the abandoned mine lands within their boundaries. That 
is projected to reduced spending for 2012 by $184.2 million and 
is expected to reduce the Federal budget deficit by $1.2 
billion over 10 years.
    The proposal also includes a legislative change to modify 
how the grants for abandoned mine reclamation is distributed 
going from a production-based formula to a competitive process 
with an advisory committee to address the most dangerous safety 
and environmental hazards. Those types of hazards include 
abandoned mine lands that were created prior to the enactment 
of the Surface Mining Act that propose an extreme danger to the 
health and safety to the people or property, that provide 
adverse effects to health or safety and create severe 
environmental problems to the environment.
    The budget proposal also includes the creation of a 
parallel abandoned mine land program for the reclamation of 
abandoned hard rock mines. It would provide for funding from a 
new AML reclamation fee on hard rock production that would be 
developed by the Bureau of Land Management within the 
Department of the Interior. In order to achieve efficiencies, 
the expertise that OSM has gained over the years on recovering 
coal fees would be used to cover the AML fees.
    In conclusion, the Fiscal Year 2012 budget is a fiscally 
sound and responsible budget that lowers the cost to the 
American taxpayers, reduces the Federal subsidy to the mining 
industry and will reduce the size of the Federal deficit. Thank 
you. I am available for questions.
    [The prepared statement of Mr. Pizarchik follows:]

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

    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify on the Fiscal Year 2012 budget request for the 
Office of Surface Mining Reclamation and Enforcement (OSM).
    The Surface Mining Control and Reclamation Act of 1977 (SMCRA) 
established the Office of Surface Mining Reclamation and Enforcement 
for two basic purposes: First, to assure that the Nation's coal mines 
operate in a manner that protects citizens and the environment during 
mining operations and restores the land to beneficial use following 
mining; and second, to implement an Abandoned Mine Lands (AML) program 
to address the hazards and environmental degradation remaining from two 
centuries of unregulated mining. These tasks are vital to public health 
and safety, and the environmental well-being of the United States.
    The SMCRA recognized the need to ensure that the Nation strikes a 
balance between the protection of the environment and the Nation's need 
for energy. Nearly 34 years after the passage of SMCRA, coal remains an 
important fuel source for our country, providing about half of our 
Nation's electricity. In the continued drive to decrease our Nation's 
dependence on foreign oil, coal will continue to be part of our 
domestic supply of energy for the foreseeable future.
    While new energy frontiers are being explored, including the 
development of clean coal, the coal supply (conventional coal 
production) is essential to the Nation's energy requirements. In order 
to ensure that coal is produced in an environmentally conscious way, 
OSM is committed to carrying out the requirements of SMCRA in 
cooperation with States and Tribes. Of the almost 2,400 employees 
involved in carrying out these two responsibilities on a daily basis, 
less than 25 percent are employed by OSM. The rest are State and Tribal 
employees who implement programs approved by the Secretary of the 
Interior with assistance from OSM. States permit and regulate 97 
percent of the Nation's coal production. States and Tribes also abate 
well over 90 percent of the AML problems.
    The major tasks for OSM are to ensure that States and Tribes 
successfully address coal mining activities by ensuring they have high-
quality regulatory and AML frameworks and to oversee implementation of 
their programs. Importantly, OSM also provides technical assistance, 
funding, training, and technical tools to the States to support their 
regulatory and reclamation programs.
    Currently, 24 States have approved regulatory programs in place 
pursuant to Title V of SMCRA. There are 25 States and three Tribes that 
administer approved AML programs pursuant to Title IV of SMCRA.
    Since enactment of SMCRA in 1977, OSM has provided more than $3 
billion in grants to States and Tribes to clean up mine sites abandoned 
before passage of SMCRA. In the course of addressing health, safety and 
environmental hazards, about 255,000 acres of Priority 1 and 2 
abandoned coal mine sites have been reclaimed under OSM's AML Program, 
though many sites still remain.
    The authority to collect and distribute the AML reclamation fee was 
revised by the Tax Relief and Health Care Act of 2006, which included 
the 2006 Amendments to SMCRA (Public Law 109-432). Among other things, 
these amendments extended the authority for fee collection on mined 
coal through September 30, 2021, and changed the way that State and 
Tribal reclamation grants are funded, beginning in FY 2008. State and 
Tribal grants are funded by permanent appropriations that are derived 
from current AML fee collections and the general fund of the U.S. 
Treasury.
    The 2006 Amendments dramatically increased funding to States and 
Tribes, from $145.3 million in FY 2007 to the most recent distribution 
made available of $395.6 million for FY 2011. Because of the increased 
State and Tribal funding, OSM began phasing out Federal responsibility 
for addressing AML emergency projects. It is more efficient and cost 
effective to provide responsibility for AML related issues to a single 
manager, from a single source of funding. In FY 2012, States with AML 
programs will have fully assumed this responsibility, so the budget 
eliminates the remaining discretionary funding for State emergency 
grants and Federally-managed emergency projects.
    The budget also includes a legislative proposal to reform the AML 
reclamation program to eliminate unnecessary spending and focus 
reclamation efforts on the Nation's most dangerous abandoned mines. 
First, the budget proposes to eliminate the unrestricted payments to 
States and Tribes that have completed their abandoned coal mine 
reclamation. Terminating these payments will save taxpayers $1.2 
billion over the next decade. Second, the budget proposes to reform the 
allocation of grants for coal AML reclamation to a competitive process. 
The current production-based formula allocates funding to States that 
have the most coal production and not necessarily States with the most 
critical reclamation needs. A competitive process would ensure that 
funding addresses the highest priority AML coal sites across the 
Nation, regardless of which State they are located in and how much coal 
is currently produced. Third, the budget proposes to create a parallel 
hardrock AML program, with fees collected by OSM and distributed 
competitively by the Bureau of Land Management. The mandatory 
distribution to the United Mine Workers of America (UMWA) health 
benefit plans, estimated at $225.3 million in FY 2012, will not be 
affected by this proposal.
Fiscal Year 2012 Budget Request Overview
    The FY 2012 budget request for OSM totals $145.9 million in 
discretionary spending and supports 528 equivalent full-time positions. 
Compared with the 2010 enacted level of $162.9 million, this represents 
a net decrease of $17.0 million. The budget request contains a 
programmatic increase of $3.9 million for expansion and enhancement of 
Federal oversight and stream protections. Reductions include $11.0 
million in discretionary spending for State regulatory program grants 
to be offset with increased user fees for services provided to the coal 
industry; $6.8 million for State and Federal emergency grants and 
projects, Federal high-priority projects, and related Federal 
reclamation operations staff; $1.2 million for technical studies and 
mine mapping under the Applied Science Program; $500,000 for audit 
activities; and $160,000 for coal outcrop fire projects. The budget 
also includes a decrease of $1.3 million for administrative savings and 
efficiencies.
    OSM's budget also contains an estimated $539.1 million in permanent 
appropriations. This spending includes $313.8 million for reclamation 
grants to non-certified States and Tribes (those with remaining 
abandoned coal mine problems); and $225.3 million for the UMWA for 
specified health benefits plans. This spending is derived from both the 
AML and U.S. Treasury Funds. The estimates, as contained in the budget 
submission, are projections based on information current as of the end 
of the 2010 calendar year and subject to change since they are based on 
fee collections and requests from the UMWA.
Regulation and Technology Appropriation
    The OSM's overall FY 2012 request includes $118.5 million for the 
Regulation and Technology appropriation, $8.8 million below the 2010 
enacted level. This includes an increase in funding and staff to 
support the expansion and enhancement of Federal oversight of State 
programs and stream protections, and reductions for regulatory grants, 
technical studies, and other efficiency gains. The FY 2012 budget 
request will enable OSM to provide financial and technical support, and 
training to the 24 States with approved regulatory programs. It will 
also enable OSM to continue to administer Federal regulatory programs 
in States that do not operate their own programs and on Federal and 
Tribal lands.
    The requested programmatic increase of $3.9 million and 25 FTE will 
support the Administration's commitment to significantly reduce the 
harmful environmental impacts of coal mining in Appalachia, formalized 
in a Memorandum of Understanding (MOU) with the Army Corps of Engineers 
and the Environmental Protection Agency. Increased resources and 
technical skills are needed to implement this new strategic direction 
i.e., enhanced oversight, stream protections to maintain the hydrologic 
balance of watersheds, coordinated permitting, and increased 
transparency as priorities for the coming years, while continuing to 
provide the technical support and training that States and Tribes need 
to maintain program effectiveness.
    A large portion of the regulatory and technology funding 
appropriated to OSM is distributed to the States and Tribes in the form 
of regulatory grants. These grants account for 51 percent of this 
proposed appropriation. For FY 2012, the request includes $60.3 million 
for regulatory grants, $11.0 below the 2010 enacted level. States are 
encouraged to offset the decrease in Federal funding by increasing cost 
recovery fees for services to the coal industry. The decrease supports 
the Administration's commitment to reduce subsidies to fossil-fuel 
industries.
    In addition, a decrease in technical studies of $834,000 is 
proposed. OSM will use its existing staff to provide direct technical 
assistance to the States and Tribes to address technical on-the-ground 
issues instead of funding nationwide or regional studies.
    The remaining portion of the budget provides funding for OSM's 
regulatory operations on Federal and Indian lands, evaluation and 
oversight of State regulatory programs, technical training and other 
technical assistance to the States and Tribes as well as administrative 
and executive activities.
Abandoned Mine Reclamation Fund Appropriation
    The request includes $27.4 million for the AML appropriation, which 
is $8.1 million below the 2010 enacted level. The budget supports OSM's 
program evaluations and reclamation operations, watershed cooperative 
agreement projects, fee compliance and audits, technical training and 
other technical assistance to the States and Tribes as well as 
administrative and executive activities. Reductions are proposed for 
State and Federal emergency grants and projects, Federal high-priority 
projects, related Federal reclamation operations staff, the Applied 
Science Program (technical studies and preservation of mine maps), 
audits related to coal export litigation, and coal outcrop fire 
projects and monitoring.
    As previously stated, because of the increased State and Tribal 
funding, OSM began phasing out Federal responsibility for addressing 
AML emergency projects. Therefore, the budget request eliminates 
discretionary funding for State emergency grants and Federally-managed 
emergency projects. States with AML reclamation programs will now 
address AML emergencies to improve efficiency and coordination.
    The budget proposes to decrease funding for technical studies by 
$366,000 and $160,000 for coal outcrop fire projects. In addition, the 
proposal reduces funding for audit activities related to coal export 
issues because the funding is no longer needed. The balance of the 
reductions for this account is derived from efficiencies in travel and 
strategic sourcing.
Permanent Appropriations
    The OSM will continue to distribute mandatory funding to States and 
Tribes under the AML program and make payments to the UMWA health 
benefit plans. The budget request includes a legislative proposal to 
eliminate payments to certified States and Tribes and restructure AML 
coal payments from a production-based formula to a competitive process, 
allocating $313.8 million in 2012 for reclamation of the highest 
priority coal AML sites in the Nation. In addition, the proposal will 
also create a new parallel AML program for the reclamation of abandoned 
hardrock mines, funded by an AML fee on hardrock production. 
Altogether, this proposal will reduce Federal spending by an estimated 
$184.2 million in 2012 and an estimated $1.8 billion over the next 
decade while ensuring that the Nation's highest priority abandoned coal 
and hardrock mines are addressed.
Initiatives
    The OSM's activities and related budget support the Presidential 
and Secretarial initiatives for responsible production of coal through 
the protection, preservation, and restoration of mined lands; 
restoration of lands left unreclaimed; and provision of opportunities 
for youth.
    It is essential to have properly mined coal and to see that land is 
reclaimed in accordance with the permit and the law. State permitting 
actions and inspections of mine sites are among the most important ways 
to help ensure the law is being implemented and to protect society and 
the environment. Consistent with the intent of SMCRA that States take 
the lead in regulating coal mining, in FY 2010, States completed 49,799 
partial and 29,095 complete inspections for a total of 78,894 
inspections. The OSM conducted 2,067 oversight inspections in primacy 
States during that year, a 40 percent increase over the number 
conducted in FY 2009.
    As part of the Secretarial initiative to increase youth employment 
in DOI programs, OSM set a goal in FY 2010 and FY 2011 to increase 
youth engagement by 35 percent over the FY 2009 baseline. In FY 2010, 
OSM engaged 218 youth. Accomplishments included engaging 198 youth 
through partnership efforts and 20 new students under other hiring 
authorities. In FY 2012, OSM will continue to support the program 
through ongoing activities and partnerships, with a cumulative goal of 
engaging 219 youth in its programs.
Conclusion
    The FY 2012 budget is a fiscally responsible request that lowers 
the cost to the American taxpayer while ensuring coal production occurs 
in an environmentally responsible way.
    Thank you for the opportunity to appear before the Committee today 
and testify on the FY 2012 budget request for OSM.
    Please be advised that due to my previous position with the 
Commonwealth of Pennsylvania, I have recused myself from matters 
pertaining to Pennsylvania that would present a conflict or an 
appearance of impropriety. The Committee questions that fall within the 
scope of my recusal I will refer to my deputy, Glenda Owens, who is 
here today.
                                 ______
                                 
    Mr. Lamborn. OK. Well, thank you for your statement, and we 
will now begin questioning. Members are limited to five minutes 
for their question, although we may have additional rounds. I 
now recognize myself for five minutes for questioning. Mr. 
Pizarchik, as I understand it, your office reprogrammed 
approximately $7 million from the states' Title V program to 
pay for the rewrite of the 2008 Stream Buffer Zone Rule.
    Now, this was after the agency had spent more than five 
years and many millions of dollars to produce the 2008 Stream 
Zone Buffer Rule, a rulemaking process that included 40,000 
public comments and two proposed rules supported by more than 
5,000 pages of environmental analysis from five different 
agencies. According to your Department's own environmental 
impact statement that was made public, your preferred 
alternative would eliminate more than 29,000 coal mining and 
related jobs and eliminate a significant portion of coal 
production in this country, more than 20 percent of surface 
mining in the east and up to 50 percent of underground mining 
nationwide.
    You testified in an Appropriations Subcommittee hearing 
earlier this year that OSM had paid the contractor about $3.5 
million so far. That means about half of the reprogrammed money 
has not been spent. Would you commit to me today to stop this 
rulemaking process, redirect the money back to states' Title V 
program and begin to repair the damage caused by this exercise?
    Mr. Pizarchik. The stream protection rule that we are 
working on is still under development, and we are in the 
process and will continue to work forward with the effort to 
improve the stream protection rules, to refine our regulations, 
to do a better job of striking the balance between meeting this 
country's energy needs with coal and protecting the environment 
from the adverse impacts of coal mining.
    Mr. Lamborn. And the tens of thousands of jobs are just 
going to be a byproduct that you are going to ignore?
    Mr. Pizarchik. The numbers to which you refer are working 
numbers from the contractor's early draft, and those numbers 
are premature at this point. We are still in the process of 
developing the proposed rulemaking. We are still in the process 
of developing the environmental impact statement. In accordance 
with the National Environmental Policy Act, development of that 
information is information that we would use in determining 
what would be in the proposed rulemaking.
    At this time, it is premature and speculative to assess any 
numbers or to provide any impacts of that because we have not 
progressed to the point of having a draft environmental impact 
statements that is based on sound science and information that 
will allow us to make informed decisions on what should be in 
the proposed rulemaking.
    Mr. Lamborn. Is the contractor that you had initially hired 
still working for the agency?
    Mr. Pizarchik. The contractor and the Office of Surface 
Mining, by mutual agreement, decided it was in the best 
interest of both parties to end that working relationship.
    Mr. Lamborn. Now, the end of that working relationship, did 
that have anything to do with the fact that some of the numbers 
that came out show that there would be massive job losses?
    Mr. Pizarchik. There were a number of factors that went 
into the decision to end the relationship. Under the contract 
terms, it was set to expire May 31 of this year, and the 
parties concluded it was in their best interest to end that 
relationship on March 24.
    Mr. Lamborn. But did it have anything to do with the very 
negative economic news that had been part of the preliminary 
analysis?
    Mr. Pizarchik. I believe, if you recall what I had 
indicated, that was a very early working draft, and from my 
other testimony, those numbers don't have a sound basis, and we 
are still in the development stage of preparing a draft 
environmental impact statement. It is premature to make any 
speculations as to what numbers would be now or in the future 
in that the Department is still developing the economic impact 
analysis, and that information as it is developed will help 
inform the Department on what should be in the proposed 
rulemaking.
    At this point, we are still in the development process, and 
we haven't reached the point where we have information on which 
to decide what will be in the proposed rulemaking.
    Mr. Lamborn. Now, the previous rule took five years, 40,000 
public comments, thousands of pages of environmental analysis. 
Why wasn't that rule sufficient?
    Mr. Pizarchik. That rule modified a Reagan-era rule and 
swung the pendulum too far the other way. There were defects 
that were acknowledged in that rulemaking process. The rule has 
been challenged in court in litigation, and as part of figuring 
out what is in the best interest of the environment and society 
and this country as far as its energy needs, we had decided it 
was best to modify the existing regulations in order to better 
strike a balance of protecting the environment while helping 
meet this country's energy needs.
    Mr. Lamborn. Well, it sounds like what you are working on 
is being rushed right through. At this point, I am going to 
defer to the Ranking Member for up to five minutes for 
questions.
    Mr. Holt. Thank you, Mr. Chairman. I just wanted to make 
sure that it is clearly stated in the record what you just 
mentioned in passing. The rule that was changed by this so-
called midnight regulation was promulgated in which 
Administration?
    Mr. Pizarchik. I am sorry. Which rule? You are talking 
about the one we are working on, or the midnight one?
    Mr. Holt. The Stream Buffer Rule.
    Mr. Pizarchik. That was promulgated during the 
Administration of President Ronald Reagan.
    Mr. Holt. OK. And I would just comment that I find it 
interesting that the majority is indirectly attributing to the 
Reagan Administration an attack on jobs. Are you in a position 
to characterize the degree of deliberation that is going into 
the current rulemaking process relative to what went into the 
process to rescind the Reagan Administration rule?
    Mr. Pizarchik. Yes. From the standpoint of our current 
process, we initiated it with an advance notice of proposed 
rulemaking that we filed in November of 2009. We received over 
32,000 public comments on that proposed rulemaking. We had made 
some suggestions as to possible options that we should consider 
as well as we solicited ideas from the public. We received a 
number of ideas from the public. We took that information and 
used it to develop some potential concepts, and then we went 
out and conducted about 15 stakeholder sessions where we met 
with the industry, we met with the regulated community, we met 
with regulators, we met with environmentalists, United Line 
Workers of America and received input from them on those 
possible ideas and concepts. We also conducted scoping sessions 
on the environmental impact statement and received thousands of 
comments on that document. We have gone beyond the statutory/
regulatory requirements as far as obtaining public input, both 
the 32,000 comments on the advance notice of proposed 
rulemaking and the comments we received at the stakeholder 
outreach sessions are not required by the statute. Those are 
our efforts to try to get more information from the public and 
from the regulated community in order to make a better informed 
decision. We conducted scoping sessions around the country. We 
had nine public meetings where we invited the public to come 
in, anyone from the public to come in and provide their 
comments on what ought to be in the scope of the environmental 
impact statement. To date, we have received more public 
comments in the time period than were received the entire time 
period on the 2008 Stream Buffer Zone Rule.
    Mr. Holt. And just to be clear, in most of what you just 
said, you were using the past tense. It is still going on, is 
that correct?
    Mr. Pizarchik. That is correct because once we get to the 
point where we actually have a draft environmental impact 
statement and that we have a proposed rule, those will be 
published for public comment, and everyone will have the 
opportunity to comment on that. One other thing that we did 
differently is during the preparation of the draft 
environmental impact statement, we solicited and had input from 
states and other folks who were cooperating on the development 
of this regulation, and we shared drafts, working drafts, of 
the chapters as they were being prepared when they first came 
right off the press from the contractor to obtain their input.
    The states have been helpful in providing input and 
suggestions on that. That information we are using to help 
prepare the final draft of the environmental impact statement. 
Again, that is another process where we have tried to be more 
open with the cooperating agencies and going beyond what was 
required by the statute.
    Mr. Holt. Would you say that this is a more-inclusive, 
more-deliberative process than went into the December 2008 
decision to revise the three-decade-old rule?
    Mr. Pizarchik. That is my understanding. We have already 
had more public input than was received on that process when we 
started at a much earlier basis. To my understanding, the 
public input on the 2008 rule was limited to what was provided 
on the proposed rulemaking when it was published.
    Mr. Holt. Thank you. Thank you, Mr. Chairman. I will have a 
couple more questions if there is an opportunity.
    Mr. Lamborn. OK. I thank the Ranking Member. Now I would 
like to recognize the Member who was here when the gavel came 
down, Representative Flores of Texas.
    Mr. Flores. I have no questions at this time, Mr. Chairman.
    Mr. Lamborn. OK. Then, we will go to Dr. Benishek. Excuse 
me. Yes. I want to make sure I follow the right order. Thank 
you. Dr. Benishek?
    Dr. Benishek. Thank you, Mr. Chairman, and I thank the 
witnesses for joining us today as well. My northern Michigan 
district has a long history of iron and coal mining, and while 
Michigan is not home to surface coal mining operations, 68 
percent of our power is generated by coal, so coal production 
matters to people in Michigan. It becomes clear to me every day 
that a major barrier to job creation is red tape and 
regulations by the Federal Government, and they are often job 
killers.
    Mr. Pizarchik, proposed changes to the stream protection 
rule are not the only regulations that coal mining communities 
have to deal with. The Army Corps of Engineers and the EPA have 
their own regulations concerning coal production. Is your 
Department looking at the big picture and taking into account 
the cumulative impact of proposed stream protection rule? How 
is it duplicative or inconsistent with existing Clean Water Act 
regulations?
    Mr. Pizarchik. In the process of deciding and evaluating 
the existing regulations and the statutory requirements in 
determining what we think needs to be improved in order to 
utilize the best science that we have available and the best 
modern techniques that we have available to do a better job of 
allowing mining to meet the environmental standards that are 
out there and to protect environment and society, we are 
looking at the big picture of that.
    The provisions that we are considering are not duplicative 
of the Clean Water Act in that under the Surface Mining Control 
and Reclamation Act, it specifically provides that any 
provisions dealing with the Clean Water Act are within the 
exclusive jurisdiction of the Environmental Protection Agency.
    What we are considering to include in the proposed 
rulemaking is revisions of the existing regulatory requirements 
that we have in the regulations, many of which have been there 
for three decades or so to take advantage of that modern 
science and that new information and to more fully implement 
the provisions of the Surface Mining Act that charge OSM 
specifically with protecting the environment, to making sure 
that the society is protected from the adverse impacts of the 
coal mining and to make sure that there are provisions taken to 
enhance the water resources, the wildlife resources and the 
fish resources.
    That is repeated a number of times in the statute. Not only 
that, the statute specifically provides that mining is to be 
designed to prevent material damage to the hydrologic balance, 
a/k/a to the streams, outside the provides it for it to 
minimize damage within it.
    Dr. Benishek. But I guess my problem is that so many times 
we have these answers where people are responsible to more than 
one agency, and despite what you say, it becomes very difficult 
for anyone in business to deal with multiple agencies of the 
government, and how can you assure me that there are not going 
to be contradictory regulations that people are having 
difficulty wading through all this stuff in order to keep 
people employed?
    Mr. Pizarchik. Part of what our charge is when looking at 
these regulations is to determine where there is ambiguity or 
need for clarity. We intend to make those types of changes. We 
are also evaluating and considering a provision providing for 
the regulatory authorities to cooperate in their decision-
making process, but notwithstanding that, we are not waiting 
for the regulations in that particular area.
    We have embarked on a process with the Army Corps of 
Engineers and with the Environmental Protection Agency and 
Office of Surface Mining and Reclamation, and we have started 
to do a better job of improving the permit coordination 
decisions because there are some provisions in that if you have 
a mine where you are going to either mine a stream or bury a 
stream you need to obtain a permit from the Army Corps of 
Engineers and the EPA. If you are going to be discharging 
water, you need a permit from the Clean Water Act regulatory 
authority.
    What we worked out with those agencies and in the State of 
Tennessee where we are the primary regulatory authority is a 
process where the agencies have agreed to get together in the 
early stages to work with the operator in order to minimize any 
duplication and to streamline the process so that there aren't 
any inconsistencies or any contradictions in the requirements 
for a surface mining permit or for a Clean water Act permit.
    We have offered our services, the Office of Surface Mining 
Reclamation and Enforcement to work with the other states on it 
and to try to facilitate a development of those improvements in 
that particular state so perhaps they can improve their 
processes with the EPA and the Army Corps and the state SMCRA 
and Clean Water Act regulatory authorities.
    Dr. Benishek. I would appreciate forwarding to the 
Committee the people that are involved in this process of 
streamlining it so that I can better understand the process.
    Mr. Pizarchik. OK. If you may, I could also provide a copy 
of the memorandum of understanding, standard operating 
procedures that we developed in Tennessee in conjunction with 
the Tennessee folks and the Federal agencies. That might help 
you understand what we are trying to do.
    Dr. Benishek. Thank you.
    Mr. Lamborn. OK. I thank the Member. Now we will hear from 
the person who is next in line when we started the hearing, and 
that would be Representative Johnson of Ohio.
    Mr. Johnson. Well, thank you, Mr. Chairman, and, Mr. 
Pizarchik, I have a lot to cover here in a short time, so I am 
going to ask you to keep your answers clear and concise if at 
all possible. As I am sure you are probably aware, I represent 
Southern and Eastern Ohio, and the coal mining industry is a 
vital economic driver in my district, and this proposed Stream 
Buffer Zone Rule rewrite could potentially shut down three coal 
mines in my district resulting in the loss of 1,300 direct jobs 
and over 10,000 indirect jobs while simultaneously reducing 
coal production in Ohio by 55 percent.
    Now, this is not only going to devastate parts of my 
district because of the job loss, but it is going to cause 
electricity rates in Ohio and the Midwest to skyrocket, and I 
am looking forward to some serious and truthful answers from 
you today about this action over the last two years and what it 
is going to result in. How can you say that the rewrite of this 
rule is to take into consideration the environment and what is 
best for American society and our energy policy?
    I don't see the wisdom in further bureaucratic regulatory 
overreach that will destroy thousands of jobs, reduce coal 
production and ultimately result in skyrocketing electric 
rates. Explain to me the wisdom of how that fits into what is 
good for America and what is good for our energy policy?
    Mr. Pizarchik. We do not yet have a proposed stream 
protection rule. We are in the process of developing that. We 
do not know what is going to be in that rule yet, so any 
numbers or anything else is pure speculation without a basis.
    Mr. Johnson. OK. Well, it is not speculation, Mr. Director. 
It is the result of the study that was done by the contractor 
that you hired and since released. That is where those numbers 
came from, so let me get into that. I would like to point out, 
as has been noted, this previous Stream Buffer Zone rulemaking 
process took five years, 5,000 plus pages of environmental 
analysis and 40,000 public comments. Yet, you assert that this 
one-and-a-half-year process that you folks are going through 
now is more deliberate and more complex and more comprehensive 
than that. Explain.
    Mr. Pizarchik. In the previous process, that was five 
years. It was totally within the Department with its resources. 
In the process that we have engaged upon, we were using 
internal resources and outside contractor resources to prepare 
some of the information in a more expedited fashion on that, 
and from the standpoint where that document was not released by 
us, that was the first working draft of the contractor, and it 
was a very preliminary document.
    Mr. Johnson. Has there been any negotiations and settlement 
agreements with the environmental groups that challenged the 
original 2008 rewrite? Yes or no.
    Mr. Pizarchik. We had a meeting with the----
    Mr. Johnson. Yes or no, have there been negotiations and a 
settlement?
    Mr. Pizarchik. We had a meeting with the Plaintiffs where--
--
    Mr. Johnson. Has there been a settlement with those 
environmental groups?
    Mr. Pizarchik. There is a settlement agreement for part of 
the----
    Mr. Johnson. OK. There is a settlement. Let me move on. Let 
me move on to the contractor. Can you explain the process by 
which you hired Polu Kai Services in June 2010? Was this a 
competitive bidding process for this contract?
    Mr. Pizarchik. Yes.
    Mr. Johnson. OK. So at the time that you hired them, 
obviously you felt that they were qualified do to the work, 
correct?
    Mr. Pizarchik. We used a competitive process.
    Mr. Johnson. At the time that you hired them, you felt that 
they were qualified, or you wouldn't have hired them, correct?
    Mr. Pizarchik. Based on the documents they provided, they 
made the impression they were the best qualified.
    Mr. Johnson. I will take that as a yes. Now, can you walk 
me through the process of terminating? You said it was of 
mutual interest. I don't want to know what Polu Kai's mutual 
interests were. I want to know what the Office of Surface 
Mining's mutual interests were in terminating that contract. 
How did that fit into what is best for America and our energy 
policy? What were your interests in terminating that contract?
    Mr. Pizarchik. The contract ended at the mutual agreement 
of the parties. It was not terminated.
    Mr. Johnson. No. You said it was based on mutual interests. 
What were your mutual interests, and why did you want that 
contract terminated?
    Mr. Pizarchik. From the standpoint of the working 
relationship that we had with the contractor----
    Mr. Johnson. Did you ever speak to anyone in the Executive 
Office of the President about the devastating effects that this 
potential rule rewrite or the results that Polu Kai had found, 
have you talked to anyone in the Executive Office of the 
President because he says we are supposed to be creating jobs, 
not destroying jobs? That is what he says, but clearly that is 
not what this rewrite is going to do.
    Mr. Pizarchik. It is premature to speculate what this 
rewrite will do because we do not yet have a proposed 
rulemaking.
    Mr. Johnson. So the contractor that you hired that you felt 
was qualified that produced results of a subcontractor that was 
experienced in the industry, so you don't find credibility in 
what your contractor provided, correct? They are the ones that 
said that this could destroy jobs.
    Mr. Pizarchik. As part of the rulemaking process, it is 
important for me to have an understanding of the bases in the 
documents on that. In working through that, it was our 
determination that it was in the mutual interest to both 
parties that we end the working relationship.
    Mr. Johnson. I realize I am over my time, Mr. Chairman. Let 
me just end by saying this: I find it incomprehensible that 
anyone could determine that this process is in the best 
interest of America, America's energy policy moving forward and 
the President's stated goal of creating jobs. I yield back, Mr. 
Chairman.
    Mr. Lamborn. OK. Thank you. We are going to go to the next 
questioner, and that would be Representative Landry of 
Louisiana.
    Mr. Landry. Mr. Chairman, I would like to yield some time 
to Mr. Johnson so he could finish his remarks.
    Mr. Johnson. OK. Thank you to my colleague for giving me a 
little more time. In that way, we are not quite so rushed. Let 
me get back to have you spoken to anyone in the Executive 
Office of the President about the mutual decision to terminate 
Polu Kai?
    Mr. Pizarchik. The decision was a mutual agreement of the 
Office of Surface Mining and Polu Kai Services to end the 
working relationship.
    Mr. Johnson. OK. I am going to give you a little bit more 
time to go back to answer that question. What was your office's 
interest, and why did you want to terminate that contract? Did 
it save money?
    Mr. Pizarchik. We did not terminate the contract. It was in 
the mutual interest of both of the parties that we agreed to 
end the working relationship.
    Mr. Johnson. Yes, but you wanted results out of that 
contract. I have served in the U.S. Government in the Defense 
Department for over 27 years. We don't terminate contracts 
unless we either get what we pay for, which is a good use of 
taxpayer dollars, or the contractor is not delivering, so 
explain to this panel, please, what was your interest in 
terminating that contract?
    Mr. Pizarchik. Again, we did not terminate the contract. We 
had certain expectations.
    Mr. Johnson. Did the contract end?
    Mr. Pizarchik. By mutual agreement of the parties.
    Mr. Johnson. Well, that is a contract termination, Mr. 
Pizarchik. Under whatever terms you want to call it, that is a 
termination. It might not have been termination for cause, but 
it was a termination. What was your interest in terminating the 
contract?
    Mr. Pizarchik. We had contracted for certain services, and 
over the course of the time period, there were work products 
which we received from the contractor that met our 
expectations, and there were some work products where they did 
not, and----
    Mr. Johnson. Explain which ones did not.
    Mr. Pizarchik. At this point, it is our best interest, and 
we think it makes more sense to move forward rather than to 
getting into information and things that have already----
    Mr. Johnson. But you had a reason for terminating that 
contract. I would like to know what work products from that 
contractor were you not happy with? Did it happen to be the 
statistics on the number of job losses and the potential 
production of coal reductions that would result from this 
action?
    Mr. Pizarchik. The numbers that were provided by the 
contractor were not the basis for the parties mutually agreeing 
to end the working relationship.
    Mr. Johnson. OK.
    Mr. Pizarchik. There were a number of other factors that 
got involved. As under any contract, I think as you are aware, 
that sometimes things develop differently through the course of 
the contract than either of the parties had anticipated.
    Mr. Johnson. Well, clearly you are not going to answer my 
question about what your interests were in terminating the 
contract, and I find that disturbing, but that is up to you. It 
seems clear to me that before this hearing today that there was 
collusion at some level between certain members of the 
Department of the Interior, OSM and outside groups to change 
the 2008 Stream Buffer Zone Rule without respect to the lengthy 
five-year process that led to that rulemaking, and that this 
stems from their disgust with the coal mining industry as a 
whole.
    Unfortunately, with your testimony today, I have no reason 
to believe that this was not the case. It seems to me that 
certain people at OSM and at the Department of the Interior 
were going to change this rule without respect for the impacts 
on the coal mining industry and the economy as a whole, and in 
my opinion, Mr. Director, that is just absolutely wrong. I am 
deeply concerned with the process and the actions of OSM over 
the past two years, and I can assure you that I will continue 
to closely monitor this issue in the future because the jobs 
and the livelihoods of the thousands in my district are on the 
line with this rule rewrite and are very much of a concern of 
mine.
    I was able to get an amendment in our first continuing 
resolution that prevented funding for you to complete this 
process, and if I have the opportunity, and I am going to look 
for it, I am going to reinsert that amendment so that if we can 
influence your inability to implement this, I am going to do 
so, and I hope that you, OSM and the Department of the Interior 
keep those people in mind that are going to lose their jobs and 
that are going to experience these skyrocketing electric rates 
with this rulemaking process, and with that, Mr. Chairman, I 
yield back.
    Mr. Lamborn. OK. Thank you. That time has expired, so we 
will now recognize the gentleman from Arizona, Representative 
Gosar.
    Dr. Gosar. Mr. Director, my district, Arizona's First 
Congressional District, can be a national model for an energy-
driven economic recovery. Rural Arizona is rich with natural 
resources ripe for extraction, including some of the largest 
copper deposits in North America. Currently, over 67,000 people 
in the Arizona's natural resources and mining sector. In 2008, 
it was estimated that the sector directly contributed to over 
$4.7 trillion to the state's gross domestic product.
    The natural resources mining and energy generation sector 
is critical to my district's local economy. However, regulatory 
and bureaucratic barriers not only prohibit the expansion and 
development of the sector, but they threaten existing jobs. 
Times are tough in my district and in my state. The states of 
Arizona's unemployment rate sits at 9.6 percent, well above the 
national average. In my district, it is even worse.
    The unemployment rate in all eight of the counties is all 
above the national average, and six of the eight are over 10 
percent. In fact, in two of my leading areas, unemployment in 
the Navajo Nation is approaching 60 percent, and the San Carlos 
Tribe is almost 75 percent. I strongly believe we must find a 
careful balance between environmental protection, worker safety 
and economic activity, but the Federal Government needs to work 
with industry, not against it.
    Specifically, I, like many of my colleagues here today, are 
concerned about OSM's effort to rewrite the 2008 Stream Buffer 
Zone Rule. There are 10 major active mines in Northeastern 
Arizona, and this policy threatens their viability. In 
particular, I would like to highlight the Kayenta Coal Mine, 
which would be adversely affected by OSM's draft environmental 
impact study. The Kayenta employs about 500 people, mostly Hopi 
Native Americans. The coal from that mine is delivered to the 
Navajo Generating Station located about 100 miles East in Page, 
Arizona.
    The plant provides 95 percent of the electricity in the 
Central Arizona Project, a critical water infrastructure 
project in my state that delivers over 500 billion gallons of 
Colorado River Water to a three-county service area that 
includes more than 80 percent of the population, Phoenix, 
Tucson and Pinal Counties. The plant and the coal mine provide 
$137 million in revenue and wages to the Navajo Nation and its 
tribal members and about $12 million annually to the Hopi 
Tribe, which is 88 percent of the tribe's annual operating 
budget.
    The total operation completely located in Arizona has a 
significant economic benefit for the tribes in my state. So now 
here comes my question, OK? I think several of my colleagues 
have started hitting on it. Is there any credible evidence that 
streams cannot be restored in Kayenta?
    Mr. Pizarchik. The existing regulations that we have under 
the current Surface Mining Act do not provide for a complete 
collection of the baseline data as to what is in the stream, 
and if you----
    Dr. Gosar. I am really confused. There seems to be no 
evidence is what we are finding out. There is no evidence that 
shows that under current rules those streams cannot be taken 
care of as is.
    Mr. Pizarchik. And under the proposed concepts that we have 
been considering, the operator will have the opportunity if 
they choose to mine through a stream to restore its form and 
function.
    Dr. Gosar. Then let me ask the next question. Why is the 
mine being penalized as we speak?
    Mr. Pizarchik. I am sorry, sir. I have no idea what you are 
referring to as far as the mine being penalized.
    Dr. Gosar. Well, that coal mine in Kayenta is already being 
penalized based upon jurisdiction over that stream 
reconstruction. There is no evidence, and so I am wondering why 
we are actually penalizing the tribe and trying to close their 
mine?
    Mr. Pizarchik. That is something of which I am not familiar 
with.
    Dr. Gosar. I would like to have an answer on that, please.
    Mr. Pizarchik. We will have to be able to get back to you 
on that.
    Dr. Gosar. Thank you.
    Mr. Pizarchik. Do you have any more specifics as to what is 
occurring there?
    Dr. Gosar. I will make sure you get all the specifics so 
that we can get that answer.
    Mr. Pizarchik. OK. Thank you.
    Dr. Gosar. Why doesn't the draft EIS specifically address 
the economic impacts of the Native American communities?
    Mr. Pizarchik. We don't have a draft EIS yet. We are still 
working on a draft EIS, and we expect our draft EIS when it 
comes out to cover all of the points that are appropriate and 
required under the National Environmental Policy Act.
    Dr. Gosar. But isn't there evidence that there was 
collusion based upon what we are seeing within the aspects of 
the data collection in this agency, and just to give you a 
hint, I do believe the Hopi Nation actually kicked out the 
environmentalists doing some of the data collection, did they 
not?
    Mr. Pizarchik. I have no information on that, Congressman.
    Dr. Gosar. Thank you. I am running out of time. Page 219 of 
the EIS table, 4.5 to 6.8 illustrates coal royalties and 
estimates disbursements to the states for the Fiscal Year 2008. 
Why is this outdated? Why aren't we showing more updated 
information in regards to royalties given to tribes?
    Mr. Pizarchik. As I indicated, we do not have a draft EIS 
at this point in time. The draft EIS is still under development 
and preparation.
    Dr. Gosar. Why aren't we showing updated panels and 
disbursements for royalties? Isn't that part of the process and 
part of the equation?
    Mr. Pizarchik. We do not have a draft EIS at this point. We 
are attempting to make sure we have one that covers all the 
appropriate information required by the National Environmental 
Policy Act.
    Mr. Lamborn. OK. I thank the member. Now the Member from 
South Carolina, Representative Duncan.
    Mr. Duncan. I thank you, Mr. Chairman. Thank you for having 
this hearing. South Carolina doesn't have a lot of coal mines, 
if any. We do have some contractors in our state that operate 
on mines in other states, so I appreciate the validity and the 
timeliness of this because it seems like the Administration 
continues to thwart American resources being used for American 
energy needs. It is concerning to folks in South Carolina.
    When we talk about open-pit mining, we are concerned that 
they may affect the granite mines that we have in our state, 
which we are blessed with that, so Mr. Chairman, I would like 
to yield the balance of my time back to the gentleman from 
Arizona to finish his line of questioning.
    Dr. Gosar. Thank you to my colleague. I want to go back to 
this draft EIS, specifically addressing the economic impacts. 
Why doesn't specifically address the Native American 
communities?
    Mr. Pizarchik. Again, the document to which you are 
referring, it was the first working draft prepared by the 
contractor. There is not a draft EIS in place yet. We expect to 
have a draft EIS that would comply with all the NEPA 
requirements and include the information necessary when it is 
ready. Right now, we do not have such a document.
    Dr. Gosar. I understand the Navajo and Hopi's are 
designated environmental justice communities. Don't you think 
it would be appropriate that the EIS address those significant 
economic ramifications for those communities?
    Mr. Pizarchik. I believe it would be appropriate for a 
draft EIS when we have one to address all the requirements that 
are appropriate under the National Environmental Policy Act. At 
this point, we aren't there yet.
    Dr. Gosar. So shouldn't we be taking into specific dialogue 
the cumulative effects of coal production on the jobs and 
revenue on the Native Americans in Arizona, New Mexico and 
Montana specifically?
    Mr. Pizarchik. Part of our job is to strike that balance 
between protecting the environment while helping meet the 
country's energy needs. The purpose of having a draft 
environmental impact statement is to garner the information, to 
provide the information so that I, the Department, we can make 
a determination of what ought to be in the proposed rulemaking. 
We do not have a draft EIS yet. We do not have the information 
that we need to make the determination as to what is 
appropriate to include in the proposed rulemaking, so anything 
at this point is just speculative.
    Dr. Gosar. It may be speculative, but unfortunately, in my 
state, what we see is the random selection of information that 
we want to include and not to include. I want to bring up 
specifics. We just had the USGS try to do a subsurface model 
without going back to the communities of interest to look at 
information that should be included in an environmental or 
actually a dialogue of mapping out subsurface waters, and it 
seems like we see this over and over again with agencies that 
we are picking and choosing what information we want to use, 
and it seems like the Native Americans seem to have been left 
out in this process, and we don't want them to be left out of 
any process.
    Mr. Pizarchik. And I agree. I don't want them left out 
either. I have been out to meet with Hopi and Navajo as well as 
with the Crow, and I am well aware of the circumstances out 
there and how important coal is to their communities and to 
their economy, and I am well aware of the concerns out there 
and the situation on that. From our standpoint, we need to have 
all appropriate information required under the Environmental 
Policy Act in order to be able to make informed decisions, and 
we are not at the point where we have that information that we 
need in order to be able to make the determination and inform 
this determination as to what should be in the proposed 
rulemaking.
    Dr. Gosar. And you do understand the ramifications of the 
Navajo Generating Station and its key operating services to the 
State of Arizona and to the Southwest? You are aware of those?
    Mr. Pizarchik. Yes, I am.
    Dr. Gosar. Very specifically?
    Mr. Pizarchik. Yes.
    Dr. Gosar. OK. Thank you, sir.
    Mr. Lamborn. OK. I am assuming the Director could stay for 
a shorter second round because there are fewer of us here?
    Mr. Pizarchik. Yes, sir.
    Mr. Lamborn. We appreciate that. Thank you so much. For my 
five minutes, I am going to yield to the gentleman from Ohio, 
Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman. Mr. Director, I have 
just a few more questions. First of all, have any states asked 
for a rewrite of the Stream Buffer Zone Rule? Have they 
expressed concerns about the quality of their streams?
    Mr. Pizarchik. I do not recall receiving such a request.
    Mr. Johnson. Have any of them expressed concerns about the 
economic impact of the rewrite of this rule?
    Mr. Pizarchik. I believe there may have been some concerns 
expressed in some letters to me, yes.
    Mr. Johnson. OK.
    Mr. Pizarchik. I don't recall the specifics.
    Mr. Johnson. All right. As I am sure you are aware, last 
year OSM placed a request to the House Interior Appropriations 
Committee to reprogram $7 million from state grant funding in 
order to pay for the environmental impact study. Has Polu Kai 
been paid for any of the work that they did up until the time 
that contract ended?
    Mr. Pizarchik. Yes.
    Mr. Johnson. How much?
    Mr. Pizarchik. I believe they were paid about $3.7 million.
    Mr. Johnson. $3.7 million?
    Mr. Pizarchik. Yes.
    Mr. Johnson. And what was the total value of the contract?
    Mr. Pizarchik. The contract was slightly under $6 million.
    Mr. Johnson. OK. So over half of the funds that were to be 
spent for the work that Polu Kai was to do has been paid to 
them, and is it safe to say are you redoing the entire 
environmental impact statement?
    Mr. Pizarchik. First, I would like to correct I actually 
believe the contract was almost $5 million, not $6. I made a 
mistake on that.
    Mr. Johnson. OK.
    Mr. Pizarchik. We are evaluating the work product that we 
have received from the contractor. They have provided some 
materials and information and provided some good services. For 
instance, in conducting the EIS scoping sessions and gathering 
the data, we received valuable work product from them. Some of 
the other work, we are evaluating on how best to proceed.
    Mr. Johnson. Does OSM plan to ask for more funding either 
through a supplemental budget request or reprogramming to do a 
new EIS or complete the existing rework?
    Mr. Pizarchik. We do not have plans at this time to ask for 
more money.
    Mr. Johnson. OK. I want to go back just briefly to another 
line of questioning from earlier because I am not sure I 
understood the answer. Have you or anyone in your Department 
spoken to anyone in the Executive Office of the President about 
the Stream Buffer Zone Rule rewrite and its implications?
    Mr. Pizarchik. I can only speak for myself, and I have not 
had discussions.
    Mr. Johnson. Do you know if anybody in your upward chain in 
the Department of the Interior, has anyone, Secretary Salazar 
or anyone else, had any communication with the Executive Office 
of the President in that regard?
    Mr. Pizarchik. I don't know the answer to that, 
Congressman.
    Mr. Johnson. OK. Mr. Chairman, I think I yield back the 
remaining on my time.
    Mr. Lamborn. OK. Thank you, and I recognize the Ranking 
Member for up to five minutes.
    Mr. Holt. Thank you, Mr. Chairman. Mr. Pizarchik, in the 
Environmental Protection Division, you plan to have 25 
additional employees at a cost of nearly $4 million. This is in 
a division that is having a proposed spending reduction of 
nearly 10 percent. Can you explain that reassignment?
    Mr. Pizarchik. Yes.
    Mr. Holt. What would these 25 employees be doing?
    Mr. Pizarchik. The majority of those 25 employees would be 
conducting oversight inspections for the Office of Surface 
Mining. Over the years, the agency had been downsized either 
through riffs or through attrition, and we were not in a 
position that we were conducting oversight to be able to 
address concerns or allegations that the states were or were 
not doing a good job.
    Mr. Holt. So where does this bring the staffing compared to 
what it was in the heyday of that office if there was a heyday 
of that office? In other words, how much are you restoring that 
was lost, or are you going to a more robust office than 
previously existed.
    Mr. Pizarchik. It will not even come close to what 
previously existed. If these are approved, 18 of the positions 
are offsets from reductions in our abandoned mine land program 
and will still leave us less than half of what the agency had 
years ago, maybe even a fraction of that.
    Mr. Holt. OK. Thank you. On the question of abandoned mine, 
the AML, how do you determine what are the mines that most need 
attention? How do you characterize the danger that they 
present?
    Mr. Pizarchik. There has been a process over the years.
    Mr. Holt. And by the way, is it danger that it the primary 
criterion?
    Mr. Pizarchik. The primary criterion gets in the danger to 
the health and safety of the public and adverse effects on 
health and public safety, and then under the current ranking 
system where there is evaluation, there are regulations that 
lay out how sites are ranked. All of the states have 
participated and created an inventory of the abandoned mine 
lands, and so we look at the way they have been ranked by the 
states in accordance with the Federal standards.
    Mr. Holt. OK. I mean, could you tick off two or three? Give 
us some idea of how you characterize them quickly, please.
    Mr. Pizarchik. Some of the factors could be dangerous high 
walls, impoundments with water slide area, open mine shafts 
where people could fall into those portals, vertical openings, 
clogged streams on lands.
    Mr. Holt. OK. And I think you also said temporary dams that 
would give way or makeshift dams and that sort of thing?
    Mr. Pizarchik. Yes.
    Mr. Holt. OK. Changing the subject, earlier this week, a 
witness, Laura Skaer from Northwest Mining Association 
advocated a good Samaritan law to allow mining companies with 
no previous involvement to be involved in reclamation and 
restoration of abandoned mines. This is through the BLM to 
remove some of their liability. This might be worthwhile. I am 
certainly willing to consider it, but my question for her was 
well, what would entice a company, what would be the motivation 
of a company to want to clean up even if we removed the threat 
of liability? Do you see any merit in a good Samaritan law? 
Might it apply to your work at all?
    Mr. Pizarchik. Yes, I do see merit, and in the coal mining 
area, there are amendments that were commonly referred to as 
the Rahall amendment that deals with liability fore acid mine 
drainage on mine sites, and it encourages reclamation of those 
sites through remining by operators. In my personal experience 
in Pennsylvania, it has been very successful.
    Mr. Holt. Removing the liability is one thing. What would 
provide the motivation for a company who no longer is liable to 
undertake such work?
    Mr. Pizarchik. It is opportunity to keep their people 
employed and to make money, basic capitalism on that, and I 
think we in the Federal Government deserve and have a 
responsibility to structure our regulations in a way that helps 
facilitate jobs for people in this country.
    Mr. Holt. Thank you. Thank you, Mr. Chairman.
    Mr. Lamborn. All right. Perfect timing. Thank you, and now 
I think we only have one or two more questions from 
Representative Gosar of Arizona, and then we will be done, and 
I thank you in advance for having been here. Representative?
    Dr. Gosar. Director, we have this large Navajo Nation where 
we actually extracted uranium during the Atomic Energy 
Commission's days which the government is responsible. We also 
had the Bennett Freeze where particularly anything was 
prohibited from being changed regardless of cleanup, changing a 
window, rebuilding a house. Tell me what we are going to do 
there? How are we going to clean that up?
    Mr. Pizarchik. I am not familiar with what you are 
referring on this. You say Bennett Freeze?
    Dr. Gosar. Called the Bennett Freeze. What it was was an 
arbitrary line drawn across the Navajo Nation that forbids 
anybody to do anything of substance, replacing a window, 
changing a house. These people are living in like the Third 
World, and we have tailing piles everywhere that are direction 
relation from Federal mining that are sitting out there 
contaminating water. We have people living by these areas. I 
want to know your priority aspects since the Bennett Freeze has 
now been lifted last year where in the priority, and I hope I 
hear it is number one that we are going to go back in there and 
start clearing up.
    Mr. Pizarchik. In this 2012 budget proposal, there is a 
provision for creation of an abandoned hard rock mind land fee 
program, and that would provide the resources for directly 
addressing those types of problems on it.
    Dr. Gosar. Well, I think it should be the direction of the 
Federal Government to direct specifically to a such project, 
that they direct that accordingly because their responsibility 
is direct here.
    Mr. Pizarchik. And there is legislation being drafted to 
accomplish this, and I understand that is under development. It 
is being worked on through the Bureau of Land Management. I am 
not quite sure, and I don't have expertise in uranium mines or 
hard rock abandoned mines and that, but that certainly sounds 
like something that ought to be considered for being addressed 
in that aspect of it.
    Dr. Gosar. I would like to make this a real priority issue 
because when we are looking at the quality of uranium, our 
area--Breccia Pipes--has the highest concentration of uranium 
in the whole country. We have the ability to mine our own and 
to have actually some increased energy issues in providing that 
type of ore for very substantive additions. The regular folks, 
the mining folks, are being held accountable to a different 
level than the Federal Government, and they are being held 
back, and that is not something that I can stand for.
    The Federal Government must answer the call here to make 
sure things are put back right because if you are asking the 
mining industry to hold to a standard, so should the Federal 
Government.
    Mr. Pizarchik. And again, sir, that is an area of which I 
am familiar.
    Dr. Gosar. I would like your answers submitted what we are 
going to do and how we are going to do it and who the 
authorities are.
    Mr. Pizarchik. We will do what we can on that to provide an 
appropriate response, yes.
    Dr. Gosar. Thank you.
    Mr. Lamborn. OK. That concludes the questioning. I want to 
thank you, Mr. Pizarchik for being here. We have asked some 
probing questions, but only because these are some very serious 
issues, so we thank you for being here, and we appreciate your 
time.
    Mr. Pizarchik. You are welcome, and it is my understanding, 
I just had a little note, that as far as what the Executive 
Office of the President, including some of the offices, and I 
guess maybe I didn't have a clear understanding on that 
question on that, so as far as some of my discussions, I have 
briefed folks at say the CEQ on where we were on our 
rulemaking, provided some information on that, so that was 
something I really just did not have a full appreciation of the 
scope of the Executive Office of the President, so I wanted to 
make that clarification and thank you all for the opportunity 
to be here today.
    Mr. Lamborn. OK. Thank you so much. That concludes our 
first panel.
    We will now bring up the four witnesses for our second 
panel, and they are Mr. Eugene Kitts of the International Coal 
Group, Senior Vice President of Mining Services testifying on 
behalf of the National Mining Association; Ms. Loretta Pineda, 
Director of the Division of Reclamation, Mining and Safety of 
the Colorado Department of Natural Resources testifying on 
behalf of the National Association of abandoned mine land 
programs and the interstate mining compact. It is always good 
to have someone from Colorado here.
    Third, we have Mr. Butch Lambert, Deputy Director of the 
Virginia Department of Mines, Minerals and Energy testifying on 
behalf of the Interstate Mining Compact Commission, and also we 
have Mr. Joe Lovett of the Appalachian Center for the Economy 
and the Environment, so for all four of you, you maybe have 
seen how this operates. You push the button to be able to be 
heard on the microphone. It will turn green. After four 
minutes, the light turns yellow, and then after five minutes it 
turns red.
    There is the possibility that we will have some votes 
called here in the next 10 to 20 minutes. If that happens, I am 
going to ask in advance your patience although I know it is an 
imposition, but we will have to take a recess for the hearing 
and go over to the chamber and come back, and depending on how 
many votes, it could be anywhere from 30 to 60 minutes. 
Hopefully, it will be shorter rather than longer, so I ask you 
in advance to bear with us if that happens because I think we 
are supposed to have a vote here pretty soon. That is the 
prediction. That is what the oracles on high have said. OK. We 
will start with you first, Mr. Kitts. Thank you for being here.

   STATEMENT OF EUGENE KITTS, SENIOR VICE PRESIDENT, MINING 
               SERVICES, INTERNATIONAL COAL GROUP

    Mr. Kitts. Thank you and good morning. My name is Gene 
Kitts, and I am Senior Vice President of Mining Services for 
International Coal Group, a leading coal producer in Northern 
and Central Appalachia and the Illinois Basin. I am appearing 
on behalf of the National Mining Association, which represents 
ICG and other producers of most of America's coal, metals, 
industrial, and agricultural minerals. Thank you for holding 
this oversight hearing today. It is vital that this Committee 
and others in Congress carefully review the Office of Surface 
Mining's recent activities. Today, I will discuss two 
initiatives by OSM, the ``Stream Protection Rule'' and the 
agency's ``State Program Oversight'' activities.
    With regard to the Stream Protection Rule, OSM worked from 
2003 to 2008 developing the current Stream Buffer Zone 
Regulation. Building a multi-agency programmatic EIS done in 
2003 to 2005, OSM published adiscussion document and two 
proposed rules before finalizing the regulation, included 
public comment on each one, held four public hearings on the 
subject and also completed another EIS to support the final 
rule, which was finally published with EPA's written 
concurrence in December 2008.
    The 2008 Stream Buffer Zone Rule was a clarification of the 
earlier rule, but it also added significant environmental 
protections, including a requirement to avoid mining activities 
in or near streams, if reasonably possible, and to use the best 
technology currently available to prevent the contribution of 
additional suspended solids to stream flow. Operators must also 
minimize disturbances and adverse impacts on fish, wildlife and 
related environmental values to the extent possible.
    The current rule requires operators to demonstrate that 
generation of excess spoil material has been minimized, all 
practical alternatives for the disposal of that excess earth 
have been considered, and the options showing at least overall 
adverse impact on fish, wildlife and related environmental 
values has been selected. However, despite five years of study, 
millions of taxpayers' dollars spent, two environmental impact 
statements and 43,000 public comments, OSM suddenly decided to 
shelf it before it was ever implemented.
    Instead of defending the rule when it was challenged by 
environmental organizations, the Secretary asked the Judge to 
vacate it so that OSM could reinterpret the old rule through a 
guidance document. The Judge refused and required the Secretary 
to follow the legal rulemaking procedures. OSM responded by 
signing a back-door settlement agreement with environmental 
groups promising to publish a proposed rule by February 28, 
2011, and requiring taxpayers to pay for all the environmental 
groups' attorneys' fees. OSM's Stream Protection Rule is not 
occurring in a vacuum.
    For example, EPA and the Corps have instituted an unlawful 
de facto permit moratorium on Clean Water Act Section 404 
permits. Since March 2009, 235 coal mining Section 404 permits 
have been blocked, and in the ensuing two years, only eight of 
those permits have been issued. These strategies were mapped 
out in a memorandum of understanding between EPA, the Corps and 
the Interior Secretary on June 11, 2009. That MOU explained how 
such new policies have been designed to reduce the 
``environmental consequences'' of Appalachian surface coal 
mining operations, and ``diversify and strengthen'' the 
Appalachian regional economy.
    Only later did we discover that diversifying and 
strengthening the Appalachian regional economy meant destroying 
tens of thousands of coal mining and related jobs in their 
region. The Stream Protection Rule is the most far-reaching 
rewrite of OSM's regulations in the last 30 years. It provides 
less clarity, and it changes the focus of the program from a 
balance between environmental protection and coal production to 
actually a punitive attack on coal mining.
    OSM's own analysis predicts that the rule will destroy tens 
of thousands of coal mining and related jobs across the 
country, and we believe that this significantly understates 
potential job losses. OSM has not justified the need to abandon 
the 2008 rulemaking, but has admitted that we had already 
decided to change the rule following the change of 
Administrations on January 20, 2009. Both the rulemaking and 
the process being used by OSM have been universally criticized 
by states charged with administering SMCRA, including the 
majority of the state EIS cooperating agencies, the Interstate 
Mining Compact Commission and the Western Governors 
Association.
    I understand that Interior announced on March 31 that the 
EIS contractor has been terminated. In 2010, OSM reprogrammed 
$7 million in its budget to pay for this ill-advised Stream 
Protection Rule and EIS with much of the money coming at the 
expense of the states. OSM has already spent an estimated $4.4 
million on the rule and EIS, yet has not completed a draft of 
the proposed rule and then fired its contractor. Now the agency 
is seeking an additional $3.9 million in Fiscal Year 2012 to 
implement this job-killing regulation and increase state 
program oversight.
    We strongly urge you to reject any further funding for 
these misguided efforts. Now, the state program oversight, in a 
primacy state, exclusive regulatory authority rests with the 
state, which is the sole issue of permits. OSM plays no role in 
issuing permits, and it does not retain veto authority over 
state permit decisions. Despite this clear statutory structure 
language and court decisions, OSM's director issued a memo on 
November 15, 2010, unilaterally asserting that the agency now 
has the authority to interfere with change and as a practical 
matter veto state permitting activities.
    In fact, not only has OSM asserted that it has such 
authority, but it has followed through with its threats against 
two of my company's state-issued mining permits. The agency's 
Fiscal Year 2012 budget requests an additional increase of $3.9 
million for activities related to state program oversight and 
for the Stream Protection rulemaking. At the same time, OSM is 
proposing to slash by $11 million state Title V grants used by 
states to run their programs.
    We strongly urge this Committee and others in the Congress 
to stop funding the agency's controversial state permit review 
policy and Stream Protection Rule and restore the necessary 
funding for the states to properly implement their SMCRA 
programs as intended by Congress. Thank you.
    [The prepared statement of Mr. Kitts follows:]

  Statement of Eugene Kitts, Senior Vice President, Mining Services, 
   International Coal Group, Inc., on Behalf of the National Mining 
                              Association

    Good morning. My name is Gene Kitts, and I am Senior Vice President 
of Mining Services for International Coal Group, Inc. ICG is a leading 
producer of coal in Northern and Central Appalachia and the Illinois 
Basin. We have 12 active mining complexes located in Northern and 
Central Appalachia and one in Central Illinois. We control over one 
billion tons of high-quality coal reserves that are primarily high-BTU, 
low-sulfur steam and metallurgical quality coal. Over the past three 
years, ICG's mines and our 2,750 employees have been recognized an 
average of seven times a year with environmental awards from state and 
federal mining regulators.
    I am appearing on behalf of the National Mining Association (NMA). 
NMA represents ICG as well as other producers of most of America's 
coal, metals, industrial and agricultural minerals.
    I want to thank the Committee for holding this oversight hearing 
today. It is vital that this Committee and others in Congress carefully 
review the Office of Surface Mining's (OSM's) recent activities. Today 
I plan to discuss two initiatives by OSM, the ``stream protection 
rule'' and the agency's ``state program oversight'' activities.
Stream Protection Rule
    OSM spent over five years, from 2003 to 2008, developing the 
current ``stream buffer zone'' regulation. This was a collaborative 
effort drawing on the October 2005 programmatic environmental impact 
statement, which was sponsored by four federal agencies including OSM, 
EPA, the Corps, and the Fish and Wildlife Service (FWS). It included 30 
scientific and economic studies, comprising over 5,000 pages of 
material. OSM published a discussion document and two proposed rules 
before finalizing the regulation, including public comment on each one, 
as well as four public hearings on the subject. OSM also completed 
another environmental impact statement to support the final regulation. 
OSM published the final rule, with EPA's written concurrence, in 
December 2008.
    While the 2008 stream buffer zone rule was a clarification of the 
longstanding regulatory interpretation of the earlier rule, it also 
added significant environmental protections that have been largely 
ignored in the debate. These include a requirement to avoid mining 
activities in or near streams if reasonably possible, and to use the 
best technology currently available to prevent the contribution of 
additional suspended solids (sediment) to stream flow or runoff outside 
the permit area to the extent possible. Operators must also minimize 
disturbances and adverse impacts on fish, wildlife, and related 
environmental values, to the extent possible.
    The current rule also requires that surface coal mining operations 
be designed to minimize the creation of excess spoil and the 
environmental impacts of fills constructed for the placement of excess 
spoil and coal mine waste. Mine operators must do this by:
          making a demonstration to the satisfaction of the 
        regulatory authority that the operation has been designed to 
        minimize, to the extent possible, the volume of excess spoil 
        that the operation will generate, thus ensuring that spoil is 
        returned to the mined-out area to the extent possible;
          identifying a reasonable range of alternatives that 
        vary with respect to the number, size, location, and 
        configuration of proposed fills; and
          selecting the alternative with the least overall 
        adverse impact on fish, wildlife, and related environmental 
        values, including adverse impacts on water quality and aquatic 
        and terrestrial ecosystems.
    However, despite 5 years of study, millions of taxpayer dollars 
spent, two environmental impact statements and 43,000 public comments 
in developing the current regulation, OSM suddenly decided to shelve it 
before it was ever implemented on the ground. The rule was challenged 
by environmental organizations and instead of defending the rule, the 
Secretary of the Interior asked a federal judge to vacate it so that 
the new administration could reinterpret the old rule, through a 
guidance document. The judge refused, and told the Secretary that if he 
desired to make any changes to a valid regulation then he must follow 
the legal requirements that afford full public participation through 
notice and comment rulemaking. OSM responded by signing a back-door 
settlement agreement with environmental groups promising to publish a 
proposed rule by February 28, 2011, a very short timeframe. The agency 
also agreed to pick up the tab for all of the environmental groups 
attorneys' fees, at taxpayer expense, despite the fact that those 
groups didn't win the case.
    OSM's proposed changes to the stream protection rule are not 
occurring in a vacuum. Other agencies, including the Environmental 
Protection Agency (EPA) and the Army Corps of Engineers (Corps) have 
implemented similar policies aimed at severely restricting coal mining 
operations. EPA and the Corps have instituted an unlawful de-facto 
permit moratorium on Clean Water Act Sec. 404 permits through guidance 
documents and memorandum. Since March 2009, 235 coal mining Sec. 404 
permits have been blocked, and in the ensuing two years only eight 
permits out of those 235 permits have been issued.
    All of these strategies were mapped out in a memorandum of 
understanding between EPA, the Corps, and the Interior Secretary on 
June 11, 2009. That document explained how such new policies have been 
designed to reduce the ``environmental consequences of Appalachian 
surface coal mining operations'' and ``diversify and strengthen the 
Appalachian regional economy.'' Only later did we discover, through 
news media reports, that ``diversifying and strengthening the 
Appalachian regional economy'' meant destroying tens of thousands of 
coal mining and related jobs in our region.
    The stream protection rule is the most far reaching rewrite of the 
agency's regulations in the last 30 years. Far from providing more 
regulatory clarity, it fundamentally changes longstanding 
interpretations of the law and prohibits widely accepted mining 
techniques. In OSM's own words, this rule is ``much broader in scope 
than the 2008 stream buffer zone rule,'' and will apply nationwide in 
scope.
    Despite OSM's statements to the contrary, its own analysis predicts 
that the restrictions contained in the rule will destroy tens of 
thousands of coal mining and related jobs across the country. 
Specifically, the agency's draft EIS predicts that it would eviscerate 
almost 1/3 of all surface coal mining production in Appalachia, over 
20% in the Illinois Basin, over 25% of the production in the Gulf 
Region, and 84% of Alaska's coal production. OSM's draft EIS predicted 
that total job losses in the Appalachian region alone are expected to 
exceed 20,000. NMA believes that this document significantly 
underestimates the potential job losses, because it does not account 
for any losses of underground mining jobs through the sterilization of 
coal reserves and denial of permits to conduct highly efficient full 
extraction underground mining operations.
    Remarkably, OSM has offered little in the way of any real 
justification for the need to abandon the 2008 rulemaking. Indeed, the 
only explanation appears in the agency's candid admission that ``. . 
.we had already decided to change the rule following the change of 
Administrations on January 20, 2009.'' 75 Fed. Reg. 34,667 (June 18, 
2010). Perhaps this pre-determination by the agency explains both the 
absence of any meaningful opportunity for consultation with the States 
and, in part, why the agency has had so many problems with the quality 
of its environmental impact statement. Those problems were recently 
acknowledged by Deputy Secretary David who testified that Interior is 
so unhappy with the work on the EIS that they may terminate the 
contractor. I understand that Interior announced on March 31 that the 
contractor has indeed been terminated. Both the rulemaking and the 
process being used by OSM have been universally criticized by states 
charged with administering SMCRA including the majority of the State 
EIS-cooperating agencies, the Interstate Mining Compact Commission, and 
the Western Governors' Association.
    In 2010, OSM reprogrammed $7 million in its budget to accommodate 
development of this ill-advised stream protection rule and accompanying 
EIS. Much of this money came at the expense of the States, who are the 
primary regulators under SMCRA. In a recent letter to this Committee, 
OSM indicated that it has already spent an estimated $4.4 million on 
the rule and EIS, yet ``has not completed a draft of the proposed 
rule.'' Now the agency is seeking an additional $3.9 million in fiscal 
year 2012 to implement this job-killing regulation and increase state 
program oversight. Based on what we have seen thus far, we strongly 
urge you to reject any further funding for this misguided regulation 
and we hope that you will continue to vigorously oversee this agency's 
actions on the stream protection rule.
State Program Oversight
    As part of the MOU on surface coal mining in Appalachia mentioned 
earlier, OSM committed to reevaluate ``how it will more effectively 
conduct oversight of State permitting, State enforcement, and 
regulatory activities under SMCRA,'' and specifically agreed to remove 
what it described as ``impediments to its ability to require correction 
of permit defects in SMCRA primacy states.'' Although OSM is 
inappropriately changing a number of its state program oversight 
policies in response to this MOU, I would like to focus my remarks 
today on the most objectionable aspect of those changes, the so-called 
``ten-day notice'' policy.
    SMCRA Sec. 503, grants a state exclusive jurisdiction over the 
regulation of surface coal mining operations within its borders by 
submitting a state program to the Secretary of the Interior and 
securing the Secretary's approval of that program. Currently all coal 
mining states, except Tennessee and the state of Washington, have 
approved state programs and thus enjoy this exclusive regulatory 
jurisdiction.
    To all, with perhaps the exception of OSM, the statutory language 
and structure is clear--``exclusive'' means just that, it does not mean 
parallel or concurrent jurisdiction with OSM. Thirty years of case law 
establishes the following principles of SMCRA: (1) the law sets out a 
careful and deliberate allocation of authority of mutually exclusive 
regulation by either OSM or the state, but not both; (2) in a state 
with an approved program that authority rests with the state; (3) 
states are the sole issuers of permits in which OSM plays no role; (4) 
OSM does not retain veto authority over state permit decisions; and (5) 
OSM intervention at any stage in a state permitting matter unlawfully 
frustrates the deliberate statutory design and allocation of authority.
    Despite the clear statutory structure, language and court 
decisions, OSM's director issued a memorandum on November 15, 2010, 
unilaterally asserting that the agency now has the authority to 
interfere with, change and, as a practical matter, veto state 
permitting decisions with which it disagrees. In fact, not only has OSM 
asserted that it has such authority, but it has followed through with 
its threats against two of my company's state-issued mining permits.
    In Kentucky, OSM has improperly inserted itself into a state water 
discharge permit controversy between ICG and the Sierra Club. OSM 
issued a Ten Day Notice in response to a citizen's complaint that 
directed the state regulatory agency to conduct water monitoring at our 
mine and to allow the outside parties to participate. This essentially 
provided free and federal agency assisted pre-lawsuit discovery to the 
opponents of our twenty year old mining operation. Moreover, the 
complaint relates to a permit that was not issued under the State SMCRA 
program but the State Clean Water Act program. It is not a matter over 
which OSM has any authority under SMCRA and is another example of 
improper mission creep.
    An ICG subsidiary in northern West Virginia was issued a state 
surface mining permit in October 2010. Local opponents of this project 
chose to not appeal the issuance of this permit to the West Virginia 
Surface Mine Board but rather filed in February 2011 a lengthy 
complaint with OSM alleging ``permit defects'' and asking OSM to 
intervene. OSM dutifully responded by issuing a Ten Day Notice to the 
West Virginia DEP, which in turn replied by stating its objection to 
use of a Ten Day Notice in these circumstances. Not only has OSM 
unlawfully frustrated the deliberate statutory design of mutually 
exclusive state-federal jurisdiction, it has enabled a third party to 
circumvent the exclusive avenue and the specific deadlines for permit 
appeals under the state program. If the permit had been issued by OSM 
in a non-primacy state such as Tennessee, it could not allow such a 
back-door attempt to belatedly appeal that decision. Here OSM's actions 
are doubly-wrong by facilitating this unlawful attempt to collaterally 
challenge a state permit in a primacy state.
    Permit delays and regulatory uncertainty are thwarting capital 
investment that will create and sustain the high-wage jobs needed and 
valued in our coal communities. At a time when our nation is recovering 
from a deep recession and requires low-cost and reliable fuel to remain 
globally competitive, agency policies are crushing these job-creating 
enterprises that will be the engine for our economic growth and 
prosperity.
    The agency's fiscal year 2012 budget requests an additional 
increase of $3.9 million for activities related to additional state 
program oversight and for the stream protection rulemaking. At the same 
time, OSM is proposing to slash by $11 million State title V grants, 
used by States to run their SMCRA regulatory programs,. We strongly 
urge this Committee and others in the Congress to stop funding the 
agency's controversial ten day notice policy and stream protection 
rule, and restore the necessary funding for the States to properly 
implement their SMCRA regulatory programs as intended by Congress..
    Thank you. I would be happy to answer any questions from members of 
the Committee.
                                 ______
                                 
    Mr. Johnson [presiding]. Thank you, Mr. Kitt. Ms. Pineda?

STATEMENT OF LORETTA PINEDA, DIRECTOR, DIVISION OF RECLAMATION, 
  MINING AND SAFETY, COLORADO DEPARTMENT OF NATURAL RESOURCES

    Ms. Pineda. Thank you. My name is Loretta Pineda. I am the 
Director of the Division of Reclamation Mining and Safety 
within the Colorado Department of Natural Resources. I am 
appearing today on behalf of the National Association of 
Abandoned Mine Land Programs and the Interstate Mining Compact 
Commission. The National Association of AML Programs represents 
30 states and tribes with Federally approved abandoned mine 
land programs authorized under the Surface Mining Control and 
Reclamation Act.
    The Interstate Mining Compact Commission represents some 24 
states, many of whom implement programs regulating the active 
mining industry under SMCRA. Based on SMCRA fee collections, 
the Fiscal Year 2012 mandatory appropriation for state and 
tribal AML grants should be $498 million. Instead, OSM has only 
budgeted $313.8 million, a reduction of $184.2 million. This 
would eliminate funding to those states and tribes that have 
certified completion of their highest-priority coal reclamation 
sites.
    From the beginning of SMCRA in 1977 to the latest amendment 
in 2006, Congress promised that at least half of the money 
generated from the coal fees collected within the boundaries of 
a state or tribe, referred to as state or tribal share, would 
be returned for uses as described in the Act. For certified 
states and tribes, the state and tribal share funds can be used 
for environmental stewardship, cleaning up abandoned coal and 
hard rock mines, sustainable development, infrastructure 
improvements and alternative energy projects, all stimulating 
economic activity, protecting health and safety, creating green 
jobs for local communities and improving the environment.
    Each of these specific goals has been embraced by the 
Administration. Breaking the promise of state and tribal share 
funding will upset 10 years of negotiation that resulted in the 
balance and compromise achieved in the 2006 amendments to 
SMCRA. We therefore respectfully ask the Committee to continue 
funding for certified states and tribes at the statutory 
authorized levels and turn back any efforts to amend SMCRA in 
this regard.
    The proposed budget would also eliminate $6.8 million for 
the Federal AML emergency program. Section 410 of SMCRA was 
unchanged by the 2006 amendments and requires OSM to fund the 
emergency AML program. Additionally, the Act does not allow 
states and tribes to fund an emergency program from their AML 
grants. On the contrary, it requires strict compliance with 
non-emergency funding priorities. If Congress allows the 
elimination of the emergency program, states and tribes will 
have to set aside large portions of their non-emergency AML 
grant funds to be prepared for future emergencies. This will 
result in funds being diverted from other high-priority 
projects.
    It will also present special challenges for minimum program 
states since they may have to save up multiple years of funding 
in order to address a single emergency thereby delaying work on 
other projects. For these reasons and many others, we urge the 
Committee to restore funding for the AML emergency program in 
Fiscal Year 2012.
    Finally, we oppose OSM's proposal to drastically reform the 
distribution process for AML funds to non-certified states 
through a competitive grant program. This proposal will 
completely undermine the balance of interests and objectives 
achieved by the 2006 amendments. Among other things, the 
proposal would cede authority to both emergency and non-
emergency funding decisions to an advisory council. Aside from 
the time delays associated with this approach, it leaves many 
unanswered questions regarding the continued viability of state 
and tribal AML programs where they do not win in the 
competitive process.
    It also upsets the predictability of AML funding for long-
term project planning. We urge the Subcommittee to reject this 
unjustified proposal, delete it from the budget and restore the 
full mandatory funding amount of $498 million. Resolutions to 
this effect adopted by both the National Association of AML 
Programs and the Interstate Mining Compact Commission are 
attached to my testimony as well as a comprehensive list of 
questions regarding the legislative proposal. I respectfully 
request that they be included as part of the record of this 
hearing.
    To the extent that the Subcommittee does desire to pursue 
changes to SMCRA to improve or clarify operation of the AML 
program, the states and tribes would recommend looking at three 
areas. First, is the use of the unappropriated state and tribal 
share balances to address non-coal AML and acid mine drainage 
projects; second, the limited liability protection at Section 
405[l] of SMCRA; and third, an amendment to the Section 413[d] 
regarding liability under the Clean Water Act for acid mine 
drainage projects.
    We would welcome the opportunity to work with the 
Subcommittee on these initiatives, including H.R. 785 recently 
introduced by Representative Pearce of New Mexico. Thank you 
for the opportunity to present our views this morning, and I am 
happy to answer any questions you may have.
    [The prepared statement of Ms. Pineda follows:]

Statement of Loretta Pineda, Director, Division of Reclamation, Mining 
 and Safety, Colorado Department of Natural Resources on Behalf of the 
National Association of Abandoned Mine Land Programs and the Interstate 
                       Mining Compact Commission

    My name is Loretta Pineda and I serve as the Director of the 
Division of Reclamation, Mining and Safety within the Colorado 
Department of Natural Resources. I am appearing today on behalf of the 
National Association of Abandoned Mine Land Programs (NAAMLP) and the 
Interstate Mining Compact Commission (IMCC). The NAAMLP represents 30 
states and tribes with federally approved abandoned mine land 
reclamation (AML) programs authorized under Title IV of the Surface 
Mining Control and Reclamation Act (SMCRA). IMCC represents 24 states 
that are responsible for operating both Title IV AML programs, as well 
as regulatory programs under Title V for active mining operations. My 
testimony today will focus primarily on the Title IV program under 
SMCRA.
    Title IV of SMCRA was amended in 2006 and significantly changed how 
state AML grants are funded. State AML Grants are still based on 
receipts from a fee on coal production, but beginning in FY 2008, the 
grants are funded primarily by mandatory appropriations. As a result, 
the states should receive $498 million in FY 2012. We adamantly oppose 
the Office of Surface Mining Reclamation and Enforcement's (OSM) 
proposed budget amount of $313.8 million for State AML grants, a 
reduction of $184.2 million, and reject the notion that a competitive 
grant process would improve AML program efficiency. The proposed 
spending cuts would eliminate funding to states and tribes that have 
``certified'' completion of their highest priority coal reclamation 
sites. OSM has also proposed a $6.8 million reduction in discretionary 
spending that would eliminate the federal emergency program under 
Section 410 of SMCRA. I appreciate the opportunity to testify before 
the Subcommittee and outline some of the reasons why NAAMLP and IMCC 
oppose OSM's proposed FY 2012 budget.
    SMCRA was passed in 1977 and set national regulatory and 
reclamation standards for coal mining. The Act also established a 
Reclamation Fund to work towards eliminating the innumerable health, 
safety and environmental problems that exist throughout the Nation from 
the mines that were abandoned prior to the Act. The Fund generates 
revenue through a fee on current coal production. This fee is collected 
by OSM and distributed to states and tribes that have federally 
approved regulatory and AML programs. The promise Congress made in 
1977, and with every subsequent amendment to the Act, was that, at a 
minimum, half the money generated from fees collected by OSM on coal 
mined within the boundaries of a state or tribe, referred to as ``State 
Share'', would be returned for uses described in Title IV of the Act if 
the state or tribe assumed responsibility for regulating active coal 
mining operations pursuant to Title V of SMCRA. The 2006 Amendments 
clarified the scope of what the State Share funds could be used for and 
reaffirmed the promise made by Congress in 1977.
    If a state or tribe was successful in completing reclamation of 
abandoned coal mines and was able to ``certify'' under Section 411 of 
SMCRA, then the State Share funds could be used to address a myriad of 
other abandoned mine issues as defined under each state or tribes 
approved Abandoned Mine Reclamation Plan. These Abandoned Mine 
Reclamation Plans are approved by the Office of Surface Mining and they 
ensure that the work is in accordance with the intent of SMCRA. Like 
all abandoned mine reclamation, the work of certified states and tribes 
eliminates health and safety problems, cleans up the environment, and 
creates jobs in rural areas impacted by mining.
    This reduction proposed by OSM in certified state and tribal AML 
grants not only breaks the promise of State and Tribal Share funding, 
but upsets the balance and compromise that was achieved in the 
comprehensive restructuring of SMCRA accomplished in the 2006 
Amendments following more than ten years of discussion and negotiation 
by all affected parties. The funding reduction is inconsistent with the 
Administration's stated goals regarding jobs and environmental 
protection. We therefore respectively ask the Subcommittee to support 
continued funding for certified states and tribes at the statutory 
authorized levels, and turn back any efforts to amend SMCRA in this 
regard.
    In addition to the $184.2 million reduction, the proposed FY 2012 
budget would terminate the federal AML emergency program, leaving the 
states and tribes to rely on funds received through their non-emergency 
AML grant funds. This contradicts the 2006 amendments, which require 
the states and tribes to maintain ``strict compliance'' with the non-
emergency funding priorities described in Section 403(a), while leaving 
Section 410, Emergency Powers, unchanged. Section 410 of SMCRA requires 
OSM to fund the emergency AML program using OSM's ``discretionary 
share'' under Section (402)(g)(3)(B), which is entirely separate from 
state and tribal non-emergency AML grant funding under Sections 
(402)(g)(1), (g)(2), and (g)(5). SMCRA does not allow states and tribes 
to administer or fund an AML emergency program from their non-emergency 
AML grants, although, since 1989, fifteen states have agreed to 
implement the emergency program on behalf of OSM contingent upon OSM 
providing full funding for the work. As a result, OSM has been able to 
fulfill their mandated obligation more cost effectively and 
efficiently. Ten states and 3 tribes continue to rely solely on OSM to 
operate the emergency program within their jurisdiction.
    Regardless of whether a state/tribe or OSM operates the emergency 
program, only OSM has the authority to ``declare'' the emergency and 
clear the way for the expedited procedures to be implemented. In FY 
2010, OSM made 153 emergency declarations in Kentucky and Pennsylvania 
alone, states where OSM had operated the emergency program. In FY 2011, 
OSM issued guidance to the states that the agency ``will no longer 
declare emergencies.'' OSM provided no legal or statutory support for 
its position. Instead, OSM has ``transitioned'' responsibility for 
emergencies to the states and tribes with the expectation that they 
will utilize non-emergency AML funding to address them. OSM will simply 
``assist the states and tribes with the projects, as needed''. Of 
course, given that OSM has proposed to eliminate all funding for 
certified states and tribes, it begs the question of how and to what 
extent OSM will continue to assist these states and tribes.
    If Congress allows the elimination of the emergency program, states 
and tribes will have to adjust to their new role by setting aside a 
large portion of their non-emergency AML funds so that they can be 
prepared for any emergency that may arise. Emergency projects come in 
all shapes and sizes, vary in number from year to year and range in 
cost from thousands of dollars to millions of dollars. Requiring states 
and tribes to fund emergencies will result in funds being diverted from 
other high priority projects and delay certification under Section 411, 
thereby increasing the backlog of projects on the Abandoned Mine Land 
Inventory System (AMLIS). For minimum program states and states with 
small AML programs, large emergency projects will require the states to 
redirect all or most of their AML resources to address the emergency, 
thereby delaying other high-priority reclamation. With the loss of 
stable emergency program funding, minimum program states will have a 
difficult, if not impossible, time planning, budgeting, and prosecuting 
the abatement of their high priority AML problems. In a worst-case 
scenario, a minimum program state would not be able to address a costly 
emergency in a timely fashion, and would have to ``save up'' multiple 
years of funding before even initiating the work to abate the 
emergency, in the meantime ignoring all other high priority work.
    OSM's proposed budget suggests addressing emergencies, and all 
other projects, as part of a competitive grant process whereby states 
and tribes compete for funding based on the findings of the proposed 
AML Advisory Council. OSM believes that a competitive grant process 
would concentrate funds on the highest priority projects. While a 
competitive grant process may seem to make sense at first blush, 
further reflection reveals that the entire premise is faulty and can 
only undermine and upend the deliberate funding mechanism established 
by Congress in the 2006 Amendments. Since the inception of SMCRA, high 
priority problems have always taken precedence over other projects. The 
focus on high priorities was further clarified in the 2006 Amendments 
by removing the lower priority problems from the Act and requiring 
``strict compliance'' with high priority funding requirements. OSM 
already approves projects as meeting the definition of high priority 
under its current review process and therefore an AML Advisory Council 
would only add redundancy and bureaucracy instead of improving 
efficiency.
    We have not been privy to the particulars of OSM's legislative 
proposal, but there are a myriad of potential problems and implications 
for the entire AML program based on a cursory understanding of what OSM 
has in mind. They include the following:
          Has anyone alleged or confirmed that the states/
        tribes are NOT already addressing the highest priority sites? 
        Where have the 2006 Amendments faltered in terms of high 
        priority sites being addressed as envisioned by Congress? What 
        would remain unchanged in the 2006 Amendments under OSM's 
        proposal?
          If the current AML funding formula is scrapped, what 
        amount will be paid out to the non-certified AML states and 
        tribes over the remainder of the program? What does OSM mean by 
        the term ``remaining funds'' in its proposal? Is it only the 
        AML fees yet to be collected? What happens to the historic 
        share balances in the Fund, including those that were supposed 
        to be re-directed to the Fund based on an equivalent amount of 
        funding being paid to certified states and tribes each year? 
        Would the ``remaining funds'' include the unappropriated/prior 
        balance amounts that have not yet been paid out over the seven-
        year installment period?
          Will this new competitive grant process introduce an 
        additional level of bureaucracy and result in more funds being 
        spent formulating proposals and less on actual AML reclamation? 
        The present funding formula allows states and tribes to 
        undertake long-term strategic planning and efficiently use 
        available funds.
          How long will OSM fund a state's/tribe's 
        administrative costs if it does not successfully compete for a 
        construction grant, even though the state/tribe has eligible 
        high priority projects? How will OSM calculate administrative 
        grant funding levels, especially since salaries and benefits 
        for AML project managers and inspectors predominantly derive 
        from construction funds? Would funding cover current staffing 
        levels? If not, how will OSM determine the funding criteria for 
        administrative program grants?
          How does OSM expect the states and tribes to handle 
        emergency projects under the legislative proposal? Must these 
        projects undergo review by the Advisory Council? Will there be 
        special, expedited procedures? If a state/tribe has to cut back 
        on staff, how does it manage emergencies when they arise? If 
        emergency programs do compete for AML funds, considerable time 
        and effort could be spent preparing these projects for review 
        by the Advisory Council rather than abating the immediate 
        hazard. Again, how can we be assured that emergencies will be 
        addressed expeditiously?
          One of the greatest benefits of reauthorization under 
        the 2006 Amendments to SMCRA was the predictability of funding 
        levels through the end of the AML program. Because state and 
        tribes were provided with hypothetical funding levels from OSM 
        (which to date have proven to be quite accurate), long-term 
        project planning, along with the establishment of appropriate 
        staffing levels and project assignments, could be made 
        accurately and efficiently. How can states/tribes plan for 
        future projects given the inherent uncertainty associated with 
        having to annually bid for AML funds?
    Given these uncertainties and the negative implications for the 
accomplishment of AML work under Title IV of SMCRA, Congress should 
reject the proposed amendments to SMCRA as being counterproductive to 
the purposes of SMCRA and an inefficient use of funds. We request that 
Congress continue mandatory funding for certified states and tribes and 
provide funding for AML emergencies. Resolutions to this effect adopted 
by both NAAMLP and IMCC are attached, as is a more comprehensive list 
of questions concerning the legislative proposal. We ask that they be 
included in the record of the hearing.
    One of the more effective mechanisms for accomplishing AML 
restoration work is through leveraging or matching other grant 
programs, such as EPA's 319 program. Until FY 2009, language was always 
included in OSM's appropriation that encouraged the use of these types 
of matching funds, particularly for the purpose of environmental 
restoration related to treatment or abatement of acid mind drainage 
(AMD) from abandoned mines. This is an ongoing, and often expensive, 
problem, especially in Appalachia. NAAMLP and IMCC therefore request 
the Subcommittee to support the inclusion of language in the FY 2012 
appropriations bill that would allow the use of AML funds for any 
required non-Federal cost-share required by the Federal government for 
AMD treatment or abatement.
    We also urge the Subcommittee to support funding for OSM's training 
program and TIPS, including moneys for state/tribal travel. These 
programs are central to the effective implementation of state and 
tribal AML programs as they provide necessary training and continuing 
education for state/tribal agency personnel, as well as critical 
technical assistance. Finally, we support funding for the Watershed 
Cooperative Agreements in the amount of $1.55 million because it 
facilitates and enhances state and local partnerships by providing 
direct financial assistance to watershed organizations for acid mine 
drainage remediation.
    To the extent that the Subcommittee desires to pursue changes to 
SMCRA to improve or clarify the operation of the AML program, the 
states and tribes would recommend looking at three areas: 1) the use of 
unappropriated state and tribal share balances to address noncoal AML 
and acid mine drainage (AMD) projects; 2) the limited liability 
protections for noncoal AML work at section 405(l) of SMCRA; and 3) an 
amendment to Section 413(d) regarding liability under the Clean Water 
Act for acid mine drainage projects.
    The reauthorization of the AML program in 2006 by Congress did not 
in any way change the provisions that allow AML funds to be used to 
ameliorate either coal or non-coal mine public health and safety 
hazards. However, OSM adopted final rules implementing the 2006 
Amendments (November 14, 2008 at 73 Fed. Reg. 67576), based on a 
Departmental Solicitor's Opinion (M-37104), that would prohibit some of 
this funding from being used to address many of the most serious non-
coal AML problems. As a result, NAAMLP and IMCC strongly support H.R. 
765, a bill recently introduced by Rep. Pearce of New Mexico that makes 
minor changes to SMCRA to correct the misinterpretation by the U.S. 
Department of the Interior. H.R. 765 will return states and tribes to 
their longstanding role under SMCRA of directing abandoned mine grant 
funds to the highest priority needs at either coal or non-coal 
abandoned mines.
    NAAMLP and IMCC have worked closely with the Western Governors 
Association in providing information to quantify the non-coal AML 
cleanup effort. While the data is seldom comparable between states due 
to the wide variation in inventory criteria, they do demonstrate that 
there are large numbers of significant safety and environmental 
problems associated with inactive and abandoned non-coal mines, and 
that remediation costs are very large. Some of the types of numbers 
that have been reported by NAAMLP and IMCC in response to information 
we have collected for the General Accountability Office (GAO) and 
others include the following: Number of abandoned mine sites: Alaska--
1,300; Arizona--80,000; California--47,000; Colorado--7,300; Montana--
6,000; Nevada--16,000; Utah--17,000--20,000; Washington--3,800; 
Wyoming--1,700. Nevada reports over 200,000 mine openings and Minnesota 
reports over 100,000 acres of abandoned mine lands.
    States and Tribes are very familiar with the highest priority non-
coal problems within their borders and also have limited reclamation 
dollars to protect public health and safety or protect the environment 
from significant harm. States and tribes work closely with various 
federal agencies, including the Environmental Protection Agency, the 
Bureau of Land Management, the U.S. Forest Service, and the U.S. Army 
Corps of Engineers, all of whom have provided some funding for non-coal 
mine remediation projects. For states with coal mining, the most 
consistent source of AML funding has been the Title IV grants received 
under SMCRA. Section 409 of SMCRA allows states to use these grants at 
high priority non-coal AML sites. The funding is generally limited to 
safeguarding hazards to public safety (e.g., closing mine openings) at 
non-coal sites.
    The urgency of advancing this legislation has been heightened, Mr. 
Chairman, by statements in OSM's proposed budget for Fiscal Year 2012. 
Therein, OSM is proposing to further restrict the ability of states to 
expend AML funds on noncoal reclamation projects. This will apparently 
occur as part of a legislative proposal that the Administration intends 
to aggressively pursue in the 111th Congress. While the primary focus 
of that proposal will be the elimination of future AML funding for 
states and tribes that are certified under Title IV of SMCRA (which we 
adamantly oppose), OSM's proposal will also substantially restructure 
the method by which AML funds are distributed to the states in an 
effort to ``direct the available reclamation funds to the highest 
priority coal AML sites across the Nation.''
    H.R. 765 would also address a similar restriction on the use of the 
unappropriated state and tribal share balances for the Acid Mine 
Drainage (AMD) set-aside program under SMCRA. Congress expanded this 
program in the 2006 Amendments to allow states and tribes to set-aside 
up to 30% of their grants funds for treating AMD now and into the 
future. AMD has ravaged many streams throughout the country, but 
especially in Appalachia. The states need the ability to set aside as 
much funding as possible to deal with these problems over the long 
term. Again, OSM has acted arbitrarily in their interpretation of the 
reauthorizing language by limiting the types of funds the state may use 
for the set-aside program. H.R. 765 includes language that would 
correct this misinterpretation and allow the states to apply the 30% 
set-aside to their prior balance replacement funds.
    In summary:
          Since the inception of SMCRA in 1977 and the approval 
        of state/tribal AML programs in the early 1980's, the states 
        and tribes have been allowed to use their state share 
        distributions under section 402(g)(1) of the AML Trust Fund for 
        high priority noncoal reclamation projects pursuant to section 
        409 of SMCRA and for the set-aside program for acid mine 
        drainage (AMD) projects.
          In its rules implementing the 2006 Amendments, OSM 
        has stated that these moneys cannot be used for noncoal 
        reclamation or for the 30% AMD set-aside.
          Pursuant to Section 411(h)(1) of the 2006 Amendments, 
        the states and tribes assert that these moneys should also be 
        available for noncoal reclamation under section 409 and for the 
        30% AMD set-aside. There is nothing in the new law that would 
        preclude this interpretation. Policy and practice over the past 
        30 years confirm it.
    Our second suggested amendment is needed to clarify a further 
misinterpretation of SMCRA contained in OSM's final rules of November 
14, 2008. Section 405(l) of SMCRA provides that, except for acts of 
gross negligence or intentional misconduct, ``no state (or tribe) shall 
be liable under any provisions of Federal law for any costs or damages 
as a result of action taken or omitted in the course of carrying out a 
state abandoned mine reclamation plan approved under this section.'' In 
its rules, OSM concluded that because of the language of SMCRA, 
including the generally unrestricted nature of the Title IV funds 
provided to certified states and tribes in Sections 411(h)(1) and (2), 
certified states and tribes can no longer conduct noncoal reclamation 
or other projects under Title IV of SMCRA (73 Fed. Reg. 67613). Thus, 
to the extent that certified states and tribes choose to conduct 
noncoal reclamation, OSM asserts that they do so outside of SMCRA and 
OSM's regulations, including the limited liability provisions of 
Section 405(l) of the Act.
    This strained reading of the 2006 Amendments is having severe 
consequences for certified states and tribes conducting AML work 
pursuant to their otherwise-approved state programs. Without this 
limited liability protection, these states and tribes potentially 
subject themselves to liability under the Clean Water Act and CERCLA 
for their AML reclamation work. Nothing in the 2006 Amendments 
suggested that there was a desire or intent to remove these liability 
protections, and without them in place, certified states and tribes 
will need to potentially reconsider at least some of their more 
critical AML projects. We therefore recommend that the Subcommittee 
consider an amendment to SMCRA that would clarify that the 2006 
Amendments were not intended to affect the applicability of section 
405(l) to AML projects undertaken by certified states and tribes. We 
would welcome an opportunity to work with you to craft appropriate 
legislative language to accomplish this.
    Finally, we recommend an adjustment to Section 413(d) of SMCRA to 
clarify that acid mine drainage projects which are eligible for AML 
funding under Section 404 of the Act, including systems for the control 
or treatment of AMD, are not subject to the water quality provisions of 
the Federal Water Pollution Control Act. This amendment is necessary to 
address a November 8, 2010 decision by the U.S. Court of Appeals for 
the Fourth Circuit, which decreed that the Clean Water Act's NPDES 
permitting requirements apply to anyone who discharges pollutants into 
the waters of the United States, regardless of whether that entity is 
private or public in nature. More specifically, the court noted that 
``the statute contains no exceptions for state agencies engaging in 
reclamation efforts; to the contrary, it explicitly includes them 
within its scope.''
    The result of this far-reaching decision by the Fourth Circuit will 
be to require some, if not all, state AML reclamation projects to 
obtain NPDES permits before work can commence. This will be 
particularly problematic for acid mine drainage control and treatment 
projects where water quality is already significantly degraded and is 
unlikely to ever meet effluent limitation guidelines under the Clean 
Water Act. Essentially, efforts by state agencies, and the watershed 
groups who work cooperatively with the states, will be stymied. In some 
cases, existing water treatment systems could be turned off and 
abandoned to the inability to obtain NPDES permits. We do not believe 
that this result was intended by either Congress or the courts, and 
thus believe that an immediate legislative clarification should be 
pursued. Again, we would welcome the opportunity to work with this 
Subcommittee to craft appropriate legislative solutions to address this 
conflict of laws situation.
    Over the past 30 years, tens of thousands of acres of abandoned 
mine lands have been reclaimed, thousands of mine openings have been 
closed, and safeguards for people, property and the environment have 
been put in place. Be assured that states and tribes are determined to 
address the unabated hazards at both coal and non-coal abandoned mines. 
We are all united to play an important role in achieving the goals and 
objectives as set forth by Congress when SMCRA was first enacted--
including protecting public health and safety, enhancing the 
environment, providing employment, and adding to the economies of 
communities impacted by past coal and noncoal mining. Passage of these 
suggested amendments will further these congressional goals and 
objectives.
    Thank you for the opportunity to testify today. I would be happy to 
answer any questions you may have.
                                 ______
                                 

                               Resolution

                  Interstate Mining Compact Commission

BE IT KNOWN THAT:
    WHEREAS, Title IV of the Surface Mining Control and Reclamation Act 
of 1977 (SMCRA) established the Abandoned Mine Land (AML) reclamation 
program; and
    WHEREAS, the Interstate Mining Compact Commission (IMCC) is a 
multi-state organization representing the natural resource and 
environmental protection interests of its 24 member states, including 
the elimination of health and safety hazards and the reclamation of 
land and water resources adversely affected by past mining and left in 
an abandoned or inadequately restored condition; and
    WHEREAS, pursuant to the cooperative federalism approach contained 
in SMCRA, several IMCC member states administer AML programs approved, 
funded and overseen by the Office of Surface Mining Reclamation and 
Enforcement (OSM) within the U.S. Department of the Interior; and
    WHEREAS, SMCRA, Title IV establishes a reclamation fee on each ton 
of coal mined in the United States to pay for abandoned mine land 
reclamation; and
    WHEREAS, SMCRA, Title IV mandates that fifty percent (50%) of the 
reclamation fees collected annually are designated as state share funds 
to be returned to the states from which coal was mined to pay for 
reclamation projects pursuant to programs administered by the states; 
and
    WHEREAS, SMCRA, Title IV also mandates that a minimum level of 
funding should be provided to ensure effective state program 
implementation; and
    WHEREAS, Congress enacted amendments to SMCRA in 2006 to address, 
among other things, continued collection of AML fees and funding for 
state programs to address existing and future AML reclamation; and
    WHEREAS, the 2006 Amendments established new, strict criteria that 
ensure states expend funds on high priority AML sites; and
    WHEREAS, the proposed 2012 budget for the Office of Surface Mining 
Reclamation and Enforcement within the U.S. Department of the Interior 
would disregard the state-federal partnership established under SMCRA 
and renege on the funding formula under the 2006 Amendments by, among 
other things, eliminating mandatory funding for states who have 
certified the completion of their coal reclamation work and adjusting 
the mechanism by which non-certified states receive their mandatory 
funding through a competitive bidding process; and
    WHEREAS, if statutory changes are approved by Congress as suggested 
by the proposed FY 2012 budget for OSM, reclamation of abandoned mine 
lands within certified states would halt; reclamation of abandoned mine 
lands in all states would be jeopardized; employment of contractors, 
suppliers, technicians and others currently engaged in the reclamation 
of abandoned mine lands would be endangered; the cleanup of polluted 
lands and waters across the United States would be threatened by 
failing to fund reclamation of abandoned mine lands; minimum program 
state funding would be usurped; the AML water supply replacement 
program would be terminated, leaving coalfield citizens without potable 
water; and the intent of Congress as contained in the 2006 Amendments 
to SMCRA would be undermined
NOW THEREFORE BE IT RESOLVED:
    That the Interstate Mining Compact Commission opposes the 
legislative proposal terminating funding for certified states and 
altering the receipt of mandatory AML funding for non-certified states 
contained in the FY 2012 budget proposal for the Office of Surface 
Mining Reclamation and Enforcement and instead supports the AML funding 
mechanism contained in current law.
Issued this 10th day of March, 2011
ATTEST:
Gregory E. Conrad
Executive Director
                                 ______
                                 

                                 NAAMLP

        National Association of Abandoned Mine Land Programs \1\
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    \1\ ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CROW HOPI 
ILLINOIS INDIANA IOWA KANSAS KENTUCKY LOUISIANA MARYLAND MISSISSIPPI 
MISSOURI MONTANA NAVAJO NEVADA NEW MEXICO NORTH DAKOTA OHIO OKLAHOMA 
PENNSYLVANIA TENNESSEE TEXAS UTAH VIRGINIA WEST VIRGINIA WYOMING
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                               RESOLUTION

                                   OF

        THE NATIONAL ASSOCIATION OF ABANDONED MINE LAND PROGRAMS

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

ISSUED THIS 22nd DAY OF FEBRUARY, 2011

ATTEST:

Michael P. Garner
PRESIDENT, NAAMLP
                                 ______
                                 
    Mr. Johnson. Thank you, Ms. Pineda. Mr. Lambert, Mr. 
Lovett, regrettably, the lights are on. We have to run vote, so 
at this time, the Committee stands in recess until votes are 
over. That is approximately 25 minutes from now. Thank you for 
your patience.
    [Recess.]
    Mr. Lamborn [presiding]. OK. The Subcommittee will come 
back to order. Thank you for your patience. We did finish the 
votes, and we should be in good shape for the rest of the time, 
and I think we are now to Mr. Lambert, and I look forward to 
hearing your testimony.

  STATEMENT OF BRADLEY C. LAMBERT, DEPUTY DIRECTOR, VIRGINIA 
             DEPARTMENT OF MINES, MINERALS & ENERGY

    Mr. Lambert. Thank you. My name is Butch Lambert, and I am 
the Deputy Director of the Virginia Department of Mines, 
Minerals and Energy, and I am appearing today on behalf of the 
Interstate Mining Compact Commission to present views of the 
Compact's member states concerning the Fiscal Year 2012 budget 
request for the Office of Surface Mining. In its proposed 
budget, OSM is requesting $60.3 million to fund Title V grants 
to states and Indian tribes with the implementation of the 
regulatory programs, a reduction of $11 million or 15 percent 
below the Fiscal Year 2010 enacted and the Fiscal Year 2011 CR 
levels.
    In Fiscal Year 2010, Congress approved an additional $5.8 
million increase for states Title V grants over the Fiscal Year 
2009 enacted levels for a total of $71.3 million. For the first 
time in many years, the amount appropriated for these 
regulatory grants aligned with the demonstrated needs for the 
states and thereby eliminating the ever-widening gap between 
the states' requests and what they received. In the Fiscal Year 
2012 budget, OSM has once again reversed the course and 
essentially unraveled and undermined the progress made by 
Congress in supporting state programs.
    This comes precisely at the wrong time. There are states 
that are still in the process of putting the recent 
improvements funding to work in their programs through the 
filling of vacant positions and the purchase of much-needed 
equipment. We trust that the recent increase approved by 
Congress will remain the new base of which we build our 
programs into the future. In this regard, it should be kept in 
mind that a 15-percent cut in Federal funding translates to an 
additional 15-percent cut for overall program funding for many 
states since these states can only match what they receive in 
Federal money.
    For instance, in Virginia should OSM reduction prevail, we 
would be looking at a $1.2 million cut. OSM's solution to this 
drastic cut for state regulatory programs comes in a way of an 
unrealistic assumption that these states can simply increase 
user fees in an effort to eliminate the de facto subsidy to the 
coal industry. OSM's proposal is completely out of touch with 
the realities associated with establishing and enhancing user 
fees. IMCC's recent polling of its member states confirms that 
it would be difficult, if not impossible, for most states to 
accomplish this fete at all let alone in less than one year.
    We strongly urge this Subcommittee to reject this approach, 
mandate that OSM work through the complexities associated with 
the future user-fee proposal in close cooperation with the 
states and approve not less than $71 million for the state and 
tribal Title V regulatory grants for Fiscal Year 2012. If 
Congress seeks to restrain OSM's budget, we suggest that this 
Subcommittee look seriously at the OSM proposal to increase its 
own budget by $4 million and 25 FTE's for Federal oversight of 
state programming. OSM justifies this increase based on its new 
strategic direction, most of which in turn is based upon a June 
2009 MOU between Interior, EPA and the Army Corps of Engineers.
    However, beyond the MOU itself, OSM has never justified or 
explained its rationale for proceeding in this way. In fact, 
OSM's own annual oversight evaluation reports indicate that the 
states are doing a commendable job in implementing their 
programs. In our view, OSM has adequately accomplishing its 
statutory oversight obligations with current Federal program 
funding and any increase in workloads are likely to fall upon 
the states, especially given the potential permitting 
requirements growing out of the OSM's anticipated Stream 
Protection Rule.
    While not alluded to or fully addressed in the OSM budget 
justification document, the states also have serious concerns 
with several aspects of OSM's enhanced oversight initiative, 
especially three recent adopted directives on annual oversight 
procedures, corrective actions and the issuances of 10-day 
notices. IMCC has submitted extensive comments on these 
directives over the past year. I would like to submit a copy of 
those comments for the record here today.
    We are particularly concerned about the potential of 
Federal actions to duplicate and/or second guess state 
permitting decisions. Aside from the impact on limited state 
and Federal resources, these actions undermine the principles 
of primacy that underscore SMCRA and are likely to have 
debilitating impacts on the state-Federal relationship 
envisioned by the Act. As Federal courts have made it clear, 
SMCRA's allocation of jurisdiction was careful and deliberate 
and that Congress provided for mutually exclusive regulation 
either by the Secretary or the states, but not by both.
    Thank you for the opportunity to appear before this 
Subcommittee today, and I will be happy to answer any questions 
you may have.
    [The prepared statement of Mr. Lambert follows:]

 Statement of Bradley C. Lambert, Deputy Director, Virginia Department 
   of Mines, Minerals and Energy on Behalf of the Interstate Mining 
                           Compact Commission

    My name is Bradley C. Lambert and I serve as Deputy Director of the 
Virginia Department of Mines, Minerals and Energy. I am appearing today 
on behalf of the Interstate Mining Compact Commission (IMCC). I 
appreciate the opportunity to present this statement to the 
Subcommittee regarding the views of the Compact's 24 member states on 
the Fiscal Year (FY) 2012 Budget Request for the Office of Surface 
Mining Reclamation and Enforcement (OSM) within the U.S. Department of 
the Interior. In its proposed budget, OSM is requesting $60.3 million 
to fund Title V grants to states and Indian tribes for the 
implementation of their regulatory programs, a reduction of $11 million 
or 15% below the FY 2010 enacted/FY 2011 CR level. OSM also proposes to 
cut discretionary spending for the Title IV abandoned mine land (AML) 
program by approximately $6.8 million, including the elimination of 
funding for the emergency program, and a reduction in mandatory AML 
spending by $184 million pursuant to a legislative proposal to 
eliminate all AML funding for certified states and tribes.
    The Compact is comprised of 24 states that together produce some 
95% of the Nation's coal, as well as important noncoal minerals. The 
Compact's purposes are to advance the protection and restoration of 
land, water and other resources affected by mining through the 
encouragement of programs in each of the party states that will achieve 
comparable results in protecting, conserving and improving the 
usefulness of natural resources and to assist in achieving and 
maintaining an efficient, productive and economically viable mining 
industry.
    OSM has projected an amount of $60.3 million for Title V grants to 
states and tribes in FY 2012, an amount which is matched by the states 
each year. These grants support the implementation of state and tribal 
regulatory programs under the Surface Mining Control and Reclamation 
Act (SMCRA) and as such are essential to the full and effective 
operation of those programs.
    In Fiscal Year 2010, Congress approved an additional $5.8 million 
increase for state Title V grants over the FY 2009 enacted level, for a 
total of $71.3 million. This same amount was approved for FY 2011. For 
the first time in many years, the amount appropriated for these 
regulatory grants aligned with the demonstrated needs of the states and 
tribes. The states are greatly encouraged by the significant increases 
in Title V funding approved by Congress over the past three fiscal 
years. Even with mandated rescissions and the allocations for tribal 
primacy programs, the states saw a $12 million increase for our 
regulatory programs over FY 2007 levels. As we noted in our statement 
on last year's budget, state Title V grants had been stagnant for over 
12 years and the gap between the states' requests and what they 
received was widening. This debilitating trend was compounding the 
problems caused by inflation and uncontrollable costs, thus undermining 
our efforts to realize needed program improvements and enhancements and 
jeopardizing our efforts to minimize the potential adverse impacts of 
coal extraction operations on people and the environment.
    In its FY 2012 budget, OSM has once again attempted to reverse 
course and essentially unravel and undermine the progress made by 
Congress in supporting state programs with adequate funding. This comes 
at precisely the wrong time. The states are still in the process of 
putting the recent improvements in funding to work in their programs 
through the filling of vacant positions and the purchase of much needed 
equipment. As states prepare their future budgets, we trust that the 
recent increases approved by Congress will remain the new base on which 
we build our programs. Otherwise, we find ourselves backpedaling and 
creating a situation where those who were just hired face layoffs and 
purchases are canceled or delayed. Furthermore, a clear message from 
Congress that reliable, consistent funding will continue into the 
future will do much to stimulate support for these programs by state 
legislatures and budget officers who each year, in the face of 
difficult fiscal climates and constraints, are also dealing with the 
challenge of matching federal grant dollars with state funds. In this 
regard, it should be kept in mind that a 15% cut in federal funding 
generally translates to an additional 15% cut for overall program 
funding for many states, especially those without federal lands, since 
these states can only match what they receive in federal money.
    OSM's solution to the drastic cuts for state regulatory programs 
comes in the way of an unrealistic assumption that the states can 
simply increase user fees in an effort to ``eliminate a de facto 
subsidy of the coal industry.'' No specifics on how the states are to 
accomplish this far-reaching proposal are set forth, other than an 
expectation that they will do so in the course of a single fiscal year. 
OSM's proposal is completely out of touch with the realities associated 
with establishing or enhancing user fees, especially given the need for 
approvals by state legislatures. IMCC's recent polling of its member 
states confirmed that, given the current fiscal and political 
implications of such an initiative, it will be difficult, if not 
impossible, for most states to accomplish this feat at all, let alone 
in less than one year. OSM is well aware of this, and yet has every 
intention of aggressively moving forward with a proposal that was 
poorly conceived from its inception. We strongly urge the Subcommittee 
to reject this approach and mandate that OSM work through the 
complexities associated with any future user fees proposal in close 
cooperation with the states and tribes before proposing cuts to federal 
funding for state Title V grants.
    At the same time that OSM is proposing significant cuts for state 
programs, the agency is proposing sizeable increases for its own 
program operations ($4 million) for federal oversight of state 
programs, including an increase of 25 FTEs. OSM justifies this increase 
based on its ``new strategic direction,'' i.e. expanded and enhanced 
oversight of state regulatory programs and strengthened stream 
protections to maintain the hydrologic balance of watersheds pursuant 
to the June 2009 Memorandum of Understanding with the U.S. Army Corps 
of Engineers and the U.S. Environmental Protection Agency. However, as 
we have articulated on numerous occasions over the past 18 months in 
comments submitted to the agency, OSM has never fully explained or 
justified the basis for these new directions. In fact, OSM's annual 
oversight reports indicate that, in general, the states are doing a 
commendable job of implementing their programs.
    In making the case for its funding increase, OSM's budget 
justification document contains vague references to the need for 
improvement in approximate original contour (AOC) compliance and 
reevaluation of bonding procedures in 10 states with respect to bond 
adequacy. OSM also notes a marked increase in the number of potential 
violations pursuant to enhanced federal oversight inspections during FY 
2010. However, when placed in context, neither of these two 
explanations justifies the significant increase in funding for federal 
operations. Increasing the number of federal inspections can logically 
be expected to generate more Ten-Day Notices, especially where state 
regulatory authorities are not invited to accompany federal inspectors 
(as required by OSM's own regulations). The oversight process can also 
be expected to identify areas of potential program improvement, 
especially where OSM has designated certain areas for more intensive, 
nationwide review, as it did in FY 2010 with regard to AOC and bond 
adequacy. Again, the overall performance of the states as detailed in 
OSM's annual oversight reports demonstrates that the states are 
implementing their programs effectively and in accordance with the 
purposes and objectives of SMCRA.\1\
---------------------------------------------------------------------------
    \1\ While not alluded to or fully addressed in OSM's budget 
justification document, there are myriad statutory, policy and legal 
issues associated with several aspects of the agency's enhanced 
oversight initiative, especially three recently adopted directives on 
annual oversight procedures (REG-8), corrective actions (REG-23) and 
Ten-Day Notices (INE-35). IMCC submitted extensive comments regarding 
the issues associated with these directives and related oversight 
actions (including federal inspections) on January 19, 2010, July 8, 
2010 and January 7, 2011.
---------------------------------------------------------------------------
    In our view, this suggests that OSM is adequately accomplishing its 
statutory oversight obligations with current federal program funding 
and that any increased workloads are likely to fall upon the states, 
which have primary responsibility for implementing appropriate 
adjustments to their programs identified during federal oversight. In 
this regard, we note that the federal courts have made it abundantly 
clear that SMCRA's allocation of exclusive jurisdiction was ``careful 
and deliberate'' and that Congress provided for ``mutually exclusive 
regulation by either the Secretary or state, but not both.'' Bragg v. 
West Virginia Coal Ass'n, 248 F. 3d 275, 293-4 (4th Cir. 2001), cert. 
Denied, 534 U.S. 1113 (2002). While the courts have ruled consistently 
on this matter, the question remains for Congress and the 
Administration to determine, in light of deficit reduction and spending 
cuts, how the limited amount of federal funding for the regulation of 
surface coal mining and reclamation operations under SMCRA will be 
directed--to OSM or the states. For all the above reasons, we urge 
Congress to approve not less than $71 million for state and tribal 
Title V regulatory grants, as fully documented in the states' and 
tribes' estimates for actual program operating costs.\2\
---------------------------------------------------------------------------
    \2\ We are particularly concerned about recent OSM initiatives, 
primarily by policy directive, to duplicate and/or second-guess state 
permitting decisions through the reflexive use of ``Ten-Day Notices'' 
as part of increased federal oversight or through federal responses to 
citizen complaints. Aside from the impact on limited state and federal 
resources, these actions undermine the principles of primacy that 
underscore SMCRA and are likely to have debilitating impacts on the 
state-federal partnership envisioned by the Act.
---------------------------------------------------------------------------
    With regard to funding for state Title IV Abandoned Mine Land (AML) 
program grants, Congressional action in 2006 to reauthorize Title IV of 
SMCRA has significantly changed the method by which state reclamation 
grants are funded. Beginning with FY 2008, state Title IV grants are 
funded primarily by mandatory appropriations. As a result, the states 
should have received a total of $498 million in FY 2012. Instead, OSM 
has budgeted an amount of $313.8 million based on an ill-conceived 
proposal to eliminate mandatory AML funding to states and tribes that 
have been certified as completing their abandoned coal reclamation 
programs. This $184.2 million reduction flies in the face of the 
comprehensive restructuring of the AML program that was passed by 
Congress in 2006, following over 10 years of Congressional debate and 
hard fought compromise among the affected parties. In addition to the 
elimination of funding for certified states and tribes, OSM is also 
proposing to reform the distribution process for the remaining 
reclamation funding to allocate available resources to the highest 
priority coal AML sites through a competitive grant program, whereby an 
Advisory Council will review and rank AML sites each year. While we 
have not seen the details of the proposal, which will require 
adjustments to SMCRA, it will clearly undermine the delicate balance of 
interests and objectives achieved by the 2006 Amendments. It is also 
inconsistent with many of the goals and objectives articulated by the 
Administration concerning both jobs and environmental protection, 
particularly stream quality. We urge the Congress to reject this 
unjustified proposal, delete it from the budget and restore the full 
mandatory funding amount of $498 million. A resolution adopted by IMCC 
concerning these matters is attached. We also endorse the testimony of 
the National Association of Abandoned Mine Land Programs (NAAMLP) which 
goes into greater detail regarding the implications of OSM's 
legislative proposal for the states.
    We also urge Congress to approve continued funding for the AML 
emergency program. In a continuing effort to ignore congressional 
direction, OSM's budget would completely eliminate funding for state-
run emergency programs and also for federal emergency projects (in 
those states that do not administer their own emergency programs). When 
combined with the great uncertainty about the availability of remaining 
carryover funds, it appears that the program has been decimated. 
Funding the OSM emergency program should be a top priority for OSM's 
discretionary spending. This funding has allowed the states and OSM to 
address the unanticipated AML emergencies that inevitably occur each 
year. In states that have federally-operated emergency programs, the 
state AML programs are not structured or staffed to move quickly to 
address these dangers and safeguard the coalfield citizens whose lives 
and property are threatened by these unforeseen and often debilitating 
events. And for minimum program states, emergency funding is critical 
to preserve the limited resources available to them under the current 
funding formula. We therefore request that Congress restore funding for 
the AML emergency program in OSM's FY 2012 budget.
    One of the more effective mechanisms for accomplishing AML 
restoration work is through leveraging or matching other grant 
programs, such as EPA's 319 program. Until FY 2009, language was always 
included in OSM's appropriation that encouraged the use of these types 
of matching funds, particularly for the purpose of environmental 
restoration related to treatment or abatement of AMD from abandoned 
mines. This is a perennial, and often expensive, problem, especially in 
Appalachia. IMCC therefore requests the Committee to once again include 
language in the FY 2012 appropriations bill that would allow the use of 
AML funds for any required non-Federal share of the cost of projects by 
the Federal government for AMD treatment or abatement.
    We also urge the Committee to support funding for OSM's training 
program, including moneys for state travel. These programs are central 
to the effective implementation of state regulatory programs as they 
provide necessary training and continuing education for state agency 
personnel. In this regard, it should be noted that the states provide 
nearly half of the instructors for OSM's training course and, through 
IMCC, sponsor and staff benchmarking workshops on key regulatory 
program topics. IMCC also urges the Committee to support funding for 
TIPS, a program that directly benefits the states by providing critical 
technical assistance. Finally, we support funding for the Watershed 
Cooperative Agreements in the amount of $1.55 million.
    Attached to our testimony today is a list of questions concerning 
OSM's budget that we request be included in the record for the hearing. 
The questions go into further detail concerning several aspects of the 
budget that we believe should be answered before Congress approves 
funding for the agency or considers advancing the legislative proposals 
contained in the budget. Also attached to our testimony is a copy of 
comments recently submitted to OSM concerning the agency's most recent 
oversight directives, which we also request be included in the record 
for this hearing. Those comments explain in greater depth the states' 
concerns with OSM's enhanced oversight initiative, especially as it 
impacts the exclusive jurisdiction of the states under SMCRA.
    Thank you for the opportunity to present this statement. I would be 
happy to answer any questions you may have or provide additional 
information to the Subcommittee.
                                 ______
                                 

               Questions re OSM's Proposed FY 2012 Budget

        1.  What does OSM plan to do with the additional $3.8 million 
        that has been budgeted for ``enhanced federal oversight of 
        state regulatory programs''? How much of this will be 
        designated for the ongoing development of the stream protection 
        rule and accompanying EIS? What portion of this money is 
        actually a re-designation of FTEs from the federally-managed 
        AML programs to Title V program oversight?
        2.  How do you justify an increase in money for federal 
        oversight while decreasing money for state Title V grants? What 
        is the demonstrated need for an additional 25 FTEs to perform 
        federal oversight of state programs? Will this not simply lead 
        to duplication of effort, second-guessing of state decision-
        making, undermining of state primacy and wasted resources? If 
        OSM needs additional resources to implement the anticipated 
        stream protection rule, what about the states, who are 
        responsible for implementing the rule through permit issuance, 
        inspection and enforcement? Will OSM be attempting to recoup 
        any of this discretionary funding for oversight via permit fees 
        of its own? How will OSM allocate the reduced amount of funding 
        to the states under its proposed reduction of $11 million for 
        state Title V grants? To what extent will OSM continue to 
        support technical training and technical support programs for 
        the states, especially for things such as mine mapping, 
        software enhancements and travel?
        3.  If pressed by Congress, how expeditiously does OSM intend 
        to push the states to recover more of their regulatory costs 
        from the coal industry through user fees? Has OSM undertaken a 
        full analysis of the administrative and rulemaking complexities 
        inherent in such an undertaking?
        4.  OSM's newest AML legislative proposal (to eliminate 
        payments to certified states and tribes and to utilize a 
        competitive bidding process for the allocation of remaining AML 
        reclamation funds for non-certified states) is the third time 
        that the agency has put forth potential legislative adjustments 
        to the 2006 amendments to SMCRA in its proposed budgets. To 
        date, no legislative proposal has been drafted that we are 
        aware, much less shared with the states, tribes or Congress. 
        When can we expect to see a draft of this most recent 
        legislative proposal? At this point, there are many more 
        questions than answers about how this process will work. (See 
        attached list) Do you intend to seek input from the states and 
        tribes during the early drafting stages, especially given the 
        role that the states and tribes will play in the bidding/
        selection process and the significant impact this will have on 
        current program administration? What is the basis for OSM's 
        proposal to essentially upend the carefully crafted legislative 
        resolution related to future AML program funding and AML 
        reclamation work approved by Congress in 2006? Has OSM thought 
        and worked through the implications for AML program management 
        and administration that would result from its legislative 
        proposal?
        5.  Why has OSM chosen to advocate for a hardrock AML 
        reclamation fee to be collected by OSM but not distributed by 
        OSM? Why bring another federal agency (BLM) into the mix when 
        OSM has the greater expertise in this area?
Specific Questions re Cost Recovery/User Fees
    As it did last year, OSM has once again requested an amount of $60 
million for state Title V regulatory program grants in FY 2012, which 
reflects an $11 million decrease. And while OSM does not dispute that 
the states are in need of an amount far greater than this, the agency 
has suggested once again that the states should be able to make up the 
difference between what OSM has budgeted and what states actually need 
by increasing cost recovery fees for services to the coal industry. 
What exactly will it take to accomplish this task?
    Assuming the states take on this task, will amendments to their 
regulatory programs be required?
    How long, in general, does it take OSM to approve a state program 
amendment?
    It is my understanding that the state of Alabama submitted a 
program amendment to OSM last year to raise current permit fees and 
authorize new, additional fees but to date OSM has still not approved 
these amendments, resulting in lost fees of over $50,000 to the state. 
If OSM is unable to approve requested state program amendments for 
permit fee increases at this time, how does the agency expect to handle 
mandated permit increases for all of the primacy states within a single 
fiscal year?
    If OSM is not expecting to pursue this initiative in fiscal year 
2012, why include such a proposal in the budget until OSM has worked 
out all of the details with the states in the first instance?
    Speaking of which, what types of complexities is OSM anticipating 
with its proposal at the state level? Many of the states have already 
indicated to OSM that it will be next to impossible to advance a fee 
increase proposal given the political and fiscal climate they are 
facing.
    OSM's solution seems to be that the agency will propose a rule to 
require states to increase permit fees nationwide. Won't this still 
require state program amendments to effectuate the federal rule, as 
with all of OSM's rules? How does OSM envision accomplishing this if 
the states are unable to do it on their own?
    Even if a federal rulemaking requiring permit fee increase 
nationwide were to succeed, how does OSM envision assuring that these 
fees are returned to the states? Will OSM retain a portion of these 
fees for administrative purposes?
Specific Questions re Federal Program Increases
    At a hearing before the House Interior Subcommittee on March 10 
regarding the agency's budget, OSM Director Pizarchik stated, in 
response to a question from the Chairman about how he would 
characterize the permitting process for mining in the United States, 
that permitting is primarily a state responsibility under SCMRA and 
that OSM provides technical assistance to the states. In OSM's written 
testimony, the agency also notes that the states permit and regulate 97 
percent of the Nation's coal production and that OSM provides technical 
assistance, funding, training and technical tools to the states to 
support their programs. And yet OSM proposes in its budget to cut 
funding to the states by $11 million while increasing OSM's own federal 
operations budget by nearly $4 million and 25 FTEs. How does OSM 
reconcile these seemingly contradictory positions?
    Director Pizarchik also spoke about the various permitting 
enhancements that OSM and other federal agencies hope to accomplish 
pursuant to the 2009 MOU between Interior, EPA and the Corps. While 
supposedly focused on Appalachia, this effort is clearly aimed at all 
of the states based on recent actions taken by OSM, EPA and others. 
Assuming OSM succeeds in developing these national permitting 
enhancements, who is responsible for implementing them?
    Mr. Pizarchik also noted in his statement, and in his recent 
testimony, that OSM needs additional resources to implement a new 
``strategic direction'' growing out of the 2009 MOU, which will include 
enhanced oversight, stream protections, coordinated permitting, and 
increased transparency. Again, assuming a new stream protection rule is 
put in place, who will be responsible for implementing the rule and 
issuing permits? Who will be responsible for assuring that permitting 
is indeed better coordinated?
    OSM's budget justification document points out in more detail why 
it believes additional federal resources will be needed based on its 
recent federal oversight actions during FY 2010, which included 
increased federal inspections and special oversight studies on 
approximate original contour and bond adequacy. Was OSM not in fact 
able to accomplish this enhanced oversight with its current resources? 
If not, where were resources found wanting? How much of the strain on 
the agency's resources was actually due to the stream protection 
rulemaking and EIS process?
    What is the justification for OSM's enhanced oversight initiatives 
and hence its federal program increase? The states have been requesting 
opportunities to meet with OSM and Interior management to better 
understand the basis for these actions since last January but still do 
not have definitive answers. In light of recent annual oversight 
reports over the past five years which demonstrate high levels of state 
performance, what is the basis for these new initiatives?
    Something has to give here--no doubt. There is only so much money 
that we can make available for the surface mining program under SMCRA. 
Both Congress and the courts have made it clear that the states are to 
exercise exclusive jurisdiction for the regulation of surface coal 
mining operations pursuant to the primacy regime under the law. It begs 
the questions of whether OSM has made the case for moving away from 
supporting the states and instead beefing up the federal program. 
Unless the agency can come up with a better, more detailed 
justification for this realignment of resources, how can Congress 
support its budget proposal?
Specific Questions re Stream Protection Rule
    During OSM Director Pizarchik's testimony on March 10 before the 
House Interior Appropriations Subcommittee, in response to a question 
from Rep. Moran regarding what OSM would do if restrictions on its 
funding were enacted as part of the Continuing Resolution for FY 2011, 
Director Pizarchik stated that because OSM would be unable to expend 
any of its funding on the development of the stream protection rule and 
EIS, pollution of streams would continue and OSM would not be able to 
utilize the new science and the newest technologies that are now 
available to protect streams. Aside from the question of whether this 
``new science'' has in fact been peer reviewed and proven, this 
response intimates that there is no one on the front lines responsible 
for protecting streams and assuring the quality of our Nation's water. 
Does this imply that the states are not doing the job?
    If OSM believes the states are not doing a good job, why have the 
states consistently received positive annual reports indicating that 
they are effectively administering their programs? And again, assuming 
new requirements are put in place based on new science, will it not be 
the states who are responsible for implementing these requirements 
through the issuance of permits?
    Does SMCRA allow mountaintop mining? Does SMCRA allow steep slope 
mining? Were impacts to streams anticipated as a result of these 
authorized mining techniques? Have states been complying with the law 
and OSM's regulations as currently written? If these laws or rules are 
changed, does OSM have any reason to doubt that the states will not 
enforce the laws as written? If the answer to all of these questions is 
``yes'', why does OSM envision the need for enhanced oversight and 
increased federal resources? Will it not in fact be the states that 
will require enhanced resources to comply with any adjustments to 
current law, especially if expanded monitoring, permitting and lab 
analyses are required?
Specific Questions re OSM Oversight Initiative
    In response to a question by Rep. Hinchey at the March 10 budget 
hearing by the House Interior Appropriations Subcommittee, OSM Director 
Pizarchik stated that if OSM did not increase its oversight presence in 
the coalfields through increased federal inspections, there could be 
more violations and citizen complaints in the future. It appears that 
the basis for his position is the fact that there was an increase in 
the number of Ten-Day Notices issued by OSM in FY 2010. Was there not a 
40% increase in the number of federal inspections over those conducted 
in FY 2009? Would that not, in and of itself, explain the increase in 
TDNs?
    What percentage of federal inspections during FY 2010 resulted in 
the issuance of TDNs when a state inspector did not accompany the 
federal inspector? Don't OSM's regulations at 30 CFR 842.11(a)(1) 
mandate joint inspections when requested by the state? Does OSM's 
recent oversight directive (REG-8) acknowledge and incorporate this 
rule?
    OSM has recently finalized a Ten-Day Notice directive (INE-35) that 
had previously been withdrawn in 2006 based on a decision by then 
Assistant Secretary of the Interior Rebecca Watson. The basis for 
terminating the previous directive was several court decisions that 
clarified the respective roles of state and federal governments 
pursuant to the primacy regime contained in SMCRA. The Secretary's 
decision also focused on the inappropriate and unauthorized use of Ten-
Day Notices under SMCRA to second-guess state permitting decisions. 
OSM's new TDN directive flies in the face of both this Secretarial 
decision and federal court decisions. Does OSM have a new Secretarial 
decision on this matter? If not, how can its recent action overrule 
this prior decision? Has the Solicitor's office weighed in on this 
matter? If so, does OSM have an opinion supporting the agency's new TDN 
directive? Will OSM provide that to the Committee?
    In light of limited funding for the implementation of SMCRA, how 
does OSM justify the state and federal expenses that will necessarily 
follow from reviewing and second-guessing state permitting decisions? 
States have complained that responding to a single OSM TDN, especially 
with respect to state permitting decisions, can require the investment 
of 2--3 FTE's for upwards of a week. How do you justify this?

        Questions and Concerns re the AML Legislative Proposal 
                        in OSM's FY 2012 Budget

The Proposed Competitive Allocation Process
          What is the potential for this new review and ranking 
        process to reduce expenditures and increase efficiency without 
        being counter-productive? Will it introduce an additional level 
        of bureaucracy and result in more time being spent formulating 
        proposals and less on actual AML reclamation? The present 
        funding formula, while not perfect, at least provides some 
        direction on which to base long term strategic planning and 
        efficient use of available funds. The closest analogy to what 
        OSM is proposing by way of its competitive allocation process 
        is the way BLM and the Forest Service currently allocate their 
        AML funds through competitive proposals to various state 
        offices and regions. Because of the uncertainties of funding, 
        neither agency has been able to develop significant in-house 
        expertise, but instead often rely on SMCRA-funded states like 
        MT, NM, UT and CO to do a good portion of their AML work. Why 
        would OSM want to duplicate a system that has proven 
        problematic for other agencies?
          Who would be the ``other parties'' potentially 
        bidding on AML grant funds? Would this include federal agencies 
        such as BLM, FS, NPS, etc? If so, in many cases, those agencies 
        already rely on the states to conduct their reclamation work 
        and also determine priorities based on state input or guidance.
          What do the state project managers and inspectors do 
        if a state does not win a competitive bid for AML funds? How 
        does a state gear up if it receives funding for more projects 
        than it can handle with present staffing? Each state and tribe 
        has different grant cycles. Unless all are brought into one 
        uniform cycle, how will everyone compete for the same dollars? 
        In this regard, how can the competitive allocation process and 
        the use of the Advisory Council be more efficient and simple 
        than what we already have in place?
          How long will OSM fund a state's/tribe's 
        administrative costs if it does not successfully compete for a 
        construction grant, even though the state/tribe has eligible 
        high priority projects on AMLIS? How will OSM calculate 
        administrative grant funding levels, especially since salaries 
        and benefits for AML project managers and inspectors 
        predominantly derive from construction funds? Would funding 
        cover current staffing levels? If not, how will OSM determine 
        the funding criteria for administrative program grants?
          How do the states and tribes handle emergency 
        projects under the legislative proposal? Must these projects 
        undergo review by the Advisory Council? Will there be special, 
        expedited procedures? If a state/tribe has to cut back on 
        staff, how does it manage emergencies when they arise? If 
        emergency programs do compete for AML funds, considerable time 
        and effort could be spent preparing these projects for review 
        by the Advisory Council rather than abating the immediate 
        hazard. Again, how can we be assured that emergencies will be 
        addressed expeditiously?
          What ranking criteria will be used to determine the 
        priority of submitted AML project grant requests? The number of 
        people potentially affected? The current priority ranking on 
        AMLIS? How would the Council determine whether a burning gob 
        pile near a city presents a greater hazard than a surface mine 
        near a highway or an underground mine beneath a residential 
        area? Would the winning bid be the ``most convincing'' 
        proposal? The one with the most signatures on a petition? The 
        one with the most influential legislative delegation? Will 
        AMLIS continue to serve as the primary mechanism for 
        identifying sites and their priority status?
          If the current AML funding formula is scrapped, what 
        amount will be paid out to the non-certified AML states and 
        tribes over the remainder of the program? What does OSM mean by 
        the term ``remaining funds'' in its proposal? Is it only the 
        AML fees yet to be collected? What happens to the historic 
        share balances in the Fund, including those that were supposed 
        to be re-directed to the Fund based on an equivalent amount of 
        funding being paid to certified states and tribes each year? 
        Would the ``remaining funds'' include the unappropriated/prior 
        balance amounts that have not yet been paid out over the seven-
        year installment period? What about the amounts due and owing 
        to certified states and tribes that were phased in during FY 
        2009--2011?
          Has anyone alleged or confirmed that the states/
        tribes are NOT already addressing the highest priority sites 
        for reclamation within the context of the current AML program 
        structure under to the 2006 Amendments? Where have the 2006 
        Amendments faltered in terms of high priority sites being 
        addressed as envisioned by Congress? What would remain 
        unchanged in the 2006 Amendments under OSM's proposal?
The Nature and Purpose of the Advisory Council
          Who would be on the AML Advisory Council and how 
        could they collectively have better decision-making knowledge 
        about hazardous AML sites than the state and tribal project 
        managers and administrators who work with these sites on a 
        daily basis?
          What will be the criteria to serve on the Advisory 
        Council? Will the Federal Advisory Committee Act (FACA) 
        requirements apply to the formation and deliberations of the 
        Council? How long does OSM envision it will take to establish 
        the Council and when will it become operational?
          Will the Advisory Council be providing 
        recommendations to OSM or will OSM make all final decisions? 
        Will these decisions by appealable? If so, to who? Does OSM 
        envision needing to develop internal guidance for its own 
        review process? If so, how long will it potentially take from 
        Advisory Council review and recommendation to final OSM 
        decision in order to complete the grant process so a state can 
        begin a project?
          What degree of detail will be required in order to 
        review and approve competitive grant applications? Will the 
        Council review each project? What type of time constraints will 
        be placed on their review?
          Will the Advisory Council consider partial grants for 
        projects that may exceed the allocation for a single year? 
        Would minimum program states be authorized to apply for a grant 
        that would exceed $3 million?
          Will grant applications be based on an individual 
        project or will the grant be based on a project year? How will 
        cost overruns be handled?
Planning for AML Work
          One of the greatest benefits of reauthorization under 
        the 2006 Amendments to SMCRA was the predictability of funding 
        through the end of the AML program. Because state and tribes 
        were provided with hypothetical funding levels from OSM (which 
        to date have proven to be quite accurate), long-term project 
        planning, along with the establishment of appropriate staffing 
        levels and project assignments, could be made more accurately 
        and efficiently. How can states/tribes plan for future projects 
        given the uncertainty associated with having to annually bid 
        for AML funds? NEPA compliance issues alone can take years of 
        planning. One state recently asked its State Historic 
        Preservation Office for initial consultation regarding project 
        sites that may be reclaimed over the next five years. This 
        process will also have significant impacts on those states that 
        utilize multi-year construction contracts that are paid for 
        with annual AML grants.
          State and tribal AML projects are often planned 18 
        months to two years in advance of actually receiving 
        construction funds, based on anticipated funding under the 2006 
        Amendments. During that time, states and tribes are performing 
        environmental assessments, conducting archeology reviews, 
        completing real estate work and doing NEPA analyses. There 
        could be considerable effort and money wasted if a project does 
        not get approved during the competitive allocation process.
          At what point does a State or Tribe seek approval 
        from the advisory council? Considerable investigation must take 
        place prior to developing most projects, whether they be acid 
        mine drainage projects or health and safety projects. How much 
        time should be spent in design prior to proceeding to the 
        Council? How accurate must a cost estimate be prior to taking a 
        project before the Council? The greater the accuracy, the 
        greater the design time expended, possibly for a project that 
        will be rejected.
          State and tribes often seek and obtain considerable 
        matching funds from watershed groups, which take considerable 
        lead time to acquire. It will be difficult to commit to 
        partners if we don't know what level of funding, if any, will 
        be made available.
          Several states have committed significant amounts of 
        money to waterline projects across the coalfields. Local 
        governmental entities have started designs and applied for 
        additional funds from other agencies to match AML funds in 
        order to make these projects a reality. Ending all AML funding 
        for these projects (assuming they are not considered ``high 
        priority'') could have significant consequences for local 
        communities. Our understanding is that these projects were 
        excluded under the 2006 Amendments from the priority scheme 
        contained in section 403(a) of SMCRA.
          Does OSM's proposal allow acid mine drainage (AMD) 
        projects to be undertaken? Can these be designated as high 
        priority? (Our understanding is that those AMD projects 
        undertaken pursuant to the ``AMD set-aside program'' are not 
        subject to the priority scheme under Section 403(a) and that 
        those AMD projects done ``in conjunction with'' a priority 1 or 
        2 project are considered ``high priority''.) How do states 
        handle ongoing engineering, operating and maintenance costs for 
        existing AMD treatment systems? As the Administration works 
        diligently to develop a new rule to protect stream nationwide, 
        why would it advance a proposal to essentially halt the cleanup 
        of streams funded by the AML program?
Overarching Concerns
          Given the original design of SMCRA by its framers 
        with regard to the allocation of AML funds to those states who 
        first agree to implement Title V regulatory programs for active 
        mining operations, to what extent can we expect that states 
        will continue to implement and fund their Title V programs if 
        Title IV funding is drastically cut or eliminated under the 
        proposal? Furthermore, since states and tribes will not know 
        what level of staffing to maintain from year to year under the 
        proposal, who would desire to work for a program that is in a 
        constant state of flux?
          The SMCRA 2006 Amendments were the result of roughly 
        ten years of negotiations, discussions, and debates in 
        Congress. Since the legislative process to enact these changes 
        could take years, why didn't OSM begin with the legislation and 
        then follow with the budget proposal? Why weren't the states/
        tribes or the NAAMLP included in discussions that led to this 
        budget proposal?
          As OSM develops the legislative proposal for a 
        competitive bidding process, the agency should consider the 
        impacts on minimum programs and consider maintaining the 
        minimum allocation of $3 million for minimum program states.
          What type of state AML plan amendments does OSM 
        foresee as a result of this new process?
Proposed Elimination of Funding for AML Emergencies
          While amendments to Title IV of SMCRA in 2006 (P.L. 
        109-432) adjusted several provisions of the Act, no changes 
        were made to OSM's emergency powers in Section 410. Quite to 
        the contrary, Section 402(g)(1)(D)(2) states that the Secretary 
        shall ensure ``strict compliance'' with regard to the states' 
        and tribes' use of non-emergency grant funds for the priorities 
        listed in Section 403(a), none of which include emergencies. 
        The funding for the emergency program comes from the 
        Secretary's discretionary share, pursuant to Section 402(g)(3) 
        of the Act. This share currently stands at $416 million. OSM's 
        proposed elimination of funding for the emergency program will 
        result in the shift of approximately $20 million annually that 
        will have to be absorbed by the states. This is money that 
        cannot be spent on high priority AML work (as required by 
        SMCRA) and will require the realignment of state AML program 
        operations in terms of personnel, project design and 
        development, and construction capabilities. In most cases, 
        depending on the nature and extent of an emergency project, it 
        could preclude a state's ability to undertake any other AML 
        work during the grant year (and even following years), 
        especially for minimum program states. How does OSM envision 
        states and tribes being able to meet their statutory 
        responsibility to address high priority AML sites in light of 
        the proposed elimination of federal funding for AML 
        emergencies? How does OSM reconcile this proposal with the 
        intentions of Congress expressed in the 2006 amendments to move 
        more money out of the AML Fund sooner to address the backlog of 
        AML problems that continue to linger? If Congress were to 
        approve the elimination of funding for AML emergencies (which 
        in our view would require an amendment of SMCRA to accomplish, 
        not just a stroke of the budget pen), what type of transition 
        protocol does OSM envision putting in place to accomplish this 
        significant shift in responsibilities from the federal 
        government to the states?
Proposed Elimination of Funding to Certified States and Tribes
          From what we can ascertain, OSM proposes to eliminate 
        all payments to certified states and tribes--in lieu of funds; 
        prior balance replacement funds; and monies that are due and 
        owing in FY 2018 and 2019 from the phase-in during the past two 
        fiscal years. Is this accurate? OSM says nothing of what the 
        impact will be on non-certified states as a result of 
        eliminating these payments to certified states and tribes--
        especially the equivalent payments that would otherwise be made 
        to the historic production share that directly relate to ``in 
        lieu of'' payments to certified states and tribes under section 
        411(h)(4). Previously, OSM has stated that ``the amounts that 
        would have been allocated to certified states and tribes under 
        section 402(g)(1) of SMCRA will be transferred to the 
        historical production allocation on an annual bases to the 
        extent that those states and tribes receive in lieu payments 
        from the Treasury (through the Secretary of the Interior) under 
        section 402(i) and 411(h)(2) of SMCRA.'' By OSM's own admission 
        in its FY 2012 proposed budget, this will amount to $1.2 
        billion over ten years. If the in lieu payments are not made 
        (as proposed), how can the transfer to historic production 
        occur? The result, of course, would be a drastic impact on the 
        historic production allocation otherwise available to 
        uncertified states. Will OSM address this matter in its 
        proposed legislation? If so, how?
          OSM recognizes (as does the Interior Department) that 
        a ``legislative proposal'' will be required in support of its 
        ``assumption'' in the FY 2012 budget concerning the proposed 
        end to mandatory payments to certified states and tribes. More 
        specifically, OSM states the following on page 138 of its 
        Budget Justification Document: ``The budget proposes to 
        terminate the unrestricted payments to certified States and 
        Tribes. Certified States and Tribes have already completed 
        their coal reclamation projects [this is NOT true in all cases] 
        and now use their AML payments for general revenue [also NOT 
        true--a majority of these moneys are targeted as either 
        hardrock AML reclamation projects or at impacts associated with 
        coal development.] These payments rarely contribute to the 
        reclamation of abandoned coal mine lands [Congress clarified in 
        2006 that they didn't have to be]. Terminating these payments 
        will save the taxpayer $1.2 billion over the next decade.'' The 
        attempt by OSM to develop a legislative proposal in both FY 
        2010 and FY 2011 never materialized to the point that a formal 
        proposal was ever shared with Congress, much less the tribes or 
        the states. OSM has a fiduciary duty to consult with the Indian 
        tribes regarding any proposed legislation that potentially 
        impacts them given the Interior Department's trust 
        responsibilities for Native American communities. As a partner 
        with the states in the reclamation of abandoned mine lands, OSM 
        should also share any proposal with the states. Since we are 
        uncertain exactly what OSM and Interior have in mind with 
        respect to the legislative proposal, especially given the 
        language cited above, it is essential that the states and 
        tribes be brought into the legislative development process as 
        soon as possible. At least one draft proposal that we saw went 
        much further than simply eliminating payments to certified 
        states and tribes, and addressed such issues as: providing some 
        baseline funding for certified states and tribes; immediately 
        transferring unappropriated state and tribal share balances for 
        certified states and tribes into the historic coal production 
        account; ensuring that all future payments to certified states 
        and tribes are transferred to historic coal; clarifying the 
        ``adjacent to'' provision in Section 403(a); modifying the ``in 
        conjunction with'' provision in Section 402(g)(7); clarifying 
        how uncertified states may use the various types of AML funds; 
        and modifying the certification standards in section 411(a). 
        Some of these were encouraging; others were very troubling. How 
        and when will OSM bring the states and tribes into the 
        legislative development process?
          Has OSM considered the fiscal and programmatic 
        impacts that could result if the certified states and tribes, 
        who no longer receive AML monies, choose to return their Title 
        V regulatory programs to OSM (especially given the severe 
        reductions being proposed for FY 2012 in Title V grants)?
          Finally, how do the cuts in the Title IV program line 
        up with the Administration's other economic, fiscal and 
        environmental objectives as articulated in the economic 
        stimulus plans and the jobs bills that have considered by 
        Congress? These objectives include environmental stewardship, 
        cleaning up abandoned mines (coal and noncoal) nationwide, 
        creating green jobs, pumping dollars into local communities, 
        putting money to work on the ground in an expeditious manner, 
        sustainable development, infrastructure improvements, 
        alternative energy projects, protecting public health and 
        safety, and improving the environment. It seems to us that 
        there is a serious disconnect here and we remain mystified as 
        to how these laudable objectives and OSM's budget proposal can 
        be reconciled.
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony, and now if we 
could hear from our next witness, Mr. Lovett I believe? Thank 
you.

 STATEMENT OF JOE LOVETT, DIRECTOR, APPALACHIAN CENTER FOR THE 
                  ECONOMY AND THE ENVIRONMENT

    Mr. Lovett. Thank you, and thank you for the opportunity to 
testify here today. My name is Joe Lovett, and I am Executive 
Director of the Appalachian Center for the Economy and the 
Environment, a non-profit law and policy center located in West 
Virginia. It is important for Congress to provide adequate for 
Federal agencies like the Office of Surface Mining to enforce 
the laws designed to protect the people and the environment 
they depend on. Yet, without adequate oversight from Congress, 
the Agencies will not do their jobs. This is particularly true 
I think of OSM.
    Since at least 2001, OSM has refused to enforce the Surface 
Mining Act. The failure of OSM to carry out its duties has had 
devastating impacts on Appalachia. Appalachian coal is cheap 
because OSM ignores its duty to enforce SMCRA and it allows the 
coal industry to pass its costs onto its workers, communities, 
local and state economies and the environment. The mining 
industry naturally takes advantage of the Federal regulator's 
failure to enforce the law, and one of the worse consequences 
of OSM's disregard for the law is the prevalence of mountaintop 
removal mines in Central Appalachian.
    Mountaintop removal mines are large strip mines with 
attendant valley fills, and they have already destroyed many 
hundreds of miles of streams in my region. Valley fills are 
just large waste disposal areas created when mining companies 
blow up mountains, so in my region, mining companies are 
engaged every day in blowing up the mountains in my region and 
filling the streams with the waste that comes from the blowing 
the mountains up.
    The coal-rich mountains of Central Appalachia are home to 
generations-old communities and contain beautiful hollows 
through which thousands of pristine and ecologically rich 
mountain streams flow. The forests in our region are the most 
diverse and productive, temperate hardwood forests in the 
world. Yet, they are being laid to waste by the mining 
industry. Though OSM is supposed to protect our environment and 
our communities, it is not doing so. Valley fills are strongly 
associated with violations of water quality standards and loss 
of stream uses.
    EPA recently stated that increasing levels of conductivity 
that result from the valley fills have significant adverse 
effects on biological communities in the streams. A recent EPA 
study found that nine out of every 10 streams downstream from 
surface mining operations are impaired and that they therefor 
violate the Clean Water Act and also SMCRA. OSM's waste of 
money appropriated by Congress, as well as illustrated in its 
ongoing efforts to promulgate a new buffer zone rule, OSM 
promulgated the Stream Buffer Zone Rule originally under 
President Reagan to carry out the Congressional mandate to 
protect the hydrologic balance of waterways in coal mining 
regions.
    The need for strong oversight by Congress is made even 
clearer because of the way OSM has handled the Stream Buffer 
Zone Rule over the years, and unfortunately, these problems 
have continued during the Obama Administration. Until 2008, the 
Buffer Zone Rule Protected intermittent and perennial streams 
from incursions by mining. However, the last Administration, 
the Bush Administration, rescinded the Reagan rule and replaced 
it with a rule that provided really no protection for our 
streams. OSM is engaged in an activity of replacing that rule 
yet again.
    However, I think the Subcommittee has heard and there has 
been other testimony that EPA is bungling its rulemaking. In 
fact, the rulemaking has become a fiasco, and I agree very 
little with Mr. Kitts, but I think we are in agreement that 
OSM's current rulemaking will lead to no good for anyone and in 
fact is a waste of money. The present Administration is in the 
process of promulgating this rule and is conducting an 
environmental impact study, but I am not optimistic that it 
will actually accomplish anything.
    OSM appears once again to be failing in its duty to enforce 
the law or protect our streams. Indeed, only the U.S. EPA, one 
of the three Federal agencies responsible for regulating 
mining, has taken any meaningful action to protect our streams 
as OSM is supposed to do. I hope this Committee will use the 
budget process to take action, to compel OSM to enforce SMCRA 
rather than allow it to continue squander money and time on a 
bungled rulemaking. Thank you for your time.
    [The prepared statement of Mr. Lovett follows:]

             Statement of Joe Lovett, Executive Director, 
           Appalachian Center for the Economy and Environment

Introduction
    Good morning. Thank you for the opportunity to testify today. My 
name is Joe Lovett and I am the Executive Director of the Appalachian 
Center for the Economy and the Environment, a non-profit law and policy 
center located in Lewisburg, West Virginia. I am also a lawyer who has 
been attempting for over a decade to enforce surface coal mining and 
other environmental laws that federal and state regulators refuse to 
enforce in Appalachia.
    From its inception in 2001, the Appalachian Center has been at the 
forefront of the battle to end the abuses associated with the 
devastating method of coal mining known as mountaintop removal. The 
Center serves low-income citizens, generations-old communities, and 
local and grassroots groups of central Appalachia.
    It is important for the Congress to provide adequate funding for 
federal agencies like the Office of Surface Mining Reclamation and 
Enforcement (``OSM'') to enforce the laws designed to protect people 
and the environment they depend upon from unacceptable harm caused by 
surface coal mining. Yet without adequate oversight from Congress--and 
due to a lack of political will within agencies like OSM to do their 
job--no amount of money will achieve the goals of Congress. 
Accordingly, real oversight by Congress is needed to ensure OSM uses 
the money appropriated to the agency to enforce the law and do its job 
to protect streams and mining communities.
    Further, money provided by OSM to the state agencies in states in 
which the Center works (West Virginia, Kentucky and Virginia) is too 
often spent not on protecting the environment and the communities in 
coal mining communities, but rather on protecting coal operators from 
enforcement. For example, the cabinet secretary of West Virginia's 
Department of Environmental Protection, Randy Huffman, recently sued 
the United States Environmental Protection Agency for trying to raise 
the level of protection given to streams in the region. This action was 
taken to protect the coal industry from EPA and citizen enforcement of 
environmental laws, including SMCRA. I would, therefore, suggest that 
State agencies that are unwilling to enforce environmental laws should 
not continue to be provided with operating funds from OSM.
    In the abstract, the Surface Mining Control and Reclamation Act 
(``SMCRA'') is an imperfect but useful law. Since at least 2001, 
however, the Office of Surface Mining Reclamation and Enforcement has 
refused to enforce the Act. The failure of OSM to carry out its duties 
has had devastating impacts on Appalachia. Appalachian coal is 
``cheap'' because OSM ignores its duty to enforce SMCRA and allows the 
coal industry to pass its costs onto workers, communities, local and 
state economies, and the environment. The mining industry naturally 
takes advantage of federal regulators' failure to enforce the law. One 
of the worst consequences of OSM's disregard for the law is the 
prevalence of mountaintop removal mines, large strip mines with 
attendant valley fills that have already destroyed 2000 miles of 
streams in my region.
    The coal-rich mountains of central Appalachia are home to 
generations-old communities and contain beautiful hollows through which 
thousands of pristine and ecologically rich mountain streams flow. 
Mountaintop removal mining carelessly lays waste to our mountain 
environment and communities. The deforestation is not only an 
ecological loss, but a permanent blow to a sustainable forest economy 
in a region in desperate need of long-term economic development. 
Mountaintop removal has already transformed huge expanses of one of the 
oldest mountain ranges in the world into a moonscape of barren plateaus 
and rubble.
Mountaintop Removal Coal Mining
    To show the need for strong oversight of OSM, I'd like to give the 
Subcommittee some background on how devastating the particular mining 
practice of mountaintop removal mining is in Appalachia and how little 
the OSM has done to try to protect our waters or local communities from 
these impacts, as they are required to do by law.
    Disregarding human and environmental costs, mountaintop removal 
coal mining as currently practiced in Appalachia eradicates forests, 
razes mountains, fills streams and valleys, poisons air and water, and 
destroys local residents' lives. Toxic mine pollution contaminates 
streams and groundwater; hunting and fishing grounds are destroyed. 
Because the large-scale deforestation integral to mountaintop removal 
takes away natural flood protections, formerly manageable storms 
frequently inundate and demolish downstream homes. The toll on 
coalfield communities is tremendous, and for this reason, I joined with 
other citizen groups in my region to petition EPA to take account of 
the environmental injustice of this practice; other agencies, including 
the OSM, also have the obligation to consider the human toll taken by 
mountaintop removal on these communities. (See attachment 1.)
    From 1985 to 2005 over 7000 valley fills were authorized in central 
Appalachia for mountaintop removal and other strip mining operations. 
This has led to the destruction of over 1700 miles of Appalachian 
streams. Past, present, and future mining in Appalachia may 
cumulatively impact 1.4 million acres. The destruction of these nearly 
1.5 million acres of forest is profound and permanent Mountaintop 
mining causes ``fundamental changes to the terrestrial environment,'' 
and ``significantly affect[s] the landscape mosaic,'' with post-mining 
conditions ``drastically different'' from pre-mining conditions.
    Valley fills are strongly associated with violations of water 
quality standards and loss of stream uses. EPA in its 404(c) veto of 
the Spruce No. 1 permit in West Virginia stated that increasing levels 
of conductivity have ``significant adverse effects'' on biological 
communities in streams. EPA's April 1, 2010 guidance on water pollution 
downstream from mountaintop removal sites further outlines significant 
water quality impacts from surface mining operation. ``A recent EPA 
study found that nine out of every 10 streams downstream from surface 
mining operations were impaired based on a genus-level assessment of 
aquatic life. Another federal study found elevated levels of highly 
toxic and bioaccumulative selenium in streams downstream from valley 
fills. These impairments are linked to contamination of surface water 
supplies and resulting health concerns, as well as widespread impacts 
to stream life in downstream rivers and streams. Further, the estimated 
scale of deforestation from existing Appalachian surface mining 
operations is equivalent in size to the state of Delaware. Appalachian 
deforestation has been linked to significant changes in aquatic 
communities as well as to modified storm runoff regimes, accelerated 
sediment and nutrient transport, reduced organic matter inputs, shifts 
in the stream's energy base, and altered thermal regimes. Such impacts 
have placed further stresses on water quality and the ecological 
viability of watersheds. A 2008 seminal EPA study found that 
mountaintop removal mining is strongly related to downstream biological 
impairment.
    The Surface Mining Control and Reclamation Act makes clear that the 
Clean Water Act and other applicable laws take supremacy over any 
provision in SMCRA:
        ``Nothing in this Act shall be construed as superseding, 
        amending, modifying, or repealing...the National Environmental 
        Policy Act of 1969 (42 U.S.C. 4321-47), or any of the following 
        Acts or with any rule or regulation promulgated thereunder, 
        including...(3) [the Clean Water Act], the State laws enacted 
        pursuant thereto, or other Federal laws relating to 
        preservation of water quality.'' 30 U.S.C. Sec. 1292. For the 
        same reason, that same Mining Act gives EPA the ability to 
        refuse to concur in any proposed regulation from OSM.
    Despite all of these impacts, OSM is not enforcing SMCRA in the 
region. SMCRA requires OSM and state agencies to prevent material 
damage to the hydrologic balance. Both science and common sense show 
that the hydrologic balance of our region is being decimated 
mountaintop removal. Congress continues to direct funds to OSM to 
enforce the SMCRA, but the agency does not carry out its duties to 
protect central Appalachia. In fact, the environmental harm occurring 
in our region today dwarfs the harm that was occurring when the Act was 
passed in 1977.
Environmental Impact Statement on Mountaintop Removal
    Because of litigation that I brought in 1998, a programmatic 
Environmental Impact Statement on mountaintop removal was performed by 
EPA, the Army Corps of Engineers and OSM.
    The EIS concluded that mining could impact 244 terrestrial species, 
including, for example, 1.2 billion individual salamanders, and that 
the loss of the genetic diversity of these affected species ``would 
have a disproportionately large impact on the total aquatic genetic 
diversity of the nation.'' The EIS also observed that valley fills are 
strongly associated with violations of water quality standards for 
selenium, a toxic metal that bioaccumulates in aquatic life. All 66 
selenium violations identified in the EIS were downstream from valley 
fills, and no other tested sites had selenium violations.
    OSM's response to these devastating conclusions was to further 
weaken its enforcement of the Act in Appalachia.
    In 2001 and 2002, the federal agencies responsible for regulating 
mountaintop removal weakened the EIS and did not proceed with necessary 
scientific studies when they realized that the science was showing that 
mountaintop removal could not be practiced without devastating the 
environment and economy of our region. The agencies simply halted the 
economic study that was crucial to the EIS when it became apparent that 
the results were not what OSM wanted them to be.
    In sum, the EIS was supposed to demonstrate the environmental and 
economic impacts of large scale strip mining on Appalachia and propose 
ways to protect the environment and mitigate the impacts of mining on 
the region. In spite of the fact that the environmental studies that 
were performed all showed significant harm to the environment, OSM 
guided the other agencies involved to make permits easier for mining 
operators to receive. OSM ignored the science and turned the EIS on its 
head.
    Because of OSM's role in this process, we still desperately need an 
adequate and impartial EIS to be performed to demonstrate the far 
reaching impacts this form of mining is having on the Appalachian 
region.
Stream Buffer Zone
    One of the most important provisions of SMCRA requires that no 
mines be permitted unless they prevent material damage to the 
hydrologic balance off site and minimize disturbance on site. OSM 
promulgated the stream buffer zone rule under President Reagan in 1983 
to carry out the Congressional mandate to protect the hydrologic 
balance of waterways in the coal mining regions.
    The need for strong oversight by Congress is made even clearer 
because of the way OSM has handled the Stream Buffer Zone rule over the 
years--and unfortunately, these problems have continued during the 
Obama Administration.
    Until 2008, the buffer zone rule, 30 C.F.R. 816.57, stated that no 
land within 100 feet of a perennial stream or an intermittent stream 
may be disturbed by surface mining unless the regulatory authority 
specifically authorizes surface mining activities closer to, or 
through, such a stream. The regulatory authority may authorize such 
activities only upon finding that surface mining activities will not 
cause or contribute to the violation of applicable State or Federal 
water quality standards, and will not adversely affect the water 
quantity and quality or other environmental resources of the stream. On 
its face, this rule prohibited valley fills in intermittent and 
perennial streams and, in 1999, a federal judge in West Virginia agreed 
that this is what the rule means. That decision was reversed on appeal 
for purely procedural reasons--the Court of Appeals did not reach the 
merits.
    To protect the coal industry, OSM utterly failed to enforce this 
law and instead as a last minute give away to the coal industry, the 
previous administration changed the Stream Buffer Zone rule to remove 
the ``buffer'' and expressly allow coal companies to dump their wastes 
right into streams. It is absurd to allow, as OSM has, more than 2000 
miles of mountain streams to be permanently buried beneath mining waste 
and still claim to be protecting the hydrologic balance. Rather than 
weakening the rule to accommodate the mining industry, a responsible 
agency would force the industry to conform to the law. Yet the exact 
opposite has occurred.
    The present administration has pledged to conduct and Environmental 
Impact Statement on this regulation and to propose a revised rule, but 
I am not optimistic that it will actually accomplish anything, despite 
the fact that OSM is spending several million dollars on the study.
    In 2009, it appeared that the Secretary of Interior and OSM might 
correct the rules and start protecting streams again. In the spring of 
2009, the Secretary of the Interior asked a court to vacate the 2008 
midnight rule, recognizing that it was unlawful and needed to be 
removed.
    In June 11, 2009, the U.S. Army Corps of Engineers, the U.S. 
Environmental Protection Agency, and the U.S. Department of Interior 
issued a joint Memorandum of Understanding to address the environmental 
impacts of surface mining in the Appalachian states. In this Agreement, 
OSM and the other agencies recognized that:
        ``The mountains of Appalachia possess unique biological 
        diversity, forests, and freshwater streams that historically 
        have sustained rich and vibrant American 
        communities....[Surface mining] often stresses the natural 
        environment and impacts the health and welfare of surrounding 
        human communities. Streams once used for swimming, fishing, and 
        drinking water have been adversely impacted, and groundwater 
        resources used for drinking water have been contaminated. Some 
        forest lands that sustain water quality and habitat and 
        contribute to the Appalachian way of life have been fragmented 
        or lost.'' June 2009 MOU at 1.
    The agencies jointly announced an interagency plan that said it was 
``designed to significantly reduce the harmful environmental 
consequences of Appalachian surface coal mining operations, while 
ensuring that future mining remains consistent with federal law.'' Id. 
As part of this plan, Interior specifically promised that OSM would 
``issue guidance clarifying the application of the 1983 stream buffer 
zone provisions to further reduce adverse stream impacts.'' Id. at 3. 
This statement was widely interpreted as a decision finally to start 
enforcing the 1983 rule, and finally start protecting Appalachian 
streams.
    Unfortunately, OSM appears to be failing again in its duty to 
enforce the law or protect streams. Indeed, only the U.S. EPA, of the 
three federal agencies responsible for regulating mining in the region, 
has taken meaningful action to protect our streams or help local 
communities avoid the environmental impacts of mountaintop removal 
mining.
    OSM's proposed rulemaking to replace the buffer zone rule is 
shaping up to be an expensive fiasco. Here is what has happened so far 
with OSM \1\:
---------------------------------------------------------------------------
    \1\ http://www.osmre.gov/topic/StreamProtection/
StreamProtectionOverview.shtm
---------------------------------------------------------------------------
    In November 2009, OSM issued an Advance Notice of Proposed 
Rulemaking in November 2009 that included problematic statements about 
the 2008 rule and the 1983 stream buffer zone rule. Then, in April 
2010, OSM published a Notice of Intent to complete an environmental 
impact statement for its new rule. At the same time, OSM also publicly 
announced that it had agreed to propose a new rule ``in early 2011'' 
and would finalize it ``in mid-2012.'' It also stated that ``[a]s we 
move forward, we are talking with citizen groups, conservationists, 
coal industry representatives, state regulators, and others to seek 
their input in order to write a better rule that will be more 
protective of streams affected by mining.''
    In February, the draft environmental impact statement (``DEIS'') 
and OSM's proposed rule were both leaked to the public, although 
reports indicated the drafts may have been leaked to industry earlier. 
OSM then stated publicly that there were significant problems with the 
draft environmental impact statement in progress for the new rule, and 
that information contained in the proposed draft was not credible. 
Then, on March 31, 2011, OSM announced that was terminating the 
contract with the company preparing the DEIS.
    OSM's rulemaking appears to be in complete disarray, and OSM has 
yet to fully disclose the reasons it has encountered these obstacles, 
how the draft of the DEIS got leaked to industry and the press, how the 
draft already identified a preferred alternative under NEPA when all of 
the work done to date has been discredited, or why they waited so long 
to even acknowledge that it has encountered obstacles. We currently do 
not know when the OSM will complete its work on the DEIS or draft rule, 
but it is already many months behind its promised deadlines for 
revising the rule.
    Meanwhile, mountaintop removal continues to devastate Appalachia 
and mining permits continue to be issued by the states; OSM does 
nothing to prevent their issuance. Both the leaked draft environmental 
impact statement and draft proposed rule suggest that OSM's process is 
not following important legal requirements and will not fully protect 
streams.
    The draft EIS is a useless document. It has a section on 
environmental impacts that does not recognize the basic science showing 
the harm that occurs when mining waste permanently buries American 
waterways. Both the environmental and economic analysis are incomplete, 
inaccurate, and ignore the state of the art science that other 
agencies, including EPA, are already using. A comparison between the 
Spruce No. 1 Mine Veto, which includes an environmental analysis of 
just one mine, reveals the inadequacies of OSM's work. (See attachment 
2.)
    The draft EIS does not even reach the level of the 2003 draft 
programmatic EIS or final 2005 EIS that the prior Administration 
issued. Apparently, OSM now recognizes how problematic the draft EIS is 
and has ended the contract with its contractor and distanced itself 
from the draft EIS. According to the Wall Street Journal on March 31, 
2011,: Interior Deputy Secretary David Hayes told a House 
Appropriations Subcommittee ``that Interior was unhappy'' with the work 
of the contractor chosen to create the draft EIS.
    The Appalachian region is historically one of the poorest in the 
nation, particularly because the mining industry has cut jobs in order 
to increase its profit at the expense of the environment and the law. 
The law requires protection of waters, and policymakers need valid 
economic data to assist communities transition from man economy based 
on mountaintop removal to less harmful forms of mining and a 
sustainable economy. As a presidential candidate, Mr. Obama expressed 
``serious concerns about the environmental implications'' of 
mountaintop mining,'' saying: ``We have to find more environmentally 
sound ways of mining coal than simply blowing the tops off mountains.'' 
It is time for OSM to help make the President's commitment a reality.
Cumulative Hydrologic Impacts
    OSM is also charged with protecting the cumulative hydrological 
integrity of the mining region. Again, OSM utterly fails to discharge 
its duty to assure that states are performing adequate cumulative 
hydrological impact analyses as the Act requires. For example, more 
than11.5 percent of the land area in the region encompassing eastern 
Kentucky, southern West Virginia, western Virginia, and areas of 
eastern Tennessee is being impacted by mountaintop removal. As a result 
of this destruction of headwater streams, mountaintop removal mines 
cumulatively devastate aquatic ecosystem. Recent studies, peer-
reviewed, support this conclusion. (See attachment 3.) OSM has not 
attempted to analyze and minimize the environmental harm of past, 
present, and reasonably foreseeable future surface mining operations in 
the Appalachian. These impacts include total elimination of all aquatic 
life in buried streams, negative impacts on the proper functioning of 
aquatic ecosystems, including fisheries located downstream of 
mountaintop removal mining operations, and impairment of the nutrient 
cycling function of headwater streams.
    For example, in the Coal River watershed in West Virginia, existing 
and pending surface mining permits cover 12.8 % of watershed. In the 
Laurel Creek watershed Coal River, existing and pending surface mining 
permits cover 28.6 % of the watershed. Surface mining permit including 
valley fills cover 14.5% of first order streams and 12 % of all streams 
in Coal River and surface mining permits including valley fills cover 
37.3% of first order streams in Laurel Creek and 27.9% of all streams.
    The United States Fish and Wildlife Service recognize that 
mountaintop removal mining results in forest loss and fragmentation 
that is significant not only within the project area, but also 
regionally and nationally. In particular, the mines cause a fundamental 
change in the environment from forestland to grassland habitat, cause 
significant adverse impacts to the affected species, cause loss and/or 
reduced quality of biodiversity, and cause loss of bird, invertebrate, 
amphibian, and mammalian habitat.
    When Congress passed the Surface Mining Act in 1977, it thought 
that it was enacting a law to protect the environment and citizens of 
the region. OSM has used and has allowed the states to use the Act as a 
perverse tool to justify the very harm that the Congress sought to 
prevent. The members of Congress who voted to pass the Act in 1977 
could not have imagined the cumulative destruction that would be 
visited on our region by the complete failure of the regulators to 
enforce the Act.
Approximate Original Contour
    Also at the heart of the Surface Mining Control and Reclamation Act 
is the requirement that mining companies must restore surface mines to 
approximate original contour, or AOC. If mines are restored to AOC, the 
disturbed area is smaller, valley fills and stream impacts are reduced. 
The Act provides that approximate original contour is the surface 
configuration achieved by backfilling and grading of the mined area so 
that the reclaimed area closely resembles the general surface 
configuration of the land prior to mining and blends into and 
complements the drainage pattern of the surrounding terrain.
    Remarkably, there are few, if any, large surface mines in 
Appalachia that comply with this basic requirement. Instead, mining 
operators, with the acquiescence of OSM, thumb their noses at the law 
and create monstrous valley fills and sawed off mountains that more 
closely resemble the surface of the moon than our lush, green hills. 
There is nothing even close to ``approximate'' about it.
    Mountaintop removal mines are not required to restore the post 
mining site to AOC. The Act sanctioned mountaintop removal mining, but 
only in very limited circumstances. The Act requires that all mines be 
restored to AOC unless the mining company shows that it will restore 
the site to an industrial, commercial, agricultural, residential, or 
public facility (including recreational facilities) use.
    Almost no post-mining land in Appalachia is put to any of these 
uses. The post mining land is in isolated mountain areas, the land is 
unstable for building and it will no longer support native vegetation. 
There is no surface or groundwater available on the post mining sites 
because the mountain has been blown to bits. In short, mountains and 
valleys have been changed dramatically in contour so that they resemble 
no surface configuration on Earth and the land is useless for future 
development. Whether the mines are technically ``mountaintop removal 
mines'' or not (and OSM has so bent the definition of ``mountaintop 
removal'' that not all mines that have the affect of mountaintop 
removal mines are classified as such), almost all Appalachian surface 
mines fit this description. OSM has not lifted a finger to stop this 
complete abuse of the most important provision of the Act.
Higher and Better Use and Topsoil
    The Act requires that all post mining sites be restored to 
conditions that are capable of supporting the uses they were capable of 
supporting before any mining or higher or better uses. The Act also 
requires operators to save and replace the topsoil found on the mining 
site.
    Again, OSM's record here is dismal. Our mountains have been reduced 
to scrubland that will not support native hardwood tree species. Far 
from requiring a higher or better use of that land, OSM has acquiesced 
to allowing operators to turn the most productive temperate hardwood 
forests in the world into useless and unproductive grasslands. One of 
the reasons for the sham reclamation practices that are common practice 
on Appalachian surface mines is OSM's failure to assure that operators 
save and reuse the topsoil. Very few, if any operators, save the 
topsoil as the law requires. Instead, they are permitted to use 
``topsoil substitutes'' and dump the irreplaceable topsoil into bottoms 
of valley fills, losing this valuable resource and destroying streams 
in the process.
Economics
    Mountaintop removal is also devastating the economy of the coal 
bearing regions of Appalachia. In 1948, there were 125,669 coal mining 
jobs in West Virginia and 168,589,033 tons of coal mined. In 1978, 
there were still 62,982 coal mining jobs in West Virginia with only 
84,696,048 tons mined. By 2010, however, only 20,452 of these jobs 
remained despite the fact that coal production had again risen to 
144,017,758 tons mined.
    So, although coal production today is roughly the same as it was 
sixty years ago, coal mining jobs have decreased by approximately 80%. 
This job loss has been driven not by environmental production or 
decreased production, but by coal operators themselves who have 
replaced workers with machines and explosives. McDowell County, which 
has produced more coal than any other county in West Virginia, is now 
one of the poorest counties in the Nation. Far from being an economic 
asset to communities, mountaintop removal devastates economies wherever 
it occurs.
Conclusion
    I hope that that this Committee it will use the budget process to 
take action compel OSM to discharge its duties. I hope that it will 
require OSM to follow the clear science and the law. The absence of 
energetic oversight invariably leads to problems, particularly with 
agencies, like OSM, that have close ties with the industries they 
regulate. We saw this very same dynamic play out, with devastating 
consequences, last year within another Department of the Interior 
agency, the Minerals Management Service. The OSM situation is really no 
different.
    Finally, I would like to take this opportunity to invite members of 
this Subcommittee and the full Committee and its staff to travel to 
West Virginia to witness the devastation caused by mountaintop removal 
to help you appreciate the incalculable harm that OSM's failure to 
enforce the Act has done to our region. We would be pleased to provide 
flyovers of mountaintop removal area and to arrange meetings with 
community members whose lives and property are severely impacted by the 
illegal mountaintop removal mines that OSM refuses to regulate.
                                 ______
                                 
    Mr. Lamborn. Well, thank you for your testimony and thank 
all four of you for being here. We are going to start our first 
round of questions, and there may be another Member or two join 
us if we could make sure they know we are doing questions now. 
First, Mr. Kitts, I would like to ask you something. You may 
have covered some of this when I was out of the room, but I 
would like a little more detail if possible in case you have 
already addressed it? Can you elaborate on what impact the 
Stream Buffer Zone Rule as anticipated by OSM and the more 
stringent regulations contained therein would have on industry, 
on the Appalachian communities and on the U.S. economy?
    Mr. Kitts. The documents that I have seen that are drafts 
or work documents generated by OSM and its contractors indicate 
that the rules affecting any activities near streams, such as 
the development of valley fields for surface mining of all 
types, not just mountaintop mining, would be severely 
restricted. I understand that an OSM official stood on a large 
surface mine in the Powder River Basin and pointed out that if 
these regulations were passed, that mining of about half of 
that reserve area would not be allowed because they could not 
guarantee that they could reconstruct the stream as it existed 
there even though it was essentially a dry wash.
    That is one component of the proposed Stream Protection 
Rule that would impact mining across the entire country. It 
would have especially devastating effects in Appalachia where 
any type of mining operation must create space on which to 
operate whether it is a surface mine or a deep mine or a 
processing plant or whatever. The streams that we are talking 
about for the most part are simply ephemeral or in some cases 
intermittent streams that are almost ditches running up these 
steep hillsides. They are not flowing streams where we are 
displacing people who like to fish or boat or anything like 
that. These are very, very small streams, so it would make 
mining in general in Appalachia extremely difficult.
    Another provision of the proposed rule that is mentioned in 
the draft EIS is that any effects on streams from underground 
mining, the change of elevation of a streambed according to the 
draft EIS would be considered something that was irreversible 
and thus would not be allowed. That would eliminate long-wall 
mining, which is the most productive means of mining in 
Northern Appalachia, in Ohio and actually are the most 
productive mines in the world, so this rule is far-reaching in 
its scope. We really, really think that the estimate of job 
losses and production impacts is vastly understated in this 
document that we have reviewed.
    Mr. Lamborn. Did the SMCRA Act ever contemplate the 
possibility that there would be some valley fill, or is that a 
new development that was not anticipated and needs to be 
addressed for the first time?
    Mr. Kitts. Actually, in the statute itself, it says when 
placing a valley fill that the designer must address the flow 
from springs, seeps and natural water courses. Underdrains must 
be placed in those fields so that water is discharged to 
provide for the long-term stability of the valley fill. The 
Fourth Circuit Court in a decision on February 13, 2009, 
clearly stated that SMCRA contemplated the placement of valley 
fills in streams.
    I was around in 1977 when the Act was passed, and the 
requirement to backfill high walls when surface mining and 
restore the ground to its original contour and to place the 
excess spoil material in engineered valley fills was a 
fundamental concept that all the other environmental 
protections were based on, so it is ludicrous to think that 
SMCRA could do all that it has done but not contemplate the 
creation of valley fills.
    Mr. Lamborn. OK. Thank you for your answers, and before I 
turn it over to the next questioner, are you all able to stay 
for another round or two, if necessary, of questions? There 
aren't a lot of us here, so I don't think each round will take 
a lot of time, but we would appreciate that opportunity. OK. 
Thank you. Now I would like recognize Representative Johnson 
from Ohio.
    Mr. Johnson. Well, thank you, Mr. Chairman, and thank you 
folks again for being with us today. Mr. Lambert, I understand 
that your agency was one of several state agencies that are 
cooperating agencies in the development of the draft 
environmental impact statement for the OSM proposed stream 
protection rule. Did OSM ever sit down with the states charged 
with implementing SMCRA and ask their opinion whether such a 
comprehensive rewrite of the 2008 Stream Buffer Zone Rule was 
necessary?
    Mr. Lambert. No, sir, they did not.
    Mr. Johnson. In your opinion, has OSM provided those states 
with a compelling reason to justify this rewrite of the rule?
    Mr. Lambert. No, sir, they have not. Actually, in their 
oversight report, they indicate that states are doing a 
commendable job in applying their programs.
    Mr. Johnson. OK. Mr. Lambert, also in your testimony you 
expressed concerns about recent changes to OSM oversight 
policies that are at odds with SMCRA state primary structure. 
Does SMCRA give OSM authority to veto state permits issued by 
the state?
    Mr. Lambert. No, sir, we believe it doesn't.
    Mr. Johnson. Have there been any legal challenges to their 
trying to do so?
    Mr. Lambert. I have been involved with the mine program in 
Virginia for 20 years, and to my knowledge, no.
    Mr. Johnson. OK. Mr. Kitts, can you briefly give an 
overview of how your company ensures that water flows are 
protected in the instances where you engage in surface mining?
    Mr. Kitts. Yes. We follow a very detailed mine development 
plant, a water management plan. We provide for sediment control 
and drainage management before mining starts. We conduct mining 
based on the geology of the particular site. For instance, if 
there are materials that might potentially create acid mine 
drainage, for instance, those materials are identified and 
specially handled in the mining process, so as a result of all 
the built-in controls over where materials go, where the water 
goes and so forth, we have been able to successfully manage our 
mining operations to avoid long-term water quality impacts.
    Now, recently EPA has brought up issues about conductivity 
in water, and OSM is apparently attempting to adopt many of 
those theories into its program. Conductivity is just a measure 
of impact, not of damage, so we think that is misguided and it 
has severely impacted the industry, and it is something that 
OSM should certainly stay away from in any regulation changes 
that it anticipates.
    Mr. Johnson. OK. It is my understanding that you 
participated or your company participated in the 2008 rewrite 
of the Stream Buffer Zone Rule, do I have that correct?
    Mr. Kitts. Yes.
    Mr. Johnson. Can you give us some idea of what your 
experience was with that process?
    Mr. Kitts. Well, me, personally, I was involved in the 
litigation Bragg v. Robertson where the opponents of mining, 
specifically Arch's Spruce Mine, claimed that valley fills were 
a violation of the Stream Buffer Zone Rule, so despite to me 
the clear reading of SMCRA that valley fills are anticipated, 
the ambiguity in the regulations led the industry to propose 
that this needs to be fixed. We don't need to be in court every 
time we apply for a surface mining permits, so the process was 
begun by OSM to clarify the rule, provide protections. I think 
they accomplished that.
    Not only did they define when activities could be done in 
streams, but it also required alternatives analysis of what can 
we do other than impact streams, and it required a minimization 
analysis to say that if we have to be in a stream, then we have 
to put in the fewest, smallest fills that allow us to conduct 
our mining activity, so again we participated in terms of 
comments in working with the state agencies to try to push that 
in that direction.
    After it was adopted, my company encouraged the State of 
Kentucky and the various entities, stakeholders there in 
advance of OSM actually implementing the 2008 rule to develop 
their own fill minimization and AOC policy, which they did by 
sitting down with the environmental groups, the regulators, 
including OSM, the state agencies and the industry, and that 
worked out very successfully.
    Mr. Johnson. I have some additional questions, but I will 
wait until the next round. Mr. Chairman, I yield back.
    Mr. Lamborn. OK. Thank you. At this point, we will start a 
second round of questions, and for Ms. Pineda or Mr. Lambert, 
how would your state be affected if this rule as proposed goes 
into effect and it has the result that many of us are concerned 
about, namely that jobs would be lost in the coal mining 
industry, production would go down and prices would go up? What 
would be the economic impact within your state if that happens?
    Mr. Lambert. Yes, sir. Actually, it was made known that 
Virginia is a cooperating agency participating in commenting on 
the chapters of the rule, and some of our comments were 
directed directly toward the economic impact on the state or 
the Commonwealth of Virginia, and we estimated that could be up 
to as many as 3,000 coal jobs. In addition, we used a 
multiplier of either a three or a four of value attached to 
those direct jobs which could mean upward of 7,000, 8,000 jobs 
entirely.
    Coal production would drop. From our state of this past 
year, we produced 21 million tons of coal. It could drop to 
somewhere between 15 and 16 million tons of coal if that rule 
was to be implemented as proposed. In addition to just the jobs 
loss, the tax revenue base for the counties would be reduced 
significantly, which most of our counties depend on that as a 
major source of their tax revenue, so the economic impact to 
Virginia would be significant.
    Mr. Lamborn. Ms. Pineda?
    Ms. Pineda. Thank you. Colorado is not one of the 
cooperating agencies on the EIS, and so I haven't fully 
reviewed the economic impact, but there are significant coal 
jobs in Colorado, so there would be the similar kind of impact 
that you see in West Virginia or Virginia and the Appalachian 
states, so I can certainly get back to the Subcommittee on 
specifically what that impact would look like.
    Mr. Lamborn. I would certainly appreciate that. Thank you.
    Ms. Pineda. OK.
    Mr. Lamborn. And, Mr. Kitts, looking at the macro level, 
the national level, if production goes down, what does that do 
to the cost of electricity and other kinds of economic impacts 
in America?
    Mr. Kitts. The ability to produce dependable, low-cost 
electricity in this country I think it something that has 
helped us build the strength that we enjoy, the middle class, 
for instance, based on manufacturing jobs that again are 
dependent on low-cost electricity. There was a new plant, 
brought something like 400 new jobs to Louisville, Kentucky, 
and the owners specifically stated it was because of the 
electricity cost based on coal-fired electricity.
    If you do such a misguided change to the regulations, 
regulations that have worked well over 30 years, and have been 
implemented on a state-by-state basis, if you change all that 
up, try to standardize and such, take the authority and the 
funding away from the states and then try to make SMCRA 
essentially mimic the Clean Water Act in all the efforts that 
are being made under it to restrict mining, the impact to the 
overall economy in this country could be extremely damaging.
    I mean, there are job losses, the increase in electricity 
prices, the disruption of the transportation system, for 
instance. If you say that we are going to lose Appalachian 
production and Appalachian jobs, but coal could be moved in 
from out west, our infrastructure is just simply not up to the 
task. They are shipping what coal can be shipped out of the 
Powder River Basin right now, so to say that we will make up 
the deficit with coal from elsewhere I don't think is a 
reasonable proposition, so it could have basically a trickle 
effect throughout the entire economy, and none of it that I see 
would be good.
    Mr. Lamborn. OK. Thank you very much. At this point, I 
would like to yield to the Ranking Member for up to five 
minutes. Thank you.
    Mr. Holt. Thanks. Mr. Lovett, I would like to ask several 
questions. Let me just state them now and ask you to address 
them. First of all, are you familiar with the EPA study that 
found that water quality in nine out of every 10 streams 
downstream from surface mining operations is impaired? If you 
are familiar with it, how serious is this effect in your 
judgment or in the judgment of the water quality scientists?
    Second, the restoration that takes place in Appalachian 
mountaintop mining is really of a different nature than what is 
done for restoration and reclamation say in Powder River or 
other areas. How many examples are there, how would you 
describe the successful reclamation efforts in Appalachia, and 
is the Office structured and funded and so forth well enough to 
accomplish the kind of restoration that is needed there?
    The third has to do with the famous rulemaking, the 
midnight rulemaking. That has come under a lot of criticism 
from the majority Members today. Do you think that the 2008 
change of the two-decade-old rule was justified or does it need 
revisiting I guess is the way I would describe it? If you could 
take all three of those, and I am sorry. I have only given you 
two or three minutes to do it.
    Mr. Lovett. That is fine, thank you. I will move quickly as 
I can. I will move backwards from your questions. The first 
question about the 2008 rule change, I think I heard Mr. Kitts 
just testify that he helped or his company helped with that 
rule change, so you can imagine that the people living near the 
mines weren't very satisfied with the rule change drafted by 
the Bush Administration and coal industry lobbyists.
    On the other hand, this rule change that OSM is proposing, 
as much as I think it is not well-considered, is done by OSM. I 
give it credit for that. It hasn't involved the environmental 
community in the rulemaking at all. The other thing I would say 
is what we think should happen is that the Reagan rule, the 
original rule should be restored, and that is what we asked OSM 
to do was just to go back to the Reagan rule. Instead, OSM on 
its own took off on this rulemaking without any input from the 
environmental community.
    Mr. Holt. So the short answer to that question is you 
thought the two-decade-old rule was fine?
    Mr. Lovett. Yes.
    Mr. Holt. Didn't need to be changed? OK. Got it. Thank you.
    Mr. Lovett. We thought that rule should not have been 
changed, and especially with the rewrite by the coal industry 
it sounds like from Mr. Kitts' testimony.
    Mr. Holt. OK. Thanks.
    Mr. Lovett. In terms of familiarity with EPA studies and 
the impairment levels, there is no question that all of the 
streams below big valley fills are impaired. Now, Mr. Kitts 
testified correctly that valley fills were anticipated by 
SMCRA. They are, but not valley fills of the size we are seeing 
today. There is a difference between a valley fill in an 
ephemeral or a smaller stream and in a perennial stream, and 
these valley fills have become so big, we are now challenging 
one valley fill that is more than two miles long, so it is 
filling a stream that is longer than two miles.
    Those are the valley fills that we think are impermissible, 
and there is no question that the fish populations, all of the 
aquatic life populations beneath these filles are significantly 
impaired and therefore violate the Clean Water Act and SMCRA. 
In terms of restoration and reclamation, Appalachian streams 
cannot be restored. Even during the Bush Administration, the 
head of the Army Corps of Engineers' regulatory branch in 
Washington testified that he had never seen a successful stream 
restoration project in Appalachia. That is because our streams 
are fed by groundwater.
    This area is coursing with water. It is not like the Powder 
River basis. If you blow up the mountain, you destroy the 
source of the streams, the groundwater, and there are no more 
streams. The streams can't be restored, haven't been restored, 
and it is really a fiction to think that they can be, and it is 
a fiction that the coal industry uses to continue to get 
permits.
    Mr. Holt. That is useful testimony. Thank you very much.
    Mr. Lamborn. OK. Thank you. Representative Johnson?
    Mr. Johnson. Thank you, Mr. Chairman. I would like to ask 
just a few quick questions, and I am not sure which of you 
needs to respond. Have any of you been involved or been in 
contact with Polu Kai, the contractor that was contracted to 
write the EIS?
    Mr. Lambert. Yes, sir. I think I can answer that question 
for you. As a cooperating agency, we were not allowed to 
contact the contractor.
    Mr. Johnson. OK. So do you have a perception or an opinion 
about why the Office of Surface Mining wanted to end that 
relationship?
    Mr. Lambert. Yes, sir. The opinion of Virginia would be 
that they ended that relationship because of the false and 
misinformation contained in the chapters that were being 
released.
    Mr. Johnson. And your assertion is that there is false and 
misleading information in those chapters?
    Mr. Lambert. Yes, sir. As a cooperating agency, we are 
certainly of the opinion that there is some false and 
misleading information. To carry that a step further, the 
numerous hours that Virginia spent on providing comments on 
that document, most of our comments were never even used or 
never showed up in that document.
    Mr. Johnson. OK. Mr. Kitts, I would like to give you the 
remainder of my time, about three and a half minutes here, to 
respond to the questions that the Ranking Member asked just a 
few minutes ago about surface mining.
    Mr. Kitts. Yes. Thank you. If you get your information from 
websites put up by anti-mining organizations, you might think 
that Appalachia is being devastated, that it is being leveled. 
One of those organizations had on its website that mountaintop 
mining had caused flooding, that it kills hundreds of people 
and left thousands homeless. That was completely false, but 
there is no way to measure the accuracy of those statements 
unless you are on the ground, and you can see what is 
happening, and what we see happening in Appalachia is well-
managed, well-controlled mining of the reserves that are left.
    About 40 percent of the coal production from Appalachia 
comes from surface mining jobs. Not all mountaintop removal 
jobs, but all types of surface mining, which I guess is now 
defined as mountaintop mining in steep terrain, so to come out 
and change a regulation that would make such mining nearly 
impossible if you can't put in fills, you can't mine through 
these small, intermittent streams up on the side of a mountain 
to do a contour mine because you can't prove that you will 
restore it back to exactly its pre-mining condition with the 
same type of insects living there and the same substrate and so 
forth, then you are going to stop mining.
    If the intent is to stop all impacts of mining, then the 
answer is you stop mining, but mining by its definition has 
impacts. It has impacts on the land. It has impacts on the 
water. The conductivity issue with the change in insect 
populations. That is considered impairment, a reasonable person 
would not say that is the reason to abandon the fundamental 
industry that supports the economy in Appalachia, the fact that 
you may not have a certain genus of May Fly, but it is replaced 
by a different insect that provides the downstream services 
that the aquatic ecosystem requires.
    There is research being done by others than EPA that 
indicates that is the case.
    Mr. Johnson. I want to ask one final question before I 
finish here. It seems to me that there really is a very overt 
attempt to basically stop mining in America and so seriously 
restrict our ability to go after the natural resources that 
will move our energy footprint forward that is being 
collaborated by and bought into by this Administration and the 
Department of the Interior and the OSM and others. Is my 
perception valid in your opinion?
    Mr. Kitts. That is my opinion. That is what I have seen. 
That is what I derived from comments made. For instance, when 
the June 2009 MOU was released, there was a press conference, 
and the head of CEQ said that this was going to allow 
Appalachia to move toward a sustainable green economy with 
green jobs, and there were comments made at that time that 
people could be put to work repairing the devastation left 
behind by surface mining. It seems like there was no 
realization or acknowledgment whatsoever that coal companies 
post bond on these mined areas. They have a legal obligation to 
do the reclamation up to standards, and it is measured over 
time, and if we fail to do that, we lose the bond, and we lose 
the right to obtain future permits.
    Mr. Johnson. OK. Thank you very much. Thank you for 
extending my time, Mr. Chairman. I yield back.
    Mr. Lamborn. OK. Thank you, and we will have one last and 
final round, and I just have basically one question and that is 
for you, Mr. Kitts. Do you believe that the process was flawed 
in how the Obama Administration and Secretary Salazar quickly 
moved from the existing 2008 rule to pursuing another rule with 
OSM?
    Mr. Kitts. Yes, I certainly do. The 2008 rule with its 
additional provisions for fill minimization, approximate 
original contour and alternatives analysis was never given a 
fair chance to be implemented on the ground to see what 
environmental benefits that would bring. That would level the 
playing field between the Appalachian states, for instance, 
where West Virginia already had such a plan in place. Of 
course, the Stream Buffer Zone Rule that existed from 1983 was 
somewhat in conflict with the statute itself, so the desire was 
not to write a new law but to remove that ambiguity, so we 
think the 2008 rule accomplished that accomplished it very 
well. Again, it was never given a chance to be put into place.
    Mr. Lamborn. What about the court decision? Was there a 
caving in to the other side as opposed to carrying out to a 
more normal conclusion?
    Mr. Kitts. There certainly was. The court decision in 
February of 2009 basically said that valley fills were legal, 
and the Corps of Engineers had the discretion that they should 
receive deference in applying the Section 404 rules and so 
forth. It was at that time that EPA specifically stepped up and 
said that we have not had time to properly evaluate all these 
pending permits, so we want to install essentially an extra 
legal process for doing permit reviews, and as a result of 
that, there have been virtually no mining permits, Section 404 
permits specifically, issued in that time.
    The regulatory program is all tied together, the Section 
404 permits, the SMCRA permits, or the EPA or the NPDES 
permits, so the tentacles of this effort to stop, slow down, 
make mining so difficult that it simply can't be done is in all 
of those programs. It is very difficult to get a water 
discharge permit now. It is almost impossible to get a Corps 
permit, so the SMCRA permit that is issued right now is almost 
meaningless because it is sitting on the shelf.
    Under the changes that are being proposed as per these 
draft regulations and EIS, it would just essentially roll 
everything into one, formalize it and make mining in Appalachia 
extremely difficult, extremely expensive, and probably, in many 
cases, not practical.
    Mr. Lamborn. OK. Thank you so much. At this point, I will 
see if Representative Johnson has any final questions?
    Mr. Johnson. I do. I do have a couple of final ones. In 
Director Pizarchik's testimony, he comments that state 
permitting actions and inspection of mines are among the most 
important ways to help ensure the law is being implemented and 
to protect society and the environment. However, in their 
budget, the Department proposes to decrease funding for these 
state activities by $11 million. Can you explain to us how the 
state permitting and inspections process will be affected by 
this $11 million proposed cut? I am not sure which one of you 
want to answer that. Probably, Mr. Lambert?
    Mr. Lambert. Yes, sir, I will be happy to take that 
question. You asked me a question a minute ago if primacy had 
ever been challenged. What this additional oversight inspection 
rule would do, actually OSM would have the ability now to come 
in and challenge the states' permitting processes thereby the 
states have that primacy right, right now, to review and 
approve mining permits, and we are certainly concerned about 
states' primacy if that happens.
    Also, we are concerned about the additional oversight 
inspections that they would be doing in addition permit 
decisions. Additional inspections on the ground without state 
inspectors who have the knowledge of the permitted area, who 
has the knowledge of the permitted area, who has the knowledge 
of the program would certainly put OSM in a position of second 
guessing and additional resources that we would have to expend 
to go out and take care of perceived or violations that will be 
discovered by OSM, so the additional resources, second-guessing 
our permit decisions, we can see the states' programs suffering 
from those issues.
    Mr. Johnson. And this reduction in budget authorization, 
funding authorization of $11 million, that only serves to 
exasperate that situation, right?
    Mr. Lambert. You are correct. That would only increase the 
reductions that we would have to take in our state program to 
absorb that cut.
    Mr. Johnson. OK. Let's see. From a state perspective, Mr. 
Lambert, what are your thoughts on OSM no longer conducting 
emergency abandoned line mine reclamation projects and the 
closing of OSM state emergency offices? Do the states have 
adequate resources in existing grants to carry out these 
functions on their own, or will we see a decrease in abandoned 
land mine reclamation projects?
    Mr. Lambert. For Virginia, we do not have the resources to 
absorb the emergency program. We are operating on a limited 
staff at this point with a limited amount of money to reclaim 
only the Priority 1 and Priority 2 sites that you heard talked 
about from Director Pizarchik this morning. If you add in 
having to take the emergency program, then those resources that 
were dedicated to the Priority 1's and Priority 2's, which is 
public health and safety, we would no longer be able to do 
those and have to focus only on the emergency program. In 
addition, if we go to the competitive bid process like is being 
proposed, there is no way we could plan a budget from year to 
year even to do Priority 1 and Priority 2 projects.
    Mr. Johnson. Yes.
    Mr. Lambert. We would be tied up in a competitive bid 
process pitting Virginia, Kentucky, all the other states 
against one another on who is going to get any money for that 
particular year, and I think Ms. Pineda could probably address 
that a little further than I could since she is directly 
related to the AML program.
    Ms. Pineda. Yes. Thank you. Yes, it would be a hardship, 
particularly the emergency program on minimum program states 
that only get between like $2 and $3 million a year. It is 
specifically a hardship on them, and then in addition, OSM 
still has some of the regulatory authority to declare 
emergencies, so on one hand, they are going to cut the funding, 
but on the other hand, they still want to have some say in 
whether or not a site is an emergency and whether or not states 
can do that work, so that certainly is an issue.
    As Butch said, Mr. Lambert noted the competitive process of 
these grants is also problematic because it takes several years 
for us to develop AML projects going through the NEPA process, 
going through our public participation process and all the 
different communities and identifying these high-priority 
projects, so going to a competitive process year to year would 
certainly hamper our process.
    Mr. Johnson. Sure. I appreciate your answers. Real quickly, 
let me close with saying this. I appreciate the testimony from 
all of you, and I am disturbed because I hear creative double 
talk coming from the Department and from the Administration. 
Out of one side they scream protect the environment, protect 
the environment. Out of the other side, they handcuff the 
states, reduce budgets and hamper your ability to respond to 
cleanup activities, and then they want to use those as 
justification for further regulatory outreach, over-reach. It 
is just kind of sad. Thank you, and, Mr. Chairman, I yield.
    Mr. Lamborn. OK. Thank you. That concludes our questions. I 
want to thank each of you for being here and for your time and 
for your testimony. Members of the Subcommittee may have 
additional questions for the record, and I would ask that you 
would respond to these in writing should you receive these, and 
as a matter of final business, I have a letter here dated 
February 27 of this year from the Western Governors Association 
to Secretary Salazar detailing concerns about the proposed 
rulemaking process, and I would ask that it be entered into the 
record without objection. So ordered. Thank you for being here, 
and this hearing is concluded.
    [Whereupon, at 12:11 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [A letter submitted for the record by the Alabama Surface 
Mining Commission, Indiana Department of Natural Resources, 
Kentucky Department for Natural Resources, Railroad Commission 
of Texas, Utah Division of Oil, Gas and Mining, Virginia 
Department of Mines, Minerals and Energy, West Virginia 
Department of Environmental Protection, and Wyoming Department 
of Environmental Quality follows:]

November 23, 2010

The Honorable Joseph G. Pizarchik
Director
Office of Surface Mining, Reclamation and Enforcement
U.S. Department of the Interior
1951 Constitution Avenue, N.W.
Washington, DC 20240

Dear Director Pizarchik:

    We are writing to you as cooperating agencies that are 
participating in the Office of Surface Mining's development of a draft 
Environmental Impact Statement (EIS) to accompany a soon-to-be-proposed 
rule on stream protection. Our role as cooperating agencies, as defined 
by the memoranda of understanding that each of us entered into with 
your agency, is to review and comment on those Chapters of the draft 
EIS that are made available to us (at present, Chapters 2 and 3). Based 
on our participation to date, we have several serious concerns that we 
feel compelled to bring to your attention for resolution.
    Without rehashing our previously articulated concerns about the 
need and justification for both the proposed rule and the accompanying 
EIS, we must object to the quality, completeness and accuracy of those 
portions of the draft EIS that we have had the opportunity to review 
and comment on so far. As indicated in the detailed comments we have 
submitted to date, there are sections of the draft EIS that are often 
nonsensical and difficult to follow. Given that the draft EIS and 
proposed rule are intended to be national in scope, we are also 
mystified by the paucity of information and analysis for those areas of 
the country beyond central Appalachia and the related tendency to 
simply expand the latter regional experience to the rest of the country 
in an effort to appear complete and comprehensive. In many respects, 
the draft EIS appears very much like a cut-and-paste exercise utilizing 
sometimes unrelated pieces from existing documents in an attempt to 
create a novel approach to the subject matter. The result so far has 
been a disjointed, unhelpful exercise that will do little to support 
OSM's rulemaking or survive legal challenges to the rule or the EIS.
    We also have serious concerns regarding the constrained timeframes 
under which we have been operating to provide comments on these flawed 
documents. As we have stated from the outset, and as members of 
Congress have also recently noted, the ability to provide meaningful 
comments on OSM's draft documents is extremely difficult with only five 
working days to review the material, some of which is fairly technical 
in nature. In order to comply with these deadlines, we have had to 
devote considerable staff time to the preparation of our comments, 
generally to the exclusion of other pressing business such as permit 
reviews. While we were prepared to reallocate resources to review and 
comment on the draft EIS Chapters, additional time would have allowed 
for a more efficient use of those resources and for the development of 
more in depth comments.
    There is also the matter of completeness of the draft Chapters that 
we have reviewed. In the case of both Chapters 2 and 3, there are 
several attachments, exhibits and studies that were not provided to us 
as part of that review. Some of these are critical to a full and 
complete analysis of OSM's discussion in the chapters. OSM has 
developed a SharePoint site that will supposedly include many of the 
draft materials, but to date the site is either inoperable or 
incomplete.
    As part of the EIS process with cooperating agencies, OSM committed 
itself to engage in a reconciliation process whereby the agency would 
discuss the comments received from the cooperating agencies, especially 
for purpose of the disposition of those comments prior to submitting 
them to the contractor for inclusion in the final draft. The first of 
those reconciliations (which was focused on Chapter 2) occurred via 
conference call on October 14. The call involved little in the way of 
actual reconciliation but amounted to more of an update on progress 
concerning the draft EIS. There was talk about another reconciliation 
session, but to date this has not occurred. There were also several 
agreements by OSM during the call to provide additional documents to 
the states for their review, including a document indicating which 
comments on Chapter 2 from cooperating agencies were accepted and 
passed on to the contractor, as well as comments provided by OSM. OSM 
also agreed to consider providing us a copy of a document indicating 
those comments that were not accepted. To date, neither of these 
documents has been provided to us. And even though a draft of Chapter 3 
has now been distributed and comments have been provided to OSM, we are 
still awaiting a reconciliation session on this chapter. \1\
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    \1\ We also understand that OSM had planned to contact the states 
to provide estimates of the additional time and resources that would be 
required to review/process a permit under the proposed rule. This 
information would be used by OSM to prepare at least one of the burden 
analyses that are required by various executive orders as part of 
federal rulemakings. We now understand that OSM plans to generate these 
estimates on its own. We are somewhat mystified about how OSM intends 
to accomplish this without direct state input and urge the agency to 
reconsider the methodology under which they are currently operating.
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    Frankly, in an effort to provide complete transparency and openness 
about the disposition of our comments, we believe the best route is for 
OSM to share with us revised versions of the Chapters as they are 
completed so that we can ascertain for ourselves the degree to which 
our comments have been incorporated into the Chapters and whether this 
was done accurately. We are therefore requesting that these revised 
Chapters be provided to us as soon as practicable.
    We understand that OSM is considering further adjustments to the 
time table for review of additional Chapters of the draft EIS. We are 
hopeful that in doing so, the agency will incorporate additional time 
for review by the cooperating agencies, especially given the size and 
complexity of Chapter 4 and the full draft EIS. Pushing back the time 
for the completion of these drafts by OSM without additional time being 
provided for review by the cooperating agencies would be wholly 
inappropriate. We request that you please provide us with these new 
time tables as soon as possible so that we can begin our own internal 
planning.
    You should know that, as we continue our work with OSM on the 
development of the draft EIS, some of us may find it necessary to 
reconsider our continued participation as cooperating agencies pursuant 
to the 30-day renegotiation/termination provision in our MOUs. Under 
the NEPA guidance concerning the status of cooperating agencies, some 
of the identified reasons for terminating that status include the 
inability to participate throughout the preparation of the analysis and 
documentation as necessary to meet process milestones; the inability to 
assist in preparing portions of the review and analysis and help 
resolve significant environmental issues in a timely manner; or the 
inability to provide resources to support scheduling and critical 
milestones. As is evident from much of the discussion above, these are 
some of the very issues with which many of the cooperating agencies are 
struggling given OSM's time schedule for the EIS and the content of the 
documents distributed to date. We continue to do our best to meet our 
commitments under the MOUs but based on our experience to date, this 
has become exceedingly difficult.
    Finally, as you have likely noted throughout the submission of 
comments by many of the cooperating agencies, there is great concern 
about how our comments (limited as some of them are due to time 
constraints for review) will be used or referred to by OSM in the final 
draft EIS that is published for review. While the MOUs we signed 
indicate that our participation ``does not imply endorsement of OSM's 
action or preferred alternative'', given what we have seen so far of 
the draft EIS we want to be certain that our comments and our 
participation are appropriately characterized in the final draft. 
Furthermore, since CEQ regulations require that our names appear on the 
cover of the EIS, it is critical that the public understand the purpose 
and extent of our participation as cooperating agencies.
    As it is now, the states are wrestling with the consequences of 
their names appearing on the EIS, as it would assume tacit approval 
independent of the comments that have/have not been incorporated into 
the document. And while the cooperating agency has the authority to 
terminate cooperating status if it disagrees with the lead agency 
(pursuant to NEPA procedures and our MOUs), the states realize the 
importance of EIS review and the opportunity to contribute to, or 
clarify, the issues presented. We therefore request an opportunity to 
jointly draft a statement with you that will accompany the draft EIS 
setting out very specifically the role that we have played as 
cooperating agencies and the significance and meaning of the comments 
that we have submitted during the EIS development process.

Sincerely,

Randall C. Johnson
Director
Alabama Surface Mining Commission

Bruce Stevens
Director
Division of Reclamation
Indiana Department of Natural Resources

Carl E. Campbell
Commissioner
Kentucky Department for Natural Resources

John Caudle
Director
Surface Mining and Reclamation Division
Railroad Commission of Texas

John Baza
Director
Utah Division of Oil, Gas and Mining

Bradley C. Lambert
Deputy Director
Virginia Department of Mines Minerals and Energy

Thomas L. Clarke
Director
Division of Mining & Reclamation
West Virginia Department of Environmental Protection

John Corra
Director
Wyoming Department of Environmental Quality
                                 ______
                                 
    [A letter submitted for the record by Gregory E. Conrad, 
Executive Director, Interstate Mining Compact Commission, and 
Douglas C. Larson, Executive Director, Western Interstate 
Energy Board, on behalf of the WIEB Reclamation Committee, 
follows:]

January 7, 2011

The Honorable Joseph G. Pizarchik
Director
Office of Surface Mining Reclamation and Enforcement
1951 Constitution Avenue, N.W.
Washington, DC 20240

Dear Director Pizarchik:

    This letter represents the comments of the Interstate Mining 
Compact Commission (IMCC) and the Reclamation Committee of the Western 
Interstate Energy Board (WIEB) concerning three draft documents 
recently released by the Office of Surface Mining (OSM) as part of its 
Oversight Improvement Actions initiative. The documents consist of a 
new directive on ``Ten Day Notices'' (INE-35), a revised directive on 
``Corrective Actions for Regulatory Program Problems and Action Plans'' 
(REG-23) and a revised directive on ``Oversight of State and Tribal 
Regulatory Programs'' (REG-8). Together, these three documents 
represent the heart of OSM's oversight procedures and policies under 
the Surface Mining Control and Reclamation Act of 1977 (SMCRA) and its 
implementing regulations. Given the fact these are OSM directives, they 
are binding on OSM only and cannot, in and of themselves, affect the 
rights (or impose or alter obligations) of the states beyond the 
requirements in SMCRA and the Secretary's regulations. Nonetheless, 
given the nature and scope of these documents, they are of critical 
importance to the state regulatory authorities that we represent. 
Several of our member states implement approved regulatory programs 
under SMCRA and are therefore subject to the federal oversight process 
anticipated by the Act and addressed by these three draft documents.
    We alerted OSM to our initial concerns with the direction and 
approach that the agency was taking with respect to federal oversight 
in comments we submitted to OSM on January 19th of last year. Since 
that time, we have submitted additional comments on various components 
of the oversight initiative (see our comments of July 8, 2010) and have 
also had occasion to meet with OSM both formally and informally to 
discuss the agency's actions. The most recent draft documents not only 
fail to reflect the nature and substance of our comments and 
discussions to date, but appear fully committed to a preconceived 
decision regarding the need for a strong command and control approach 
by the federal government to the implementation of SMCRA in ways not 
supported by the Act and the Secretary's own regulations.
    We are well aware of the fact that the majority of OSM's oversight 
improvement actions have been in response to a June 2009 Memorandum of 
Agreement between the Interior Department, the U.S. Environmental 
Protection Agency and the U.S. Army Corps of Engineers. These three 
directives, in particular, represent commitments made by the Interior 
Department under the MOU to ``remove [alleged] impediments to OSM's 
ability to require correction of permit defects in SMCRA primacy 
states'' and ``to reevaluate and determine how OSM will more 
effectively conduct oversight of state permitting, state enforcement 
and regulatory activities under SMCRA.'' However, nowhere during the 
time since the MOU was released and over the course of OSM's release of 
its various oversight improvement actions has the Interior Department 
or OSM articulated exactly what its vision or philosophy is for 
oversight. And while we have now seen a plethora of proposed approaches 
for handling the specifics of oversight (such as the use of Ten Day 
Notices, oversight inspections, and data collection and analysis), we 
continue to be at a loss for OSM's overall objective for these various 
approaches.
    In the comments that follow, we present our perspective on what 
oversight means and how it is to be conducted consonant with the 
requirements of SMCRA and OSM's regulations. Much of our philosophy 
regarding federal oversight is the result of a collaborative process 
that began in the early 1990's through federal/state discussions and 
negotiations about the meaning of oversight and our respective roles in 
the process. Interestingly, where we ended up with the specifics of the 
process (via Directive REG-8) is completely consistent with SMCRA and 
OSM's regulations, as it obviously should be. However, OSM's new 
direction, as evidenced by its various oversight improvement actions 
and in particular the three directives that are the subject of this 
letter, suggests that the agency has changed its philosophy about 
oversight, and along with it, the specific approaches that align with 
this significant policy shift.
    We are extremely concerned that this cultural shift by OSM will 
completely undermine the progress that we have made in this area over 
the years. It will also stifle the innovative ideas and approaches that 
have been the hallmark of our regulatory programs and the oversight 
process in recent years, particularly as states put forth new ways of 
dealing with what have often been viewed as intractable issues. A 
heavy-handed approach to oversight, in which state permitting decisions 
are second-guessed and differences of approach to environmental 
challenges are rejected in favor of a one-size-fits-all criterion, 
discourages new thinking about problems and inevitably makes a mockery 
of primacy and all that it stands for.
    While we set out many of our concerns in the comments that follow, 
along with both legal and statutory support and suggested changes to 
the directives, the issues and the procedures addressed by these 
directives do not lend themselves well to paper arguments. We believe 
it is therefore essential that we sit down with you, our federal 
partners, and talk through our concerns and work through the details of 
a realistic approach to oversight. We have done this in the past with 
remarkable results. In fact, the current oversight directive (which is 
still in effect) calls for the Oversight Steering Committee to 
``analyze the implementation and results of oversight policies, 
standards and procedures to ensure that the objectives of SMCRA are 
achieved.'' This Committee should be convened to undertake a detailed 
review of the proposed revisions to both REG-8 and REG-23. A separate 
working group should be composed to address INE-35 and the implications 
of reinstituting this directive. In the meantime, we urge your serious 
consideration of the following comments as you contemplate next steps 
in the federal oversight process.
Introduction and Background
    The Surface Mining Control and Reclamation Act of 1977 (SMCRA) is 
one of several laws passed in the environmental decade of the 1970s 
that provided for a cooperative and somewhat unique blend of federal 
and state authority for implementation of its provisions. One of the 
law's key underpinnings was that the primary governmental 
responsibility for developing, authorizing, issuing and enforcing 
regulations for surface mining and reclamation operations subject to 
the Act should rest with the states with an oversight role accorded to 
OSM. It has taken a good portion of the past thirty years to sort out 
the components of these often competing roles, but the result has been 
a balance of authority that generally works.
    The first attempt at designing a meaningful oversight program in 
the early 1980's (following on the heels of primacy program approvals) 
was primarily an exercise in data gathering or output measurement. We 
were concerned then with numbers of inspections, numbers of permit 
reviews and numbers of enforcement actions. However, the numbers that 
were collected into oversight reports told us little or nothing about 
whether the objectives of SMCRA were being met. OSM also tended to look 
behind state permitting decisions to determine whether OSM would have 
handled them in the same way. This type of paternal ``second-guessing'' 
generated significant conflict and even resentment between the states 
and OSM. Rather than a statistics-gathering/second-guessing approach, 
it made more sense to focus on the following: what was happening on the 
ground?; how effectively were state programs actually protecting the 
environment?; how well was the public being protected and how 
effectively were citizens being served?; how well were we working 
together as state and federal governments in implementing the purposes 
of SMCRA?
    Following an effort by OSM and the states in the late 1980's to 
fashion a more effective state program evaluation process based on a 
goal-oriented or results-oriented oversight policy and another review 
of the process in the mid-1990's, a performance measurement approach 
was adopted, based in large part on the requirements of the Government 
Performance and Results Act (GPRA). The new outcome indicators focus on 
the percentage of coal mining sites free of off-site impacts; the 
percentage of mined acreage that is reclaimed (i.e. that meets the bond 
release requirements for the various phases of reclamation); and the 
number of federal, private and tribal land and surface water acres 
reclaimed or mitigated from the effects of natural resource degradation 
from past coal mining, including water quality improvement and 
correction of conditions threatening public health or safety. These new 
measurements are intended to provide Congress and others with a better 
picture of how well SMCRA is working and how well the states are doing 
in protecting the public and the environment pursuant to their 
federally-approved programs.
    From the time of initial state program approvals (from 1980 through 
1982) until Robert Uram was confirmed Director in 1994, far more effort 
and resources were spent arguing and litigating over the validity of 
issues raised by OSM during oversight than in trying to find solutions. 
Furthermore, the regulated coal industry was constantly caught in the 
middle of disputes between OSM and states. By 1993, it had reached the 
point where IMCC submitted a petition for rulemaking in order to return 
some meaning to primacy as intended by SMCRA. (See 58 FR 54594, August 
17, 1993, copy attached).
    Before Director Uram arrived in March 1994, Secretary of Interior 
Bruce Babbitt brought in outside leadership on a temporary basis and 
launched a broad review of OSM in an effort to understand why there was 
such a high level of controversy surrounding OSM and its programs. 
Although Director Uram made organizational changes that partially 
addressed this issue, the primary change he implemented was the 
approach to oversight embodied in current Directive REG-8. Those 
changes, and the work of the state/federal Oversight Steering Committee 
that helped to direct them, were recognized by Vice President Gore with 
a ``Hammer Award'' under the National Performance Review for helping 
``to build a government that works better and costs less''. State 
performance-based programs have also received national recognition for 
their effectiveness and efficiency.
    In addition to a re-examination of the oversight process, the 
antagonistic environment between OSM and the states led to the 
development of the ``Ten-Day Notice'' rule in 1988 (30 CFR Section 
843.12). That rule was not fully and effectively implemented until the 
Clinton Administration under the leadership of Director Uram following 
the rule's validation in federal court in 1994. In response to the 
continued tensions between OSM and the states, and partially in 
response to IMCC's rulemaking petition on appropriate federal oversight 
and enforcement action in primacy states, Director Uram developed 
``Principles of Shared Commitment'' which served as the basis for the 
joint development by OSM and the states of the oversight policy (REG-8) 
that is still in operation today.\1\
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    \1\ The TDN rule was also in partial response to a rulemaking 
petition by industry on federal NOV authority. In addition to 
clarifying the ``appropriate action'' and ``good cause'' criteria with 
respect to state responses to TDNs, it also provided states an appeal 
process as part of the TDN process within which to raise their 
concerns.
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    As a result, during the past fifteen years, the working 
relationship between the states and OSM has been much more productive 
and non-contentious. We have moved beyond the second-guessing of state 
decisions that predominated the early years of state program 
implementation and instead are engaged in more cooperative initiatives 
where OSM strives to support the states through technical advice and 
training and where the states and OSM work together to solve difficult 
policy and legal questions. OSM's oversight program is more focused on 
results, looking at on-the-ground reclamation success and off-site 
impacts, which better reflect the true measure of whether the purposes 
of SMCRA are being met.\2\ We articulated many of these perspectives in 
a letter to the Obama/Biden Transition team dated December 4, 2008, a 
copy of which is attached. It includes a resolution on state primacy 
adopted by the IMCC member states, which we hereby incorporate by 
reference.
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    \2\ In the most recent official statement by OSM regarding federal 
oversight of state programs, former OSM Director Brent Wahlquist stated 
the following at an oversight hearing conducted on November 13, 2007 by 
the Senate Committee on Energy and Natural Resources concerning ``The 
Surface Mining Control and Reclamation Act of 1977: Policy Issues 
Thirty Years Later'': ``The first years after SMCRA's passage were 
filled with controversy, contention, litigation, and uncertainty. OSM 
faced the challenge of striking the proper balance between oversight, 
direct enforcement, and assistance, in order to promote both qulity 
state programs and achieve a high level of industry compliance. Through 
the years, efforts to clarify OSM's oversight role, increase 
cooperation with states, develop a training program, provide technical 
tools, and promote technology transfer have largely eliminated the 
highly contentious relationship with states and other interested 
parties that existed during the early years of SMCRA. We believe that 
OSM has succeeded in its efforts to develop and implement a stable 
regulatory structure that achieves the desired balance between 
environmental protection and energy production, while respecting the 
role of states as the primary regulators.''
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    Unfortunately, almost everything OSM has laid out in its recent 
Oversight Improvement Actions documents seems designed to undermine 
these accomplishments and return us to a time when OSM was at its 
maximum size and its ineffective worst. What is contemplated by OSM's 
suggested approach is far more than a reexamination of the process to 
improve/enhance oversight--it is closer to a complete reinvention, in 
contravention of the Secretary's rules. It appears to be the 
dismantling of a good oversight product and the replacement of it with 
an older and much more expensive model that has already proven to be 
ineffectual.\3\
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    \3\ Nowhere in OSM's Oversight Improvement Actions document has OSM 
suggested, much less substantiated, that is has missed something in its 
evaluation of state programs, or been precluded from conducting 
effective federal oversight. In contrast, a review of data submitted as 
part of the state program evaluation process over the past 20 years 
(and reported in OSM's annual reports to the public) demonstrates that 
there has been a dramatic reduction in citizen complaints, TDNs and 
federal enforcement in primacy states.
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Draft Directive INE-35 re Ten-Day Notices
Overview
    The primary premise behind OSM's newly revised directive on TDNs 
rests on a decision by OSM Director Pizarchik that is contained in his 
memorandum dated November 15. In that memorandum, Director Pizarchik 
states that ``this guidance clarifies that OSM's TDN and pertinent 
Federal enforcement regulations at 30 CFR Parts 842 and 843 apply to 
all types of violations, including violations of performance standards 
or permit conditions and violations of permitting requirements.'' 
Director Pizarchik notes the effect of this decision is to ``reject the 
rationale set forth in the Metiki decision and to reaffirm OSM's 
historic position on this issue.'' There are myriad problems with the 
Director's memorandum and its rationale which we will address below.
    Firstly, we do not believe that a Departmental decision rendered by 
an Assistant Secretary on behalf of the Secretary of the Interior can 
be summarily reversed by a Bureau Director with the concurrence of a 
Deputy Assistant Secretary, as was done here. The letter decision of 
October 21, 2005 rendered by then Assistant Secretary Rebecca Watson 
was clearly designated as a ``final decision of the Department of the 
Interior'' and was based on a substantive review of SMCRA provisions as 
interpreted by Federal court decisions. Hence it remains the position 
of the Secretary and is binding on OSM until such time as either the 
Secretary chooses to reverse it or a federal court rules otherwise.
    Secondly, Director Pizarchik states that his decision ``reaffirms 
OSM's historic position on this issue.'' However, OSM's position is 
irrelevant if it is in conflict with the Secretary's position regarding 
SMCRA and the Secretary's own regulations. Further, history shows that 
OSM has struggled with its position on whether TDNs should apply to 
``all types of violations'', and specifically whether TDNs should be 
issued to state regulatory authorities with respect to permit defects. 
As far back as 1987, OSM has issued a series of directives, reports and 
recommendations attempting to articulate the appropriate balance of 
jurisdiction and programmatic responsibility with respect to federal 
oversight of state permitting decisions. Letters from IMCC to OSM 
concerning the matter over the period 1995--1997 during the Clinton/
Gore Administration are attached that evidence the wide range of 
discussions that occurred during this period and that eventually led to 
revised versions of INE-35 to accommodate state concerns. However, 
occasional confusion and concern related to the oversight of state 
permitting decisions continued and thus the Secretary rendered a final 
decision on the matter in the Metiki case, which ultimately led to the 
rescission of OSM's sixth iteration of INE-35 in 2006.
    Interestingly, since the rescission of the last version of INE-35 
in 2006, there have been few cases that we aware of where OSM felt the 
need to rely on the use of a TDN to address state permitting issues. 
The only exception is the recent TDN issued to the state of Oklahoma 
involving Georges Colliers, Inc. (Permit 54/86-4105), which we will 
discuss later in our comments. We believe that over the past five 
years, to the extent that there have been OSM concerns regarding state 
permitting matters, these have been appropriately handled under the 
state program oversight process pursuant to OSM's Directive REG-8. This 
is as it should be given OSM's limited statutory role to oversee the 
administration of state regulatory programs, which includes the state 
permitting process, but not individual permits. More on this later in 
our comments.
    Thirdly, there is the matter of legal support for Director 
Pizarchik's November 15 memorandum. The memorandum references the legal 
advice received from the Office of the Solicitor regarding the use of 
TDNs in primacy states. However, short of the November 16 decision 
document in the Oklahoma TDN case referenced above (which contains some 
limited jurisdictional analysis), we have not seen this larger legal 
analysis. Given the significance of the Director's reversal of the 
Secretary's decision in the Metiki case, which included extensive legal 
analysis of its own from the Solicitor's office, we believe it is 
critical that the Director release this analysis for our review.
    Importantly, beyond the lack of a rational basis in the Director's 
November 15, 2010 memorandum refuting the carefully articulated legal 
analysis laid out in Secretary Watson's decision, the changes being 
contemplated in revised directive INE-35 dramatically affect the rights 
of both state regulatory authorities and mine operators and thus 
constitute rulemaking subject to the Administrative Procedures Act 
(APA). Any significant adjustments to these rights must occur through a 
formal rulemaking process that lays out a basis and purpose for the 
rule demonstrating why it is needed and how it is consistent with 
SMCRA--hurdles that, as explained in more detail below, cannot be met.
    Secretary Watson's decision in the Metiki case laid out broad 
principles of general application in reaching a case-specific decision. 
However, despite its broad circulation, no one stepped forward in any 
forum with jurisdiction to challenge the merits of the decision's 
arguments or to claim that it reflected a change in policy. Rather, as 
elaborated upon below, in 2007, the Secretary referenced this decision 
and its rationale in support of removing Section 843.21 from the CFR 
after receiving comments strongly supporting both the proposed removal 
and the rationale for such a change in the proposed rule. No negative 
comments were received on either the rule's removal or the rationale 
behind doing so.
    The Director's memorandum refers to the ``confusion'' that has 
allegedly attended OSM's oversight and enforcement responsibilities 
with respect to permitting issues arising under state regulatory 
programs, purportedly attributable to the departmental decision in the 
Metiki case. Based on our experience, there appears to be little in the 
way of confusion at the OSM staff level that we aware of, especially 
given the clear articulation of the department's position concerning 
the use of TDNs to challenge state permitting decisions in the Metiki 
decision document. To the contrary, we believe it is the Director's 
memorandum that will lead to new confusion and potential controversy. 
As we explain below, Section 521 of SMCRA and the agency's regulations 
at 30 CFR Parts 842 and 843, when read in context with all relevant 
provisions in SMCRA, were never intended to apply to state permitting 
decisions.
    But as importantly, OSM's decision to boldly declare in the 
November 15 memorandum and the revised version of INE-35 that TDNs 
apply to ``all violations of permitting requirements'' in primacy 
states makes no practical sense and will lead to the very confusion OSM 
hopes to avoid. There are several related problems here:
          OSM intermixes the use of terms like ``permit 
        defect'' and ``permitting violation''. Clearly SMCRA and OSM's 
        implementing regulations are structured to assure that all 
        permit requirements and permit conditions are complied with by 
        mine operators and that violations of those requirements or 
        conditions lead to enforcement action by the regulatory 
        authority. However, where OSM determines that a state (as 
        opposed to a mine operator) is failing in some way to comply 
        with the permitting provisions of its approved program, the 
        only appropriate route for OSM to pursue is limited federal 
        intervention that is permissible after following the applicable 
        notice and hearing requirements set forth in sections 504 and 
        521 of SMCRA and further elaborated upon in Part 733 of OSM's 
        rules. If by its use of the term ``permitting violation'', OSM 
        means violations of a state-issued permit by a mine operator, 
        then the ten day notice requirements of section 521(a)(1) would 
        be applicable. If, however, OSM means differences of opinion 
        between itself and the state regarding appropriate 
        implementation of the state's permitting function, then the 
        notice and hearing provisions of section 521(b) come into play 
        (following an impasse between the state and OSM to resolve the 
        matter). It matters little whether this involves one permit 
        decision or a series of permitting decisions--in every case 
        where there is a difference of opinion between state and 
        federal regulatory authorities (whether self-initiated by OSM 
        as part of program oversight or triggered by a citizen 
        complaint), SMCRA sees this as a programmatic issue requiring 
        resolution through the Part 732 and 733 process, failing all 
        else.
          The use of the term ``violation'' throughout SMCRA 
        and OSM's own regulations envisions an act of noncompliance by 
        a mining operator for which abatement is possible. (See 
        definition of ``violation'' at section 701.5). OSM's regulation 
        at 843.12 reinforces this understanding when it refers to OSM's 
        authority to issue NOVs ``during federal enforcement of a state 
        program under section 504(b) or 521(b) of the Act and Part 733 
        of this chapter'', meaning after the notice and hearing 
        required for federal takeover of all or part of a state 
        program, after which OSM then becomes the regulatory authority 
        responsible for enforcing the provisions of the state-issued 
        permit. Any other interpretation leads to absurd results. For 
        instance, let's assume that OSM believes a state did not follow 
        its program requirements for a cumulative hydrologic impact 
        analysis (CHIA) and thus asserts that the state ``violated'' 
        this permitting component of its state program and that the 
        permit is therefore ``defective''. If OSM issues a TDN to the 
        state, and the state refuses to take further action (based on 
        its belief that it fully complied with its program 
        requirements), under OSM's reading of the Act and its rules, it 
        would be authorized to issue a notice of violation to the mine 
        operator. What would OSM require for abatement of the 
        violation? That the operator force the state RA to revise the 
        permit? What if the state refuses? The operator would then be 
        faced with a cessation order for something he had no ability to 
        control or abate. Would OSM further consider the permit 
        ``invalid'', thereby subjecting the operator to a charge of 
        ``mining without a permit''? If so, an imminent harm cessation 
        order would be the order of the day and a TDN wouldn't be 
        needed in the first place. Let's assume that the state agreed 
        from the outset to address the specific defect alleged by OSM. 
        If the state continued to abide by its view of CHIA 
        determinations under its approved program for other permits, 
        OSM would be faced with a continuing round of TDNs, rather than 
        focusing on the programmatic issue through oversight 
        discussions or, if all else fails, a federal takeover of this 
        aspect of the state program.
          The definition of what types of ``violations'' lead 
        to TDNs is further complicated by the language used in OSM's 
        draft TDN directive (INE-35), wherein a ``permit defect'' is 
        defined as a type of ``violation'' consisting of ``any 
        procedural or substantive deficiency in a permit-related action 
        taken by the RA.'' Several examples follow, including the broad 
        criterion ``an error in the analysis of technical or other 
        information of plans.'' It was this very type of second-
        guessing language that generated so much confusion and 
        controversy in the past. Essentially, any difference of opinion 
        between an OSM field office oversight inspector and a state 
        permit reviewer will result in a violation of SMCRA, thereby 
        leading to a TDN and eventual federal enforcement action. Not 
        only does this fly in the face of primacy under SMCRA, it will 
        also result in a monumental waste of government resources due 
        to intergovernmental squabbling. Furthermore, these types of 
        permit ``defects'' are not violations attributable to the 
        operator; they are programmatic issues between OSM and the 
        state that can only be addressed through direct interaction 
        between these two parties and outside a process that is focused 
        on enforcement against an operator. Clearly the situation begs 
        for a different approach to oversight, as eluded to above.
Legal and Statutory Framework
    The Surface Mining Control and Reclamation Act establishes a two-
phased implementation scheme for the regulation of surface coal mining 
operations. The first stage, or ``interim program'', involves the 
promulgation of federal standards implementing certain aspects of SMCRA 
with federal enforcement of those standards accompanied by continuing, 
or concurrent, state regulation. 30 U.S.C. Sec. 1252. The second phase, 
or ``permanent program'', is to be adopted in each state through a 
state or federal program ``with enforcement responsibility lying with 
either the State or Federal Government.'' Hodel v. Virginia Surface 
Mining and Reclamation Association, 452 U.S. 264, 269 (1981) (emphasis 
added). If a state receives approval of its program, it assumes 
exclusive jurisdiction, or ``primacy'', over the regulation of surface 
coal mining operations within its borders, 30 U.S.C. Sec. 1253(a) and 
the ``statute does not provide for concurrent jurisdiction in the 
states and federal government.'' Haydo v. Amerikohl Mining Co., Inc., 
830 F.2d 494, 497 (3d Cir. 1987). See also id. at 497 (``We have 
encountered nothing...which leads us to believe that anything other 
than the ordinary meaning of `exclusive' was intended.'')
    In a primacy state, it is the state law, state regulations and a 
state-issued permit which apply and establish an operator's 
obligations. 30 U.S.C. Sec. 1253(a); Haydo, 830 F.2d at 498; In Re 
Permanent Surface Mining Regulation Litigation, 653 F.2d 514, 519 (D.C. 
Cir.) (en banc), cert. denied sub nom., Peabody Coal Co. v. Watt, 454 
U.S. 822 (1981) (Surface Mining Regulation Litigation); National 
Wildlife Federation v. Lujan, 928 F.2d 453, 464 n.1 (D.C. Cir. 1991) 
(Wald, J., concurring). Neither SMCRA nor the federal permanent program 
rules apply in a primacy state. Lujan, 928 F.2d at 455 n.1. See also 
Hodel, 452 U.S. at 271 (permanent program is not self-implementing, but 
becomes effective through the approved state or federal program under 
Sections 503 or 504). At best, SMCRA and federal rules only establish 
standards for the approval of state programs. Haydo, 830 F.2d at 498 n. 
2. Pursuant to a state program, the state applies the national 
standards to the local conditions in that state through the 
implementation of its program requirements. Once the Secretary approves 
the state program as capable of meeting the Act's requirements, he ``is 
not directly involved in local decision making.'' Surface Mining 
Regulation Litigation, 653 F.2d at 518. The state becomes ``the sole 
issuer of permits...[and] permit decisions are matters of state 
jurisdiction in which the Secretary plays no role.'' Id. at 519.
    Just as the state program is the law in a primacy state, the state-
issued permit applies the law and establishes the permittee's 
obligations. The primacy state, as the sole issuer of permits, decides:

        Who will mine in what areas, how long they may conduct mining 
        operations, and under what conditions the operations will take 
        place. It decides whether a permittee's techniques for avoiding 
        environmental degradation are sufficient and whether the 
        proposed reclamation plan is acceptable. The state...inspects 
        the mine to determine compliance; [and] [w]hen permit 
        conditions are violated, the state is charged with imposing 
        appropriate penalties.
Surface Mining Regulation Litigation, 653 F.2d at 519 (citations 
omitted). Thus, when it assumes exclusive jurisdiction over the 
regulation of surface coal mining operations, the state, as the 
``regulatory authority'', performs the duties and functions required 
under SMCRA through state laws and regulations.
    The primary means of guaranteeing ``effective state programs'' is 
the state program approval process exercised by the Secretary. The 
principal components required of a state program are:
          A state law for the regulation of surface mining 
        operations in a manner consistent with SMCRA;
          Sanctions for violations of state law, regulations, 
        and permit conditions;
          State law which provides for effective 
        implementation, maintenance, and enforcement of a permit system 
        consistent with SMCRA.
30 U.S.C. Sec. 1253(a).
    These requirements include a permitting system that provides 
procedures, public participation, and appeals; citizen complaints; and 
appeals of the state authority's decisions on those complaints. 30 CFR 
Sec. 732.15(b)(10). In other words, state permits are issued under 
state laws and are subject to state procedures and remedies the state 
adopts in order to obtain regulatory authority under the Act. Cf. 
Laurel Pipeline Co. v. Bethlehem Mines Corp., 624 F.Supp. 538, 539-41 
(W.D. Pa. 1986); :Lujan, 928 F.2d at 464 n. 1.
    The Secretary of the Interior maintains an oversight role once the 
state has assumed jurisdiction and how this oversight is performed goes 
directly to the issue of the allocation of authority under SMCRA 
between the state and federal governments. Typically, this oversight 
role is carried out through occasional federal inspections of ``surface 
coal mining and reclamation operations...to evaluate the administration 
of approved state programs.'' 30 U.S.C. Sec. 1267(a). In one of the 
first opinions surveying the statute and its allocation of authority, 
the U.S. Court of Appeals for the District of Columbia characterized 
the state program approval process as the ``Secretary's primary means 
of guaranteeing effective state programs,'' Surface Mining Regulation 
Litigation, 653 F. 2d at 520 (emphasis added); and the court described 
the federal takeover of a state program under Section 521(b) of SMCRA 
as ``the Secretary's ultimate power over lax state enforcement.'' Id. 
at 519.
    As the federal courts have repeatedly held, and as the Interior 
Department has confirmed, SMCRA's allocation of exclusive jurisdiction 
was ``careful and deliberate''. Congress provided for ``mutually 
exclusive regulation by either the Secretary or state, but not both.'' 
Bragg v. West Virginia Coal Ass'n, 248 F.3d 275, 293-4 (4th Cir. 2001), 
cert. denied, 534 U.S. 1113 (2002). See also Pennsylvania Federation of 
Sportsmen's Clubs, Inc., v. Hess, 297 F.3d 310, 318 (3d Cir. 2002).
    The June 11, 2009 Memorandum of Understanding among the U.S. Army 
Corps of Engineers, the Department of Interior, and the Environmental 
Protection Agency obligates OSM to ``remove impediments to its ability 
to require correction of permit defects in SMCRA primacy states.'' 
Frankly, we believe OSM has several options that it can legitimately 
pursue when it has reason to believe that a state is not appropriately 
implementing its permitting requirements. OSM simply lacks the 
authority to take direct enforcement action against operators for 
perceived defects in state-issued permits as well as the authority to 
directly require changes in those permits without going through the 
procedures outlined in 30 CFR Part 733 and Section 521(b) of SMCRA to 
take over enforcement and permitting. That lack of authority cannot be 
altered or overcome by issuance of a new Directive INE-35 since 
Directives are only internal policy guidance to OSM staff and cannot 
impose or create obligations on outside parties. That can only be done 
by changing SMCRA and/or the Secretary's regulations.
    In any discussion of alleged permit ``defects'', it is important to 
reiterate an overriding principle that is often overlooked: namely, any 
existing permit for a coal mining operation issued under SMCRA, 
including those issued by state regulatory authorities, is, by 
definition, in full compliance with SMCRA and the regulatory program 
since, under 30 CFR Sec. 732.15, the duly authorized regulatory 
authority has, after opportunity for public input, made written 
findings to that effect before issuing the permit.
    For those who disagree with a permitting decision (including a 
permit recipient who may disagree with restrictions contained in that 
permit), SMCRA (section 514) and its implementing regulations (30 CFR 
Part 775) prescribe administrative and judicial procedures and 
timeframes for challenging that decision. Further, the regulatory 
authority, subject to administrative and judicial review, may, by order 
(after preparing written findings to support the order), subsequently 
require permit revisions ``to ensure compliance with the Act and the 
regulatory program.'' 30 CFR Sec. 774.10(b). However, the revision 
provisions serve to strengthen the view that an existing SMCRA permit 
is, by definition, in full compliance with SMCRA and the regulatory 
program unless and until a duly authorized body, under the limited 
procedures identified above, concludes otherwise.
    While the States feel this issue has always been clear, we 
acknowledge that, because of a failure to look critically at SMCRA, its 
own rules, and Court rulings, OSM has taken various positions on this 
issue as reflected in, among other things, its six iterations of 
Directive INE-35 from 1987 through 1995, before it finally rescinded 
that directive in 2006. Years of frustration with OSM over its abuse of 
the TDN process as reflected in INE-35 led IMCC to submit a petition 
for rulemaking in 1993. The petition laid out our objections to using 
the TDN process to raise alleged permit defects to a state regulatory 
authority. (See 58 FR 43603--43608) That discussion is hereby 
incorporated by reference into these comments. Some of the points made 
in that discussion are also made below for emphasis.
    The issue of using the TDN process in permitting oversight was 
clarified for OSM in the October 25, 2005 letter decision in the Metiki 
case by the Assistant Secretary for Land and Minerals Management in 
response to a state request to review a decision by an OSM field office 
to conduct a federal inspection in response to a citizen's complaint 
alleging defects in a state-issued permit even though no activity had 
yet been initiated on the ground. That letter decision was a final 
decision on behalf of the Department of Interior and led OSM to rescind 
INE-35 in 2006. That decision also caused OSM to reconsider its 
regulations at 30 CFR Sec. 843.21 providing OSM enforcement authority 
against improvidently issued state permits (the first two iterations of 
this rule had been struck down by the Court of Appeals for the District 
of Columbia Circuit and the third iteration was subject to further 
revision as required by a settlement with the National Mining 
Association to resolve pending litigation challenging it). After notice 
and comment (no opposing comments were received) OSM removed 30 CFR 
Sec. 843.21 in its entirety on December 3, 2007. In doing so it stated:

        Its removal provides greater regulatory stability through 
        clarification of the State/Federal relationship related to 
        permitting in primacy States, which has been a source of great 
        confusion for many years. 72 FR 68024
    Under SMCRA and the Federal regulations, permitting is an entirely 
separate function from inspections and associated enforcement. 
Regulatory provisions related to permitting are found in Subchapter G 
of 30 CFR, while inspection and enforcement provisions are in 
Subchapter L. The statutory and regulatory provisions related to permit 
review and decisions are found at Section 510 of the Act and 30 CFR 
Part 773. Review of permitting decisions is covered by Section 514 of 
the Act and 30 CFR Part 775 respectively. Permit revisions, including 
the authority to require a permit revision, are covered by Section 511 
of the Act and within 30 CFR Part 774 respectively. By statute and 
regulation, an order to revise a permit must be based upon written 
findings and is subject to administrative and judicial review 
requirements established by the State or Federal program. See Section 
511(c) of the Act and 30 CFR Parts 773 and 775. In contrast to 
inspection and enforcement provisions, there is nothing in any of these 
statutory or regulatory provisions related to permitting that provide 
for or authorize Federal intervention in state permitting decisions.
    In its landmark en banc 1981 decision upholding OSM's authority to 
promulgate permitting requirements not specified in the Act, the Court 
of Appeals for the D.C. Circuit (the only Circuit with jurisdiction to 
review the Secretary's national rules implementing the Act) laid the 
groundwork for its holding with a discussion of the roles of the States 
and the Secretary in administering the Act, including the States' role 
under an approved program. In addition to ruling that ``the State is 
the sole issuer of permit,'' the court also noted that 
``[a]dministrative and judicial appeals of permit decisions are matters 
of State jurisdiction in which the Secretary plays no role. Act 
Sec. 514.'' Surface Mining Regulation Litigation, 653 F.2d at 519.
    The following footnote was attached to the last sentence quoted 
above.

        The independence of a State administering an approved State 
        program under the Surface Mining Act may be contrasted with the 
        continuing role of the Environmental Protection Agency after a 
        State has assumed responsibility for pollution discharge 
        permits under the Federal Water Pollution Control Act, 
        33.U.S.C. 1251--1376 (1976 & Supp. II 1978). The EPA 
        Administrator retains veto power over individual permit 
        decisions under that statute. See id. 1342(d).
Surface Mining Regulation Litigation, 653 F.2d at 519 n. 7.
    This discussion by the Circuit Court is plain and unambiguous and 
leaves no room for debate. OSM simply does not retain authority to 
require revision of an existing state issued permit or to issue 
violations for actions expressly authorized by that permit without 
going through the procedures of Sec. 521(b) of SMCRA.
    The above quote from the Circuit Court was cited in the October 21, 
2005 decision by the Assistant Secretary. It was also cited, along with 
the Assistant Secretary's 2005 decision, in the December 3, 2007 
Federal Register notice (72 Fed. Reg. 68000) removing 30 CFR 
Sec. 843.21 as follows:

        On October 21, 2005, the Department of the Interior's Assistant 
        Secretary for Land and Minerals Management (ASLMM) issued a 
        final decision concerning a citizen's group's request that OSM 
        conduct a Federal inspection in a case where the citizen's 
        group was dissatisfied with a State regulatory authority's 
        decision to issue a coal mining permit. (A copy of the ASLMM's 
        October 21, 2005, final decision is contained in the public 
        record for this rulemaking.) The citizen's group requested an 
        inspection even though mining on the permit had not yet 
        commenced and the citizen's group had failed to prosecute a 
        direct appeal of the State's permitting decision in State 
        tribunals.

        In her decision, the ASLMM pointed out that ``OSM intervention 
        at any stage of the state permit review and appeal process 
        would in effect terminate the state's exclusive jurisdiction 
        over the matter and [would frustrate SMCRA's] careful and 
        deliberate statutory design.'' See also Bragg v. Robertson, 248 
        F. 3d 275, 288-289, 293-295 (4th Cir. 2001) (regulation under 
        SMCRA is ``mutually exclusive, either Federal or State law 
        regulates coal mining activity in a State, but not both 
        simultaneously''; primacy States have ``exclusive 
        jurisdiction'' over surface coal mining operations on 
        nonfederal lands within their borders).

        The final decision also explained that in a ``primacy state, 
        permit decisions and any appeals are solely matters of the 
        state jurisdiction in which OSM plays no role.'' In support of 
        this statement, the final decision cited the U.S. Court of 
        Appeals for the District of Columbia Circuit's landmark en banc 
        decision in In re Permanent Surface Mining Regulation Litig., 
        653 F. 2d 514, 523 (DC Cir.) (en banc), cert. denied sub nom., 
        Peabody Coal Co. v. Watt, 454 U.S. 822 (1981) (PSMRL). In that 
        case, the en banc court held that SMCRA grants OSM the 
        rulemaking authority to require States to secure permit 
        application information beyond the Act's specific information 
        requirements. Id. at 527. The court laid the groundwork for its 
        holding with a discussion of the relative roles of the 
        Secretary of the Interior and the States in administering the 
        Act.
    After then quoting the Court's opinion listed above, OSM went on to 
state in that same Federal Register notice:

        The ASLMM's decision, and the materials cited therein, caused 
        us to look more carefully at the statutory and regulatory 
        scheme governing our oversight role related to State permitting 
        decisions and, in particular, the propriety of retaining 
        section 843.21. Inasmuch as section 843.21 authorized direct 
        Federal enforcement against State permittees based on State 
        permitting decisions, it was inconsistent with the ASLMM's 
        decision and PSMRL's admonition that a primacy State is the 
        ``sole issuer of permits'' within the State.

        Further, under SMCRA, State permitting is entirely separate 
        from Federal inspections and associated Federal enforcement. 
        The statutory provisions related to permit application review 
        and permit decisions are found at section 510 of the Act, 30 
        U.S.C. 1260, and appeals of permitting decisions are provided 
        for under section 514 of the Act, 30 U.S.C. 1264. There is no 
        mention in these statutory provisions of the need for an 
        inspection--the predicate to Federal enforcement under section 
        521 of the Act (30 U.S.C. 1271)--in connection with State 
        permitting decisions, and certainly nothing in these provisions 
        mandates Federal intervention in State permitting decisions. 
        Our regulations governing administrative and judicial review of 
        permitting decisions (30 CFR part 775) are likewise silent as 
        to the need for an inspection in the context of permitting 
        appeals. Moreover, nothing in our Federal inspection 
        regulations at 30 CFR parts 842 and 843 suggests that those 
        procedures can be used as an alternative to our permitting 
        appeal provisions.

        The Act's provisions for Federal inspections expressly provide 
        that such inspections are of mining ``operations.'' See SMCRA 
        Sec. 517(a), 30 U.S.C. 1267(a) (referring to inspections of 
        surface coal mining and reclamation operations) and SMCRA Sec. 
        521(a) (referring to inspections of surface coal mining 
        operations). The definitions of surface coal mining and 
        reclamation operations and surface coal mining operations at 
        SMCRA Sec. 701(27) and (28), 30 U.S.C. 1291(27) and (28), do 
        not mention anything about permits or permitting decisions. 
        Instead, those definitions refer to activities and the areas 
        upon which those activities occur. In short, the purpose of a 
        Federal inspection is to determine what is happening at the 
        mine, and, thus, SMCRA's inspection and enforcement provisions 
        do not readily apply to State permitting decisions because they 
        are not activities occurring at the mine. See, e.g., Coteau, 53 
        F. 3d at 1473 (``Permitting requirements such as revelation of 
        ownership and control links are not likely to be verified 
        through the statutorily-prescribed method of physical federal 
        inspection of the mining operation * * *.'').

        In summary, the statutory and regulatory provisions related to 
        inspections and enforcement are separate and distinct, both 
        practically and legally, from permitting actions. The Act and 
        our regulations provide specific administrative and judicial 
        procedures for persons adversely affected and seeking relief 
        from permitting decisions; our Federal inspection regulations 
        do not serve as an alternative to those procedures. Distinct 
        from the review of permitting decisions, Congress provided for 
        inspection and enforcement for activities occurring at the mine 
        and purposely excluded permitting activities from the 
        operation-specific inspection and enforcement process. In 
        short, Congress did not intend for OSM to second guess a 
        State's permitting decisions. Instead, the Secretary of the 
        Interior's ultimate power over a State's lax implementation of 
        its permitting provisions is set out in section 521(b) of the 
        Act, 30 U.S.C. 1271(b). PSMRL, 653 F. 2d at 519. The 
        Secretary's power under section 521(b) includes taking over an 
        entire State permit-issuing process. Id.
    In past discussions regarding ``Review of Permits During 
Oversight'', OSM cited 30 CFR Sec. 701.4(b)(1) as authority to conduct 
reviews of state issued permits during oversight. However, 30 CFR 
Sec. 701.4(b)(1) expressly distinguishes conducting inspections of 
mining and reclamation operations from reviewing state issued permits 
by placing an ``and'' between the two. Therefore, that rule is entirely 
consistent with the discussion above and affirms that the permitting 
process is entirely separate from the inspection and enforcement 
process. Thus, 30 CFR Sec. 701.4(b)(1) does not support using the TDN 
process to address concerns resulting from an OSM review of a state 
issued permit. To the contrary, it supports the view that it would be 
inappropriate to apply the TDN process to permitting issues, since that 
process is, by law (through sections 517 and 521 of SMCRA and 30 CFR 
Parts 842 and 843), expressly linked to inspections.\4\
---------------------------------------------------------------------------
    \4\ Alleged deficiencies about the quantity and quality of either 
information or technical analysis hardly provides what the Act requires 
as reason to believe that ``any person is in violation of any 
requirement of this Act or any permit condition required by this Act.'' 
Section 521(a)(1). Instead, these issues involve a difference of 
opinion as to whether two people would make the same policy judgment 
based upon a given set of facts and information. Such issues are not 
amenable to the purpose of the enforcement procedures whereby the 
inspector must set forth: The nature of the permittee's violation; 
remedial action required; the period of time established for abatement; 
a description of the surface coal mining operation to which the notice 
applies; and a statement that the failure to meet the abatement date 
leads to an order for the cessation of the operation. Section 521(a)(2) 
and (5). These enforcement provisions contemplate that abatement is 
within the power of the permittee. This simply is not the case where a 
permittee is subjected to an action by the federal agency (which lacks 
permitting authority) merely because of a continuing disagreement with 
the state agency (which is vested with the permitting authority under 
SMCRA).
---------------------------------------------------------------------------
    Importantly, the 1988 TDN rule (53 FR 26728) does not support using 
a TDN to address permitting disagreements between OSM and a State 
regulatory authority. In fact one of the express purposes of the 1988 
TDN rule was to avoid situations where operators are caught in the 
middle because of disputes between OSM and States. The preamble 
contains a discussion (at pages 26729 and 26730) of when OSM is 
obligated under Section 521(a)(3) of SMCRA to issue a Federal NOV 
during enforcement of a state program under 521(b). That discussion 
notes:

        Thus, where OSMRE takes over an inadequately enforced state 
        program, Congress clearly envisioned a time lag in the 
        suspension or revocation of permits in situations where an 
        operator was in violation because of a permit not requiring 
        full compliance with the State program. Rather than penalizing 
        the operator when the State is at fault, OSMRE must allow a 
        reasonable time for a permittee to comply with additional 
        permit conditions required by OSMRE when the permittee has been 
        complying with the original permit conditions. Although the 
        proviso expressly addresses suspensions and revocations, it 
        naturally follows that during the reasonable period for 
        compliance, OSMRE would refrain from issuance of NOVs and 
        cessation orders related to the problem being corrected. The 
        same principle is also established in Section 504(d) of SMCRA. 
        (53 FR 26730)
    In litigation over the TDN rule, the National Wildlife Federation 
claimed this discussion substantially eroded OSM's mandatory 
enforcement obligation and represented an attempt to regulate through 
preamble in violation of the APA because it stated that ``OSMRE would 
refrain from issuance of NOVs and cessation orders related to the 
problem being corrected.'' In dismissing the complaint, the Court 
stated:

        The Court concludes that the statements in the preamble to the 
        TDN rule are not inconsistent with the rulemakings concerning 
        this issue and therefore permissible under SMCRA. As repeatedly 
        mentioned above, it is not unfair not to punish a permittee if 
        it has fully complied with state permit obligations later 
        determined to be inadequate.
National Coal Association v. Uram, 1994 U.S. Dist. LESIX 16404 at *60 
(D.D.C. Sept. 16, 1994).
    In summary, OSM cannot, through any iteration of INE-35, give 
itself authority to take direct action against operators for alleged 
permit defects without going through the requirements of Section 521(b) 
of SMCRA.
    Finally, OSM's insistence on using TDNs to address permit defects 
is simply unworkable, as we noted earlier. In most instances where OSM 
disagrees with a state-issued permit, ad-hoc federal intervention in an 
individual permit through direct enforcement action against the 
permittee would have the same effect as commandeering the state 
permitting process. The statute and case law would preclude such a 
result since the grant of exclusive jurisdiction vests the state as the 
sole issuer of permits ``in which the Secretary plays no role.'' In re: 
Permanent Surface Mining Regulation Litigation (en banc), 653 F.2d 514, 
519 (D.C. Cir. 1981) (hereinafter ``In Re: (en banc)''). An enforcement 
action against the permittee based upon OSM's view of non-conformity of 
a permit to applicable standards would be nothing less than exercising 
a ``veto power'' over state permits, authority which Congress expressly 
withheld from the Secretary. To allow OSM to accomplish at the back-end 
what Congress forbade initially would essentially vest OSM with day-to-
day ``concurrent jurisdiction'' which does not exist under the 
permanent program in a primacy state; Haydo v. Amerikohl Mining 
Company, Inc., 830 F.2d 494, 497; and improperly allows the Secretary 
to become ``directly involved in local decision making after the 
program has been approved.'' In Re: (en banc), 653 F.2d at 518.
    Furthermore, the use of SMCRA's inspection and enforcement 
provisions as a means to dislodge state permitting decisions does not 
fit well with the statutory scheme. Issues involving the non-
conformance of a permit to applicable standards are resolved through a 
request by the state regulatory authority to the permittee for a permit 
revision, and not enforcement action. See Section 511(c); 30 CFR 
774.11(b). This process is accompanied by notice, findings supplying 
the basis for the request, and an opportunity for a hearing before the 
revision must be submitted.
    Even when OSM is the regulatory authority, it must proceed to 
correct permit problems through the revision process. It appears 
incongruous for OSM to take direct enforcement action against a 
permittee in a state where it has no direct jurisdiction, and lacks 
permitting authority, when it could not conduct itself in such a manner 
where it does have ``exclusive jurisdiction'' as in a federal program 
state. Moreover, an enforcement action under Section 521(a) generally 
requires the prescription of abatement measures to assure compliance 
and presumes that such measures are within the power of the permittee. 
However, if the enforcement action requires the submission of a 
revision to a state-issued permit, the state regulatory authority is 
the only one empowered under SMCRA to request and approve a revision. 
If the state disagrees that a revision is warranted under the state 
program, the permittee cannot fully comply with the federal enforcement 
action and remains in jeopardy because of a continuing disagreement 
between the state and OSM. Moreover, the permittee has been denied its 
rights to prior notice, findings, and a hearing under SMCRA for permit 
revisions.
    It also appears incongruous with the statutory scheme to permit OSM 
in its general oversight role to take action it could not otherwise 
pursue even when it takes action to substitute either federal 
enforcement or a federal program for all or part of the state program. 
In two provisions which discuss direct federal intervention, the 
statute requires that the Secretary, before issuing any enforcement 
orders, first afford the permittee an opportunity to revise a permit it 
finds does not conform to the requirements of the applicable regulatory 
program. Section 504(d), 521(b). See also 53 Fed. Reg. 26730, 26735. A 
permittee operating in a primacy state in which OSM has not completed, 
let alone initiated, a proceeding to ``take over'' a state program has 
ample ground for relying on the permit issued by the state permitting 
authority without becoming subject to direct intervention or 
enforcement by OSM in its oversight role.
    However, this is not to say that OSM has absolutely no recourse. 
The federal action, if OSM decides it is necessary, is captured in the 
TDN rule's guiding principles for OSM's oversight role in these 
circumstances: ``the regulatory focus shifts from individual situations 
to a broader evaluation of a state's overall program.'' 53 Fed. Reg. 
26731. See also 53 Fed. Reg. at 26738. In other words, OSM will use the 
other mechanisms the law provides for ``resolving problems with state 
implementation of the program; and, these mechanisms allow inadequacies 
to be corrected without placing the mine operator in the middle of 
conflicting orders from state and federal officials.'' Id.
    One final legal matter: In the November 16, 2010 Decision for 
Informal Review issued by OSM Regional Director Ervin Barchenger 
regarding Georges Colliers, Inc., Permit 54/86-4105, there is legal 
discussion of ``Jurisdiction'' on pages 3--5 of the document. There is 
significant reliance on two Interior Board of Land Appeals decisions 
and two U.S. Court of Appeals decisions. All of these are cited for the 
proposition that ``OSM has jurisdiction to address state permitting 
issues under its TDN authority.'' However, OSM misunderstands the 
reasoning in these decisions and misapplies them to the question of 
OSM's TDN authority in primacy states.
    First, it is instructive to note that both IBLA decisions in the 
Kuhn and Mullinax cases preceded OSM's regulatory decision regarding 
the issuance of TDNs in primacy states in December of 2007. 72 Fed. 
Reg. 68000. This regulation is the most recent and most definitive 
ruling by the Interior Department concerning the use of TDNs in primacy 
states and thus is the applicable and operative law. Furthermore, the 
Kuhn case references the 1988 ten-day notice rule but fails to even 
examine, let alone discuss, its possible application to the case at 
hand, and instead sets forth erroneous premises citing a string of 
cases all decided prior to the 1988 ten-day notice rule. For example, 
the Board stated in Kuhn ``no definition of the phrase appropriate 
action has been provided by OSM.'' 120 IBLA at 16, citing a 1982 
version of 30 CFR 843.12. This is flatly wrong, and the opinion makes 
no mention of the other consideration of whether the state showed good 
cause for not taking action.
    Kuhn also misstates some of the precedent that serves as the basis 
for its decision as follows: ``where it is evident that a permit has 
been issued in violation of state regulatory requirements, this Board 
has declared such action inappropriate, and has ordered federal 
enforcement. 120 IBLA at 20, citing W.E. Carter, supra. Not only was 
W.E. Carter not decided under the ten-day notice standards that are now 
applicable, the Board in W.E. Carter only ordered a federal inspection 
but never reached the issue of what type of federal action should 
follow the inspection. In many respects, Kuhn is advisory at best since 
the Board chose to articulate its views despite the fact that the 
permitting controversy was moot. 120 IBLA at 23, n. 9. Compare with 
Hopi Tribe v. OSM, 109 IBLA 374, 381 (1989) (an appeal is moot if there 
is no effective relief which the Board can afford to the appellant).
    It should also be noted that all of these Board cases were 
considered in the context of citizen complaints and the Board was 
either never advised of or chose not to consider the issue (discussed 
in other sections of our comments) that citizen complaints cannot 
displace the more specific procedures to contest state permit 
decisions. To the extent one construes these cases as rejecting this 
view, the cases then simply remain contrary to applicable case law 
because they would allow the Secretary to review state permitting 
decisions, a matter in which ``the Secretary plays no role.'' In Re: 
(en banc), 653 F.2d at 519.
    Secondly, OSM completely misreads the two U.S. Courts of Appeals 
decisions. In National Mining Ass'n v. Dep't of the Interior, 177 F.3d 
1 (D.C. Cir. 1999), the U.S. Court of Appeals for the District of 
Columbia Circuit pointed to the very construction of SMCRA which we 
articulated above--that OSM may not take remedial action against a 
state permittee until after the agency complies with the provisions of 
Section 504(b) and 521(b) of SMCRA, which require that OSM first 
provide notice to the state and hold a public hearing prior to taking 
over that portion of a state's program that relates to the permitting 
function (or any other function, for that matter). This process is 
embraced by OSM in its regulations at 30 CFR Part 733 and is a 
prerequisite to any federal enforcement action by OSM. While this 
process may take more time than OSM and others would prefer, Congress 
believed that meaningful concepts of state primacy and exclusive 
regulatory authority require nothing less. Short of changes to the 
underlying statute, this is the mechanism designed by Congress and for 
good reason. And short of the Secretary articulating a rational basis 
for departing from the Department's current regulatory position on this 
matter (as set forth in the preamble to the final rule removing 30 CFR 
843.21 at 72 Fed. Reg. 68024--68026), OSM must continue to abide by its 
interpretation of SMCRA's requirements.
Recommended Changes to Draft INE-35
    Based on the above discussion and rationale, IMCC and WIEB see no 
need for INE-35 and urge the agency not to pursue it further. OSM 
should, instead, simply follow its regulations. However, if OSM feels 
compelled to guide its field personnel via directive, IMCC and WIEB 
recommend several changes to draft INE-35 as follows:
    Permit Defects--OSM should remove all references to the use of TDNs 
to address permit defects and should clarify that any concerns with the 
state permitting process or function should be handled as a 
programmatic issue, utilizing the various mechanisms available to OSM 
such as action plans, technical reviews, and the 732 or the 733 process 
where appropriate. More specifically, OSM should delete sections 3(i) 
(definition of ``Permit Defect''); section 4(g)(3) (regarding when a 
TDN will not be issued for a permit defect); and sections 6(a)(5) and 
(b)(5) (regarding the procedures for handling permit defects).
    Citizen Complaints--OSM should either remove all references to the 
use of TDNs to convey citizen complaints to states or, in the 
alternative, define the term ``reason to believe'' to include an 
investigation by OSM of the veracity of the complaint prior to 
conveying the complaint to the state via TDN. Given the requirement at 
30 CFR 732.15(b)(10) that a state program must contain a citizen 
complaint mechanism in order for the program to be approved by OSM, 
this mechanism must be given an opportunity to work prior to OSM 
intervening in the process. This is further confirmed by 30 CFR 842.12, 
which requires a person requesting a federal inspection to notify the 
state regulatory authority in writing of the existence of a violation, 
condition or practice. As a result, any federal action under Section 
521 of SMCRA should be held in abeyance until the state has issued its 
findings pursuant to its own citizen complaint process. If a citizen is 
unsatisfied with this result, it may then approach OSM about the need 
for a federal inspection. Following a ``reason to believe'' 
determination (including a review of the state's findings), OSM may 
then issue a TDN to the state concerning the alleged violation as a 
precursor to a possible federal inspection, in accordance with Section 
521.
    In conjunction with this change, OSM should also define the term 
``reason to believe'', since the current standard (i.e. ``the facts 
alleged by the citizen, if true, would constitute a violation'') is 
unduly and inappropriately broad. As long as OSM holds to this 
standard, the threshold established by the definition is unreasonably 
and unworkably low and flies in the face of the legislative history 
concerning the term. In its discussion of Section 521(a)(1) of the Act, 
Congress stated that ``it is anticipated that `reasonable belief' could 
be established by a snapshot of an operation in violation or other 
simple and effective documentation of a violation.'' (H. Rep. No. 95-
218, 95th Cong., 1st Sess., at 129 (1975) (emphasis added). Obviously 
Congress had something more in mind with regard to the ``reason to 
believe'' determination than the mere filing of a complaint. OSM is 
expected to go behind the bald allegations of the complaint and 
determine, based on a ``snapshot'' (or, in our view, an investigation, 
even if limited in scope) of the alleged violation at the surface 
mining site, or some other effective documentation (such as the state's 
analysis contained in its response to the complaint) establishing 
whether to proceed with any further action (be it a TDN, or in the case 
of imminent harm, a federal inspection followed by appropriate 
enforcement action). This process would provide a degree of credence 
and credibility to the primacy scheme contained in SMCRA by deferring 
to the procedures in the approved state program. It would also provide 
for serious and meaningful consideration by the federal government in 
its oversight capacity whether to proceed with expanded federal 
involvement in the state's business via a TDN. If OSM is unwilling to 
do this via directive, then we would advocate for a rulemaking on the 
matter, similar to what we advanced in our rulemaking petition of 1993.
    OSM's reluctance to allow the states to first process citizen 
complaints that are received by OSM reflects a mistrust of either our 
procedures or our ability. In either case, the answer is not to 
incorporate federal intervention in the process, but to assess whether 
there are systemic or programmatic issues that must be addressed and 
resolved from a larger perspective. If the states are truly to have 
primacy, OSM must be wiling to allow the states to function 
independently. The mere receipt of a citizen complaint by OSM, rather 
than by the state, does not change this integral aspect of primacy. 
Instead, it compels OSM to act in a way that respects the states' role 
under SMCRA, which in this instance means forwarding the complaint on 
to the state for initial review and action. Only after that opportunity 
should a complaint be ripe for any type of OSM review, and then 
pursuant to the approach suggested in our comments above.
    Transmittal of a citizen complaint through a ten-day notice when 
the state has not been previously apprised of the complaint by the 
citizen triggers a federal process which is duplicative of the existing 
state program procedures. Congress' intent was to avoid such federal-
state overlap. S. Rep. No. 128 at 90; See also section 201(c)(12) 
(cooperate with state regulatory authorities to minimize duplication of 
inspection, enforcement, and administration of the Act). Citizen 
complaint procedures and the ten-day notice process must be reconciled 
with the deliberate allocation of authority under SMCRA. If OSM 
immediately invokes the ten-day notice process to intervene in a state 
program matter when the citizen has never availed himself of the state 
procedures and remedies, OSM undermines the statutory provisions for 
primacy and the rationale for the requirement that state programs 
provide the same opportunities found in SMCRA for citizen 
participation.
    To the extent a state persistently handles citizen complaints 
inadequately, OSM's general oversight role provides the avenue to 
evaluate the state's administration of its program. Citizens may also 
petition the Director to evaluate the state's implementation of the 
program if they believe the state is not effectively implementing, 
administering or enforcing, 30 CFR 733.12(a)(2). The general oversight 
function serves adequately to ensure that states will routinely handle 
citizen complaints under their programs without OSM intruding upon the 
state's jurisdiction on a case-by-case basis. The use of ten-day 
notices upon receipt of a citizen complaint which has not been 
previously made to and pursued with the state undermines the state 
program and creates ``federal-state overlap'' which Congress expressly 
intended to avoid.
    Appropriate Action--OSM's definition of ``appropriate action'' 
incorrectly cites the applicable regulation in the Code of Federal 
Regulations. It should be 30 CFR 842.11(b)(1)(ii)(B)(3).
    Arbitrary, Capricious or Abuse of Discretion Standard--OSM's 
definition of this standard at section 3(b) is confusing and overly 
broad. What is the difference between the use of the term 
``irrationally'' in (b)(1) and the words ``without a rational basis'' 
in (b)(4)? This seems unnecessarily duplicative. Furthermore, the 
standard in (b)(4) is new and seems to line up more with NEPA than 
SMCRA, especially the use of the term ``hard look''. We suggest that 
(b)(4) be deleted. In addition, we recommend that the following 
language be added to Section 4(d) regarding field office determinations 
regarding whether an RA's response is arbitrary, capricious or an abuse 
of discretion: ``The arbitrary, capricious or abuse of discretion 
standard does not allow OSM as a reviewer to substitute its judgment 
for that of the RA. Adherence to this standard mandates a finding of 
appropriate action or good cause if the RA presents a rational basis 
for its decision, even if OSM might have decided differently if it were 
the RA. In reviewing TDN responses, OSM must determine whether the RA's 
action or response is based on a reasonable consideration of the 
relevant factors and is an exercise of reasoned discretion that does 
not deviate from the approved state program. If OSM determines that the 
RA's response to a TDN does not constitute appropriate action or a 
showing of good cause for inaction, the written determination must 
provide a reasonably detailed explanation of the basis for the 
conclusion that the RA response is arbitrary, capricious or an abuse of 
discretion.''
    Authorized Representative - OSM should include the wording ``in 
accordance with the right of entry requirements of 30 CFR 842.13'' at 
the end of subparagraph (c)(1).
    Definition of Federal Inspection--this definition at section 3(e) 
includes an all-embracing catch-all phrase in subparagraph (3) that 
reads: ``Any other inspection conducted by OSM or jointly by OSM and an 
RA.'' Recent experience causes us to inquire what OSM has in mind with 
this definition. Would a meeting between OSM and the state to discuss 
an oversight issue constitute ``any other inspection'' for purposes of 
this definition? If so, we believe it is overly broad. We recommend 
that this paragraph be written to read: ``An inspection by OSM, either 
individually or jointly with a state RA, under 30 CFR 842.11(a)(1).'' 
In addition to this change, OSM should also insert the words ``an 
authorized representative of'' before the word ``OSM'' in subparagraphs 
(1) and (2) when referencing inspections.
    Section (4)(g)--When TDNs will not be issued--in conjunction with 
our position that TDNs should not be issued for alleged permit defects, 
we recommend the inclusion of the following subsection under this 
Section so as to clarify OSM's options for programmatic issues. This is 
also consistent with section 5(b)(9) of the draft directive:
    ``(5) Programmatic issues. OSM will not use a TDN once an issue has 
been determined to be programmatic in nature. The following types of 
issues have been determined to be programmatic:
    (1) there is or may be a systemic implementation of an aspect of an 
approved program which OSM believes is inconsistent with the approved 
program; or
    (2) the state program lacks a counterpart to a requirement of the 
Act or federal regulations resulting in the RA's inability to take 
enforcement action against certain types of violations or to perform 
certain regulatory functions; or
    (3) the RA and OSM disagree on the adequacy of permit information 
or the adequacy of reviews required as part of the permitting 
process.''
    In conjunction with this suggested language, OSM should also add 
the following in Section 6:
    ``(f) Programmatic issues--When there is a programmatic issue as 
described in section (4)(g)(5), OSM will void any TDN, if the dispute 
arises from issuing a TDN, and will
    (1) enter into corrective action plans with the RA as part of 
oversight work plans or performance agreements;
    (2) initiate actions under 30 CFR Parts 732 or 733, as appropriate;
    (3) initiate joint OSM/RA or other state/federal agency technical 
reviews; or
    (4) defer to the RA's technical expertise and judgment with the 
understanding that, if a performance standard violation develops, 
either a state enforcement action or a TDN will address it.''
    Section 6(b)(4) regarding Field Office evaluation of an RA's 
response to a TDN. In an effort to facilitate resolution of TDNs at the 
state level, we recommend adding the following language at the end of 
this section: ``When the Field Office Director anticipates that it will 
decide that the RA's response is arbitrary, capricious or an abuse of 
discretion, the Field Office Director is encouraged to inform the RA of 
the basis for the conclusion before issuing a final written 
determination to give the RA a final chance to take enforcement action 
or to provide any final views. This process should not delay the time 
it takes OSM to complete its evaluation of the RA's response.''
    Section 6(c)(2)(d)--we recommend that the Field Office Director 
should make available to the RA not only items I--V, but also item VI 
so that the RA is fully aware of, and has an opportunity to respond to, 
the synopsis of the case and the rationale for the Field Office TDN 
determination, if the RA has not had the opportunity to do so 
previously. Similarly, in section (6)(3)(c), the RA should be given an 
opportunity to review and respond to information the Field Office 
submits to the Regional Director that was not previously available to 
the RA.
Draft Directive REG-23 re Corrective Actions for Regulatory Program 
        Problems
    As with other elements of OSM's oversight actions, OSM is again 
making false assumptions about the current progress of program 
implementation and performance by the states. Nothing in the record 
before OSM (i.e. recent annual oversight reports and OSM's budget 
justification document and GPRA reporting) supports the assertion that 
there are significant programmatic issues that have not been adequately 
addressed by the states as part of the existing oversight protocol. 
Furthermore, nothing in the record supports the assertion that states 
need to be ``induced'' to take corrective action. The cooperative 
working relationship that we are familiar with between OSM and the 
states has led to effective problem solving and resolution of 
outstanding issues. We are not dealing with a program that is broken or 
bleeding; to the contrary, we have been a model of cooperative 
federalism that is often commended by other state and federal agencies.
    In terms of the options available to OSM to insure correction of 
programmatic issues, while some may label them as ``severe'', we would 
describe them as congressionally mandated and deliberately conceived to 
preserve state primacy. And while the options may be limited in scope, 
we believe this is also intentional. Congress did not intend for state 
primacy to be easily undermined through a streamlined second-guessing 
process by the federal government. Instead, Congress anticipated that 
any adjustments or ``corrections'' to a state program or implementation 
thereof be preceded by either an opportunity for public hearing and 
comment (for programmatic changes) or an opportunity for the state to 
take appropriate action or show good cause for not doing so (for 
alleged violations of the state program).\5\
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    \5\ OSM appeared to understand and capture this important principle 
of state primacy in the draft discussion paper that was provided to us 
in August of 2009 where the agency said: ``OSM's primary role in a 
State with an approved program is to monitor the State to ensure that 
it maintains the capability to fulfill those SMCRA responsibilities, to 
assist the State in implementing their responsibilities and to report 
on its evaluation of the State program. OSM maintains its authority 
under SMCRA to intervene when there is a clear breakdown in the States' 
implementation.'' (Emphasis added). This is much closer to 
congressional and judicial intent, as noted above.
---------------------------------------------------------------------------
    OSM's suggested resolution of this matter is to reinstate policy 
and procedures previously contained in Directive REG-23 for the 
development and implementation of process-oriented action plans to 
address programmatic issues and/or to place a condition on state 
regulatory program grants to require correction of issues. We are 
uncertain what OSM has in mind with regard to its use of ``action 
plans'', but this appears to hearken back to the days when oversight 
was focused on the minutia of state program implementation, rather than 
on-the-ground performance. OSM further tips its hat toward this 
approach in draft Directive REG-8 where the agency states that it will 
maintain ``to the extent possible'' the focus on on-the-ground results. 
We are very uncomfortable with the direction that this ``enhancement'' 
is heading and urge extreme caution.
    Whenever OSM references OSM's options for dealing with our failure 
to complete the terms of an action plan (as in Subparagraph 5(a)), it 
is critical that the directive reference the procedure set forth in 
Section 521(b) of SMCRA and 30 CFR 733.12 of its regulations.
    With regard to the suggestion in Section 6(a) of the draft 
directive that states' Title V grants be conditioned to encourage 
correction of issues, we are totally opposed to this approach. First, 
we assert that this action is in contravention of SMCRA. Section 705 
contains no suggestion that these ``support'' grants are to be 
restricted or otherwise conditioned for any reason. Quite the contrary: 
Section 102 of SMCRA anticipates that OSM will ``assist the states in 
developing and implementing a program to achieve the purposes of this 
Act.'' 30 U.S.C. Sec. 1202(g). Restricting the federal funding provided 
in Section 705 flies in the face of Section 102. Additionally, OSM has 
not received permission from either the authorizing or appropriating 
Committees of Congress to proceed in this manner. We assert that both 
of these bodies expect that OSM will use and apply the moneys 
appropriated for state regulatory grants for the purposes intended and 
without restriction or condition.
    Secondly, it makes little sense to restrict the states' ability to 
spend federal (and matching state) moneys to implement their regulatory 
programs when the very reason for ``the issue being corrected'' may 
result from limited resources in the first place. And even if this is 
not the case, after working diligently for the past 10 years to secure 
increases for Title V funding, it sends the wrong message to now 
restrict, via conditions, the expenditures of those funds--especially 
given the fiscal constraints within which states are operating. This 
incredulous suggested approach by OSM leaves the states wondering what 
the agency's true intentions are with regard to ``enhancing'' 
oversight. Are we back to the ``gotcha'' approach to oversight? We 
trust not. Too much progress has been made over the years to recede to 
this type of state/federal interaction.
    We also question the process that OSM has in mind with respect to 
grant conditioning. OSM notes in the draft directive that it will 
target additional resources to correct identified problems or reduce 
grants based on poor performance. Does OSM have specific criteria in 
mind that will be used to target additional resources or reduce grants 
based on performance? Will something other than the key performance 
measures set out in REG-8 be utilized? If so, it will be incumbent on 
OSM to work with the states to develop these criteria so that we are 
aware of these new criteria for performance.
    OSM's draft directive also seems to anticipate that problems will 
inevitably be found when it uses language on page 3 under 
``Responsibilities'' in subparagraph (5)(c)(1) that Field Office 
Directors will ``identify regulatory program problems.'' Again, the 
history of oversight, especially over the past 15 years, does not 
support this conclusion. In fact, quite to the contrary, there have 
been relatively few ``problems'' that have begged for the far-reaching 
types of solutions and procedures that OSM is proposing in this draft 
directive. This is one of the reasons that Directive REG-23 was 
rescinded in the first place. If OSM continues to insist on the need 
for a new directive, we suggest that the language in Subparagraph 
5(c)(1) be changed to read ``Determine if Regulatory Program Problems 
Exist.'' Similar adjustments should also be made in Subparagraph 
(5)(c)(2), where the words ``if a regulatory program problem is 
determined to exist'' should be added to the end of the sentence and in 
Subparagraph (5(c)(3) where the word ``identified'' should modify 
``Regulatory Program Problems''. We also suggest adding at the end of 
subparagraph (5)(c)(3) the words: ``An opportunity should be provided 
for the states or tribe to review and comment on the action plan''. 
This will be consistent with paragraph 6(b) on page 4 of the draft 
directive.
    Finally, in subparagraph 5(b)(2), the directive should be amended 
to provide an opportunity for the state or tribe to request appropriate 
technical assistance, not just the Field Office Director.
Draft Directive REG-8
    This directive has grown exponentially since the last version in 
2006 (from 45 pages to 105 pages) and the primary explanation appears 
to be the June 2009 MOU. Substantial new sections of the directive have 
been added under oversight inspections, off-site impacts, stream 
impacts, bond release, special category permits and regulatory program 
problems--all of which trace their roots to obligations in the MOU 
directed at OSM. Were it not for the MOU, it is unlikely that this 
directive would have been revisited at all. It certainly would not have 
undergone such a drastic facelift. Based on the annual oversight 
reports received by the states over the past five years, there has been 
no evidence to support such a major overhaul.
    While we understand that OSM has struggled with the presentation of 
certain data elements contained in REG-8 that are used to support 
oversight reports, OSM's own annual report, and responses to requests 
from Congress, the General Accountability Office (GAO) and others, what 
OSM has undertaken with this revision goes well beyond that concern. We 
have offered on numerous occasions to work with OSM on these data 
needs, most recently during the summer of 2009. Rather than engage us 
on this matter, OSM has chosen to move in a direction that once again 
reverses much of the progress we have made over the years and sets up a 
confrontational environment that will do little to meaningfully 
evaluate and report on state program implementation. Instead, the 
directive is structured to provide maximum leverage for OSM to 
implicate the states for their failure to comply with commitments made 
on our behalf by OSM in the June 2009 MOU. Some of those commitments 
require rulemakings to accomplish, not internal directives. The section 
on ``mitigating the impacts to streams'' is particularly egregious, as 
it advances OSM's objectives under its stream protection rule prior to 
actual promulgation.
    It is difficult to know where to begin in providing comments on 
this expanded directive. In addition to changes to the text of the 
directive, there are significant adjustments to the various charts for 
collecting data and information. We provided detailed comments on the 
portion of the directive entitled ``Oversight Inspections'' on July 8 
of this year but the draft reflects only a few of our suggested 
changes. We believe the most effective process for reviewing and 
sorting out our respective concerns with current and proposed oversight 
procedures and requirements is through a collaborative effort, as has 
been utilized in the past. The Oversight Steering Committee has 
facilitated this process and the result has been an oversight directive 
and evaluation process that reflects a meeting of the minds. We believe 
that such an approach is critical and recommend that that Oversight 
Steering Committee meet in the immediate future to begin an appropriate 
review process.
    In the meantime, below are a sampling of some of our concerns with 
REG-8, all of which (in addition to others that will likely be 
identified) require further review and discussion.

        Page 3--item (h) Performance Agreement/Evaluation Plan and (j) 
        Action Plan--allows OSM to concoct a written plan with or 
        without the primacy State's concurrence. It basically 
        anticipates the State will sign, but notes that signing is not 
        mandatory for OSM to proceed as it wishes to conduct oversight. 
        This attitude undermines many years of State and OSM 
        cooperation and collaboration in implementing SMCRA.

        Page 4--Subparagraph (5)(a)(2) indicates that the Director/
        Deputy Director will appoint an Oversight Steering Committee 
        ``when appropriate''. We cannot imagine a scenario where this 
        would not be appropriate. Part of the past success of OSM's 
        oversight policy and procedure has been attributable to the 
        work of this Steering Committee. As suggested above, we believe 
        this is the proper forum for discussing and resolving the many 
        issues associated with the new draft directive and we urge OSM 
        to rejuvenate this Committee as soon as possible.

        Page 5--item (d)(4)--The States have no problem with public 
        participation as allowed under their approved programs, which 
        must be consistent with and as effective as that provided under 
        the federal regulations. OSM seems to be anticipating far more 
        public participation than that currently required by law and 
        regulation.

        Page 6--item 5--preparing a Performance agreement/Evaluation 
        Plan ``to the extent possible'' cooperatively with the State 
        regulatory Authority--intent is explicit that OSM will prepare 
        the plan as it deems appropriate, even absent the regulatory 
        authority's cooperation and concurrence.

        Page 8--OSM does not mention the effect that this new draft 
        directive will have on other REG-8 change notices, including 
        Transmittal Number 932 dated July 1, 2008 and Transmittal 
        Number 943 dated October 6, 2008.

        Appendix--Page 1-2, last paragraph--This is a federal guidance 
        document and does not have the weight of regulation or statute. 
        While OSM may feel that the States have ``respective roles and 
        responsibilities'', those are set forth by law and regulation. 
        The States should not and are not bound by this federal 
        guidance document.

        Appendix--Page 1-3--OSM notes in paragraph 2 that oversight 
        reviews, ``may be associated with evaluation of customer 
        service, actual or potential on-the-ground or permitting 
        problems, and end results.'' This sets up the classic second-
        guessing scenario, especially with respect to permitting 
        issues. OSM's authority is restricted to review of the state's 
        permitting process and program, not individual permitting 
        decisions. The suggestion that ``potential'' problems are fair 
        game also unduly expands the reach of OSM's oversight review 
        and authority. And while OSM states that its oversight ``will 
        not be process-driven'', the draft directive allows OSM to 
        essentially review and second guess the regulatory authority's 
        decisions and actions at any time. In this regard, paragraph 2 
        on page 1-3 seems inconsistent with paragraph 4 that follows. 
        OSM sets percentages of the number of inspectable units it will 
        focus on, then provides a caveat that it may review more should 
        it so choose. Not only will this be duplicative of the 
        regulatory authority's processes, the additional record keeping 
        and reporting will further strain OSM and State resources and 
        foster uncertainty in the regulated community.

        Appendix--Page 1-4--Outreach--OSM needs to be sure that it does 
        not confuse its oversight role with the jurisdictional role of 
        the state regulatory authority. To actively seek other federal 
        agency concerns is the role of the state regulatory authority 
        under its primacy program, either as part of the permitting 
        process or in the initial stages of program approval or later 
        program amendments. This is not and should not be a function of 
        OSM oversight. OSM's expansion of the role of other federal 
        agencies in the oversight process is a clear indication of the 
        far-reaching impact of the 2009 MOU.

        Appendix--Pages 1-5 through 1-8--Oversight Inspections--This is 
        an entirely new section of REG-8, also driven by the 2009 MOU. 
        In it, OSM has decided upon a shotgun approach without a 
        statistical basis for selecting the types and percentage of 
        inspections it intends to conduct--with or without concurrence 
        of the regulatory authority. Independent inspections contravene 
        and usurp a State regulatory authority's primacy. If 
        independent inspections are conducted, OSM's inspections should 
        always be conducted with reasonable notice to the regulatory 
        authority. OSM's intent to give less than 24 hours notice is 
        unrealistic and unreasonable. OSM and the States have many 
        years of cooperation and trust in implementing SMCRA. OSM is 
        reverting back to the days of mistrust and confrontation with 
        the States. OSM's inspector should give his/her State 
        counterpart at least 5 working days notice of the inspection 
        date. OSM would not have to disclose the permit or site 
        location until the day of the inspection. OSM's intent to 
        conduct independent inspections without notice to the 
        regulatory authority is unacceptable and contrary to State 
        primacy.

        Appendix--Page 1-6--Oversight Inspections--OSM states in the 
        second paragraph of this section that ``inspections that do not 
        specifically address the purpose of an oversight inspection 
        [such as citizen complaints and federal enforcement 
        inspections] will not be counted in meeting the targeted number 
        of inspections in the Performance Agreement/Evaluation Plan''. 
        The fact is, all OSM inspections have the effect of evaluating 
        the effectiveness of a state's program in some form or another. 
        As a result, all OSM inspections in primacy states should be 
        accounted for in determining the actual number of oversight 
        inspections for each respective state or tribe.

        Appendix--Page 1-7--OSM notes with respect to the selection of 
        random and focused inspections that ``the final decision on the 
        types of inspections to be used for evaluation of any state or 
        tribal program will be at the discretion of the FOD.'' This 
        would seem to undercut any agreements that were reached between 
        the state and the FOD during the negotiation and development of 
        the state's annual performance agreement.

        Appendix--Pages 1-9 through 1-13--Offsite Impacts--The current 
        REG-8 provisions addressing offsite impacts should remain in 
        place. The draft greatly expands the universe of offsite 
        impacts and goes far beyond the jurisdictional control of the 
        regulatory authority. Offsite impacts should be limited to 
        violations cited under SMCRA. OSM's draft would also consider 
        violations cited by other federal and state agencies that are 
        outside the scope of SMCRA. Several of the reporting 
        requirements are new and deserve further discussion before 
        being incorporated in the directive. Again, in many cases, OSM 
        is utilizing the directive to foist new requirements on state 
        regulatory authorities which do not find their support in 
        existing regulations. This is particularly true with respect to 
        the collection of information on unregulated off-site impacts 
        in addition to those regulated or controlled by the state 
        program and the identification of off-site impacts where no 
        violation was required or cited. In addition to the potential 
        confusion and controversy this could engender, spending limited 
        state and federal resources on these matters seems 
        inappropriate.

        Appendix--Pages 1-13 through 1-18--Reclamation Success--The 
        decision to apply for a phase bond release is a business 
        determination of the permittee. While the regulatory authority 
        can encourage the permittee to submit a bond reduction 
        application, it cannot by regulation or law mandate this 
        result. The timeliness measurements of the approval of the 
        various bond release phases may not provide the most accurate 
        data.

        Appendix--Pages 1-20 through 1-21. OSM is moving toward an 
        enhanced database for oversight, especially with the expanded 
        ``Regulatory Program Data for States and Tribes'' (DST). It is 
        absolutely critical that OSM engage in discussions with the 
        states about the ability to provide the data being sought by 
        OSM before the agency moves forward with this aspect of 
        oversight. The states will likely face challenges associated 
        with both the availability of this data and the resources 
        required to provide the data. If OSM is to be successful in the 
        collection and analysis of this important program data, the 
        agency's state partners must be brought into the process.

        Appendix--Page 1-23--OSM is proposing to place minutes from 
        meetings between OSM and the states in OSM's ``Evaluation 
        Files'', which in turn would be placed on OSM's website. These 
        oversight ``team meetings'' are often frank exchanges about 
        challenging issues, and may involve discussions about potential 
        future enforcements actions against operators. Making these 
        types of notes and discussions available to the public could 
        prove problematic. These materials should enjoy the same 
        protection as attorney-client privilege and work product.
Conclusion
    We appreciate the opportunity to submit these comments on the three 
oversight directives discussed above. We call upon OSM to reconvene the 
Oversight Steering Committee to engage in further discussions 
concerning both REG-8 and REG-23 to address the various concerns raised 
in our comments. We also urge OSM to appoint a separate working group 
composed of state and federal representatives to work through the 
issues associated with the proposed reinstitution of INE-35. We stand 
prepared to meet with you at your earliest convenience.

Sincerely,

Gregory E. Conrad
Executive Director
Interstate Mining Compact Commission

Douglas C. Larson
Executive Director
Western Interstate Energy Board
On behalf of the WIEB Reclamation Committee
                                 ______
                                 
    [A letter submitted for the record by the Western 
Governors' Association, to The Honorable Ken Salazar, 
Secretary, U.S. Department of the Interior, dated February 27, 
2011 follows:]

                     WESTERN GOVERNORS' ASSOCIATION

                             Headquarters:

                       1600 Broadway, Suite 1700

                            Denver, CO 80202

                    303-623-9378 -- Fax 303-534-7309

                        Washington, D.C. Office:

                 400 N. Capitol Street. N.W., Suite 388

                         Washington, D.C. 20001

                    202-624-5402 -- Fax 202-624-7707

                            www.westgov.org

February 27, 2011

The Honorable Ken Salazar
Secretary of the Interior
Department of the Interior
1849 C. Street, N.W.
Mail Stop 7060
Washington, D.C. 20240

Dear Secretary Salazar:

    On behalf of the Western Governors' Association (WGA), we are 
writing to express concerns over recent actions by the Office of 
Surface Mining, Reclamation and Enforcement (OSMRE) to comprehensively 
revise regulations regarding stream protection under the Surface Mining 
Control and Reclamation Act (SMCRA). These proposed changes, called the 
``stream protection rule,'' will apply nationwide and in the agency's 
own words are ``much broader in scope than the 2008 stream buffer zone 
rule.'' WGA is an independent, nonpartisan organization of Governors 
representing 19 Western states and three U.S.-flag Pacific islands. The 
states in our territory produce 599 million tons of coal annually, 
representing 56% of the total U.S. coal production.
    Several of our member states who are ``cooperating agencies'' have 
delivered a letter (see attached letter dated November 23, 2010) to 
your Director of OSMRE expressing serious concerns about the need and 
justification for both the proposed rule and accompanying environmental 
impact statement (EIS), as well as the quality, completeness and 
accuracy of the chapters of the EIS that they had the opportunity to 
review. WGA is also concerned by the procedures used by your agency in 
developing the EIS to support this rule. Members who are ``cooperating 
agencies'' on the EIS feel that they have not had a meaningful 
opportunity to comment on its contents, given the constrained time 
periods for reviewing and submitting comments.
    WGA feels that the OSMRE has not provided a sufficient basis to 
support the need for sweeping regulatory changes, hi fact, one of the 
primary justifications put forward by the agency in its Federal 
Register notice is a June 11, 2009 memorandum of understanding (MOU) 
between the Administrator of the U.S. Environmental Protection Agency, 
the Acting Assistant Secretary of the Army, and you. However, the MOU 
was specifically targeted at ``Appalachian Surface Coal Mining,'' which 
expressly refers to mining techniques requiring permits under both the 
Surface Mining Control and Reclamation Act (SMCRA) and Section 404 of 
the Clean Water Act (CWA), in the states of Kentucky, Ohio, 
Pennsylvania, Tennessee, Virginia, and West Virginia.'' (See MOU at p. 
1 [REMOVED ADVANCE FIELD] and fn 1). Despite this limitation in the 
MOU, the OSMRE rules will be applied to coal mines throughout the 
United States, including coal-producing Western states that we 
represent.
    Likewise, the agency has not provided objective data to support 
such comprehensive regulatory changes. OSMRE's most recent annual 
evaluation reports for Western states for 2010 strongly suggest 
otherwise. For example, the report for Wyoming, which produces more 
coal than any other state in the U.S. (almost 40% of the nation's 
total), says that: ``...the Wyoming program is being carried out in an 
effective manner.'' The report also demonstrates significant and steady 
progress in reclamation, showing that the ratio of reclaimed to 
disturbed acres has steadily increased from 10% in 1988 to 45% in 2010. 
The report also stated that the state ensured that backfilled and 
graded areas will be returned to approximate original contour, that 
there have not been any public complaints about bonding, and that 
Wyoming has not had any bond forfeitures in recent years. Finally, 
despite OSMRE's insistence on a 78% increase in inspections, no 
enforcement actions were taken by OSMRE during 2009 or 2010. hi OSMRE's 
own words, ``this lack of additional enforcement actions, despite 
increased inspection frequency, helps to illustrate the effectiveness 
of the Wyoming's regulatory program.''
    Similar statements can be found in OSMRE evaluation reports on 
other WGA-member states. Here is a sampling of what OSMRE said about 
some of the other major coal producing states in the West:
          North Dakota: ``Overall, North Dakota has an 
        excellent coal regulatory program.''
          Montana: ``...an off-site impact is defined as 
        anything resulting from a surface coal mining and reclamation 
        activity or operation that causes a negative effect on people, 
        land, water, or structures outside the permit area...Off-site 
        impacts were not identified during the reporting period.''
          Utah: ``...site conditions indicated that the state 
        is effectively implementing and enforcing its program.''
          Texas: ``...the Office of Surface Mining finds that 
        Texas is properly administering its regulatory and abandoned 
        mine lands programs.''
          Alaska: the ``DMLW [Division of Mining, Land, and 
        Water] is effectively maintaining and administering the coal 
        regulatory program in accordance with the Alaska Surface Coal 
        Mining and Reclamation Act.''
    WGA urges you to consider these reports on Western state coal 
programs, evaluate the proposed regulatory changes, and consider 
suspending further work on their implementation so that OSMRE can re-
examine the purpose and need for these rules, and provide appropriate 
scientific and factual information to support rule changes of this 
magnitude. If after such evaluation and consideration the agency 
determines that rule changes are necessary, we request that OSMRE 
engage our member states and members of the public in a meaningful and 
substantial way.

Sincerely,

C.L. ``Butch'' Otter
Governor of Idaho
Chairman

Christine O. Gregoire
Governor of Washington
Vice Chair

Enclosure

                                 
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