[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
THE PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST FOR THE U.S.
GEOLOGICAL SURVEY; THE OFFICE OF SURFACE MINING, RECLAMATION AND
ENFORCEMENT; AND THE MINERALS MANAGEMENT SERVICE
=======================================================================
OVERSIGHT HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
March 14, 2002
__________
Serial No. 107-94
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
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COMMITTEE ON RESOURCES
JAMES V. HANSEN, Utah, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska, George Miller, California
Vice Chairman Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
Jim Saxton, New Jersey Peter A. DeFazio, Oregon
Elton Gallegly, California Eni F.H. Faleomavaega, American
John J. Duncan, Jr., Tennessee Samoa
Joel Hefley, Colorado Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado Calvin M. Dooley, California
Richard W. Pombo, California Robert A. Underwood, Guam
Barbara Cubin, Wyoming Adam Smith, Washington
George Radanovich, California Donna M. Christensen, Virgin
Walter B. Jones, Jr., North Islands
Carolina Ron Kind, Wisconsin
Mac Thornberry, Texas Jay Inslee, Washington
Chris Cannon, Utah Grace F. Napolitano, California
John E. Peterson, Pennsylvania Tom Udall, New Mexico
Bob Schaffer, Colorado Mark Udall, Colorado
Jim Gibbons, Nevada Rush D. Holt, New Jersey
Mark E. Souder, Indiana James P. McGovern, Massachusetts
Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho Hilda L. Solis, California
Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
J.D. Hayworth, Arizona Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
Tim Stewart, Chief of Staff
Lisa Pittman, Chief Counsel/Deputy Chief of Staff
Steven T. Petersen, Deputy Chief Counsel
Michael S. Twinchek, Chief Clerk
James H. Zoia, Democrat Staff Director
Jeffrey P. Petrich, Democrat Chief Counsel
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SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
BARBARA CUBIN, Wyoming, Chairman
RON KIND, Wisconsin, Ranking Democrat Member
W.J. ``Billy'' Tauzin, Louisiana Nick J. Rahall II, West Virginia
Mac Thornberry, Texas Edward J. Markey, Massachusetts
Chris Cannon, Utah Solomon P. Ortiz, Texas
Jim Gibbons, Nevada, Calvin M. Dooley, California
Vice Chairman Jay Inslee, Washington
Thomas G. Tancredo, Colorado Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
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C O N T E N T S
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Page
Hearing held on March 14, 2002................................... 1
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming........................................... 1
Prepared statement of.................................... 3
Kind, Hon. Ron, a Representative in Congress from the State
of Wisconsin............................................... 4
Rahall, Hon. Nick J. II, a Representative in Congress from
the State of West Virginia................................. 5
Statement of Witnesses:
Denett, Lucy Querques, Acting Director, Minerals Management
Service, U.S. Department of the Interior................... 16
Prepared statement of.................................... 18
Response to questions submitted for the record........... 32
Jarrett, Jeffrey D., Director, Office of Surface Mining,
Reclamation and Enforcement, U.S. Department of the
Interior................................................... 7
Prepared statement of.................................... 9
Response to questions submitted for the record........... 38
Leahy, Dr. P. Patrick, Associate Director for Geology, U.S.
Geological Survey, U.S. Department of the Interior......... 11
Prepared statement of.................................... 13
Response to questions submitted for the record........... 45
OVERSIGHT HEARING ON THE PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
FOR THE U.S. GEOLOGICAL SURVEY (EXCEPT THE WATER RESOURCES DIVISION);
THE OFFICE OF SURFACE MINING, RECLAMATION AND ENFORCEMENT; AND THE
MINERALS MANAGEMENT SERVICE
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Thursday, March 14, 2002
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Resources
Washington, DC
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The Subcommittee met, pursuant to call, at 10:11 a.m., in
room 1310, Longworth House Office Building, Hon. Barbara Cubin
[Chairman of the Subcommittee] presiding.
STATEMENT OF THE HONORABLE BARBARA CUBIN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WYOMING
Mrs. Cubin. The Subcommittee is now called to order. We
meet today to review the program budgets for the coming fiscal
year for three agencies within our jurisdiction from which we
have not already heard. These are the U.S. Geological Survey
(USGS), the Office of Surface Mining Reclamation and
Enforcement (OSM), and the Minerals Management Service (MMS),
all of which are within the Department of Interior.
The USGS, established in 1879, is the premier earth
sciences agency in this country, and now does research in the
biological sciences as well, in support of our public lands
managers and for societal needs in general. Our water resources
investigations are a large part of this agency's efforts, but
oversight of those programs falls within our sister panel, the
Subcommittee on Water and Power. Dr. P. Patrick Leahy,
Associate Director for Geology at the USGS, is here today to
outline the agency's proposed programs and the budget to
support them.
OSM was established under the Surface Mining Control and
Reclamation Act of 1977, or as we fondly call it, SMCRA, to
oversee State and tribal efforts to regulate the impacts of
modern-day coal mining operations and reclaim the pre-1977
abandoned mine lands. OSM is a relatively small bureau, in
large measure because Congress wanted to ensure a consistency
in State regulation of coal mining impacts by creating a
Federal review of the adequacy of the State programs, but not
by regulating the mines directly. Likewise, most reclamation
efforts are conducted in response to State program-identified
needs, where OSM's role is to administer grant monies, not to
do the dirt-work per se.
The newly sworn in Director of OSM, Mr. Jeffrey Jarrett,
who most recently was the Deputy Secretary in the Commonwealth
of Pennsylvania's coal mining regulatory and reclamation
program, is here with us today. He will outline plans for the
Federal agency and describe the 2003 budget proposal in which,
by the way, he had no input because it was created well before
he came. So I expect him to know every detail and reason for
each line item.
[Laughter.]
Last, MMS is the Federal agency established by way of an
appropriations law in 1982 from functions formerly in the
Geological Survey and the Bureau of Land Management. MMS owes
its birth actually to the mismanagement of Federal and Indian
royalty collection efforts which prompted then Secretary of the
Interior James Watt, who is from my State as well, to work with
Congress to reform the program and establish this agency. MMS
lacks an organic act but it has a big job to do in managing
offshore leasing and operations for oil and gas beneath Federal
waters of the Outer Continental Shelf and collecting Federal
and Indian mineral lease revenues.
I am proud to say that Ms. Johnnie Burton, currently the
Director of Revenue for the great State of Wyoming, has been
announced as the new Director of MMS effective mid-March this
year, but today we are happy to have the Acting Director, Lucy
Denett, with us to outline the MMS proposed budget. And she is
here in spite of recent surgery, and we really appreciate the
extra effort.
Together, these three bureaus are proposing to spend over
$2 billion, some from appropriated general funds and some from
dedicated trust funds. On the other hand, the two regulatory
agencies will collectively take in somewhere on the order of $6
billion to be distributed to States, tribes, and individual
Indian allottees, land and water conservation trust funds,
reclamation funds, and the general fund.
The USGS, in the conduct of sound science, will take in
matching funds from State and local governments in support of
its cooperative programs, and will part with some Federal
dollars to State geological surveys to pay for peer-reviewed
geological mapping grants.
While not a part of this Subcommittee's jurisdiction, I
would note that the administration is proposing to shift some
$10 million in previous USGS funding for hydrologic research in
toxic compounds to the National Science Foundation, and the
National Science Foundation is to competitively grant to
researchers in academic institutions throughout the country for
the studies that will be done. Perhaps this is a sign of things
to come--I don't really know--as government science goes down
the ``contracting out'' route that industry takes lower costs
into consideration, and makes efficiencies work and be shown
that making efficiencies is as productive.
Before I turn to our ranking member, let me give a
collective welcome to all three of our witnesses, and thank you
in advance for your testimony. We look forward to hearing from
all of you.
The Chair now recognizes the ranking member, Mr. Kind.
[The prepared statement of Mrs. Cubin follows:]
Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on
Energy and Mineral Resources
The Subcommittee meets today to review the program budgets for the
coming fiscal year for the three agencies within our jurisdiction from
which we have not already heard. These are the U.S. Geological Survey,
the Office of Surface Mining, Reclamation and Enforcement, and the
Minerals Management Service, all of which are within the Department of
the Interior.
The USGS, established in 1879, is the premier earth sciences agency
in the country, and now does research in the biological sciences as
well, in support of our public lands managers and for societal needs in
general. Water resources investigations are a large part of this
agency's efforts, but oversight of those programs falls within our
sister panel, the Subcommittee on Water and Power. Dr. P. Patrick
Leahy, Associate Director for Geology at the USGS, is here today to
outline the agency's proposed programs and the budget to support them.
OSM was established under the Surface Mining Control and
Reclamation Act of 1977, (SMCRA), to oversee state and tribal efforts
to regulate the impacts of modern-day coal mining operations and
reclaim pre-1977 abandoned mined lands. OSM is a relatively small
bureau in large measure because Congress wanted to insure a consistency
in state regulation of coal mining impacts by creating a Federal review
of the adequacy of the state programs, not by regulating mines
directly. Likewise, most reclamation efforts are conducted in response
to state program-identified needs where OSM's role is to administer
grant monies, not to contract the dirt-work, per se. The newly sworn-in
Director of OSM, Mr. Jeffrey Jarrett, who most recently was the Deputy
Secretary in the Commonwealth of Pennsylvania's coal mining regulatory
and reclamation program, is here with us today. He will outline plans
for the Federal agency and describe the 2003 budget proposal in which,
by the way, he had no input because it was created well before he took
office.
Lastly, MMS is the Federal agency established via appropriations
law in 1982 from functions formerly in the Geological Survey and the
Bureau of Land Management. MMS owes its birth to mismanagement of
Federal and Indian royalty collection efforts which prompted then
Secretary of the Interior Jim Watt to work with Congress to reform the
program and establish this agency. MMS lacks an ``organic act'' but it
has a big job to do managing offshore leasing and operations for oil
and gas beneath Federal waters of the outer continental shelf, and
collecting Federal and Indian mineral lease revenues. I'm proud to say
that Ms. Johnnie Burton, currently the Director of Revenue for the
great State of Wyoming, has been announced as the new Director of MMS,
effective mid-March of this year. Today, the Acting Director, Ms. Lucy
Dennett is with us to outline the MMS proposed budget.
Together these three bureaus are proposing to spend over two
billion dollars, some from appropriated general funds and some from
dedicated trust funds. On the other hand, the two regulatory agencies
will collectively take in on the order of six billion dollars to be
distributed to states, tribes, individual Indian allottees, land and
water conservation trust funds, reclamation trust funds, and the
general fund.
The USGS in the conduct of ``sound science'' will take in matching
funds from state and local governments in support of its cooperative
programs, and will part with some Federal dollars to state geological
surveys with matching funds for peer-reviewed geologic mapping grants.
While not a part of this Subcommittee's jurisdiction, I would note the
Administration is proposing to shift some $10 million in previous USGS
funding for hydrologic research in toxic compounds to the National
Science Foundation to be competitively granted to researchers in
academic institutions throughout the country. Perhaps this is a sign of
things to come, as government science goes down the ``contracting out''
route that industry takes to lower its costs when and where
efficiencies can be shown by doing so.
Before I turn to our Ranking Member, Mr. Kind, let me give a
collective welcome to our witnesses. Thank you in advance for your
testimony. We look forward to working with all of you over the coming
year.
______
STATEMENT OF THE HONORABLE RON KIND, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WISCONSIN
Mr. Kind. Thank you, Madam Chair, and I too want to thank
the witnesses for your presence today and the testimony you are
about to give. Obviously we in the Subcommittee and the Full
Committee as a whole have been very busy over the last year and
3 months or so dealing with national energy policy, and there
are still a lot of remaining questions in regards to where we
go here in the 21st century in developing a sustainable and
reasonable and logical energy policy that is going to not only
meet our energy needs in this century but also deal with some
very basic facts of life, one of which is we have roughly 3
percent of the oil reserves in the world yet we are consuming
about 25 percent of what is being produced today.
In fact, if you just access the Department of Energy's web
site, they too, taking into account the additional expenses of
maintaining security interests in the Persian Gulf, have
estimated that it cost our country roughly $57 billion last
year alone in trying to maintain a continuous and reliable oil
supply line from the Persian Gulf region. In fact, during the
decade of 1980 to 1990 that cost, including the military
expenditure in the region, was roughly $360 billion for the
American taxpayer, which equates to roughly $100 a barrel of
oil from the region or $5 for a gallon of gasoline in this
country.
So there are tremendous costs incurred in this country in
trying to maintain the fossil fuel consumption or dependence
that we are currently on. That is why so many of us have been
working hard, and trying to work with the administration as
well, in developing a much more sustainable energy policy, one
that also recognizes the value of alternative and renewable
energy sources, the potential of wind, solar, geothermal power,
looking at the nuclear industry.
But I appreciate the chance to be able to listen to the
budget implications in your respective agencies, because you
are going to be playing a very important and vital role in
regards to the energy policy, whatever happens to pass this
Congress. I am particularly concerned in regards to some areas
of cutbacks being proposed in the President's budget and the
impact on your areas.
The USGS budget, and although we don't have direct
jurisdiction over it, but the water resources aspect and the
cutbacks in the water resources program, and I have a
particular interest in that, along with a bipartisan coalition
of Members, and we are hoping to be able to work with the
administration to find out the reason for some of these program
cutbacks, but the impact that is going to have on the type of
data collection and water resource monitoring that is going on
with the USGS, which I think is an incredibly important and
vital role in regards to the management of the watershed areas
and the water quality in this country.
And for OSM, we are seeing a significant decrease in the
Abandoned Mine Lands Fund which is used to reclaim the
environment from past coal mining practices. I think that, too,
is something we are going to have to take a closer look at and
see what the real impact of the funding reductions in that
program is going to be.
And then with MMS, it is going to be losing some funding
under the proposed budget provided last year for marine
research, for instance.
So these are, I think, some serious issues of concern that
a lot of Members share with myself. We will be interested to
hear your testimony, and perhaps some specific questions in
those areas in particular. I just think we have so much
potential in this country in developing the technology we need
to really make the transition to a more sustainable energy
policy that becomes more reliant, and understanding that we are
going to be consuming a lot of fossil fuels and we are not
going to make that transition quickly or easily, nonetheless I
think more needs to be done in the research area to develop
these alternative and renewable possibilities that exist in
this country.
Just quickly, I met again with the Ministry of Fisheries
from Iceland yesterday and had a follow-up conversation that I
had last year with them in regards to their hydrogen-powered
program that they are implementing in Iceland, a 10-year
program to have fuel cell powered vehicles and a bus fleet and
their fishing fleet. And the technology that they are using to
enable them to do that is being developed by Enable Fuel Cell
Corporation, located in Middleton, Wisconsin, my home State. So
it is not that we don't have the know-how or the potential to
do it here, I think we are just lacking the will and the
dedication of resources and really the vision and the
leadership in order to help this country develop those type of
alternative energy resources, as well.
So thank you again for coming. We look forward to your
testimony. Thank you, Madam Chair.
Mrs. Cubin. The Chair would like to also recognize Mr.
Rahall for an opening statement, but before I do that, I would
like to compliment him on his appearance today, and I was
wondering if his tie represented some of those AML dollars--
[Laughter.]
Mr. Rahall. Yes, Madam Chair, we wish we were rolling in
the green that we ought to be in order to do the job that is
necessary, but unfortunately we are not. My tie expresses that
hope, you are correct.
Mrs. Cubin. Mr. Rahall.
STATEMENT OF THE HONORABLE NICK RAHALL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Madam Chair and distinguished
ranking member, Mr. Kind, for allowing me to give an opening
statement, and I salute you both for holding today's hearing.
I would like to welcome the directors of the U.S.
Geological Survey and OSM who are with us, as they attempt to
justify their proposed Fiscal Year 2003 budgets. I would like
to limit my remarks to matters pertaining to the Office of
Surface Mining Reclamation and Enforcement, and I do so for a
number of reasons.
First, I do want to thank Director Jarrett for spending
time with myself and my staff and allowing us to go over a
number of these issues beforehand with you. The agency is very
important not only to myself, but my home State of West
Virginia. I was intimately involved with the establishment of
SMCRA back in 1977 during my first year in this august body.
It is one of those accomplishments, or lack thereof, that
have a direct effect on the health and welfare of many of those
that I have the true honor of representing in the Congress of
the United States. And if for no other reason, OSM deserves our
attention because it has often been treated, as I have said
before, like a poor stepchild of the Department of Interior.
That is unfortunate, but it is true.
Director Jarrett, I do welcome you. I pray you recognize
the challenges you face, that we all face, because these are
trying times in our Nation's coal fields. As we continue our
efforts to reclaim land that has been ravished by past mining
practices, we witness a proposed cut in the Abandoned Mine
Reclamation Program funds. The money is there. The unspent
balance in the fund, as Madam Chair so well knows, is
approaching $2 billion. It should be put to use improving the
health and safety of our coal field residents and providing
jobs.
Our retired coal miners continue to see the stability of
their health care system dealt severe blows time after time by
the judiciary. Today the provision of health care for 50,000
retirees whose average age is 78 years old may very well rest
with this body and this administration. It may only be through
increased AML interest transfers to their special health care
fund that can avoid cruel cutbacks in their health care
coverage--health care, I might add, that has been promised to
them by our Federal Government, by administration after
administration after administration.
And our regulatory program, almost 25 years after the
enactment of SMCRA, still remains unsettled. The mountaintop
mining controversy that erupted in West Virginia a few years
ago was a wake-up call to the regulatory authorities. The
matter has yet to be fully put to rest.
There are other challenges we face that you know that we
must grapple with, as the Director of the Office of Surface
Mining Reclamation and Enforcement, and you have that
responsibility. A West Virginia coal miner once wrote to me,
and I quote, ``Every law that has ever been enacted dealing
with coal mining was penned in blood.''
Indeed, the Farmington mine disaster gave rise to the
enactment of the Federal Mine Safety Act in 1969, and the
events that took place at Buffalo Creek, West Virginia, in my
district, on that grim morning 30 years ago when a coal waste
dam was breached, with the resulting torrent leaving 125 dead,
over 1,000 injured, and wiping out almost 5,000 homes, that
disaster gave rise to the enactment of SMCRA in 1977.
As you go about your official duties, Director Jarrett, I
urge you to keep the words of Psalm 23 close to your heart:
``Yea, though I walk through the valley of the shadow of death,
I will fear no evil.''
Thank you, Madam Chair.
Mrs. Cubin. I am having trouble finding the button. Amen.
[Laughter.]
Mr. Rahall. I was waiting for that.
Mrs. Cubin. I would now like to introduce the panel. We
have with us today, as I said in my opening statement, the
Honorable Jeffrey Jarrett, Director of the Office of Surface
Mining Reclamation and Enforcement; Dr. P. Patrick Leahy, the
Director of the USGS; and Ms. Lucy Denett, Acting Director of
Minerals Management Service.
I now recognize Director Jarrett to testify for 5 minutes.
Oh, you can go 10 minutes, the boss says. Oh, I said so in the
letter of invitation. Excuse me. And if you don't have time for
your whole testimony, then the entire testimony will be
included in the record. Mr. Jarrett.
STATEMENT OF JEFFREY D. JARRETT, DIRECTOR, OFFICE OF SURFACE
MINING RECLAMATION AND ENFORCEMENT, U.S. DEPARTMENT OF THE
INTERIOR
Mr. Jarrett. Thank you, Madam Chairwoman and members of the
Committee. I think I can probably keep it under 5 minutes. I
have prepared a written statement, opening statement for the
record, that discusses OSM's proposed budget, so I will not
discuss those budget issues in any detail in my opening
comments.
As you know, I have been on the job now for just a little
over a month, and during that month I have been spending my
time being briefed by my staff and meeting with various
stakeholders of the OSM to learn about their concerns and
impressions of the office. While I am continuing to learn, and
clawing rapidly up the learning curve, I do have some initial
impressions about some of the things that are going on within
OSM.
One of those issues has to do with the bonding programs
that we oversee. As you know, Federal SMCRA requires operators
to post bonds or other financial guarantees to ensure that the
reclamation and the environment can be taken care of in the
event of operator default.
We have identified some fairly significant problems with
the bonding program across this country, specifically the
bonding mechanism established in Federal SMCRA. Our regulations
are not very well suited to dealing with some of the perpetual
environment obligations that we are encountering now.
Specifically, within the mining industry it would be acid mine
drainage. So we are going to be searching for better mechanisms
available to the industry which could provide those required
financial guarantees.
At the same time, we have some renewed concerns about the
adequacy of bonds for land reclamation across this country, I
do not know enough at this point in time to say whether those
concerns are legitimate or not. I just know that those concerns
are such that I want to take a closer look at the issue.
Having said that, the larger issue with bonds is that
bonding capacity is severely reduced in this country, and
whatever the bonding program is, I think it is incumbent upon
us to make sure that we are not asking our industry to provide
a financial guarantee that simply is not available in the
marketplace. So we are going to be working with the insurance
industry and the surety industry to explore ways of increasing
the availability of adequate financial guarantees, not only for
the coal mining industry, but for some of the other mineral and
resource extraction industries as well.
Overall, I think my impression is that one of the key
themes of my tenure is going to be to create some stability
within the Office of Surface Mining. I think stability is
something that industry certainly needs. It is something that
our citizenry needs. It is something that the State regulatory
authorities need, because the projects that we work on and the
job that we have to do requires us to think long term, and we
can't think long term without adequate planning.
So to have that adequate planning, we need a little bit of
stability. We are going to be working in several areas to
provide that stability, and I won't go into a great deal of
detail, but some of the issues we are looking at is our
rulemaking calendar, where we have to make some decisions about
some of the proposed rulemakings to decide which ones we really
want to proceed with and which ones we don't. My philosophy is
that if a rule is not going to fix a problem, we probably
shouldn't be doing it.
On the other hand, we do have a lot of very serious
problems out there that can only be fixed through rulemaking.
We have other significant single issue problems that we need to
get resolved. Mr. Rahall, you mentioned the mountaintop mining
issue. That is certainly one of them. The 106 consultation
review required by the National Historic Preservation Act is
another issue.
But ultimately I think all of the issues that we are
struggling with right now because of the lack of stability in
our regulatory programs can only be resolved through proper
planning, and I think proper planning has to have two
cornerstones to it. One is forecasting where we want to be in
the future and where some externalities are going to force us
to be in the future. The other is to work on defining what we
are all about, answering the questions about why do we do all
of the things that we do, looking at our performance outcomes
as opposed to, checking off the list of numbers and the bean-
counting that we traditionally get accused of.
So we are going to be working hard on those issues. I think
that if we can do that forecasting, if we can accurately
measure the things that we are trying to accomplish, that we
will be able to do the one thing that I am committed to do,
that I think is most important to create stability, and that is
to be able to provide and achieve some level and fair budgets
and grants to the States, not only for their Title V programs
but also their Title IV programs. Having been responsible for
managing a State regulatory authority for 7 years prior to this
job, I know that even more critical than the level of funding
is the stability and predictability of that funding. That is
true in the Title V program and in the Title IV program.
And of course one of the criticisms leveled against OSM by
industry, is that we have spent a great deal of money on
overhead in the AML program. As a former State regulator I can
tell you that one of the contributing factors to overhead is
not knowing what your grant is going to be next year and not
having level grants. States simply can't staff up to handle
large grants, and then lose the grant the next year and then
have to staff back down.
So we want to work real hard to develop the information
that we think we need, and I will take the blame for this, but
I think as an agency we need to do a much better job of making
a case for those grants, both Title IV and Title V. We need to
be able to debate, internally and up the line, about the
importance of those programs, and we can only do that if we
come up with better ways to measure what those programs are all
about.
Having said that, I will be glad to answer any questions
that anyone has.
[The prepared statement of Mr. Jarrett follows:]
Statement of Jeffrey D. Jarrett, Director, Office of Surface Mining
Reclamation and Enforcement, U.S. Department of the Interior
Madam Chairwoman and Distinguished Members of the Subcommittee, I
am pleased to present to you the Fiscal Year (FY) 2003 budget request
of the Office of Surface Mining Reclamation and Enforcement (OSM).
In August, OSM will mark the 25th Anniversary of its creation. OSM
was established with the passage of the Surface Mining Control and
Reclamation Act of 1977 (SMCRA). Since then, working closely with the
States and Tribes, OSM has been responsible for assuring that coal
mines are operated in a manner that protects citizens and the
environment and to assure that the land is restored to beneficial use
following mining. Additionally, we are responsible for reclaiming and
restoring lands and water degraded by past mining operations.
In the last 25 years, OSM has provided nearly $1 billion in grants
to the States and Indian Tribes to assist in funding the regulation of
active coal mines. Since 1979, OSM has provided about $3 billion in
grants to the States and Tribes to clean up mine sites abandoned before
SMCRA's 1977 enactment.
In fact, more than 180,000 acres of abandoned coal mine sites have
been reclaimed under OSM's Abandoned Mine Land Program.
Our record of consultation and cooperation with States, Tribes,
local entities, industry and the public has been a key factor in
achieving these results. In fact, we have been praised as ``Feds Who
Get It'' by Governing Magazine. That same professional, cooperative
approach must continue if, in the next few years, we hope to continue
to match these past achievements.
The United States possesses one-fourth of the world's coal
resources, with over 275 billion tons of recoverable reserves. Because
of these vast domestic coal resources and the fact that over one-half
of electricity generated in our country comes from coal-fired
utilities, coal must be an integral part of our Nation's energy policy.
In Fiscal Year 2003, OSM will work to identify innovations it can
implement that will help maintain environmental quality and protect
public health and safety while enhancing domestic coal production.
Fiscal Year 2003 Budget Request
To address some of the issues I have just outlined, I would like to
present some highlights of our Fiscal Year 2003 budget proposal. OSM's
Fiscal Year 2003 budget request totals $283.6 million in current
authority, $70 million in permanent authority, and 637 FTE's. Included
in this amount is $4.2 million to reflect a government-wide legislative
proposal to shift the full cost of the government's pension system and
employee health benefits program for current employees to their
employing agencies. Without this proposal, OSM's Fiscal Year 2003
request is $279.4 million, a decrease of $27.1 million below the Fiscal
Year 2002 enacted level of $306.5 million. In addition, we have a
continuing obligation under the Coal Act of 1992 to make payments from
interest earned on the Abandoned Mine Land (AML) Fund to the United
Mine Workers of America Combined Benefit Fund (UMWACBF). These payments
help defray the health care costs of retired coal miners and their
dependents where the employing company or related entity for which they
worked have gone bankrupt or are no longer in business. As of January
31, 2002, $574 million had been transferred to the UMWA since Fiscal
Year 1996. I will discuss this transfer in more depth, but first let me
describe the discretionary portion of our Fiscal Year 2003 request.
Our Fiscal Year 2003 budget is a fiscally responsible proposal that
enables OSM to effectively and efficiently implement its mission goals.
OSM's net Fiscal Year 2003 request includes $105.4 million for the
Regulation and Technology (R&T) appropriation and $174 million for the
AML appropriation. This request represents an increase of $2.3 million
for the R&T program and a decrease of $29.4 million for the AML
program, thus accounting for a total decrease of $27.1 million from
Fiscal Year 2002.
The Fiscal Year 2003 request for the Regulation and Technology
appropriation will enable OSM to provide sufficient financial support
for the 24 State regulatory programs. OSM is requesting a net $1
million increase in State regulatory grants. This is comprised of a $2
million increase for West Virginia offset by a $1 million reduction to
other States' grants. State regulatory funding was increased by over $6
million during the period from Fiscal Year 2000 to Fiscal Year 2002,
from $50.6 million to $56.6 million. OSM is also requesting $1.3
million for uncontrollable cost increases.
In the Abandoned Mine Lands Program, the budget proposes a $17
million reduction for State reclamation grants. Additionally, the
budget proposes to transfer $2 million in carryover for Federal
emergencies to State reclamation grants, resulting in total grant
funding of $144.1 million. It eliminates a $0.5 million grant to
Pennsylvania for an acid mine drainage demonstration project. It
provides a $10.9 million one-time reduction in funding for the Federal
emergency program; this reduction should have no programmatic impact
since OSM has sufficient carryover funds to operate the Federal
emergency program for Fiscal Year 2003. The proposal also reduces
funding for Federal high priority projects by $1.3 million. The budget
identifies savings of $0.2 million in travel costs and $0.1 million in
general services efficiencies. It requests $0.6 million for
uncontrollable costs.
OSM is also continuing its funding support for the Appalachian
Clean Streams Initiative at the Fiscal Year 2002 level of $10.0
million. This initiative supports local efforts to eliminate
environmental, economic, and public health impacts of acid mine
drainage from abandoned coal mines in Appalachia. OSM has partnered
with over one hundred Government agencies and private groups to
leverage our resources with other parties' resources to assure
increased reclamation of streams polluted by acid mine drainage.
Let me now address the other component to our budget--the annual
transfer payment to the UMWACBF.
The Coal Industry Retiree Health Benefit Act of 1992 (the ``Coal
Act'') amended the Surface Mining Control and Reclamation Act (30
U.S.C. section 1232) to provide for annual transfers of interest from
the Abandoned Mine Reclamation Fund to the Combined Benefit Fund (CBF)
to defray health care costs for unassigned beneficiaries. The CBF
provides health care and death benefits for eligible union coal mine
workers who retired on or before July 20, 1992, and their dependents.
The Coal Act holds coal operators and related companies responsible
for paying monthly premiums for the costs of health benefits related to
their retired mine workers and dependents (known as ``assigned''
beneficiaries). Under the Coal Act, the Social Security Administration
(SSA) is responsible for computing the per beneficiary health premium
and for assigning retired mine workers to their former employers or
related companies. Those for whom a responsible company cannot be
identified, are considered ``orphans,'' or unassigned beneficiaries.
For Fiscal Year 2003, we estimate the amount of this mandatory transfer
will be $70 million.
Government Performance and Results Act
OSM recognizes the importance that both the Administration and the
Congress have placed on implementing the Government Performance and
Results Act (GPRA). The Fiscal Year 2003 budget request fully addresses
GPRA requirements. OSM has established a Strategic Plan to carry out
its mission, vision, and goals and to implement a budget that relates
resource requests to strategic goals in a more understandable way. OSM
also has developed a business-line based accounting system to determine
the cost of each program activity, provide a mechanism for linking
costs to performance outputs, and enhance OSM's management decision-
making process. OSM's Business Lines are:
LEnvironmental Restoration;
LEnvironmental Protection;
LTechnology Development and Transfer;
LFinancial Management; and
LExecutive Direction and Administration.
Government-wide Management Reforms
This budget proposal also supports the President's Government-wide
management reform agenda of:
LIntegrating Budget and Performance Measures
LImproving Strategic Management of Human Capital
LIncreasing Competitive Sourcing
LImproving Financial Performance
LExpanding E-Government
OSM's budget proposals have integrated strategic goals and
associated measures with its budget structure for the past several
fiscal years and in 2002, OSM is implementing activity based costing.
OSM has already developed a succession plan to help strategically
manage its human resources. Consistent with Administration guidance,
OSM updated its Commercial Activity Inventory in Fiscal Year 2001 and
has just completed another update for 2002. To address improved
financial performance, OSM has made nearly one hundred percent of its
financial transfers through electronic funds transfers. Because of
OSM's expanded Electronic Government initiatives, such as electronic
payment of reclamation fees and the new on-line Abandoned Mine Lands
Survey, greater opportunities exist for citizens to access OSM provided
information.
Proposed Appropriation Language
OSM is also proposing an appropriation language change in its
Fiscal Year 2003 budget proposal. This change will allow OSM to:
LRemove the funding and twenty-five percent limitations on
the amount of emergency program funding that can be spent in any one
state; and
LEliminate the earmarking of funds for the Pennsylvania
demonstration project.
Madam Chairwoman, I consider myself fortunate to have been given
the opportunity to lead the Office of Surface Mining as it completes
its first quarter century and prepares itself for the demands of the
future. OSM began as an enforcement agency enforcing SMCRA directly. As
states adopted their own regulatory programs, OSM evolved into a
partner with the states--enabling, advising and providing much-needed
technical assistance. Today, state programs are maturing and OSM will
be called upon to adapt to the new needs of the states, intensifying
its efforts to protect the American people and their environment and
creatively using the great potential of our natural resources. I am
pleased to be part of the OSM team at this important juncture.
I thank the Subcommittee for providing this opportunity to present
OSM's Fiscal Year 2003 budget request.
______
Mrs. Cubin. Thank you, Director Jarrett.
The Chair now recognizes Dr. Leahy to testify.
STATEMENT OF P. PATRICK LEAHY, ASSOCIATE DIRECTOR FOR GEOLOGY,
U.S. GEOLOGICAL SURVEY
Mr. Leahy. Thank you, Madam Chairman. It is a pleasure to
be here and to discuss the administration's proposal for the
U.S. Geological Survey's budget for 2003 with you and the
members of the Subcommittee.
The proposed budget requests $904 million, and this
includes $37 million for a government-wide legislative proposal
to shift to agencies the full cost of the Civil Service
Retirement System and the Federal Employee Health Benefits
Program. Without the legislative proposal, the request is $867
million, which is a decrease of $47 million from the Fiscal
Year 2002 enacted level. Although 2003 is less than the 2002
enacted level, this request will enable us to maintain our core
science and monitoring programs to continue to provide the
Nation with relevant and impartial scientific information.
Before I begin, Madam Chairman, I would like to thank the
Subcommittee for its strong support of the USGS over the years.
Your support for the scientific programs of the Survey has
provided a wealth of valuable information to assist the
citizens of this Nation in making sound decisions. As the
science bureau in the Department of the Interior, USGS provides
information and technologies that are critical to achieving the
missions of the department's land management bureaus and
research management bureaus.
Let me take just a few moments to share with you a few of
our accomplishments of the past year, which show that the
taxpayer investment in the programs of the USGS has paid sound
dividends.
After the September 11th attacks on America, USGS staff
provided critical geospatial data and coordination to many
State and Federal agencies, helping them respond to the crisis.
Well over 100,000 maps were distributed as part of this effort.
The USGS topographic maps are the only complete nationwide
coverage of the Nation's land surface and infrastructure. As
part of the process of modernizing this topographic data, we
are conducting eight national map pilot projects, and these
pilots are the foundation upon which we will build future
partnerships for data sharing and maintenance of this resource.
In the water resources arena, a team of hydrologists in
Nevada has conducted an intensive restudy of the ground water
in the Fallon area, where 16 children have been diagnosed with
two forms of leukemia, and unfortunately two have died since
1997. This is a rate 100 times higher than expected for a
community of this size. Earlier USGS reports document a broad
spectrum of metals, organic compounds, and radioisotopes in the
ground water of the area. The USGS has worked closely with
State agencies and the Center for Disease Control to design the
study that is ongoing, and the results of the study are
expected soon.
Finally, the Nisqually earthquake in Washington fortunately
did not cause widespread death and destruction in the Seattle
area. One reason certainly was the depth of the earthquake. The
epicenter was more than 30 miles below the surface. But clearly
another is the 15 years of work by USGS scientists to assess
the seismic hazard in the area and to provide the information
to local officials.
USGS scientists have worked closely with the University of
Washington, FEMA, and others to raise awareness of the
earthquake risk among local businesses--including Boeing,
Microsoft, and the Bank of America, to name a few--perhaps most
importantly raising the consciousness in the general public, so
that people could take effective action to mitigate their risk
to the seismic events up there.
The earthquake also provided the first major test of the
Advanced National Seismic System stations that had recently
been installed in and around Seattle, and I am pleased to
report that all 20 instruments were active and provided
valuable information on ground shaking for immediate data
analysis and damage assessment that was critical in terms of
the effort up there.
The budget preserves a number of significant program
increases received in recent years that provide science support
to Interior bureaus and to other high priorities. For example,
in the hazards area the request preserves the 2002 funding
increase for continued implementation of the Advanced National
Seismic System.
Similarly, USGS will continue to provide scientific
information that is vital to the President's national strategy
for a sound energy policy. The 2003 budget request proposes an
increase of $27 million for USGS to step up its efforts in
support of the National Energy Policy. Of that $2.7 million,
$1.2 million will enable USGS to more fully implement the
requirements of Section 604 of the Energy Act of 2000, which
requires USGS to conduct estimates of undiscovered oil and gas
on Federal land.
During 2002, with reimbursable funds provided by the Bureau
of Land Management, the USGS will estimate volumes of oil and
gas on Federal lands in five study areas in the Rocky
Mountains. The 2003 increase will enable USGS to expand this
work beyond these initial study areas. The budget also includes
an additional $1 million to produce digital base maps in
Alaska, with the work focused initially on the potential lease
areas in the National Petroleum Reserve.
The USGS proposal also supports alternative nonfossil fuel
energy development, as well, with $500,000 for the USGS to
begin the process of updating the Geothermal Energy Assessment.
I believe in an earlier testimony to this Committee I pointed
out that the last Geothermal Energy Assessment conducted was in
1979, so it is quite out of date. Our initial efforts in terms
of that energy assessment will focus on the Great Basin.
The net funding decrease for 2003--and as I mentioned, it
was a substantial one--reflects the elimination of unrequested
funding increases, many of which were for short duration
projects that are now complete, and it also includes reductions
to lower priority programs.
In closing, Madam Chairman, I know that the USGS will do
its best to remain a strong, dynamic, and ready organization to
meet the science needs of the Nation. I will be pleased to
respond to any questions that the Subcommittee may have.
[The prepared statement of Mr. Leahy follows:]
Statement of Dr. P. Patrick Leahy, Associate Director for Geology, U.S.
Geological Survey
Madam Chairman, and Members of the Subcommittee. I come before you
today to present the Administration's proposal for the budget of the
U.S. Geological Survey (USGS) for Fiscal Year 2003. The proposed budget
requests $904 million, including $37 million for a government-wide
legislative proposal to shift to agencies the full cost of the Civil
Service Retirement System (CSRS) and the Federal Employee Health
Benefits Program for current employees. Without the legislative
proposal, the request is $867 million, a decrease of $47 million from
the Fiscal Year 2002 enacted level. Although less than the 2002 enacted
level, this request will enable us to maintain our core science and
monitoring programs to continue to provide the Nation with relevant and
impartial scientific information.
Before I begin, Madam Chairman, I would like to thank the
Subcommittee for its strong support of the USGS over the years. Your
support for the scientific programs of the Survey has provided a wealth
of valuable information to assist the citizens of this Nation in making
sound decisions on environmental, resource, economic, agricultural, and
social issues.
The Survey's 123-year history of excellence in the earth and
biological sciences is a solid foundation from which we provide
scientific solutions to many national issues. The USGS, through its
scientific activities--long-term monitoring and data collection,
innovative research and process understanding, and informative
assessments and interpretive studies--is well poised to provide the
natural science information that society demands to address critical
issues, such as
Lmitigating the impacts of earthquakes,
Ldeveloping strategies to detect and control harmful
invasive species,
Ldeveloping a better knowledge base for the sustained
development of the Nation's water resources, and
Lproviding information on the availability, quality, and
development impacts of energy and mineral resources.
As the science bureau of the Department of the Interior, USGS
provides information and technologies that are critical to achieving
the missions of the Department's land and resource management bureaus.
Scientific support from the USGS to these bureaus ensures that the
increasingly complex management decisions for Interior's vast resources
are informed by relevant, impartial, credible science.
Let me take just a moment to share a few of our accomplishments
over the past year, which show that the taxpayer investment in the
science and monitoring programs of the USGS has paid sound dividends
for the Nation.
After the September 11 attacks on America, USGS staff provided
critical geospatial data and coordination to many State and Federal
agencies, helping them respond to the crisis; well over 100,000 maps
were distributed. The USGS topographic maps are the only complete,
nation-wide coverage of the Nation's land surface and infrastructure.
As part of the process of modernizing these topographic data, we are
conducting eight National Map pilot projects in Delaware, Florida, the
Lake Tahoe area, Missouri, Pennsylvania, Texas, Utah, and Washington-
Idaho. These pilots are the foundation upon which future partnerships
for data sharing and maintenance will be built.
Our science is respected and valued. In the December issue of
Environmental Science and Technology, 10 papers were selected for high
impact in the field of environmental research over the past 35 years. I
am proud that three of those papers were authored by scientists who
currently work at the USGS in our hydrology programs.
We are using the Internet to maximize the availability of our
information, so that taxpayers have easy access to the scientific
results of their investment in our research and monitoring. The new
National Water Information System online database provides 14 gigabytes
of real-time and historical streamflow, ground-water, and water-quality
data collected from 1.5 million sites in all 50 States, Puerto Rico,
and the District of Columbia. Since the online database was formally
launched last July, the number of pages served has continued to grow,
and we have received many compliments praising USGS for the usefulness
of this site. Furthermore, the website was selected as one of only 25
finalists in the Federal Chief Information Officers Council
Excellence.Gov Awards.
Partnerships remain an essential component of how we do business,
to ensure cost-effective operations. In the Tampa Bay region, USGS
worked with the National Oceanographic and Atmospheric Administration
to develop a seamless merged topographic/bathymetric elevation model of
the Tampa Bay region. The new model is proving very useful to local
planning, natural resource, and regulatory agencies. We continued to
work with the Centers for Disease Control and other public health
entities to provide biological and geospatial data about the spread of
West Nile Virus. By the end of summer 2001, this disease had been found
in birds in most States east of the Mississippi River. In addition,
USGS research demonstrated that the disease can be transmitted bird-to-
bird, rather than only through mosquito bites. This is a critical
advance in understanding how the disease moves between birds,
mosquitoes, and humans.
In Nevada, a team of hydrologists has been conducting an intensive
re-study of the ground water in the Fallon area, where 16 children have
been diagnosed with two forms of leukemia and 2 have died since 1997--a
rate 100 times higher than expected for a community of this size.
Earlier USGS reports document a broad spectrum of metals, organic
compounds, and radioisotopes in the ground water; the samples collected
this past summer indicated 10% of the samples have arsenic
concentrations greater than 500 ``g/L (a maximum concentration of 2,900
``g/L has been observed) and some uranium activities are greater than
200 pCi/L. The USGS Nevada District office has worked closely with
State agencies and the CDC to design the study, and results are
expected soon.
Finally, the Nisqually earthquake did NOT cause widespread death
and destruction in the Seattle area. One reason certainly was the depth
of the earthquake--30 miles below the surface--but another is the 15
years of work by USGS scientists to assess the seismic hazard in the
region and provide the information to local officials in ways that they
could use to protect and prepare communities for such events. USGS
scientists have worked closely with the University of Washington, the
Federal Emergency Management Agency, and others to raise awareness of
the earthquake risk among local businesses--including Boeing,
Microsoft, and Bank of America--and the general public, so people can
take effective action to mitigate their risk. The earthquake also
provided the first major test of the 20 Advanced National Seismic
System stations that had been recently installed in and around Seattle.
All 20 instruments provided valuable information for immediate data
analysis and damage assessments, as well as information on the effects
of local soil conditions and geologic structures.
The 2003 budget request focuses resources on our core mission
programs of geology, mapping, biology, and water. The budget preserves
a number of significant program increases received in recent years that
provide science support to Interior land- and resource-management
bureaus and other high priorities. In the area of hazards, the request
preserves the 2002 funding increase for continued implementation of the
Advanced National Seismic System, which provides both immediate
information on the intensity of ground shaking, for use by emergency
responders, and high-quality data on building response, used by
engineers to improve building safety. The request also includes funding
to address Administration priorities. The USGS will continue to provide
the scientific information that is vital to the President's national
strategy for a sound energy policy. In addition to ongoing national
assessments of coal, oil, and natural gas, and other energy and mineral
commodities, the 2003 budget request proposes an increase of $2.7
million for USGS to step up its efforts in support of the National
Energy Policy and the overall goal of increasing domestic energy
production. Of that $2.7 million, $1.2 million will enable USGS to more
fully implement the requirements of section 604 of the Energy Act of
2000, which requires USGS to conduct estimates of undiscovered oil and
natural gas resources on Federal lands in the continental United
States. During 2002, with reimbursable funding provided by the Bureau
of Land Management, the USGS will estimate volumes of oil and gas
resources on Federal lands in five study areas in the Rocky Mountains.
The 2003 increase will enable USGS to expand this work beyond the
initial five study areas. The budget includes an additional $1.0
million to produce digital base maps in Alaska, with work focused
initially on potential lease areas in the National Petroleum Reserve.
The mapping effort will provide resource managers with information they
need to make timely and environmentally sound resource and management
decisions. The USGS budget proposal supports alternative, non-fossil
fuel energy development as well, with $500,000 for USGS to begin the
process of updating geothermal energy assessments. The USGS will
initiate this effort in the Great Basin region.
Besides these energy-related budget increases, USGS is also
proposing a $1.0 million initiative to utilize its core mission
expertise to study the relationship between environmental change and
human health issues in the U.S.-Mexico border region. The border area
is a significant contributor to our economic vitality and encompasses
important natural resources. In partnership with the National Institute
of Environmental Health Sciences, USGS will bring its expertise in
geologic, geochemical, and hydrologic processes to bear on these
issues. The proposal aims to improve the understanding of naturally
occurring and introduced disease-causing agents in the environment--
like radiation, pesticides, and pathogens--and their specific exposure
pathways in water, air, and soil. For example, USGS will produce
geologic maps showing the distribution of rock types likely to produce
elevated levels of potentially toxic elements such as mercury, arsenic,
and selenium.
The budget maintains recent funding increases that have enabled
USGS to undertake a multi-disciplinary coastal initiative, as requested
by the Congress. Coastal regions are under enormous pressure due to
population growth, and USGS science will lead to a better understanding
of the impacts of natural and human-induced change on the coastal
environment. In 2003, the current USGS pilot study in Tampa Bay,
Florida, will focus on developing a comprehensive understanding of
coastal and marine systems. The study will provide Internet-accessible
data and decision support systems to inform the responsible use and
management of the Nation's coastal and offshore resources.
The budget proposes a $4.0 million increase for the Critical
Ecosystems Science Initiative for the Everglades. This will enable USGS
to provide the long-term science, analysis, monitoring, modeling, and
decision support systems needed for the adaptive implementation of the
Comprehensive Everglades Restoration Plan. The budget retains increases
appropriated in 2001 and 2002 for base USGS biological science center
operations and high-priority tactical science support for the Fish and
Wildlife Service. It also retains funding increases that have
accelerated the pace of the biological Gap Analysis Program and
expanded the National Biological Information Infrastructure. These
programs develop and disseminate data that are beneficial to land and
resource managers at all levels of government.
The 2003 budget also retains funding increases provided in Fiscal
Year 2001 that expanded the Ground-Water Resources Program, in response
to the Nation's growing reliance on these resources. There is a
recognized need for more sophisticated knowledge to support sustainable
development of complex aquifers and to protect inter-related surface
waters and riparian habitat.
The net funding decrease for Fiscal Year 2003 reflects the
elimination of unrequested funding increases, many of which were for
short-duration projects that are completed, and reductions to lower
priority programs. The budget includes a 10% reduction to the National
Water Quality Assessment Program. The budget proposes to offset this
decrease with funding contributions from NAWQA customers and
beneficiaries. Finally, the budget reflects a transfer of $10 million
in Toxic Substances Hydrology Program funding to the National Science
Foundation, where it will be used for a water-quality research grants
program. This transfer reflects the Administration's goal of realigning
the Federal Government's investment in research and development to give
greater support and emphasis to competitive research.
In closing, Madam Chairman, I know that the USGS will do its best
to remain strong, dynamic, and ready to meet the science needs of the
Nation. I will be pleased to respond to any questions you may have.
______
Mrs. Cubin. Thank you, Dr. Leahy.
I would like to now recognize Ms. Denett.
STATEMENT OF LUCY QUERQUES DENETT, ACTING DIRECTOR, MINERALS
MANAGEMENT SERVICE
Ms. Denett. Thank you. Good morning, Madam Chairman and
members of the Committee. Thank you for the opportunity to
testify before your Committee. I would like to make a few
remarks and then answer any questions you may have.
First, I am pleased to say, as Madam Chairman indicated,
tomorrow MMS will have a new director, Regine ``Johnnie''
Burton. Ms. Burton's background provides a solid mix of
experience in State government, the oil and gas industry, and
education. Since 1995 she served on the Governor of Wyoming's
Cabinet as the Director of the Department of Revenue. Before
that she served as Vice President of TCS, Inc., an oil and gas
exploration company based in Casper, Wyoming. Her background,
particularly in State government and industry, will be a good
fit with our operations in the Minerals Management Service.
I would like to spend a few minutes discussing some of our
accomplishments. The MMS's Offshore Minerals Management Program
saw recordbreaking activity in the Gulf of Mexico in Fiscal
Year 2001. Deep water drilling reached an all-time high, with
over 45 rigs drilling in water depths over 1,000 feet. That is
compared to only nine in 1990. The number of wells drilled in a
single year in water depths greater than 200 meters reached a
record high of 302, and 1,408 new well starts were drilled in
the Gulf of Mexico last fiscal year, another new record.
The Minerals Revenue Management Program also reached a new
milestone in Fiscal Year 2001, collecting over $11 billion in
Federal receipts, with more than $1 billion in shared mineral
revenue receipts being distributed to the States.
In Fiscal 2003, MMS will account for a projected $4.2
billion in Federal receipts, $200 million for American Indian
tribes and individual American Indian owners, and $39 million
in shared mineral revenue receipts with coastal States. The
Federal receipts include $2.8 billion from OCS receipts and
$1.4 billion from onshore receipts.
From a taxpayer perspective, that converts to $1.9 billion
deposited to the general fund of the U.S. Treasury, $674
million in mineral revenue payments made to onshore States,
$897 million transferred to the Land and Water Conservation
Fund, $536 million credited to the Reclamation Fund, and $150
million for the Historic Preservation Fund.
There are challenges, however. While new sources of energy
may be on the horizon, oil and gas will continue to be imported
during the next 20 to 30 years. DOE estimates that dependence
on oil and natural gas will increase significantly during that
time. Because of this dependence, MMS programs are vitally
important to the security of the Nation and the well-being of
the national economy.
Production from deepwater wells will continue to increase
as compared to prior years, and drilling activities continue to
reach record highs in the Gulf of Mexico. The continuing
increase in production and drilling activities places
additional work load demands on the MMS in the areas of field
determinations, engineering, inspection, production, and
deepwater operation plan reviews, as well as environmental
assessments.
Since the oil and gas resources of the OCS, though
abundant, are ultimately exhaustible, MMS must manage these
resources in the most prudent manner possible. To do this, MMS
must impose data requests and reporting requirements on the oil
and gas industry, and must also share information, analysis,
data bases, with other government and public entities.
Together, these management responsibilities create intense
pressure for automation of many recurring processes.
The Offshore Minerals Management Program has developed an
e-government framework to address the need to facilitate the
exchange of OCS-related information with a complex network of
stakeholders. The MMS's reengineering initiatives in the
Minerals Revenue Management Program have provided a new
financial system, a robust data warehouse, and an array of new
tools and applications for financial management and mineral
revenue compliance. These new tools and capabilities will,
however, require ongoing maintenance and support, including
continuous upgrades to ensure a stable, secure computing and
communication backbone for the new systems.
The President's November 13, 2001 decision to fill the
strategic petroleum reserve greatly expands the role of the
royalty-in-kind in the Gulf of Mexico. When completed in 2005,
MMS will have delivered approximately 120 million barrels of
crude oil taken in kind from Federal leases in the Gulf to the
onshore market centers for utilization by DOE in filling the
SPR.
MMS has requested additional funding for an automated oil
RIK system in Fiscal Year 2003. However, there are associated
transportation costs and a need to expedite the oil RIK system
as a result of this decision of the President.
Our budget request: The MMS is requesting $281 million, a
net increase of $21.5 million above the MMS's enacted Fiscal
2002 level. This includes $10.4 million for a government-wide
legislative proposal to shift to the agencies the full cost of
the CSRS and the FEHB program for current CSRS employees. That
is a tongue-twister. Also included in the request are program
decreases of $14.3 million.
The increases that we are requesting are to manage the
increased demand from the industry for drilling and production
activities in the Gulf of Mexico region, which as I have
indicated have reached record high levels; to initiate the
first phase of the e-government initiative that will
dramatically reform and streamline OMM's business operations;
to provide ongoing maintenance and support for MRM's new
mineral revenue compliance tools and capabilities; and,
finally, to fund the development of the automated
infrastructure needed to support the expanding of the oil RIK
program.
I appreciate the opportunity to talk to you, and will be
happy to answer any questions you may have.
[The prepared statement of Ms. Denett follows:]
Statement of Lucy Querques Denett, Acting Director, Minerals Management
Service, U.S. Department of the Interior
Madam Chairman and Members of the Subcommittee, I appreciate the
opportunity to testify today on the Fiscal Year (FY) 2003 budget
request for the Minerals Management Service (MMS). We have looked
closely at our ongoing operations and responsibilities and this request
reflects our best assessment of the funds needed to carry out critical
MMS programs during Fiscal Year 2003.
The MMS is requesting $281.0 million, including $10.4 million for a
government-wide legislative proposal to shift to agencies the full cost
of the CSRS pension system and the Federal employee health benefits
program for current CSRS employees. Without the legislative proposal,
the request is $270.6 million, a net increase of $ 11.1 million above
the 2002 enacted level, and includes both programmatic and
uncontrollable cost increases.
Our budget request is based upon our accomplishments in
successfully implementing and completing past budget initiatives. It is
also based upon the challenges confronting us during the next fiscal
year and beyond, which are the reasons for the increases in budgetary
requirements. The request includes funding to:
Lmanage the increased workload and complicated industry
requirements for drilling and production-related activities in the Gulf
of Mexico Region,
Lprovide additional resources to keep pace with the
increased demand on our revenue management network and enterprise
systems,
Lacquire an automated liquids (oil) management system to
support the pilot royalty-in-kind programs, and
Lbegin a five year e-government initiative that will
deliver web-based, paperless transactions and better manage data,
resulting in reduced future costs and improved information delivery to
citizens.
The MMS manages the nation's oil, natural gas, and other mineral
resources on the Outer Continental Shelf (OCS), and collects, accounts
for, and disburses revenues from offshore Federal mineral leases and
from onshore mineral leases on Federal and American Indian lands. To
carry out this mission, MMS manages two very important programs--the
Offshore Minerals Management (OMM) Program and the Minerals Revenue
Management (MRM) Program. These programs provide major economic and
energy benefits to the Nation, taxpayers, states and the American
Indian community.
The MMS has leased and currently manages more then 40 million acres
of the OCS. More than 13.1 billion barrels of oil and 146.4 trillion
cubic feet (tcf) of natural gas have been produced from the OCS since
1953.
From an economic standpoint, MMS will account for a projected $4.2
billion in Federal receipts in Fiscal Year 2003. MMS will also account
for an additional $200 million in receipts for American Indian tribes
and individual American Indian owners, and $39 million in shared
mineral revenue receipts with coastal states. The Federal receipts
include $2.8 billion from OCS receipts and $1.4 billion from onshore
receipts. From a taxpayer's perspective, that converts to:
L$1.9 billion deposited to the General Fund of the U.S.
Treasury;
L$674 million in mineral revenue payments made to onshore
states;
L$897 million transferred to the Land and Water
Conservation Fund;
L$536 million credited to the Reclamation Fund; and
L$150 million for the Historic Preservation Fund.
The receipts I have described above are derived from the
accomplishment of the Bureau's two program missions. MMS has recently
celebrated its 20th anniversary, and during this relatively short time
these two programs have experienced dramatic and profound changes in
the business, energy and government climates in which they operate.
These changes have challenged MMS to keep pace, and I believe that the
bureau has risen to the challenge. I would now like to review a few of
MMS's recent achievements and what MMS sees as its challenges for the
future.
OMM Program Achievements
OCS and the Nation's Energy Supply
The OCS continues to play a critical role in supplying the nation's
energy needs. It is estimated that oil and gas production from the OCS
will account for over 25 percent of the country's total production in
Fiscal Year 2003. The average combined shallow and deepwater production
in 2003 is estimated to be about 587 million barrels of oil and 5.1 tcf
of gas.
Record Setting Activity in the Gulf of Mexico (GOM)
Drilling in the GOM deep water has increased dramatically over the
last decade. Today, deepwater drilling continues to be at an all time
high with over 45 rigs drilling in water depths of over 1,000 feet,
compared to just nine in 1990. The number of wells drilled in a single
year in water depths greater than 200 meters reached a record high of
302 in 2001, and a record 1,408 well starts were drilled in the GOM
last fiscal year. This is a 52% increase from the 928 well starts
drilled in Fiscal Year 1995.
Safety Remains a Top Priority.
The MMS regards the safety of personnel, the environment, and
operations as top priorities. Prevention is our most important safety
strategy. The continued movement of industry into deeper waters and the
overall increased industry activity in the GOM have increased both the
level and complexity of monitoring and ensuring safe OCS operations.
Likewise, there has been a significant rise in the number of operators
on the OCS, some without the same level of experience as the more
seasoned operators.
MMS continues to work with industry and other agencies to ensure
the continued safety of offshore operations. In 2002, the MMS will be
authorized to inspect and enforce U.S. Coast Guard safety regulations
on fixed OCS platforms. By authorizing MMS to also check for compliance
with Coast Guard safety regulations, we avoid duplicating functions,
reduce Federal costs, and increase the frequency of these critical
safety inspections.
OMM Program Challenges
Meeting Future National Energy Needs
The U.S. is the most mature petroleum-producing region in the
world. Much of the Nation's easily located oil and gas has already been
extracted. Despite this, domestic discoveries and reserve additions
over the past decade have replaced 100 percent of the natural gas and
79 percent of the crude oil produced during this period. Advanced
technologies have allowed economical access to domestic resources that
are concentrated in deeper formations, tighter zones, deeper water,
more sensitive environments, and increasingly more unconventional
settings. In 1998, the U.S. Department of Energy (DOE) estimated that
two-thirds of the 603 billion barrels of known oil reserves in the U.S.
remained untapped.
While new sources of energy may be on the horizon, oil and gas will
continue to be important during the next 20 to 30 years, and the DOE
estimates that dependence on oil and gas will increase significantly
during that time. Because of this dependence, MMS programs are vitally
important to the security of the Nation and the well being of the
national economy. One such example is our royalty-in-kind program that
will enable MMS to meet the President's November 2001 directive to fill
the Strategic Petroleum Reserve.
Demand for oil and gas uncharacteristically declined in 2001. This
is attributed mainly to the decline in air travel after September 11th
and an unseasonably warm winter. Nevertheless, demand for oil is
expected to increase once again in 2002. By 2003, DOE projects annual
average petroleum demand to exceed 20 million barrels per day for the
first time.
While oil production on the OCS is projected to increase through
2010, the long-term overall U.S. oil production is projected to
decline. This decline is projected at an average annual rate of 0.7
percent between 1999 and 2020, to 5.1 million barrels per day. The
share of U.S. oil demand met by net imports is projected to increase
from 56 percent in 1999 to 70 percent in 2020, an average annual
increase of 2.5 percent
U.S. demand for natural gas is projected to increase from 22 tcf in
1998 to as high as 29 tcf by the year 2010 and 31.3 tcf by 2015. This
is a 50 percent increase over what the Nation consumes today. If the
OCS is expected to maintain the same percentage contribution towards
future U.S. gas consumption, the annual gas production from Federal
waters will have to increase 7 to 8 tcf. Natural gas is clearly the
fuel of choice for the Nation's future energy use because it is a
cleaner burning fuel.
Safety and Environmental Protection
While development of offshore mineral resources has already meant
billions of dollars in revenues to the United States, MMS is
responsible for ensuring that those economic benefits are not made at
the expense of safe operations and environmentally responsible
development. The move into deeper water and the overall rise in
activity have increased both the level and complexity of monitoring OCS
operations. The number of operators drilling in the GOM has increased
over the past several years by about 30 percent. Some of these new
operators are not as experienced as those that have been working in the
GOM for a longer time. There is also a much greater reliance by all
operators on the use of contractors. In addition, the offshore industry
downsized significantly throughout the 1980s and 1990s. All of these
events have reduced the pool of skilled offshore workers. The presence
of workers with a minimum of offshore experience is placing an added
burden on the inspection and compliance program.
One of MMS's top priorities is ensuring that industry maintains its
excellent safety and environmental record as the level of activity
increases in both amount and complexity. From a safety perspective,
recent statistics indicate that the rate of injuries and illnesses for
offshore workers is less than half the rate for the private sector as a
whole. On the environmental front, since 1985, over 63 billion barrels
of oil have been produced from the OCS with only 0.001% spilled.
Natural seeps contribute more than 150 times this amount to the marine
environment. Maintaining the OCS's good safety and environmental record
is critical to preserving the public's confidence in the integrity of
the program and to facilitating further OCS production. If a serious
incident were to occur and we were prohibited from further development
of these promising areas, the Nation would lose the significant
contributions that the Offshore Program makes to the economy in the
form of revenues and secure supplies of oil and natural gas.
Deepwater Production
Production from deepwater wells continues to increase as compared
to prior years. In 1985, for example, only six percent of the GOM's oil
production came from deepwater wells as compared to over 50 percent in
Fiscal Year 2001. Natural gas production from deepwater areas in the
GOM increased from less than 1 percent of total gas production in 1985
to over 20 percent in Fiscal Year 2001. As discussed earlier, drilling
activities continue to reach record highs in the GOM.
The continuing increase in production and drilling activities in
the GOM places additional workload demands on MMS in the areas of
environmental assessments, field determinations, engineering,
inspection, and production and deepwater operation plan reviews.
Maintaining a Viable OCS Program
One of the agency's core responsibilities in managing OCS leasing
and development is to ensure that our leasing decisions fully consider
the possible risks to coastal communities and environments of offshore
development, and that our regulatory efforts ensure the highest degree
of safety and protection possible in day-to-day operations.
The MMS is entering the final stages in the development of its next
OCS 5-Year Program covering the 2002-2007 timeframe. The comment period
on the Proposed Program and the draft environmental impact statement
closed in January 2002. A final EIS will be prepared and a proposed
final program will be submitted to the President and Congress in April
2002. Following a 60-day waiting period, the Secretary is scheduled to
approve the new program in June with an effective date of July 1, 2002.
Expanding Electronic Government
Since the oil and gas resources of the OCS, though abundant, are
ultimately exhaustible, MMS must manage these resources in the most
prudent manner possible. To do this, MMS must impose complex requests
and reporting requirements on the oil and gas industry. It must also
share information, analysis, and databases with other government and
public entities. Together, these management responsibilities create
intense pressure for automation of many recurring processes. To fulfill
each of its mandated tasks, MMS must facilitate the exchange of OCS-
related information within a complex network of stakeholders (industry,
other agencies, states, the public). That fact is the basis of OMM's e-
Government vision.
OMM's e-Government framework consists of investment in core
infrastructure, such as a regulatory data model, redesigned web-enabled
corporate database, document management, security, and a data warehouse
to support its business functions. A strong OMM infrastructure will
support web-based, customer-responsive solutions; facilitate internal
analysis; and set a foundation for future integrated systems.
Additional investments will support processes such as permitting,
inspections, Freedom of Information Act, public commenting, and
industry reporting. To ensure that the foundation is flexible,
capabilities will be built in a coordinated and modular fashion, using
commercial off-the-shelf applications and outsourcing when feasible.
MMS's approach is driven by customers and stakeholders, focused on
mission and strategy, process-efficient, and technology-enabled.
MMS will also work closely with the Bureau of Land Management to
ensure data exchange compatibility with future onshore oil and gas
program applications.
FY 2003 Budgetary Impact
To address these challenges, we are requesting $5.0 million to
accommodate the increased demand for services in the GOM region, and
$8.7 million as first-year funding for development of OMM's E-
government initiative.
Minerals Revenue Management Program Achievements
Reengineered Program, Processes, and Systems
FY 2002 brought the culmination of many fundamental changes that
were presented in the Roadmap to the Future published in November 1998.
In Fiscal Year 2001, the MRM realigned its organizational structures
and resources to support the reengineered business processes that will
yield the significant and recurring benefits sought from the royalty
reengineering initiative. In its realignment MRM also changed its name
from Royalty Management Program to better reflect the program's
mission. The new MRM organizational structures were developed based on
extensive input from employees and in close consultation with industry,
State, and tribal partners.
In Fiscal Year 2002, MRM implemented a new systems infrastructure
to support our reengineered business processes. These fundamental
changes to organizations, infrastructures, and processes require
significant new skill sets, bringing opportunities to build knowledge
of new systems, understand relationships, develop expertise, and refine
processes. The two reengineered end-to-end business processes support
the continued emphasis on our Indian trust responsibilities as well as
help us achieve our stretch goals.
LThe Financial Management Process manages the information
and money that flows through the MMS to program beneficiaries. The new
process shortens the receipt and distribution cycle, providing
beneficiaries with access to their funds sooner.
LThe Compliance and Asset Management Process ensures that
all revenues, whether received through in-kind or in-value royalties,
are paid timely and accurately. This process introduces fundamental
change to the way MMS has historically done compliance work. Instead of
focusing on payors in evaluating royalty payments, the MRM now focuses
on properties and producing areas. This new process introduces a
significant reduction in business cycle time, with a goal of completing
all compliance work, including audit, within 3 years or less after the
payment was made. With the property and producing area focus, this
process also well positions the MRM to support its royalty in-kind
asset management strategies.
Consummate Asset Manager
The asset management concepts developed through reengineering and
demonstrated by the RIK pilots and operational model support MRM's
mission to be ``the best in the business'', pursuing fair market value
and cost-effective collection and disbursement of royalties whether
collected in-kind or in-value. MMS is currently focusing its
development of the RIK asset management strategy in the Gulf of Mexico.
At present, about 84 percent of the Federal oil and gas revenues are
produced from leases on the Outer Continental Shelf. Most of these
revenues come from the Gulf of Mexico, which offers the following asset
management advantages:
LClose proximity to market centers
LAccess to extensive systems for the delivery of mineral
production to buyers
LRelatively few lease contracts to administer
In Fiscal Year 2002, MMS began the development of the automated
infrastructure to support the gas RIK program. When complete, this
development effort will provide the needed tools to support gas RIK
business processes. MMS expects to complete implementation of the RIK
gas automated infrastructure in early Fiscal Year 2003.
Indian Trust Responsibilities
In accordance with the Department's American Indian trust
responsibilities, MMS has a special dedication to the tribes and
individual American Indian mineral owners. MMS serves American Indian
tribes and individual American Indian mineral owners by ensuring that
they receive accurate returns for mineral production on their land.
Distribution of payments is made twice monthly for revenues collected
for leasing and production activities on Indian lands.
In response to feedback from the Indian community, MRM proposed a
separate royalty valuation rule for crude oil produced from Indian
leases. The new rule, when final, will add more certainty to the
valuation of oil produced from Indian lands, eliminate reliance on
posted oil prices, and address terms unique to Indian leases. The rule
is expected to result in additional Indian oil royalties of
approximately $4.7 million.
In Farmington, New Mexico, MMS participates in a Departmental
effort, implementing a new concept in serving our Navajo constituents.
The Farmington Indian Minerals Office (FIMO) unites employees from the
Bureau of Indian Affairs (BIA), Bureau of Land Management (BLM), and
MMS, under one director for outreach, inspection, enforcement, and
mineral revenue compliance services to industry and American Indian
stakeholders. The FIMO office was established as a permanent DOI office
on September 28, 2001. In addition, the Department's Indian Minerals
Steering Committee, made up of representatives from BIA, BLM, MMS, and
the Office of Special Trustee for American Indians (OST), is assessing
the feasibility of expanding the program to other geographic areas
having a significant population of Indian mineral leases and lessees.
Minerals Revenue Management Program Challenges
Continuous Improvement
MRM's reengineering initiative has provided a new financial system,
a robust data warehouse, and an array of new tools and applications for
financial management and mineral revenue compliance. When fully
realized, the reengineering initiative will dramatically modernize both
the financial and the compliance and asset management business
processes and supporting systems. MRM plans to gradually introduce
additional enhancements, especially in the area of mineral revenue
compliance. As these changes are embraced and applied by the compliance
staff, the environment will continue to allow for more and more changes
and improvement. This phased approach was anticipated from the outset
of the reengineering effort in order to allow for staged implementation
as more knowledge is acquired and applied.
These new processes and system enhancements address MRM's
continuous improvement objectives for mineral revenue compliance.
However, several offsetting factors contribute to the need for an
overall increase in operations and support funds during Fiscal Year
2003 to support MRM's new information technology environment:
LRobust new tools and capabilities will improve MRM's
ability to accomplish its mission and goals but will require ongoing
maintenance and support.
LThe new systems and tools, coupled with growing
requirements for remote access, place an increased demand and a growing
dependency on MRM's networks and enterprise systems. This requires
continuous upgrades to ensure a stable, secure computing and
communication backbone for the new systems.
LIndustry is anticipating major cost increases for
enterprise software systems (database, operating systems, office
automation, etc.) upon which our new systems and networks rely. For the
past 5 years, IT professionals' salaries have been increasing at a rate
greater than 10% per year in the Denver area. The only way MRM has been
able to maintain adequate funding for its primary IT providers is by
reducing enhancement work performed on systems scheduled for
replacement because of the reengineering effort. The cumulative effect
of the increased costs of IT professionals and the implementation of
the reengineered system prevent a similar approach in Fiscal Year 2003.
Expanding RIK Opportunities
The President's November 13, 2001, decision to fill the SPR greatly
expands the role of RIK in the Gulf of Mexico (Gulf). When completed in
2005, MMS will have delivered approximately 120 million barrels of
crude oil taken in-kind from Federal leases in the Gulf to onshore
market centers for utilization by DOE in filling the SPR. There are
associated transportation costs and a need to expedite the oil RIK
system as a result of the President's decision to fill the SPR. MMS has
requested funding for an automated oil RIK system in Fiscal Year 2003,
which will enable the program to handle the added SPR effort. Timing
for the implementation of the oil system depends on funding
availability.
The SPR RIK initiative at 130,000 barrels/day and the continuation
of the Small Refiner Program at some 50,000 barrels/day, will result in
much of the Gulf oil production royalties being taken in-kind.
FY 2003 Budgetary Impact
To address these challenges while maintaining our accomplishments,
we are requesting $2 million to cover increasing automated systems
operations and maintenance costs. Additionally, we are requesting
$6.015 million to fund development of the automated infrastructure to
support the expanding oil RIK program.
MMS's Fiscal Year 2003 Budget Request--Highlights
The MMS budget request totals $281 million, a net increase of $21.5
million or slightly more than 8 percent above the 2002 enacted level of
$259.5 million. The $21.5 million increase combines program decreases
of $14.3 million with $3.6 million for uncontrollable and related cost
changes (primarily pay raises and GSA rent increases); $21.8 million
for programmatic increases, and $10.4 million for a government-wide
legislative proposal to shift to agencies the full cost of the CSRS and
the FEHB Program for current CSRS employees. In addition to the
programmatic increases described above for the OMM Program (+$13.7
million) and the MRM Program (+$8 million), we are requesting the
following decreases:
La decrease of $0.8 million for the Center for Marine
Resources and Environmental Technology which will be eliminated due to
higher priorities for oil and gas exploration and extraction; and
La decrease of $0.8 million for the Marine Minerals
Technology Center which will be eliminated due to higher priorities for
oil and gas exploration and extraction;
La decrease of $0.5 million for the Offshore Technology
Research Center that will have funding reduced due to higher priorities
for oil and gas exploration and extraction;
La decrease of $3.0 million for the Royalty Legacy System,
which was replaced by the reengineered system in Fiscal Year 2002;
La decrease of $2.2 million for the Environmental Studies
Program that will allow for the continuation of existing projects and
starts for limited but critical new projects;
La decrease of $1 million in the Pacific OCS Regional
office from a review of its operations; and
La decrease of $6.0 million for the completed gas
management system acquired in Fiscal Year 2002 in support of continuing
RIK pilots and longer-term projects.
Revenue Sources
[GRAPHIC] [TIFF OMITTED] T8206.001
The MMS receives funding for operations from three sources: the
Royalty and Offshore Minerals Management (ROMM) appropriation, Oil
Spill Research (OSR) appropriation, and offsetting collections
(primarily from rental receipts from offshore leases). Since 1994, when
MMS received authority to retain a portion of OCS rental receipts
(offsetting collections) the share of the agency funded with
appropriated funds has decreased substantially. The share of MMS's
total budget funded from offsetting collections peaked in Fiscal Year
2000 at 52 percent. In Fiscal Year 2003, approximately 37 percent of
MMS's funding is proposed to come from offsetting collections.
Several years ago, dramatic increases in leasing activity in the
GOM made it possible to shift a larger portion of MMS funding from
direct appropriations to offsetting collections. The increased GOM
activity was made possible by new technologies that allowed exploration
and development in very deep water. Examples of these new technologies
included the rapid expansion in the availability of high quality 3-
dimensional seismic data, inexpensive geo-science workstations, and
seismic processing advances that allowed geo-scientists to look below
the previously impenetrable layers of salt. In addition to the
technological advances, Congress enacted legislation (Deep Water
Royalty Relief Act of 1995) that has encouraged deepwater exploration
and production.
The combination of very favorable geologic characteristics,
technological advances, and economic incentives caused leasing in the
GOM to increase almost ten-fold between 1992 and 1997. In 1998,
however, the number of tracts leased in the two GOM sales declined by
37 percent from the record levels of 1997. While 1998 marked the first
time that the number of tracts leased in the GOM had declined in the
past several years, the number of total active tracts actually
increased in 1998 by over 12 percent. In 1999, the number of new tracts
leased (333) fell 71 percent below the 1998 level and 81 percent below
the peak level reached in 1997. In Fiscal Year 2000, the number of
tracts leased (553) in the GOM increased by almost 70 percent over
Fiscal Year 1999. In Fiscal Year 2001, the number of tracts leased grew
again as 753 new leases were issued.
While Fiscal Year 2000 and Fiscal Year 2001 saw the number of
tracts leased increase, MMS does not expect new leasing activity to
return to the Fiscal Year 1996--1998 level in the near future. Because
of this lower level of new leasing activity, MMS is requesting the cap
on currently authorized offsetting collections be lowered to $100.230
million in Fiscal Year 2003.
In addition to appropriations for operations, MMS receives
appropriations for distribution of the states' share of onshore mineral
receipts. In Fiscal Year 2003, MMS estimates that the states' share of
these onshore mineral receipts will be approximately $674 million. This
amount is slightly more than our Fiscal Year 2002 estimate of $670
million.
[GRAPHIC] [TIFF OMITTED] T8206.002
Conclusion
Mr. Chairman, that concludes my written testimony. At this time I
would be happy to answer any questions you or other Members of the
Subcommittee may have regarding any aspect of our budget request for
Fiscal Year 2003.
______
Mrs. Cubin. Thank you. We will now begin our questioning. I
would like to remind the members that the Committee Rule 3(c)
imposes a 5-minute limit on questions. I will begin the
questioning.
I want to make a little statement first, actually. It never
ceases to amaze me that the Interior Department and the
agencies that you work for are charged with--are probably the
only agency in government that actually brings in a lot of
money for the Treasury of the United States and for the States,
and you are also charged with looking after the environment,
doing it scientifically, doing it well, and yet every time the
administration, this one or others, want to cut--whack--they
cut the Department of Interior, and it just doesn't make sense
to me.
I really do relate to Mr. Rahall's opening statement, and
want to point out, just to emphasize it, money that was paid
into the AML by the State of Wyoming for 2001, $120,987,000,
the 50 percent that Wyoming got was $28,820,000. West Virginia
paid in $35,640,000. They got, their half was $23,490,000.
Washington paid in $1,720,000. They got nothing. It is not
right, and we have to work together to try to change that.
But now that I have had my say, I will start the
questioning with Director Jarrett. The authorization for fee
collection under Title IV of SMCRA for the Abandoned Mine Land
Trust Fund expires in September of 2004, as you know. I
wondered, what is the position of the administration regarding
the extension of this fee collection authority? Do you
anticipate that the administration will seek any other
adjustments to Title IV of SMCRA?
But before you answer please be sure to take into
consideration that my State alone pays nearly 42 percent of
the--it pays 42 percent of the entire AML fee, and yet we
receive 20 cents, roughly 23 cents back on the dollar. And then
we find a way to spend the rest of it, even though the interest
would meet the needs that we have, interest alone.
So what is the administration planning on expiration of
this fee?
Mr. Jarrett. Currently the administration does not have a
position on reauthorization. It is my plan to start identifying
all of the various positions on reauthorization, and there are
many splits on this issue, as you know. Some of the States,
such as Wyoming, that have certified completion of the AML
inventory, have a different position, I am sure, than States
like Pennsylvania who have a lot of unreclaimed abandoned mine
lands.
But we want to identify all of those various positions on
reauthorization, and at a minimum evaluate what the impact of
those positions would be on our ability to complete at least
all of the Priority 1 and Priority 2 AML projects throughout
this country. We have done that evaluation assuming that there
is no change other than an extension of the current system, but
we want to do that evaluation for a lot of the other proposals
and options that we have been hearing about. And of course that
information we will make available to this Committee or to
anyone, so that we can all make intelligent and wise decisions
in the future based on what we think is best for the American
people.
At the same time, I think it is very important that we also
explore ways to make that program more efficient and to learn
ways to leverage the money a little bit better than we have in
the past. And I can give you just one example from my
experience in Pennsylvania.
We got a little friendly competition going between our AML
folks and our Title V folks over who could get the most AML
reclamation done, the Title IV folks with their at the time $22
million AML grant from OSM, or the Title V regulators through
creating remining incentives with the industry. And that was a
program we worked very hard on, and within a few years we were
getting about $30 million worth of free reclamation through
remining, compared to the $22 million we were getting from our
AML. So I think it is very important that we also explore those
options for leveraging those dollars better.
Mrs. Cubin. Well, I hope that you will stay in touch with
us throughout the process of the decisionmaking on what changes
might be made, because it would really be better to be working
together as we go rather than have something dumped on us that
we will have trouble--
Mr. Jarrett. OK. We will be glad to do that.
Mrs. Cubin. Thank you. Funding for the implementation of
State regulatory programs under Title V of SMCRA has been
reduced this year by about $1 million in comparison to last
year's amount, and is $6 million less than what the coal mining
States had requested. While the proposed budget recognizes
special needs in West Virginia that I don't disagree with, and
probably because of the fierce debate over mountaintop mining,
will OSM be prepared to assist other States that find
themselves with additional funding needs, should they too
require it to adequately comply?
Mr. Jarrett. I think the Title V grants are actually $1
million more, but $2 million extra was going to West Virginia
to help us through some of the problems there. That did result
in sort of a net $1 million decrease that is spread out among
the other States.
We are still in the process of identifying any problems
that that cut will have in any of the other States, and we
expect there to be some problems, but by and large we have had
more concerns raised to us over the proposed cut in the Title
IV grants than in the Title V grants. But we are prepared to
work through that with all of the States and provide whatever
assistance they need, should that become necessary.
Mrs. Cubin. My time has expired. I would like to ask
unanimous consent that each member be allowed to question 10
minutes rather than doing two rounds.
Mr. Kind. That is fine, Madam Chair.
Mrs. Cubin. The next question is for Dr. Leahy. I am just
going to go directly to homeland security, although we have
other questions that certainly we hope that you will all answer
in writing. What is the Department of Interior's involvement in
homeland security?
Mr. Leahy. As I pointed out in my testimony, we have
supplied a number of topographic maps. We were also involved in
an effort to provide spatial data focused on the 120 cities
that are being looked at in detail, and we will be providing
the information along with our partners in an organization
called NEMA.
So that is just one area. We are also looking at water
resources areas in terms of ways to monitor water resources
more effectively, particularly biologically as well as
chemically. Also, we had involvement in terms of the World
Trade Center collapse, in terms of using techniques that have
traditionally been used in the mineral resources area to look
at the composition of the collapsed piles up there.
Mrs. Cubin. So how have your efforts been funded?
Dr. Leahy. Basically, we have funded them through our
existing appropriation. For example, in the 120 cities effort,
one of our major efforts in the cooperative topographic mapping
effort is to create more recent topographic maps, and clearly
the priorities will be focused on the 120 cities initially.
Mrs. Cubin. So we have appropriated from Congress a lot of
money to help with that terrorist attack, and do you have any
idea how much--I know you don't, so I won't even ask that right
now, but it seems that there ought to be some money coming to
you, as well.
Dr. Leahy. In fact, we are in discussions with OMB in terms
of a potential supplemental that they may push forward.
Mrs. Cubin. Good. $500,000 has been budgeted to update the
Geothermal Energy Assessment, which was last updated, as you
said in your testimony, in 1979. When do you expect that
assessment to be completed, and will you be working with the
land management agencies, the BLM, within the Department?
Dr. Leahy. Basically, the assessment is not a national
assessment. It will focus specifically on the Great Basin
region. To do a national assessment of geothermal would require
significantly more resources than $500,000. We have decided to
target on an area that has the highest potential initially. I
believe that study will probably take on the order of 3 years.
We are obviously in the process of planning that. Depending on
the outcome of the budget, we will proceed.
BLM also has funds in their budget request, but they, much
like we are doing in NPRA, the survey will be looking at the
resource base, whereas the BLM--which we will work closely
with, by the way--will be looking more at the leasing issues
associated with the development of geothermal.
Mrs. Cubin. And that is certainly something that needs to
be done, as well.
Now to Ms. Denett. We anticipate that there will be
increased interest in developing and producing renewable energy
resources. In this light, the royalty calculation methods for
geothermal energy production, particularly low temperature
geothermal resources used for direct heating applications, are
complicated and an administrative nightmare, frankly. Regarding
low temperature geothermal resources, how much revenue does MMS
collect annually for royalties?
Ms. Denett. From geothermal?
Mrs. Cubin. Low temperature. Do you know that?
Ms. Denett. I don't have that number offhand. We can
provide it to you.
Mrs. Cubin. Do you think that the amount collected--well, I
guess if you don't--
Ms. Denett. It is only a couple million dollars.
Mrs. Cubin. Yes, it isn't very much.
Ms. Denett. It is not very high, but I would have to give
you the breakout. I would have to check into that.
Mrs. Cubin. OK, but I think we can agree that it is a real
minimal amount.
Ms. Denett. Very small, right.
Mrs. Cubin. And do you think that the amount collected
justifies the effort that is required to collect those low
temperature geothermal resources? I personally think that the
rate is discouraging and the process is discouraging to produce
low temperature geothermal.
Ms. Denett. I know that in 1999 there was interest from the
California congressional delegation that we re-look at the
geothermal evaluation regulations, and in fact the agency
issued an Advance Notice for Proposed Rulemaking to see if
there was an interest in reevaluating, or should we be making
changes to the valuation regulations.
The comments we received, and we also had a workshop,
ultimately everyone from the congressional delegation as well
as from industry and State representatives, it was decided that
we should leave well enough alone, that the regulations that
are there were working, and that in fact for unique situations
within the framework of the regulations we could develop with a
particular company, whichever the geothermal company is, and
with the collaboration of the State--California, Utah,
etcetera--that we could develop future valuation methodology
through a settlement process, and we have done that in numerous
cases.
I will add one other thing, that there has recently--a
couple of weeks ago there was a renewable conference, a meeting
with the various agencies to develop what else can we do, and
there were some companies from the geothermal industry that
again put on the table or at this time put on the table, maybe
we should re-look at the geothermal valuation regulations to
simplify. We will be looking at all of those things.
Mrs. Cubin. Thank you. My time has expired. I now recognize
Mr. Kind.
Mr. Kind. Thank you, Madam Chair. And thank you again for
your testimony here today, and I do echo Ms. Cubin's sentiments
that there seems to be a game in play that is played out every
year with the administration's budgets, where the Department of
Interior is always on the chopping block, where those of us who
know what value comes of these very valuable programs
understand that there is going to be an effort to try to
restore the funds, and the administration is able to stand back
and say, ``Well, it's just the spendthrift Congress. That's why
we're in deficits and everything else.'' And I just think it is
an unfair game. If they would just submit some more realistic
budgeting, rather than this constant battle with the
appropriators and trying to restore funding for crucial
programs.
Dr. Leahy, let me start with you. You indicated that
$500,000 for the geothermal survey is going to be mainly for
the Great Basin area. Are you going to be able to complete a
complete survey of the Great Basin area with $500,000, or is
more going to be required for that 3-year study?
Mr. Leahy. I think the initial effort will focus primarily
on reevaluation of the initial assessment and bringing it up to
modern standards. We will have to look at what additional data
is available out there to really determine if the resources are
adequate.
Mr. Kind. Do you have any cost estimate of what it would
take to have a true national survey for geothermal potential in
the country?
Mr. Leahy. I would prefer to provide that for the record.
We certainly know what it cost us the first go-round.
Mr. Kind. Right. Well, I would be interested in working
with you on that. Obviously we have some shared interests here.
I know Mr. Gibbons from Nevada, too, has been a pretty strong
proponent of developing the geothermal potential in this
country, too. I think if we can get a good snapshot of what
that potential actually looks like, we might have a better idea
of how it can fit into the long-term energy policy in this
Nation.
Mr. Leahy, I will stay with you for a second. In the
President's proposal he is calling for a $500,000 in the
Central Great Lakes Mapping Coalition. As you are aware, this
is binational. Canada is chipping in, as well as the States in
the Upper Midwest area, the Great Lakes area. What would be the
practical impact of that funding reduction as far as the
mapping program?
Mr. Leahy. OK. I don't think Canada is chipping into that
effort, but it is a bi-state effort in terms of a partnership
between the U.S. Geological Survey, the State of Ohio, the
State of Indiana, the State of Illinois--and, let's see, who
have I missed?--State of Michigan. So there are five partners
in it.
It is basically a recognition that traditional geologic
mapping has tended to look at the bedrock. However, in that
part of the world there is a very thick cover of glacial
deposits that basically is where humans interact most with the
environment, and it supplies the water resources for the area,
it supplies the sand and gravel resources, it is what we farm
on, so there are pathways for water quality issues and so
forth.
The focus of the effort is to provide modern, three-
dimensional geological maps of the glacial deposits of that
area. There are an enormous number of maps, and it would be a
25-year effort to basically map all the surficial areas of
those States.
There has been a prioritization to develop those new
techniques, be they geophysical or even three-D visualization,
to show this complex information. There are pilot efforts in
terms of individual quadrangles in each of those States, and
the elimination of that will eliminate the mapping activities
to look at those surficial deposits.
Mr. Kind. Could you do me a favor and just double-check
your facts in regards to the Canadian role in what is taking
place up there? I know they have some sort of involvement. I am
just not sure of the extent of--
Mr. Leahy. We have done a lot of collaboration with the
Canadians in terms of geologic map standards, and in fact the
State Geologist of Illinois is a former Geologic Survey of
Canada employee. He is a U.S. citizen, actually. But certainly
there have been many discussions with the Canadians, but I
don't believe there has been any cost-sharing, but I will
check.
Mr. Kind. Thank you.
Ms. Denett, it is nice to see you again. Thanks for your
testimony, as well. Your testimony indicated you are
anticipating about a $4.2 billion raise in regards to offshore/
onshore leasing and mineral development. In 2001 I believe it
was over $6 billion or so, so it is roughly a $2 billion
dropoff from just the previous year. Could you explain to us
what factors are contributing to that $2 billion dropoff?
Ms. Denett. Sure. A lot of it deals with prices and
production, so it depends on level of production and the prices
of the oil and the gas and the coal, and that has a direct
impact on the revenues that we collect, and as well the bonus
bids that come in from the offshore program, which we collect
close to a couple billion or so dollars just from those type of
activities.
Mr. Kind. Thank you.
Ms. Denett. We can give you a more detailed breakout if you
would like.
Mr. Kind. That would be great, yes, some type of breakdown,
show us what factors are contributing to that. I would
appreciate that.
Director Jarrett, again in the proposed budget there is
about a $17 million reduction, I believe, if I have got my
facts right, for the Abandoned Mine Land reclamation grants
that would be available. According to some quick calculations,
that would leave roughly $144 million left which would provide
a potential of roughly 6,900 to 7,000 acres or so of land that
could be reclaimed under the proposed budget. What could $17
million do in regards to the number of acres that potentially
could be reclaimed? How many acres?
Mr. Jarrett. I could get you that number, but from my
perspective that is not an important number. The primary
purpose of the AML program is to abate hazards to human health
and safety, and that is one of the concerns that I have had.
One of the things I think we need to do, that I addressed
earlier, is come up with better ways to measure the value and
answer the question, what are we buying with those dollars,
because it is not reclaimed acres. We need to ask ourselves,
why are we reclaiming those acres, and it is to save lives. It
is to protect people and children. That is the reason that we
want to spend dollars to reclaim an abandoned high wall that is
near a highway or a school yard, as opposed to one that is many
miles from a population center.
Mr. Kind. Let me just rephrase that. What won't get done
with a $17 million shortfall?
Mr. Jarrett. I can't answer that question because we
haven't measured it properly. If you want an answer to the
question in terms of acres, it will be 6,900 acres versus 8,200
acres that won't get done. But there are other programs out
there that we are looking at to help get more problems
corrected.
One of the programs in the department's proposed budget is
the CCI program, which looks to me like about $50 million would
be available on a competitive basis for our State AML
authorities, to use AML dollars to match against those dollars.
I personally think that is a better delivery mechanism, because
it covers environmental remediation projects that go beyond
just those related to mining and allows the department to focus
on the most important environmental problems, as opposed to
just the important mining ones. And it also requires that you
have some other participation from not just local governments
but from citizens, and I think any time you can start building
coalitions out there, you are going to end up with a better
product.
Mr. Kind. Let me also state, as you and your department get
in a position to start taking a look at reauthorization of AML
and that, we would be interested in working with you, and
trying to get some feedback from you on some thoughts that we
would like to share with the administration on where we need to
take the program and whether it is worthy of reauthorizing when
it is due to expire.
Mr. Jarrett. OK. I would be more than happy to do that.
Mr. Kind. Dr. Leahy, can I throw you a quick curve? I know
we don't have specific jurisdiction over these water resource
issues and that, but I am very concerned, there are quite a few
of us in Congress that are very concerned in regards to the
funding cutback for the National Stream Flow Information
Program, you know, the stream gauging, in light of the flooding
and the drought conditions we are facing.
I think this is not the appropriate time to have a
significant reduction in stream flow gauging information that
USGS has been doing. There is a $2 million proposed cutback.
What would be the impact of that on the work that is being done
right now?
Mr. Leahy. The impact would be the loss of 130 stream
gauges nationally. And those 130 gauges have been identified on
a State-by-State basis, and we have a priority order for our
stream gauges. And currently the length of record is extremely
important, so we don't want to lose that length of record, so
they tend to be some of the ones that were added most recently.
The priorities were established with our cooperators at the
State level.
Mr. Kind. Right.
Mr. Leahy. Many of these, of course, are co-funded with the
States, so it is particularly challenging.
Mr. Kind. There is a lot of cost-sharing, and the data that
is being collected I think is invaluable. And if we start
seeing a significant dropoff or a discontinuation of the
collection of the data, I think it is going to start throwing
things out of whack. So we are going to need to get that word
out, and I will be happy to work with you in regards to that
program.
And, finally, you know, you have the proposal on the Toxic
Substances Hydrology Program of taking the money, shifting it
over to the National Science Foundation competitive grant
process. But again it seems to me, from personal experience in
working with the experts at USGS and the fine work that they
are doing, there is a certain amount of quality and expertise
that has been built up now within USGS in order to conduct this
important work that is being done under the hydrology program
and that. Could you give us a little bit of insight as far as
the reasoning or the justification in this shift away from USGS
expertise?
Mr. Leahy. Well, certainly the NSF is very capable of high
quality science, and that is one of issues here, is to ensure
that the water quality work in terms of toxics is done in the
highest quality manner.
Mr. Kind. I assume NSF is just turning around and
contracting out this money to private entities.
Mr. Leahy. There is a transition plan that is being
developed between the USGS and NSF, that will take a period of
3 years, I believe, to effect the transition. Clearly the toxic
program, one of the benefits is, these are long-term field
laboratories, so that the body of information that is collected
is a research value that supports or is the foundation for the
next research question that comes up. We are hoping, as part of
the transition, that that capability is not lost, and
discussions are underway.
Mr. Kind. I think this is going to require more careful
thought and study and that before we go down that road, because
I can just think of a myriad of private property interests,
too, and concerns that might be raised with private contracting
doing this type of data collection, where safeguards are
already built in with the work that USGS is doing.
Well, thank you again. I have gone over my time. Thank you,
Madam Chair.
Mrs. Cubin. Thank you, Mr. Kind.
Perhaps an answer to that would be to allow USGS scientists
to compete with other scientists in whoever would get the
grants. I don't know, but I agree with you that you hate to
lose institutional knowledge that you have already built up and
things that you have already paid for.
I would like to thank the witnesses for their testimony,
and thank Mr. Kind for his questions. I know that there will be
more questions that will be submitted to you in writing, and we
do ask you to respond to those. The hearing record will be held
open for 10 days for the responses.
So if there is no further business before the Committee,
the Committee now stands adjourned.
[Whereupon, at 11:17 a.m., the Subcommittee was adjourned.]
[Responses to questions submitted for the record by the
Minerals Management Service follow:]
Follow-up Questions for the Record
Minerals Management Service
House Resources Committee
Subcommittee on Energy and Mineral Resources
March 14, 2002, Oversight Hearing on:
FY 2003 U.S. Geological Survey; The Office of Surface Mining,
Reclamation & Enforcement; and The Minerals Management Service
Questions from Chairman Cubin
Question 1. (a).
We anticipate that there will be increased interest in developing
and producing renewable energy resources. In this light, the royalty
calculation methods for geothermal energy production, particularly low-
temperature geothermal resources used for direct heating applications,
are complicated and an ``administrative nightmare.''
Regarding low-temperature geothermal resources:
a. LHow much revenue does the MMS collect annually for royalties on
low-temperature geothermal resources?
b. LDo you think the amount collected justifies effort required to
collect royalties on low-temperature geothermal resources?
c. LDo you think the royalty rate is discouraging use of low-
temperature resources?
Answer:
a. LHow much revenue does MMS collect for royalties on low-
temperature geothermal resources?
The Minerals Management Service does not require the reporting of
low vs. high temperature geothermal royalties on our financial system.
However, equating low-temperature with direct-use, we currently have
seven geothermal leases in California, Nevada, and New Mexico that
produce geothermal fluids for direct-use operations. MMS historically
collects between about $30,000 and $70,000 per year in royalties for
these resources, mostly from the Honey Lake project in northern
California.
b. LDo you think the amount collected justifies the effort required
to collect royalties on low-temperature geothermal resources?
Low-temperature geothermal resources have broad commercial
applications (for example, aquaculture, greenhouse heating, vegetable
dehydration) that displace large amounts of conventional fuels. As such
they are a valuable public asset. MMS expends little additional effort
in collecting royalties on these resources as opposed to conventional
fuels, as they are reported in the same manner as oil and gas
royalties.
c. LDo you think the royalty rate is discouraging use of low-
temperature resources?
To our knowledge, the royalty rate applied to direct-use resources,
10 percent--the minimum allowed by statute--does not appear to be
discouraging direct-use applications.
Question 1. (b).
Regarding medium- and high-temperature geothermal resources, do you
think that a simpler royalty calculation method, based on gross
proceeds (similar to oil and gas royalty determination) would be
equitable to the producers, while resulting in a net savings from what
is currently devoted to the geothermal royalty management program?
Answer:
MMS's current valuation rules do provide for royalties based on
gross proceeds, providing the geothermal resource is actually sold. Few
geothermal resources, however, are subject to sales transactions, thus
requiring valuation by indirect methods such as a netback from the sale
of electricity. (The Geothermal Steam Act, as amended, 30 U.S.C. 1001
et seq., provides for royalty only on the produced resource itself and
not on a created product, such as electricity. Thus, for value to be
directly determined by gross proceeds, those proceeds must come from a
sale of the resource.)
There are simpler, less costly indirect methods than the one
currently commonly used'the netback procedure'to value those medium-
and high-temperature resources used to generate electricity. However,
when MMS reopened its current valuation rules to public comment and
potential revision in 1999, with one of our express purposes of finding
an equitable alternative to netback valuation, the geothermal industry
responded against any changes, indicating that the current netback
procedure was working as intended. As a result, MMS withdrew its notice
of proposed rulemaking. The MMS recognizes the difficulty in auditing
royalties paid under netback valuation and is open to initiating
discussions on the current rules if interest is expressed.
Question 2.
Senator Boxer (D-CA) recently introduced S. 1952, the ``California
Coastal Protection and Louisiana Energy Enhancement Act'' to buy out
the interest of 40 non-producing leases on the OCS off the coast of
California in exchange for credits that can be applied to bid on lease
sales in the Western and Central Planning Areas of the Gulf of Mexico
or to make royalty payments on existing production in those planning
areas. If this legislation were to be enacted, what effect would there
likely be on the U.S. Treasury?
Answer:
Due to the way the language of the bill is constructed, there could
be two possible scenarios with different associated costs. That is
because the language of the bill requires that, for the lease credits
to be offered, all eligible lessees must agree to the terms of the
settlement offer as they relate to their individual leases. Under the
first scenario, it is very likely that some of the lessees may not
accept the settlement offer. If that were to be the case, the effect on
the U.S. Treasury is zero.
Under the second scenario, if all eligible lessees agreed to the
terms of the settlement offer as they relate to their individual
leases, then the language of the bill stipulates that the value of the
credits is to be calculated in an amount equal to the sum of the amount
of consideration paid the Federal government for the eligible lease;
and the difference between the amount of direct expenditures made after
the date of issuance of the eligible lease in connection with the
exploration and development of the eligible lease, and the amount of
revenues earned from the eligible lease before the date of
cancellation.
MMS has no way to accurately calculate the effect on the Federal
Treasury based on the criteria above since we have no information on
the amount of direct expenditures made on the leases by the current
lease holders nor the amount of revenues earned from the eligible
leases. However, MMS does have the data on bonus and rental amounts
paid on the leases to the Federal government by the original lease
holders. Specifically, the 40 undeveloped leases in the Pacific region
are composed of 36, which were granted suspensions in late 1999 and 4
which expired. For the 36 leases, the total amount of all cash bonuses
paid to the Federal government was about $1.1 billion (current dollars
at time of payment). The total bonuses paid the Federal government on
the 4 leases that expired was about $144 million. Rentals paid on the
40 leases were--about $6.5 million.
It is MMS's understanding that the current lease holders paid the
original lessees much less than the $1.1 billion.
Question 3.
Recent news articles have reported that peer-reviewed studies
commissioned over the past twenty years by MMS ``strongly suggest that
oil and gas rigs in the Gulf amount to islands of intense mercury
contamination...'' and that they may be poisoning seafood. Was MMS
consulted prior to the publication of these stories? Can you comment on
the accuracy of those claims?
Answer:
The news articles mainly reference one study, the Gulf of Mexico
Offshore Monitoring Experiment (GOOMEX), performed by Texas A& M
University (TAMU) scientists with MMS funding in 1992 - 1995. MMS had
received an anonymous information request, but was not consulted before
the initial article was published. The lead scientist for the study,
(Dr. Mahlon Kennicutt, TAMU) has explained to the Mobile Register that
they had substantially misinterpreted the study's findings, but the
newspaper fails to accept the scientific interpretation of data. In
fact, the study demonstrated no differences in mercury levels found in
fish and other organisms living near the three oil/gas platforms and
those living far away from the platforms. Therefore, the study
concluded that drilling operations at platforms do not contribute to
mercury in marine organisms. This was also the conclusion of an article
on the study in the scientifically peer reviewed Canadian Journal of
Fisheries and Aquatic Sciences.
Question 4.
Would you please describe MMS'' efforts to minimize and mitigate
the impact of offshore drilling and production activities on the
environment and the effect the proposed budget has on this aspect of
MMS'' environmental and compliance program?
Answer:
To minimize and mitigate impacts from offshore activities, MMS
evaluates the potential effects during pre-lease and post-lease
activities. The key products of this effort are identification and
implementation of mitigation measures designed to protect sensitive
biological communities and habitat, air quality, archaeological
resources and protected species. MMS studies, in general, are designed
to contribute to the knowledge base and enhance the MMS decision making
process; and those efforts will continue. The less than 2 percent
reduction of funds from the fiscal year 2002 enacted level should not
limit our ability to address unforeseen or priority environmental
issues.
Question 5.
The royalty-in-kind (RIK) pilot programs have had their share of
controversy. Would you describe MMS'' efforts to measure the success of
both on-shore oil and off-shore gas RIK programs? Does MMS believe that
the Federal Government is getting its fair share when royalty is
collected in kind rather than in value? What effect, if any, will the
recent circuit court decision styled IPAA v. DeWitt have upon in-kind
versus in-value analyses?
Answer:
Beginning in 1998, MMS commenced a series of royalty-in-kind (RIK)
pilots to test and evaluate the viability of MMS taking its production
royalty-in-kind and selling it through a competitive bid process. For
the first pilot, the MMS and the State of Wyoming's Office of State
Lands and Investments cooperatively developed an oil RIK sales
initiative with first deliveries beginning October 1998 under six-month
contracts. After four succeeding sales, the MMS conducted an assessment
of the success of the initiative and published for comment its draft
report of findings in March 2001. The following criteria were used for
evaluation:
1. LSimplicity, accuracy, certainty for lessees and government;
2. LRevenue neutral (or better) for government; and
3. LReduced administrative burden for lessees and government.
The assessment concluded that:
1. LThe RIK approach simplifies the royalty process and
significantly reduces the period of uncertainty for lessees and
government;
2. LRIK receipts were at least revenue neutral compared to the in-
value approach; and
3. LThe RIK approach can result in administrative savings for
industry and government.
Regarding natural gas, MMS initiated its first RIK pilot in a
cooperative effort with the State of Texas General Land Office. The
pilot was initiated in 1998, with first deliveries from Outer
Continental Shelf Section 8(g) leases beginning in 1999. The MMS is
nearing completion of its evaluation of this pilot and will be
publishing its draft report for comment in Spring 2002. Initial
assessment results indicate that for sales of RIK gas at robust market
centers, under standard contract terms, we will get the same price as
anyone else who sells that way.
Based on its assessment results to date, MMS believes that, in its
RIK Pilots, the Federal Government is receiving revenues at least
equivalent to what would be received if royalties were collected in-
value.
MMS is evaluating the impact of the circuit court decision in IPAA
v. DeWitt on its royalty program. Currently, MMS believes that the
court decision will have little, if any effect on MMS's economic
analyses of royalty-in-kind versus royalty-in-value.
Question 6.
In your statement, you say that ``...oil and gas will continue to
be important during the next 20 to 30 years, and DOE estimates that
dependence on oil and gas will increase significantly during that
time.'' You also state that U.S. imports will increase from 56% in 1999
to 70% in 2020. This is a significant increase. Does MMS have any
suggestions on how to increase domestic production from the OCS to
decrease our dependence on foreign oil?
Answer:
There are several options available which can be taken to increase
production from the OCS. These include: 1) continuation of 5-year
leasing programs, perhaps with larger/more frontier sales, 2)
development of economic incentives to encourage increased production
from areas included in these programs, and 3) increased funding of
hydrate exploration/production research.
Question 7.
Will natural gas production from the OCS be able to keep pace with
its same annual percentage contribution if the anticipated increase of
50%, from 22 TCF to 32 TCF by 2015 occurs? Will MMS'' next five-year
leasing plan help assure that the OCS can meet the forecasted demand
for natural gas?
Answer:
At present, about 25 percent of the Nation's natural gas is
supplied from the OCS. With the anticipated 50 percent increase in
demand, it is expected that, despite increased OCS production, the
percentage supply contribution from the OCS will range from 20 to 22
percent. The next 5-year leasing plan, together with deep water and
deep drilling royalty suspension programs already in place, will help
ensure that the OCS can meet its projected share of the forecasted
demand.
Questions from Ranking Member Kind
Question 1.
MMS collects the royalties from onshore federal and Indian and
outer continental shelf mineral leases, and administers the OCS lease
program. In 2003, you are projecting that MMS will collect about $4.2
billion in revenues in 2003 from minerals produced from offshore and
onshore Federal and Indian lands. This is about $2 billion less than
MMS collected in 2001. Please explain the drop in revenues.
Answer:
Actually the change from fiscal year 2001 receipts to fiscal year
2003 projected receipts is even more dramatic. MMS collected over $10
billion in fiscal year 2001. The change in receipts is a factor of
declining oil and gas prices over the last three years, overall
moderating production levels, and plans to transfer oil to the Nation's
Strategic Petroleum Reserve.
[GRAPHIC] [TIFF OMITTED] T8206.003
As can be seen from the above table oil and gas prices declined
dramatically from fiscal year 2001 to the projections for fiscal year
2003 (fiscal year 2002 and 2003 prices are estimates in the 2003
budget). Oil prices are projected to decline by 27 percent and gas
prices by more than 57 percent. Production levels are projected to
climb moderately with oil production growing by 0.5 percent. Gas
production is projected to increase at a higher rate, 8.1 percent, but
not enough to overcome the more than 57 percent projected decline in
prices.
In addition, the decision to add oil to the Nation's Strategic
Petroleum Reserve affects projected receipts. The SPR will be filled by
taking in-kind Outer Continental Shelf royalties on oil production.
This, of course, reduces the dollars collected in fiscal year 2002 and
fiscal year 2003. The reduction of adding to the SPR on fiscal year
2003 royalty collections is currently projected to be-$885 million
based on OMB economic price assumptions used for preparing the fiscal
year 2003 budget and a transfer of 47.5 million barrels of oil.
Question 2.
In fiscal year 2003, the President is requesting an increase of
$11.1 million in appropriated funds for MMS. One area you will spend
this increase on is to develop software to allow greater royalty-in-
kind collection programs where warranted. What exactly do you expect to
accomplish with this effort?
Answer:
The requested funding for systems development is needed to support
the MMS's royalty-in-kind program activity. With this funding, MMS will
complete the development of the needed systems support to manage
business activities that are unique to the in-kind approach versus the
in-value approach. These royalty-in-kind business activities include
the identification and management of oil and gas volumes from point of
production to point of sale or other disposition; management of
production imbalances from point of production receipt to production
disposition; and contract management for sales, processing and
transportation of production. Furthermore, this needed systems support
will be integrated with MMS's financial and compliance systems
infrastructure. With the completion of the royalty-in-kind development
effort, MMS will have the needed systems support for efficiently and
cost-effectively executing its asset management strategy of utilizing
both the in-kind and in-value options in achieving its business
objectives.
Question 3.
MMS also plans to increase funding by $5.0 million for OCS
activities in the Gulf of Mexico to increase oil and gas production in
support of the President's energy policy. What exactly will these funds
be used for?
Answer:
The requested resources will be used to ensure that offshore
operations are conducted in a safe and environmentally sound manner, to
assure that the public receives fair value for its mineral resources,
and to process industry plans.
* $0.94 million for leasing and environmental assessment activities
L$0.24M is for two FTE for lease administration. Lease
inventory grew 43 percent from 1995 through 2000. Bonding
issues are becoming more complex and more critical.
L$0.60M is for five FTE to prepare environmental
reviews. Special environmental assessments are required for new
and unique proposals, such as pipelines for regassification of
LNG, commercial waste disposal into salt caverns, and complex
pipeline scenarios involving multiple projects and platforms.
NEPA and Coastal Zone Consistency workload continues to grow.
L$0.10M will be used for a periodic journal of
Environmental Studies results.
* $1.62 million for resource evaluation and decisions
L$0.60M for five positions to handle field
determinations. Since the passage of the Deepwater Royalty
Relief Act of 1995, this has evolved into a resource-intensive
responsibility having a huge economic impact to both Government
and industry. One determination could result in $300M more
revenues to the U.S. Treasury. Decisions affect billions of
dollars of revenue to the U.S. Treasury. If there are about 340
new discoveries in the next 10 years, the impact to royalty
payments could be in the range of $45 billion.
L$0.48M for four FTE to collect, process, distribute,
and archive technical data and records derived from new wells
that are drilled. New wells drilled increased 40 percent in
fiscal year 2000. A backlog in this work slows resource
assessments, tract evaluations, reserves inventory, and field
determinations--all of which affect revenues to the U.S.
Treasury.
L$0.29M is needed to digitize well logs.
L$0.25M will be used for regional sand resource
identification
* $1.89 million for regulation of operations
L$0.24M for two FTE to process deepwater operations
plans. Submittals increased by 36 percent from 2000 to 2001.
Billion dollar industry projects depend on timely review of
these plans. Approval delays cause production and revenue
delays.
L$0.12M for a corrosion engineer. Aging infrastructure
presents a potential prospect of corrosion problems that could
result in premature abandonment of some platforms.
L$0.12M for a position to deal with the 27 percent
increase in pipeline applications.
L$0.36M for three inspectors for workplace safety on
fixed facilities. This function was previously handled by the
US Coast Guard.
L$0.24M for two positions to review production
completions, and violations for flaring, maximum production
rates, and downhole commingling. This is essential to assure
ultimate recovery of oil and gas.
L$0.15M for engineering and other technical training.
Changing technology requires increased training of the current
workforce.
L$0.585 million for increased helicopter contract
costs.
L$0.075 million for contractual accident and
prevention analysis. Accidents and pollution incidents
undermine confidence in program.
* $0.25 million for contractual information technology support for
the new fiscal year 02 and fiscal year 03 FTE
* $0.30 million for one FTE and increased administrative services
required for the expanding GOM workload.
Question 4.
MMS proposes to reduce funding for environmental studies by $2.2
million, the Center for Marine Resources and Environmental Technology
(CMRET) in Mississippi by $800,000, the Marine Mineral Technology
Center (MMTC) in Alaska by $800,000, and the Offshore Research and
Technology Center $499,000. The Centers, in particular, were funded
through Congressional add-ons last year. What will MMS not be able to
accomplish if these decreases are maintained through the appropriations
process?
Answer:
Environmental studies allow us to study current issues and conduct
environmental monitoring related to oil and gas activities and marine
minerals development, as well as conduct research on evolving topics
such as methane hydrates, biotechnology and invasive species. The
proposed budget reduction should not limit our ability to address
unforeseen or lower priority research.
The Mississippi CMRET is constructing a methane hydrate monitoring
station to be placed in the Green Canyon area of the Gulf of Mexico in
2004. When completed, the facility will be the only one of its kind in
the world. As such, many of the components of the station have to be
specially designed and constructed. The station will monitor, on a
continuing basis, changes in the stability of the seafloor and amounts
of gas released to the sea and atmosphere. These conditions may result
when man-induced activities such as drilling and production of oil and
gas occur on or adjacent to methane hydrate deposits. The station will
also monitor changes to environmentally-sensitive seafloor biological
communities that depend upon methane hydrates for survival. The Green
Canyon contains a number of methane hydrate deposits that are
considered prime candidates for future gas production. Without
additional funding CMRET's design and construction work on the
monitoring station would be delayed or stopped.
The MMTC at the University of Alaska plans to continue resource and
environmental studies in support of future placer gold leasing in the
outer continental shelf of the Norton Sound offshore Nome. The Norton
Sound contains the largest known placer gold reserves in the U.S. and
is one of the largest in the world. Included in this work is the design
and testing of an unmanned, underwater mining machine that could work
beneath the 6-month long ice cap in the Norton Sound. Another planned
project is the location and testing of offshore sand and gravel
deposits for use in building beach berms to protect the native fishing
villages of Kivalina and Shishmaref, located on the Chukchi Sea. This
project is unrelated to offshore minerals activity. Without additional
funding in fiscal year 2003, these MMTC projects would be delayed or
discontinued until future funds became available.
MMS signed a Cooperative Agreement with the Offshore Technology
Research Center (OTRC) in June 1999, which provides funds to support
basic engineering research and test technologies for deepwater oil and
gas production. The funds are allocated among three categories: (1)
specific research applicable to MMS regulatory program
responsibilities; (2) basic research projects jointly funded with
industry sponsors focused upon new and innovative technologies
applicable to deepwater oil and gas production; and (3) operational and
administrative support of the Center. Reduction in the MMS funding
level will shift to industry the obligation to increase funding for the
basic research activities and operational and administrative costs of
the Center. Currently, MMS has provided about 50 percent of the OTRC
funding.
______
[Responses to questions submitted for the record by the
Office of Surface Mining follow:]
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 1
AUTHORIZATION OF FEE COLLECTION
Mrs. Cubin. Authorizations for fee collection under Title IV of
SMCRA for the Abandoned Mine Land Trust Fund will expire in September
of 2004. What is the position of the Administration regarding extension
of this fee collection authority? Do you anticipate that the
Administration will seek other adjustments to Title IV of SMCRA? If so,
what might they be? But, before you answer please consider carefully
that coal producers in one state alone--Wyoming--pay nearly 42 percent
of the fees collected nationwide, yet my state receives but 23 cents
back on each dollar sent to Washington DC rather than the mandated
minimum of 50 cents on the dollar.
Mr. Jarrett. The Administration has not yet taken a position on
extension of AML fee collection. Over the next several months, OSM
staff plans to discuss the issue of possible fee extension with
representatives of States and Tribes, industry, environmental groups,
Members of Congress, and others to gain a better understanding of the
various positions. Based on these discussions, the Department will work
with the Administration in formulating a position. In addition to
exploring the issue of fee collection, we will be looking at other
possible issues in the AML program. We have not yet determined,
however, what, if any potential statute changes might be sought.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 2
REGULATORY GRANT FUNDING
Ms. Cubin. Funding for the implementation of state regulatory
programs under Title V of SMCRA has been reduced this year by $1
million in comparison to last year's amount and is almost $6 million
less than what the coal mining states had requested. While the proposed
budget recognizes special needs in West Virginia (perhaps because of
the fierce debate over mountaintop mining and valley fill practices)
will OSM be prepared to assist other states with additional funding
should they too require it to adequately regulate current operations?
Mr. Jarrett. Regulatory grants to primacy states have increased by
approximately 10 percent over the last two years. OSM works
cooperatively with the States throughout the year to avoid similar
situations and to ensure that the States are able to continue operating
viable programs. As with the state of West Virginia, OSM would work
with the Congress to prevent the failure of a state regulatory program.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 3
STATE ABANDONED MINE LAND PROGRAM GRANT FUNDING
Mrs. Cubin. Funding for state AML programs has been reduced by $17
million in comparison to last year's amount, and this is in the face of
an increasing Fund balance and increased receipts to the Fund. Given
that state and tribal share balances continue to increase (from a
cumulative $881 million at the end of fiscal year 2001 to over $918
million at the end of calendar year 2001, just three months later!)
what plans does OSM have for future appropriations requests to insure
that the states can gain access to these increasing balances and put
the money to work on the ground to remediate outstanding AML
priorities.
Mr. Jarrett. The proposed reduction of $17 million for reclamation
grants to states is partially offset by a $2 million request for
transfer of prior-year carry over funding from the Federal emergency
program. The resulting reduction of $15 million to state reclamation
grants in no way signals a lessening of this Administration's support
for the Abandoned Mine Land program. This is a valuable program that
the participating States and Indian tribes carry out very effectively.
The proposed reduction from the fiscal year 2001 grant level is a
result of difficult budget choices. The Administration supports the
Abandoned Mine Land program to the greatest extent possible within the
context of existing budgetary constraints. Also, the President's Budget
will result in an additional 6,900 acres reclaimed and will maintain
the Clean Streams Program at the fiscal year 2002 level.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 4
MOST PRESSING ISSUES
Ms. Cubin. What do you consider to be the most pressing issues that
you will be called upon to handle during the early weeks and months of
your term as Director of OSM?
Mr. Jarrett. There are three issues on which I most want to focus
at this. First, we need to create a stable regulatory framework to
ensure responsible and environmentally sound energy production. One way
to do this is to review our regulatory activities and set priorities to
identify and work with other Federal and state agencies on a consistent
approach for regulating coal mining and reclamation operations. We are
in the process of analyzing this issue. Second, I want to continue
moving toward resolution on several difficult surface and underground
coal mining issues, particularly those related to longwall mining and
mountaintop mining operations. For instance, we are continuing to work
with other Federal and State agencies to resolve the many issues that
surround mountaintop mining, in order to complete the programmatic
Environmental Impact Statement that should provide a basis for
coordinated decision making to minimize the adverse effects of excess
spoil in valley fields. Third, I want us to pursue the means to
encourage remining and recovery of coal from coal refuse piles by
developing alternative regulatory approaches. Toward this end, we are
examining options for providing financial incentives for remining.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 5
STATE-FEDERAL PARTNERSHIP
Ms. Cubin. As a former State regulator, you bring a unique
perspective to the job as OSM Director. What is your sense of how well
OSM is doing to fulfill its mandate of ensuring an effective State/
Federal partnership under SMCRA? What, if anything, should be done to
bolster the relationship between OSM and the States?
Mr. Jarrett. My sense is that OSM supports and recognizes that
States serve as front-line regulators performing the bulk of the
required inspection, enforcement and permitting activities, while OSM
provides monitoring, and technical and financial assistance. In effect,
the States and OSM are working well together to co-implement SMCRA. As
a result, I believe SMCRA has become one of the most effective
regulatory programs in the country. The program is working well in
large measure because of the stability that has gradually come to the
Federal/State relationship, which is so integral to achieving the goals
of SMCRA. I believe the program is operating at its most successful
level where it counts - on the ground.
OSM, the States and Tribes have developed several initiatives to
enhance cooperation on a number of important issues concerning
oversight, technical training, technical assistance, and enforcement of
environmental laws. Examples of this cooperation include: making State
program oversight more effective by measuring results and solving
problems cooperatively; increasing technical knowledge and improving
working relationships among Federal, State, and tribal personnel
through technical training; making regulation more effective through
advanced technology and data capabilities for hydrology and geology;
and implementing the Endangered Species Act through cooperative
efforts. To bolster the relationship, OSM will continue to further and
enhance our partnerships with the States and Tribes on issues of mutual
concern.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14,2002
QUESTION 6
STATUS OF THE ABANDONED MINE LAND PROGRAM
Ms. Cubin. Can you give us a quick summary of the status of the AML
program? How many high priority sites have been reclaimed? How many
high priority sites remain to be reclaimed? Where most of these sites
are, etc.?
Mr. Jarrett. The total inventory includes 18,252 sites, which have
priority 1, 2, or 3 problems (both coal and non-coal). Of these, 12,487
are high priority coal sites (priority 1 and 2, coal, health, safety
and general welfare). OSM has completely reclaimed 6,064 high priority
coal sites and partially reclaimed an additional 1,552 sites. Unfunded
sites total 4,871. It is estimated it will cost $6.6 billion to reclaim
all these unfunded and partially funded coal sites.
The total number of sites is shown below by State and Indian tribe.
Sites shown in the ``Partially Funded/Completed'' column represents
locations where some reclamation problems have been addressed, but
others remain to be reclaimed.
[GRAPHIC] [TIFF OMITTED] T8206.004
[GRAPHIC] [TIFF OMITTED] T8206.005
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 7
APPALACHIAN CLEAN STREAMS INITIATIVE
Ms. Cubin. Regarding the Appalachian Clean Stream Initiative, can
you give us an idea of the extent of acid rock drainage in Appalachia
before the initiative was undertaken versus the extent of acid rock
drainage now? To what extent will the proposed fiscal year 2003 funding
remediate the problem?
Mr. Jarrett. According to a survey of State fisheries biologists
(U.S. Environmental Protection Agency - 1995, 1997), 7,500 stream miles
in Appalachia were adversely affected by acid rock drainage. According
to State Abandoned Mine Land agencies, approximately 100 stream miles
and 52 lake acres have been improved by Appalachian Clean Streams
Program projects. An additional 400 miles of streams will be improved
by projects currently in progress and new projects launched with fiscal
year 2003 funding would improve about 150 stream miles.
______
QUESTION FOR THE RECORD
HOUSE RESOURCES COMMITTEE
ENERGY AND MINERAL RESOURCES SUBCOMMITTEE
PRESIDENT'S FISCAL YEAR 2003 BUDGET REQUEST
MARCH 14, 2002
QUESTION 8
APPALACHIAN CLEAN STREAMS INITIATIVE
Ms. Cubin. The media commonly says that 12,000 miles of streams in
the United States are impacted by mining. This figure is at least
several decades old, but I believe that OSM is the original source. Did
this figure originate with OSM? If so how much of the impact is due to
coal mining and where are these impacts? How much progress have we made
in reducing those stream impacts due to coal mining since SMCRA was
passed in 1977?
Mr. Jarrett. The Office of Surface Mining did not originate the
cited statistic on stream impacts. Of the12,000 miles of streams
impacted by mining nationwide (U.S. Environmental Protection Agency, et
al.), acid drainage from abandoned and active coal mines accounts for
more than half of the total, predominantly in Appalachia and to a small
extent in the Midwest and West. The most dramatic progress in dealing
with mine drainage under the Surface Mining Control and Reclamation Act
has to do with active mines. Because of concurrent reclamation and
water treatment at active mining operations, mine drainage impacts have
not increased since Congress promulgated national reclamation
standards. The aggregate effects of 25 years of land and watershed
restoration under the Abandoned Mine Land Program, coupled with
targeted programs such as the Appalachian Clean Streams Program and
State Ten Percent Acid Mine Drainage Set-Aside have made substantial
but unquantified improvements to impacted streams.
______
House Resources Committee
Energy and Mineral Resources Subcommittee
President's Fiscal Year 2003 Budget Request
March 14, 2002
Question 1
Coal Waste Impoundments
Mr. Rahall. What actions has OSMRE taken, or intend to take, in
response to the recommendations contained in the National Research
Council (NRC) report Coal Waste Impoundments: Risks, Responses, and
Alternatives?
Mr. Jarrett. Staffs from the Office of Surface Mining (OSM) and the
Mine Safety and Health Administration (MSHA) have established a
standing committee to work on areas of mutual concern, including the
recommendations in the NRC report. The committee will focus its initial
efforts on the recommendations relating to (1) improving engineering
standards and practices, and (2) improving the accuracy of mine maps.
In addition, OSM will encourage technology development including
research to reduce coal waste such as slurry.
Prior to release of the NRC report, OSM had initiated several
actions relating to impoundments. In July 2001, we issued review
criteria for the States to use in re-evaluating existing and proposed
impoundments. We have just released our investigative report on the
Martin County Coal impoundment breakthrough. Finally, OSM and the state
regulatory authorities in the Appalachian region have largely completed
an initial re-assessment of the breakthrough potential for all existing
impoundments. As a part of this re-assessment, states have required
corrective measures, e.g. geotechnical drilling, lowering the pool
elevation, improved engineering analysis, etc., for impoundments
identified with concerns. Joint efforts will continue on the structures
with the highest risk for breakthrough. Finally, OSM is working on a
proposed rule that would require an emergency action plan in the event
of an impoundment failure such as the one in Martin County, Kentucky.
______
House Resources Committee
Energy and Mineral Resources Subcommittee
President's Fiscal Year 2003 Budget Request
March 14, 2002
Question 2
Mountaintop Mining
Mr. Rahall. Has OSMRE modified its approach to conducting oversight
of State regulatory programs since the mountaintop removal controversy
erupted in West Virginia?
Mr. Jarrett. The mountaintop mining issue in West Virginia
apparently goes back several years to a time when Office of Surface
Mining's (OSM's) oversight policy required a review of all aspects of
state programs. For whatever reasons, OSM did not clearly identify the
mountaintop mining issue for the problem it would become. In 1996, OSM
made significant changes in its oversight strategy to evaluate primacy
state regulatory programs. OSM's new regulatory approach focuses on end
results and on-the-ground success of states meeting SMCRA's
environmental protection goals. The approach relies on performance
agreements with primacy states. The approach has been successful in
general. The agreements have improved relationships, shared
responsibilities, fostered interest in joint reviews, and achieved a
more open discussion of difficult issues. I intend to review and, if
necessary, refine OSM's current oversight policies.
In response to the mountaintop mining controversy, OSM initiated
technical assistance to West Virginia to improve the state's
performance in permitting decisions and documentation. This effort is
ongoing. Also, the mountaintop mining litigation in West Virginia
identified permit findings documents as not being fully supportive of
permitting decisions. In June 1999, OSM launched a national oversight
objective that required each OSM field office to review state permit
files to determine if those files provided adequate support for the
required findings. Further, as part of its technical training program,
OSM developed a Permit Findings Workshop in fiscal year 2000 to assist
regulatory authority personnel in preparing permit findings that are
technically and legally sufficient and appropriately documented. To
date more than 100 state and federal permitting and program staffs have
attended the training.House Resources Committee
______
Energy and Mineral Resources Subcommittee
President's Fiscal Year 2003 Budget Request
March 14, 2002
Question 3
Abandoned Mine Reclamation Fund
Mr. Rahall. Does the Administration support extension of the
reclamation fee which finances the Abandoned Mine beyond its current
expiration date in order to raise the necessary revenues to address all
priority 1 and 2 projects on the inventory?
Mr. Jarrett. The Administration has not yet taken a position on the
extension of the Abandoned Mine Land (AML) fee. I would be very
interested in discussing your ideas about the extension of the fee.
______
[Responses to questions submitted for the record by the
U.S. Geological Survey follow:]
Responses to follow-up questions submitted by the House Resources
Subcommittee on Energy and Minerals as a result of the oversight
hearing on USGS budget on March 14, 2002
Questions from the House Resource Subcommittee - oversight hearing on
fiscal year 2003 Budget
Questions from Chairwoman Cubin
1.) Question: The Committee is concerned and wants to see that the
Department's infrastructure is protected but two particular areas of
interest are the EROS Data Center and the National Earthquake
Information Center. The Federal government has quite an investment
worth protecting at the EROS Data Center which holds the world's
largest collection of civilian remotely sensed data covering the
Earth's land masses and houses millions of satellite images and aerial
photographs. The National Earthquake Information Center receives the
seismic data nationwide critical to monitoring earthquake activity
within the United States.
Can you comment on the steps Interior has taken in securing its
facilities?
What measures have been taken to protect these two facilities?
Have additional funds been provided for these facilities?
Comment on steps DOI/USGS has taken to protect the National
Earthquake Information Center? Have additional funds been provided for
these facilities?
Answer: DOI/USGS has taken two important steps to protect the
security of the National Earthquake Information Center (NEIC). First,
an employee-identification entry system was implemented to restrict
access to the NEIC facility. Visitors must now schedule visits in
advance and be escorted into and out of the building. Additionally, the
master earth station--a large satellite dish that receives incoming
seismic waveform data from sensors across the United States--was fenced
off to protect it from vandalism. No additional funds have been
provided for this purpose.
The U.S. Geological Survey (USGS) EROS Data Center (EDC) in Sioux
Falls, South Dakota, is the largest USGS-owned facility. The Data
Center employs about 600 persons, both Federal employees and
contractors and has over 20,000 visitors each year. The archives at EDC
hold the world's largest collection of civilian remotely sensed data
covering the Earth's landmasses, housing millions of satellite images
and aerial photographs. Scientists, managers, and technical users from
around the world use data from the archive for a variety of data
applications and research programs, including those necessary for
defense, intelligence, and disasters, natural and man-made (i.e.
Nisqually earthquake, Houston floods, Desert Storm and acts of
terrorism). Since the events of September 11, the Data Center has
increased the number of security guards and added X-Ray equipment for
mail and package handling in an effort to improve site security.
There are no additional funds in the fiscal year 2003 Budget
request to make other facility security upgrades.
2.) Questions on Homeland Security
2a) Question: What is the Department of the Interior's involvement
in Homeland Security?
Answer: Principally, DOI's work in Homeland Security covers five
areas: 1) security of the Bureau of Reclamation's dams, power
generation and transmission facilities, and water conveyance
structures; 2) security of nationally significant historic, natural,
archival and cultural sites and lands like the Washington Monument,
Statue of Liberty, Mt. Rushmore, Yosemite and thousands of others; 3)
physical protection of our 65,000 employees located in all fifty states
and beyond; 4) coordination with major border protection agencies to
ensure protection of our homeland from potential terrorists crossing
into the United States over international borders--DOI lands adjacent
to Canada and Mexico account for nearly half (including Alaska) of all
borderlands; 5) coordination with homeland security authorities for
appropriate dissemination of scientific information and analysis of
relevant homeland security information and analysis of biologic events.
DOI also has the third largest number of federal law enforcement
officers, nearly 4,300 in the federal government (National Park
Service, Bureau of Indian Affairs, Fish and Wildlife Service, Bureau of
Land Management, Bureau of Reclamation). Homeland security is not these
officers mission, but they can coordinate with and provide support for
anti-terrorism efforts when called upon.
2b) Question: Can you briefly describe what efforts are underway
within the Department in support of Homeland Security?
Answer: The Department of the Interior has worked closely with the
Office of Homeland Security and the Defense, Intelligence, Law
Enforcement and Civilian communities as a result of September 11th, and
has contributed a great deal of information and expertise in direct
support of homeland security. Also, DOI has greatly increased the
physical security of nationally significant sites and lands as well as
emphasizing further security measures for employees. It has done this
through screening or limiting access to certain locations, addition of
barriers, changes of operating hours and methods, addition of security
staff or providing the means to cover more area with existing staff,
and numerous other enhancements. If called upon, Interior law
enforcement near international borders will coordinate with and provide
support to the primary border security agencies.
2c) Question: How are these efforts being funded? What other
agencies are involved?
Answer: Most of the physical security improvements have occurred as
a result of receiving emergency supplemental appropriations funding
during this fiscal year. Many others are the result of a
reprioritization of projects in response to meeting the current
national emergency. In some cases, funding has come from existing
resources to date. Again, our partners have come from the Defense,
Intelligence, Law Enforcement and Civilian communities, as well as
State and local government.
2d) Question: It is our understanding that the U. S. Geological
Survey is involved in working with DOD to provide up-to-date mapping
over the Nation's 120 most populous cities that have been identified as
potential targets for terrorists.
Can you comment on the roles of these two Departments related to
this work?
Answer: Current and accurate mapping and imagery is essential for
informing decisions on topics ranging from natural resources and urban
planning to security and emergency issues.
Many state and local jurisdictions already collect geographic
information in urban areas. USGS and the Federal Geographic Data
Committee can promote cooperative investments in this type of mapping
and geographic information, and ensure that the data is standardized,
accessible, and capable of being shared across Federal, State, and
local jurisdictions.
The DOD has an international mapping mission.
Questions: What is the status of this effort? Cost of the effort?
Timeframe for completion?
Did the Department receive supplemental funding for this work? Or
is DOD funding the effort? If not, please explain how the work is being
funded? Are additional funds needed to complete this effort?
Answer: No, the administration has not requested or received
supplemental funding for these activities. They are fully supported by
resources that have been appropriated to date and are included in the
fiscal year 2003 request. The USGS will concentrate on building
cooperative partnerships with state and local government to guarantee
that accurate, accessible and timely mapping and geographic information
exists for urban areas.
2e) Question: Is the Department working with the President's newly
established Office of Homeland Security? Is the project on the largest
120 U.S. cities being coordinated with the Office of Homeland Security?
Answer: The Department of the Interior has met with senior managers
of the Office of Homeland Security to discuss urban mapping and the key
role of geospatial information establishing and maintaining homeland
security. Our Deputy Secretary and Admiral Abbott, Deputy Director,
Office of Homeland Security have discussed that mapping and imagery
information that are timely, easily accessible, and capable of being
shared across federal, state, and local political jurisdictions, are
fundamental to the decision making capability of all first responders
and threat assessors. The Deputy Secretary has further informed Admiral
Abbott that in the immediate aftermath of the September 11 tragedies,
the USGS supported first responders with over 115,000 maps, satellite
imagery, aerial photographs, and other technical assistance.
2f) Question: Are these other areas of expertise within the
Geological Survey that can be utilized in the area of homeland
security?
Answer: While the U.S. Geological Survey is not a federal agency
that would lead specific efforts to detect, mitigate or respond to
terrorist threats, the USGS has a large cadre of experienced scientists
with skills that could provide support on homeland security matters
depending on the type of action or threat. For example, USGS has the
ability to accomplish detailed spectrographic analyses of suspect
materials, and is capable to complete detailed analyses of water
samples. Other USGS skills include seismology, engineering geology (for
a variety of ground response needs), surface and ground water resources
and wildlife health.
2g.) Question: Given the importance of having current accurate
high-resolution geographic data and information to allow planning and
rapid response to protect our cities and infrastructure, does your
budget include any funding to purchase commercial imagery for homeland
defense? What is the plan within the Survey to address such imagery
needs? Can you assure me that the USGS can sufficiently respond to any
homeland security issues that would need to be addressed by your
agency?
Answer: There is not funding in the USGS budget for the purchase of
commercial imagery specifically for homeland defense. A role of the
USGS is to develop the National Spatial Data infrastructure by
establishing partnerships to co-invest in geographic information and
make data easier to use. Many state and local governments and the
private sector, already collect geographic data for cities and
infrastructure. The best strategy to guarantee that high quality data
exists for homeland security is to coordinate federal acquisitions of
data with that of state and locals, based upon common data standards. A
strong partnership between Federal, State and local governments, the
private sector, and universities is essential to guarantee that current
data of high quality is available, while making an effort to avoid
duplication and the resulting inefficient use of government resources
at all levels. However, to conduct this effort using USGS existing
resources alone, the timeframe for completion will expand to a decade
or more. Leveraging investments with state and local government for
geographic information in urban areas is a faster and more efficient
means to guaranteeing current quality information for supporting policy
decisions, which can include homeland security.
3) Question: An Interior Department appeals officer recently halted
a seismic exploration operation northeast of Arches National Park in
Utah, saying letting the project proceed could cause irreparable harm.
A recent news article stated that a ``geophysical project outside
Arches National Park in Utah was stopped recently because of
environmental concerns by the U.S. Geological Survey.'' Among the
concerns raised by the USGS biologist is that the traffic associated
with the seismic survey could destroy a thin crust of bacteria that
forms over the desert soil and prevents erosion and weed growth and
could take up to 300 years for that crust to regenerate. Actually, the
seismic survey would be conducted by ``vibroseis'', a very non-invasive
(no-drilling and no blasting), environmentally sound method of
subsurface exploration.
3a.) Question: Was USGS formally consulted during the preparation
of the environmental review by BLM? Do you know the total acres that
may be disturbed by the operation?
Answer: Prior to approving the proposed seismic exploration
project, BLM prepared an environmental assessment (EA) on the project
pursuant to the National Environmental Policy Act (NEPA). In this
process, BLM: (1) prepared a draft EA that it made available for review
and comment by federal and state agencies and members of the public;
(2) prepared a final EA that took into account and responded to
comments received on the draft EA; and (3) based on the analysis of the
project in the final EA, issued a decision approving the project. BLM
did not formally consult with USGS during this process. However, USGS
comments on the draft EA, and BLM's incorporation of the information in
the final EA were fully consistent with the role of federal agencies in
the NEPA process. BLM considered comments submitted by USGS on the
draft EA in BLM's preparation of the final EA and its decision to
approve the proposed project. Based on its environmental review, BLM
concluded that about 16.7 linear miles, or 35 acres of the
approximately 23,000 acres in the project area would be disturbed by
the seismic exploration operation.
USGS does not disagree with BLM's conclusion about the acreage that
would be disturbed by the project. However, as a matter of
clarification, USGS is concerned that the above description of
vibroseis as a non-invasive, environmentally sound method of subsurface
exploration is not an accurate portrayal. This is because vibroseis
causes surface impacts, including impacts to soils and biological
crusts and other vegetative cover where present.
3b.) Question: In your opinion is the impact significant
considering that the area is also open to oil and gas leasing, in fact
much of the area is already leased, as well as grazing, off road
vehicle use, etc.?
Answer: USGS's intent in submitting comments on the draft EA
(referred to in answer 3a) was to point out text that needed
clarification, make BLM aware of the most up-to-date studies on the
disturbance and recovery of soils and biological crusts, and correct
certain information presented in the document. For example, the draft
EA indicated that soils and vegetation distributed by the project area
would recover in one to three years. This conclusion differed from
information in the Department's Technical Reference 1730-2 (2001),
entitled ``Biological Soil Crusts: Ecology and Management'', which
summarizes current research on human-caused impacts to soils and
biological crusts and the rates of recovery from such disturbance.
According to the Technical Reference, there are two general categories
of recovery: visual and biological. Visual recovery can occur
relatively quickly. On the other hand, biological recovery (recovery to
pre-disturbance species composition, density, and physiological
functioning) is highly site-specific, and more difficult to predict.
This is because biological recovery is highly dependant on the pre-
disturbance successional stage of the crust, with early successional
stages generally recovering more quickly than late successional stages,
the intensity of the disturbance, with crusts that are compressed or
crushed generally recovering more quickly than crusts that are scalped,
and climate during and after disturbance. The Technical Reference also
indicates that the rate of recovery of a disturbed site can be
estimated by observing the site and the recovery that has taken place
within a period of time. This observation-based estimation technique is
described as linear extrapolation or linear assumption, and is commonly
used when there are no fully recovered disturbances available for
study. However, because linear extrapolations are based on limited
data, estimated recovery rates by use of linear extrapolations may be
over or under estimates. USGS's comments on the draft EA referred BLM
to the Technical Reference and indicated that, for the Moab area,
recovery of soil crusts after severe surface disturbance ranges from 50
to 300 years. In the final EA, BLM acknowledged USGS's comments and the
information on recovery rates in the Technical Reference, and revised
the text of the document accordingly. The USGS comments on the draft
EA, its referring BLM to current research on soils and biological
crusts, and BLM's incorporation of the information in the final EA were
fully consistent with the role of federal agencies in the NEPA process.
In its environment review, BLM concluded that when viewed in light
of the past and present impacts to the project area from various uses,
and the relationship between the impacted acreage and the overall
project area, the project's impacts would not be significant, as that
term is used in NEPA. USGS believes that the project will degrade soils
and biological crusts and other vegetative cover.
It is important to emphasize that USGS's comments on the draft EA
were technical in nature and not intended to opine on whether or not
project impacts would be significant as that term is used in the NEPA
process.
4) Question: $500,000 has been budgeted to update the geothermal
energy assessment that was last updated in 1979. When do you expect the
assessment to be completed? Will you be working with the land
management agencies, BLM and USFS, to prioritize assessed areas to
assure that they have the necessary information to incorporate into
their ``time sensitive land use plans''?
Answer: The updated geothermal resource assessment of the Great
Basin will be completed in three years assuming continuing funding for
the activity. The USGS has excellent working relations with BLM and
USFS and will continue to coordinate with them to provide timely,
necessary information for their land-use planning.
5) Question: In your testimony, you state ``Partnership remains an
essential component of how we do business, to ensure cost-effective
operations.'' Yet, I see that you propose a reduction of almost $6
million in the National Cooperative Geologic Mapping Program, a
partnership with the state geological surveys and, as you know, a
product of this subcommittee's work beginning when Rep. Rahall chaired
the panel in 1990 and continuing thru my tenure.
5a.) Question: Isn't geologic mapping a vital component to our
energy future, as well as all the benefits that detailed geologic
mapping can provide for environmental considerations, such as geologic
hazards, land use planning, etc.?
Answer: The National Cooperative Geologic Mapping Program (NCGMP)
does indeed play a significant role in a number of energy-related
projects. Geologic maps and three-dimensional databases of the
subsurface are a foundation for much geologic research including
energy.
In addition, a large percentage of the NCGMP budget supports
geologic mapping projects engaged in discovering and protecting our
Nation's water resources. A sand and gravel deposit that provides
materials for road construction in one community may very well be the
aquifer providing water for a neighboring community. Geologic maps are
a very useful tool that allows land-use planners and local decision
makers to use resources wisely and avoid unnecessary conflict.
5b) Question: What is the rationale for this significant reduction
in the geologic mapping partnership program with the states?
Answer: The President's budget preserves a number of significant
program increases received in recent years that provide science to
support Interior land and resource management bureaus and other high
priorities, including funding to enhance USGS support for the
Administration's efforts to facilitate and stimulate domestic energy
production. Because of these and other priorities, the increase that
Congress provided to the National Cooperative Geologic Mapping Program
in 2002 is not being requested in 2003. The USGS continues to recognize
the growing need for geologic mapping across the Nation, and agrees
that partnerships are a good mechanism to fund this work.
6) Question: The USGS has been criticized in the past for not
meeting the needs of her sister agencies in providing scientific data
in a timely manner for land management plans, inventories, regional
assessments, etc. What is USGS doing to improve or streamline process
to assure that the agencies have the information necessary to make
informed decisions?
Answer: The USGS has the principal responsibility to provide the
scientific information, research, and understanding needed by DOI
Bureaus and others to manage and use optimally the Nation's biological,
water, energy, and mineral resources.
We recognize the criticism of the past and are working diligently
at improving our service and timeliness for our sister agencies. This
focus on knowing and meeting partners needs, establishing a goal for
partner satisfaction and measuring performance toward reaching that
goal has improved the quality and timeliness of USGS products and
services. Recent customer surveys estimate that DOI customers are
satisfied or are very satisfied with 97% of our biology products
delivered to land or resource managers (65% very satisfied, 32%
satisfied, 2% satisfied, 1% very dissatisfied). That survey provides
important feedback to our programs, including very helpful specific
suggestions for improvement.
USGS is working closely with parks selected by NPS to develop long-
term proto-type ecological monitoring programs in those parks and has
stationed scientists at those parks to work closely with NPS staff.
Work is underway to improve monitoring methods and techniques to meet
resource management needs identified by the parks.
In fiscal year 2001 Congress provided $3,400,000 to the USGS for
mission critical science support needs solely identified by the U.S.
Fish and Wildlife Service (FWS). In fiscal year 2002, the USGS''
Species at Risk program funds were added bringing the total funding to
$4,100,00. The FWS is particularly pleased with the Science Support
Program (SSP) because it narrowly focused to address their specific
management needs for science information. The FWS has the
responsibility for identifying what science needs will be addressed,
they can suggest to USGS which investigators they would like to conduct
the work, and they are invited to provide input to the study plan
developed by the USGS. The SSP program is particularly attractive to
the FWS because it provides an immediate funding source to address
unanticipated or emerging science needs of a tactical, applied nature,
and the program is designed to provide this information in a relatively
short period of time.
Questions from Ranking Member Kind
1) Question: fiscal year 2003 funding for the National Cooperative
Geologic Mapping Program would be reduced by almost $6 million. This
reduction will decrease the number of cooperative grants for geologic
mapping programs to State Geological Surveys by (30%) and universities
(20%), (States match these grants). What will be the effect of these
cuts if they are maintained?
Answer: The decrease of almost $6 million would return funds to the
fiscal year 2000 level. This will result in two changes in work focus
for the program. First, in accordance with the National Geologic
Mapping Act (P.P. 106-148), half of the reduction would reduce funding
available for the Cooperative grants to partners in State geological
surveys and universities. Secondly, half of the reduction would reduce
funding for the FEDMAP project.
2.) Question: The USGS 2003 budget request proposes an increase of
$2.7 million for USGS to step up its efforts in support of the National
Energy Policy and the overall goal of increasing domestic energy
production. Of the $2.7 million, $1.2 million would be used by USGS to
continue its efforts under section 604 of the Energy Act of 2000, which
requires USGS to conduct estimates of undiscovered oil and natural gas
resources on Federal lands in the continental United States. What
exactly would this increase be spent on?
Answer: The USGS role in Section 604 of the Energy Act of 2000 is
to provide estimates of undiscovered oil and gas resources under
Federal Lands in the U.S. The work involves analysis that is beyond the
scope of our present funding. The increase in funding will be used for:
1) LPartial payment of commercial oil and gas well and field
databases,
2) LHiring of contract GIS specialists, graphics specialists,
3) LHiring of contract geologic specialists.
These three items account for about 95% of the additional funding.
The remainder is for travel, publication costs, and the purchase of
data sets related to Federal lands.
3.) Question: The USGS budget proposal supports alternative, non-
fossil fuel energy development with $500,000 for USGS to begin the
process of updating geothermal energy assessments. The USGS will
initiate this effort in the Great Basin region. Is this assessment
going to be nationwide and regardless of land ownership? How much can
you expect to accomplish with this amount in 2003?
Answer: The USGS will begin its geothermal resource assessment
efforts in the Great Basin of the western United States. Funding and
staffing levels mandate that the assessment effort be conducted
serially, that is, one area at a time rather than all areas with
significant geothermal power generation potential at once. When the
Great Basin assessment is complete, in approximately three years, the
next area of significant geothermal resource potential will be chosen
for assessment. Thus the assessment activity will be nationwide in the
sense that assessments will be conducted in areas of the U.S. with
significant geothermal power generation potential, assuming funding for
the activity continues. USGS assessments are geologically based and
thus cross-land ownership boundaries. Upon request, and in
collaboration with the land managing agencies, USGS may allocate
resource estimates on a Federal land basis.
4.) Question: Also on the subject of geothermal assessments, BLM is
proposing a similar appropriation ($500K) to assess geothermal
resources on public lands. What steps will you take to assure that USGS
and BLM do not duplicate efforts?
Answer: The USGS has excellent working relations with the BLM and
will continue to coordinate with BLM and the USFS to provide timely,
necessary information for their land-use plans. USGS is responsible for
assessing the remaining geothermal power generating potential of the
Nation. BLM is the primary land managing agency in DOI and is
responsible for facilitating multiple-use of the public lands. Also, in
response to industry comments during the Secretary's Renewable Energy
Summit, USGS and BLM have joined in a National Geothermal
Collaborative, to insure coordination and eliminate duplication. USGS
and BLM have had discussions about the nature of the geothermal
assessment and the early thought is to follow the model of the EPCA
study, where USGS will assess the resource potential of Federal lands
and BLM will assess land use restrictions that may impede development
of the resource. These data sets will be combined to produce an
estimate of geothermal power generation potential of public lands in
the U.S.
5.) Question: In fiscal year 03, the President proposes to
eliminate funding--$500,000-for the Central Great Lakes Mapping
Coalition. This project is a multi year, bi-national effort to map the
depth and shape of the lake bottom and to classify lakebeds materials.
There is significant Congressional support for this program. What will
not be accomplished if this cut is maintained?
Answer: The 2003 budget assures continued emphasis on the USGS
science programs that support the Department's role in the National
Energy Strategy, land management, species management and the management
of our national parks, refuges and public lands. At the same time, the
budget continues funding to perform science functions that are inherent
to the historical responsibilities of the USGS. The 2003 budget
achieves these goals at the request level through a strategy that
included reductions for certain lower priority programs, and also by
scaling back funding for base programs that received increases in 2001
and 2002. This strategy also assumes an increases reliance on cost
sharing by USGS partners and beneficiaries of USGS programs. The
decrease of $500,000 will discontinue the Central Great Lakes Geologic
Coalition, a partnership that initiated in fiscal year 2000 with an
unrequested funding increase between the USGS and the State geological
surveys of Illinois, Indiana, Michigan and Ohio. The primary purpose of
the coalition is to make three-dimensional geological maps of the
complex glacial material that characterize the surface deposits and
shallow aquifers of this region. Geologic mapping activities by the
geological surveys of the States of the Coalition would be curtailed.
6.) Question: USGS is proposing cuts in the Mineral Resources
Program of approximately $4 million in fiscal year 2003 from the fiscal
year 2002 level. This program provides and communicates current,
impartial information on the occurrence, quality, quantity, and
availability of mineral resources. This program produces useful
publications and data including: Mineral Commodity Summaries; Mineral
Industry Surveys; Minerals Yearbook; and Commodity Statistics and
Information. Please explain exactly what effect the proposed cuts would
have on the USGS minerals programs and what work will not be done as a
result of the cuts.
Answer: The budget for 2003 includes reductions for certain one
time increases, lower priority programs, and also by scaling back some
2002 increases not requested by the Administration or proposing
alternative sources of funding, such as cost recovery from customers or
transferring responsibilities to other organizations. Within the
Minerals Resources Program, the 2003 President's budget includes three
major reductions.
A decrease of $1.3 million will discontinue three regional projects
on aggregate materials. Among the study elements included in the
projects to be discontinued is a study evaluating the suitability of
alluvial fan deposits for use as high quality aggregate and development
of a methodology for assessing the aggregate potential of individual
alluvial fan deposits. A second study that will be discontinued is a
study to examine the geology, geography and economics of megaquarries.
The third regional project that will be discontinued is a study to use
geophysical methods to characterize aggregate resources. Additionally,
the continued implementation of mapping techniques and geographic
information systems to estimate sand and grave resources in
glaciofulvial systems and adaptation of detailed local methods to
general large scale regional scale maps will also be discontinued.
A $1.5 million decrease will discontinue USGS funding for the
Alaska Minerals Information Project. The President's Budget proposes
that state and/or energy partners in the project fund any further work
on this project.
The President's Budget proposes a $750,00 decrease in the Minerals
Resources Program Minerals Information Team. This reduction will be
focused on reducing the number of reports on the production, use, reuse
and disposal of mineral commodities. The USGS can consult with the
Department of Commerce, the Department of Defense, and other users of
this information to gauge current demand and whether these users want
to share in the costs of the program to maintain it at its current
level.
7.) Question: The President's budget proposes a reduction of $2.1
million for the National Streamflow Information Program (NSIP). This
would result in the loss of 129 stream-gauges across the United States,
creating more gaps in the nation's gauging network and continuing a
trend that seriously threatens the nation's information base for water
management decisions and emergency warning systems. A 1999 report to
Congress requested by the House Interior Appropriations Committee
expressed concern about the decline of the stream-gauging network,
stating that ``we have increasing demands for information and yet the
infrastructure to supply the information is declining.'' Why is funding
being reduced for the NSIP?
Answer: The rationale of the 2003 budget is to ensure continued
emphasis on USGS science programs that support the Department's role in
the national energy strategy, land management, wildlife refuges, and
public lands. At the same time, the budget continues funding to perform
science functions that are inherent to the historical responsibilities
of USGS. The 2003 USGS budget reflects a scaling back of recent base
program funding increases that exceeded the President's budget request
for these programs. For example, the 2003 budget retains $6.2 million
of the $8.3 million base program increase received in 2001 for stream-
gauges.
8.) Question: What will the consequences be of losing 129 stream
gauges across the country?
Answer: Operations at those stream-gauges will cease, and no
further streamflow data will be collected at those sites. Historical
streamflow information from these stream-gauges will continue to be
available through the USGS National Water Information System (NWIS),
which is accessible to everyone, free of charge, over the Internet. For
those 90 stream-gauges (out of the total 129) that supply data for the
National Weather Service's flood forecasting system, no new data will
be available.
9.) Question: Does the Administration support an adequate
infrastructure to collect the information needed to make high quality
and reliable water management systems? If so, then why are these
funding reductions being proposed?
Answer: The Administration remains committed to ensuring that there
is adequate information to make good decisions about water management.
However, the 2003 budget ensures continued emphasis on USGS science
programs that support the Department's role in the National Energy
Strategy, land management, wildlife refuges, and public lands. At the
same time, the budget continues funding to perform science functions
that are inherent to the historical responsibilities of the USGS. The
2003 USGS budget achieves these goals at the request level through a
strategy that includes reductions for certain lower priority programs
and also by scaling back funding for base programs that received
increases in 2001 and 2002. This strategy also assumes an increases
reliance on cost-sharing with beneficiaries of the USGS programs.
In the case of the National Water Quality Assessment Program, the
budget assumed that less than ten percent of the total NAWQA budget can
be offset from program partners and beneficiaries who gain significant
benefit from the program. Again, in the case of the stream-gauging
program, it is assumed that operations at 129 stream-gauges will be
halted unless Federal or non-federal partners provide additional
funding support to keep these stream-gauges operational.
In the case of the toxics program, the budget reflects the
Administration's goals of realigning the Federal government's
investment in research and development to give greater support and
emphasis to competitive, peer-reviewed research.
In the case of the Water Resources Research Act Program, the State
Water Research Institutes who receive grant funds through this program
have been highly successful in leveraging their USGS grants with other
federal funding. It is anticipated that most of the 54 institutes will
be able to continue their work.
10.) Question: The President's budget proposes a reduction of $5.8
million for the National Water-Quality Assessment (NAWQA) in fiscal
2003, a 9 percent reduction from the fiscal 2002 level. All 42 water-
quality assessment study units would be affected by these cuts, with an
estimated 6 units eliminated from the program. NAWQA would be unable to
initiate microbial sampling designed to identify possible bacteria and
viruses in surface-water and ground water resources. In addition, the
program would be forced to reduce its national focus on understanding
the causative factors that affect water quality.
11). Question: Why is a funding reduction being proposed for this
important program?
Answer: USGS conducts many scientific investigations that primarily
benefit other Federal agencies, States, and local governments. These
entities rely on USGS to provide information to help them fulfill their
own mission-critical responsibilities. This is particularly the case
with the NAWQA Program, which provides extensive data and information
to State and Federal regulatory agencies such as the Environmental
Protection Agency. The 2003 budget presents an opportunity for these
environmental agencies to increase their partnership with USGS on this
program. The Department and USGS will consult with the program's
stakeholders in 2002 to develop increased reimbursable funding, so that
most NAWQA activities can continue in fiscal year 2003.
12.) Question: What will be the consequences of eliminating 6 water
quality assessment study units from the program?
Answer: In developing the NAWQA Program, USGS identified 59 study
units to address the most important areas of the Nation's surface water
and ground water resources. In aggregate, the 59 areas account for
about 65 percent of the Nation's water use for municipal supply and
irrigated agriculture. Further, NAWQA was designed to provide broad
geographic coverage, with each State having a portion of a study unit
within its boundary. In recent years, program funding has remained
relatively flat; thus, to keep the level of scientific investigation
high within the remaining study areas during its second decade of
operation (Cycle II), USGS recently undertook a geographic redesign of
NAWQA from 59 to 42 study areas. The approach to redesign was complex
and resulted in a collection of study areas that still represent more
than half the population served by municipal supply and irrigated
agriculture.
Reducing the program from 42 to 36 study units would require
changes in planned activity unless cost sharing on the part of the
beneficiaries becomes available.
13.) Question: Does the Administration not support funding the
NAWQA at a level adequate to support microbial sampling to identify
bacteria and viruses in surface and ground water?
Answer: The testing for bacterial and viral contamination carried
out by the NAWQA program is one of a very few nationwide monitoring
programs for microbial contamination conducted by a single agency using
nationally consistent techniques.
However, even the current level of this type of sampling is not
adequate for complete coverage of public drinking water supplies across
the Nation. Such national coverage would require significantly more
resources than the Department of the Interior has available. USGS can
provide limited assistance to States, localities, and public drinking
water utilities for developing standard data collection and laboratory
analysis techniques.
14.) Question: If surface and ground water cannot be adequately
tested for bacterial and virus contamination, what will be the impact
to homeland security?
Answer: Testing for public drinking water supplies is a
responsibility of State and local governments and the public utilities
who provide these drinking water supplies to the public. The USGS is
not in a position to discuss the impact to homeland security.
15.) Question: Is Homeland Security Director Tom Ridge aware of
these proposed funding reductions? If not, are there plans to brief him
on these reductions and possible impacts to homeland security?
Answer: The Office of the Secretary has discussed the Department's
role in homeland security with the Office of Homeland Security;
however, the specifics of the funding reductions proposed for USGS were
not addressed during this discussion.
16.) Question: The State Water Resources Research Institutes
Program was authorized in the Water Resources Research Act of 1984 to
promote State, regional, and national coordination of water resources
research and training through a network of Institutes at the nation's
land grant universities. There are 54 Water Resources Research
Institutes, one in each State, the District of Columbia, Puerto Rico,
the U.S. Virgin Islands, and Guam. The President's budget proposes to
eliminate $6 million in USGS grant funding. Under this proposal, all 54
State Water Resources Research Institutes would lose their base Federal
grants. Why is a funding reduction being proposed to this important
cooperative program?
Answer: Due to the constraints of funding limitations and high
priority objectives, the Administration had to choose among many
excellent and beneficial programs to fund the objectives that are the
most important. In the case of the USGS, the 2003 budget maintains
funding for the highest priority programs through a strategy that
included reductions for certain one-time increases and lower priority
programs, and scaling back some 2002 increases not requested by the
Administration, and an increased reliance on cost-sharing by partners
and beneficiaries of the USGS programs. Because the State Water
Research Institutes who receive grant funds through this program have
been highly successful in leveraging their Federal grants with non-
Federal funding, it is anticipated that most of the 54 Institutes will
be able to continue their work, using other funding sources.
17.) Question: Does the Administration not think it is important to
continue the federal commitment to this program?
Answer: The 2003 President's Budget proposes to discontinue USGS
funding support for the Water Resources Research Institutes Program,
not all Federal funding.
In the Past, the Institutes have been very successful in leveraging
their Federal grant shares with non-Federal funds; according to a 2001
report of the National Institutes for Water Resources, in fiscal year
2000, the Institutes collectively generated over $14 in support for
each dollar they received through the USGS grant program, with $5
coming from other Federal funds and $9 from non-Federal sources. The
Department believes that this is an indication that most of the
Institutes will continue to be able to attract funding for their
research, even without the grant monies they receive from the USGS
under the Water Resources Research Act.
18.) Question: What will be the impact to the 54 State Water
Resources Research Institutes if they lose their federal funding?
Answer: Elimination of all Federal support for the State Water
Resources Research Institutes is not proposed in the President's 2003
budget request.
According to a survey conducted by the National Institutes for
Water Resources, whose members consist of the 54 Institutes receiving
support under the Water Resources Research Act, 20 of the 54 institutes
expect to be either closed or folded into another institute or
department if they lose funding from the USGS program.
19) Question: The President's budget proposes to eliminate funding
in the amount of $13.9 million for the Toxic Substances Hydrology
Program and to transfer the program's mission responsibilities to the
National Science Foundation (NSF). What is the rationale for
transferring this program's responsibilities to the NSF?
Answer: The transfer of the Toxic Substances Hydrology Program to
the National Science Foundation reflects the Administration's goal of
aligning the Federal government's investment in research and
development to give greater support and emphasis to competitive, peer-
reviewed research.
20.) Question: Have there been problems with how the program has
been administered by the USGS?
Answer: USGS administration of the program has resulted in no
problems.
21.) Question: Is it realistic to assume that the academic research
community to which most NSF grants are given will attend adequately to
the applied research questions that the Toxics program currently
addresses?
Answer: The scientific and educational community funded by the
proposed new water quality competitive grant program at NSF would be
expected to work in close collaboration with numerous State and local
governments, and non-governmental entities. Scientists and educators
with a broad range of expertise in hydrology, ecology, geology,
geochemistry, biology, and information technology would participate in
these activities.
22.) Question: If the program is transferred to the NSF how will
the past databases and institutional memory of the program be
maintained?
Answer: Information from the Toxics Program that is currently
available in the form of paper publications will continue to be
available in this form until the supply of those publications has been
exhausted. Otherwise, some publications will be available on our
website. The USGS will work with NSF to determine maintenance of
databases.
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