June 3, 1975 veto justification breifing
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Legislative History June 3, 1975 veto justification breifing |
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TUESDAY, JUNE 3, 1975
1 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEES ON ENERGY AND THE
ENVIRONMENT AND ON MINES AND MINING OF THE COMMITTEE ON INTERIOR
AND INSULAR AFFAIRS, Washington, D.C.
1 The subcommittees met, pursuant to notice, at 9:45 a.m., in the caucus room, 345 Cannon
House Office Building, jointly chaired by Hon. Morris K. Udall and Hon. Patsy Mink presiding.
1 Mr. UDALL. This is a joint hearing of the House Interior Committee Subcommittees on
Energy and Environment, which I have the honor to Chair; and Mines and Mining, which is
chaired by the distinguished gentlewoman from Hawaii, Mrs. Patsy T. Mink.
1 At the time we scheduled these hearings, we also invited some members of the Senate
Interior Committee who had worked on this legislation. We are delighted to have with us this
morning Chairman Metcalf of the Subcommittee on Minerals, Materials, and Fuels, who is Floor
manager of this legislation on the other side, and the distinguished Senator from Arkansas, Mr.
Bumpers. We are happy to have both of you here with us this morning.
1 Mrs. Mink and I called these hearings about 2 weeks ago in an attempt to enlighten the
country and Members of the Congress on the basis for the Presidential veto on the surface mining
legislation.
1 We have with us here this morning the distinguished Secretary of Commerce, Rogers
Morton. We have Mr. Zarb, the Administrator of the Federal Energy Administration. Mr. Zarb,
if you will identify your backup experts with you so we will have a cast of characters before we
begin.
STATEMENTS OF FRANK G. ZARB, ADMINISTRATOR, FEDERAL ENERGY
ADMINISTRATION; JOHN HILL, DEPUTY ADMINISTRATOR, FEDERAL ENERGY
ADMINISTRATION; ERIC ZAUSNER, ACTING DEPUTY ADMINISTRATOR, FEDERAL
ENERGY ADMINISTRATION; TOM FALKIE, DIRECTOR, BUREAU OF MINES,
DEPARTMENT OF INTERIOR; RAYMOND PECK, OFFICE OF GENERAL COUNSEL,
DEPARTMENT OF COMMERCE; AND ROGERS C. B. MORTON, SECRETARY OF
COMMERCE
1 Mr. ZARB. Mr. Chairman, on my extreme left is Eric Zausner and John Hill. To the
extreme right, Dr. Tom Falkie, Director of the Bureau of Mines. To his left, Ray Peck, who is
now General Counsel, from the Office of General Counsel, Department of Commerce.
2 Mr. UDALL. Do you have some further backup people to call on if necessary? I have a
longer list from the White House.
2 Mr. ZARB. We do, Mr. Chairman. I don't have a list here in front of me. They are seated
behind us three rows deep; Alvin Cook, Director of the Economic Analysis, FEA; Dan Jones,
Office of Coal, FEA; Jim Paone, Bureau of Mines, Department of Interior; R. A. Pense, Bureau
of Mines, Department of Interior; R. Hadley, USGS; Jack Reed, USGS; W.R. Keefer, USGS;
Dan Colby, Bureau of Mines, Department of Interior; George Miller, Bureau of Mines,
Department of Interior.
2 Mr. UDALL. Very well. I will begin with a series of questions which I hope might set the
stage for questions by the other members. Following that, I propose to yield to Senator Metcalf.
I understand, Mr. Zarb, you have a time problem this morning. We had intended to go into the
afternoon to resume at 2 o'clock in the event we do not finish this morning. From the indications
I have had from other members of the joint subcommittees, I rather suspect that we will not be
able to conclude this morning. But let us move along and see how far we can get.
2 Mr. ZARB. May I just point out, Mr. Chairman, that those that are with us, the Secretary
and I think this morning, are the senior people who put together the interagency review of the bill
and comparing the extensive branches/analysis with respect to its impact.
2 So if the Secretary and I have to leave later this morning - and we both have commitments
downtown - John Hill, who is my deputy, will have all of the backup background which I think
the committee requires.
2 Mr. UDALL. Let's see how far we can get. We will discuss that at a later point in the
morning.
2 In the veto message, the President gave us four principal reasons for disapproving H.R. 25,
and they were that up to - and I emphasize up to - 36,000 Americans were going to lose jobs; that
utility bills would be increased; that the Nation would become more dependent upon foreign oil;
and that coal production would be unnecessarily reduced at a time when we need increased
production.
2 Is this a fair summary of the four major reasons the President gave?
2 Mr. ZARB. Yes, sir, that is fair.
2 Mr. UDALL. It was your advice in part, I take it, that, if the bill were to become law, it
would cut back jobs, reduce production, make us dependent upon foreign oil, and drive up the
price of electricity. That is your position here today?
2 Mr. ZARB. Mr. Chairman, that summarizes in general terms some of my views and the
views of my agency; yes, sir.
2 Mr. UDALL. All right.
2 Then as I understand it, the administration proceeded somewhat in this fashion to reach these
conclusions. First, a number of assumptions were made about the effects of various provisions
of the bill. That is, the effect the bill would have on mining on steep slopes; the effect it would
have on mining on alluvial valley floors; the effect of the bill on small mining operations, et
cetera. Then these assumptions were used as a basis to project how much coal could not be
mined if the bill were actually passed.
2 Have I stated that correctly?
3 Mr. ZARB. Well, I think I would like to just amend that slightly before I agree to it. While
we looked at what could not be mined, we also calculated what we likely could mine during that
period of time. So total production was part of the analysis.
3 Mr. UDALL. Based on your assumptions and logic, the administration projects that if this
bill passes in the first full year of implementation of the act, that is, in 1977, the range of coal
production losses that could occur - coal that could not be mined that otherwise could be mined -
would be at least 40 million and up to 162 million tons, and the top figure is the more likely
figure. Is that correct?
3 Mr. ZARB. I think I would ask Mr. Falkie to answer that specific question, particularly with
respect to the latter part of your statement.
3 Dr. FALKIE. This, the range you cited, was correct, Mr. Chairman. However, to determine
which part of the range the production losses would be in would require much more legal
interpretation of the bill. We are holding to the statement that that is the range in which the
losses could occur.
3 Mr. UDALL. Is it not true that you emphasize the upward range, that you have been telling
the American people that the likely loss is 162 million tons?
3 Dr. FALKIE. I don't recall us ever having said that the likely loss is any particular number.
We have always emphasized the range.
3 Mr. UDALL. Is the lower range more likely than the upper range or are they equally likely?
3 Dr. FALKIE. We cannot answer that question because of the complexities and difficulties of
interpreting the various parts of the bill.
3 Mr. PECK. Mr. Chairman, if I might add, in assessing the legal consequences of not only
the bill as it was enacted, but the various versions of the bill as they came forward from the
committees, we assessed and set forth in the various memorandums to the committees what we
thought were the quantifiable losses. That is to say, those of which we were certain enough to
assign numbers. Within that range in general, the low number represents the assumption that the
most lenient interpretation will be given to any given provision of the bill and the high range the
maximum.
3 But at each stage we have emphasized that in addition to those quantified losses, there will
be additional but unquantifiable losses derived from parts of the bill for which we simply can't
have any basis now for calculating.
3 Mr. UDALL. I don't want to quibble. This is a minor point. But in the veto message the
President said actually resulting losses from H.R. 25 can run considerably higher because of
ambiguities in the bill.
3 Mr. PECK. That is correct.
3 Mr. UDALL.You first established how much coal mining production was actually going to
be lost. Then, using that as a basis, you projected and computed a loss of a number of jobs based
on that production. So the production figure came first. Based on that, your formula used the
number of miners it takes to produce a certain quantity of coal; then you projected the 36,000 job
losses. Is this correct?
3 Dr. FALKIE. That is correct.
3 Mr. UDALL. You arrived at the 36,000 upward limit of jobs that would be lost?
4 Mr. ZARB.Mr. Chairman, could I borrow just a moment? I think it is important to just
spend a few seconds in describing the context within which these questions were asked within
the administration to calculate the necessary answers. It was not done in a vacuum or with
respect to this bill alone, or with respect to coal production from strip mining alone. It was done
within the total context of what is fairly clear to be a declining condition of U.S. production of
energy and increased consumption and increased oil imports.
4 We then had to look at the impacts at all parts of the range and how they would treat our
total energy condition as a nation.
4 When you put it in that context, and even if you look at that 40 million tons of coal and make
a judgment as to how many additional barrels of oil would have to be imported, you get
something of a different flavor than when you look at the impacts of this bill alone.
4 Mr. UDALL. I am coming to that, but I am trying to get to the very basic logic. You first
figure 162 million maximum tons of lost production. Based on that, you say there will be up to
36,000 jobs lost.
4 Then the third step in the logic is that because you have loss in coal you will have to import
up to 96 percent of the energy equivalent in foreign oil and you have to pay for that. Is this
correct? That is the third step?
4 Mr. ZARB.That is correct.
4 Mr. UDALL. You put a dollar figure on that of $8 billion for imports at that range?
4 Mr. ZARB. About $7.9 billion was the high range, Mr. Chairman.
4 Mr. UDALL. So the validity of the job projections and validity of projections of imports of
foreign oil rests on the validity of the assumptions of how much coal you are not going to be able
to produce, correct?
4 Mr. ZARB. Right.
4 Mr. UDALL. If you are wrong about production, you are also wrong about jobs and also
wrong about the $7.9 billion cost to consumers, is that correct?
4 Mr. ZARB. I think it is fair to say that if we can demonstrate there will be no production
losses as a result of the implementation of this bill those other numbers would probably have to
be reevaluated.
4 Mr. UDALL. Then I am going to focus with what time I have left on production losses,
because that is the key and I appreciate your concession on that point. When you determined that
there is going to be up to 162 million tons of coal production loss, did your people actually go to
specific mines and say, "What will this bill do to you at this mine?" Or were these calculations
made here in Washington?
4 Mr. ZARB. I will ask Dr. Falkie to respond to that, Mr. Chairman.
4 Dr. FALKIE. Mr. Chairman, this calculation of production losses was based on actually I
guess several years of work on the part of the Bureau of Mines. As the Federal Energy Agency
became a reality, they participated in the production loss estimates along with several other
agencies. It is a combined technical-legal estimate of production losses based on many, many
factors.
4 When you say did we go out and look at and determine at individual mines, yes, that was
part of it. We looked at ratios. We looked at past histories of production patterns with respect -
5 Mr. UDALL. Did you go to the field in connection with advising the President on the veto
and making this projection? Did you determine that specific mines, in specific locations, in
specific States would be shut down? Did you, or did you not?
5 Dr. FALKIE. There was much field survey work done by our people.
5 Mr. UDALL. Can you give me the name and address of any mine in any State that you can
tell us will be shut down as a result of this bill?
5 Dr. FALKIE. If the maximum interpretation of the bill is in effect, in other words, if the
most stringent interpretation of certain parts of that bill is put into effect by the administrators of
the bill, or by the courts, there will be some mines that will be, in our opinion, practically shut
down.
5 Mr. UDALL. My question was: Can you give me the name and address of a single mine that
is going to be shut down because of the passage of the bill; yes or no?
5 Dr. FALKIE. Yes, we can in our opinion.
5 Mr. UDALL. Would you provide those for us today?
5 Dr. FALKIE. We will provide a list of mines that, in our opinion, would be affected by the
bill. n1
5 n1 This list was never provided the Committee even after repeated requests.
5 Mr. UDALL. In regard to a significant portion of the tonnage loss you attribute to small
mines and mines on steep slopes, as I understand it, your projection was that 20 percent of the
small mines and 20 percent of those mines on steep slopes would be totally closed down and
would be unable to produce any coal at all, and that the remainder would be severely impacted; is
that correct?
5 Mr. PECK. Sir, I believe the 20-percent figure was an estimated production loss that
included not simply mine closures, but reduced production as a result of the application of those
standards.
5 I might point out that in the calculations as is noted in Dr. Falkie's letter, there is no
duplication between the figure attributed to small mine closures and the figure attributed to the
steep slope provisions. But in terms of the total production, that 20 percent is the figure in Dr.
Falkie's letter; yes.
5 Mr. UDALL. Let me get to something more central.
5 Is it not an inherent, basic, fundamental assumption of your calculation that if a small miner
or a miner on steep slopes could not mine under this law, that in no case would that miner go to
another location where he could comply with the law and mine new, additional coal? Isn't that
an inherent fundamental assumption behind your figures?
5 Dr. FALKIE. On our maximum set of assumptions that is one of the assumptions made.
5 Mr. UDALL. What you are telling us is that in a nation where we have 137 billion tons of
strippable coal in different States that has not been touched, some 297 billion tons of coal than
can be deep mined, you say that some particular mine in some place in this country that is closed
down represents a production loss and not a ton of this coal would be regained by someone going
to a slope where he can mine?
5 Mr. STEIGER. Would the Chair yield?
5 Mr. UDALL. Not at this time.
5 Mr. STEIGER. We have a procedural problem which we can resolve, Mr. Chairman.It is
obvious we are going to be depending upon the technical people here to respond to your
questions. Mr. Zarb, and I understand Mr. Morton, have got a problem. I wonder, Mr.
Chairman, if we could permit Mr. Zarb to make an expression that will be responsive to your
letter, to your and Mrs. Mink's letter, then allow him to proceed?
6 As you know, he has a serious conflict. His statement, as I understand, is very brief.
6 Mr. UDALL. I was going to be very brief and I am nearly through. I wanted to get some
fundamental assumptions on which the calculations were made. Then I will yield to the other
members.
6 Mr. STEIGER. Mr. Chairman, I appreciate that.
6 Mr. MORTON. Maybe I can help you with the answer to your question, Mr. Chairman?
6 Mr. UDALL. Yes.
6 Mr. MORTON. Over the long pull, 5 years, 10 years down stream, the disruptions can be
overcome in what we are talking about. But in the short term, until all of the real estate
transactions are made that would permit a small miner to move from one area to another, you are
going to have this dip in production and this difficulty. It happens to come at a very critical time
as far as our overall energy situation is concerned and as far as our economy is concerned.
6 Nobody is arguing the fact that these reserves are not in the ground. Nobody is arguing the
fact that these reserves cannot in large part be mined through surface mining techniques. But
what happens if you have a hard interpretation of this bill is that you will have an interim period,
a very difficult period to quantify the 3, possibly 5 years in which you will have a dip in
production and loss of equipment.
6 Mr. UDALL. I personally would challenge that, particularly with regard to these small
mines. They open them up every week, every month. I would also call attention to the fact that
we have phasein procedures where adjustments and variances can be made while the operator is
learning to comply with the new standards. It is completely unacceptable to me to suggest to all
of these 1,500 miners that they are not going to be able to find new sources of coal. All of them
have projections ahead where they are getting ready for a new minesite when they finish up an
old one.
6 Mr. MORTON.If you talk to the fellows that run the property you will find they don't have,
in many cases, these additional properties under lease or ownership. It will be a difficult
transition.
6 I think that is what the real difficulty is in this. Everybody wants a good reclamation bill. It
is a question of getting from here to there without having a really severe blow against the
economy and against our energy production; also, against the possibility or probability of a very
sharp increase in the price of coal during the period that we are trying to convert from oil to coal.
6 Mr. PECK. Mr. Chairman, a major problem we have had with this particular question and
this particular issue has also been the extremely complicated permit application procedures and
the difficulty in interpreting the provisions of this act, insofar as they apply to an existing as
opposed to a new mine.
6 The fact is that rapid opening and closure of mines will be prevented in our judgment by a
hard application of the provisions of this bill.
7 Mr. UDALL. Let me go to that, because this is central.
7 Throughout the veto message and throughout what has been said here already this morning
are some assumptions that I challenge. Let me give them to you because I think you will have to
agree that you have made these assumptions, and the President made them in the veto message
that was written for him.
7 Do you not assume that reaching this figure of 162 million tons of production loss, that
inspectors in the field are going to be arbitrary and capricious, have you not assumed that?
7 Mr. PECK. No, sir. As a matter of fact, at least some of the changes made during the course
of the progress of this legislation have been directed toward the authority of the inspector to issue
a cease and desist order and the authority of the inspector to be overruled in the short term.
7 Our concern is not so much that, as it is with the fact that under this bill, enforcement actions
will not be determinable with finality by either State or Federal regulatory agencies but rather by
the courts.
7 Mr. UDALL. Do you not assume in that connection that every time you open a new mine
there is going to be a lawsuit? To get the 162 million, don't you have to assume that every time a
new mine is opened there will be a new lawsuit?
7 Mr. PECK. No, sir.
7 Mr. UDALL. That every time the judge will misapply the law and every time the
Government will lose - isn't that inherent?
7 Mr. PECK. The first and third of those questions are probably answered "yes." We do
assume with respect to lawsuits only that this is a particularly sensitive area that will trigger more
lawsuits than one might expect under other environmental legislation, under other similar citizen
suit provisions.
7 With respect to the Government losing the lawsuits, that is a prospect that depends upon the
merits of the individual case. But with respect to the court's misapplying the law, we are not in a
position at this point to be able to say what the law is. So we have to assume that a court could
go either way.
7 Mr. UDALL. Secretary Morton touched on this a moment ago. Throughout the veto
message and in your appearance so far this morning, you are talking about the regulatory
authority making erroneous interpretations of the act, taking harsh views of the act? Who is
going to administer this, Stanley Hathaway or the Sierra Club? Isn't it going to be administered
by the Interior Department?
7 Mr. MORTON. And the courts.
7 Mr. UDALL. And you assume the courts will always go wrong?
7 Mr. MORTON. No. As you know, Mr. Chairman, we have been through this together for a
long time. It is a question of time, and production is a product of time and delays. Take the
pipeline, for example; a long delay.
7 Mr. UDALL. Didn't the courts make the right decision in the pipeline finally?
7 Mr. MORTON. Yes. It was not a question of the decision being right or wrong. It was the
time it took to make it. We have many sitings, sitings of other than mines, that you are familiar
with, that are taking a long time because they are in the courts. We would assume there would be
a certain number of lawsuits. I think that assumption is pretty well founded. I was a defendant in
over 5,000 lawsuits.
8 Mr. UDALL.You do not get the 162 million ton loss unless there is a lawsuit every time
you open a mine and unless the Government loses every case.
8 Mr. MORTON. We are talking about a range, and somewhere in that range is the most
likely figure for the loss.
8 Mr. UDALL. Let me pursue this citizen suit business more, Mr. Zarb, if I may.
8 On January 16, there was a letter sent to the President signed by Mr. Zarb. Russell Train,
Administrator of EPA, and by Rogers C. B. Morton, who was then Secretary of Interior.
8 In that letter three officials told the President that while the bill approved by the last
Congress contained a number of deficiencies, most of these were of secondary importance.
8 Your veto - that is the December veto - was addressed principally to adverse coal production
impacts, inflationary impacts, and administrative uncertainty. We believe that five amendments,
if adopted, will result in acceptable surface mining legislation in terms of impact on energy
supply and the environment.
8 Let me go to the end of the letter. At the end of the letter you suggested to the President that
if you could get adjustment made on these five points, the bill would be satisfactory and could be
signed.
8 The first one of those was modification of the prohibition against stream siltation. I put it to
you that in the conference report in section 515(b), the language on point No. 1 was clarified so
as to avoid the interpretation feared by the administration. Is that not a fact?
8 Mr. PECK. No, sir; it is not.
8 Mr. UDALL. Why not? We did not change the siltation requirement?
8 Mr. PECK. Yes, sir; you did. But you did not change it enough, and you changed it in a
way that, read in conjunction with the legislative history and interpretations of the Federal Water
Pollution Control Act amendments, could have well produced the same result that we had
anticipated in advance in making that objection to the original language.
8 If you would care to discuss the specifics -
8 Mr. UDALL. I thought we gave you 95 percent of what you asked for. If we didn't then we
have a difference of interpretation.
8 Mr. PECK. I suppose we would take 95 percent of the $1 60 million loss.
8 Mr. UDALL. Item two, modification of the surface, of the prohibition against hydrological
disturbances. I would ask you did we not in the conference report, section 515(b), modify what
you referred to as the absolute requirements objected to by the administration?
8 Mr. PECK. No, sir; you did not. Our concern with that problem as it has been expressed
several times in conferences with the committee is this: As the bill is now drafted, there is an
absolute requirement upon a permit applicant to affirmatively demonstrate that there will be no
adverse hydrological effects.
8 In addition, if there is a challenge to the permit application, the bill expressly places the
burden of proof in that challenge upon the applicant.
9 So the question is not so much what is the adverse hydrologic effect against which we are
all interested in protecting.
9 Mr. UDALL. But your objection went to what you called an absolute requirement, and we
modified it.
9 Mr. PECK. No, sir; I am afraid it is our judgment that it is still virtually absolute. Certainly
insofar as the question of the overall impact on the bill is concerned, it is as near absolute as the
original language.
9 Mr. UDALL. Your third objection was clarification and limitation of the scope of citizen
suits. I put it to you that we limited the scope of the citizen suits so that you had to have a valid
legal interest and some little old lady in Toledo with a typewriter couldn't hold up the opening of
a coal mine.
9 Mr. PECK. That depends upon what a valid legal interest is. A valid legal interest is
anybody using the resources. If that was the intent of the committee, then it could have been put
into the statute or conference report -
9 Mr. UDALL. We finally adopted the language suggested by the administration in that regard
and you are not satisfied yet?
9 Mr. PECK. No, sir; there were two points made by the administration with respect to the
citizen suits. The first question was whether an action would lie directly against the operator as
opposed to against the regulatory authority where an operator is proceeding in full compliance
with the terms and conditions of his permit. That was, in fact, adopted.
9 The second objection, however, and it forms the basis for our assumptions that lead to the
high range, is that a citizen suit will still lie to compel determination by the courts and not the
regulatory authorities of how the bill will be interpreted.That objection remains valid and that
objection is the basis for our high assumption.
9 Mr. UDALL. You are going to get some argument on that from my friends here at the table.
It simply isn't true.
9 The fourth item was -
9 Mr. MORTON. Maybe -
9 Mr. UDALL. The fourth item was a provision for executive authority. You wanted the
executive authority, the Interior Department to have the unlimited authority to define ambiguous
terms. Any time the Secretary of the Interior thought a provision or act of Congress was
ambiguous you could redefine it. We did not give you that one; right?
9 Mr. PECK. That is correct, sir, but our suggestion and the force behind our recommendation
on that amendment went beyond the characterization you just expressed.
9 Mr. UDALL. You did not have a single vote in the committee, on either side, either party,
House or Senate to give the administration the power to reinterpret acts of Congress.
9 Mr. STEIGER. I will remind the chairman -
9 Mr. UDALL. I will retract that statement.
9 Your fifth suggestion against an acceptable strip mining bill was that a substantial reduction
of the mined land reclamation fee from 25 cents and 35 cents a ton, did we not in conference
reduce the fee on underground production 15 cents a ton from 25?
9 Mr. PECK. Yes, sir. But you raised the other surface mine fee from 25 to 35 cents.
10 Mr. UDALL. No, it was 35 cents last year. It was 35 cents in the House this year and in
the Senate this year.
10 Mr. PECK.It depends on how the various -
10 Mr. UDALL. Did we not adjust that?
10 Mr. PECK. There was some adjustment; yes, sir.
10 Mr. UDALL. Let me ask you one other question, then I will turn to Senator Metcalf.
10 Wouldn't it be nice, you see these are just projections, you are guessing we are going to lose
all this coal and I am guessing we are not going to lose any at all and you are probably going to
gain production. Wouldn't it be nice if we could have an experiment somewhere, take a State
somewhere and pass a tough law like this and have 2 or 3 years of experience under that law and
see how it comes out? Would that not settle it?
10 Mr. PECK. It would depend upon how tough the law is, sir. There are a number of States
which have over the last year or year and a half enacted legislation which, in part, duplicate the
reclamation and performance standard requirements of this legislation. None, however, approach
the application and permit granting requirements and procedural mechanisms involved in this
legislation. But yes, it would be good.
10 Mr. UDALL. Let me tell you flatly that Pennsylvania has a tougher law than this one.
They have had it in effect for many years and tell us how much production losses you have had in
the State of Pennsylvania and how in heaven's name do you reconcile that experience up there?
10 Dr. FALKIE. Mr. Chairman, first of all I would, from a technical standpoint, have to
suggest that I might disagree with you that Pennsylvania's law is as tough as this one.
10 First of all, there is no question that Pennsylvania has a good law. They have done a good
job of enforcing it. They have done a good job of reclaiming. But there are some major
differences between the Pennsylvania law and the law, or act, we are working on here today.
One of them being this whole area of permit application and procedures connected with the act.
10 The second one, and probably more important, would be the business of being able to grant
variances which this act apparently does not do. We have some charts that I would like to show
you, some production trends, both in Pennsylvania and some other States that have laws that tend
to approach the general direction of this one.
10 Mr. UDALL.We are going to have to have a disagreement here.You think the Pennsylvania
law is not as tough as this law and I think it is tougher. I guess we are going to have to have a
disagreement.
10 Mr. HILL. I think that is a key point though that should not be overlooked, Mr. Chairman.
That the Pennsylvania law has a number of key provisions which allow the State regulatory
authority to grant variances, or exemptions, or requirements of the act, particularly to small
miners.
10 Mr. UDALL. We don't have variance language in this bill.
10 Mr. HILL. As we read the act these are set Federal standards, if you meet them, you mine,
if you don't meet them, you don't mine.
10 Mr. UDALL. You are telling us we have no variance provision in this bill?
11 Mr. PECK. No, sir; there is one variance, there are two actually. It deals with mountain
top mining and head of the hollow fill.
11 In terms of the problems faced by the small miners, it is our estimate that the impact and
utility of such a variance will be extremely limited. I might add that the administration's request
for variances were made under very stringent environmental conditions and were variances from
only a limited number of the set requirements of the act. There was no intent either on the part of
the administration, or of draftsmen of the administration legislation, to create wholesale
variances. But the essential question is whether the State regulatory authority has the power to
grant such a variance, because if the State authority does not have it, then the courts cannot create
it. It is our problem that, faced with the complete absence of a variance, for instance, from the
down slope spoil placement requirement, even the courts can't help out.
11 Mr. UDALL. I was curious how you were going to get around this Pennsylvania
experience.
11 Let me throw back at you this one point then I will quit.
11 In the letter that Mr. Zarb, and Russell Train, and Secretary Morton sent to the President on
January 16, you listed five changes that needed to be made in order to have an acceptable bill.
You did not have a variance provision in there at all on January 16, did you? That was not one of
the key important defects of the bill.
11 Mr. PECK. No, sir; but it was one of the items identified by the President in the transmittal
of this legislation on February 6.
11 I remind the chairman that the letter of January 16 was not from the President, it was to the
President.
11 Mr. UDALL. He had the same advisors that he had when he vetoed this bill in May.
11 Mr. HILL. When he sent forward his new bill, Mr. Chairman, it had been considerably
expanded as to the number of changes that would be necessary to make this an acceptable bill.
11 Mr. UDALL. I yield.
11 Mr. MORTON. I just want to make sure the record is clear on one thing. Even with the
five changes, if the five changes had taken place completely, we do not feel that they did, maybe
this is the area of disagreement in points of view.Still, there were a lot of features about the bill
that certainly worried us over in Interior from an administrative point of view. I never thought
we would get a perfect bill, a simple reclamation bill.
11 I understood all of the interests that would prevent that, but I certainly was willing to
swallow some of the difficulties with the administration if we could have had a bill with those
five changes completely incorporated into the bill. Then we would have had, it would be a tough
one to administer, it will be a tough one for the Director of the Bureau. I think it will be a tough
one for our legal department as well as the Department of the interior, the Secretary as a whole.
11 Mr. UDALL. The gentlewoman from Hawaii.
11 Mr. STEIGER. Would the gentlewoman from Hawaii yield?
11 Mr. Chairman, I would like to renew my request once more. As the Chair recalls, Mr.
Zarb's and the President's Chairman of the President's Council on Energy, Mr. Morton, they are
here at the Chair's request. I have no problem with what the Chair is trying to do and I think it is
probably proper. But I do think we are entitled to hear from Mr. Zarb who, with the chairman's
assistance is here. He has prepared a position which the Chair, I think, ought to hear and he does
have a problem which the Chair is aware of.
12 I think, if nothing else, simple courtesy would dictate that we inject a little reason and
logic into this at this point.
12 Mr. UDALL. I would be happy to look at Mr. Zarb's statement, but this whole hearing was
set up to attempt to analyze the veto message, the reasons behind it, get the calculations and
assumptions that were made and not to take the time of the joint subcommittees for the reading
of statements.
12 Mr. STEIGER. Then, Mr. Chairman, I suggest then that Mr. Morton and Mr. Zarb be
excused, if you are going to be directing your technical questions. What you are after is the basis
of the way these decisions were arrived at.
12 Mr. MELCHER. Mr. Chairman, I would have to object to that. The President has been
advised -
12 Mr. STEIGER. I do not yield either. I do not address my request to the gentleman from
Montana. I address it to the Chair. It is a fairly simple request, Mr. Chairman. I will say it
again.
12 Mr. UDALL. Mr. Zarb?
12 Mr. ZARB. I appreciate your courtesy, Mr. Steiger. We certainly would forego the
statement, if you would hopefully accept it for the record and get to the questions that the
committee members would like to address to Secretary Morton and I before we have to leave.
That would certainly be all right with us.
12 Mr. UDALL. Without objection, the full statement will be printed in our record. I
personally would be happy to look at it.
12 [The prepared statement is as follows:]
12 PREPARED STATEMENT OF FRANK G. ZARB, ADMINISTRATOR, FEDERAL
ENERGY ADMINISTRATION
12 Mr. Chairman, it is a privilege to be with you today to discuss the reasons why the
President believes that enactment of H.R. 25 would be contrary to the National Interest.
12 I especially welcome the opportunity because I fully support the objective that you,
Congresswoman Mink and others have of setting the record straight on the impact that H.R. 25
could have on this Nation's economy and overall energy situation. Quoting from your May 23
letter to your colleagues in the House:
12 "A number of Members who had formerly supported the bill were concerned with the
assertions that enactment of the legislation would result in the loss of thousands of jobs, drive up
electric utility bills, and preclude the production of millions of tons of coal."
12 "Those of us who are close to the development of this legislation are certain that these
charges cannot be substantiated - our support would be irresponsible if they could be - and during
the next two weeks we will be attempting to set the record straight."
12 I believe that these hearings will set the record straight. The facts and figures that will be
presented during these hearings will demonstrate that the responsible, if perhaps not the
politically popular, course has been taken.
12 I would stress, at this point, our willingness to evaluate and discuss with you any estimates
of adverse effects that the Committee or its staff may have developed which are different from
ours. The experts that I have here with me today are those responsible for developing the
Administration's estimates, and they are available not only to answer questions regarding our
estimates, but also to examine any estimates you may have.
13 John A. Hill, Deputy Administrator of the Federal Energy Administration, did his work
for his BA degree and his Ph. D. studies at Southern Methodist University. He has worked on
energy and environmental matters in the Environmental Protection Agency and the Office of
Management and Budget before taking his present post. As Associate Director at OMB, he was
responsible for interagency coordination, budgeting and overall management of all Federal
programs in Natural Resources, Energy and Science. He has continued his leadership of the
interagency group working on strip mining and related programs since coming to FEA.
13 Eric R. Zausner, Deputy Administrator-designate of the Federal Energy Administration,
has a BS in electrical engineering from Lehigh, and an MBA from the Wharton School of the
University of Pennsylvania. He has worked on energy and environmental matters in the Council
on Environmental Quality, the Department of the Interior before coming to the Federal Energy
Administration. Prior to his nomination as Deputy Administrator, he served as Assistant FEA
Administrator for Policy and Analysis, and led the Executive Branch efforts that culminated in
the Project Independence Report and in subsequent national energy policy analyses.
13 Thomas V. Falkie has served as Director of the U.S. Bureau of Mines since 1974. He
received extensive training in engineering, having received a B.S., an M.S., and a Ph. D. in
mining engineering from Pennsylvania State University. Prior to joining the Government as
Director of the Bureau of Mines, he served for five years as Head of the Department of Mineral
Engineering at Penn State. In addition, Dr. Falkie has served as arbitrator of the Joint Industry
Health and Safety Committee of the Bitumunous Coal Operations Association and the United
Mine Workers of America and as a consultant to the United Nations on Mining Economics and
Mine Management.
13 Raymond A. Peck, Jr., is a lawyer with LL.B. and LL.M. degrees from New York
University, where he was a Root-Tilden Scholar. After five years of private practice in New
York City, he joined the Government in 1971 as an attorneyadvisor in the Department of
Commerce. Since that time he has worked exclusively on environmental and energy matters for
the Departments of Commerce and Treasury, and specifically on surface mining legislation.
13 I have every confidence that we can explain the adverse effects of the bill so that you and
your colleagues will have a firm basis for casting your vote on June 10 to sustain the President's
veto.
13 I would like to make several preliminary points before turning to a detailed review of the
Administration's impact estimates and the methodologies used in determining those estimates.
Of primary importance is the fact that our loss estimates only relate to impacts on small mines
and expected impact of restrictions relating to steep slopes, aquifers, siltation and alluvial valley
floors.
13 Our estimates do not cover:
13 First, losses that could result from provisions of the bill that simply cannot be quantified
because no one can predict how they might be implemented or enforced. Provisions in this
category include the authority to designate areas unsuitable for mining, surface owner consent,
and State control over Federally-owned coal.
13 Second, losses that would result from litigation that could be necessary to resolve
ambiguous features of the bill and its legislative history. Ambiguous language breeds litigation,
and forces the courts to legislate. With different opinions from different district courts, subject to
review by 11 different circuit courts of appeal, and ultimately the Supreme Court, definitive
resolution of uncertainties can take years.
13 Past history - the case of the Trans-Alaska Pipeline, for example - demonstrates how long
these periods of confusion can last.
13 More recent history - the case of the "non-significant deterioration" language of the Clean
Air Act, for example - demonstrates what can happen when a court feels compelled to apply the
more rigid possible interpretations of ambiguous language - interpretations that may be far more
inflexible than the Congress would have intended if the particular circumstances before the
courts had been presented to the legislative draftsman.We cannot afford to rely on the courts to
thrash out these problems which should, in the first place, be resolved at the legislative, not the
judicial, stage.
13 Thus, it is important to recognize that our estimates of losses of 40 to 162 million tons of
coal attributable to H.R. 25 are not all-inclusive. It is clearly impossible for the Administration -
or anyone else - to provide numbers to go with many such features of the bill. But we can state
categorically that they can only increase these losses and their corresponding impacts on jobs,
consumer costs, and vulnerability, not decrease them.
14 We also have not attempted to quantify adverse impacts of the bill, such as the impact on
coal miners' health and safety - human considerations that cannot be equated to barrels of oil or
tons of coal. No one gets black-lung in a strip mine, and the injury rate in strip mines is less than
half what it is underground.
14 A final preliminary point that I must make this morning relates to the charge that the
Administration is willing to tolerate continuation of the environmental abuses that have
accompanied surface mining activities in the past. That, simply, is not the case.
14 The previous Administration first submitted legislation to impose minimum Federal
standards on surface mining in 1971. Since then, on countless occasions, in testimony, in
correspondence and in conferences with members and staff of this and other Committees and
Subcommittees, we have stressed our commitment to a balanced view of the compelling
environmental and energy considerations involved in the surface mining of coal.
14 As recently as February 6, 1975, the President transmitted to Congress proposed surface
mining legislation. In submitting that legislation, he specifically identified the areas of difference
between the previously vetoed bill, S. 425, and our proposal. He stressed the overwhelming
importance of these differences in terms of lost coal production, unemployment and other
adverse economic impacts.
14 Because of the gravity of our energy situation, and its implications for the future of all
Americans, these differences must be resolved as soon as possible - and resolved on a basis of
knowledge, not emotion, a basis of responsibility and cooperation not partisanship and politics.
14 We have worked long and hard to come up with an accurate analysis of H.R. 25 and a fair
assessment of its potential impact. But we recognize - as we hope each of you does - that there
are legitimate areas of disagreement among responsible individuals - both within the
Administration and within the Congress. I would say once again that the Administration stands
ready to work with Congress to resolve these differences. But we must avoid coming together in
an arena of confrontation. We must meet on the higher ground of cooperation and conciliation.
14 IMPORTS, VULNERABILITY AND H.R. 25
14 You all know the magnitude and scope of this Nation's energy problem. Even under the
most optimistic circumstances - assuming Congressional enactment of the President's entire
legislative program and crude oil price decontrol - we will still be importing about five million
barrels of oil per day in 1985. With no action on our energy program, we will be importing more
than half the oil we consume, or more than 12 million barrels per day.
14 No matter what projections are used, one thing is clear: we will have to greatly expand coal
production in the next ten years. This expansion must occur steadily during this period if our
1985 goals are to be reached. Coal will be needed in new and existing powerplants, for direct
burning in some areas, and in a growing synthetic fuel industry.In the long-run, coal will be one
of the most essential elements for conversion to liquids and gases for industrial and utility use.
14 If the strong national energy program proposed by the President were enacted by the
Congress, we might be able to accept the losses of coal production that would result from this
bill. Without such an energy program we cannot.
14 The President's conservation and domestic supply actions would substantially reduce our
need for imported oil, whereas H.R. 25 would increase it. The loss of even 40 million tons of
coal per year - the low end of our estimate spectrum - could increase imports by more than
450,000 barrels per day. And, at the high end, lost production could mean more than 1.8 million
barrels a day in increased oil imports because of H.R. 25 alone.
14 An increase of imports of this magnitude would have to come from insecure foreign
sources - where still higher prices are already being discussed and where the danger of an
embargo remains very real. Even at current prices, such an increase in oil imports to make up for
the lost coal would require consumers to export an additional $1.9 to $7 .8 billion a year for their
energy.These extra costs would do nothing to reduce the Nation's vulnerability; they would be
incurred, in fact, as a result of actions that would actually increase our vulnerability.
15 Viewed in this context, the Administration believes that this bill would preclude the
possibility of achieving true balance among important national objectives for energy, our
economy, our environment and our national security. It has been called an "anti-energy" bill, but
its negative impact is much broader than that.
15 I would now like to address some of the specific provisions of H.R. 25 and our assessment
of its impact.
15 H.R. 25 AND PRODUCTION LOSSES
15 On May 23, 1975, Dr. Thomas Falkie, Director of the Bureau of Mines, submitted to
Chairman Metcalf of the Senate Subcommittee on Minerals, Materials and Fuels an analysis of
the adverse impact that we predict would result if H.R. 25 were to become law. I understand that
copies of this material have been distributed to members of the Subcommittee, but I would like
to submit it at this time for the record.
15 In general, the low range of our estimates represents the adverse impact we expect if the bill
were interpreted loosely, that is, if its provisions were interpreted in ways that would minimize
production losse, economic costs and mine closures. The high range of estimates represents
those losses that we would expect if a strict, literal interpretation and vigorous implementation
were given to each provision.
15 In brief, we have estimated that from 40 to 162 million tons of annual coal production
would be lost during the first full year of implementation.Losses would occur in three general
categories:
15 Reduced production or closures of small mines;
15 Delays or prohibitions arising from the steep slope siltation and aquifer protection
provisions; and, most important perhaps,
15 Bans on mining operations which would affect alluvial valley floors.
15 Each of these areas is identified in Dr. Falkie's submission to Senator Metcalf, and he is
here today prepared to discuss them in more detail. I will now touch briefly on each of the three
categories in which losses would result.
15 Small mines
15 In preparing our estimates for small mines, we have classified as "small" those mines with
annual production of 50,000 tons or less.As noted by the Council on Environmental Quality in its
report to Congress in 1973, at that level of production, a mine's capital availability, cash flow and
technical resources are limited. As a result, operators of this size would simply not be able to
bear the front-end costs of applying for and obtaining permits to mine, and would have great
difficulty meeting the increased reporting requirements under H.R. 25.
15 Faced with this inability to obtain a permit and the difficulty of meeting those requirements,
many such mines would be required to close. Our estimate is that at least 40%, and possibly all
of projected production from small mines would be precluded under H.R. 25, with principal
impact in the East. As the Council on Environmental Quality pointed out, such mines account for
as much as 56% of production in the Appalachian states. I might also note here that these losses
attributed to small mines, which I have just mentioned, are not included in the loss estimates that
I will be discussing during the remainder of my testimony.
15 Steep slopes, siltation and aquifer protection
15 With respect to provisions concerning steep slope, siltation and aquifer protection, we have
estimated losses ranging from seven to 44 million tons in the first full year of implementation.
Strict interpretation and application of H.R. 25's steep slope provisions alone would result in loss
of production from virtually every mine operations on slopes in excess of 20 degrees - loss
totalling from seven to 25 million tons.
15 Much of this loss is, in our view, unnecessary. With appropriate environmental restrictions,
authority to grant some variances from the absolute requirements of H.R. 25 could be allowed,
greatly reducing production losses without danger to the environment.
15 The aquifer protection provided by H.R. 25 is also set forth in near-absolute and ambiguous
terms. Consequently, a literal interpretation of these provisions could result in termination of all
production near aquifer-fed water sources. We estimate that nine million tons of actual and
projected production is subject to such an interpretation. Allowing individual operations to
accommodate individual circumstances at individual mine sites could greatly reduce the losses
that these provisions might entail, without serious negative enivronmental effects.
16 Earlier versions of this legislation prohibited absolutely any increase in normal siltation
levels during or after mining operations. Congress recognized the impossibility of achieving this
result and modified the siltation provisions of H.R. 25 accordingly.
16 However, a serious problem still remains. As now drafted, the bill would require operators
to use any technology that exists and that could prevent siltation. Such a requirement is
unrealistic. It could require operators to apply technology that, although theoretically available,
would be prohibitively expensive, to prevent even relatively insignificant siltation. Here again,
the bill's lack of flexibility could result in mine closures where environmental concerns could, in
fact, be accommodated with continued producation of the Nation's coal resources.
16 Alluvial valley floors
16 Finally, we estimate that the various provisions of H.R. 25 related to alluvial valley floors
would cost us from 11 to 66 million tons of coal production during its first full year of
implementation.
16 It should be noted that what we are dealing with here is a possible ban on the mining of
coal in certain areas. We are not dealing only with reduced production levels, or closures of
mines which might afterwards be reopened. We are talking about locking away billions of tons
of coal - placing it permanently off-limits for any and all surface mining. And our experts tell us
that in virtually all of the geological areas involved, surface mining is the only feasible method of
extraction. Thus, the effect of these provisions will be permanent losses, both of production and
of reserves.
16 As I suggested earlier, the fairly wide range of these estimates derives from the fact that our
lawyers are unable to predict how regulatory authorities or courts would interpret H.R. 25 and its
legislative history.
16 We cannot say, for example, whether a court would conclude that an area such as the
Powder River Basin is "undeveloped range land," and thus not subject to the bill's prohibitions,
or whether it would consider such an area to be "potential" framing or ranching land and thus
off-limits for surface mining.Under the first interpretation, a great proportion of the Powder
River Basin would be covered by the exclusion and open for mining. Under the latter
interpretation, our experts tell us that a virtual ban on the mining of great Western coal deposits
could result.
16 This question, although critically important, cannot be answered on the face of the bill. Nor
does its legislative history solve the problem.
16 But this is only one difficulty of many in interpreting the language of H.R. 25. In addition,
it would prohibit mining that would have an adverse effect on some actual or potential farming or
ranching operations that are themselves located on such floors. The impact of this language is
even more difficult to assess. Proper interpretation would depend upon the individual geologic
and hydrologic conditions of a given proposed operation. H.R. 25 places the burden of proving
the absence of any such adverse impact upon the applicant for a permit. Proving a negative is
always difficult, and, under H.R. 25, the negatives which must be proved could present
insurmountable hurdles for an applicant.
16 Based upon all of these considerations, we estimate a production loss attributable to alluvial
valley floor provisions ranging from 11 to 66 million tons and a reserve loss at least 1000 times
greater - that is, a loss of from 17 to 66 billion tons of coal, permanently locked into the ground.
16 Our experts have reviewed these figures in detail.They have made on-site inspections and
have analyzed closely the provisions of the bill. We consider these loss estimates, in fact, to be
conservative.
16 RELATIONSHIP OF PRODUCTION IMPACTS TO OTHER NATIONAL CONCERNS
16 In addition to these concerns, there is the very broad concern that the President has
expressed; We must move with extreme caution as we seek to balance our national objectives. If
we take away from our domestic energy supplies, we must know precisely how much we are
subtracting, what the impact will be on consumers, industry and our Nation's economy, and how
our environmental and foreign policy objectives will be affected. And we must find ways to
balance our priorities so that no sector of our Nation bears a disproportionate burden. If we do
not take such an approach, our economy, the welfare of America's citizens, and our national
energy situation will deteriorate.
17 H.R. 25 AND COSTS TO CONSUMERS
17 If one combines the higher costs of imported oil use to replace lost coal - the $1.9 to $7 .8
billion I mentioned earlier - with the higher market costs of the remaining coal that would be
mined, during the first year of the bill's implementation, total additional consumer costs could
range from $2.4 to $5 .6 billion. The price effects of lost production and strict limitations on
capacity expansion on spot market price for coal itself would be immediate, sharp and
substantial. Coal users would be bidding against one another for limited supplies of coal. Its
price would quickly jump to that of residual fuel oil, taking into account the higher cost of
handling and burning coal. Our experts estimate that the spot price could increase by $12 to $18
per ton, for an annual additional cost to consumers of $1 .6 to $2.4 billion.
17 In more meaningful terms, this $2 .4 to $5 .6 billion total would constitute the equivalent of
increases in the cost of electricity of between 3.4% and 8%, increases in the Consumer Price
Index of between 0.16% and 0.38%, and increases in average household budgets of between $34
and $80.
17 H.R. 25 AND UNEMPLOYMENT
17 Not only would American consumers pay more, if H.R. 25 were to become law, many
thousands would lose their jobs. Basing our calculations on the loss of 36 tons per day per man,
we calculate that direct job losses could affect between 5,000 and 20,000 coal miners. And for
each 10 miners' jobs lost, a minimum of an additional eight jobs would be lost in other sectors of
the economy dependent upon the mining industry. Applying this factor to projected production
losses and manpower efficiency rates applicable to such losses, we have concluded that from
9,000 to 36,000 jobs would, in fact, be lost as a result of implementation of H.R. 25.
17 Again, these numbers are conservative, and would increase as we experienced production
losses that have not been quantified.
17 Two other specific points should be mentioned in this regard.
17 First, we would expect this resulting unemployment to be concentrated in certain areas and
to be especially severe in Appalachia. New jobs created nationwide in reclamation efforts could
not offset these regional disparities. As indicated by data in the CEQ report, some counties in
Appalachia - which have suffered through years, not months, of depression, not recession - could,
in fact, be devastated by H.R. 25.
17 Second, to the extent that reclamation activities funded by H.R. 25 would create jobs, they
would do so only at the expense of other jobs and any actual offset would be illusory. The
reclamation fee would withdraw significant funds from the economy and reduce employment
elsewhere accordingly. To the extent that expenditures of those funds lagged, there would be a
direct recessionary impact.
17 It has been suggested that the shift to underground mining would create more jobs and
offset unemployment of surface miners. However, as the Council on Environmental Quality has
pointed out, long lead-times and major capital outlays are required to open or expand
underground mines. As a result, any offset from this source would be years away.
17 Moreover, the skills required for surface mining are drastically different from those
required for underground mining. Substantial retraining of suface mine personnel would be
required before they could work in deep mines.
17 H.R. 25 AND OTHER NATIONAL GOALS AND CONCERNS
17 Besides the detrimental impact that H.R. 25 would have in terms of consumer costs and
unemployment, it would severely distort the development of the coal industry and, consequently,
limit the further contributions that the industry could make to our national productivity and
security.
17 Underground mining is inherently less efficient in terms of mineral removal and manpower
utilization. Thus, the costs of such mining, relative to productivity, is substantially greater than
those of surface mining operations.
17 Still another dimension of the problem lies in what H.R. 25 would mean for other national
priorities. One year ago Congress passed, and the President signed, the Energy Supply and
Environmental Coordination Act.
18 The Administration is firmly committed to carry out Congress' ESECA mandate, which
aims at increasing coal use in certain power plants and other major fuel-burning installations.
Under the provisions of that law, we can do so in a way that still protects our environment. But
to carry out that law, we must have the coal to burn. That means more coal production, not less.
We believe the Congress shares our commitment to carry out the ESECA, but I must add that if
H.R. 25 were to become law coal conversion under ESECA could be seriously impaired.
18 And, while substantial progress in underground mine safety has been made, the fact
remains - as I mentioned earlier - that underground mining is more dangerous than surface
mining and involves more than twice the risk of accidents and injuries associated with surface
mining.
18 Mr. Chairman, I consider this only a brief outline of the objections and problems which
compelled the President to veto H.R. 25. Many additional issues could and should be discussed
if our efforts here today are seriously concerned with responsible action. We must consider
realistically:
18 To what extent would the states, in fact, designate land areas unsuitable for mining?
18 To what extent could H.R. 25 allow frivolous petitions for such designations to create
additional obstacles to the granting of mining permits?
18 To what extent would the states be able to implement programs within the narrow time
constraints of the bill, and how much time would an operator have to bring an existing operation
into line with the terms and conditions of a new permit?
18 How many operations presently being planned would be classified as "new" instead of
existing operations, and therefore be subject immediately to the more stringent standards set forth
in the bill?
18 To what extent would the owners of surface lands overlying Federal coal deposits simply
refuse to allow the mining of coal belonging to the Nation?
18 To what extent would production be halted or reserves locked up by the bill's "water
replacement" provisions?
18 To what extent would the states use this law to prevent development of Federal coal
reserves on Federal lands within their borders?
18 To what extent would small mines be forced to close or sell out to large companies that are
able to bear increased capital and operating costs? And is such an incentive to market
concentration desirable?
18 To what extent would the bill affect Clean Air Act objectives by precluding low-sulfur coal
production?
18 Mr. Chairman, these questions are obviously not frivolous; they cannot be ignored. Each
derives from ambiguities or uncertainties in the language of the bill or in its legislative history,
and any or all could present questions of public policy and national security at least as grave as
those issues that I have covered in this statement. In our view, the Nation simply cannot afford to
run the risks inherent in a regulatory program as important, and as uncertain, as that embodied in
H.R. 25.
18 To date, no comprehensive energy program has been enacted. No legislation has been
passed that would significantly curb consumption. No legislation has been passed that would
assure the development of other domestic resources - resources to offset the coal production that
would be lost because of H.R. 25.No recognition has been given to the progress made by the
individual states as they have moved to implement surface mining regulations.
18 This Nation cannot afford to reduce the availability of our one abundant domestic energy
resource until and unless we have another to replace it. We cannot continue the past practice of
making piecemeal decisions and calling them policy.
18 Coal is the only major domestic resource upon which we can rely as a secure source of
energy in the coming decades. This bill would have a direct and immediate impact on its
availability.
18 We firmly believe that environmental concerns can be balanced with energy needs -
without the uncertainties so clearly present in H.R. 25 and without the burdens that it would so
clearly place on American workers and American consumers and the Nation as a whole. We beg
Congress to proceed with that task - to take the responsible course and to sustain the President's
veto.
19 Mr. UDALL. Mrs. Mink.
19 Mrs. MINK. Thank you, Mr. Chairman.
19 Pursuing the line of inquiry that the chairman has started this morning, I think it is fair to
say that in reading and analyzing the veto message that the whole basis for the veto lies in the
accuracy and dependability of the loss of coal production estimates which were given to this
committee and to the Congress.
19 Taking the coal loss production figures, and then calculating how many man-hours are
required for that coal, you calculated the number of employees that would have to be laid off, and
you calculated the amount of energy loss for the country that would have to be transposed to oil
imports. This was the basis of the whole veto message.
19 This being the case, and I have heard no contradiction of my analysis of this veto, then the
crux of the matter is your analysis of loss production. It seems the heart of the criticism we are
making this morning is that in assessing the coal loss production, you failed to take into account,
in you rrecommendations to the President, the fact that the coal production could be shifted to
other lands with no loss of total national coal production.
19 Let me give you one illustration of a point that I have in mind.
19 There are 533 outstanding Federal coal leases. These leases now cover a total of 278,000
acres and contain an estimated 16.1 billion tons of coal. To put this reserve in perspective, this
coal, if produced today at a rate of production that would be appropriate, we would have a
27-year supply of production.
19 It seems to me that it is the fault of the Interior, fault of the administration for failing to
make these coal leases operative. If the policy of the administration is to convert to coal in order
to meet the energy requirements of this country and to be less dependent upon oil imports, it
seems to me clear that the coal that has already been let, already been leased over the years,
rather than being permitted to be held in speculation, could very well be put into production
under the terms of H.R. 25 without any coal losses whatsoever, without any time lag, without any
further evaluations because these 533 leases are in existance.
19 I would be very pleased to hear any of the panel's comments with regard to this coal
production and how it could easily be achieved by using the coal resources we already have
under lease.
19 Mr. MORTON. Let me be the first to respond, then I think the Director of the Bureau
should respond. Most of these leases are on public lands in the West. All of them are. If these
leases were brought into full production, say within the next year, we would make a mountain of
coal on the surface of the ground. We do not have the transportation systems in this part of the
world, this part of our country, to transfer that coal economically to using systems.
19 We are, as you know, moving toward an orderly coal leasing policy that will incorporate,
hopefully, the improvement of the right kind of transportation systems and the right kind of using
systems to utilize these leases. The big coal production loss that would be incurred would be
more in the historical coal producing areas. There is no question about the 16 million tons and
the many, many other millions of tons of coal applicable to surface mining in the West. But coal
is a systems oriented resource. You have to mate the production of coal, the transportation of
coal, with the usage of coal.
20 To bring those 16 million tons into production immediately would be folly. It could not
be done in short order.
20 I think much more detail can be supplied by the Director on this subject, but we looked into
this one time and time again. We have a lot of problems. This is a multiple use resource, the
public lands. A great feeling that some of the surface ownership should be totally protected.
20 The policy for doing this is beginning to evolve.
20 Mrs. MINK. Mr. Secretary, if I may be permitted to interrupt, I am not addressing my
question to the reserves that have not yet been leased. My question goes to those leases that have
already been issued on the assumption that coal would be produced from these lands which are
owned by the people of the United States. However, they have been allowed to remain in the
hands of speculators and no production has been forthcoming.
20 If the administration is going to come before the Congress and give us estimates of 40 to
162 million tons of coal losses and attribute the range of figures between strict or lenient
enforcement of the bill before us, is it not also a responsibility of the administration to make sure
that existing Federal leases produce coal in order to meet the energy requirements of this country;
and, if so, there would be no coal loss production whatsoever and no further dependence upon oil
imports, and every single person wanting to be involved in coal production could be so engaged,
if not some additional thousands.
20 Mr. MORTON. I wish it was that simple.Previous administrations have seen fit not to put
stipulation requirements in coal leases. We are the first administration that ever did. And these
are all leases. As the gentlemen on both sides of you, the legal problems in recasting the profile
of these leases, it is a very difficult thing. We have tried. During my tenure as Secretary of
Interior, I leased no additional coal, for virtually 4 years, because I felt that this particular
problem had to be resolved. But the loss of coal production and the economic problems of it,
admittedly, are in a time frame of the next 3 or 4 years. I think we have got to be very careful not
to assume that we can suddenly get that 16 billion tons of coal reserve that is under lease on the
public lands into production with our present transportation systems, and burning systems. It just
cannot be done.
20 We cannot convert a substantial number of our boilers to coal from oil or gas with those
reserves without a tremendous increase in production in the historical areas that produce coal.
20 Mr. HILL. I would like to add to that if I may. I think you have to take a look at this, the
lands that have been leased and the program under which they were leased. I would like to point
out several key factors on that.
20 One: They were leased at a time when oil prices were very low, and no one was going to
make the investments either for mining equipment or large investments for the transportation
equipment in the East, when oil prices were that low.
20 Second: These are only leases.There have not been permits granted for the mining of these
areas. That is another step we have to go through.
21 Third, previous leasing policies of other administrations were such that we ended up with
a checkerboard effect on these leases out in the West. Most of those leases turned out to be fairly
small plots of land that are uneconomic and it is going to take some period of time to put them
together into economic units for which they can come in and get permits.
21 Keep in mind these are long leadtime matters, both the capital investment of the mine
which comes after putting the checkboards together, plus the time required to go East, where
there will be some of the biggest impacts of H.R. 25.
21 Mrs. MINK.I would like to point out that the memorandum sent to the committee by the
Bureau of Mines' Director indicates that in arriving at the high estimate of 162 million, the
largest factor component in that estimate is not the mining activities of the East, to which you
have alluded, but the western strip mining situation.
21 So I find your response quite unsupportable by even the statements made by the Bureau of
Mines.
21 May I go to my next inquiry?
21 Dr. FALKIE. Mrs. Mink, I think that there are perhaps some misconceptions on what is
going to happen with coal in this country. The Project Independence report on the coal task force
which I chaired arrived at a number of somewhere between 1.1 and 1.2 billion tons of coal as a
target for 1985. We used the basic numbers from that in this study here. They have been revised
somewhat, brought up to date, because those other estimates were made over a year ago.
21 Mrs. MINK. What basic study are you referring to?
21 Dr. FALKIE. The coal task force study of Project Independence which I chaired.
21 There are two points. One is that the coal production increases are not all going to come
from the West. There are going to be coal increases in the East, too, if, in fact, we remove the
constraints to coal production both on the supply and demand side.
21 The second thing is that not all of the increases are going to come in surface mines. Osme
will be in underground mines as well.
21 Regarding your question about leases meeting requirements, there are two types of
problems we looked at from the technical standpoint. One is the problems connected with bans,
possible bans that this act appears to project.
21 Second are the technical, legal, economic problems. Any leases would have to meet those
requirements in the same way as any other area we looked at.
21 The third point, and this is probably the most important point, we know now that if you
went out to order a large piece of mining equipment, you would be given a delivery time of some
5 years plus time for assembly. That 5 years is into 1979, 1980. The leadtime for starting new
mines, both underground and surface, has increased. This is one of the real constraints which is
part of our problem. It is also one of the constraints to moving from area to area that you have
asked about.
21 Mrs. MINK. Is not the equipment which a coal operator is currently using to strip in one
area, if they are not permitted to use it in that area, usable in another area to which they move so
that they will not need any more leadtime to buy new equipment?
22 Dr. FALKIE. Well, it is not that easy, Mrs. Mink. First of all, these leases, some of them
are spread out by a considerable number of miles.Just moving this equipment would take time.
22 Mrs. MINK. Overnight we saw a shift of coal production from the East to the West, so that
currently there is 50 percent of our national coal production coming from the West.
22 So it seems to me that in arriving at your coal loss production figures you did not take into
account the increased productions that could be possible under the bill with the lands that have
already been leased out in the West. It seems to me your have totally neglected that area. I do
not wish to get into an argument. There are so many other questions I want to ask.
22 Dr. FALKIE. I want to correct one fact. Fifty percent is not a correct number. We have
those numbers here. Coal production in the West is considerably less than 50 percent at the
present time.
22 Mrs. MINK. Fifty percent of the strip mine coal in the country is out in the West. I do not
think you can deny that.
22 Dr. FALKIE. We are strip mining around 300 million tons and we are producing
approximately 90 million tons from the West at the present time.
22 Mr. UDALL. The Chair would ask our guests here to refrain from applause. The
committee can proceed in a more orderly way.
22 Mrs. MINK. It appears that we have a number of coal operators in the room, Mr.
Chairman. Their big concern in coming to Washington, as I recall, was the question with respect
to return to approximate contour.
22 In sending your comments with regard to coal production losses and giving the basis for the
veto, you mention that there would be a coal production loss with respect to small mines, of 22 to
52 million tons. In analyzing this loss of the small mines, you made mention of two issues, the
bonding and permit applications. And that because of the requirements under H.R. 25, regarding
bonding and permit applications, you felt it was beyond the capability of these small mines.
22 Did the Bureau conduct a study to arrive at that conclusion, and if so, may the committee
have a copy of that study?
22 Dr. FALKIE. Mrs. Mink, we looked at it from many standpoints. The estimated
production from mines producing less than 50 million tons per year is about 60 million tons for
1977. The FEA conducted a survey of the Appalachian States and got estimated loss figures
from some of the State agencies. We looked at some of the trends and some of the effects. This
gets back to answering your - some of the questions that were posed earlier.
22 In Tennessee, West Virginia, Ohio, and Pennsylvania, there was, in fact, a production drop
after these surface mine laws were enacted. We are not about to sit here and say that the entire
production drop was due to the Surface Mine Act, but the trends are there. They eventually
started to recover. This is what is shown on this chart.
22 The second type of thing we looked at is the pricing situation. This shows the Pennsylvania
problem that you talked about. The act was passed in 1971. You can see what is happening to
the price. In fact, there was a drop. Again, we are not saying that this drop was entirely due to
the strip mining law. Then it came back up, the price projected exponentially at the same time.
23 We also looked at what is happening to prices. As you know, the prices have gone up
quite dramatically.But since December of last year, spot prices have been coming down and the
contract prices have been going up.
23 Mrs. MINK. Will you answer my question as to whether there is or is not a study and if the
committee may or may not have a copy of it?
23 Dr. FALKIE. There is a study and obviously the committee may have a copy.
23 Mrs. MINK. Could we have that by noon today?
23 Dr. FALKIE. We have the study summarized in a form that you could have today.
23 Mrs. MINK. Could we have a copy of the study itself in addition to the summary?
23 Dr. FALKIE. We have, Mrs. Mink, as you know, we have sent you material in the past. I
cannot remember the exact date. But some of the descriptive material that describes the study.
We have submitted that.
23 Mrs. MINK. My question is: May we have the study?
23 Dr. FALKIE.Yes, you may. n1
23 n1 Appendix I includes the portions of the study provided the committee by Dr. Falkie.
23 Mrs. MINK. May we have that today?
23 Mr. HILL. We will also make available a study done by the Council on Environmental
Quality in 1973 for Senator Jackson which reaches precisely the same conclusion. n2
23 n2 Appendix II includes those excerpts from the CEQ study to which reference is made.
23 Mrs. MINK. With respect to the impact on permit applications and bonding?
23 Mr. HILL. For small miners, that is correct. That was done in relation to a bill that had
many less requirements on the small miners than H.R. 25. So I think it would be useful to look
at that report, also.
23 Mrs. MINK. Since you made reference to Senator Metcalf, I will yield to comments from
the Senator on the point just made.
23 Senator METCALF. Thank you.
23 The study, as I recall, that you prepared for the Interior Committee, my subcommittee, and
presented to the chairman of the committee, Senator Jackson, was not at all the kind of study you
describe, it was entitled a study on a permanent ban on mines and mining, and the impact of a
permanent ban, isn't that correct?
23 Mr. PECK. No, sir. May I read from the title of that study?
23 Senator METCALF. OK.
23 Mr. PECK [reading]. "Coal, Surface Mining, and Reclamation, an Environmental, and
Economic Assessment of Alternatives. Prepared at the Request of Henry M. Jackson, Chairman,
Committee on Interior and Insular Affairs, United States Senate, by the Council on
Environmental Quality."
23 At page 61 this precise question is addressed.
23 Senator METCALF. Now I did not ask you to take material out of context.I just suggested
that the study you propounded and presented to the committee from which you are citing was a
study on overall impact. You read the title and it was a study on overall impact.
23 Mr. PECK. That is correct, sir.
23 At page 61 it addresses the financial problems of small mines.
23 Mr. MELCHER. On page 62?
24 Mr. PECK. I am sorry. I am wrong. It was the wrong page. The economic discussion is
on page 62, not page 61.
24 Senator METCALF. You had to go 60 pages before you found any impact on small mines.
24 Mr. MELCHER. Mrs. Mink, we are very grateful -
24 Mr. PECK. Mr. Chairman, one of the authors of that study is here.
24 Senator METCALF. We are very grateful for the opportunity to appear here.
24 May I ask your indulgence to let one of my colleagues on the committee have the floor for 2
or 3 minutes because he does have another engagement.
24 Mrs. MINK. I yield.
24 Senator BUMPERS. I want to thank the Senator from Montana for allowing me just a
couple of minutes. I have about four or five questions to direct to Mr. Falkie. Many of these
questions can be simply answered yes or no because I am really curious as to these figures.
24 How I vote on overriding or sustaining, if it ever gets to the Senate, is going to depend on
what I think is the validity of these figures.
24 I would like to ask you first of all, were your projections on coal loss, production loss,
based on present production trends, or what you had projected last year in your Project
Independence?
24 Dr. FALKIE. We took the Project Independence numbers and projected what we think will
be produced. I have numbers but since you are out of time we will not go through them to show
you what the basic numbers are in the study.
24 Senator BUMPERS. My point is this: It is not a loss of present production, you are simply
saying this is a loss of what you would have anticipated?
24 Dr. FALKIE. That is correct.
24 Senator BUMPERS. That would also affect your projection on loss of jobs, would it not?
In other words, if you are projecting not a loss of present production but some anticipated
production in the future, your loss of jobs will necessarily come, your projections on loss of jobs
would also be something that was anticipated, not a loss of jobs presently in existence?
24 Dr. FALKIE. I have a little problem with that logic. The answer is yes, the loss of jobs is
related to the production loss. But a loss of jobs is a loss of jobs.
24 Senator BUMPERS. But it is a loss of anticipated jobs, a loss of jobs that would have been
created had this bill met the administration criteria.
24 Mr. PECK. Senator, the question might be misleading. Project Independence had included
current production and estimated increases in that production.The job market loss calculated
from updating that number, therefore, includes losses from existing jobs and jobs that would
have come into being had that estimated increase in production occurred.
24 Senator BUMPERS. Thank you very much. That is a direct response to the question.
24 Did you take into consideration in computing your job loss any additional jobs that would
be required to come into existence because of the reclamation requirements?
25 Mr. HILL. I will answer that. We did take that into consideration. The jobs for
reclamation would largely, primarily, in fact, be created as a result of the reclamation fee which
would be on surface mined coal. There will be some jobs created, particularly in regions or areas
where there are a lot of old surface mines, as a result of the reclamation. That would be a long
process.
25 Our estimates show they will certainly be less, significantly less than the jobs lost in
mining.
25 I might add another factor. Since those jobs are created by the tax, jobs somewhere else in
the economy are being lost because that money is not somewhere else creating employment. So
in a national economic accounting kind of system, there would be no net creation of jobs from
the Reclamation Act.
25 Senator BUMPERS. Will the study to which Mrs. Mink referred show how you calculated
all those figures?
25 Mr. HILL.We have provided all of our assumptions and the basis for our calculations
several times.We will be glad to make those available again, Mr. Bumpers.
25 Senator BUMPERS. I would appreciate it.
25 Two final questions. How much coal is presently being mined in this country from
alluvial-valley floors? Let me tell you what your report says. It says 45 million tons.
25 Dr. FALKIE.That is correct. We are projecting somewhere in the neighborhood in excess
of 80 million tons in the first full year.Of course, we have not gotten into the alluvial-valley floor
situation, but that basic number is correct.
25 Senator BUMPERS. I was curious here. How can you show on the top side of your
projection 66 million tons of production will be lost in alluvial floors when we are only
producing 45 million tons now?
25 Dr. FALKIE. It also includes, of course, the effects on alluvial-valley floors, but it is
projected into 1977. So it is based on 1977. As we gather new numbers, more and more tons are
projected to be mined from areas that would bear the impact of these provisions of the bill.
25 So we feel that we are, at least on the lower end of our estimate, being conservative on this.
25 Mr. HILL. Our estimate does -
25 Senator BUMPERS. Is that what your projections were based on, 1977? This does not take
place until 1979, does it?
25 Dr. FALKIE. No, the first full year of implementation would be 1977-78, but if we did
carry it on to another year the loss calculations would be greater because the production would be
greater.
25 Mr. HILL. I think it is also important to note here, Mr. Bumpers, that if there is going to be
expanded mining on the alluvial-valley floors, according to our projections - those plans are
being made now. They are pretty far along in terms of the preparations necessary.I think our
estimate has a great deal of validity.
25 Senator BUMPERS. Let me ask one other question.
25 Did you take into consideration the price increases in coal, either through increased - let me
put it another way. Did you take into consideration any improved technology in the production
of coal in the future, and did you take into consideration any incentives to produce additional
amounts of coal, if the President has his way on getting the $3 fee on imported oil?
26 Mr. HILL. We looked at a number of estimates. I think the key is in any extra incentives
that may come from higher prices on coal, and we would like to present a paper to show that the
higher price of oil would not raise coal prices unless we have a substantial drop in coal
production. That would be a very long leadtime kind of response elasticity, or your coal supply
is very elastic.
26 So we are talking about the next 2 to 5 years in the context of this bill. So any of those
assumptions about better technology, elasticity or response to increased prices will be beyond the
period of time which is the focus of our concern.
26 Senator BUMPERS. I do not want to encroach upon the generosity of my colleague from
Montana further. I wish I had time to pursue some of the questions further. I would like to say
here that in Secretary Morton's testimony before the House of Representatives, this committee,
the Interior, his statement was - this is regarding jobs for reclamation - he said, "Mr. Seiberling,
there will be a net gain in employment from a good reclamation bill because reclamation is going
to require capital investment.It is going to require a work force. So we should have a net gain in
employment."
26 Mr. MORTON. We should have had a bill that would give us that, too, in my opinion.
Unfortunately, we did not have that kind of bill.
26 Senator BUMPERS. I thank the chairman.
26 Mr. UDALL. We have a time problem here. Let me suggest the following procedure. I
understand Mr. Zarb and Mr. Morton would like to leave.Mrs. Mink tells me she has one more
question, and I have mutiny on my hands on my north side unless we give them some time here.
So one question by Mrs. Mink. Then I will give Mr. Steiger the floor.
26 Mrs. MINK. This is just a follow-up question.
26 The follow-up question was that I was asking Dr. Falkie with regard to a study which
would support his claim that small mines would be affected by the bill's provision on bonding
and permit applications. The response was that there was a study and reference was made to the
CEQ study which was prepared for the Senate Interior Committee.
26 May I request that in providing this study to the committee that the page reference be
provided which makes reference to the effect of bonding and permit applications on small mines
which would justify an estimated loss of 22 to 52 million tons?
26 Thank you, Mr. Chairman.
26 Mr. UDALL.Mr. Steiger.
26 Mr. STEIGER. Thank you, Mr. Chairman.
26 Mr. Zarb, this rather extraordinary meeting has come about really because of a conviction
on the part of the Chair people of this joint committee that the administration caved in to
pressures from the coal companies and utility companies and manufactured some figures.
26 I think it would be appropriate, Mr. Zarb, if you address that, if you would, because I am
aware of the fact that the administration very logically would have preferred to not veto this bill
since the clear political profit was on the side of not vetoing it. As a matter of fact, in my
opinion, it was a rare demonstration of courage on the part of the President and your own
operation that recommended the veto.
27 Would you give us the basis of not point A and point B, but your own action in attempting
to pursue the effects of this bill on the economy and the energy supply?
27 Mr. ZARB. Mr. Steiger, this gets somewhat away from the statistical balance. I would just
take a brief minute to describe the events leading up to the President's final decision. You are
quite right in saying that we at the energy agency really wanted to find a reason to approve this
bill and get on with our life. It is clear that we do not need this kind of difficulty with people
who are concerned with environmental questions.
27 We have many, many more issues of a similar nature that we have to develop, to negotiate
and work out in the future.
27 It was, it seemed to me, in our best interests to find substantial reasons to recommend
approval of the bill. We did ask those professionals who have backgrounds in this area to do the
staff work.
27 The Bureau of Mines is a long-standing organization of the Federal Government, and Dr.
Falkie has been there, I think, since 1974 as Director, as well as our people, as well as the
economic people, developed data which demonstrated that there was a very, very good chance
that we were going to have a substantial coal cutback based upon implementation of this bill.
27 Now, it is argumentative to the extent that the numbers would be high or low. Most
everyone indicated and acknowledged that there would be a coal penalty. But not always was
there a willingness to articulate what the projected coal penalty would be over the next 3 years, as
Secretary Morton said. We looked at the projected range and, of course, that was distressing.
27 Whenever you have a range between 40 to 162, that is hardly conducive to make a good
judgment. But we determined that based upon possible interpretation of the various provisions,
that is what could occur.
27 What concerned us even more were four or five other provisions put forward by the
attorneys that looked at it. That indicated we are not even predicting the kind of penalties that
might accrue to us.
27 Mr. Chairman, members of the committee, I want you to know we want to work out a
surface mining act that will achieve reclamation and will get our energy produced, and at the
same time stop any erosion of our environment; not only with respect to this area but the clean air
and clean water.
27 We can in good conscience stand up and say the bill will not be effective in terms of its
energy penalty when the numbers clearly indicate that possibility is so real in the light of what is
happening in domestic production of increased imports. So after looking at all of the staff work
we did come to the reluctant conclusion this bill would not be helpful to our energy problem at
this moment in time.
27 Secretary MORTON. Could I just add one thing. I think it is not generally understood by
the public, the people in general, to get from here to there, to a reasonable posture for energy
independence, it will be necessary to virtually double the use of coal in the next decade. That is
the keystone of anybody's program: We must double the use of coal in our utilities and in many
other areas where coal is applicable and if we inhibit that during this decade we take great energy
risks, I think, for our society.
28 Mr. STEIGER. Well, on the subject of variances, as I read this bill, for the small mine
operator to qualify in the two areas you mentioned, he must respond or he must be able to comply
with 19 separate tests.
28 Now, I find that, that is on page 41 of the printed bill, we start by saying that under the rules
of the application for the permit, the applicant must demonstrate that whatever the variance is,
will be compatible with adjacent land usages, obtainable according to data, assured of investment
and necessary public facilities, supported by commitments from public agencies where
appropriate, and so forth. There are 19 of them.
28 Now, did you consider the probability or improbability of the small miners' being able to
comply with those 18 tests in your analysis as far as lost production?
28 Mr. PECK. Yes, sir, we did.That was part of the analysis of the costs of the small miner for
this bill and the necessity for the miner, the way the bill operates, to incur that cost as a front end
load on this operation.
28 In other words, before he can plan the operation, before he can obtain it, he must submit a
reclamation plan which shows the subsequent postmining uses and this applies even for the
variances involved.So it is not just the fact there are these 19 variances specific detailed
requirements, and I must admit, I have not counted them, it is the fact that all of these
requirements must be complied with by the small miner, or for that matter, by any miner, at the
time he makes the application. It is that capital requirement, that major outlay of money, that the
small miner just does not have in our view. So, yes, that was calculated in the front-end costs of
the small miner that would force either a mine closure, or in some cases, the sellout to a large
miner, and further concentration of the market in large companies.
28 Mr. STEIGER. We really have a time problem. I am going to yield to the chairman to try
to resolve it in some way, but I do know that Mr. -
28 Mr. UDALL. I do not know what the meeting is. I thought this was critical, too.
28 Mr. Melcher tells me he would like 5 minutes.
28 Would it be agreeable to grant Mr. Melcher 5 minutes?
28 Mr. MELCHER. Thank you, Mr. Chairman.
28 Mr. ZARB. Mr. Chairman, we could add just our schedule to stay at least until 11:30, if
that would be helpful.
28 Mr. UDALL. That would be helpful. I must announce we have to be out of this room we
have scheduled at about 12:30, and we will try to reconvene in the regular committee room this
afternoon, but we only have this reserved until 12:30 today.
28 Mr. MELCHER. Secretary Morton and Mr. Zarb, it is entirely possible that you have
received inaccurate information and that your inaccurate information has provided the basis for
recommending to the President a veto.
28 In one instance, the possible production loss was listed as upwards to 160 million tons, and
of that, 66 million tons was attributable to the section in the bill dealing with alluvial valley
floors.
28 I do not know whether the two of you are aware the alluvial valley floor only deals with the
land questioned at 100 meridian but that is the bill and the mines that are now operating there
that have been listed as operating on alluvial valley floors include seven which are not on alluvial
valley floors.
29 Secretary Morton?
29 Secretary MORTON. I have got the production, the western production.
29 Mr. MELCHER. Do you have that in front of you?
29 You will see a list of mines, some of which are marked as operating on alluvial valley floor.
29 Secretary MORTON. Dr. Falkie, you understand I only have 5 minutes.
29 Dr. FALKIE. Yes, OK. There are other aspects of this legislation which put restrictions on
the alluvial-valley floor provision.
29 Mr. MELCHER. Doctor, I understand that very well.
29 You and I and Mr. Peck and Mr. Udall and members of this committee probably understand
most of what is in that bill but I do not know that Mr. Zarb and Secretary Morton do; however,
they are the conduit to the President for all of the information from which were drawn
conclusions for recommending a veto.
29 Secretary MORTON. Let me straighten the record out on that, Congressman.
29 The President has been exposed to large meetings in which all of the technical people here
have been either there or represented there.
29 This was not a judgment that was made solely by myself and Frank. It was made after a
tremendous amount of analytical exposure on the part of the President himself because, as Frank
said, this is one that no President wants to veto.
29 Mr. MELCHER. We would like to assist the President in developing an energy policy, but
we find it very difficult when we give them a strip mine bill which is part of the keystone for
developing an energy policy in 1974 and again in 1975, and he vetoes part of our best efforts.
29 I want to go over the alluvial-valley floor section and the projections made, based on what I
know to be inaccurate information in arriving at 66 million tons of possible loss in the first year
of the operation of the bill.
29 There are nine mines listed in the West alluvial-valley floors in Dr. Falkie's information.
Seven of those are not on the alluvial valley floor.
29 They include the Black Mason Mine in Arizona, the Nava in Washington, the Western
Energy at Colstrip, Mont., in my own county, the Westmoreland Mine which is next door to my
own county, the Decker Mine at Decker, Mont., which is moved off the alluvial valley floor and
now operating up in the hills, the Arch Miner Mine in the Anne Basin, Wyo.
29 There are two listed of those nine - the Bellaire Mine and the Wilde Mine near Gillette,
Wyo. - on the alluvial valley floor. Only those two. So that part of the information that has been
presented by Dr. Falkie and all of the rest of the people, including Mr. Salisner, Mr. Zarb, who
put all of the information into this vast study, that part of it is inaccurate and, therefore, we
question how much other inaccuracies there are. The two mines listed in Wyoming, on the
alluvial valley floor were projected by false and inaccurate information in denoting that the
alluvial valley floor section would remove from possible strip mining in the entire Powder River
basin 43 percent of that area's coal or 23 million tons.
30 Highly inaccurate - yet it is information that has been presented as part of this study that
has been talked about here.
30 Now, Mr. Zarb and Secretary Morton, I referred to the Powder River basin in Wyoming and
after considerable discussion with the Interior Department as to how much of the Powder River
basin in Wyoming and Montana could conceivably be included under this section dealing with
the alluvial valley floor in our bill, at the last day of the conference in the last 10 minutes of that
conference, I received this answer, that approximately 97.3 percent of the total agricultural land
in the Powder River basin is not alluvial valley floor. That leaves 2.7 percent of that area under
land which could be conceivably construed as alluvial valley. So the 2 percent that is indeed on
the alluvial valley floor in Wyoming leaves a vast area to get out of the way of the alluvial valley
floor.
30 Mr. PECK. The answer to your previous question is, first that this bill does more than ban
mining in the alluvial valley floor.
30 Second -
30 Mr. MELCHER. This bill, Mr. Peck, does not ban mining in the alluvial valley floor. It is
entirely clear, it does not.
30 Mr. PECK. I said it does more than ban mining in the alluvial valley floors. I am sorry, but
it does ban mining. The 97.3 came from the local office of the Bureau of Land Management.It is
an average derived from two calculations, Campbell County and Sheridan County.
30 Mr. MELCHER. That is correct and they project it for the rest of the area.
30 Mr. PECK. That is correct; and the assessment, not of the alluvial valley but of
undeveloped rangeland in Campbell County used in that calculation was 100.9 percent, that is to
say nine-tenths of a percent more than the entire county was considered to be excluded from the
operation of this provision.
30 Mr. MELCHER. Mr. Peck, are you aware of the northern Great Plains resources program?
30 Mr. PECK. Yes, sir.
30 Mr. MELCHER. That it is a Federal-State cooperative program?
30 Mr. PECK.Yes, sir.
30 Mr. MELCHER. Of the 89 million acres in Fort Union overlying the Fort Union coal
deposits, they are estimating that 2 percent are involved with the alluvial valley floors.
30 Mr. PECK. Again sir, I would have to point out much of the confusion that has occurred,
not only with respect to communications to the committe but with respect to the bill and with
respect to the Congress report, derives from both differing definitions of what the alluvial valley
means and differing interpretations of what this bill prohibits.
30 This bill prohibits some surface mining in the alluvial valley floors and certain mining off
of the alluvial valley floors which will have the effect on the alluvial valleys.
30 Mr. MELCHER. Mr. Peck, and I hope Mr. Zarb and Secretary Morton are taking this in.
30 Mr. Peck, the administration bill has the same language on the alluvial valley floors and the
same language which we put in the bill.
30 Mr. PECK. I beg your pardon.The definitions of the alluvial valley floors are identical, but
the provisions that operate to ban mining there, that is, to prohibit the issuance of a permit, are
very much different.
31 Mr. MELCHER. Well, Mr. Peck, the definition is identical and your misinterpretation, or
whoever's, resulting in misinterpretation within the administration to project a loss of 66 million
tons of coal per year was based on a misinterpretation of something that did not exist.
31 Mr. PECK. Mr. Congressman, if the Congress report said 97.3 percent of the Powder River
Basin is going to be allowed to be mined, it would have included 100 percent of Campbell
County, 100.9 percent of Campbell County; surely parts of which no one would want to mine.
31 The point I am trying to make is the operative language of section 510(b)(5), the provisions
respecting hydrology and the definition of alluvial valley floors, plus the confusing language
contained at page 81 of the conference report, add up to such a tangle that someone has said that
long after the last barrel of oil has been imported, lawyers will still be retiring on interpreting it.
That is our problem.
31 Mr. MELCHER. Regardless of what the lawyers will do, Mr. Peck, regardless of what
lawyers will do to arrive at a figure of 66 million tons projected loss from one section of the bill,
the alluvial valley floors projection is completely inaccurate.
31 It is by far more than what is being mined now in the West on anything that would be
construed as near the alluvial valley floors.
31 Of the nine mines that you have listed as being on the alluvial valley floors, only two are.
31 Mr. PECK. Well -
31 Dr. FALKIE. I am afraid in our professional judgment I will have to disagree with that.
31 I did not list all of the mines. We will have to take a look at what you have there but there
are one or two on there that I have seen and would definitely have to take exception with you on
and if you would like, I could go through our presentation of how we determined.
31 Mr. MELCHER. Mr. Peck, we used the best available information we could get from the
USDA on what would be construed as alluvial valley floors and how you would project that in
the West because that is what we are talking about, it is only in the West, it is west of the 100
meridian.
31 The USGS people, our staff people, our own career people are refuting and contradicting
your figures which is a sad commentary on how information flows through channels up to Mr.
Zarb and Secretary Morton to advise the President. He has been advised with inaccurate
information.
31 Mr. PECK.Mr. Congressman, on the specific question you raised with respect to the USGS,
there has not been any inaccuracies, there has not been any misinterpretations and we are
prepared to discuss the question in detail.
31 Mr. MELCHER. Mr. Peck, the USGS cannot back up your statements of the projected loss
of 66 million tons, the USGS cannot back up your statements that these nine mines are on
alluvial valley floors.
31 They will confirm what I have said and you may ask Mr. Hadley if he is present in the room
to come up here.
31 Mr. PECK. Sir, we have discussed it at great length. The USGS never made any
projections as to production loss.
32 What the USGS was asked to estimate or to identify on maps was a specific definition on
an alluvial valley floor narrower than that contained in this bill's prohibitions.
32 Those estimates, those maps are valid, they are accurate and they are technically correct,
and we are prepared to defend them to the very last square mile. Insofar as the specific mines are
concerned, I am afraid I will have to defer to Doctor Falkie's judgment, that your characterization
is not accurate.
32 Mr. MELCHER. Well, Doctor Falkie, which of those mines I have listed would you put on
the alluvial valley floor?
32 Dr. FALKIE. I would think, I would like to have benefit from my counsel for a second.
32 Mr. MELCHER. Is Mr. Hadley here?
32 Dr. FALKIE. There is some concern, Mr. Melcher, on my part about advising the
legislative record with my opinions.
32 Mr. MELCHER. Dr. Falkie, is Mr. Hadley here?
32 Mr. PECK. He is in the Department of Interior, prepared to be here on 15 minutes notice.
32 Mr. UDALL. We will recess when we finish this morning until 1:30 in the committee
room. If you could have him here, we might want to pursue that and also we would like to have
Mr. Keefer at that time.
32 Mr. PECK. I was going to suggest Mr. Klepper and Mr. Keefer.
32 Mr. UDALL. And Mr. Jack Green also.
32 Before we excuse Mr. Zarb and Mr. Morton, the two of you could maybe help me get some
peace of mind with two things involved.
32 We have shed a lot of tears for poor people who will be unemployed by this bill and yet the
United Mine Workers and the AFL-CIO who represent many of the people if not most of the
people who work in the mine support the bill.
32 Are they wrong? How do you reconcile that? I have not been able to understand that.
32 Mr. ZARB. I cannot and will not characterize the reasons for support. I do not know
whether the formal endorsement of these organizations, if you say there is, I will stipulate to the
fact that there is. There are obviously reasons for their support, this judgment. Only they know
or perhaps you know.
32 I will ask this. There has not been hardly anyone in this entire program right from the
beginning who has been willing to say that they would not, there would not be a coal deficit of
some size during the first 3 years.
32 No one has made that statement.
32 Mr. UDALL. I have made it. I have made it everywhere I go. In my judgment, under this
bill, we can produce, we can double the production of coal in the next 10 years and I have spent 4
years of my life helping to put it together.
32 Mr. ZARB.In the next 3 years, would you say there would be no coal disruption?
32 Mr. UDALL. No, there would be a net increase largely because we have removed the
uncertainty and investments could be made and mines could be opened up.
32 Let me ask you this finally.
32 Secretary MORTON. On your first question, Mr. Chairman, one of the things that may be
influential in this is that most of the United Mine workers are underground and are in mines that
are not surface mines.
33 There is another large area of mining where in the smaller surface mines, miners are not
members of the union and this could have an influence.
33 Mr. UDALL. I find it strange that the representatives of people who work in the mines
would not be more interested in the preservation of their jobs than some people in Washington.
33 Mr. Zarb, let me ask you this. On November 19, it has been increased I believe the way
these estimates have gone up and down. We had finished the old bill; it was all signed and
sealed except for surface owners' consent and we were deadlocked on that for weeks.
33 On November 19, the estimate of the first full year of production losses, a minimum of 16
million and maximum of 105 million. On April 22, when we finished the conference report this
year, we have watered down the bill and we have loosened up the performance standard, indeed
to the extent that Mrs. Mink and myself and others were unfairly attacked by the environmental
groups for having given away a tough provision. We have watered down the bill; we have met
17 of 28 objections that the administration made, and you sent us back a new estimate, and the
low was not 18; the low had gone up to 68, and the high was not 105; it had gone up to 162. So
with the weaker bill your production loss estimate had increased by 54 percent.
33 Can you enlighten me on how that came about?
33 Mr. HILL. I would like to comment, Mr. Chairman, on your reference to the bill prior to
the Christmas recess. Those estimates were on the basis of that bill, and preliminary estimates.
Between that time and the time we finished up the present bill, we had firmed up those estimates
and they were all hard.
33 It was those higher estimates we firmed up and we made the lower estimates as a result of a
few of the changes in HR. 25, which is now in the present status.
33 I think Mr. Falkie could give you the exact reasons as to why the changes, from the last
November estimates.
33 Mr. UDALL. I wanted to find out from Mr. Zarb and Secretary Morton why these
estimates, why in heaven's name the estimates would go up when the bill was weakened during
that period of time, and I take it from you, Mr. Morton, and Mr. Zarb, you have no answer.
33 Mr. ZARB. Mr. Chairman, to say we rely heavily on only technical analysis every step of
the way I think is an unfair statement, but I would go a step beyond.
33 One of the things that has bothered me right through this process is being unable to really
calculate what the potential coal penalty would be. Each step of the way, in each set of analysis,
there was that prevailing asterisk. And as you follow on the asterisk to the bottom of the page, it
says depending on how the courts rule on this provision, on that provision or on that provision,
so even when we got up to a range as broad as 40 up to 162, those responsible for totaling the
calculations indicated there were some provisions they simply could not quantify.
33 I think that has a great deal to do with a lot of what we talked about here this morning, the
fact that the precise nature of many of these determinations has not been nailed down
specifically.
33 I do not know why that is. I do not know why it is an impossibility in legislation of this
nature, but our people have not been able to calculate firmly what our potential liability will be to
the point that, in the last analysis and I would like to leave this with you on the record, when we
went through it and we looked at the 40 to 162 million ton potential, there was some in the staff
system that said those are low numbers, that they could easily construe a scenario, based upon
four or five positions as outlined in my statement, where those losses could be even higher.
34 Now, Mr. Chairman, I have not been able to, through either the Department of Interior
counsel or through any other series of counsel, receive assurances that the original calculations
could be interpreted one way or another, because of rather loose definitions that would prevail,
and I think that perhaps is the reason.
34 Mr. UDALL. I have promised the Secretary and Mr. Zarb that we would release them at
1:30.
34 Do you have a quick question, Mr. Kazen, or could your question be directed to the
technical people?
34 Mr. KAZEN. I would like the Secretary and Mr. Zarb to be in on this.
34 One of the reasons the President gave for vetoing the bill was that consumers would pay
higher costs, particularly for electrical bills. Mr. Chairman, all of us have been getting mail from
home about the high cost of utilities at this particular time. I would want no part of any bill that
would raise utility rates any higher. My question is: What in this bill would raise the cost of
electric bills?
34 Secretary MORTON. Obviously, we are moving from an oil to coal generation for electric
power as quickly as we can. If this bill restricts the amount of coal as compared to demand, it is
going to escalate the price of coal. It is just a simple economic fact.
34 What we would like to do is have ceiling pressure on the whole coal usage field so we can
go from oil generation to a coal generation without going through the arbitrary level of energy
pricing.
34 Mr. KAZEN. Now, in following up with that, the statement says the provisions permitting
the Federal Government to pay private landowners 80 percent or more of the cost of reclaiming
previously mined land, leaving title to the land in private hands, could provide windfall profits at
the expense of coal consumers.
34 Would someone explain that particular statement?
34 Mr. HILL. I think the key is in the reclamation program. The Federal Government
reimburses landowners for previously mined land.
34 That is land for which they received a royalty for the production of coal, and already
achieved substantial value from that.
34 Now, we will shoulder up to 80 percent of the costs of reclaiming which will upgrade the
value of that land to the current landowners. Not only will they get the benefit of the previous
royalties, they will have the reclamation costs paid for which is another benefit. And the third
benefit is that the land is more valuable as a result of the Federal Government coming in.
34 Mr. KAZEN. What would you estimate would be the outlay of dollars for this particular
program?
34 Mr. HILL. I do not have an estimate. It is hard to tell, depending in some cases on what
the use of the reclamation fund would be put to.
34 As you know, in the act, there are seven or eight different things that funding can go to
apart from reclamation, so that would be a function of how much actually went into the
reclamation, into dams, highways, streets, and so forth, whatever.
35 Mr. UDALL. Mr. Kazen, thank you.
35 Senator Haskell, did you want to ask a question?
35 Senator HASKELL. I really had questions, probably for the technical people.
35 Mr. UDALL. Probably we could come back.
35 Senator HASKELL. I don't think either Secretary Morton or Mr. Zarb have much
knowledge, unless it was Mr. Zarb that sadi there was no elasticity in coal.
35 Were you the one that said that?
35 Mr. ZARB. That was a statement by Mr. Hill, but I do share in that.
35 Senator HASKELL. Well, since Mr. Zarb does share in that, then I would like to discuss it
with him a little bit.
35 Mr. Zarb, my impression is that in 1973, which is pre-OPEC embargo, the average cost of
per ton utilities was $9.25, and that in 1975, which is of course post-OPEC embargo, the average
cost is $10.
35 Now, I don't know whether you share those figures, but would you agree with those
figures?
35 Mr. ZARB. They sound generally correct; yes, sir.
35 Senator HASKELL.That would occur to me to be considerable price elasticity, somewhere
in the neighborhood of 100 percent.
35 At the same time, one of the things that concerns me, Mr. Zarb, is that according to Mr.
Carlson, who testified in February, before the Senate Interior Committee, the worst case of this
bill as has been introduced, would cost the eastern small operators something in the
neighborhood of $1.30. The average cost added to strip mining is $0 .65.
35 Now, it would occur to me that the cost of this bill, when you consider the escalation and
the price, and then the magnitude of $9, , an increase in maximum costs of $1 .30, that the cost
could well be absorbed, probably should be absorbed, by the operators, so I find a little difficulty
in the position taken on price.
35 Mr. ZARB. May I comment on the question of elasticity?
35 Senator HASKELL. Yes.
35 Mr. ZARB. That was in response to a series of questions with respect to the elasticity price
of coal, not to the price escalation of coal.
35 The notion we put forward is that as coal went up in price, the elasticity point to reduce
consumption was not as reachable as in many other products.
35 Secretary MORTON.Go over that again please. I missed it.
35 Mr. ZARB. The elasticity point, the elasticity factor in coal, if it were within the range of
numbers, as they change, there would be a reduction as price went up. As a result, there would
be a reduction in the supply to price part of the equation.We are saying that that did occur, and
we did not go any further. It is an unofficial thing that the Council-of-Economic Advisors did for
us, and it does not have a lot of depth, but they did suggest that with a curtailment in production,
that -
35 Senator HASKELL. We will get to the curtailment of production later.
35 I think my definition of price elasticity is that price goes up in accordance with the demand
of the product.
35 Now, if you are using different definitions, then that is something else, but let me make one
more point, and maybe Mr. Zarb, you are the one to ask this, Mr. Chairman, if I might ask one
more question, the first year of implementation as I see it is 1978 of the bill.
36 Would you be correct in that, Mr. Zarb?
36 Mr. ZARB. I am sorry. I was listening with my other ear.
36 Senator HASKELL. I know, it is tough. I tried to do that too.
36 My interpretation of the bill is the first year of effectiveness is 1978, 30 months?
36 Mr. PECK. Thirty months is maximum. We have assumed 1977 will be the first full year.
It is 20 months to get a permit, and there are various timetables set forth in the bill, so it is
difficult to say just when with respect to any -
36 Senator HASKELL. Let me ask you, I think I was discussing this with Mr. Zarb.
36 Anyway, let us assume even if it is the middle of 1977, 36 months is what is the figure that
takes place in my mind.
36 What we are talking about is future jobs, and we are not talking about the net increase in
jobs due to reclamation.
36 You folks write that off in some manner; you do it in some way, but you do write off the
net increase in jobs; but what is bothering me is you are projecting something in the future; you
are projecting too much costs, but I think the cost could easily be absorbed, as I point out, and
you are projecting a loss of jobs, not taking into consideration the increased jobs, and then you
also have, as Mr. Melcher pointed out, certainly three of the mines you listed as losing
production from them; then thereby losing jobs in his own district, he sees them in his own eyes;
you list them as lost jobs; and I really do have great trouble with the figures that you have
presented here today, but I realize this is not the question.
36 It is a speech, I should apologize, but I have very great difficulty, and particularly when the
gentlemen over here in charge of the Bureau of Mines, in response to the chairman's question,
says yes; he does know a few mines that might be closed down under the work assumptions.
36 What I would like you to do, Mr. Peck, Mr. Falkie, I think you did say some existing mines
might be closed down by the bill, did you not?
36 Dr. FALKIE. Yes, I did.
36 Senator HASKELL. What I would like you to do is submit the names of those mines for
the record, because I think we would want to examine those, we want to examine the factual
basis, as you or I arrive at these conclusions, and I would like to see the specific mines in the
record today that have been closed down.
36 Can you do that?
36 Senator METCALF. Mr. Chairman, if the gentleman will yield, we want this material
submitted, and we want it when we reconvene this afternoon.
36 Senator HASKELL.Yes, that would be what we want.
36 Dr. FALKIE.We are prepared to discuss at length -
36 Senator HASKELL. I am not prepared for discussion. I want the names of the mines that
will be closed down. I want to see on what facts you built this on.
36 Dr. FALKIE. We have the facts.
37 Senator HASKELL. And you will submit them for the record?
37 Dr. FALKIE. Yes. n1
37 n1 This list was not submitted. See appendices for submitted materials and related
correspondence.
37 Mr. HILL. I think I will have to object as to whether we will name specific mines, and
refer this to counsel.
37 Senator HASKELL. I am asking Mr. Falkie to submit the names of those of specific mines
for the record.
37 Secretary MORTON. I would like to check with counsel on that too. I think there is a
question of preempting a condition