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 of a business by saying it will close down.
37 Senator HASKELL. What you are doing is basically preventing any real factual material
from getting into the record.
37 Secretary MORTON.We do not want to do that either. We would like you to have a look at
the work, examine the way we did it, and your big problem there in closing down, is a lot of
these small mines close one property and open another property, the company may operate
several small properties, and what you are talking about is not closing down a total mining
company, but you may be closing down several of its properties, and I think this has to be very
carefully handled, and I think you would want it handled that way too if you were a coal miner.
37 Senator HASKELL. What I am asking is for Mr. Falkie to submit the properties that will
be closed down, because we have to make independent judgment of how good you folks are at
estimating, and that is why I am asking this.
37 I yield the rest of my time.
37 Mr. UDALL. Mr. Roncalio, one quick question.
37 Mr. RONCALIO. I happen to come from one State that contributes 75 percent of the coal
you are talking about.
37 Mr. Secretary, last fall we were a short distance away from this bill, in the writing of the
law, and we in the House said we will make changes, and you said if we change it, the President
will sign the bill, but we lost it for time, time ran out on us, and the bill was pocket vetoed.
37 At the risk of very harsh criticism from environmentalists, we allowed the mining act to be
loosened, the language on the alluvial valley floors, we softened citizen suits, but there was still
no cooperation from the President of the United States.
37 You are not going to agree to anything. The point is that we now see so clearly is there is to
be no bill on mining. That is what the people think is happening under this sad matter. What we
give, we still end up getting a veto on.
37 Mr. UDALL. There will not be any bill, unless the coal companies approve of it.
37 Mr. RONCALIO. That is correct, and I cry for you. We should have had a bill.
37 Mr. UDALL. Mr. Seiberling?
37 Mr. SEIBERLING. Mr. Secretary, on page 72 of your testimony to this committee on
February 18, if I may have your attention, please, on page 72 of your testimony before this
committee, on February 18 of this year you made the following statement, "Today we are not
restricted on the use of coal by coal production. We are restricted on the use of coal by limited
facilites for bringing up coal. It is demand restricted or market restricted commodity."
38 Now, I wonder if you would like to clarify those words in any respect before we proceed?
38 Secretary MORTON. Well, you contract for coal, most of the coal that is produced is
contracted for before it is produced, and goes specifically into a certain transportation role, into a
certain system for combustion.
38 That is, in that sense, it is demand restricted. It is demand oriented.As opposed to
petroleum, which is very flexible, it can be readily moved around all over the country, and a
specific barrel of oil, based on its specifications can find a market at any time for its use, whereas
a specific ton of coal, it is usually directed, because of transportation limitations, because of
transportation, and so on, it has to fit into the system.
38 Mr. SEIBERLING. Well, what you are saying also, that the demand for coal is the limiting
factor at the present time?
38 Secretary MORTON. Yes, the demand for coal is always the limiting factor. Unless we
can improve the demand, develop more systems that can use coal in our utiliities, and in other
ways, where coal is an appropriate fuel, such as the mandatory conversion program, we are not
going to have the coal production that we need in terms of meeting our energy requirements. We
have to pull it all together at the same time, and we do need new facilities to move it,
transportation capable of moving it, and obviously mines to produce it.
38 Mr. SEIBERLING. On page 87 of the same testimony, a portion of the colloquy, you said
you assumed we would get a good bill, and I submit in the context you were talking about H.R.
25, and I would like to read to you a few more lines from that colloquy, and get your comments
on that.
38 I had raised the point that the unemployment compensation sections of the bill, which
incidentally we have since eliminated, were not necessary, and I made this statement to the effect
of that.
38 This bill, in my view, has been so worked over that it seems to me that the number of
people who are going to be unemployed as a result of this bill is almost zero. Maybe some others
could quarrel with that, but that is at least it is going to be extremely small - that there is not
really any need for it.
38 Namely unemployment compensation provisions.
38 Secretary MORTON. I do not think there is either. I would think that Congress must -
38 Mr. SEIBERLING. There will be a net gain in employment. A good reclamation bill,
because reclamation is going to require capital investment, it will require a work force, so we
will have a net gain.
38 That was all with respect to this bill.
38 Secretary MORTON. In respect to obviously the reclamation aspect of it, because if you
have a good reclamation bill, I think you will have a net gain.
38 Mr. SEIBERLING.To read a couple more lines, I say, "Especially if we have a nice
reclamation fee.
38 "Secretary MORTON. If we have an adequate reclamation fee."
38 Mr. Secretary, I figured "25 cents and 35 cents a ton is a rather modest fee." That was the
end of that colloquy.
38 Now, in the President's veto message, we have the statement that the tax provision would
be excessive and unnecessarily increase the price of coal, and I wonder, in the light of that
colloquy, about an adequate reclamation fee, how that is reconciled with the statement by the
President, that this is an excessive fee.
39 Secretary MORTON. I think the economic impact of the proposal obviously was
developed by an economic analysis by the Council of Economic Advisors, and by the economic
part of the FEA. They are more competent certainly than I am, to measure economic impacts,
and I do not have any problem admitting that I was wrong.
39 I think that the major price impact is going to be because the systems for using coal are
going to develop faster than additional coal production, and we are going to have a severe pricing
problem.
39 Mr. SEIBERLING. Mr. Secretary, are you aware that the price of coal today is being
determined, not by the cost of production but by market forces, particularly the increase in the
price of oil, and that the price has risen almost threefold in the last 2 or 3 years, and that the
operator's profits have risen astronomically as a result?
39 How can we say that adding 35 cents a ton to the cost of strip mining coal is going to have
any effect on the market price of coal, when the price is astronomically higher than the cost of
production?
39 Secretary MORTON. It will be the limiting of production, and the curtailment of supply
that will force the price up. I am not arguing the point that 35 cents a ton will have any major
effect on the price of coal.
39 Mr. UDALL. I have committed myself to terminating at this time, gentlemen.
39 Mr. ZARB. Mr. Chairman, it is important that this further dimension of the issue get in the
record. The Congress mandated the FEA to order the conversion of utilities from oil to coal,
under certain circumstances, and with certain directives.
39 For some months after I took office the Congress asked me why we had not after almost a
year, used that authority.
39 We have recently put that authority into use much to the chagrin of many utilities, and
many Members, but the point is that we are placing a demand on coal.
39 Now, when we do that, if in our calculation - and I agree we have a disagreement with
respect to Mr. Morton - but if in our calculation, we are reducing the available supply over the
same period we are increasing demand, when we are increasing the price at some extraordinary
rate, because all of the difficulties you articulated.
39 That is a consumer cost increase, that will accrue, if that is the event that will take place.
39 Mr. SEIBERLING. Do you agree that the 35-cent fee will have no effect on the production
of coal?
39 Mr. ZARB. Mr. Seiberling, I agree with that. I will stipulate to that point.
39 Mr. RUPPE. Mr. Chairman, can you give us a minute?
39 I just want to take 1 minute. As these hearings terminate, the hearings have been held so
that the majority has been able to question the witnesses, and the minority has not had equal time,
and I regret that the hearings are not really calculated to encourage the minority support for the
override vote when the legislation comes to the floor.
40 I say that regretfully because I will vote to override, but I do not think the hearings are
really geared this morning to elicit the minority support, and I think it will give some credence to
the suggestion made that this perhaps is a political contest, and unfortunately it is not related to
what I consider a very worthwhile piece of legislation.
40 Mr. SEIBERLING. The hearings are not over. We are merely accommodating the
Secretary.
40 Mr. UDALL. Mr. Zarb, could you come back this afternoon? Other members want to ask
questions.
40 Mr. ZARB. Mr. Chairman, I just reshuffled my schedule. If it is all right, I would like to
stay another half hour to get it done with. I have to be downtown at 1:30, but if we can do
something between now and then, I have cleared everything else up to that point.
40 Mr. UDALL. Are there any members of the minority side that have not had a fair show?
40 Mr. RUPPE.I yield to Mr. Skubitz.
40 Mr. SKUBITZ. We started at 9:45; it is now 12 o'clock. Mr. Steiger has had 3 minutes.
40 Is that what the chairman considers fair time, and will that be the distribution of time this
afternoon?
40 Mr. UDALL. I do not think my friend from Kansas can ever say that at a meeting I
presided over there has not been a fair distribution of time.
40 These hearings are a special case. Those who support the bill wanted to know the basis of
the calculations by which we are going to lose all of this coal production, so the chairman has
deliberately allocated the time to the proponents of the bill.
40 I am prepared to hold hearings this afternoon, tonight, and tomorrow, so the members of the
minority can feel they have had a proper share of time.
40 Mr. Zarb said he can stay a little longer. I am now going to the minority to ask questions.
40 Mr. Ruppe?
40 Mr. RUPPE. Mr. Chairman, I might say, as far as I can remember, the Chair has always
been very fair in allocation of time, perhaps with the presence of these distinguished men, we in
the minority should be given the opportunity to have their expertise as well.
40 Mr. Zarb, I have had the opportunity to gain from the slight delay in my addressing my
question to read your statement. On page 11, you indicate that in the case of a number of small
mines, they simply do not have the cash flow to afford the technical resources, to perhaps afford
the expertise that would be necessary at times in submitting an application for permission to
mine.
40 As I recall, the small mining coal prices have risen substantially more than the prices of the
major mines - those that are on long-term contracts.
40 My understanding would be that small mines have been able to increase their prices
substantially more than was suggested by my colleague from the Senate a few months ago.
40 It is hard for me to understand, in view of the quadrupling of prices, why they could not
afford the administrative costs for filling out the permits you suggested.
41 Dr. FALKIE. The pricing situation rose to a peak increase in terms of what the delivered
prices of coal was, both from the contract market and from the spot market. In recent months the
spot market prices have been going down.
41 Mr. RUPPE. What are they now, compared to a year and a half ago?
41 Dr. FALKIE. I have the figure from the Federal Power Commission, on delivered prices,
something like in excess of $15 for the long-term contracts, and something around $2 5 for the
spot market, and these are still going down.
41 This is February delivered prices to the Federal Power Commission, data that is collected
from the electric steam power fire plants.
41 Mr. RUPPE. The prices are up over a year and a half ago, prior to the oil embargo.
41 Dr. FALKIE. Yes.
41 Mr. RUPPE.Have they doubled, tripled, what would they be?
41 Dr. FALKIE. I would guess in the order of being doubled. I do not have the number with
me.
41 Mr. RUPPE. How can you say the small mines would go out of business, because they
simply could not afford the cost of filling out a permit application?
41 Mr. ZARB. Mr. Ruppe, the cost of filling out the forms is, according to my information,
only part of the total exposure of the capital investment required. You do have to make a
judgment, as to whether those mines would continue in operation, faced with that capital
investment.And there is a further point. We know it in virtually every business that we regulate,
there is a point beyond which you squeeze out marginal production.
41 Mr. RUPPE. Have you squeezed out marginal production under the Pennsylvania law in
the last year and a half; have any operators who are operating in Pennsylvania and Ohio, say
subsequent to the oil embargo, found that the Ohio and Pennsylvania mandates, precluded them,
even with the higher post embargo price for staying in business?
41 Dr. FALKIE. As this chart has shown, there was a definite drop of production in Ohio.
41 Mr. RUPPE. I am speaking of the Ohio production, which was prior to the oil embargo,
was it not? Subsequent to that time, has any time that is in business after the oil embargo, had to,
because of stringencies of filling out the form, not been able to stay in business in Ohio and
Pennsylvania?
41 Dr. FALKIE. There is more than just filling out the forms, Mr. Ruppe. It is a matter of
availability of equipment, availability -
41 Mr. RUPPE. I have a limited amount of time. I read your statement, Mr. Zarb. As a result,
operators would simply not be able to bear the front end costs of applying for and obtaining a
permit to mine? They would have great difficulty in meeting the increase?
41 I cannot conceive of the small operators, because of reporting requirements, because of
application requirements, with the high price of coal as it is today, not being able to stay in
business.
41 Mr. HILL. The spot market price is coming down.
41 Mr. RUPPE. I know it is coming down. It has come down from what?
41 Mr. HILL. In December of 1974, it was $2 8 a ton. In January of 1975, it was $25 a ton, in
February 1975, - so it has come down.
42 Now, the small operator is less efficient. He has higher costs than the larger operator, so
I am comparing differences between the spot mining and -
42 Mr. RUPPE. He does have a higher price too. The big operators are under long-term
contracts with lower prices.
42 Mr. HILL. That is correct, but in the case of Ohio and Pennsylvania, I think one of the
features of those two State laws, in fact all of the State laws we have looked at, there are special
provisions and variances just for small miners that are not in this bill, and we think that reflects
the fact that some States also made judgements in some of these heavy requirements, all of these
requirements, when in fact there is substantial damage -
42 Mr. RUPPE. Do the Pennsylvania and Ohio laws require similar identification?
42 I want the Department of Interior. They administered the bill. I want the Department
involved who say they can manage this bill.
42 Mr. ZARB. Mr. Hill is from the Federal Energy Administration.
42 Dr. FALKIE. The answer to your question is that the Pennsylvania and Ohio laws are
considerably more lenient in regard to the front end part that we are talking about, No. 1, and,
No. 2, the Pennsylvania and Ohio laws are considerably more lenient with regard to variances.
42 Mr. RUPPE. We are talking about the initial application requirements, and if you could
send us a letter outlining them it would help us very much.
42 Dr. FALKIE. I would like to submit to you, for the record, if you wish, an analysis of the
comparison of all of the State laws, with this particular proposed legislation that we are working
on now. I think it will show you, in a qualitative way what the differences are.
42 Mr. RUPPE. Mr. Zarb, I have a few minutes left, on page 13, getting to a more technical
subject, you indicated in your third paragraph that the bill would require operators to use any
existing technology. It could require operators to apply technology, although only theoretically
available.
42 Now, it is my understanding in reading the conference report on page 38, there would have
to be measures undertaken to minimize disturbances to the hydrological balance by having the
operators prevent disturbances to the extent possible, that is, to make them use the best
technology currently available, so I would suggest that I have some difficulty with your testimony
because you state that they have to use any existing technology and I believe the language says to
the best extent possible.
42 Also, you say theoretically available technology, and I believe it is currently available.
42 We are on the subject of semantics; is not that substantially different than what your
testimony would indicate to the average layman?
42 Mr. ZARB. I guess it comes down to our definition and the word "theoretical," whether
that is an economic judgement or not.
42 Mr. RUPPE.Theoretical and current.You would identify those two as the same?
42 Mr. ZARB.Theoretical in that context seems to me that our interpretation may have created
the problem you described.
42 Mr. RUPPE. As I recall, fusion is theoretically possible, but not currently available. I do
not believe anybody would suggest that they are synonymous.
43 Mr. PECK. As a lawyer, could I speak?
43 Mr. RUPPE. Not from your department, please.
43 You can take a phrase that says currently available, and say this means theoretically
available. They are logically different interpretations, and I cannot believe the Bureau of Mines
would read both interpretations the same way.
43 Mr. HILL. Mr. Ruppe, it means any technology currently available to prevent the siltation
problem.
43 Whether or not that is economical does not appear to be an available test under the law.
43 In fact, in our own proposed amendment, we asked for a practicability test, and that was
rejected in the act itself.
43 Mr. RUPPE. It says to the extent possible, does it not?
43 Mr. HILL. It does say to the extent possible, as to whether or not the technology would fit
that geological situation, but we had specifically asked for this economic test, and did not get it.
43 Mr. RUPPE. I understand Mr. Zarb has an urgent request to be elsewhere, and I prefer to
hold my questions for someone else.
43 Mr. UDALL. Mr. Steelman?
43 Mr. STEELMAN. We have been around and around over the past 3 years and we have had
various technical questions, and a number of us have been involved in this process, but I think
the vast majority of our colleagues still have to decide whether to sustain or override.
43 On the bottom line, I would have to ask two basic questions: Whether or not it is a
reasonable thing to require operators to do as the bill directs, because I do think that we have
taken a middle ground here, or do we follow our distinguished colleague from West Virginia
who says to abolish all strip mining, allow just underground mining? We also have others that
say let us go on as usual, but I think we have come up with a reasonable middle ground, which
allows mining of coal, but also has strict standards.
43 I think the economic impact really represents the bottom line for most of our colleagues.
43 I find myself in agreement with George Meany, and that is not usual. Over the years, where
there was the remotest possibility of any advese economic impact to the membership, he is the
first one down here, or at least those who represent him are, to say do not pass this bill. But they
formally endorsed this legislation and I would say especially given the kind of economy we are
dealing with now, it is very difficult to understand how this could represent a decline in
employment, and still be endorsed by the AFL-CIO.
43 Now, why in the world would George Meany and the United Mine Workers come up here
and formally endorse this bill if that was so?
43 You say it will represent a loss of 36,000 local jobs.
43 Mr. ZARB. We went through that line before, and I will repeat what I responded with
before, Mr. Steelman.
43 In looking at the bill from the energy standpoint we had to base our judgment on the facts
put before us. I have no idea why -
43 Mr. STEELMAN. Now, the question is, who put the facts before you, and, I think this
complements the line of questioning by our colleagues earlier, who is putting the facts before
you?
43 Mr. ZARB. Well, let me answer your first question, before we get to the second. It is clear
from our standpoint, from the FEA standpoint, we are looking at the energy equation, and it is
also our observation that not everybody does that always, when we have one piece of legislation,
one discipline versus another.
44 We came to the conclusions based on an interagency analysis, it was not only energy and
FEA people, it was the Department of Interior Bureau of Mines, Office of Management and
Budget, Commerce, Treasury, all of those people involved, that developed the set of facts for us
to base our judgment upon.
44 We did not start with a judgment that we ought to find a way not to sign the bill. We
started in reverse. I tried to find a way to approve this.
44 It was clear before us, that this would have an economic impact in a number of dimensions.
It would reduce supply at a time when capacity was important, because we are in the business
right now, today of mandating conversion from one fuel to another.
44 We will be in court, with that, I am sure, because people will complain that we have cut the
potential availability of long-term contracts.
44 We have to fit both sides of the equation together, and that is our job, so we called the shots
the way we saw them.
44 Mr. SEIBERLING. I would like to ask Mr. Zarb if they consulted with the Department of
Labor in determining what the job effects of this would be, since that is the Department that is
supposed to be expert on this.
44 Mr. HILL. Yes, they were. We had a number of meetings on the problem of the
unemployment calculations. The basic work that was used in the development of the
unemployment figures, relating to the level of production losses that we estimated, was based on
some work done by the Department of Commerce, the economic people, and the professor from
West Virginia University, who is a substantial nationwide authority on output methods, and we
used basically his formula, even though there were some studies that projected higher
unemployment, we used his basic studies.
44 Mr. SEIBERLING. In other words, the Department of Labor was not involved in making
the calculations?
44 Mr. HILL.They were at the task force meetings that we had.
44 Mr. STEELMAN.Could you furnish us with the names of the Department of Labor people
who were present?
44 Mr. HILL. We would do that.
44 Mr. STEELMAN. My understanding is they were not involved in making the calculations.
44 Mr. HILL. They were at the meetings.
44 Mr. STEELMAN. What this means then, is that the agency within the executive branch
which traditionally would have been the advocate regarding employment aspects, along with the
unions, was not consulted.
44 Mr. HILL. Mr. Steelman, we used the studies of the Department of Commerce. They had
done some of these studies. They historically have put out studies relating to unemployment in a
lot of the areas. I do not think the Labor Department has ever done any particular studies in this
area, thought we did go to the authorities.
44 Mr. STEELMAN. The point is, however, when you are citing statistics, the credibility of
the source, of course, is always open to question and I have great respect for the Department of
Commerce, but I would also say you should also consult others. Not just let the agency whose
historical role has been as an advocate for big business. Let me ask one final question. Most of
us on this side of the aisle, most Republicans pride ourselves in our devotion to the free market
concept, and I certainly pride myself in that devotion, and part of that devotion to a free market
economy is that the cost of goods should reflect the true costs, economic costs as well as social
costs involved in protecting the public health and safety.
45 Now, we had a witness here yeaterday from our agency, Mr. Clayman, and he was arguing
with respect to the nuclear problem, that all costs should be internalized in the product.Yet you
say the exact opposite with respect to coal, that is we should not internalize reclamation costs by
the imposition of reclamtion fees.
45 Now, it seems to me there is a clear social cost here, that would have to be paid someday
out of the Treasury, if we are going to reclaim these lands. Unless we do it by this reclamation
fee. There seems to be some inconsistency here in the testimony.
45 Mr. HILL. I do not think there is any inconsistency. I think it is a general rule that the
administration has consistenly argued that costs should be reflected in the environmental kind of
considerations in the product, and the output of any goods and services, even though the
Congress has gone differently than that in the past.
45 That has been the administration's consistent position.
45 I think in the case of the surface mining bill, it is our judgement, there are costs in H.R. 25,
which are for what is required to be, far in excess of what is required to reclaim the land, and we
need to bring some of those costs down, and still have an adequate reclamation.
45 I do not think everybody on record is against reclamation.
45 Mr. STEELMAN. What would be a reasonable reclamation fee, would it be 25 cents?
45 Mr. HILL. I think the 35-cents fee is not a major turning point, or it should not be in terms
of the impact that this bill would have on production, and what that applies to, the 35-cent fee
would be lost, it would be inconsequential if it were lost.
45 Mr. PECK. If I might inject a note, I think it is important to make the distinction between
reclamation of ongoing operations, and the reclamation of orphan lands.
45 The 35-cent fee we are talking about is an excise tax in substance. It is enacted on coal
which is being mined now, and presumably passed on to the customers of that coal, to reclaim
orphan lands which have been destroyed by strip mining in the past.
45 Now, it was the administration's position that an appropriate reclamation fee was indeed a
social cost, acceptable and desirable, and the administration's bill provided for that. The
difficulty was when the interagency task force reviewed the amount of land required to be
reclaimed, and the possible rates of expenditure, we were concerned that that fund could be spent
in realistic reclamation contracts.
45 It was determined that the 35-cent fee from the very beginning of the date of enactment was
too much and too soon, so the original administration proposal was for a lesser amount, with a
scaling, so that the amount would increase over time, as reclamation activities increased.
46 The amount of the fund, which we calculate for the first full year of production, under this
bill, is $109 to $1 58 million, which we cannot possibly spend. To the extent that this money is
retained in the Treasury and not spent, it has a recissionary impact, it creates no jobs, and is
simply another tax imposed on today's customers for the last generation of users.
46 Mr. STEELMAN. Let me make one final point, and I will yield the rest of my time to my
friend from Ohio.
46 The only alternative as far as this orphaned land is to go to the general Treasury. Either we
have been in the present condition, either we funnel in a reclamation fee, or we go to the general
Treasury. I know from the Office of Management and Budget, if we did this, we would not get
the time of day, so either we go through it this way, or we leave it the way it is.
46 Mr. PECK. The President has not opposed the concept of the reclamation fee. It was the
amount and timing of the fee.
46 The administration's own legislation had such a fee and provided for such a fund.
46 Mr. RUPPE. Mr. Hill, you indicated the FEA does not support this legislation.
46 Has your department at any time supported any or expressed their support for any surface
reclamation legislation?
46 Mr. HILL. We are a fairly young agency.
46 Mr. RUPPE. So your memory would be reasonably fresh.
46 Mr. HILL. FEA was created after the whole surface mining was going on, but I know Mr.
Zarb, myself, and Mr. Zausner have consistently argued that we need surface mining reclamation.
46 Mr. RUPPE. Have you ever supported in any meeting, any Congress, any bill, any
administration?
46 It is my understanding that the FEA has always been against a bill.
46 Mr. HILL. That is not correct.
46 Mr. RUPPE. You have consistently supported legislation?
46 Mr. HILL. Yes.
46 Mr. PECK. We did support it.
46 Mr. RUPPE. I never heard the Department of Commerce at any time get up and support a
bill.
46 Mr. UDALL.The Chairman proposes to recess in just a moment until 1:30.
46 Mr. STEIGER. I would just like to explain for the edification for the record, if nothing
else, the basis of Mr. Meany's support, and the United Mine Workers support.
46 I suspect the witnesses -
46 Mr. UDALL. You are a spokesman for them?
46 Mr. STEIGER. Absolutely. This is something of a shock to you, I know it was to Mr.
Meany, the fact is that the United Mine Workers structure is made up of 12 divisions in the areas
of the country.
46 On the vote as to whether or not to support the Surface Mining Reclamation Act, the vote
was 5 to 4, because of three of the divisions, 5 to 4 in our position.
46 Those who opposed it had a significant number of surface miners in their membership.
Those who supported the bill, where membership consisted largely of underground mines, and,
in most instances, whose wages were geared to the price of coal. It is a fairly simple equation, if
the price of coal goes up, the wages go up.
47 If there is a shortage of coal, there will be an increase in the price of coal, therefore,
there will be an increase in wages. In order to guarantee the support of the mine workers, they
brought in the three Canadian districts and asked them to vote. Since they are not under the
regulations or the mandate of this bill, they had not been contributing to the increase in the cost
of coal, because their wages would also have gone up, so they supported the bill.
47 That is the way they ended up on the issue, whatever the figure would result in, the 7 to 5
vote.
47 Mr. UDALL. Except that the mine workers are not part of Mr. Meany's -
47 Mr. STEIGER. I understand that. Mr. Meany has an obvious objective interest, and this
was a very reasonable way to support the mine workers, so it seems to me there should not be
any mystery as to why they have supported this measure, and I would hope we would not
substitute the judgment of the United Mine Workers, or Mr. Meany, when we evaluate the
specifics of this legislation.
47 Mr. SKUBITZ. I think I would also like to point out that the United Mine Workers
membership is composed of 75 percent below ground operators and only 25 percent above
ground.
47 Mr. UDALL. Mr. Seiberling?
47 Mr. SEIBERLING. The Department of Interior's estimate of the cost of reclaiming all of
the orphaned lands was $9 billion, and on that basis, the fee that is included in this bill at the
current rate of production would take about 90 years to reclaim all of the orphaned lands. Even if
we assume an increase as projected by the Department, it would take about 60 years. So I do not
see how the Department could take the position that this fee is excessive. Of course, a
10-cent-a-ton fee would take probably a couple of hundred years. I just put that in the record.
47 I would also like to put in the record that Professor Miernyk's study, which was cited by
Mr. Morton, was done on the abolition of strip mining, not the regulation, and, incidentally, his
conclusion was that if we abolished it entirely, there would be an increase in jobs, because deep
mines employ more people than strip mines for the same amount of production.
47 Mr. UDALL. We will reconvene at 1:30 in the Interior Committee room of the Longworth
Building.
47 [Whereupon, the hearing was recessed at 12:20 p.m.]
47 AFTERNOON SESSION
47 Mr. UDALL. The subcommittee will come to order.
47 Do you have your troops here?
47 Mr. HILL. Ready to go, Mr. Chairman.
47 Mr. UDALL. We asked before lunch for the presence of Mr. Jack Reed, Mr. Hadley, and
Mr. William Keefer.
47 Are they here?
47 Mr. HILL. They are all here.
47 Mr. UDALL. Will these gentlemen please stand up.
48 At the request of several subcommittee members I am going to administer the oath to
these professional witnesses, not because of any doubts about their integrity, but because it has
been suggested that they may need this additional protection since questions will be asked of
them.Will each of you raise your right hand?
48 [Whereupon, Mr. Reed, Mr. Hadley, and Mr. Keefer were duly sworn.]
48 Mr. PECK. Mr. Chairman, in view of the fact the witnesses have been sworn, may I
introduce the Deputy Solicitor of the Department of Interior, as counsel for the witnesses?
48 Mr. UDALL. Yes, you may.
48 Mr. PECK. This is Mr. David Lindgren.
48 Mr. UDALL. Mr. Melcher?
48 Mr. MELCHER. Mr. Reed and Mr. Hadley will please come forward.
48 Mr. HILL. Mr. Chairman, I might like to ask a few question, if I can, before we start. I
would like to ask if we would have an opportunity for Mr. Falkie to go through a very brief
presentation of our production loss estimate. I think that would be very useful. It would be a
summary of the report we are providing, but I think it would be a very useful thing to do, so that
we could think about the entire methodology that was used. I do not think it would take very
long.
48 Mr. MELCHER. Mr. Chairman, I would suggest that we do that after we get through with
Mr. Reed and Mr. Hadley, or perhaps that would be in order, but we have been waiting -
48 Mr. UDALL. We will give you that opportunity.
48 Mr. SEIBERLING. Mr. Chairman, do you know whether any of the minority members
plan to be present?
48 I would hope we would not have the claim later that they were not able to participate.
48 Mr. UDALL. They were advised of the hearing, and under the committee rules, we are
within our rights to proceed.
48 Were phone calls made to all minority members?
48 I suggest that be done now, and that we go ahead and proceed.
48 STAFF MEMBER. The meeting was announced.
48 Mr. UDALL. To fully protect ourselves, I suggest we call each member.
48 Mr. Melcher?
48 Mr. MELCHER. You are Mr. Reed?
48 Mr. REED. Yes.
48 Mr. MELCHER. And Mr. Hadley is to your right?
48 Mr. REED.Right.
48 Mr. MELCHER. Mr. Reed, I believe on the 14th of April you attended the meeting in Mr.
Udall's office and several other employees of the Department of Interior staff to discuss the
impact of the bill's provisions, regarding the alluvial valley floors.
48 Now, if that is the case, was it not a fact that at that time you were projecting the worst set
of circumstances you could conjecture as to how much of the loss there would be in full
production, due to that provision in the bill?
48 Mr. REED. Yes, sir; we attended that meeting according to my records on the 14th in Mr.
Udall's office, with several members of the committee staff and of the Geological Survey, and of
the Bureau of Mines.
49 The meeting was specifically to discuss two overlays which the Geological Survey
prepared at the request of Mr. Kraft of the Senate committee staff, in response to a specific
question about the effects - the worst possible effects, as you worded it - of the wording of S. 7 as
it then stood on strippable coal, specifically in the Powder River basin.
49 Mr. MELCHER. Now, in doing that, it is my understanding you talked about whether
colluvial soil was involved.
49 Mr. REED. Yes, sir.
49 Mr. MELCHER. And I wonder why.
49 Mr. REED. The reason for that?
49 Mr. MELCHER. Yes; since it was not anywhere in the bill?
49 Mr. REED. Yes, sir; the reason was, could somebody read the exact wording of the alluvial
valley floor provision in S. 7, as it stood at that time?
49 Mr. MELCHER. Were you dealing with the definition, Mr. Reed?
49 Mr. REED. Yes, sir.
49 STAFF MEMBER. "Alluvial valley floors" means the unconsolidated stream laid deposits
holding streams where water availability is sufficient for subirrigation or flood irrigation
agricultural activities.
49 Mr. REED. The reason we brought up the question was as follows: We presented at that
meeting, I believe to Mr. Crane of the committee staff two paragraphs from the Glossary of
Geology published by the American Geological Institute.
49 One of these indicates that under one usage of the word alluvial, colluvial deposits may be
included under the term, general term alluvial.
49 Mr. MELCHER. Mr. Reed, that definition, is that not the same definition, word for word,
used and recommended by the administration's bill?
49 Mr. REED. I am not cognizant of the exact wording of the recommended bill.
49 Mr. MELCHER. Would I be advised by staff; I believe it is the exact wording.
49 Mr. CRANE. Yes, sir.
49 Mr. MELCHER. It is the exact wording. So your concern at this April 14 meeting was on
the possible interpretation that upon review some doubt was cast on what the language meant -
the definition meant?
49 Mr. REED. Yes, sir.
49 Mr. MELCHER. And you were not aware it was the same language that had been
recommended many months prior to that time by the administration bill?
49 Mr. REED. No, sir; I was not. In fact I am not aware of the recommended administration
bill.
49 Mr. MELCHER. Now, in going over its interpretation, you had already arrived at it, but in
reviewing it for the satisfaction of the committee staff, had you not read the committee report that
accompanied the bill?
49 Mr. REED. Sir, I am not aware of the various documents that customarily evolved during
the work on the bill of this sort.
49 The committee report, as I understand it, is this document that I have here; maybe
somebody could tell me whether this is the document to which you refer.
50 Mr. MELCHER. No, that is the conference report. The committee report would have
accompanied the bill.
50 Mr. REED. I have now read the committee report.
50 Mr. MELCHER. Well, after you discussed your interpretation and your fears with the
committee staff on April 14, in Mr. Udall's office, was it not a fact that you agreed that your
projection was based on a very unreasonable interpretation of this section of the bill.
50 Mr. REED. Yes, I did indeed agree.
50 Mr. PECK.Excuse me.
50 What projections?
50 I did not hear the witness.
50 Mr. MELCHER. The loss of production, I believe the figure you were using at that time
was 28 million tons loss of production.
50 Mr. REED. Sir, I do not believe any figures which the Geological Survey presented ever
referred to loss of production. They referred to loss of reserve.
50 Mr. MELCHER. Well, let us put it this way. You have to map out for the Bureau of Mines
to arrive at a figure. You mapped out the area, but after reviewing the language with the staff,
you did agree, is it not true, that including colluvial soils in the identification of the definition
was unreasonable.
50 Mr. REED. Yes, we did.
50 Mr. MELCHER. And, therefore, because of that, that would then change your mapping
drastically, would it not?
50 Mr. MELCHER. It would in fact narrow it down to a very small area, as compared to
where you started.
50 Mr. REED. In fact there were two maps discussed at that meeting, and we have been
discussing one of them.
50 The other one showed something on the order of 3 percent of the area of the Powder River
basin, so the second one -
50 Mr. MELCHER. So the 3 percent of the Powder River basin then would be the
interpretation that you arrived at, which was the intent of the bill?
50 Mr. PECK. Mr. Chairman, may I clarify again, we are talking about the definition in
section 601 of the administration bill, is that correct?
50 Mr. MELCHER. I will get to you later on, but we will now use Mr. Reed.
50 Of course we are talking about the definition. We do not need to be reminded of that, and
the map, the two maps that you referred to, Mr. Reed, one of them would include colluvial, and
this would be in the larger areas.
50 The second one would be limited to the alluvial valley, and that was the very narrowly
defined area on the map, and about 3 percent of the Powder River basin?
50 Mr. REED. That second map, if I may clarify a little bit was using a wording, which a
group of professional people at the Geological Survey were suggesting to the Senate committee,
as a possible wording, and that wording, I believe, you have copies of those maps with you, sir?
50 Mr. MELCHER. We are aware of the wording.
50 Mr. REED. The second one referred to a wording, which I quote here, I believe, that we
were suggesting, was never in the bill, in which alluvial valley floors were taken to mean, the
flood plains and channels underlaid by unconsolidated stream laid deposits, holding perennial
streams, where water availability is sufficient for subirrigation or flood irrigation agriculture
activities, and I call your attention specifically to perennial streams.
51 Mr. MELCHER. Yes, and we are aware of that, which is identified on this documents
as B.
51 Mr. REED. Yes, sir.
51 Mr. MELCHER. In contrast to A, which was more closely identified with the language that
is in the Senate bill, and which was in the bill recommended by the administration.
51 Mr. REED. Yes, sir, I think that is now clear.
51 Mr. MELCHER. Is that correct, Mr. Hadley?
51 Mr. HADLEY. Yes, sir.
51 Mr. MELCHER. On the documents that were discussed on that day, and which were later
discussed with Senator Hansen and Senator Metcalf, and I believe in correspondence there was
an accompanying document that listed a number of mines in the West, and bearing in mind the
alluvial floor section only refers to mines west of the 100th meridian, and some of these were
identified as being in the area of the alluvial valley floors, which would be covered by the
definition of the House or Senate bill.
51 Mr. LINDGREN.Would it be possible, if there is reference to documents, where documents
are to be discussed by witnesses, that those documents be sufficiently identified for the record, so
there could be no question whatever about which documents the witnesses are in fact discussing.
51 Mr. MELCHER. This document is entitled "1974 Coal Production" based on the
interpretation of the language in H.R. 25, and it is dated April 15, 1975. n1
51 n1 See Appendix, pp. 227-29.
51 Does that identify it sufficiently, counsel?
51 Mr. LINDGREN. Yes.
51 Mr. MELCHER. On this document there are a number of mines at the left, they were
mining at that time, and are mining today, that are identified on this document on the alluvial
valley floors.
51 Mr. Hadley, are you familiar with the Black Mesa Mine in Arizona?
51 Mr. HADLEY. I know where it is, but I have never been there.
51 Mr. MELCHER. Are you advised whether it is on the alluvial valley floor?
51 Mr. HADLEY. I could not really say.
51 Mr. MELCHER. The Navajo Mine?
51 Mr. HADLEY. I am familiar with that, and I have been there.
51 Mr. MELCHER. Would you identify that as being on the alluvial valley floor?
51 Mr. HADLEY. No, sir.
51 Mr. MELCHER. You categorically say it is not on the alluvial valley floor.
51 Mr. HADLEY. It is not on the alluvial valley floor, as far as I am concerned.
51 Mr. MELCHER. The Western Energy Mine at Colstrip, Mont.?
51 Mr. HADLEY. I am not that familiar with that mine to say one way or the other.
51 Mr. MELCHER. Have you been at the Westmoreland Mines at Sarpey Creek?
52 Mr. HADLEY. Yes, sir.
52 Mr. MELCHER. Is that on the alluvial valley floor, as described in H.R. 25?
52 Mr. HADLEY. No, sir, I don't think it is.
52 Mr. MELCHER. Let the record show that these mines are really listed here as being on the
alluvial valley floor.
52 Mr. LINDGREN. Did that question go to the definition in H.R. 25?
52 Again, what definition is the Congressman using for purposes of asking the question, as to
whether or not this witness' opinion is that they are on the alluvial valley floor -
52 Well, the point is -
52 Mr. MELCHER.I identified this as H.R. 25.
52 Do you understand the question, Mr. Hadley?
52 Mr. HADLEY. Yes, sir, but I am not sure I understand what document you are talking
about.I don't think I am familiar with that document.
52 Mr. MELCHER. Pass the document down to the floor.
52 Is counsel for Mr. Hadley attempting to infer that the definitions are different between the
several bills?
52 Mr. LINDGREN. Mr. Melcher, I am attempting to infer nothing. I am just concerned,
inasmuch as these witnesses have been sworn, that there be no question whatsoever as to what
definition is being used at any particular moment.
52 Mr. MELCHER. Let the record show that the definitions in any of these bills are the same,
but that document refers to H.R. 25.
52 Mr. UDALL. Could I interrupt just a moment.
52 We have a large group outside trying to come in. Unless there is some objection, I will
move some of the press to the lower table, and leave the upper level to the members of both
sides. That will free up some seats for some of the spectators that want to get in.
52 Members of the working press may take the seats up here.
52 While I am interrupting, Mr. Melcher, it might be wise, in view of the criticism this
morning, to get some kind of understanding on the division of time.
52 The Chair would propose, as a suggestion, that we proceed in the usual order of 10 minutes'
interrogation. Is that agreeable?
52 Ten minutes for each member, and the Chair will list the members in order as to their
arrival, as we customarily do, and since we did not impose this on Mr. Melcher, we will give him
another 8 minutes or so.
52 Mr. MELCHER. That is very agreeable to me, Mr. Chairman.
52 Mr. Hadley, you have identified two mines listed, the Navajo mine near Farmington,
N.Mex.
52 Can you find that mine on there?
52 Mr. HADLEY. Yes.
52 Mr. MELCHER. All right, and it is listed in this document as being on the alluvial valley
floor.
52 From your own knowledge, that is not on the alluvial valley floor under the definition as
provided in H.R. 25 or the Senate bill, or the administration proposal.
52 Mr. LINDGREN. Mr. Chairman, if I may interrupt, I do not believe that document
identifies that mine as being on the alluvial valley floor.
52 Mr. HADLEY. If these represent no production on the alluvial valley floor, then the
Navajo mine is not on the alluvial valley floor?
53 Mr. MELCHER. Pardon me, Mr. Hadley, do you not understand what that chart refers
to?
53 Mr. HADLEY. No, sir; I do not.
53 Mr. MELCHER. The X's in the last column identifies production on the alluvial valley
floor.
53 Mr. LINDGREN. Mr. Chairman, I do not believe the document so identifies it, but I
believe there are other witnesses that could do that.
53 Mr. MELCHER.I believe we have to interrogate counsel.
53 Counsel, will you refer to the last page of that document?
53 Mr. PECK. Mr. Chairman, could I suggest somebody from the Bureau of Mines?
53 Mr. MELCHER. Could you refer to the last page. n1
53 n1 Page 229 of Appendix.
53 What is in the total, 45.1 under estimated production of alluvial valley floor mean?
53 Mr. LINDGREN. I believe there is a footnote, it states "estimated production based on
H.R. 25 as amended. A strict interpretation of burden of proof, that no alluvial valley floor," and
so on.
53 May I ask if there is a specific question in the committee's mind, I would like to state there
are witnesses here willing to address the meaning of this document, how it was prepared, what it
references, and so forth.
53 These are technical witnesses, from the Department, who are capable of answering a
number of the Congressman's questions, but I do wish to make certain inasmuch as this is sworn
testimony, that there is a clear understanding in the witness' mind exactly what they are being
asked to respond to.
53 Mr. MELCHER. Counsel, I believe the document speaks for itself. It is very clear, as the
column states, activity on the alluvial valley floor, a million tons.
53 The footnote that you have read may further clarify that, but it is what we are asking about,
whether or not these mines are located on the alluvial valley floor.
53 Mr. PECK.Mr. Melcher, if you look at the total of the last page, does that not add up to the
indicated total?
53 Now, independent of that, this is the question we got into this morning. The language of the
bill would proscribe mining in areas other than the alluvial valleys, and the areas that you are
discussing here are precisely those kinds of areas which in the judgment of the Bureau of Mines
would suffer production loss because there would be an adverse effect on the alluvial valley
floors.
53 It does not relate to the definitional section of the bill alone, but to the operative language
of the bill, which prohibits mining where there would be an adverse effect on these kinds of
areas.
53 Mr. MELCHER.Mr. Peck, either the X's mean on the chart that they are on the alluvial
valley floor or it means that they are not on the alluvial valley floor.
53 Mr. PECK. No, sir. But I did not do the document. Maybe we could have someone who is
familiar with the document, and I would say they could identify specifically what it refers to.
53 Mr. MELCHER. Does anybody care to identify that, whether the X's mean on or off.
53 Mr. FALKIE. The X's mean that in the judgment of our professional people these mines
are either on the alluvial valley floor or can adversely affect the alluvial valley floor, or the
hydrology, so it is the whole package.
54 Mr. MELCHER. They are to indicate that their mines would have an effect on the alluvial
valley floors so we agree on that.
54 We will proceed, Mr. Hadley. We have identified two that are listed here as being on the
alluvial valley floors, that are -
54 Mr. LINDGREN. Mr. Chairman?
54 Mr. STEIGER. He is just restating what has been said. Mr. Chairman, as long as the
witnesses are under oath, and that is an introduction to a question, a misstatement of what has
been said, is contained in the question. I must object to that.
54 Mr. MELCHER. Mr. Hadley, tell us in your own words, whether or not the Navajo mine
near Farmington, N. Mex., is on the alluvial valley floor.
54 Mr. HADLEY. To my knowledge, it is not.
54 Mr. MELCHER. You do know the mine?
54 Mr. HADLEY. I have been there, yes.
54 Mr. MELCHER. Thank you.
54 Now, the next one that you seem to have some knowledge is the Westmoreland mine, at
Sarpey Creek, Mont.
54 Tell us in your own words, is it or is it not on the alluvial valley floor?
54 Mr. HADLEY. To the best of my knowledge, it is not.
54 Mr. MELCHER. You have that on the location?
54 Mr. HADLEY. Yes.
54 Mr. MELCHER. The Decker mine at Decker, Mont.?
54 Mr. HADLEY. It is not now on the alluvial valley floor.
54 Mr. MELCHER. The Arch Minerals mine in the Hanna Basin of Wyoming, are you
familiar with that?
54 Mr. HADLEY. I am not too familiar with that mine, no, sir.
54 Mr. MELCHER. You do not know of your own knowledge?
54 Mr. HADLEY. No.
54 Mr. MELCHER. But three of the mines listed, nine in total of your own knowledge, and
having been to the sites, you know they are not located on the alluvial valley floor.
54 Mr. HADLEY. Right.
54 Mr. MELCHER.Mr. Hadley, do you have any information that any of the three mines that
you have identified as not being on the alluvial valley floor would have an adverse affect on the
hydrology involved with that alluvial valley floor that may be anywhere in the vicinity?
54 Mr. HADLEY. The mining would have an adverse affect on the alluvial valley floor?
54 Mr. MELCHER. From your knowledge, any of the three mines that you have identified, do
you know that continuation of mining there would have an adverse affect on the hydrology of the
area?
54 Mr. HADLEY. I really don't know, sir.
54 Mr. MELCHER. Would you have any reason to suspect that it would have any adverse
affect on the hydrology of the alluvial valley floor somewhere in that area?
54 Mr. HADLEY. I don't know, sir.
54 Mr. MELCHER. Well, would you have any reason to suspect such?
54 You answered no, or you cannot give an answer?
54 Mr. LINDGREN. I believe the question was answered.
55 Could the reporter please read that back?
55 Mr. MELCHER.Please read it back, the question and answer.
55 [Whereupon, the reporter read back the last question and answer.]
55 Mr. MELCHER. Your answer is you do not know?
55 Mr. HADLEY. Yes.
55 Mr. MELCHER. You have no reason to suspect such?
55 Mr. HADLEY. No.
55 Mr. MELCHER. Mr. Hadley, the alluvial valley floor is not well understood. The
interpretation, and we must try to understand the definition that was read, perhaps it would be
well for our record if we asked you to home in on this subject.
55 Tell me, as a professional hydrologist, do you find that definition ambiguous?
55 Mr. HADLEY. No, sir, I do not.
55 Mr. MELCHER. Do you find it subject to a wide range of interpretation?
55 Mr. HADLEY. I did not hear your question.
55 Mr. MELCHER. Would you find the definition to be subject to a widening range of
interpretation?
55 Mr. HADLEY. I don't think so, sir.
55 Mr. MELCHER. Would you under any circumstances find that definition inclusive enough
to cover colluvial deposits?
55 Mr. HADLEY. No, sir.
55 Mr. MELCHER. Well, then, it seems apparent, Mr. Hadley, that you as a professional
hydrologist, would be able to correctly identify what areas, which mines, might be interfered with
or might be affected, by this section of the bill, and as a professional hydrologist you have found
three mines that are listed of the nine, that you know, and have visited, and can assert
affirmatively are not on the alluvial valley floor, and, furthermore, that you have no knowledge
that mining at those locations would adversely affect the hydrology of the adjacent alluvial
valley.
55 I think you have been a most helpful witness, and I think it does point out the factual
information that was gathered in this basic document that we have referred to, to arrive at what
affect the bill might have on the alluvial valley floor was not based on the expertise and the
knowledge you possess, but was based on some inaccurate information.
55 Thank you, Mr. Chairman.
55 Mr. UDALL. Mr. Steiger?
55 Mr. STEIGER. Thank you, Mr. Chairman. I think the record ought to reflect that what we
have just had is a reassertation of one professional's opinion and I suspect that Mr. Melcher
would be the first to agree that there is not unanimity on very much of this bill as regards either
definition or the lack of definition.
55 I do not share Mr. Melcher's connotation, and the information as being erroneous, because
of disagreement within the Interior Department as regards the ambiguity or lack of it, of the
alluvial valley floor definition, but it makes me even more disappointed at Mr. Melcher's
approach, he referred to the April 19 letter to him, in which the administration's objection to
name and address by the conference is made very clear. If the words excluding deposit,
contributory streams, after the word deposit, then it was felt the bill, the alluvial valley definition
would be less erroneous, as regards the administration.
56 We did not add those words, and I suspect that is the basis of whatever designation the x
's, and I do not have the document before me, I suspect that is the basis of that.
56 If I am making an erroneous supposition, I would like to know.
56 Mr. FALKIE. We looked at the alluvial valley floor provisions from the standpoint of what
could be interpreted as alluvial valley floor, and geologists do have a different interpretation. I
think I can show you this from a sketch I have taken from a geological textbook. Second, we
looked at not only what mines are on the alluvial valley floor itself, but what potential nearby
mines might have for affecting the hydrology of the area, and of the alluvial valley floor itself.
56 As soon as we get the chart, I can point this out. I would have to say that I would disagree
with Mr. Hadley's answer to the question posed by Mr. Melcher, but I do not think the question
was really a broad enough one that he could give a good professional answer, in the first place,
with regard to say the Decker Mine, because we have maps showing that the Decker Mine does
have alluvial valley floors running right down through it, under the narrowest of definitions.
56 Mr. MELCHER. Mr. Chairman, I must insist that the gentleman's remarks identify the
Decker Mine at the time he is referring to, because it was true the Decker Mine was on the
alluvial valley floor, and it has now moved off of it.
56 Mr. UDALL. Mr. Steiger has the time.
56 Mr. FALKIE. That depends on your definition of alluvial valley floor, but your question
was, is it on the alluvial valley floor.
56 Part of it is mined out. There is another alluvial valley running through it, that is not mined
out. I would like to show you an item taken from a geological textbook, and this is a broad type
of interpretation, that some geologists could give to alluvial valley floors.
56 Obviously Mr. Hadley does not agree with that interpretation. Now, you asked about how
we determine the effect. We look at the effect on not only the meandering stream, whether it is
intermittent or permanent, we look at what effect on this whole area a mine might have under a
very tight interpretation of the alluvial valley floor provision. We look at the hydrology.
56 The problem with the alluvial valley floor provision, as we see it, is that it would not be
able to provide positively that it was not going to have a permanent effect under the alluvial
valley floor provision, and we look at this as well.
56 There is also the matter of the lowering of the water tables. Here is a hypothetical example,
using the narrowest definition of alluvial valley floors in yellow, and using the cross section of
that particular area, as shown here.
56 Now, under the very narrow interpretation, this would be the area affected. The yellow area
would be the area affected by the definition in the act.
56 Well, we looked at the possibility of what effect on the rest of the area mining might have,
if in fact you mine the area that is the alluvial valley floor, and we also looked at the effect of
moving the mining equipment to another area, on the ratios of overburden, on possible delays on
getting equipment to move that additional overburden, so it is the whole picture, it is not one
narrow definition of alluvial valley floor that we looked at, but it is the possibility of a broad
definition, and it is the possibility of what effect mining could have on the alluvial valley floor
that we looked at in our analysis.
57 Mr. STEIGER. This morning you described the election of the United Mine Workers
which was held, my numbers were incorrect, and I wish the record to reflect the correction.
57 The numbers involved, because each United Mine Workers Mining district consists of two
members, one an international member, and one a district member, and there are 24 votes
involved in the outcome of any board action.
57 The final vote was 12 to 11, of all of the directors involved, which I believe Mr. Miller, the
President of the United Mine Workers casting the deciding vote, supporting the legislation.
57 The significant thing is that the Canadians did support the legislation in total, even though
they were not involved in it, and if they had not voted, of course only the American districts in
the United States have been involved, then the United Mine Workers would have opposed this
measure, and I am also advised that Virginia District 28, a Virginia district has just completed an
election within a matter of days.
57 And that election, the two district representatives from that district were the incumbents,
were voted out of office, by the membership of the district, and the issue was the support of the
Surface Mining Act, and they were supporters of the Act, they had been replaced by
nonsupporters, with the assumption, that if the other district directors remained the same, the
assumption, is the vote, if it were taken now, it would not support the legislation.
57 However, be that as it may, some emphasis was placed on the likelihood that there really
were not going to have any jobs lost, because the United Mine Workers support of the bill, I
suspect that is not a good basis to make a judgment, as to whether or not there will be any jobs
lost.
57 Mr. Hill, I wonder if we could have a description, an explanation of the impact, of the
estimation of the production of impact overall of the bill, rather than just taking it section by
section, because I think if we attacked this thing on a section-by-section basis, we will lose the
actual compilation exercise you went through, so I wonder if you might like to address that?
57 Mr. HILL. I would like to ask Mr. Tom Falkie to run through the specific impacts as they
relate to the Alluvial Valley Floor provisions and others, and his brief statement of methodology,
how that was arrived at.
57 Mr. UDALL. There is less than 2 minutes remaining on Mr. Steiger's time so please do it
as quickly as possible.
57 Mr. FALKIE. We will not be able to do it in 2 minutes, but we will make do with the time
we have, with the time that is available.
57 Mr. STEIGER. Mr. Chairman, I ask unanimous consent my time be extended by 2
additional minutes, and I guarantee I will not state one more syllable.
57 Mr. UDALL. Any objections?
57 You have 4 minutes.
58 Mr. STEIGER. First, very quickly, where is the production reserves of the United States,
and as you can see, a considerable amount of them are west of the Mississippi.
58 It is generally low in sulfur content, but there is also a considerable amount of low sulfur
coal in the east.
58 I wanted to talk about productivity because it has an impact on the employment
calculations, and see what the productivity trends are in surface mines. Last year there was a
productivity of something like 35 tons per man-day, and in underground mining, it is
underground the order of 11 1/2 tons per man-day, and the trend in underground mining is clear.
Surface mining has just taken a dip. We used 36 tons per man-day in calculating our production,
our employment impact, and I want to point out that in my opinion, this is a conservative number
for several reasons. One is it does not include clerical employees. Two, it does not include a
ripple effect within the company, and also, in Dr. Miernyck's study, he used a factor that was
larger for surface mines than the one we used.
58 Now, the potential problem areas with this bill, can be summarized from an engineering
standpoint, as possible production losses, possible reserve losses, possible consumer cost
increases, which John Hill will address, the job loss impact, any energy impact from the overall
energy policy and the economic impact in terms of trade deficit and lower productivity.
58 This is what we came up with in terms of a summary of potential production losses in the
first full year of implementation, based on projection of 685 million tons per year.Our ranges of
course are there because of the great difficulty in interpreting the language of the bill, both from
an engineering and a legal standpoint. The high part of that range includes very strict
interpretation including a broad interpretation on the alluvial valley floor situation that you
mentioned, the steep slopes, siltation, and aquifers (7 to 44 million tons) and, of course, the
alluvial vally floor provision, is 11 to 66 million tons.
58 I would like to make one comment in all fairness to Mr. Hadley. I was not aware of, and I
do not think the Geological Survey made a production impact study. They did look at reserves,
and they did not look at production impact, and I think that should be clear.
58 Now, there is some confusion apparently.
58 Mr. UDALL.You have about 1 minute.
58 Dr. FALKIE. I will not be able to make any presentation of our numbers, but I think the
basic numbers are important, so I will go over the basic numbers.
58 Mr. SKUBITZ. Mr. Chairman, I will yield 2 of my minutes.
58 Mr. UDALL. Mr. Skubitz yields 2 of his minutes.
58 Dr. FALKIE. OK.
58 The 1973 production was 592 million tons. It rose to 601 million tons. We projected that,
using ratios, up to 685 million tons for 1977, of which 350 would come from surface mining,
including a considerable amount in the east.
58 I want to point out one thing, that as to any newer projections, as the numbers come in from
the western part of the country, the numbers now appear to be conservative. If we had to make
this production estimate today, we would estimate more production for that particular year, from
the northern Great Plains area and from the western area in general. This would have a larger
impact on our production numbers, but I don't think that is a particularly fair thing to do at this
time.
59 Now, what de did look at, in a qualitative way, was the potential production impact that
we could not quantify. One of these was the citizens' suits possibility.
59 We have no idea what that will cost in terms of production. Designation of lands
unsuitable to mining - we have no idea what that will cost. The surface owner protection
provisions if somebody refuses to allow mining. We talked about ambiguous terms, the possible
interpretations by court and regulatory authorities as well. We did look at this in general, and
some other parts of the bill, some of the hydrologic provisions, the anthracite language, which
was just called to my attention and as to which the conference report confuses us now.
59 Possible State actions with respect to Federal lands. With the States, you have an override
on Federal lands. We have not attempted to quantify any of these.
59 Now, we did look at the production west of the 100th meridian, and with no legislation, we
estimate this as some 95 million tons to be mined in 1977, 73 million tons with the minimum
loss, and 29 million tons with maximum loss under those loss ranges which we showed
previously.
59 We also looked at the eastern small mines, and we projected that about 60 million tons
without this particular legislation, would be produced. With the maximum loss we would project
a very drastic decrease in production to some 8 million tons, and with a minimum loss, to some
38 million tons.
59 We also looked at the employment impact based on this. We looked at the direct and
indirect employment projected for 1977 without H.R. 25. Direct employment would be 43,000
people, and the indirect, using the 0.8 multiplier, would be 34,000. We used the multiplier on
direct employment based on the tonnage loss we calculated. We came out with a direct and
indirect jobs loss of up to 36,000. This is the maximum, and we should have shown a range on
here, but it is the maximum. The range is somewhere between 9,000 and 36,000 people.
59 We also looked at reserve losses, and this is particularly important to the long-term future
of the energy picture of the country.
59 Mr. UDALL. The gentleman's time has expired.
59 Dr. FALKIE. Well, we calculated a reserve renge, using the same type of analysis as on
production, and this is the range that we calculated.
59 I have not had a chance to dig into the details like I wanted to.
59 Mr. STEELMAN. If the gentleman needs 2 more minutes, I would be glad to yield.
59 Dr. FALKIE. I think 2 minutes would not do justice, so I will stop here.
59 Mr. UDALL. Before I go to Mr. Seiberling, I want to raise this point. This morning, Mrs.
Mink requested a study of the CEQ report regarding impact of bonding and application
procedures on small mines. You indicated you would give that.
59 Dr. FALKIE. I gave a study to Mr. Norm Williams earlier this afternoon. n1
59 n1 Appendix I.
60 We did not reference any page, however.It was not clear that that was requested.
60 Mrs. MINK. The staff turned these documents over to me. There is no page reference in
the CEQ study anywhere. It is what I consider to be backup data done in preparation for these
hearings and does not comply with my request for a study which led to the conclusion that small
mines would be affected as indicated in your letter to the committee. There was no
accompanying page reference to the CEQ report which you mention in answering my question
this morning. So, I make the same request, Mr. Chairman.
60 Mr. PECK. I believe the request was made with respect to my testimony earlier this
morning.I did not reference the CEQ report with respect to bonding and permit. I referenced the
CEQ report generally.
60 Mrs. MINK. I am sorry, Mr. Chairman. I do know exactly to whom I addressed my
question. The question was to Dr. Falkie and he answered by saying that all the information I
needed could be found in the CEQ report. He even made page references which would answer
my question. I could not find such source material in the CEQ report; therefore I ended my turn
by making specific my question to Dr. Falkie and renewed my request for information.
60 Mr. PECK. Mr. Chairman, the page reference in the CEQ report which deals with the
question of performance bonds and the relative value required of them under State law, is page
37, page 38, and page 39. It also deals with other materials as well.
60 The material that dealt with the financial capability, which is set forth as problems of small
mines, appears at pages 61 and 62. I am sorry, pages 59 through 62. n2
60 n2 Appendix II.
60 Mrs. MINK. Mr. Chairman, I wish to know whether those are the page references, and I
ask that these pages be inserted in the record. They do not respond to the question at all
regarding bonding and permit applications.
60 Mr. SEIBERLING. I would add that chapter 3 which covers the pages in question, is
entitled "Impact of Slope Angle Prohibitions on Coal Production and Reserves."
60 As far as I can determine on a quick rereading of that chapter, the chapter is dealing with
prohibitions on mining above 10 or 20 degrees slope and has nothing to do with the kind of
provisions we have in this bill.
60 Mr. HILL. If I may, I was the one who first introduced the CEQ study this morning. I
introduced it as a document that I studied that had been done which talked about the problem of
small mines, not just in dealing with permits or with bonds but the problems of small mines,
mining companies, within a full range of the requirements. I think if they have difficulty dealing
with narrower provisions in the CEQ study, we would argue they would have more difficulty
dealing with the tougher provisions now in H.R. 25. That was the context in which I first
introduced the CEQ study.
60 Mr. SEIBERLING. Do you agree that the bill which was vetoed does not contain
prohibitions against mining on slopes above 15 degrees?
60 Mr. HILL. That is correct.
61 Mr. SEIBERLING. But the content of the discussion in the chapter you referred to is
dealing primarily with prohibitions, and not with requirements of reclamation. So, I do not really
see that it is particularly relevant to the bill before us. Even though it does discuss the problems
of small mines, it is in a totally different context. That is my comment on it and I would like to
yield 1 minute to the gentleman from Montana.
61 Mr. MELCHER. Thank you for yielding.
61 Dr. Falkie, in your last chart you trotted out this bit, this argument that language definition
which is identical in all the bills, going to preclude a lot of mining in the West. Then to back that
up, because the definitions are identical, you go to the effect that mining might have on
hydrology and say if there was any effect on it, that that would prevent mining in that area. The
language I refer you to says that in granting the permit application for approval of the permit that
there has been a finding made that the proposed operation has been designed to prevent
significant irreparable offsite damage to the hydrologic balance.
61 That certainly does not jibe with what your conclusion was. Based on the definition, based
on what the actual situation is at the mines, I can understand how you can put one inaccurate fact
on another and add it up to a lot of tonnage. You defended the Decker Mine in Montana as being
one that was involved on alluvial valley floors. I can understand why the operator of the Decker
Mine is scared about a national bill, although the national bill treats him just the same as the
Montana law in many respects because people like you, I suspect, have been circulating this
information which has gone out nationwide, that there is real tight restriction here that is going to
put people out of business.
61 You may have fooled Decker, I do not know whether they are still fooled or not but I do not
believe you will fool Western Energy because they have reviewed the bill and signed off on it
and they are one of those mines listed.
61 Nor, do I believe you have fooled the Westmoreland, the people operating the Sarpy Creek
Mine there in my part of Montana because they also have reviewed it carefully and do not draw
any of the conclusions you do which I think are extremely erroneous.
61 Mr. STEIGER. Mr. Chairman, I think there must be some rule of the committee that would
protect the witness from that kind of abuse based on the kind of unsubstantiated assumptions my
friend from Montana has made.
61 Mr. MELCHER. I will make a point of order. I do not abuse the witness.
61 Mr. STEIGER. Dr. Falkie is perfectly capable of taking care of himself, but the gentleman
from Montana has said the miners are afraid of this bill because Dr. Falkie has been circulating
false information.
61 Mr. Chairman, obviously Mr. Melcher has nothing to base that on but his own insticts and I
do not think the witnesses deserve that kind of treatment.
61 Mr. UDALL. The Chair would have to rule that members of the committee are entitled to
express their opinions in the course of discussion. Sometimes those opinions are harsh, and I
have heard them on both sides in previous times. I happen to think personally this is the most
dishonest set of calculations I have seen on all my years in the committee. I think they set out to
give the highest losses - the highest reserve losses - they could get.They went to any lengths that
any interpretation of the bill could imply.
62 Mr. MELCHER. I must respond. I did not use the term "dishonest."
62 Mr. UDALL. I did.
62 Mr. MELCHER. I am not drawing that conclusion but I did use the term "inaccurate" and
they certainly are inaccurate and Dr. Falkie and others have disseminated inaccurate information.
If that abuses the witness, it is high time the witnesses have had the truth spoken to them.
62 Mr. UDALL. The time is in the control of Mr. Seiberling.
62 Mr. SEIBERLING. How much time do I have?
62 Mr. UDALL. You have 4 minutes left. You did not lose time because of Mr. Steiger's
point of order or the outburst that I made.
62 Mr. SEIBERLING. Thank you, Mr. Chairman.
62 Now, on that point I would like to ask Mr. Falkie, or who is here from the FEA, what is
your name?
62 Mr. HILL.Mr. Hill.
62 Mr. SEIBERLING. Mr. Hill, if you are familiar with a report entitled "Predicted Coal
Production Losses, H.R. 25, S. 652, and S. 7" prepared for the Office of Coal, Federal Energy
Administration by the Energy and Environmental Analysis, Inc. of Arlington, Va., dated March
1975, are you familiar with that study?
62 Mr. HILL. I am familiar with that.I will not call it a study. We can talk about that if you
like. I am familiar with it.
62 Mr. SEIBERLING. Whatever you want to call it. It is something that consultants to the
FEA prepared, is that correct?
62 Mr. HILL. What was your question, sir?
62 Mr. SEIBERLING. Is this prepared by consultants to the FEA for the FEA?
62 Mr. HILL. That report came back in response to a request for proposals to the FEA group.
We asked EEA if they had any interest in doing an assessment of the production impacts of those
bills as a contract study. They did not reply as to whether or not they wanted to do the contract
study. They volunteered the information back that you see there but it was not a contract study.
62 Mr. SEIBERLING. In any event it was prepared and you have it, correct?
62 Mr. HILL. It was prepared on a quick turn-around basis and they did not do the full-blown
study we initially asked them to do.
62 Mr. SEIBERLING. It exists, does it not?
62 Mr. HILL. That is correct, sir.
62 Mr. SEIBERLING. It shows on page 10 thereof, an estimate of production losses from
H.R. 25 of a minimum of 27 million tons per year and a maximum of 32 million tons per year
which compares with the Department's estimates prepared after the veto of 40 million and 162
million tons per year.
62 Percentages are 4 to 5 percent in the consultant's study and 6 to 24 percent of total
production in the Department's study prepared after the veto. I am simply submitting that and will
ask if you have any other comments. Otherwise, I will pass on to something else.
63 Mr. HILL. I would like to put in the record if I may, a request that we made to EEA for
a comprehensive study, plus the study you refer to which is certainly less than comprehensive,
since we never sat down and had the contractor session where you lay out the scope of work and
methodology.
63 We do have an analysis of that letter back to us. I would not call it a study, which explains
the difference. They used different interpretations of certain provisions of the act. They used
different definitions in their report than ended up in the act.
63 They treat some things as cost items and not as production loss items which, in the minds
of people more familiar in mining, mean that the cost would be prohibitive and would result in
production loss.
63 Mr. Sansom's firm as far as I know did not take the time to go out and do those assessments
to draw those same kinds of conclusions.
63 Mr. SEIBERLING. On December 16, 1974, at page S2611 of the Congressional Record,
Senator Fannin, who opposed this bill and still does, put in a study apparently done by the
Department of Interior based on the assumptions you now say you base them on, that showed
total unemployment resulting from the legislation of 11,124 and production loss of 50 million
tons per year. I wonder whether you are familiar with that study?
63 Mr. HILL. No, I am not. What was the date of that?
63 Mr. SEIBERLING. It was put in the Record on December 16, 1974 by Senator Fannin.
63 Mr. UDALL. The gentleman has 1 minute remaining.
63 Mr. SEIBERLING. Are you familiar with that study?
63 Mr. HILL. Not personally. I know there were a number of studies done prior to the
Christmas recess of the Congress, that as I mentioned earlier this morning were firmed up after
the final language of the bill was adopted.
63 Mr. SEIBERLING. Were any studies done that showed higher production losses than the
losses you show with the current study you are now using?
63 Mr. HILL. We have been on these numbers and methods since about January, Mr.
Seiberling.
63 Mr. SEIBERLING. That is the maximum loss you show?
63 Mr. HILL. What we showed on the charts awhile ago, yes, sir.
63 Mr. SEIBERLING. You are not interested in the ones that show less at the present time?
63 Mr. HILL. I think the people that did those came back to us, Mr. Seiberling, at a later point
in time and said that through further work and analysis, their estimates were now higher.
63 Mr. UDALL. The gentleman's time has expired.
63 Mr. Pettis.
63 Mr. PETTIS. Mr. Chairman, may I yield my time to the gentleman from Arizona?
63 Mr. UDALL. You may do anything you wish.
63 The gentleman from Arizona will be recognized for 10 minutes.
63 Mr. STEIGER. Thank you, Mr. Chairman.
63 Mr. HADLEY and Mr. Keefer -
63 Mr. REED. I am Mr. Reed. Mr. Keefer is in the audience.
63 Mr. STEIGER. I want Mr. Reed. You were sworn, correct?
63 Mr. REED. Yes, sir.
64 Mr. STEIGER. Were either of you gentleman advised of your rights prior to the
administration of the oath as all good criminals are supposed to be?
64 Mr. REED. No, sir.
64 Mr. STEIGER. I take it you have counsel of choice in company with you, is that correct?
You are represented by counsel, is that correct?
64 Mr. REED. Yes, sir.
64 Mr. STEIGER. Counsel of your choice?
64 Mr. REED. Our counsel is from the Department of the Interior.
64 Mr. STEIGER. I did not ask you that. Is counsel acceptable to you?
64 Mr. REED. Yes, sir.I am answering all of these questions.
64 Mr. STEIGER.I assume Mr. Hadley will speak up if he disagrees. I will address this to Mr.
Hadley.
64 Mr. Hadley, when did you meet with Mr. Udall or members of the minority staff,
approximately? What dates if you can recall and how recently and the number of times?
64 Mr. HADLEY. I met with Mr. Crane of Mr. Udall's office, I believe, it was sometime in
February, late February or early March.
64 Mr. STEIGER. Only the one time?
64 Mr. HADLEY. I met with him 2 years ago.
64 Mr. STEIGER. In context with this bill?
64 Mr. HADLEY. No, just the one time.
64 Mr. STEIGER. Was Mr. Reed with you then?
64 Mr. HADLEY. No.
64 Mr. STEIGER. Was Mr. Keefer with you then?
64 Mr. HADLEY. Yes, sir.
64 Mr. STEIGER. How was that particular meeting arranged? Do you recall how you
happened to meet with Mr. Crane?
64 Mr. HADLEY. Mr. Crane met with me in my office in Denver. He called me up and came
to Danver.
64 Mr. STEIGER. D2d he show you any identification - I assumed he approached you with
the idea of finding some acceptable language for the bill, was that the basis?
64 Mr. HADLEY. Yes, sir.
64 Mr. STEIGER. Do you recall any other purpose of the meeting that was stated at that time?
64 Mr. HADLEY. No, sir. We discussed the language of the alluvial valley provision in the
bill.
64 Mr. STEIGER. Had you met with anybody else from the committee staff or members of
the staff in the last 10 days prior to this hearing?
64 Mr. HADLEY. No, sir.
64 Mr. STEIGER. Were you contacted by them during that time?
64 Mr. HADLEY. No, sir.
64 Mr. STEIGER. Thank you.
64 I have a question. I guess, Dr. Falkie, maybe you could help me with this, or maybe Mr.
Peck can be most responsive with the kind of specific rhetoric I am looking for.
64 With regard, Mr. Peck, to the anthracite exemption of Bethlehem Steel, is there anything to
your knowledge, regarding the character of anthracite that ought to exempt it from this bill if,
indeed, it would be appropriate to include bituminous - would it be appropriate to include
anthracite?
65 Mr. PECK. As a technical question, sir, I would have to defer to Dr. Falkie.
65 Mr. STEIGER. Dr. Falkie would be most responsive.
65 Dr. FALKIE. The athracite mine situation is considerably more complex than most
bituminous mining. It is in a very highly complex geology area. It is in folded seams. It is
mined by a slightly different method than bituminous, but it is coal. There is a difference in
geology.
65 Mr. STEIGER. Does the difference in geology mean that the surface is less disturbed and
therefore reclamation requirements are not necessary?
65 Dr. FALKIE.No, I could not honestly say that.
65 Mr. STEIGER. Is the difference in geology such that the specific requirements in the bill
would be impossible to comply with and still continue to mine anthracite?
65 Dr. FALKIE. I think there would be a great deal of difficulty complying with some of the
provisions of the act, for the anthracite producers.
65 Mr. STEIGER. The same, you said, with the bituminous with regard to specific
requirements of the act, the ability to comply? In other words, would it be fair to say that, while
anthracite has a unique geologic location, the uniformity of the standards might be just as
onerous for some bituminous products?
65 Dr. FALKIE. Yes. This is reflected in our production loss estimates in the wide range.
There are obviously some varying geographical and geological characteristics in there because
mining on a steep slope is different from mining on a plain in the northern Great Plains. I don't
know whether that answers your question but that is the way we look at it.
65 Mr. STEIGER. That has been my feeling, since I agree with you in answering my question.
We talked this morning about the difficulty of small mines complying with applications. I have
the feeling we left the record with the idea that the simple filling out of the applications was a
problem. As I recall, the requirements for small operators in the filing of applcations involves
boring, mapping, and plans of a very extensive nature. When you made the assumption that
small mines, some small mines, would be unable to bear that cost, were those requirements what
you had in mind?
65 Dr. FALKIE. Yes, partially. I think there are a number of things that would impact the
small mines to a greater or lesser extent. One is increased production costs, which was discussed
this morning. We talked about the bonding and permit requirements, and the front-end costs. I
think we mentioned somewhere along the line possible lack of readily available technical
expertise to do all the detailed underground mapping, test boring, and hydrologic studies and so
forth that are required.
65 We looked at the additional equipment required to handle overburden if we went to, say, a
slightly altered method of mining, the possibility of a shortage of drilling equipment to do the
coring that is required; we checked this out with some of the drlling equipment people, the
requirement that bonding be held for 5 years.
65 Mr. STEIGER. Dr. Falkie, were you ever given instructions, either explicitly or implicitly,
that you were to make this bill appear as bad as possible through your discovery and data
accumulation?
65 Dr. FALKIE. Absolutely not.
66 Mr. STEIGER. Mr. Peck, were you involved in the accumulation of the data in this
process, or analysis of the bill?
66 Mr. PECK. Some of it; yes, sir.
66 Mr. STEIGER.Were you ever either implicitly or explicitly advised to make this bill distort
the numbers or give the negative aspects of this bill?
66 Mr. PECK. Absolutely not, sir. As a matter of fact, if I could add, to the contrary; we sent
people back to the adding machines to verify as often as possible and in as many ways as
possible the kinds of estimates we were coming up with.
66 Mr. STEIGER. Mr. Hill, were you ever, either implicitly or explicitly given the
instructions to make this bill appear as bad as possible?
66 Mr. HILL. No, sir; I was not, just to gather the facts and do the best estimates we could.
66 Mr. STEIGER. To your knowledge was your immediate superior, Mr. Zarb, ever given
instructions -
66 Mr. HILL. To my knowledge he was not, sir. I am sure if he had been asked that he would
have reacted rather violently.
66 Mr. UDALL. Mr. DeLugo.
66 Mr. DELUGO. I yield to my friend from Ohio.
66 Mr. UDALL.We will come back in 10 minutes and resume the hearing.
66 [A short recess was taken.]
66 Mr. UDALL. The gentleman from Ohio is recognized for 10 minutes. I wonder if he
would yield 1 minute to me.
66 Mr. SEIBERLING. I would yield to the chairman.
66 Mr. UDALL. Dr. Falkie and Mr. Hill, in light of the statement I made earlier today, I still
am unable to understand why anyone in his right mind would place all of the strain and
unreasonable interpretation on every section of this bill when the Interior Department was going
to administer the bill. Who was it you thought was going to make these asinine interpretations -
such as your assumption that 93 percent of the valley that was not alluvial would somehow be
affected or some fool would conceivably assume it would be affected - who did you think was
going to interpret and enforce the bill?
66 Mr. HILL. I think, Mr. Chairman, that as we looked at these estimates, one of the first
things we had to do was look at some of the particular provisions of the act. I think alluvial
valley floors is a very good example of that. In this interagency group that worked on this from
last September 4, including people from OMB, EPA, Interior, Commerce, and Treasury, all over,
there were a number of differing possible interpretations of some of those provisions that were
clearly possible. That was the opinion of the various counsel.
66 Mr. UDALL. Of all the plausible interpretations, or likely interpretations, it seems from
every one of those things you have set forth on an absurd collection of charts, that you take the
most unlikely interpretation possible.
66 Mr. HILL. That is where we came up with the range, Mr. Chairman, the low range as we
said earlier was sort of the loosest interpretation. The high end of those ranges was the most
difficult. We had legal interpretations, that spanned the full range from loose to very tight.
66 Mr. UDALL. I don't want to use Mr. Seiberling's time, but my question was, Who did you
assume was going to be writing the regulations and enforcing the bill?
67 Mr. HILL. Some of it, I think was, certainly, the Secretary of the Interior. But where we
have these problems in the act, we assume the courts were going to be interpreting those
provisions and also the regulations that flowed therefrom. When you get into areas like the
Clean Air Act, for instance, nonsignificant deterioration, that word never appears anywhere in
NEPA. But that is what NEPA requires. That was a very stringent interpretation and we have
had a number of those. So we had to assume that the courts would be making these
interpretations.
67 Mr. UDALL. All right. Mr. Seiberling, I thank you.
67 Mr. SEIBERLING. Thank you, Mr. Chairman.
67 I would like the record to show that the anthracite exemption in the final bill that the
administration submitted to the conference committee is identical to that in the conference report.
Therefore, Dr. Falkie's efforts it seems to me, to raise a possible problem with respect to the
anthracite portion is really of no relevance here because the two sections are identical. In
addition, the application requirements differ between the administration bill and the conference
report only on hydrologic data and allow a waiver, but for small mines only, where the data is not
necessary.
67 Finally, the bond requirements are the same in all material respects, except we put in the
additional requirement that the siltation bond could not be finally released until all the siltation
requirements had been proven over a period of 5 years.
67 Mr. PECK. Could I speak to those because they get to the heart of our problems with this
bill?
67 Mr. SEIBERLING. If you will do it briefly, because I do not have unlimited time.
67 Mr. PECK. Yes, sir.
67 With respect to the anthracite provision, the language of the statute is the same, but the
language of the conference report implies circumstances, which, in our judgment, make
anthracite no longer exempt insofar as, for instance, the State of Pennsylvania is concerned.
Insofar as the hydrology is concerned, our problem with those requirements has been the
affirmative placement of the burden of proof upon the applicant, not the nature of the
requirements. In each of the States, for instance, Ohio is one of the States that has particularly
stringent requirements in terms of what has to be shown, the burden of proof is not on the
applicant, and the front-end cost of developing all the studies necessary is not on the applicant.So
our concern has been that the applicant must affirmatively demonstrate the absence of an adverse
effect in order to get a permit, or else the authority has no jurisdiction to issue a permit.
67 Mr. SEIBERLING. We are getting down to some awfully fine points here. Now, with
respect to this statement about 36,000 unemployed possibly resulting from this bill, the United
Mine Workers advises me that there are currently only 36,140 workers in the entire surface mine
industry.It seems to me that this is stretching a point, to say the least. I understand the rationale
about the downstream effects and all that, but that gets into some sort of speculation. I will say
that the same arguments were made when we passed the Coal Mine Safety Act Amendments in
1969, when Pennsylvania passed its tough strip mining law. Every time the industry got up and
said, "Oh, if you do this you will put us out of business."
68 Ralph Hatch, the president of Hanna Coal Co. at the time I was visiting the surface mines
in Ohio with Governor Gilligan, made the statement that if Ohio passed its strip mining law,
6,000 miners in Ohio would be put out of work, and his company would go out of business in
Ohio. And within a few weeks after the law was passed he was applying for a license to move
the Gem of Egypt across Interstate 70 so he could open a new mine on the other side. So we
have heard this story over and over again, gentlemen. And I think it demeans the administration
to lend itself to that kind of argument. I would like also to add that, according to calculations
that I have made, that the reclamation fee provisions alone will add 2,727 jobs, if the amount of
the fee is only$1 09 million, your low estimate; and 2,950 jobs if it is the high estimate. I wonder
if you would care to comment.
68 Mr. HILL.I think that is very close to our estimates. We estimated that in Appalachia, for
example, where most of the small miner and steep slope impact would be, the result, most of
your unemployment, unemployment we think could run as high, the job losses resulting from the
bill, run as high as 20,000, that there would be several thousand people put back to work in the
reclamation effort. Keep in mind, you have taken that money to pay their salaries and for the
equipment and everything for the reclamation effort out of the economy somewhere else where it
is not going to be creating any jobs. It will add some specific relief to the production losses and
unemployment impact in West Virginia, say, or in Virginia. But it will be much smaller than the
losses there. Whatever relief you pick up in the reclamation effort you are going to be losing
somewhere else in the economy because you have only taken that money from one place and put
it somewhere else.
68 Mr. SEIBERLING. I understand that. I am a college graduate. But it is most likely to
come out of the profits of the operators which at the present time are quite high.
68 The TVA has made an estimate that the total production and reclamation costs under this
bill, following the standards of this bill, would be under $9 a ton. At the present time they are
paying an average of $15 5 a ton for contract coal. Of course, on the spot market they are paving
two and three times that much.
68 The same is true of utilities. Ohio Edison and Cleveland Electric Illuminating and so forth
in terms of what they are paying on the spot market. So the cost of reclamation is going to come
out of the profits of the coal companies. I agree that money is coming out of the economy
somewhere but it is also going into the economy if it employs people to do reclamation. It is
rather significant to me that the UMW study - and they are certainly interested in jobs for miners
- states, and I am reading, that:
68 When viewed in the context of the industry's development pattern and announced new mine
options, the maximum possible unemployment resulting from small surface mine closings is
more than eliminated by new employment resulting from new mining development. That is over
and above the reclamation fees.
68 Mr. HILL. I would like to see their study. I might add, if the committee has any studies
that would indicate there would be no production losses we would also like to look at those.
69 Mr. SEIBERLING. I will ask UMW if they will make that available.
69 Dr. FALKIE. I woud like to, if I may, mention a couple of numbers so that perhaps some
things can be straightened out. In 1974 there were approximately 43,000 people employed in
surface mining in this country. We projected that out to 1977. This is direct employment now.
The direct employment loss, on the upper range as we have explained, is 20,000. So that we
cannot confuse direct employment with total employment.
69 Mr. SEIBERLING. Are you talking about the reduction in the present level, or a lower rate
of increase?
69 Mr. UDALL. The gentleman's time has expired. You can answer briefly.
69 Dr. FALKIE. We are talking about both, really.
69 Mr. SEIBERLING. Can you separate the two and provide us with the figures?
69 Dr. FALKIE. No, the number stands - the confusion is indirect versus direct. That is the
point I meant to straighten out.
69 Mr. UDALL. Mr. Skuzitz is recognized for 8 minutes.
69 Mr. SKUBITZ. Thank you, Mr. Chairman. I would like to be notified at the end of 7
minutes so I can yield.
69 Mr. UDALL. The gentleman will be notified.
69 Mr. SKUBITZ. Personally, I am very much interested in strip mining legislation. Perhaps
more so because I was born and raised in a coal mining town and took my place at age 16 beside
my father in the mine. Thank God I had a father and mother who insisted that I go to school.
After so many years, I finally got out of college. After graduating from college, I taught 15 years
in coal mining counties of Kansas - Crawford and Cherokee Counties. I saw 55,000 acres of land
raped because of the action of the coal operators with no law to stop them or force them to
reclaim the soil. So when I came to Congress, I was quite interested in strip mining legislation.
69 Thirteen years ago I became a member of this committee and a member of the Mining
Committee because I was interested in strip mining legislation. But the thing that bothers me
about this bill today - and I have supported it, I voted for it out of conference. I think the timing
is terrible - I have listened to the debate which is supposed to take into consideration facts. I
think Mr. Udall summed it up pretty well when he said, "You are guessing that we are going to
lose all this coal and these jobs, and I am guessing that we aren't going to lose any."
69 You know, the thought came to mind after I heard Mr. Udall make that statement, who do I
want to follow if they are wrong; Mr. Udall or you?
69 Mr. UDALL. I have an answer.
69 Mr. SKUBITZ. So the issue as I see this is what damage will really be done if no law is
passed at all at this moment, even though we have 21 States that have laws on the books. In one
case, as Mr. Udall pointed out, Pennsylvania has a tougher law than the proposed bill. I know
my own State has a similar piece of legislation on its books. So we get into a debate here of "tis
so and taint so."
69 Most of the questions I wanted to ask have already been asked. But I would like to ask this
question. Will you specifically point out the ambiguities in this bill which threaten production?
70 Mr. PECK. If I could address that, Mr. Skubitz.
70 Mr. SKUBITZ. All right.
70 Mr. PECK. The specific items that were referred to by Dr. Falkie in his presentation under
potential production impacts not quantified were citizen suits, designation of lands unsuitable for
mining, surface owner protection, ambiguous terms, anthracite, and State actions.
70 Specifically, our concern over citizen suits is the concern that has been underlying much of
the discussion, that it will not be the regulatory authority that will have the power to implement
this bill. Part of the rationale for the administration's amendment which would have expressly
given the Secretary of the Interior the authority to define terms was the expectation that those
terms, by virtue of the Federal statutory authority, would be binding upon State courts and
binding upon the regulatory authorities that would be using them.So that, as we come to
ambiguous language, we would be able to define our way around it.
70 Under designation of lands unsuitable for mining, our concern is this. As the bill now
stands, any person may petition at any time that any given area be designated unsuitable for
mining. This could occur before or after an application for permit has been filed. Once that
petition has been filed and an action triggered to study the land, no permit can be issued for at
least a year.
70 With respect to surface owner protection, our position has been to prevent only two things.
To prevent an absolute veto in the hands of the surface owners who took under homestead acts,
where the mineral rights were reserved to the States; and to prevent extreme windfalls.
70 The administration bill would have allowed existing law to continue to prevail in each of
the States.
70 Under ambiguous terms, I think we have already hit at least two of them. We have the
anthracite question - whether the conference report has successfully removed the exclusion for
anthracite mining. Under the provisions with respect to alluvial valley floor, there is a
parenthetical exclusion for undeveloped rangelands. We don't know what that means and more
importantly, we don't know whether that language is still subject to the application of the test of
whether potential or existing ranching or farms could be conducted. The study that apparently
was the basis for that exclusion, if that criteria is used, would exclude from the alluvial valley
prohibition virtually all of the Powder River Basin, far more than anybody would want excluded,
and in fact exclude from the prohibition, and thus allow mining in areas where even the most
rigorous proponents of mining would not wish to go in.
70 With respect to State and Federal lands, it is provided that where Federal lands are within
the territorial boundaries of a State, the Federal lands must conform to State programs. Does that
include a State ban? There was colloquy on the floor of the Senate between two Members which
indicated that the answer to that question was "yes," that a State could in fact by operation of its
program ban mining on Federal lands of Federal coal. Colloquy was to the contrary on the
House floor. In either event, what would happen if a State were to propose a ban that was not
contained in its program?
70 With respect to water rights, we had a situation in which as it stands now the Government
is in the situation of requiring specific performance, delivery of water. We do not see how that
could possibly be done by an operator, and some variance from that kind of a requirement, or
some provision for obtaining appropriate consent or compensation should be expressly written in
the act.
71 Mr. UDALL. The gentleman's time has expired.
71 Mr. SKUBITZ. I ask to be allowed to proceed for 3 minutes.
71 Mr. UDALL. Objection? None.
71 You are recognized.
71 Mr. SKUBITZ. There has been a lot of talk about alluvial valley floors. How broad was
this GS study? Did it go to existing Federal leases?
71 Mr. HADLEY. This study was on selected leases in the eastern and western Powder River
basins, and it only included the alluvial valley floors on Federal leases.
71 Mr. SKUBITZ. Thank you.
71 You made reference, Mr. Peck, about the difficult burden of proof. What do you refer to?
71 Mr. PECK. That, again, sir, is one of the underlying problems that causes many of the
others, and in fact amplifies them. Under the bill, three provisions, for instance, with respect to
the alluvial valley floors prevail.
71 There is the definition of the alluvial valley floors, the prohibition on mining on alluvial
valley floors, but then there is the express language in section 510(b) that no permit can be issued
unless the application affirmatively demonstrates and the regulatory authority finds in writing on
the basis of the information set forth in the application or from information otherwise available
that, and then follow all of the application requirements. The question is, in our minds, what
happens if, on a challenge, a question such as was raised here with respect to the Decker Mine is
presented? How does the applicant affirmatively prove the absence of an adverse impact? With
respect to the Decker Mine it is our information that when mining was occurring on the alluvial
valley floor there was substantial drawdown in wells as much as half a mile away. The very
existence of that fact would raise a presumption in the event of a challenge to the permit
application which the applicant simply couldn't bear.
71 These are not unreasonable interpretations.As recent a statute as the Federal Water
Pollution Control Act has come very close to this kind of interpretation.We are very concerned
about it. This is the siltation problem, as well. Right across the board we are concerned that
these provisions will in fact have maximum impact.
71 Mr. SKUBITZ. This morning Mr. Zarb and Mr. Morton rather surprised me when they
indicated that a 35-cent tax on coal was nothing, would not raise the price of coal. I have seen
wheat go up a penny but the price of a loaf of bread went up 5 cents. I am not so sure they know
what they are talking about. I would like to point out to you that an acre-foot contains about
1,800 tons of coal in my State. That means if you have a 3-foot vein of coal that is 4,500 tons of
coal. So reclamation fee of 35 cents means the operator is paying $1 ,890 into the reclamation
fund to recover or reclaim that acre of land.
71 You go into Mr. Melcher's State and I understand they have veins of coal from 60 to 80
tons. If you take 60 times 180, 60 to 80 feet, I mean, 60 times 1,800 will give you 108,000 tons
of coal in each acre. Then you come up with $3 7,800. It seems ridiculous to me that we are
going to collect $3 7,800 to reclaim an acre of coal and say that that is not going to raise the price
of coal; unless, of course, as this bill provides, you are going to build schools and public
buildings and roads and what have you with money that is labeled reclamation money.
72 Mr. UDALL. The gentleman's time has expired.
72 Mr. HILL. May I just amplify on Mr. Morton's remarks this morning for a minute, Mr.
Chairman? I think what Mr. Morton meant was that in terms of the consumer costs and the
higher energy costs of this bill, the 35 cents a ton is not the major consideration. Our estimates
show that the consumer cost on energy price effects would be on the order of the magnitude of
2.4 billion at the long range of the production impacts to 5.6 billion. This is an interaction, this is
what happens to the coal prices and the substitution of foreign oil for coal. What he was saying
was that in the context of this potential $5 billion to $6 billion cost impact of this bill, 35 cents
for the reclamation fee is not that significant. In your particular case, it certainly is.
72 Mr. SKUBITZ. Certainly it will raise the price of fuel to the consumer and utility, all of
which would be passed on to the consumer, isn't that correct?
72 Mr. UDALL. Mr. Santini is recognized for 10 minutes.
72 Mr. SANTINI.Thank you, Mr. Chairman.
72 Addressing my question to the issue involved here, I suppose FEA would be the agency
then to respond. I believe it is generally conceded that coal consumption is demand limited and
not production limited.
72 Mr. HILL. For the last several years that has been the case. The constraints of theClean
Air Act and limitations have created demand constraints. But as we move into the
implementation plans, as they go into effect, and people begin to install precipitators, demand
constraints will be less severe than they have been for the last several years. It is true that
demand would not be what it was in the absence of the Clean Air Act.
72 Mr. SANTINI. Have you made any quantitative examination of the extent to which
production capacity exceeds demand today?
72 Mr. HILL. Yes, you are there talking largely about the surge capacity. You do not open a
major mine without contracts for the coal from that mine. So there is not, in that sense, any
excess production in terms of the large mining operations. Where you pick up additional short
term coal supplies are from particularly, I guess, the small mine operations that open up very
small mines. This is what we call the surge capacity. There is some surge capacity in large
mines, both on surface and underground; but it is not that significant. They try to keep that as
small as they can and just produce the coal they have contracts for.
72 Mr. SANTINI. Then there has been no precise study of the extent to which the capacity to
produce exceeds the existing demand?
72 Mr. HILL. I think that there have been studies on this issue. I will be glad to go back and
look at them. If my memory serves me correctly, however, the coal supply capacities pretty well
are geared to current demand and to expected demand; and the long leadtime investments are not
made until there is new demand on the horizon. So we operate very close to supply and demand
equilibrium in the coal supply business.
72 Mr. SANTINI. What was the cost of production, for example, in 1970?
72 Mr. HILL. The cost of production? Tom, do you have cost-of-production numbers?
73 Dr. FALKIE. I do not have the precise cost-of-production nembers for underground or
surface mining for 1970 with me. I think it is fair to say it has increased appreciably in the last 4
years.
73 Mr. SANTINI. Could you roughly estimate that figure, Doctor?
73 Dr. FALKIE. I would say for surface mining in 1970, very roughly the cost of production
would be somewhere between $5 and $10 a ton. And for underground mining, somewhere
between $1 0 and $1 5, possibly upward, per ton. Those are very, very rounded-off numbers. We
could get some roughted-out numbers for you, if you want. That will give you an idea of the
ballpark around that time. Since that time I would say that the production costs for surface
mining in the East, would probably range from $8 a ton on up. In the West it would be lower,
maybe anywhere from $4 a ton on up.
73 Mr. SANTINI. Do you have precise figures on cost of production in 1974?
73 Dr. FALKIE. We do not have precise figures because the cost information is not available
to us. We could develop an estimate.
73 Mr. HILL. I think the cost will vary from mine to mine depending upon the particular
geology of the setting, the size of the equipment that will be required, the life of the mine, and
how long you are going to be able to amortize your capital cost. It is very hard to come up with
these kinds of estimates. We have been trying to do it on the Outer Continental Shelf.
73 Mr. SANTINI. Then you are saying today that none of your computations include any
cost-of-production figures?
73 Mr. HILL. That is correct.
73 Dr. FALKIE. We have taken cost of production into consideration, but not precisely - we
have not collected cost information in our data collection system from mines. So when you ask
if it is precise -
73 Mr. SANTINI. Is that not a rather critical question in assessing just who is or is not going
to go out of business and weighing that against the existing market price and attempting to
determine the impact of this legislation?
73 Dr. FALKIE. Yes.
73 Mr. SANTINI. If you do not have precise figures on what the cost to produce coal is -
73 Dr. FALKIE. We do, but not precisely, so that we could say this is the cost of production
for the whole country. We do not have that. We have already said that the delivery cost by
contract purchasing is in the neighborhood of $1 5.71. That is delivered costs for powerplants,
for steam electric powerplants.
73 Mr. SANTINI. What is the source of information for that particular figure? And are you
not giving to me the selling price rather than the cost of production?
73 Dr. FALKIE. This is the Federal Power Commission report for steam electric plants in the
continental United States having 25 megawatts or greater capacity.
73 Mr. HILL. That is the national average of both surface and underground coal used in steam
plants. That is the average of what they paid for the coal.
73 Mr. SANTINI. Then that particular figure represents the sole cost figure that was included
in your calculations of existing cost of production?
74 Dr. FALKIE. No, it does not. We have many interim studies on cost estimates. We have
models which develop costs. We have field personnel who have wide experience with costs. We
have many angles from which to approach the cost picture. But we do not have a precise number
that we can say that is the overall cost for underground mining in the country or surface mining.
74 Mr. HILL. It is important to note, too, that that is the cost of the coal at the utility boiler
tip. That is not a figure you could relate to cost of production at the mine mouth. That is the
price that utilities paid for the coal delivered to their State for burning.
74 Mr. SANTINI. What then was the profit margin in 1970?
74 Mr. HILL.I do not have the exact profit margin figures for 1970.
74 Mr. SANTINI. How about 1974, what was the profit margin?
74 Mr. HILL. I do not have that either, really, available. We do not collect, as we do with the
oil industry, information systematically on the profit margins of the coal industry.
74 Mr. SANTINI. Is this not a valid consideration in assessing exactly what is going to be the
impact of this legislation? The administration estimates 22 to 52 million tons of small mines
production losses, steep slope production losses of 27 to 44 million tons, and alluvial valley
losses of 66 million tons. In each of these assessments the law is one factor, economics is the
other. In order to assess the cost of H.R. 25 to the consumer the profit statistic must be
considered.
74 Mr. PECK. At the risk of getting myself in even more trouble over the CEQ report, on
page 62 there is an analysis of profitability from an unpublished study conducted for the
Appalachian Regional Commission which reviews large, medium and small surface mines in
eastern Kentucky, giving the number of companies, the number of mines, average production,
average fixed assets, average total assets, average before tax profits, after tax return on sales,
after tax cash flow on sales and average return on assets. This is part of the analysis that, again, I
indicated earlier as demonstrative of the financial difficulties of these small mines. I do not
purport to offer it as evidence that it is represenative of the industry or certainly of a larger mine;
but that is the kind of a study you are asking about. I honestly do not know whether any exist of
the scope you are talking about.
74 Mr. UDALL. While we are on that, as I recall from this morning, somebody down there
was going to furnish us this afternoon with a list of the names and addresses of 200 or 300 mines
that were going to be closed. Did we get that?
74 Mr. HILL. We do not have, Mr. Chairman, a list of the mines per se that are going to be
closed.
74 Mr. UDALL. Didn't somebody tell me this morning you could get the names and
addresses?
74 Mr. HILL. We raised a question regarding them. We are still having counsel downtown
check it out. Whether or not it would be correct to make a regulatory decision now regarding
these particular mines, whether or not they are going to be closed, that will be the decision of the
regulatory authority.We are checking that out though and we will get back with an answer. But
we do have a 1973 study of small mines where we studied a number of situations and assessed
whether or not those would be in compliance with certain kinds of provisions.
75 Mr. UDALL. You estimated that a fifth of all the small mines, and steep slope mines,
were going to be closed down. Based on that the President vetoed the bill.We would like the
names of one or two of them.
75 Mrs. MINK. I was going to say, Mr. Chairman, in response to my question in this
morning's session, I specifically recall that the information requested was going to be provided.
At that point the counsel to the Department intervened saying they would have to check it out,
whether such a list could be provided the Committee. At no time was it indicated that no such
list was in existence. Am I to understand now that there is no list at all?
75 Mr. HILL. We do not have a list of all the, say, 3,000 to 4,000 small mines with an
estimate of whether or not they are going to be open or closed. We do have mines we went out
and studied in our 1973 small mine study effort and from that study have drawn judgments about
their capacity to meet the financial requirements imposed by that act.
75 But in terms of a specific list like was referenced here a while ago, we do not. These are
small mines, moved from location to location. It has more to do with the financial capacity of
the mining company than with a particular mining site, per se. I think if we were to produce such
a specific list it would probably be out of date almost as soon as we got it here because a lot of
those mines would have been closed and moved on to others. But their financial capacity would
not have changed in making that switch.
75 Mr. SEIBERLING. Would the gentleman yield?
75 Mr. UDALL. We have to keep in order on the time.
75 Mr. SEIBERLING. Would the gentleman yield just while we are on that point?
75 Mr. UDALL. Mr. Steelman is recognized for 10 minutes. Would you yield briefly to Mr.
Seiberling?
75 Mr. STEELMAN. Yes.
75 Mr. SEIBERLING. Mr. Hill referred to the 1973 study. But in 1974 the rate of profit for
the coal industry went up 181 percent. That is for the industry as a whole. Some of the large
companies went up 500. Westmoreland went up 1,200 percent. So I do not think that 1973
study is up to date.
75 Mr. UDALL.Mr. Steelman.
75 Mr. STEELMAN.I yield 1 minute to my colleague from Kansas.
75 Mr. SKUBITZ. Mr. Chairman, you asked about closing mines. I understand Gulf Oil is
pulling out its shovels in my district right now. That is one example. No. 2, the average you
spoke of -
75 Mr. SEIBERLING. The bill is not in effect.
75 Mr. SKUBITZ. I know but we are going out because of the cost squeeze on coal today.
That gives you an idea of what is happening. You can't speak of averages, Mr. Santini, for this
reason, because what is the average cost could very well squeeze all of the marginal mines
completely out of existence. This is the very reason we passed special legislation in order to
exempt the operators from price control and allocations, simply because they could not exist
under the existing price they were getting for oil. So we took them out from under. Here is a
group, 10 barrels or less that are producing 40 percent of the oil in this country. Thank you.
76 Mr. STEELMAN. Mr. Chairman, I think the final consideration for many Members of
Congress is going to be this economic question, particularly the unemployment matter. The
President cited, as the first of his reasons for the veto, 36,000 unemployed that would result from
this act. I spent some time on the executive side before I got elected to Congress. If this
President operates like former Presidents, when he has a decision to make like this, especially a
far reaching one, he gathers together people who can work up the kind of information he needs to
make these decisions. I take it from testimony this morning he did that here. He had a task force
of some kind. You have been through production losses and this sort of thing, and you have
made mention several times of the unemployment which would be caused by this.
76 Now, I want to pursue the line of questioning that I tried to develop this morning about
what role the Commerce Department played and what role the Labor Department played, as well
as the role of whomever else you may have called upon to give you figures as to unemployment.
If I could just briefly again ask you, who served on the task force, how often did you meet, and
whom did you depend upon for the unemployment statistics that you cited to us here?
76 Mr. HILL. I think the best way way, Mr. Steelman, to cover that is to go back. We have
been doing unemployment kind of assessments back into last September and October related to
production losses matters.
76 Mr. STEELMAN. Who is we?
76 Mr. HILL. Involved in that were FEA, Interior, Commerce, Labor, Treasury, EPA. I think
the other thing I would like to point out is that this task force is working on a full range of issues.
Within that task force each group, or a particular group would have responsibility for a piece of
the study and would interact with a group and defend their conclusions and changes would occur.
The typical kind of give and take that would come when the challenges would be made, and there
were many.
76 Mr. STEELMAN.Did the Labor Department sign off on these projections?
76 Mr. HILL. I don't know if the Labor Department - what do you mean by the Labor
Department? I don't think Secretary Dunlop actually said "I agree with these estimates."
76 Mr. STEELMAN. How about the Bureau of Labor Statistics?
76 Mr. HILL. I couldn't speak to that either. We are providing a list of the names of the
people from Labor that were there. The major work that was used for the unemployment
projections was the work of Professor Miernyk at the University of West Virginia, as I indicated
this morning. His is not only in terms of national economic studies, but with particular focus on
West Virginia and the mining industry. The work done by the Department of Commerce in 1971
on this issue, it might have been in the late sixties, actually came up with a slightly smaller
multiplier than Professor Miernyk did. But it was the judgment of the group that Miernyk's work
probably was valid.
76 CEQ in their study came out with a higher employment multiplier.
76 Mr. STEELMAN. Whose figure is the 36,000?
76 Mr. HILL. I think you would have to say that that figure is the combined output of this task
force. We all agreed that we should use an average of 36 tons per day. You could have used a
different number but the task force essentially - eventually resolved on that. We agree on 220
man-days, or 225. We agreed to use the employment multipliers of Professor Miernyk. When
you agree to those basic assumptions then you just plug the numbers in and it came out.
77 Mr. PECK. If I might clarify part of the question that arose this morning. When you are
talking about the Department of Commerce you are talking about the statistical analysts that
develop input-output models and that historically for the Government have been doing so. There
was Labor representation on the task force. Some of the assumptions with respect to the
dimensions of offset were specifically questioned, but in terms of the multiplier, the 1.8 factor, it
was the consensus of everyone, including the Labor Department, to the best of my recollection,
that this was a valid national factor which took into account the higher productivity per man hour
per man-day in the West and the lower productivity in the East.
77 Now, subsequent to that analysis the Bureau of Mines looked at those figures very carefully
and are convinced that they are conservative to say the least, because they reflect an
overemphasis, or I guess an underemphasis on the surface mine factor of it. So that a higher
multiple might well have been chosen and validly defended. But the 1.8 factor is a fairly
standard, common multiplier to determine the correct effect.
77 Mr. UDALL. Will the gentleman yield for a quick comment?
77 Mr. STEELMAN. Yes.
77 Mr. UDALL. I have been sitting here all day, Mr. Peck, and wondering, in my experience
around here the Commerce Department rarely plays any kind of major role in these resource
questions. The President has the CEQ, EPA, Interior, he has FEA. But here is a man from the
Commerce Department, the spokesman for big business, dominating a large part of our
discussion. Is there any significance to that?
77 Mr. HILL.Are you referring to Mr. Peck or Mr. Morton?
77 Mr. UDALL. Mr. Peck.
77 Mr. HILL. I would not, myself, be willing to accept Mr. Peck as an expert on input-output
models and these unemployment multipliers. I think we have sufficient staff in FEA to assess the
validity of the Miernyk model.
77 Mr. UDALL. It is very strange to me that Mr. Peck plays such a role in this resource
decision.
77 Mr. HILL. I don't think he played a role in doing the unemployment. He was part of the
task force but that task force was covering a number of issues, not just unemployment.
77 Mr. STEELMAN. The statement was made by you this morning, Mr. Peck, that the
Commerce Department had the major input on these unemployment statistics. In response I said
that historically the role of Commerce has been one of advocacy. That is like asking the Corps of
Engineers how to preserve wetlands. I want to know quantitatively, specifically, what role the
Labor Department played.
77 I have served on executive branch task forces before and Commerce is always there to
advocate whatever role big business has in the particular question. We always depended upon
Labor to speak to Labor's viewpoint. Did you call the AFL-CIO, did you ask them? Apparently
they reached a different conclusion.They are supporting the bill. They must not think it will
cause unemployment.
78 Mr. PECK. I think I inherited most of my role here today by longevity. I have been
dealing with this piece of legislation since 1971 when the administration sent it up, 4 years.
78 Mr. STEELMAN. What were you doing before you were General Counsel of Commerce?
78 Mr. PECK.I was in private practice in New York. I am on the staff of the General
Counsel's Office of the Commerce Department.
78 Mr. UDALL. Did you ever represent any coal companies or electric utility companies?
78 Mr. PECK. No, nor have I spoken with anybody from the industry, either now or during
the deliberations of the interagency task force we are talking about. When I say spoken with
someone from the industry I mean about the substance or impact of the legislation. I had one
argument about whether or not the Administrative Procedues Act would apply. That was 2 1/2
years ago. It was by telephone and took 5 minutes. My participation has been as an attorney and
as a legislative analyst and without any regard for specific or general industry considerations.
78 Mr. STEELMAN. The chairman informed me I have less than a minute remaining so I
would just like to say that this is a critical point in this whole consideration, that is, how the
decision was arrived at. In this case, form does become substance. A substantive decision has
been made by the President to veto this legislation based on certain assumptions given to him. If
the assumptions were good it is a good decision and he should be complimented. But if those
assumptions were bad, and I suspect they were bad, given the input here, I would like to ask, Mr.
Chairman, that we formally request from whomever the task force chairman is, I haven't asked
that question, is that Mr. Morton? Who headed up the task force?
78 Mr. HILL. Mr. Carlson and myself.
78 Mr. STEELMAN. Could I then, Mr. Chairman, ask Mr. Hill, acting in his capacity as
cochairman to furnish the committee a written statement on the methodology, on who had input,
how often they met, who they asked for specifically for the Labor statistics?
78 Mr. SEIBERLING. How about who was present?
78 Mr. HILL. We can provide that.I would like to amplify on one further point. The people
we were working with from