Muddying the Waters

Contractors claim regulator tampered with job loss estimates

Interior Sec. Ken Salazar/AP Images
March 21, 2012

Congress is investigating whether the nation’s top coal regulator attempted to tamper with estimates of potential job loss from a proposed regulation.

In the fall of 2010, contractors were preparing an Environmental Impact Statement for the Office of Surface Mining Reclamation and Enforcement (OSM).

Their objective: compare the effect that five different versions of the Stream Protection Rule, a regulation aimed at curbing mining near water sources, would have on coal output, using 2008 as a baseline.

In January 2011, a leaked copy of their report revealed that more stringent guidelines could put thousands of miners out of work.

"Once those numbers got released, things got a little testy," said Jose Sosa, a former project manager with Polu Kai Services, the lead contractor analyzing the rule.

Officials with OSM were infuriated by the leak, sources say, and summoned the contracting firms for a Feb. 1, 2011, meeting.

After talking to the contractors about maintaining the integrity of the regulatory process, OSM officials made another request, according to a source with knowledge of the meeting.

"OSM tried to change the baseline assumptions that went into the job losses," Sosa said. "They talked about averaging out the coal production over a number of years, analyzing coal production (in 2008) as if regulation was already in place. All so the numbers would seem lower."

Another source familiar with the congressional investigation into the controversy said OSM was trying to downplay job losses in order to get the rule through.

"OSM is not driven by the job losses caused by these policies in places like West Virginia and Pennsylvania and Ohio, but they can’t come out and say that," the source said. "They’re paying back environmental groups by punishing coal."

"We reached out to stakeholders: coal miners, unions, and coal companies," OSM spokesman Christopher Holmes said. "The point of an environmental impact statement is not, ‘we’re going to do this.’ The point is to work with these groups to strike a balance."

Representatives from one of the consulting firms, however, questioned the OSM techniques.

By March 2011, all but one consulting firm, Morgan Worldwide, was cut loose from the $3.7 million contract.

Another firm, Industrial Economics, was hired for more than $1 million.

OSM denied it put any pressure on contractors to lower the job loss estimate.

"OSM has never asked anyone to do anything inappropriate or to falsify any numbers and both [Secretary of the Interior Ken] Salazar and [OSM Director Joe] Pizarchik have told the committee that," Holmes said.

The leaked report was making its rounds among state agencies and other stakeholders for review when it was handed to the Associated Press. Holmes said that OSM’s frustration centered on the contractors rather than the job-loss numbers.

"The numbers were never verified," Holmes told the Washington Free Beacon. "We never got the study [before it was leaked]. That document is unreliable."

OSM Director Joe Pizarchik had a similar response at the time of the leak. He posted an open letter to news companies branding the report "a work in progress, and the data" incomplete.

Sosa, who left PKS in August 2011 to start a consulting firm, agreed that the environmental impact statement was not complete when it went public.

He said OSM disputed the high job loss estimates, but added that the dispute stemmed from differences in methodology rather than from political pressure.

"They were not happy with the numbers that were produced," Sosa said. "I don’t think we were ever asked to change numbers directly. Discussions revolved around what methodology worked best. It was all based on science."

The House Committee on Natural Resources, which began looking into the matter in the fall of 2011, is seeking an audio recording of the meeting to verify that no pressure was exerted on the contractors.

OSM has handed over more than 12,000 pages of documents to the committee, but the tape of the Feb. 1 meeting has not emerged.

The committee may therefore subpoena OSM if it does not receive the tape soon, according to a second source with knowledge of the investigation.

"They’re at the point now that they might have to compel OSM to turn it over," the source said.

Holmes said Pizarchik and the entire office "will continue to cooperate" with the committee.

Since 1983, mining companies have conducted operations while maintaining a 100-foot barrier between their activities and streams.

The rule, known originally as the Stream Buffer Zone Rule, was never codified and has been loosely enforced.

George W. Bush signed an official Stream Buffer Zone rule in 2008 that maintained the 100-foot restriction, but also included more exemptions for mining companies to conduct operations within the barrier.

Earthjustice, an environmentalist group, blocked OSM from implementing the Bush rule, which was seen as being too lenient on coal companies.

The group dropped the suit once OSM agreed to rewrite the rule in March 2010.

Environmental groups have spent millions lobbying OSM since President Obama appointed Pizarchik in November 2009.

Much of that money has been directed toward revising the stream buffer rule. The Earthjustice Legal Defense Fund spent nearly $1.4 million, including approximately $450,000 on the stream rule alone.

As it rewrites the rule, OSM will be looking at a variety of environmental impacts, including sediment run off, restoring mountains damaged by mountain-top drilling, and monitoring water quality.

The department hopes to release a final working draft later this year.