IG: No evidence of political meddling in botched coal regs

A probe into allegations of Obama administration misconduct in the development of contentious coal mining regulations found failures that cost taxpayers millions of dollars but found no evidence of political interference, a government witness told Congress Thursday.

In testimony before the House Natural Resources Committee, Assistant Interior Department Inspector General Robert Knox said the agency lost more than $3.7 million in contract costs in support of a rule designed to protect streams located near coal mines.

Republicans seized on the botched rule making after revelations that the agency directed the contractor to change the way it calculated the likely coal production and job losses that would result were the regulations to take effect.

The inspector general’s office concluded that the directive was based on the agency’s belief that it was following the law, Knox testified.

“There was no evidence that it was politically motivated,” he said.

Republicans on the panel were unconvinced, arguing that that the agency’s Office of Surface Mining (OSM) pressured contractors to lower its estimate of lob losses associated with the proposed rule.

“The decision to change the baseline numbers appears to be politically motivated,” said Rep. Doc Hastings (R-Wa.), the committee’s chairman. “It appears the Obama administration cared more about avoiding bad PR than presenting accurate job numbers.”

Democrats brushed off the criticism as disingenuous, accusing the GOP of merely using the issue to help build its “war on coal” narrative, which is likely to be a major theme in the upcoming election cycle.

“I don’t even know why we’re here,” said Rep. Peter DeFazio (D-Ore.), the panel’s top Democrat. DeFazio largely blamed the problems on contractor incompetence. 

At issue is the development of the OSM Stream Protection Rule, which would place more requirements on coal mining companies that operate near streams. The effort is the latest update to regulations first enacted in 1983 to protect streams from environmental impacts.

An updated version of the regulations, intended to replace the 1983 rule, was put forward in 2008, but it was challenged in court and the surface mining agency never directed states to comply with it.

In 2010, the agency hired the firm Polu Kai Services to conduct analyses of the proposal’s impacts to environment, as well as its costs and benefits. The contractor was told to use the 1983 rule as a baseline to estimate job losses associated with the rule in the works.

But after the contractors found that a new rule would yield high industry costs and job losses, the OSM told the contractor to apply the proposed 2008 provisions to their calculation instead.

The agency drew fire after initial figures showing some 7,000 estimated job losses were leaked to the media. Criticism mounted after the Polu Kai’s contract ended abruptly, and suspicions mounted that the firm was let go after refusing to lower its estimate.

However, the IG probe determined that the agency was authorized to use either the 1983 or the 2008 rule as a benchmark for its estimates, and concluded that the firm’s contract was never terminated. The agency simply chose not to renew it, Knox said.

Still, he faulted disagreement within the Interior Department's mining office for inconsistent directions given to the contractor, and said both the government and its contractor were to blame for the botched reports, which were ultimately scrapped.

“Our conclusion revealed a poorly managed process that resulted in over $3.7 million in contract costs, over a year of effort, and no final (analyses),” Knox said.