Summary of Major Initiatives and Related Progress
DMME is undertaking initiatives to respond to the needs of our customers and stakeholders.
• The American Recovery and Reinvestment Act (ARRA) is enabling DMME to offer substantial grant programs for Virginia’s citizens, businesses, and local governments to invest in energy-saving activities. DMME has applied for $16.1 million under the Energy Efficiency and Conservation Block Grant (EECBG) Program. These funds will be divided among three program areas, as follows:
• $9.7 million in sub-grants to nearly 300 eligible local governments for community energy planning, energy efficiency and conservation projects and other qualifying activities.
• $5.3 million in grants for renewable energy systems for local government and public school facilities. (This will be supplemented with $4.1 million in State Energy Program Recovery Act funds.)
• $0.7 million to provide technical assistance to local governments to use energy saving performance contracting to improve energy efficiency and reduce utility costs.
• $0.47 million in administration costs
Under ARRA, DMME has applied for an additional $70 million for its State Energy Program (SEP). These funds will be directed at three program areas:
• $32.14 million in grants or rebate incentives to stimulate purchases of renewable energy systems for residences, businesses and government facilities. $15 million will be made available to households and businesses to support installation of solar and small wind power systems. Payments will be based on the size of the system installed as follows: $2,000 per kilowatt capacity of solar photovoltaic (electric) systems; $1,500 per kilowatt capacity of wind systems; $1,000 per kilowatt capacity equivalent for solar thermal (hot water and steam) systems. $4.14 million will be made available for installations on local government and public school facilities. (This will be supplemented with $5.86 million funds from the Energy Efficiency and Conservation Block Grant to total to $10 million.) $13 million will be made available for installations on state government facilities.
• $20 million in three economic development incentives to support biomass, waste-to-energy, renewable energy and energy efficiency products, services and projects. $10 million will be made available to support biomass and waste to energy projects in Virginia. $5 million will be made available to support new clean energy business development in Virginia. $5 million will be made available to support commercialization of new energy technologies in Virginia.
• $15 million in grants or rebate incentives to stimulate implementation of energy efficiency improvements in homes and commercial properties. Residential consumers will be eligible for a rebate for 20 percent of the cost of eligible energy efficiency improvements, up to $2,000 per consumer. Commercial consumers will be eligible for a rebate for 20 percent of the cost of eligible energy efficiency improvements, up to $4,000 per consumer.
• $2.86 million will be used to administer the grants.
• In 2007, DMME implemented the Virginia Energy Management Program (VEMP) to help agencies comply with Executive Order 48. E.O. 48 directed state agencies to reduce their annual costs of non-renewable energy purchases by at least 20 percent, compared to fiscal year 2006, by fiscal year 2010. Agencies were directed to aggressively pursue: energy-saving activities whose costs could be recovered in one year, such as switching to compact fluorescent bulbs from less efficient incandescent bulbs; using energy savings performance contracting; renovation of existing buildings; alternative procurement techniques for energy; and procurement of renewable energy. In response, DMME’s VEMP is assisting agencies in implementing energy savings performance contracts, demand response programs, and consolidated energy procurement and billing.
• Sharp increases in energy costs and interest in offshore energy development led to passage of significant energy policy legislation in 2006. DMME was charged with developing a 10-year Virginia Energy Plan, which was released in September 2007. The legislation also authorized a new biofuels incentive grant program to bring biofuels producers to the Commonwealth. Partly as a result of this incentive, Virginia’s first large-scale ethanol plant is scheduled to begin production in 2010. Interest in offshore energy sources is growing, with the federal Department of the Interior taking steps to issue commercial leases for both conventional (oil and gas) and renewable resources. DMME continues to work with its federal partners and other state agencies to ensure that Virginia’s needs and policies are adequately addressed.
• DMME will need to respond to the changing regulatory climate regarding surface coal mining. In June 2009, the federal Department of the Interior, the U.S. Army Corps of Engineers, and the Environmental Protection Agency signed a memorandum of understanding recognizing the unique biological diversity of the Appalachian region and implementing an Interagency Action Plan “designed to significantly reduce the harmful environmental consequences of Appalachian surface coal mining operations…” DMME will need to work with the federal agencies, our coal industry customers, coalfield citizens, and other interest groups to ensure that DMME regulations, policies, and permitting and enforcement activities are consistent with the new federal regulatory framework.
• DMME is implementing the use of e-forms to provide customers with faster access for submittal of amendments, renewals, annual reporting, and updating of permit and company information. For example, DMME is enhancing electronic business-to-government capability for its mineral mining and oil and gas operators. The e-Forms Centers will provide operators with the ability to electronically submit permitting applications and annual production reports, manage contractor lists, register for training classes, provide electronic fund transfers and otherwise conduct their business with DMME online. DMME continues to work with mineral mine and gas and oil operators to expand the use of this e-government system.
• In response to a jump in coal mining fatalities nationwide in early 2006, Congress passed the Mine Improvement and New Emergency Response (MINER) Act. The Act, among other things, expanded the requirements for mine emergency response plans, increased the availability of self-rescue breathing devices underground, and required that two experienced mine rescue teams be available to each underground mine at all times. DMME is working with Virginia's coal mining community to meet the challenge of implementing these requirements. In 2007, in response to trends in substance abuse among mine workers, Virginia amended its Coal Mine Safety Act to require pre-employment drug testing of new mine workers, and to allow DMME’s Chief mine inspector to employ substance abuse testing during investigations of incidents in which miners are killed or seriously injured. DMME is working with the Board of Coal Mining Examiners not only to enforce suspensions and revocations of miner certifications that result from substance abuse tests, but also to assist addicted miners in seeking rehabilitation.
• In FY 2009, DMME’s budget was subject to a reduction of 11%, which severely impacted the Geologic and Mineral Resource Investigations, Mapping, and Utilization Service Area. In an effort to continue to meet customer demand for geologic and mineral resource information and products, DMME will employ innovative techniques such as expansion of web-based services. The agency also plans to seek additional grant funding for geologic and mineral resource projects.
• Virginia enacted provisions in 1990 to enable development of coalbed methane resources. Prior to 1990, these natural gas resources were wasted by venting into the atmosphere during mining operations. The coalbed methane resources were underdeveloped due to conflicts over ownership of the gas. The legislative measure provided for escrowing funds when the ownership of the coalbed methane was in conflict. A 2004 Virginia Supreme Court decision resolved the conflict for some of these conflicting claimants, opening the door for payments out of the escrow account to the rightful owners. These two events allowed an exponential growth in Virginia’s coalbed methane industry, with over 700 wells per year being drilled by 2007. DMME and the Virginia Gas and Oil Board are working to facilitate the processing of escrow payments, as well as working with citizens and lawmakers to resolve concerns regarding the deduction of post-production costs from royalty payments to natural gas interest owners.
Summary of Virginia's Ranking
DMME has used the United States Senate and Productivity and Quality Award (SPQA) process to evaluate the effectiveness and efficiency of its services against the SPQA criteria. The SPQA criteria are based on the Malcolm Baldridge Award criteria. The criteria address leadership, strategic planning, customer and market focus, information and analysis, human resources, process management, and business results. DMME received the Medallion of Quality in 1997 and the Award for Continuing Excellence (ACE Award) in 2002. DMME was the first Virginia state executive agency to receive the Medallion and remains the only state agency or institution to receive the ACE Award.
DMME’s activities are regularly benchmarked against other states’ activities in a number of areas. For example, other states and the federal Office of Surface Mining and Mine Safety and Health Administration have used DMME’s underground mine mapping initiative as a national example of how to make information available about locations of abandoned underground coal mines. The mine mapping initiative also won the Governor’s Technology Award for Innovation in Technology and Honorable Mention in the National Association of State Chief Information Officers (NASCIO) Recognition Awards for Outstanding Achievement
Based on DMME’s experience with performance measurement, the Office of Surface Mining has used DMME as a key partner in developing its national performance measurement system. DMME’s coal mining electronic permitting process has been benchmarked by numerous other states. The electronic permitting system has also won the Council of State Government’s Recognition for Significant Contributions to State Government and the Southwestern Virginia Technology Council Award for High Tech in Government.
DMME has received awards in a number of other areas. For example, the DMME Division of Mines has received the federal Mine Safety and Health Administration’s (MSHA) Annual Training Materials Competition first place and grand prize awards several times for its mine emergency and remote control miner training materials. The DMME Division of Mineral Mining’s trucker safety training program, “Drive Home Safely”, received MSHA’s first place award in the State Metal/Nonmetal division competition. MSHA has also recognized and complimented DMME on its successful safety training and safety awareness program implemented as part of MSHA’s State Grant’s Program.
DMME’s E-forms centers have won the High Tech in Government Award from the Southwest Virginia Technology Council, the Governor’s Technology Award in the “Online, not In Line” category, and the Center for Digital Government’s Digital Government Achievement Award. The agency’s laptop enforcement system has won the Governor’s Technology Award in the Workforce Productivity category. DMME’s digital signature initiative, established in cooperation with VDOT, won a grant from the Governor’s Productivity Investment Fund.
The DMME Orphaned Land Program has been recognized for its achievements by the US EPA and other state and federal agencies.
Summary of Customer Trends and Coverage
Mineral extraction operations
• The number of permitted coal mining operations and gas and oil sites and coal and gas production historically changes based on the price of energy. Non-fuel mineral production historically changes based on the health of Virginia’s economy. Energy prices are very high and are projected to remain high for at least the next five years. Virginia’s economy has slowed due to the recent recession, but expansion is to be expected during the 2010-2012 biennium as economic recovery proceeds. These factors are expected to caused an increase in the number of permitted mines and gas and oil sites and an increase in energy and mineral production.
Mineral extraction workers
• Coal mine employment in Virginia is related to the amount of coal produced in the state and the mechanization of mining. The number of Virginia coal miners peaked in 1949 at 18,341, coincident with the introduction of continuous mining machines. Since that time, coal mine employment experienced a secondary peak in 1977 at 15,742. There were 4,394 coal mine production employees in 2008. A large percentage of working miners will be reaching retirement age in the next five years. Mining companies are already facing difficulties replacing these miners with new employees. This need for new miners is causing an increasing demand for coal miner certification training and other new miner services from DMME.
• Mineral mine employment in Virginia fluctuates based on the amount of tonnage produced in Virginia’s mineral mines and changes in miner productivity. The number of mineral miners also is affected by the use of independent contractors on mineral mine sites. Some operators have shifted parts of operations away from their employees to contractor employees. Virginia had 3,849 production workers in 2008. This compares to 4,816 mineral miners working in 1989, 4,104 mineral miners working in 1994, 4,258 mineral miners in 1999, and 3,603 mineral miners in 2004, and 3,836 in 2006. DMME anticipates the number of mineral miners to remain relatively stable in the coming years.
• As DMME does not have primary jurisdiction for worker safety on gas and oil exploration and production sites, it does not maintain records of the number of persons working on gas and oil exploration and production operations in Virginia. However, as the number of permitted wells, gathering pipelines, and associated facilities increases in Virginia, the number of workers drilling the wells, constructing the pipelines and associated facilities, and maintaining the facilities will continue to increase. Virginia expects this trend to continue over the next three or more years.
Public affected by mineral extraction operations
• Public located near mineral extraction operations may be affected by activities at those operations. Such affects may include ground vibrations from blasting; degradation of groundwater quantity or quality; uncontrolled release of material such as flyrock or pushed or tracked material from the site; landslides; dust from blasting, construction, or travel on soft-surfaced roads; noise or light pollution; or truck traffic. DMME’s regulations control many, but not all, of these impacts. While some impacts, such as light, noise, local truck traffic, and hours of operation may be subject to local government land use controls, DMME receives and must investigate most complaints on all of the mining effects.
• Public located near abandoned mineral extraction sites may be affected by hazards on the abandoned sites, such as open shafts or portals, landslides, ground or surface water pollution discharges, sediment buildup causing flooding, land subsidence, or hazardous gases.
• DMME expects there will be additional people affected by mineral extraction operations in the coming years because surface coal mining operations are getting larger and locating closer to developed areas as the available remotely located coal reserves suitable for surface mining dwindle. Development is moving into areas containing historic, unreclaimed coal mine lands, increasing the number of people at risk from these abandoned sites. More natural gas wells and pipelines are being constructed near developed areas, and sprawl has reached areas where mineral mines have traditionally been located.
Affiliated mineral extraction business interests
• Numerous businesses support mineral extraction operations. These range from engineering firms that assist with permit preparation and facility design, to independent contractors providing non-mining services at mine sites (such as blasting, mobile equipment lubrication and maintenance, logging, overburden removal, plant construction), to independent trucking companies hauling mined material from a mine, to title attorneys, and others.
• DMME expects there will be an increase in the number of affiliated business interests. Mining companies are increasingly outsourcing work on mines. DMME has been given expanded responsibility for regulation of activities of independent contractors on coal and mineral mines. DMME served over 2,200 independent mineral mining contractors in 2008. The department expects the number of independent contractor customers to continue to grow.
General public and businesses
• DMME provides information on the state’s mineral resources, geology, energy efficiency, and alternative energy development to the general public, educational customers (teachers, faculty, and students), facility managers, economic development officials, real estate developers, and other similar customers.
• With increasing energy prices and growing concerns about global warming, the general public and businesses are becoming more interested in energy conservation, energy efficiency, and alternative energy sources. The release of the Virginia Energy Plan in September 2007 has also generated increased interest in these subjects and will likely expand DMME's customer base. The receipt of nearly $90 million from the federal Department of Energy under the American Recovery and Reinvestment Act, which is to be distributed as grants to citizens, businesses, and local governments for energy efficiency investments, will drive a large portion of the activity in DMME’s State Energy Program during the biennium.
• DMME also works with vendors to supply goods and services to the department. Most procurement is made through the eVA system. DMME strives to use businesses located in Southwestern Virginia as a way to support the regional economy where most of its operations are located. DMME also strives to procure goods and services through small, women-owned, or minority-owned (SWAM) businesses consistent with its SWAM plan.
• DMME expects the general public and business customer base to increase over the next few years. DMME has expanded the number of businesses it works with as it implements eVA and SWAM purchase requirements. DMME also is expanding the information it provides across the Internet. As information is more readily available in electronic form, additional customers will become aware of its availability, thereby increasing DMME’s customer base.
Other governmental agencies
• DMME works with numerous other state agencies, as well as federal and local agencies, to meet management and administrative requirements. There has been an increasing mandate to meet centralized management standards in such areas as procurement, lease management, and information technology. Further centralized mandates are being developed for areas such as facility maintenance, payroll, and general administrative support services.
• DMME expects the number of governmental agency customers to grow in the next few years. These will increase the need for administrative coordination with the agencies.
•Consolidation of the mineral mining companies continues to take place mainly in the crushed stone industry resulting in fewer and larger operators dominating the marketplace.
•Mineral mining companies are experiencing greater difficulty in obtaining zoning and conditional use permits from counties for both new operations and expansion of existing operations.
•Companies are increasingly using outside contractors to perform many of the tasks previously performed by company employees. Many of these contractor workers are immigrants with limited English language skills, which generates a need for multilingual supervision.