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By Patrick Reis
POLITICO Pro

The Interior Department has parted ways with a contractor whose analysis of draft coal mining rules landed the department in the center of a political maelstrom.

Interior and Polu Kai Services LLC “ended their working relationship” on March 24 — more than a month before the company’s contract was scheduled to expire, Office of Surface Mining Director Joe Pizarchik told a House panel Thursday.

The department has paid Polu Kai $3.7 million of a contract worth slightly less than $5 million, said Pizarchik, who didn’t say whether any more payments are expected. A representative from Polu Kai confirmed the breakup.

The pair’s relationship had been on the rocks since January, when Polu Kai’s analysis of a draft of the department’s new rules on mountaintop removal coal mining was leaked to The Associated Press. Polu Kai estimated that the rules would eliminate 7,000 jobs.

Interior has been playing defense ever since, with Pizarchik repeatedly telling Congress that Polu Kai’s analysis was flawed, and that it was too early in the rulemaking process to speculate on the economic impacts of the policy.

That has done nothing to soothe Republicans and the mining industry, which have trumpeted the analysis as proof that the Obama administration’s ongoing overhaul of mountaintop removal regulations would be an economic disaster for Appalachia and other coal-producing regions.

House Republicans, led by Ohio freshman Bill Johnson, called on Pizarchik on Thursday to abandon his agency’s efforts to rewrite Interior’s “stream protection rule,” and pledged to continue their efforts to defund it in upcoming federal budgets. The House continuing budget resolution, approved in February, included a rider that would block Interior from funding the rewrite.

Since President Barack Obama took office, Interior has been trying to rewrite Bush administration rule changes from 2008 that allowed for more mountaintop removal mining.

After a federal court blocked Interior from voiding the Bush changes, the department set out to write its own rule and originally said it hoped to release a final version by early 2011. Pizarchik said Thursday that a draft would be released sometime later this year, but he did not give a timeline for releasing a final rule.