[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                        HARDROCK MINERAL BONDING

=======================================================================

                           OVERSIGHT HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY
                         AND MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

 HARDROCK MINING BONDING REGULATIONS AND THE DECISION ON THE SECRETARY 
OF THE INTERIOR TO PUBLISH ON FEBRUARY 28, 1997, A FINAL RULEMAKING ON 
       BONDING OF ``HARDROCK'' MINING OPERATIONS ON PUBLIC LANDS

                               __________

                     MARCH 20, 1997--WASHINGTON, DC

                               __________

                            Serial No. 105-8

                               __________

           Printed for the use of the Committee on Resources


                                


                      U.S. GOVERNMENT PRINTING OFFICE
 40-682 CC                   WASHINGTON : 1997
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                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey               NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho               FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona                SAM FARR, California
JOHN E. ENSIGN, Nevada               PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon              ADAM SMITH, Washington
CHRIS CANNON, Utah                   WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA CHRISTIAN-GREEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               NICK LAMPSON, Texas
JIM GIBBONS, Nevada                  RON KIND, Wisconsin
MICHAEL D. CRAPO, Idaho

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director
                                 ------                                

              Subcommittee on Energy and Mineral Resources

                    BARBARA CUBIN, Wyoming, Chairman
W.J. (BILLY) TAUZIN, Louisiana       CARLOS ROMERO-BARCELO, Puerto Rico
JOHN L. DUNCAN, Jr., Tennessee       NICK J. RAHALL II, West Virginia
KEN CALVERT, California              SOLOMON P. ORTIZ, Texas
WILLIAM M. (MAC) THORNBERRY, Texas   CALVIN M. DOOLEY, California
CHRIS CANNON, Utah                   CHRIS JOHN, Louisiana
KEVIN BRADY, Texas                   DONNA CHRISTIAN-GREEN, Virgin 
JIM GIBBONS, Nevada                      Islands
                                     ------ ------
                    Bill Condit, Professional Staff
                   Sharla Bickley, Professional Staff
                    Liz Birnbaum, Democratic Counsel



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held March 20, 1997......................................     1

Statements of Members:
    Cubin, Hon. Barbara, a U.S. Representative from Wyoming; and 
      Chairman, Subcommittee on Energy and Mineral Resources.....     1
    Ensign, Hon. John, a U.S. Representative from Nevada.........     5
    Romero-Barcelo, Hon. Carlos, a U.S. Resident Commissioner 
      from Puerto Rico...........................................     3
    Young, Hon. Don, a U.S. Representative from Alaska; and 
      Chairman, Committee on Resources...........................     4

Statements of witnesses:
    Hanneman, Karl, President, Alaska Mining Association, 
      Anchorage, AK..............................................    27
        Prepared statement.......................................    40
    Hocker, Philip, President, Mineral Policy Center, Washington, 
      DC.........................................................    29
        Prepared statement.......................................    44
    Jones, Paul, President, Minerals Exploration Coalition, 
      Golden, CO.................................................    25
        Prepared statement.......................................    37
    Leshy, John, Solicitor, Department of the Interior...........     6
        Prepared statement.......................................    36

Additional material supplied:
    Summary of Bonding Requirements relating to minerals 
      exploration................................................    69
    Mine's toxic leaks render river lifeless.....................    80
    Bankrupt mine costly to EPA..................................    81

Communications submitted:
    Barlow, Leo H. (Sealaska): Letter of March 25, 1997, to Hon. 
      Barbara Cubin..............................................    61
    Cubin, Hon. Barbara: Letter of March 24, 1997, to Hon. Bruce 
      Babbitt (DOI)..............................................    50
    Ely, Marion F., II: Letter of March 27, 1997, to Hon. Barbara 
      Cubin......................................................    66
    Glavinovich, Paul S. (minerals consultant): Letter of March 
      24, 1997, to Representative Barbara Cubin..................    63
    Hanneman, Karl (AMA): Letter of April 7, 1997, to Hon. 
      Barbara Cubin..............................................    65
    Joint letter from six organizations dated March 12, 1997, to 
      Hon. Bruce Babbitt (DOI)...................................    54
    Jones, Paul C. (Minerals Exploration Coalition):
        Letter of March 28, 1997, to Hon. Barbara Cubin..........    67
        Letter of March 28, 1997, to Hon. Nick Joe Rahall........    78
    Knowles, Gov. Tony (AK): Letter of March 14, 1997, to Hon. 
      Bruce Babbitt (DOI)........................................    48
    Leshy, John (DOI): Letter of April 3, 1997, to Hon. Barbara 
      Cubin......................................................    52



                  HARDROCK MINING BONDING REGULATIONS

                              ----------                             



                        THURSDAY, MARCH 20, 1997

                  House of Representatives,
      Subcommittee on Energy and Mineral Resources,
                                    Committee on Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 12:35 p.m., in 
room 1324, Longworth House Office Building, Hon. Barbara Cubin 
(Chair of the Subcommittee) presiding.

  STATEMENT OF HON. BARBARA CUBIN, A U.S. REPRESENTATIVE FROM 
   WYOMING; AND CHAIRMAN, SUBCOMMITTEE ON ENERGY AND MINERAL 
                           RESOURCES

    Mrs. Cubin. The Subcommittee on Energy and Mineral 
Resources will please come to order. The Subcommittee is 
meeting today to hear testimony on Hardrock Mining Bonding 
Regulations. Under Rule 4(g) of the Committee Rules, any oral 
opening statements at hearings are limited to the Chairman and 
the Ranking Minority Member.
    This will allow us to hear from our witnesses sooner and 
help keep members on their busy schedules, and, boy, can we 
attest to that. Therefore, if any other members who are not 
here have any statements then they can be included in the 
record later for all of you to see.
    Today the Subcommittee will review the decision of the 
Secretary of the Interior to publish on February 28th of this 
year a final rulemaking on bonding of hardrock mining 
operations on the public lands administered by the Bureau of 
Land Management. This may come as a shock to some who 
characterize me as anti-environmentalist. In fact, I have even 
been called an eco-thug because of my position on State primacy 
for coal mining regulation.
    But I do not oppose financial assurances from companies who 
are mining in this country to guarantee to the people of this 
country that reclamation of lands disturbed by mines will take 
place. I absolutely believe in it and it should be done in the 
finest way.
    My coal miners in the Powder River Basin are bonded, as are 
oil and gas operators, and others. I think this is as it should 
be and I do believe in bonding. That is not the reason for this 
hearing. However, from where I sit, it appears to me that this 
Administration has decided to ignore the Administrative 
Procedures Act mandate to ask for meaningful public input on 
proposed rules and regulations before coming out with a final 
rule which will significantly impact a group of our citizens.
    And let me state in my State we have very, very little 
hardrock mining which makes or should make it even clearer that 
the issue of bonding is not what is at point here, the issue is 
to insure the integrity of the process. That is what I view as 
the Subcommittee's responsibility in this case.
    In the case at hand, way back in July of 1991, during the 
middle of the Bush Administration, the BLM proposed a rule 
concerning financial guarantees for reclamation of mining 
operations conducted under the general mining law. That was 
nearly five and one-half years ago, and some 220 responses were 
received before the 90-day comment period closed. On February 
28 then of this year a final rule was published by the 
Department of the Interior with an effective date of March 31, 
1997.
    In my mind, that is an awfully long shelf-life for public 
comments. A lot has happened in the last five years. Like 
bread, public input can go stale. Technology can be made stale 
with the passage of time. There are many things that are in the 
proposed rule that were not even covered in the input in the 
first five years ago.
    I am not suggesting that the Department of the Interior to 
have thrown out the entire six-year-old responses on the last 
proposal of the bonding issue, but I am only suggesting that 
the Secretary ought to have exercised good judgment and 
recognized the need to reask the public for meaningful input 
and repropose this final rule for timely comment.
    Now, I recognize that some rulemakings in other agencies 
like the EPA, for example, can drag on for years and years, but 
it seems that those air quality regulations and other 
environmental rulemakings are often proposed and reproposed and 
re-re-proposed. They go on for a long time but they are not put 
on the shelf, ignored, and then picked up five and one-half 
years later.
    And the public has a bite at those regulations each time, 
so it is not a case of dormant rules suddenly being awakened 
and sprung on an unsuspecting group of citizens. But that is 
what it looks to me like is happening here.
    Furthermore, the rule at issue is a part of the so-called 
3809 surface management regulations for the BLM, for which the 
Secretary has announced the formation of a task force to review 
the adequacy of the program. In other words, the entire plan of 
the Secretary's mandate under FLPMA, ``to prevent unnecessary 
and undue degradation of public lands'' will be scrutinized.
    I understand that the BLM plans to hold scoping meetings in 
several western locations in the relatively near future. If the 
Secretary could not wait for that task force to review the 
current bonding regulations for the revision of the entire 3809 
section, at a minimum I think he could have directed the final 
rule to have been reproposed after a 60-day period where there 
could be up-to-date, meaningful input from the public.
    And the comments that the Department would receive from re-
proposing the bonding rule would include insights that were not 
available in 1991 because the regulatory landscape of the 
various western States has changed in the intervening six 
years. My guess is that these State regulatory bodies, 
individually, or collectively through the Western Governors' 
Association would have something to say about this final rule 
but they have been frozen out from commenting on the rule.
    Alaska's legislature, for example, agreed to form a 
statewide bond pool to insure small miners would have access to 
financial guarantees for reclamation, but my understanding is, 
and I have read a letter from the governor of Alaska, that the 
final rule of the BLM is ambiguous at best about whether such a 
pool provides satisfactory assurance.
    In other words, will seasonal placer mine operators be 
caught up in the interpretation of this rule just as they need 
to make decisions on whether or not to improve their equipment 
or move in equipment?
    At the same time in the lower 48 States, will Nevada's 
statewide bonding pool, a surety of last resort as it has been 
described to me, be a satisfactory financial assurance? And if 
so, what is the possible impact upon the total liability of the 
pool and is it enough to prompt a finding of an unfunded 
mandate upon the State? I think these are legitimate questions 
that have not been posed to the public and have been only if 
considered at all done internally and the law strictly requires 
for public input.
    Closer to home, how will the mine operators who utilize in-
situ leach methods to recover uranium, this would be in my home 
area, from the Powder River basin, how will they be impacted? 
And does reclamation, as defined in 3809 for bonding purposes, 
include neutralization of the aquifers when other Federal and 
State laws clearly apply, not reclamation in the traditional 
sense of reshaping and revegetating the land?
    And what about the imposition of criminal penalties in the 
final rule for operators who fail to comply with a notice of 
non-compliance? Is it really within the jurisdiction of an 
agency to determine what should be felony law? Regardless of 
one's view of the BLM as public law enforcement agents, is not 
this a change from the 1991 proposal? Is there sufficient 
rationale alone in that one subject to seek more input? I 
believe that there is.
    Certainly when summed up together with the questions that I 
have already mentioned and others that I have not and there are 
many others, it is clear to me that the Secretary should have 
done the right thing and asked the public for meaningful input 
at this time on this rule. I reiterated my sense that financial 
assurances are a necessary part of doing business on the public 
lands today, but I surely do not see the reason why the public 
should have been shut out from the opportunity for meaningful 
comment on this rule.
    It is my desire to respectfully request that the Secretary 
withdraw the final rule and at the very minimum extend a 60-day 
comment period. With this statement, I welcome our witnesses to 
this hearing and recognize the Ranking Member, Mr. Romero-
Barcelo for his opening remarks.

STATEMENT OF HON. CARLOS ROMERO-BARCELO, RESIDENT COMMISSIONER 
              FROM THE COMMONWEALTH OF PUERTO RICO

    Mr. Romero-Barcelo. Thank you, Madam Chair. I would like to 
begin by saying that you are to be commended in holding a 
hearing today on the Bureau of Land Management's new 
requirement for hardrock mining on public lands. The new rule, 
published in the Federal Register on February 28 of this year, 
will do much to ensure that miners, and not the public, pay for 
restoring public lands after mining is complete.
    This is an important change in policy. Therefore, we hope 
that any questions or issues regarding the procedures used to 
implement the new rule will be answered during this hearing. 
The underlying policy of the final rule is sound. Under this 
new rule, the Bureau of Land Management will require all miners 
to maintain full financial bonds, or guarantees, for 100 
percent of the cost of restoring public land that their 
activities have disturbed. This is a significant change from 
the previous policy that exempted miners disturbing less than 
five acres of public land from providing proof of such 
protection.
    The Inspector General of the Department was extremely 
critical of the previous policy stating that it did not provide 
an adequate guarantee that mining operators would reclaim the 
land after mining. Reclamation is necessary to ensure that 
environmental damage, such as acid mine drainage, groundwater 
and drinking water contamination, does not occur. Reclamation 
also ensures that the land can again be used for other 
purposes, like recreation, once mining is complete.
    The Bureau of Land Management first proposed changing the 
rules in 1991. The process is finally complete with the 
issuance of the new regulation. American taxpayers have for too 
long borne the risk and expense of cleaning up after 
unscrupulous miners. Now, under the BLM's new rules, the cost 
of cleaning up the disturbance caused by mining will be placed 
squarely on the mining community's shoulders where it should 
be.
    Activities that do not disturb the land, such as panning 
for gold in mountain streams, will not require a bond. But 
anyone engaged in mining activity that disturbs the land such 
as digging or excavating will be required to post a bond or 
other financial guaranty covering 100 percent of the cost of 
reclamation. The Bureau of Land Management will release the 
bond after reclamation is completed. The rule also requires 
that a professional engineer certify the projected costs of 
reclamation.
    The Bureau of Land Management already requires reclamation 
of land disturbed by mining. By requiring bonds, with 100 
percent of costs taken into account and increasing the minimum 
dollar requirement, the Bureau of Land Management is ensuring 
that reclamation will occur without tax dollars. Thank you, 
Madam Chair.
    Mrs. Cubin. Thank you for your remarks. Ms. Green, do you 
have any opening remarks?
    Ms. Christian-Green. Thank you, Madam Chair. I have no 
opening remarks.
    [Statements of Mr. Young and Mr. Ensign follow:]

   Statement of the Honorable Don Young, a U.S. Representative from 
              Alaska; and Chairman, Committee on Resources

    Madam Chairman, we are here today because high level 
bureaucrats in the Department, under the guise of Secretary 
Babbitt, have once again decided that Washington, D.C. knows 
best. After more than five years of silence on bonding, 
Washington, D.C. wants to impose a new bonding rule on miners 
by decree. Washington, D.C. does not want the opinion of the 
Congress, it does not care what the States have done, and it 
has no intention of allowing any public input into this 
decision. But, we have laws which mandate that they follow a 
fair process before making rules. We are asking the Department 
of Interior today to demonstrate that, in making this bonding 
rule, they have respected both the letter and the spirit of the 
laws mandating a fair process.
    In my district, most mines are small placer gold mines. 
They employ about five people and produce less than 700 ounces 
of gold each year. Together, they produce the bulk of Alaska's 
gold. They are critical to Alaska's economy. They are essential 
in rural areas where mining may be the sole source of jobs.
    These mines are actually small businesses. Many are family-
owned and operated. In fact some of today's Alaska miners are 
descendants of the hardy participants in Alaska's original gold 
rushes.
    Most placer mines affect only a few acres each season and 
use simple technology. Old stream deposits are dug up, the 
gravel washed, and the gold removed by gravity. Toxic 
discharges are not a problem. The State of Alaska requires 
reclamation and has a bonding system. That system ensures 
reclamation while providing bonds at reasonable cost to 
Alaska's independent miners. The state system works. But along 
comes Secretary Babbitt, after five years of hibernation, to 
``fix'' the problem. The Department is trying to fix a problem 
that the states are handling just fine.
    What does this new Washington, D.C. rule mean for 
individualistic, hard-working Alaska placer miners?
    --They must comply with inflexible, costly regulations.
    --They will have to hire expensive engineers to certify 
reclamation plans.
    --If Washington, D.C. refuses to accept bonds underwritten 
by the Alaska state bonding pool, they will have to lay out 
huge sums of cash or marketable securities.
    Many small mining businesses in Alaska will not survive 
this rigid Washington, D.C. rule.
    Finally, Madam Chairman, I have a letter from the Governor 
of the State of Alaska to Interior Secretary Babbitt, which 
expresses his concern regarding this rule on hardrock bonding 
and asks that the Secretary reconsider this new rule. I request 
that this letter be made part of the written record of this 
hearing.
    Thank-you Madam Chairman.

                                ------                                


  Statment of Honorable John Ensign, a U.S. Representative from Nevada

    Thank you, Madam Chairman, for the opportunity to testify 
before the Subcommittee on the final rule published by the 
Bureau of Land Management concerning bonding of hardrock mining 
operations on BLM lands.
    In a state like Nevada, where 87% of the land is federally 
owned and the mining industry is the second largest employer in 
the state, we all must keep a watchful eye of the land 
management practices of our federal agencies. Likewise, in a 
state with such a federal presence, it is extremely important 
that the federal agencies work in harmony with local officials 
and the public. There must be constant communication between 
the agencies, the land users and local officials.
    In the case of this final rulemaking, it appears that 
little or no effort was afforded to the public to communicate 
with the BLM in regards to this action. The Administrative 
Procedures Act specifically mandates that the public be given 
ample opportunity to comment on such proposals. In July of 1991 
a similar proposal was suggested by the Bush Administration. 
The public was granted the customary comment period, yet no 
further action was taken. Now, nearly seven years later, this 
proposal becomes a final rule. It is irresponsible of this 
Administration not to solicit additional comments from the 
public. In the past seven years, my State of Nevada has changed 
dramatically and I think similar changes have occurred all over 
the West.
    I do not want to give the impression that I am opposed to 
bonding. The largest mines in Nevada are currently required to 
bond 100% of the reclamation costs because they operate in 
excess of five acres. It is important that we do all we can to 
ensure that the land is reclaimed to its original state. We 
also must recognize the technological gains and advancements 
the industry has made to prevent many of the mistakes of the 
past.
    I simply believe that all interested parties should be 
given the opportunity to respond to this proposal before it 
becomes final. A lot of changes have occurred in the past seven 
years and I believe it would be beneficial to the Bureau to 
understand new and current comments on the proposal. I hope 
this Administration would recognize the importance of recent 
views and make this proposal available for the public's 
comments.
    Thank you, Madam Chairman.

    Mrs. Cubin. Now if all of the witnesses that will testify 
before the committee today would please stand and raise your 
right hand to be sworn in.
    [Witnesses sworn.]
    Mrs. Cubin. Our first panel then, I would like to call Mr. 
Leshy, who is the Solicitor for the Department of the Interior, 
and ask for his testimony. I would like to remind all of the 
members of the panel that we have a time limit of five minutes 
for your presentation and if you could stick as closely to that 
as possible, that would be appreciated. And we have some lights 
down there to tell you when to go and when to caution and when 
to stop so do whatever you need. Mr. Leshy.

  STATEMENT OF JOHN LESHY, SOLICITOR, U.S. DEPARTMENT OF THE 
                            INTERIOR

    Mr. Leshy. Thank you, Madam Chair, and members of the 
Subcommittee, I appreciate the opportunity to testify here 
today to discuss the final rule on bonding for hardrock mining 
operations. The authority for these rules comes from the 
Federal Land Policy and Management Act which directs the 
Secretary of the Interior--it is his duty, not his discretion--
to prevent unnecessary and undue degradation of public lands 
from, among other things, hardrock mining operations conducted 
under the old Mining Law.
    Most members of the mining industry are responsible 
operators who live up to their reclamation obligations, but 
there is no denying that when protective measures are not taken 
or are inadequate, the consequences can be very costly, and 
unfortunately sometimes the costs are passed on to Federal 
taxpayers and not borne by the mining industry. There is a 
substantial record on which we acted in strengthening these 
hardrock rules.
    Your letter of invitation asked me specifically to address 
why BLM had published new regulations after they ``appear to 
have been dormant over five years.'' With all due respect, I 
think it is impossible to say that the public policy debate 
about environmental regulation of hardrock mining has been 
anything like dormant at any time over the last five years.
    This bonding regulation is a central part of that debate 
and I do not think anyone concerned with the subject could have 
possibly believed that Interior had put environmental 
regulation, including the bonding regulation, in some sort of 
deep freeze. There have been thousands, maybe millions of words 
spoken about hardrock mining environmental regulation over the 
last several years.
    I must reject the suggestion that we somehow behaved 
irresponsibly by suspending work on the final rule after we 
published the draft rule in 1991, while we waited for Congress 
to grapple with and we hoped enact acceptable reform of the 
Mining Law. In fact, deferring to Congress and waiting for it 
to act in the 103rd and 104th Congresses was a very responsible 
thing to do. I think it would have been terribly confusing had 
we come out in the middle of a congressional debate on the 
subject with a final bonding rule.
    That deference to congressional action explains a 
substantial part of the time between the draft and final rule. 
The other part of the time was taken up by our need to 
carefully and fully comply with the numerous procedural hoops 
in the rulemaking process that Congress and the President have 
created for rulemakings. A number of these requirements are 
new. Compliance with the Paperwork Reduction Act alone here 
took several months in between the draft and final rule.
    Some might think it a little ironic that, because during 
the time between the draft and final rule we decided to defer 
to congressional action and we took great pains to comply with 
the requirements, most of them from Congress, on the rulemaking 
process, we are now criticized. Frankly, I think if the reverse 
had been true--that if we had not waited for Congress or if we 
had not done a careful job jumping through these rulemaking 
hoops--we would have been severely criticized. I guess no good 
deed goes unpunished.
    Your letter also asked me to address the merits of 
publishing the rule as a final rule without meaningful recent 
public input. There are several things to say about that. 
First, we had substantial public input on the draft 
regulations. It was meaningful. We carefully considered those 
comments in putting together the final rule. There has been no 
effort or attempt here to short circuit full consultation with 
the public as a normal part of the rulemaking process.
    I must say a careful consideration of public input here was 
in stark contrast to that of the BLM in the Bush 
Administration. In 1990, the director of the BLM made some very 
substantial changes in the bonding policy of the BLM without 
publishing a rule at all, but instead by simple memorandum 
signed by the director, without going out for public comment. 
It made many more significant changes in the previous practice 
than the changes between the draft and final rule here, and 
those changes were made, I repeat, without any effort to get 
public comment.
    The differences here between the draft rule published in 
1991 and the final rule published earlier this year are 
relatively insignificant in the overall context of the 
proposal. The draft rule would have required bonds for all 
notice mines and all plan mines. So does the final rule. The 
only difference is in the level of bonding required. The draft 
rule would set the level at full cost for certain categories of 
mining and a prescribed maximum per acre for other categories. 
The final rule requires full cost for all categories with some 
mandatory minimums.
    Both the draft and final rules enlarged the categories of 
qualifying bond instruments. There are few differences in the 
kind of instruments accepted between the two: the final 
expanded in one area and contracted in a couple of others. 
There are a few other changes primarily for clarity. The basic 
structure, approach, and most of the details remain the same. 
Changes are exactly the kinds of changes that are within the 
original scope of the rulemaking and are the kinds of changes 
one would expect in a normal rulemaking process in response to 
public comment.
    There is nothing out of line here, legally or otherwise. We 
look at this, in conclusion, as really a simple matter. A 
mining claimant operating under the old Mining Law of 1872 is 
offered a practically unparalleled opportunity in modern 
American life--access to explore for and develop valuable 
public property while paying the owners of that property, the 
taxpayers, pocket change.
    If a claimant cannot provide some assurance to the taxpayer 
that he, and not the taxpayer, will bear the cost of 
restoration, protecting water quality and the health of the 
land, then that person or entity should not be out there on the 
public lands threatening water, air and land. We are glad, 
Madam Chair, that you share that policy.
    We think the final bonding regulation is a reasonable 
effort to protect the nation's hardworking taxpayers. They 
deserve nothing less than satisfactory guarantees that they 
will not be left holding the bag for careless or irresponsible 
mining operations, and we have found no reason in law or policy 
to delay the implementation of the rule. Thank you for the 
opportunity to testify. I am, of course, happy to answer 
questions.
    [Statement of Mr. Leshy may be found at end of hearing.]
    Mrs. Cubin. Thank you for your testimony. I have to say I 
am somewhat surprised. I frankly think that these issues are 
much too important to be partisan and I truly regret that you 
felt the need to bring up something that happened in the Bush 
Administration and try to justify actions taken by you or the 
Secretary or whomever. We have got to get the partisan politics 
out of natural resource issues, out of environmental issues, 
out of development issues, Mr. Leshy, because nobody has any 
credibility when it is partisan.
    We have to depend on the process. We have to hold the 
process inviolate because only by protecting the process can we 
protect the resource and can we protect the American people and 
their right to be compensated for their minerals and their 
right to have their land reclaimed. And I would appreciate it 
if you appear in front of this Subcommittee again that we leave 
the politics out of this.
    You started your testimony by saying that the debate has 
not been dormant about this bonding or about these regulations 
over the past five-and-a-half years. I would suggest certainly 
there has not been anything dormant about discussing bonding 
issues and environmental issues but certainly the specific 
regulations and the changes from the draft rules to the final 
rules in my mind are significant while I realize we have a 
difference of opinion.
    In fact, after I read them I wondered if you had read both 
the draft and the final because there are lots of differences 
and they are major. I am sorry that you feel that no good deed 
goes unpunished but you cannot deny this is an unique instance 
where comments are taken 5-1/2 years ago, draft rules come out 
5-1/2 years ago, and now it is jerked off the shelf, switched 
around.
    Well, I guess that is enough of that. I do appreciate the 
fact that you are here. I wish your testimony had been more 
insightful as to why the Secretary chose not to seek new 
comments on this rule. There were no reasons offered as to why 
no new comments were asked. Perhaps you can help us understand 
that decision in a minute, but let me say up front I was 
trained as a chemist, not a lawyer, and although several of our 
colleagues today are lawyers they will help me out on those 
issues but I do know that the Administrative Procedures Act 
which guides rulemaking has been interpreted by the courts to 
require agencies to solicit meaningful public input before 
imposing a final rule.
    I would suggest that input from up to ten years ago may not 
be meaningful, is not meaningful at this point in time. You may 
be aware that I wrote the Secretary asking for internal 
documents within the Department which may shed light on the 
final decision on why this decision became final. These have 
not yet been provided to me.
    I appreciate the Department for providing the Subcommittee 
with some of the documents that I requested for this hearing. 
However, the Congress and this Subcommittee have a 
responsibility under House Rule 10 and 11, Committee Rule 6 in 
Article 1 of the U.S. Constitution that requires this 
Subcommittee to have virtually unfeddered access to nearly all 
departmental documents.
    Therefore, I expect all requested documents to be produced. 
Any observer would probably agree that the rule we are looking 
at today was finalized in a highly irregular manner. I intend 
that we get to the bottom of this issue of the issuance of this 
rule. Doing so absolutely requires access to the documents that 
I requested without conditions that inhibit the legitimate 
oversight functions of this Subcommittee.
    While the President's concerns are understood, I want to 
make three points from the Subcommittee's perspective. This 
must also be very clearly understood by you, by the Secretary, 
and by the President. While it is for the President to assert 
deliberative process privilege himself, this privilege is not 
available to the Department.
    Secondly, under congressional precedent, it is for the 
Congress to determine in its sole and sound discretion whether 
to accept any claim of any attorney privilege that the 
executive exerts. I intend to take the views and desires of the 
Department in making this decision but nonetheless it does not 
change the basic fact.
    Third, even if documents are qualified for the attorney-
client privilege disclosure to Congress does not waive that 
privilege as to third parties. So the Department should not be 
concerned with releasing documents or limiting access to them. 
Furthermore, we are talking about a rule that is a final rule. 
The Subcommittee is simply trying to bring the decisionmaking 
process concerning that rule into the true light of day.
    The rule itself may very well come to be the rule that is 
accepted and acceptable to everyone involved, but my job and 
the job of this Subcommittee is to protect the integrity of the 
process in order that we can protect the people of these United 
States. I would appreciate your sending me the rest of the 
documents as soon as you can so that we can get to work so that 
I can understand why this unique process has occurred. I would 
like to know the reasons for bringing this out as a final rule 
at this late date.
    Mr. Romero-Barcelo. Madam Chair.
    Mrs. Cubin. Mr. Barcelo.
    Mr. Romero-Barcelo. I just wanted to make sure, I 
understand that the Department believes some of the documents 
to be turned over are considered privileged documents and if 
that is so I am sure that before they turn over the documents 
they would like to enter into some kind of a written agreement 
or stipulation to make sure that those privileged documents are 
not made available to anyone else.
    Mrs. Cubin. Mr. Barcelo, I would suggest to you that that 
is not within the authority nor the purview of the Department. 
The President, yes, but the Department, no.
    Mr. Leshy. May I speak to that issue?
    Mrs. Cubin. Excuse me?
    Mr. Leshy. May I speak to that issue, Madam Chair?
    Mrs. Cubin. Please.
    Mr. Leshy. The concern expressed by Congressman Romero-
Barcelo is exactly right. We have no desire to withhold 
documents that you have requested. We will make them available 
to you. The procedure we are trying to work out here on quite 
short notice, since we got the document request I think last 
week, is a procedure that we have worked out with any number of 
congressional committees, I think including this one in the 
past, which is to just have an understanding that the documents 
we turn over to you will not be disclosed outside of the 
committee without at least checking with us, because they 
involve things that could become privileged in litigation and 
if they are disclosed----
    Mrs. Cubin. Well, Mr. Leshy, why did we have to have this 
hearing for you to tell us that?
    Mr. Leshy. We have told you that previously. My deputy 
wrote the committee counsel a letter a couple days ago, I 
believe, which spelled all this out. They have had numerous 
phone conversations. I thought it was well on its way to being 
resolved. We are asking for no special treatment here.
    We have worked this out with Congressman Burton's 
committee, we have worked this out with any number of other 
committees under which we make available documents that could 
be sensitive where we could waive privilege if litigation 
ensued over a matter, documents that we would normally keep 
privileged and not disclose in litigation. All we are trying to 
work out is an understanding of how these documents will be 
treated. We are not trying to withhold any documents.
    Mrs. Cubin. Just because you give them to us does not waive 
the privilege in a judicial process.
    Mr. Leshy. We have to have an understanding about what you 
are going to do with the documents in order for us to be 
assured when we turn them over that the privilege----
    Mrs. Cubin. And I believe you have had that under--I 
believe that you have understood very well. I believe that you 
have been very disagreeable about providing those documents to 
us but there is no question there has never been--how simple 
can it be? We want to understand how the decision for the final 
rule was derived and we need these documents. How simple can it 
be?
    Mr. Leshy. We have reached arrangements like this with any 
number of other committees without difficulty. We are simply 
trying to reach an equivalent understanding here. We have had 
no problem in this area. We have had numerous discussions with 
your counsel and your staff on this. I thought we were working 
this out.
    Mrs. Cubin. We can get you a letter today if it will be 
satisfactory and I hope the documents will be coming forthwith. 
Mr. Romero-Barcelo, do you have questions?
    Mr. Romero-Barcelo. Do I understand it is all right to word 
the agreement, to make an agreement as to how the committee is 
going to proceed with what is considered privileged documents?
    Mrs. Cubin. We will agree to discuss why we need the 
documents. However, we are not obligated to do that and I would 
like to make that very clear on the record. I will give them a 
written assurance as to how we will handle the documents if 
that is the problem.
    Mr. Romero-Barcelo. Is that a concern of the Department?
    Mr. Leshy. The concern of the Department is simply that 
some of the documents that have been requested, that we are 
willing to supply, are documents that we could assert a 
disclosure privilege on if the matter concerning these rules 
ends up in litigation, and we need to just have an assurance, 
an understanding with the committee, about how those documents 
will be treated.
    Again, this is something we have worked out with any number 
of congressional committees on matters like this. This is not 
anything unique to this arrangement, and we have worked this 
out without problem everywhere else. I am not sure why we are 
having a problem here.
    Mrs. Cubin. We are having the problem here, Mr. Leshy, 
because of the time involved. Just as you seem to think it is 
all right to use testimony that is ten years old, 5-1/2 years 
old to make a final rule, you think that time span is 
acceptable, I do not think it is acceptable to request 
documents and be stonewalled and that is what I feel has 
happened in this case. But you will have the letter today.
    Mr. Romero-Barcelo. Thank you, Madam Chair.
    Mrs. Cubin. I do not know who was--OK, Mr. Cannon, do you 
have any questions for Mr. Leshy?
    Mr. Cannon. I do, Madam Chair, thank you. Let me just at 
the beginning that I find attempts to not communicate documents 
most irritating and highly consistent with many other 
activities in this Administration. I do not think it moves 
toward a good public policy or development of public policy.
    One of the things that I am deeply interested in is how 
this issue got pushed forward again. I assume, Mr. Leshy, you 
were a party to some discussions about bringing this issue, the 
rules, forward again. What precipitated that? Who got together 
and decided that we ought to have these rules promulgated?
    Mr. Leshy. Thank you, Mr. Cannon. There is absolutely 
nothing irregular about the process that was followed here. In 
the Bush Administration in about 1989 the decision was made to 
do a rulemaking on bonding--1990, I think. In 1991 proposed 
rules were published. In 1993 the process had advanced to the 
point where the final rule was being prepared.
    At the time the Congress, both Houses, were very seriously 
debating Mining Law reform. That Mining Law reform legislation 
would have superseded these rules. As you may recall, both 
Houses of Congress in 1993 and '94 passed Mining Law reform 
bills and there was a very long conference committee 
deliberation and it was not until October of 1994 that that 
failed.
    Up until that failure I think many, many people thought 
that there would be Mining Law reform. We made the judgment in 
1993 as Congress was debating it that we would only introduce 
serious confusion and consternation into the process and cause 
a great deal of understandable concern in the industry as to 
what was going on if we came out with a rule while Congress was 
debating this subject, so we made what I thought was a very 
rational decision in early '93 to put it on hold until Congress 
solved the problem for us.
    Now Congress did not solve the problem, so in early 1994 we 
resumed the process of going forward with a final rule. 
Congress in the meantime had added on some new requirements in 
the rulemaking process and we wanted to do this very carefully 
and thoroughly and make sure we complied with everything and it 
frankly took a couple years to put all that together to come 
out with a final rule.
    There was nothing irregular about the process. Rulemaking 
often takes years. We looked very carefully at the issue the 
Chair raised, about are we somehow behaving inconsistently with 
the law to come out with a final rule that has been several 
years since the draft rule----
    Mr. Cannon. My question does not go to irregularity. I have 
heard your discussion of that. At the point in time, I think 
you were saying it was in October of '94, there was apparently 
some decision that Congress was not or it was apparent that 
Congress was not moving forward and that the Department should 
take up the rulemaking again. Who was part of that discussion? 
I take it you were. Who else was there and what was the nature 
of the discussion?
    Mr. Leshy. Frankly, I cannot recall. I am sure I was 
involved. I am sure the Secretary was involved. I am sure 
Assistant Secretary Armstrong was involved. Probably Acting 
Director Dombeck of the BLM and the people, the career people 
in the BLM who had worked on this process and several other 
people.
    It was a logical--if you put yourself back at that time, we 
had made a very serious effort with the Congress to try to get 
Mining Law reform, and when that failed at the very end of the 
103rd Congress, then we all said to ourselves, OK, now what do 
we do and what do we have in process that we have interrupted 
while we had been waiting for Congress.
    There were a number of things we had in process. We had a 
rule on use and occupancy of mining----
    Mr. Cannon. Pardon me, I would actually like to just focus 
on the issue of that meeting. The Secretary was quoted in I 
believe the Washington Post the other day as being critical of 
Congress' failure to do things that needed to be changed and 
then went forward to say that these rulemakings were going to 
go forward to do things that he thought was right.
    I am wondering what was actually said in that meeting or if 
you have any recollection of the discussion because I do not 
think it is proper for the Department to substitute its 
judgment for Congress and if we have issues that are difficult 
here they ought to be perhaps left to wait on us. So what I am 
really wondering is what happened in that discussion? Who took 
the initiative, do you recall? Do you have any recollection of 
the nature of the discussions about what Congress did or said 
or failed to do and what the context was for moving the rule 
forward?
    Mr. Leshy. I do not recall specifically what the 
discussions were, although I can surmise what they were about. 
You have to remember that this bonding rule was to address a 
problem that was identified in the Reagan and Bush 
Administrations as a problem that needed to be addressed. That 
was why the proposed rule was published. That is why the 
rulemaking process was started. It was suspended while Congress 
was considering the same subject----
    Mr. Cannon. We do have a limited time. Would you summarize 
for me what was said if you can do that.
    Mr. Leshy. I imagine that after Mining Law reform went down 
in the 103rd Congress we all got together and said, OK, now 
what, since Congress has failed to address this problem this 
year, what are we going to do on the initiatives we had 
underway that we suspended while we were waiting for Congress 
to act.
    And as I said, that included the bonding rule, it included 
use and occupancy regulations, it included a policy on acid 
rock drainage, and it included a number of other things, so all 
of these things that had been put to one side while Congress 
was deliberating, we now essentially said, OK, there is no 
reason to put them to one side. We are following and carrying 
out the commitment made in the Bush Administration to upgrade 
the bonding rules and so we put that back into the active 
calendar.
    Mr. Cannon. My time is now out. Thank you very much, Mr. 
Leshy.
    Mr. Leshy. Thank you.
    Mrs. Cubin. Mr. Rahall, do you have questions? That is 
right, I yielded to you. Mr. Barcelo.
    Mr. Romero-Barcelo. Thank you, Madam Chair. Mr. Leshy, it 
would appear that the mining operators with mines of five acres 
or less on public lands feel that the rule is unfair and it 
would place a costly burden on them. How would you respond to 
these concerns?
    Mr. Leshy. First of all, this is not an issue on which 
there was really a difference between the draft and final 
rules. That is, the draft rule would have required bonds for 
all operations including those under five acres. So does the 
final rule. So the discussion we had been having about that 
issue is not really directly relevant to the impact on small 
miners.
    The second thing to say is that many States already impose 
such bonding requirements, and where they do, these rules defer 
to them where they are the equivalent to the Federal practice, 
so this is not a brand new sweeping requirement that applies 
everywhere where nothing applied before. Third, we did as part 
of the effort over the last year make a very serious analysis 
of the impact of this on small miners. That was part of the so-
called ``determination of effects'' of the rule that is 
required by one of the regulatory reform acts.
    Actually we worked very hard on that to make it as accurate 
as we could. It lays out what might be the maximum impacts and 
we think they are really frankly pretty marginal. Most 
operations under five acres either will not be hit with a new 
requirement because they are already part of this under State 
law, or where they are hit with a new requirement it will be 
phased in to some extent and they can handle it, and if there 
are a few marginal operations that cannot handle it, frankly I 
think the policy judgment that has been made, and I think it is 
the correct one, is that those people should not be operating 
on public lands if the net result of their operations is going 
to be the taxpayer foots the bill to clean up.
    Mr. Romero-Barcelo. For the record, do you have any numbers 
of how many hardrock mines have been abandoned without being 
reclaimed, actual number?
    Mr. Leshy. There is a fairly rich record of that in the 
GAO, General Accounting Office reports. The GAO issued several 
reports in the mid to late '80's. We have asked the BLM 
informally for some further information on that. There are 
dozens of operations, I think it is fair to say, that over the 
last several years where people have walked away and left a 
cleanup mess that the taxpayer will have to pay for. So these 
rules address a genuine problem.
    Mr. Romero-Barcelo. On the other hand, Mr. Hocker, who will 
be testifying after you suggests disappointment in the rule. He 
feels that the Department should have made the rule stronger. 
And how do you respond to the concerns that the rules are weak 
and they do not meet the Secretary's legal obligations to 
protect the public lands?
    Mr. Leshy. Well, what we have tried to do there, 
Congressman, is strike a balance between the concerns that you 
expressed about the impacts on small miners and the taxpayers' 
interest in not paying for these cleanups. We recognize the 
rules could have been stronger in certain areas but we think 
they are reasonable accommodation of a healthy mining industry 
and the taxpayers--the needs of the environment and the 
interests of the taxpayers.
    Mr. Romero-Barcelo. As you prepared the final rule how do 
you consider the effect of the changes in the State law since 
1991, was that taken into consideration and if so, how?
    Mr. Leshy. Well, the general approach of the final rule, 
like the draft rule, is to say basically these are the Federal 
standards and if State laws meet those standards, so that if 
you get a bond under State law and it is the equivalent 
essentially of the Federal standard, we will not require 
anything else. We are not going to duplicate State 
requirements.
    So to that extent, when States change their laws, they are 
automatically incorporated or accommodated in the rule. The 
rule does not specifically go out and say, ``Nevada is fine,'' 
and ``Wyoming needs to do more,'' or whatever. We just simply 
say that this is the Federal floor, and if a miner complying 
with State law will meet or exceed that floor, then the BLM 
will defer essentially to that.
    Mr. Romero-Barcelo. And how will the changes in the State 
law affect the rule, the bonding rule?
    Mr. Leshy. Again, future changes in the State law would be 
handled the same way. That is, if a State that falls below the 
Federal floor now would improve its law to come up to the 
Federal floor then we would defer to the State law. We do not 
want to duplicate State law where we think it meets Federal 
standards.
    Mr. Romero-Barcelo. In other words, where the State 
protects the lands more than the rule the State law applies?
    Mr. Leshy. Generally speaking, that is true. A State can 
impose more stringent reclamation or bonding requirements and 
apply them to Federal----
    Mr. Romero-Barcelo. But not lose their requirements.
    Mr. Leshy. But not loosen them. We do not think we can do 
that and have the Secretary live up to his legal obligation to 
protect public lands from unnecessary and undue degradation.
    Mr. Romero-Barcelo. And how difficult is it to secure a 
bond for small miners?
    Mr. Leshy. Well, I can get you more information on that. 
The BLM people that deal with this issue on a daily basis think 
that these rules can be complied with in the vast majority of 
cases without great difficulty. I should note that one of the 
changes made in the rule, from the previous rule that was in 
effect, actually enlarges the category of instruments that will 
suffice to meet the financial standards.
    In other words, we have to some extent raised the bonding 
requirements, but we have also enlarged the ways you can 
comply, so in that sense the changes operate in favor of the 
industry.
    Mr. Romero-Barcelo. What are the guarantees, financial 
guarantees, does the Bureau of Land Management accept? I guess 
I have run out of time.
    Mr. Leshy. They are enumerated----
    Mr. Romero-Barcelo. Briefly.
    Mr. Leshy. They are enumerated in the final rule. There is 
a whole list of them, stocks, municipal bonds, the normal kind 
of surety bond you would go out and acquire, and various other 
kinds of assets that you can essentially post as security for 
your operation and they are listed completely in the final 
rule.
    Mr. Romero-Barcelo. Thank you, Mr. Leshy.
    Mr. Leshy. Thank you.
    Mrs. Cubin. Mr. Gibbons.
    Mr. Gibbons. Thank you, Madam Chairman. Mr. Leshy, I share 
the Chairman's sentiments about the unwillingness of your 
agency to come forward with documents that are requested and I 
share also her sentiments when I listen to your answers, how 
vague they are, because you only say that the reason you are 
not submitting those documents is because you have a belief 
that some of the documents may possess some privileged 
information.
    You cannot hide the whole bundle of documents under such a 
request and I would share with the Chairman in her request to 
get these documents to us because I am very concerned about the 
substitution of what your agency believes is the information we 
should have. We should have every piece of paper in this 
committee that your agency has that we ask for, privileged or 
not. Now let me ask a final question.
    Mr. Romero-Barcelo. Would you yield for a minute?
    Mr. Gibbons. You know, I will in a minute if I can, Mr. 
Barcelo.
    Mr. Romero-Barcelo. All right.
    Mr. Gibbons. I appreciate your concern in this matter and 
perhaps we will get into a dialog or colloquy without 
interrupting Mr. Leshy's answers to this. I am sure that we are 
all going to share in that. Mr. Leshy, has not the BLM or the 
Department of the Interior sought out or established a 3809 
task force to review Mining Law regulations?
    Mr. Leshy. Yes.
    Mr. Gibbons. Doesn't it seem odd to you that 3809 also 
includes bonding requirements and that if you produce this 
proposed change today that a review of the 3809 regulations 
would also produce a proposal to change bonding regulations?
    Mr. Leshy. The 3809 task force that the Secretary directed 
be established in January of this year is looking at a whole 
range of----
    Mr. Gibbons. Mr. Leshy, just answer the question, will the 
3809 task force look at bonding issues?
    Mr. Leshy. It may.
    Mr. Gibbons. So we could see another change to the bonding 
requirements under 3809 review, yet you are telling us that 
because you feel that you have got to rush through this change 
today after a hiatus since 1991 of information and public 
output and State regulatory changes that it has got to be done 
today?
    Mr. Leshy. The bonding inadequacy was identified as a 
problem ten years ago. Every day that goes by without it being 
addressed puts the taxpayers at risk. The effort was well on 
the way, nearly on the brink of completion, in 1993.
    Mr. Gibbons. Mr. Leshy, if it puts the taxpayers at risk, 
why did you wait so long to get to it today? Have you not had 
this issue before you since 1991?
    Mr. Leshy. As I said before, we waited essentially for two 
reasons. One is to try to let Congress try to reform the law, 
and, second, to make sure we complied with all the regulatory 
requirements.
    Mr. Gibbons. Obviously, you did not need to wait for 
Congress, did you?
    Mr. Leshy. Well, I can just imagine that if we had put a 
bonding rule out in 1993 that we would have been hauled up 
perhaps before this committee or another one being asked what 
are you doing, we are fixing this law, why are you throwing 
this in the middle of it and confusing everybody? That was a 
great concern and I think frankly it was a reasonable decision 
to defer until Congress enacted Mining Law reform.
    This was not a casual effort by Congress. Both Houses of 
Congress for the first time in 125 years passed bills to reform 
the Mining Law and there was a six-month conference----
    Mr. Gibbons. I just do not want to see you back here before 
this committee if you are going to do it today with this 
proposal as you propose, come back with a 3809 review task 
force committee recommendations and change it again.
    I think this is just an extreme inexcusable process that 
you are going through today by denying due process and 
democracy to all those people who want to contribute, who want 
to comment on these changes. Putting that aside, what other BLM 
requirements have a bond that is submitted directly to the BLM 
for them to hold? What requirements?
    Mr. Leshy. I may have to get some further advice here but I 
am quite sure that a number of mineral leasing operations bonds 
are imposed. Certainly, the Office of Surface Mining and the 
State coal regulators impose bonds routinely as a matter of 
coal mining.
    Mr. Gibbons. Are those held by the State or the BLM?
    Mr. Leshy. Well, with respect to coal mining it is the 
Office of Surface Mining, the Federal agency and State 
agencies. I think it is fair to say that in many, many 
different kinds of developments, certainly mining activities, 
oil and gas and coal, bonds are a routine part of doing 
business at both----
    Mr. Gibbons. Mostly held by States though?
    Mr. Leshy. State and Federal agencies. I think the 
arrangements are basically the same as I described earlier, 
that is, if the States may impose a higher requirement than the 
Federal floor if they choose to so to avoid duplication--
    Mr. Gibbons. Is the BLM then going to take responsibility 
for managing those funds within its own accounts if it 
establishes this requirement for bonds to be submitted directly 
to the BLM and held by the BLM?
    Mr. Leshy. I may need a little help here. BLM, I think does 
not actually hold the bonds. They simply must be certified that 
the bonds are there, held by a financial institution, a trust 
account, and you can put common stock in a stock account under 
the rules----
    Mr. Gibbons. It does not require them to be held by BLM but 
it says they can be submitted to the BLM.
    Mr. Leshy. The assurance that they are there, the 
certification that they are there and available to pay for 
reclamation costs if the miner walks away, that is what we 
need. We do not necessarily need the cash as long as we can put 
our hands on the cash if there is a failure.
    Mr. Gibbons. So we can do this through a State regulation. 
The States could do this and the States are doing this today, 
aren't they?
    Mr. Leshy. Right. As I explained before, if a miner has to 
post a bond under State law that meets the Federal standards, 
that is all we require, as we do not want to duplicate and do 
not duplicate State law where it is adequate.
    Mrs. Cubin. Mr. Rahall, do you have any questions for the 
Solicitor?
    Mr. Rahall. Thank you, Madam Chair. John, let us begin with 
a little stroll down memory lane. And let me add, by the way, 
that it is your book on Mining Law reform written in your 
earlier career as a professor that first sparked my interest in 
the whole arena of reforming the Mining Law of 1872 when I 
became chairman of this Subcommittee in 1985.
    So I commend you for that book and your expertise which I 
think ranks up there above and beyond the call of duty. And you 
have given historical facts here and I appreciate that. We were 
very close, very close, in the 102nd Congress of passing a 
reform bill. We got a bill out of the House of Representatives 
about a 3 to 1 margin bipartisan support including the now 
Speaker of the House of Representatives who voted for that 
bill. No, we cannot trust him, what did you say?
    And we have had many other related votes in the House like 
on the patent moratorium, etc., which had strong bipartisan 
support. But nevertheless the point is that what you have said 
about you not being able to go forward at that time because of 
the conflicting signals it would send is a very valid point and 
you are right, had you tried to do that you would have been 
hauled up here in a second and asked, and grilled to death 
about why are you doing this when we are so close and we were 
so close, we were in conference committee, to passing a reform 
bill.
    We were right up to the edge until we got the plug pulled 
out from under us. So that is very sensible that you waited 
that long. You know, there are those, and I am sure we will 
hear from them before this afternoon is out----
    Mrs. Cubin. Would the gentleman yield?
    Mr. Rahall. Can I just finish this memory lane bit?
    Mrs. Cubin. What I have to say has to do with memory lane 
too.
    Mr. Rahall. Oh, OK, you are going to tell me when I was 
chairing this Subcommittee.
    Mrs. Cubin. No, Mr. Rahall----
    Mr. Rahall. OK. I yield to the Chair, yes.
    Mrs. Cubin. Thank you. I just wanted to remind the 
gentleman that the 104th Congress also passed Mining Law reform 
and it was vetoed by the President. That is the only part of 
memory lane I was able to stroll down. That is the only reason 
I remember that.
    Mr. Rahall. Oh, yeah, I was getting to that. You are 
talking about sham reform. I am talking about real reform.
    Mrs. Cubin. Oh, OK, there is a difference.
    Mr. Cannon. Would the gentleman yield? I suppose sham 
depends which side of the aisle or which side of the industry 
you are from.
    Mr. Rahall. Well, we will get to that too. Darn it, you 
interrupted my memory. OK, as I was saying, there are some that 
are going to be on this panel yet today that are going to come 
forward and attack you pretty stringently probably, I would 
guess, that on November 10, 1994, that year, the day after the 
revolution or whatever took place, that you did not come 
forward that day and do this, and that what you have done now 
today is not strong enough.
    They are going to say probably there should not be a cap on 
your proposed rules. So you are going to take it from both 
sides. There is no doubt about it. And I might also recall, and 
I am sure you will remember when our good friend, Cy Jamison, 
at the time and a former staffmember on this Subcommittee at 
the time was BLM director, when he saw was happening back with 
the Rahall reform bill started moving, he told us, perhaps it 
was not on the public record, I will not go that far, but he 
was very clear. He told us that he was seeking to soften our 
reforms up here in Congress by taking administrative actions.
    Let us not let the record go without that being very 
clearly put on it. So I think let us get to the heart of the 
matter and let us ask if what you are proposing here, if not 
this new bonding requirement is actually less stringent, John, 
less stringent than what some of the States already are 
imposing?
    Mr. Leshy. I believe that is true, yes. As I said, if 
States exceed our requirements obviously a miner has to comply 
with the State requirement but has automatically met ours by 
complying with the State requirements.
    Mr. Rahall. That concludes my questions then. Thank you, 
Madam Chair.
    Mrs. Cubin. Thank you, Mr. Rahall.
    Mr. Cannon. Madam Chair, can I ask another question?
    Mrs. Cubin. You can. We are going to do a second round. We 
will make it real quick. I wanted to just make two points or 
ask two questions, if you will. The surety requirements that 
the State--correct me if I am wrong, but as I understand the 
final rule the surety requirements that the States have set up 
will be approved by the BLM manager in the State, is that 
correct, the State bonding pools?
    Mr. Leshy. I think that is right. I am sorry, Madam Chair. 
I had to make sure of the answer. Yes, it is the State offices. 
They make the determinations about whether or not the State 
bonds are adequate.
    Mrs. Cubin. And I think that is laudable. I think that is a 
good idea. But the only thing that troubles me about this is 
that the rules are going to go into effect March 31, 1997--the 
rule is going to March 31, 1997, and the States will not have 
reported to you what those financial requirements are by that 
time.
    As a matter of fact, estimates are that it will take maybe 
six months at minimum into the summer to get that information 
from the States compiled and get it to you so why not allow an 
additional 60 days input because there are things in here that 
are substantially different than the proposed rule.
    And honestly I am so sincere when I tell you this, I do not 
have an investment in what those things are. I just have an 
investment in protecting the process. So why not? I mean you 
will not even have everything you need to implement the law 
anyway.
    Mr. Leshy. Madam Chair, the BLM State offices are in 
constant communication with the State regulators because the 
State regulators and the BLM folks work side by side in 
hardrock mining regulation and have for many years. Our State 
people are thoroughly familiar, our BLM people in those States 
are thoroughly familiar with what the State requirements are.
    We already accept State bonds in many cases that meet the 
requirements of the old regulations. Many of those will meet 
the requirements of the new regulations. Since these rules have 
come out, we have had a lot of meetings with the State 
regulators in places like Alaska----
    Mrs. Cubin. But, Mr. Leshy, it was from your own office 
that we found out that it would not be done by the time the 
rule went into effect which leaves the miners in a situation 
where they do not have any idea whether the surety of last 
resort as the State bonding pools are called will be adequate 
to cover their liability.
    So I mean I just--my question to you is not whether or not 
they are going to get it done because I heard from your office 
they are not going to get it done by March 31 and it will be 
some months after that, but that is not the question. The 
question is assuming it will not be done, why not just give an 
additional 60 days after 5-1/2 years?
    Mr. Leshy. Madam Chair, I think you are probably talking to 
different people in the BLM than I am talking to because the 
people in BLM I am talking to think there is no problem here 
with transition to the new rule. I should also point out that 
the most significant change in the new rule is the requirement 
for bonding by notice operators. Now the way the notice system 
works is----
    Mrs. Cubin. No, that is not the question. The question is 
assuming that the work will not be done by March 31 which is 
just a little while away, why not give an additional 60 days?
    Mr. Leshy. I cannot answer the question because I have not 
been persuaded, or told by anybody, frankly, in the Department 
that we cannot implement these rules on schedule.
    Mrs. Cubin. OK, then, well, you cannot because what if a 
manager in a State determines that the State pool is not 
adequate, then it might require State legislation to make the 
pool adequate or to fix it so that it complies with what the 
manager would require.
    I just honestly do not see the rush for this and even 
though you say this is nothing new, they did this or that in 
the Bush Administration and they have done this or that before, 
the APA is very explicit about having meaningful public comment 
and this is an anomaly in the process. Can you cite one single 
time for me where draft rule has been on the shelf for 5-1/2 
years and then with no intervening activity at all the final 
rule comes out from the BLM?
    Mr. Leshy. Madam Chair, we looked at this issue when we 
were resuming work on the final regulations. Obviously, the BLM 
and my office, consulted on, well, do we have any legal 
problems with moving forward with this rule? We looked and 
researched all the cases under the Administrative Procedure 
Act. There is not a single case that we could find that says 
mere passage of time requires you to republish as proposed.
    Mrs. Cubin. Well, let me just respond to that for a second. 
The CEQ maintains a web site. And with a couple of clicks on 
the mouse you can find guidance on CEQ matters such as when EIS 
data goes stale. Stale is the quote. And I happen to have here 
a page from NEPA Net and there it is. And let me read to you 
what it says about stale data.
    ``EISs that are more than five years old should be 
carefully re-examined to determine if the criteria in Section 
1502.9 compelled preparation of an EIS supplement. If an agency 
has made a substantial change in a proposed action that is 
relevant to environmental concerns or if there are significant 
new circumstances or information relevant to environmental 
concerns and bearing on the proposed action or its impacts a 
supplemental EIS must be prepared for an old EIS so that the 
agency has the best possible information to make any necessary 
changes.''
    OK, I realize this is not EIS. I also recognize what the 
spirit of the APA law is, if not the word of the law. And why 
should the decision on this rule be different than data that is 
collected for an environmental impact statement because 
essentially it is the same data?
    Mr. Leshy. The court cases in this area, Madam Chair, 
basically look at the opposite problem, when an agency is 
dragging its feet and not putting out rules fast enough. We 
have looked at all those court cases. The basic question they 
ask is very simple: Is the final rule within the scope and 
notice of what was proposed? Are the changes that are made 
between the draft and final rule reasonable in the sense that 
the people subject to the rule could have anticipated that 
these kind of changes would have been made?
    And if you look at the draft and final rules here there is 
no question in my mind, we are on very, very solid legal 
ground. Nobody could look at the draft----
    Mrs. Cubin. That would require a lawsuit by one of the 
affected parties but the Congress does have the authority to 
stop the implementation by proposing legislation and I would 
certainly hope that we did not have to go to all of that 
trouble just to be able to get what is due the public anyway. 
But my time is up. Mr. Romero-Barcelo, do you have any further 
questions?
    Mr. Romero-Barcelo. Yes, Madam Chair. Mr. Leshy, I am your 
friend here on this panel and I do not mean that in any way 
whatsoever to anybody else, but I am just trying to set that in 
front for the following reasons. I hear as I listen to 
everything that has been said and my concern is that to me 60 
days in terms of talking about five years or six years seems 
like a very short time.
    Let us assume that whatever you said is completely correct 
and that you have complied with all the legal requirements and 
that no one can overturn the rule. Let us assume that. However, 
if the people that are going to be bound by that rule feel 
somewhat that they have not been given an adequate opportunity 
to address themselves to the rule then the people that you are 
going to be ruling are going to be very dissatisfied I would 
feel that the rule is unfair even if it is fair.
    It is unfair because they feel they did not have a chance. 
Now what reason is there for not giving 60 days additional--
what harm, what prejudice would this cause other than the fact 
that it would take 60 days longer after five years to where the 
bonding would not be required, would not be implemented in some 
areas?
    That seems to be a small harm when you compare that to the 
reaction of the people that are going to be bound by the rule 
that feel that they were not being given an opportunity.
    Mr. Leshy. Congressman, I just must respectfully disagree 
with your assessment of what the impact of these rules is going 
to be. Our feeling from the meetings that BLM has had with the 
field people throughout the west that would be affected by this 
is that this is not going to be a big deal.
    I have met personally with many representatives of the 
mining industry as late as last week, where I discussed many, 
many issues of concern to the industry, and these bonding 
regulations were not a concern to the people I was talking with 
because the States imposed these things fairly routinely.
    In most places the industry complies with them. We are 
talking about essentially a fairly localized impact. We are 
also talking about a rule that has been discussed and a subject 
that has been addressed for many, many years, a problem first 
identified in 1985-86. The time has come to draw it to a close 
and move forward, and we think we can do that with a minimum 
disruption on this industry.
    Mr. Romero-Barcelo. Mr. Leshy, I hear everything you said 
and it still seems to me that you have not answered my question 
about why is it so important, why is 60 days so bad, why is 60 
days so inconvenient when 60 days would allow those people that 
feel themselves left out of the process an opportunity to speak 
up? Why is that such a big problem? I just find it very 
difficult to see it and I want to see it but I find it very 
difficult.
    Mr. Leshy. Let me make sure I understand what you are 
suggesting. You are suggesting a 60-day delay in implementation 
of the rule to allow for more comment or exactly what?
    Mr. Romero-Barcelo. Right.
    Mr. Leshy. Well, maybe we just have a different perception 
about the nature of the problem and whether there is a problem 
and how much difficulty might be in store for complying with 
the rule. I am happy to take back to the Secretary that 
suggestion and see what he wants to do about it, but I can tell 
you that we considered when this rule ought to be implemented, 
and what the timeframe ought to be.
    Part of the problem is you are starting a field season for 
mining operations relatively soon. Delay in implementation 
could actually be even more disruptive because then you are 
into the middle of the season and you have to worry about a 
bond, so that is another consideration that would have to be 
taken into account here.
    The BLM is doing extensive public outreach on this rule, is 
making sure that everybody out there knows what the 
requirements are. And I also have to point out that, as my 
written statement points out, there is a certain phase-in to 
this. The people most affected are the notice miners, operating 
under five acres, who have not had a requirement of a bond 
before in most cases.
    You only have to under these rules post a bond when you 
file a new notice, so if you are operating this year within the 
terms of a notice that you filed last year, you do not need a 
bond until you file a new notice. So there is a good deal of 
transition phase-in to this requirement anyway. Many of those 
notice operations will not have to post a bond this year, 
because many of them will be operating within the terms of 
their notice. So there is already a good deal of accommodation 
and transition built into this rule as we have designed it.
    Mr. Romero-Barcelo. I still have a problem that the fact of 
the opportunity to speak up to something. That is my problem. 
In the democratic system I think that people should be given an 
opportunity. I just feel from what I have heard it seems we 
might have been lacking in that. Thank you.
    Mrs. Cubin. Thank you, Mr. Barcelo. Mr. Cannon.
    Mr. Cannon. Thank you, Madam Chair. Just to comment 
following up on Mr. Barcelo's comments. You answered the 
question, Mr. Leshy, in the context of the transition under the 
new rule and much of that I believe went the lack of urgency 
for having the rule in place right now.
    In other words, the transition period you talked about 
means that it is not an urgent thing to do. I believe what Mr. 
Barcelo was talking about was taking the input from people who 
will be affected by the rule. And the rule, as I understand it, 
differs fundamentally from where I think government is going 
today.
    In other words, in the State of Utah and many other States 
you have bonding provisions already. People locally in Utah, I 
believe, have a better sense of what they need to do there than 
people in Washington do and that is I think the area where the 
rush to judg-

ment has created some difficulty and so I just echo Mr. 
Barcelo's views on that.
    I think you get a lot more buy-in than you lose in the 
other areas which you have actually minimized yourself. Let me 
ask just one technical question. In the determination to do the 
rule the economic effect on small entities BLM used a different 
definition for small entity. It is in section 3 of the Small 
Business Act according to which the BLM can only change that 
definition if they have had consultation with the Small 
Business Administration Office of Advocacy and, two, after an 
opportunity for public comment. Did BLM go through those two 
steps in this process?
    Mr. Leshy. I am sorry. Is the question why we used a 
different definition?
    Mr. Cannon. No, the question is did you--having used the 
different definition of small business entity, did you consult 
with the Small Business Administration Office of Advocacy and, 
secondly, did you offer an opportunity for comment, public 
comment, on that?
    Mr. Leshy. Congressman, I am not frankly sure of the 
answer. I will have to supply it after the hearing. Let me make 
sure I have your two questions. Did we consult with the SBA 
Office of Advocacy and did we allow comment on that decision?
    Mr. Cannon. Right.
    Mr. Leshy. OK. I will get back to you in writing as soon as 
I can.
    Mr. Cannon. Let me just add one other comment. We have 
heard about the possibility of a sham legislation which did by 
the way pass the House and the reaction in the Department of 
the Interior. This is obviously an area where we are having a 
major transition in America. I believe that the Department 
should be careful in the process of Federalizing issues which 
do not need to be Federalized and taking actions that are or 
could be perceived as being one side of the issue as opposed to 
the other side which is the industry.
    In fact, we live in America off the fruit of the land. Both 
the Speaker's chair in the House, we have an eloquent statement 
that talks about passing laws that will allow for the 
development of natural resources so that all can enjoy the 
wealth of America and I think it inappropriate to act 
unilaterally with an agenda which is inconsistent with what I 
believe is the general view of how we should develop our 
resources and whether or not we should Federalize certain 
aspects of the control of the development of our resources. 
Thank you.
    Mrs. Cubin. Mr. Rahall, do you have anything further?
    Mr. Rahall. No.
    Mrs. Cubin. Mr. Gibbons.
    Mr. Gibbons. Yes, Madam Chair, thank you very much. Mr. 
Leshy, I want to explore a little bit more about some of your 
comments. In particular, you stated that it would be no big 
deal the implementation to this with regard to certain States. 
I want to talk about the economic assessment of the rule on the 
economy. The BLM states that the impact for both notice and 
plans will be about $17.1 million.
    From the testimony we have received today, some of the 
background information that we have looked on bonding pool 
liabilities, I think this figure may be grossly underestimated. 
For example, sources that I have from the State I represent 
which is Nevada, our government is very worried about the new 
rule's requirement for a professional engineer to certify 
reclamation cost estimates which will push many small miners 
including junior companies into seeking refuge in the State 
bonding pool.
    I understand that to be bonded by the pool under the 
current Nevada law a miner must show three turndowns from 
commercial surety companies before being eligible. Now please 
help us understand how the new requirement for notice level 
operators to be fully bonded impact Nevada where State law does 
not now require bonding of less than five acres.
    Mr. Leshy. Congressman, the determination of effects that 
you refer to, which came up with the $17 million figure, as I 
recall actually made every assumption that it could make in 
favor of maximizing that figure. In other words, while your 
information may be that that is an understated figure, I think 
the determination of effects discussion itself makes it clear 
that it is, at least in the BLM's view, the maximum figure.
    That document also contains an appendix, I believe, which 
discusses the impact State by State, which shows in terms of 
small operators in Nevada the BLM's estimate, and these are 
estimates of people on the ground out there, that perhaps 15 
individual operators will cease operations. That is out of a 
small miner base of over 8,000. So we are talking about, at 
least the BLM thinks, a loss of about two-tenths of 1 percent 
in the base operation.
    I should also say that this determination of effects, I 
have worked on a number of rules in my career in the 
Department, I think frankly that this was one of the most 
careful and searching and full determinations that we have ever 
done. We sometimes take these things pretty casually. We made 
an extra effort here to do as honest and sober and detailed an 
assessment as we could of the impacts of these operations and I 
think that document, if you stack it up with other documents 
like it in other rulemakings, you will be impressed with the 
care with which BLM took their job here of assessing the 
impact.
    We wanted to make sure we knew what we were doing with this 
rule, to make sure that we did not impose unnecessary pain or 
disruption on this industry.
    Mr. Cannon. Madam Chair, I have no more questions, thank 
you.
    Mrs. Cubin. Having no more questions myself, do any of the 
others on the panel have questions. Well, if not then, we can 
proceed. Thank you very much, Mr. Leshy, for being here. We do 
have some questions that we would like to submit in writing in 
the interest of time, I know you have to be gone by 2:00. Thank 
you so much for your appearance here today.
    Mr. Leshy. Thank you very much, Madam Chair.
    Mrs. Cubin. If the second panel could please come forward. 
I would like to welcome to this Subcommittee hearing today, Mr. 
Paul Jones, President of the Minerals Exploration Coalition 
from Golden, Colorado; Mr. Carl Hanneman, President, Alaska 
Mining Association from Anchorage, Alaska; and Mr. Philip 
Hocker, the President of the Mineral Policy Center, Washington, 
DC.
    Thank you for coming. I am sorry that I am not going to be 
able to stay for your testimony but I know we will have good 
representation. Mr. Jones, would you like to begin for us, 
please?

   STATEMENT OF PAUL JONES, PRESIDENT, MINERALS EXPLORATION 
                  COALITION, GOLDEN, COLORADO

    Mr. Jones. Thank you, Madam Chair. Good afternoon. My name 
is Paul Jones. I am the Executive Director, not the President, 
of Minerals Exploration Coalition. I am pleased to be here this 
afternoon to address your committee on the BLM bonding 
regulation. I have over 35 years experience in the mining 
industry in North and South America in all levels of activity 
from that of a junior engineer through the Chief Executive 
Officer of publicly held companies.
    The Minerals Exploration Coalition is an advocate on public 
policy issues involving access to, and the safe and 
environmentally responsible use of public lands of the United 
States for mineral exploration. On February 28, as it has been 
previously mentioned, the Bureau of Land Management issued a 
rule on bonding of mining and exploration activities on the 
public lands.
    I am very deeply concerned about the manner in which this 
Administration established this rule. Unfortunately, the rule 
is formulated and published by the BLM without recent 
publication of notice to issue a rule, without recent public 
comment on the proposed rule, and without consideration of 
events which affect the need for or the operation of the rule.
    BLM's notice indicates that the proposed rulemaking process 
began in July of 1991, five and one-half years ago. Many 
relevant changes have occurred since 1991 which affects the 
recently issued rule, particularly changes have occurred since 
1991 in the State regulations affecting mineral exploration on 
public lands which justify if not mandate that proposed rules 
should be reissued, a reasonable comment period established, 
public input taken and used in the formulation of the new rule, 
whatever its content.
    In January, on the 6th of January, Secretary Babbitt sent a 
letter to the Assistant Secretary of Lands and Mineral and the 
Acting Director of the BLM asking them to prepare a plan to 
modify the hardrock mining surface management regulations 
commonly called 3809 regulations which some of you Members have 
already mentioned.
    When MEC saw that letter, we assumed that any such rule 
change that is in the 3809 regulation would follow normal 
procedures publishing the proposed rule change, taking public 
comment, considering that comment, and promulgating the final 
rule. The propagation of the rule on bonding of minerals or 
mineral activity gives us considerable alarm about how the 
Secretary plans to formulate new rules under 3809 regulations.
    The Mineral Exploration Coalition publishes an Exploration 
Permitting Directory, and I brought a copy of it just to show 
you, it covers 21 States, including all of the western States 
where most of the public land is located. In addition, it 
includes midwestern and eastern States where mineral mining 
occurs. The directory also includes BLM and Forest Service 
regulations on exploration activities.
    Numerous changes have occurred in this directory since the 
July 1991 rules were initially published. A review of our 
directory will indicate that all 21 States require some form of 
bonding for either exploration and/or mining activity on public 
lands. These basic requirements for the States are shown in 
Section 5 of this manual which is a one-page exhibit. I want to 
give the Clerk a copy of it for your record.
    This exhibit tells what is required, what permit is 
required, which forms are provided, if drill holes are required 
to be plugged and bonds are to be provided. Sixteen of the 21 
States require bonding for exploration. Two other States 
require bonding under certain circumstances. Numerous revisions 
have been made in our directory in the past few years that 
modify the various provisions--as the States modify their 
reclamation standards.
    In particular, the States of Arizona and New Mexico have 
come out with completely new regulations since the 1991 date. 
The States of Colorado, Minnesota, Montana and Nevada have made 
substantial changes in their regulations. Just two weeks ago we 
received a complete new set of regulations from the State of 
Montana.
    In the case of Colorado significant changes were made to 
the Colorado Mined Land Reclamation Act following the 
Summitville Mine incident with new rules under the revised act 
being formulated in 1994. I was personally deeply involved in 
both the legislative and rulemaking process in Colorado and 
will discuss this in more detail shortly.
    In reviewing our permit on the BLM rules, they even came 
out with a new set of regulations or a new handbook on 
reclamation in 1992, certainly after the closure of the public 
comment period we talked about earlier. In the case of the 
Colorado regulations, I was the Chairman of the Colorado Mining 
Association in 1992 and 1993 when the Summitville Mine was 
abandoned by Galactic Resources.
    I was and am Chairman of the CMA Summitville Task Force. 
This group--as such I have been involved in the negotiations 
that reshaped our State law and the regulations that came out 
of it. We made some major changes in the Colorado law all which 
enhance the regulation in Colorado of the mining industry. Most 
significantly about that, we made major changes on our bonding 
requirements.
    I have gone into more detail in my written testimony. In 
conclusion, I think the red light is on, in conclusion, the 
Minerals Exploration Coalition believes the new rule regarding 
bonding on mineral activity on public lands deserves new public 
comment and reconsideration before implementation.
    The changes in the applicable State regulations related to 
mineral exploration and mining activity have changed 
considerably since public comments were taken on the proposed 
rules in 1991. These changes without exception have 
strengthened the requirements on mineral activity, including 
that on public lands. Adequate regulation exists in States 
where exploration occurs on public lands, thus the need to rush 
into this new rule is not necessary.
    MEC is also concerned about the method of implementation of 
the rule on bonding that this method indicates a disregard on 
the part of the Administration and of the Department of the 
Interior for the normal rulemaking process. This gives us much 
concern on the upcoming 3809 regulation modifications.
    In conclusion, I would like to clearly state that MEC is 
not opposed to posting bonds on exploration activity if that 
bond is in a reasonable amount and is fairly administered. We 
already post bonds for most all of our exploration activities. 
However, MEC believes adequate change has been demonstrated in 
both the need for and the circumstances about the BLM rule on 
bonds to justify additional rulemaking of this issue prior to 
it being implemented. We strongly urge the BLM to withdraw this 
rule, reinstitute the normal rulemaking procedure in this 
matter. Thank you, and I am quite willing to take questions.
    [Statement of Mr. Jones may be found at end of hearing.]
    Mr. Gibbons. [presiding] Thank you, Mr. Jones. Mr. 
Hanneman, you are next.

     STATEMENT OF KARL HANNEMAN, PRESIDENT, ALASKA MINING 
                 ASSOCIATION, ANCHORAGE, ALASKA

    Mr. Hanneman. Thank you, Mr. Chairman. I appreciate the 
opportunity to talk with you today. My name is Carl Hanneman. I 
am President of the Alaska Miners Association, and I am also a 
mining engineer and President of Alaska Placer Development. For 
the past 17 years I have produced gold from Federal mining 
claims in Alaska, both under notices and plans of operations.
    And my relationship with BLM over the years has been 
professional and a positive relationship and it is fair to say 
that that is representative of other miners in the State on 
3809 issues, but we have grave concerns about this present 
proposal, the final rule.
    And I would like to deviate somewhat from my prepared 
remarks to address some of the issues that have been raised 
here. There are basically four reasons why this rule should not 
be implemented at this time. It is six years stale now. The 
second is that there is in fact substantive changes between 
this final rule and the proposed.
    In the context of the overall 3809 review it is 
inappropriate to proceed with the bonding leg of regulations at 
this time, and there has certainly been an inadequate analysis 
of the economic impact of this on our industry. To summarize 
some of the changes in the regulative community that has 
occurred since the last public comment period, the State of 
Alaska established a reclamation statute in 1992.
    This bond pool provides coverage for the full cost of 
reclamation. For the five-year period since the inception of 
this rule there were an average of 104 bonded operations in 
Alaska. In 1996 there were 112 bonded operations, 59 of these 
were on Federal lands. Since inception there have been no bond 
forfeitures or draws against the bond pool. That is since 1992 
all operations larger than five acres have completed 
reclamation as required including all those on Federal lands.
    All notice level operators, including 96 on Federal lands, 
of those 96 none have established a record of noncompliance, so 
I submit that this data shows that there is no compelling need 
to adopt this final rule now, that the program is working in 
Alaska. I also submit that there is a misconception about the 
relationship between BLM and the regulated community.
    In a January 6, 1997, memo from Secretary Babbitt he 
states, ``I understand that in practice it is relatively 
unusual for BLM to question what happens on these operations''. 
This is simply not the case. Miners go into the BLM during the 
winter, prepare their plans, modify their plans. The authorized 
officer determines when the reclamation is going to be 
sufficient. They visit the sites and they have significant 
input to the notice level operators.
    No operator can resubmit a notice and proceed under notice 
in a subsequent year until his reclamation is complete from the 
prior year as determined by the authorized officer. So the 
Secretary would just a couple of months ago assert otherwise 
demonstrates that the policies are not being driven by current 
information.
    The final rule is substantially different than the proposed 
rule and I will just use two examples. One is the bonding 
amount and the other are the financial instruments allowed. 
They went from a maximum cap on the bond to there being no cap 
at all. That is a major change in approach from the aspect of a 
small miner unable to obtain a bond so you go from being 
possibly able to financially meet the bonding requirement to 
certainly not being able to.
    When you add the cost of third party contractors the BLM 
has just simply not considered the fact that most sites in 
Alaska are remote, that you have to transport your equipment to 
those sites, that the cost of that transportation is very 
expensive whether it is overland winter freighting or by barge. 
Most of Alaska does not have roads and therefore when they 
estimate the economic impacts of the bonding and the bonding 
amounts there is a substantive change when they require a third 
party contractor estimates to complete the bonding.
    Then you look at the type of bonding instruments allowed. 
They purport to have added flexibility by adding additional 
financial instruments. Well, let us look at the ones they 
eliminated. They eliminated the right to use real property or 
mining property, that is, your house or your mining property. 
They eliminated the right to use your mining equipment, so for 
most small operators in Alaska the assets that they might 
otherwise have available to meet a bond have simply been 
removed. That is a substantive change from the proposal and 
demands further review.
    Their proposal to promulgate these final regs should be 
done in the context of the overall 3809 review. If the argument 
that is appropriate to look at what Congress was doing and do a 
thorough overall review of 3809 policies is appropriate a 
couple years ago it is certainly appropriate now. It is 
premature to be addressing the bonding leg of this in the 
context of the task force that has been established.
    With respect to the economic impacts, there are a number of 
things here where they have simply inadequately represented or 
estimated the economic impacts. One is this cost of 
transporting equipment to the sites. They estimated cost to 
plan operators in Alaska of $470,000. Under this proposal the 
cost of my operation alone would be $312,000 or 66 percent of 
this total. I am only one of 59 operators. It is clear that 
they have misunderestimated the economic impacts.
    I want to make it clear that we do not object to 
reclamation. In fact, reclamation can and is being done under 
the current State program but it is the financial impact of 
posting the bond when you cannot even obtain such a bond is 
what we object to. For the reasons cited above, the AMA 
believes it has not been provided proper opportunity for 
meaningful comment prior to the rule being effective.
    In January 1997, Secretary Babbitt announced that BLM has 
moved forward to complete ``a Final Rule on hardrock mine 
bonding to strengthen financial assurance requirements to meet 
reclamation responsibilities''. The Secretary also said ``It is 
plainly no longer in the public interest to wait for Congress 
to enact legislation.''
    I submit that it is in fact Congress, not the Secretary, 
that should establish public policy in this regard. If Congress 
does not see fit to enact certain laws, on what basis does the 
Secretary gain justification for proceeding on his own? The AMA 
thinks that the recently issued final rule is flawed. We urge 
this committee to do everything in its power to restore 
integrity to the public process. Thank you.
    [Statement of Mr. Hanneman may be found at end of hearing.]
    Mr. Gibbons. Thank you, Mr. Hanneman. Mr. Hocker.

 STATEMENT OF PHILIP HOCKER, PRESIDENT, MINERAL POLICY CENTER, 
                         WASHINGTON, DC

    Mr. Hocker. Mr. Gibbons, Mr. Rahall, thank you very much 
for holding this hearing today and thank you both for staying 
in attendance. We appreciate that very much. I am tempted to 
join Mr. Rahall with some trip down memory lane. It is hard to 
avoid. We have had hearings in this room when the entire dias 
was filled on these topics and I anticipate that in the not too 
distant future we may have the entire dias filled again working 
on reforming the 1872 Mining Law. I look forward to it and I 
look forward to your participation in that.
    These regulations are the tip of that iceberg. I think it 
is tremendously important that that iceberg be put in motion 
this way and we encourage the Department to move forward. We 
have talked a little bit in this memory lane trip about 
Congress versus the Administration but that seems to be--it is 
kind of like one of those weather vanes that different people 
want to blow one way or the other.
    And it was very clear in the Bush Administration first that 
the need for these regulations was widely and unequivocally 
acknowledged and supported, that the Administration and the 
Interior Department were committed to carrying out exactly the 
type of regulations that are under discussion today.
    The need for those regulations had been established through 
many widespread, thorough, documented studies, hearings held in 
this room and also hearings held in the other chamber, studies 
(of which I have a few with me here today) prepared by the 
General Accounting Office, studies prepared internally by the 
Interior Department, and in fact even reports by organizations 
and members of the mining industry itself.
    All of those studies pointed to the need for better 
protection for the public interest so that we the taxpayers 
would not have to pay to clean up the problems from mismanaged 
mining on public land. Now I applaud the statements of Mr. 
Jones and Mr. Hanneman today because I think they represent 
responsible mining operators and I think that their efforts and 
the care with which they are carrying out their operations, I 
speak on the basis of my trust in them and not on personal 
knowledge of their work, is exemplary.
    But we have been through this before. We went through it 
with the coal industry, as Mr. Rahall knows. We went through it 
with what was known as the two-acre exemption which was an 
effort to frankly give special privilege to small coal 
operators on the theory that they could not do enough damage to 
make much difference and that it would be in the general public 
interest to let them go ahead unbonded in order to allow them 
to persist.
    After a long experiment of many years, that experiment was 
found to be a failure and Congress in this room and in the 
chambers made the decision that the two-acre exemption was bad 
public policy and needed to be ended. These regulations are in 
effect a regulatory extension in hardrock mining of the end of 
the two-acre exemption.
    Now we believe in the Mineral Policy Center, and although 
we have not polled the environmental organizations broadly, I 
think it is fair to say that this is their view too, first, 
that these rules are long overdue. In fact, we were pleased 
although somewhat concerned when Director Jamison in 1991 made 
a commitment in hearings, according to my recollection, I have 
not been able to relocate his testimony although we are working 
on that, that these regulations would be promulgated.
    Shortly thereafter, the draft regulations were put forward 
by the Department in 1991 and then for no reason that we could 
determine the Bureau of Land Management did not go forward and 
adopt final regulations. Early in 1993 we called Secretary 
Babbitt's people within the Bureau and said, ``OK, how about 
moving forward with the bonding regulations,'' and they said, 
``Well, we are looking to see what Congress does, we have not 
made a decision on that yet.'' Our files show records of that 
telephone conversation.
    We urged them at that time in 1993 to move forward with the 
adoption of bonding regulations because we believed, and still 
believe, that the public interest was at risk because of this. 
Now we are in 1997. Finally--I think four years later than they 
should have--the Clinton Administration has brought forth these 
rules. We see no need for further delay. We think there is, in 
fact, a very specific reason to move forward with these right 
now because, as Mr. Leshy pointed out earlier, because of the 
timing of the mining season, because of the annual seasonal 
nature of many of these activities, a relatively short delay 
could postpone for an entire year the effect of these 
regulations on notice operations.
    We quite frankly believe these regulations are far too 
weak. We would prefer not to see distinction made between what 
are called notice operations and plan operations mining. The 
U.S. Forest Service for many years has operated under a system 
of treating mining operations of all different sizes 
essentially under the same rules. That system has worked well 
for the Forest Service and we think it would work well on 
Bureau of Land Management lands as well. We would prefer to see 
that adopted.
    Furthermore, I think it is worth commenting that what 
changes have been made between the draft and the final 
regulations as we see them today are well within the scope of 
the public debate--the changes that have been made are well 
within the scope of the public debate which was carried on both 
in 1991 and was reflected in very broad industry comments as 
well as environmental group comments that were made on the 
draft 1991 regs.
    So the changes which Mr. Hanneman and others have referred 
to are well within the range of discussion and the type of 
public comment and information which was submitted in 1991. 
There is no need for, and nothing would be gained by, 
postponing the implementation of these regulations and 
soliciting further comment. The issues have been aired. The 
issues are on the table. The issues were fully considered by 
the Department when these regs were adopted.
    We hope to see the regs strengthened in the near future, 
but we see no need for delay in putting this level of 
protection for the public interest into place right away. Thank 
you for the opportunity to comment.
    [Statement of Mr. Hocker may be found at end of hearing.]
    Mr. Gibbons. Thank you, Mr. Hocker. Mr. Jones, you listened 
and heard the Solicitor earlier talk about his concerns about 
this issue and this bill and the need for it, and then Mr. 
Hanneman listed out four of his reasons why he thought this 
bill and its urgency were not necessary at this point in time. 
You have heard Mr. Hocker recite almost verbatim what Mr. Leshy 
talked about. What is your opinion, what is your analysis of 
this bill and what impact do you think it would have on the 
industry from your perspective?
    Mr. Jones. The bonding regulations are not a stand alone 
issue. The bonding regulations have to tie in with the other 
3809 regulations. Now I am not here today to try to get a 
lengthy delay in the bonding process. As I said in my prepared 
statement and said here in my verbal statement, MEC does not 
object to bonding but we are concerned that there are several 
things in the regs as we see them that are cloudy or murky in 
their meaning.
    The bond will be released when BLM is satisfied that 
reclamation has been completed. What reclamation? What degree 
of reclamation? What limits of reclamation? Now this is all put 
together in the operating plan but this is an important part of 
the release language and that is really not addressed in the 
regs satisfactorily.
    There is a requirement in there for professional engineer 
approvals or workups of the cost estimates and I understand why 
that is in there and I understand how it is in there. And that 
makes good sense on a mining operation of a large nature. 
Colorado requires that but on only certain specific things. If 
I go out in the public lands and drill five drill holes, do I 
have to have a professional engineer go out with me and do an 
estimate beforehand of what it is going to cost? And what is 
that cost going to impact the small explorations that go out.
    There is no criteria in the regulations and maybe this is 
expecting too much from government, there is no criteria for a 
maximum amount of time BLM has to respond on these things, 
these permit applications or plan of operations. This is 
crucial to the small miner. It is crucial to the exploration. 
It is crucial to the big companies how long this process can go 
on.
    I understand there are probably some small miners that 
abuse the process and doing away with the small miner exception 
I understand is politically probably correct but it will impact 
these people. It will impact them probably more so than it will 
impact the large company and I think this needs more thought 
into it. One of the things that I do not believe is in the 
present regs and I do not believe it is the present BLM 3809 
regs that I think concerns us is when we file information with 
BLM on exploration projects, we need that information contained 
in a confidential manner.
    Under our Colorado State regulations that can be held and 
if I go in and ask for a competitor's exploration plan I will 
not get to see it. Exploration is a product of the brain. Our 
concepts are proprietary. We are out maybe staking claims on 
the public domain because I got a better idea than the guy next 
to me of why there should be minerals in that area and that 
needs to be maintained in a proprietary nature.
    These are some of the areas that I am concerned about that 
need to be worked on in total, not in part. I do not disagree 
that we need to have bonding. I for one believe the States know 
better what works in a given State than the Federal Government 
but I also have learned over my 35 years that the Federal 
Government is going to regulate and I have got to follow their 
regulations.
    So I think there are pieces of this thing that need to be 
looked at a little more. There has been a lot of things 
happened in the five and one-half years since those things came 
out originally that I think there would be much to gain by 
going through the rulemaking process again. And that is my main 
contention for being here today.
    Mr. Gibbons. Real quick like, Mr. Hanneman, you have heard 
Mr. Leshy and even Mr. Hocker talk about your field season and 
the exploration and the impact of this rulemaking or the lack 
of it being rushed through at this current time. What is your 
impression of that situation and how would you say the impact 
would be on your exploration season if this is delayed 60 days 
for a comment period?
    Mr. Hanneman. Well, the data that demonstrates in Alaska 
that there is no compelling need to rush. In five years there 
has not been a demand to draw on the bond pool nor has anyone 
been out of compliance. So there is no need. With respect to 
the--it is already close to spring now. There are miners that 
are already over the barrel, so to speak, with respect to this 
reg. It is unclear as to whether notice level operators will or 
will not be included when they are going back on their 
operations.
    It says in the preamble that notice level operators would 
not be impacted but in the reg itself it does speak there is no 
such exemption so there is ambiguity already. Further public 
comment process would help, not hinder. With respect to the 
impacts, the small operator in Alaska simply cannot get a 
surety and so we have no objection to doing the reclamation. In 
fact, the Alaska Miners Association was an important part of 
getting the reclamation law passed but the inappropriate 
financial burden of the bond is what will hurt.
    And there are several places I have pointed out where BLM 
has just simply inadequately addressed the economic impact and 
we think that they should look at it again but most importantly 
in the context of the whole 3809 reg. In this process they have 
established a bond release mechanism that includes language and 
standards that is not in existing 3809 so they are in fact 
establishing reclamation standards and also visiting the notice 
level operator issue to the issues that were identified for the 
task force to address.
    So it is premature for them to proceed and attempt to 
resolve those issues at this time, not in the context of the 
whole 3809 review.
    Mr. Gibbons. Thank you. Mr. Rahall.
    Mr. Rahall. Thank you, Mr. Chairman. Mr. Jones, I would 
like to ask you about the chart that you handed out for the 
record. In this chart I notice that there are four States, 
Arizona, Missouri and North Dakota that do not require 
reclamation bonds, correct?
    Mr. Jones. That is correct. Four States or is it three 
States?
    Mr. Rahall. I have checked off four here, Arizona, 
Missouri, North Dakota--I am sorry, I did add--that is right. 
You are right. Three, I am sorry.
    Mr. Jones. I think there are three and there are two 
variables.
    Mr. Rahall. Right, two variables. OK. Well, surely all the 
other States have different bonding requirements and my 
question, I guess, is can you tell us which States have 
stronger bonding requirements?
    Mr. Jones. Not without going through my manual one by one 
but I would be glad to make that comparison and put it in 
writing.
    Mr. Rahall. OK, I appreciate it. I think it would be a help 
for all the committee. According to the BLM, Alaska, Nevada, 
New Mexico and Utah exempt small operations, is that correct?
    Mr. Jones. What are the States?
    Mr. Rahall. Alaska, Nevada, New Mexico and Utah. According 
to BLM they all exempt small operations.
    Mr. Jones. Our permitting manual does not indicate that 
Alaska exempts but I think there are some quirks in Alaska regs 
that are slightly different than some of the others. New 
Mexico, it has a rule which I do not have with me. I would have 
to get that for you. And I can make you a comparison of what 
each State requires for bonding or does not require and who it 
exempts.
    Mr. Rahall. OK, but the bottom line again is these proposed 
new bonding regulations really would not be as stringent on 
some States as already----
    Mr. Jones. For instance, in Colorado it may or may not be. 
I am very familiar with the Colorado regs. If it costs $500 an 
acre to fix the damage you incur, that is the bond. If it costs 
$10,000 an acre to fix the damage required, that is the bond. 
It is case specific in Colorado and I think some of the other 
States are very much that way. So it is very difficult to make 
a categorical statement that BLM is or is not more rigid than 
all the States.
    Mr. Rahall. OK, but you do agree that there is bonding 
requirements required, minimum bonding requirements required?
    Mr. Jones. As I understand the new bill and regs, they have 
got $1,000 for notice of intent minimums and they have got a 
$2,000 for plan of operations. If that were compared to 
Colorado and there were a portion of your operation that 
required $500 per acre to reclaim your bond for that portion 
would be $500. If you had a portion that required a lot more, 
say $10,000, that acreage bond would be $10,000 per acre and 
your cumulative bond would be a composite of all the pieces.
    Under the BLM reg as I see it, and I did not come here to 
argue the merits of the bond, but as I understand it, if you 
got 100 acres under bond under the BLM plan it is $2,000 times 
100 acres. There is $200,000. So it very definitely may be more 
or less than it might be in the State of Colorado.
    Mr. Rahall. Phil, let me ask you, if I might. Is there one 
State that stands out as striking the right balance between 
protecting the taxpayer while also placing reasonable bonding 
requirements on mining operations?
    Mr. Hocker. We would favor the State of California. Let me 
add, though, frankly I think a problem that we all face is that 
predicting from the rules on the books exactly what bond a 
miner is actually going to be required to post for a given 
operation could be a challenge.
    Mr. Jones. It is case specific.
    Mr. Hocker. But I think two things that might help the 
discussion, first it is our understanding that Arizona should 
be added to your list of States that do not require bonding for 
small operations.
    Mr. Rahall. Yes, that already--that is according to Mr. 
Jones' chart too.
    Mr. Hocker. And, secondly, one of the changes that--there 
were as has been pointed out some changes between the draft and 
the final regulations--one of the changes was that the draft 
regulations promoted in 1991 would have capped, placed a cap, 
as I understand it, on the maximum level of bonding per acre.
    We do not believe that per acre calculation is a wise way 
to protect the public interest. USEPA was among those, and also 
many BLM staff who in 1991 commented, that a per acre cap would 
not be appropriate and so BLM has replaced the per acre cap 
with basically a third party calculation by a responsible 
professional of the actual cost to do the job. We think that is 
an excellent change and also I would add one that clearly was 
envisioned in and was within the scope of comments that were 
received in 1991.
    Mr. Rahall. It was part of my reform bill that passed the 
House of Representatives, is that correct?
    Mr. Hocker. One of the many excellent parts of that bill.
    Mr. Rahall. Thank you, just for the record. No comment from 
the other side. Mr. Chairman, let me if granted permission 
include as part of the record and perhaps as part of this 
panel's testimony a letter from the American Rivers, Mineral 
Policy Center, National Wildlife Federation, Sierra Club, 
Western Mining Action Project, and Western Organization of 
Resource Councils to Secretary Babbitt dated March 12 of this 
year if that could be just made part of the record as part of 
the testimony.
    [The letter may be found at end of hearing.]
    Mr. Gibbons. Without objection and I will also say to the 
witnesses who testified earlier that your written comments will 
also be made part of the record as well as though you have made 
in oral argument.
    Mr. Rahall. Thank you.
    Mr. Gibbons. Mr. Hocker, I just had one question for you 
and perhaps it is something you can help me understand a little 
bit better here as we wrap this up. One of the GAO studies that 
you waved about earlier in your testimony indicated that the 
legacy of abandoned hardrock mines in this country was about 
$180 million or so. Was that not what you just said in your 
testimony?
    Mr. Hocker. I actually did not bring that particular report 
with me because I placed----
    Mr. Gibbons. But you said something about----
    Mr. Hocker. There is such a report, yes.
    Mr. Gibbons. Now isn't it true that your group's study puts 
this figure at about $36 to $72 billion?
    Mr. Hocker. $32 to $72 billion was the estimate we came up 
with. The Interior Department Inspector General calculated $11 
billion. There are other numbers floating around.
    Mr. Gibbons. Which one do you place greater belief in?
    Mr. Hocker. Ours.
    Mr. Gibbons. Why?
    Mr. Hocker. First, in all candor, a range of $32 to $72 
billion is a fairly wide range and there is a lot of 
uncertainty in there. We tried, sir, to do frankly a type of 
analysis which we felt was necessary and which we have not seen 
anyone else do. And the data on this, and I bet there is 
unanimity on this panel on this point, the data are not 
conclusive. And one thing that I would love to see this 
Subcommittee call for would be an adequate expenditure to 
really do an assessment and actually inventory this problem.
    But what we attempted to do was take the data that were 
available which were of two kinds. First, counts of the total 
numbers of abandoned sites that exist, and, secondly, some 
costs for the costs of reclamation of different categories of 
sites. And clearly to take the cost of reclaiming the Superfund 
site and apply that to the total count which is approximately 
552,000 abandoned mines would be nonsense.
    So what we tried to do was to categorize, OK, roughly what 
percentage of these are fairly minimal sites that do not 
require any effort, what percentage are sort of landscape 
disturbance or pits which are going to require maybe a few 
thousand dollars to regrade and reclaim, which ones are serious 
water pollution-sites, and which ones are Superfund sites.
    And then we tried to apply reasonable cost projections to 
each of those. That was what produced the $32 to $72 billion 
estimate. That has been on the table since '93 and frankly no 
one has done a more thorough scientific analysis since then 
that I am aware of.
    Mr. Gibbons. Thank you. Mr. Rahall.
    Mr. Rahall. No questions.
    Mr. Gibbons. I would like to thank the witnesses for their 
participation and testimony today. We appreciate it and with 
that if there is no other testimony, we will call this hearing 
to a close. Thank you very much.
    [Whereupon, at 2:37 p.m., the Subcommittee was adjourned; 
and the following was submitted for the record:]

     Statement of John Leshy, Solicitor, Department of the Interior

    Madam Chair and members of the Subcommittee, I appreciate 
the opportunity to appear here today to discuss the final rule 
on bonding for hardrock mining operations.
    Section 302(b) of the Federal Land Policy and Management 
Act of 1976 (FLPMA) directs the Secretary to prevent 
unnecessary or undue degradation of the public lands from, 
among other things, activities conducted pursuant to the Mining 
Law of 1872 (mining of locatable minerals, such as gold, lead, 
silver, uranium, and bentonite).
    The consequences to the health of the public lands and the 
implications for the American taxpayer from inadequate steps to 
carry out this mandate are potentially very large, even 
staggering. The Departments of Agriculture and the Interior are 
currently defendants in several lawsuits seeking to hold the 
government, as landowner, liable for the cost of cleaning up 
toxic wastes from defunct mining operations carried out 
throughout the west under the Mining Law of 1872. The irony is 
that after over a century of making publicly owned minerals 
available for next to nothing, the taxpayers may face cleanup 
costs running into billions of dollars. Most members of the 
hardrock mining industry are responsible operators. But there 
is no denying that when protective measures are not taken, or 
are inadequate, the consequences can be costly.
    Some idea of the potential scope of the problem is 
described in a GAO Report of April 1988 to the House 
Subcommittee on Mining and Natural Resources. The GAO estimated 
that 424,049 acres of federal land were then unreclaimed as a 
result of hardrock mining operations in the 11 western states. 
281,581 of these unreclaimed acres related to abandoned, 
suspended or unauthorized mining operations. The estimated cost 
to reclaim this land was about $284 million. The remaining 
142,468 acres of federal land were being mined at that time and 
would eventually need reclamation.
    The Bureau of Land Management's (BLM) original regulations 
implementing section 302(b) of FLPMA became effective on 
January 1, 1981. That rule, 43 CFR 3809, required mining 
claimants to complete reclamation on Federal lands administered 
by the BLM during and upon termination of exploration and 
mining activities under the mining laws. The rule classified 
mining-related activities into three categories: casual use, 
notice, and plan of operations. Activities are termed ``casual 
use'' if they involve negligible surface disturbance and do not 
use mechanical excavating equipment. However, if there is 
surface disturbance involving mechanical excavating equipment, 
notice of the operation must be provided to BLM. Plans of 
operations were required where surface disturbance of more than 
5 acres, or any disturbance greater than casual use in some 
special category lands, was involved. At BLM's discretion, 
bonding was required on plans of operation. No bonds were 
required for casual use or notice operations unless there was a 
pattern of violations.
    The preamble to these regulations promised a review of them 
within three years. Since they took effect, much internal and 
external (GAO and Congressional committees) attention has been 
directed at, among other things, the adequacy of BLM's bonding 
policies. In addition, the dramatic rise of the gold mining 
industry in Nevada during the 1980's increased the public's 
awareness of the need for reclamation. Near the end of the 
Reagan Administration, the BLM Director established a Mining 
Law Administration Program Task Force to address significant 
issues. The Task Force's December 1989 report recommended that 
BLM's program ``needs to be strengthened to meet BLM's 
responsibilities,'' and addressed bonding, among other things. 
As a result, a revised bonding policy was issued in August 1990 
as a short term change. In July 1991, a proposed rule on 
Hardrock Bonding was published in the Federal Register. The 
preamble to this proposed rule explained that the Department's 
history under the 3809 bonding regulations led BLM ``to 
conclude that bonding or other financial or surety arrangements 
would be useful additions to the tools available to land 
managers to protect against unnecessary or undue degradation of 
the land caused by [notice] operations....'' (56 FR 31602). The 
published summary of the proposed rule explained:
    ``The proposed rule would require submission of financial 
guarantees for reclamation for all operations greater than 
casual use, create additional financial instruments to satisfy 
the requirement for a financial guarantee, and amend the 
noncompliance section of the regulations to require the filing 
of plans of operations by operators who establish a record of 
noncompliance.'' (56 FR 31602).
    During the 90-day comment period, which expired on October 
9, 1991, the BLM received over 200 comments on the proposed 
rule. Some said the policy went too far; others said it did not 
go far enough. All of the comments were carefully considered in 
developing this final rule.
    In August 1992, BLM completed a preliminary draft of the 
final rule incorporating changes suggested during the comment 
period. Internal Departmental review of the preliminary draft 
final rule was then begun. In addition to the proposed bonding 
rule, on September 11, 1992, BLM published a proposed rule 
which strengthened the BLM's enforcement program against the 
illegal occupancy of mining claims for non-mining purposes.
    Because it appeared at the beginning of the 103rd Congress 
that action on comprehensive legislation to reform the 1872 
Mining Law was likely, completion of BLM's bonding and 
occupancy regulations was suspended. If enacted, the reforms 
being considered would have superseded the rules.
    Once the 103rd Congress adjourned without enacting Mining 
Law reform, the Department resumed work on a number of efforts 
to address shortcomings in regulation of hardrock mining, 
including the bonding rule. Among these efforts, BLM also 
published an acid rock drainage policy in April 1996. The 
occupancy rule was completed and published in final form on 
July 16, 1996. Work then focused on finalizing the bonding 
rule.
    In response to public comment, and after due consideration, 
some changes were made between the draft and final rule. These 
changes are a logical outgrowth of the proposed rule. While the 
proposed rule will enhance environmental protection by ensuring 
consistent application of bonding requirements, the overall 
impact of the rule on the hardrock mining industry is actually 
relatively limited for several reasons. First, as was noted 
earlier, the Department already has the discretionary authority 
to impose bonds for up to 100% of the costs of reclamation on 
plan level operators, and some states already require this 
level of bonding. In other states, which do not currently 
require 100% reclamation bonds, the BLM will be cooperating 
with operators and state mining administrators throughout the 
remainder of 1997 to achieve a smooth transition. Second, the 
bonding requirement for notice level operators, which was part 
of the proposed as well as final BLM rule is not a new 
requirement in most states. Moreover, the requirement will be 
phased in, which will ameliorate its impact where it is new. 
Operators with existing notices on file with BLM which have 
initiated operations will not be required to provide 100% 
bonding until they file a new notice. With past history as our 
guide, we expect that it will take four years before all notice 
level operators are covered.
    The BLM has implemented an extensive program to inform 
interested parties of this final rule. BLM's homepage on the 
Internet (http://www.blm.gov) includes the final rule as well 
as background documents including a press release, question and 
answer sheet, and a fact sheet. Other outreach efforts include, 
for example, BLM staff visits to various mining centers and 
meetings with miners and mining industry officials, as well as 
state regulators.
    We believe this rule is a reasonable forward step to carry 
out our statutory mandate. We will do all we can in 
implementing this rule to ensure that the health of the land is 
preserved, taxpayers' interests are protected, and any negative 
implications for the mining community are minimized.
    This concludes my statement. I will be pleased to answer 
questions.

                                ------                                


     Testimony of Paul C. Jones, Executive Director, the Minerals 
                         Exploration Coalition

    Introduction.
    I am Paul C. Jones, Executive Director of the Minerals 
Exploration Coalition, an advocate of the multiple use of 
public lands of the United States. Today I am pleased to 
testify before your Committee today regarding the recently 
published Bureau of Land Management regulations related to 
bonding of exploration and mining activities on the Public 
Lands.
    I have over 35 years experience in the mineral industry in 
North and South America in all levels of the industry from 
junior engineer to Chief Executive Officer of publicly held 
corporations.
    The Minerals Exploration Coalition, located in Golden, 
Colorado, is an advocate on public policy issues involving 
access to, and the safe and environmentally responsible use of, 
public lands of the United States for mineral exploration and 
development. Our membership, including more than 30 
corporations, represents a diverse group of professionals and 
companies engaged in mineral exploration on public lands.
    Presentation.
    On February 28, 1997 the Bureau of Land Management (BLM) 
published a final rule in the Federal Register (62 FR 9093-
9103) concerning a portion of 43 CFR 3809 relating to the 
surface management of lands subject to the mining law, more 
par-

ticularly to bonding of exploration and mining activities on 
the public lands. I am deeply concerned about the manner in 
which the Administration established this rule.
    Unfortunately this rule was formulated and published by the 
BLM, effective March 31, 1997, without recent publication of a 
notice to issue the rule, without a recent public comment 
period on the proposed rule, and without consideration of 
events which affect the need or operation of the new rule. 
BLM's notice of Final Rule stated that the notice of proposed 
rule was published on July 11, 1991 (56 FR 31602) with the 
period of public comment closing October 9, 1991--five and one-
half years ago.
    Why did the BLM not issue the final rules in 1991 or early 
1992, or even in the early days of the Clinton Administration--
not five and one-half years later? What is the urgency which 
does not allow re-publication of proposed rule, a new public 
comment period, and the formulation of a final rule in this 
process--five and one-half years after the period of public 
comment for the proposed rule was closed.
    I suggest, ladies and gentlemen, that many relevant changes 
have occurred since 1991 which affects, if not makes 
unnecessary, the recently issued rule. Particularly, numerous 
changes have occurred in state regulations affecting mineral 
exploration on public lands which justify, if not mandate, 
newly formatted proposed rules be issued, a reasonable comment 
period established, and public input taken and used in the 
formulation of the final rule--whatever its content.
    On January 6, 1997 Interior Secretary Babbitt sent a letter 
to the Assistant Secretary, Land & Minerals and the Acting 
Director, BLM requesting they present to the Secretary a plan 
to modify the hardrock mining surface management regulations 
(43 CFR 3809) commonly called ``3809 Regulations.'' More 
recently we have learned that the Secretary has established a 
Task Force to review and prepare modifications of such 
regulations.
    When we at MEC saw the January 6, 1997 letter from 
Secretary Babbitt we assumed, apparently in error, that any 
such rule changes related to 3809 Regulations would follow the 
normal procedure of publishing proposed rule changes, taking 
public comment on those issues, and considering that public 
comment in formulating the final rule. The propagation of the 
rule on bonding of mineral related operations gives us 
considerable cause for alarm about how the Secretary plans to 
formulate new rules under the 3809 Regulations.
    The Mineral Exploration Coalition publishes an exploration 
Permitting Directory covering the regulations of 21 states, 
including all western states where most public land is located. 
In addition most, if not all, mid-western and eastern states 
where metal mining occurs are included. The Directory also 
includes BLM and U.S. Forest Service (FS) rules governing 
exploration activities. This directory is updated on an annual 
basis to incorporate any changes in state or federal 
regulations which occur in the preceding year. Numerous changes 
have occurred in the directory in the last six years.
    A review of the MEC Permitting Directory will indicate that 
all of the 21 states covered require some form of bonding for 
exploration and/or mining activity on the public land. The 
requirements for prior permitting, reclamation and bonding in 
each state may vary, but most states do cover all acreage 
disturbed without regard to ownership, whether it be private, 
state or federal. Sixteen of the twenty one states require 
bonding for exploration. Of the states covered in the MEC 
manual, only Alaska does not require permitting and bonding of 
exploration activities on federal lands.
    Numerous revisions have been made to our directory in the 
past few years as the individual states have modified their 
reclamation regulations. A brief review indicate that 
modifications have been made to the regulations in almost all 
states since 1991. In particular, the states of Arizona, New 
Mexico have instituted the regulation of exploration and mining 
activities since the BLM ask for comments on their most recent 
proposed rules in 1991. In addition the states of Colorado, 
Minnesota, Montana, and Nevada have made major changes in their 
legislation and/or regulations governing exploration permitting 
and reclamation since 1991. Just two weeks ago the MEC office 
received a completely revised set of regulations from Montana 
to incorporate into the 1997 edition of our directory.
    In the case of Colorado significant changes were made to 
the Colorado Mined Land Reclamation Act in 1993 following the 
Summitville Mine incident with new rules under the revised act 
being propagated in 1994. I was personally deeply involved in 
both the legislative and rule making process in Colorado and 
will discuss that process in more detail shortly.
    A review of the federal permitting section of the MEC 
Permitting Directory indicates changes were made to both the 
BLM and FS sections since October, 1991. Of particular note was 
the reference on page 4-8 related to BLM Manual Handbook H-
3042-1 dated February 2, 1992 and entitled Solid Minerals 
Reclamation Handbook, issued obviously after the date of 
closure of public comment on the 1991 BLM draft rules. The 
contents of this handbook appear to be incorporated into the 
release language of the bonding rule, again without public 
comment.
    In the case of the Colorado Regulations major changes in 
the underlying legislation and subsequent regulation were made 
in 1993 and 1994 as a result of the Summitville Mine 
abandonment by Galactic Resources Ltd. I was Chairman of the 
Colorado Mining Association (CMA) in 1992-93 and Chairman of 
the CMA Summitville Task Force from 1993 to the present. As 
such I participated in the process of revising our state law 
(93-247) to correct deficiencies in the law and subsequent 
change in regulations under that law in 1993-94 and to a lessor 
extent in 1995.
    Major changes of the Colorado Mined Land Reclamation Act 
were made in 1993. These changes specifically included 
modification of the previous law which provided minimal 
requirements for small operations, elimination of statewide 
permitting of exploration to a system where each project must 
be separately permitted under a confidential ``Notice of Intent 
to Explore'' system, introduction of a ``Designated Mining 
Operation'' classification covering operations which use 
hazardous chemicals or have the ``potential'' to produce acid 
forming chemicals or heavy metal concentrations in runoff water 
and, most importantly to this discussion, significantly 
increased bonding requirements on all operations within the 
state. Under current regulations, all operations, whether 
exploration, development, or mining, must be adequately bonded.
    Colorado regulations apply to all lands within the state, 
whether private or government owned (including federal lands). 
Certain, but not all, portions of the permit application must 
be approved by a Professional Engineer. Bonds must be 
sufficient to allow the State to conduct the reclamation in the 
event of abandonment by the operator. The form of the bond must 
be fungible and in the name of the State of Colorado.
    Exploration and/or operating bonds under the Colorado Mined 
Land Reclamation statute will vary dependent upon the nature of 
disturbance, pre-activity condition of disturbed surface, and 
other relevant conditions. Bonds posted range from $500 per 
acre to over $10,000 per acre on limited areas.
    As you can see from my description of the Colorado 
regulations, our state adequately regulates both exploration 
and mining operations on both public and private lands in the 
state. Similar regulations apply in most other Western states.
    I do not wish to devote time at this hearing to critique 
specific items of the new rules which are considered by many as 
objectionable. However, I will mention several items which 
deserve meaningful consideration:
    --the new rules do not outline specific time frames for the 
procedures for releasing the bond established for reclamation. 
All states with which I am familiar establish specific 
procedures for partial and final release of bonds;
    --the requirement for a professional engineer appears 
overkill on minor exploration plans and operating plans for 
mining operations of minor impact;
    --no criteria is established for a maximum review time 
allowed BLM for plan approvals, in fact the Q & A sheet states 
delays are inevitable;
    --the elimination of the small miner (5 acre) exemption may 
be overly restrictive, both from the standpoint of impact on 
small operations, and from the impact on BLM staffing required 
to administer the program; and
    --no method is established for providing confidential 
treatment of exploration data or information, a requirement 
which is of major importance to the exploration community.
    MEC is also concerned about the negative impact this new 
rule can have on exploration by individual explorationist who 
are an integral part the U. S. exploration scene. The self-
initiation process provides a very high percentage of the new 
mineral discoveries in the United States. We believe the rule 
in its present form will cause much confusion on what will 
consist of ``casual'' use of public lands for exploration. Will 
driving a pickup or jeep along designated roads to inspect an 
area be classified as ``casual use'', or will it require 
complying with ``notice level'' requirements and posting of a 
bond prior to commencement of the activity? Will a geologist be 
required to meet ``notice level'' requirements and post a bond 
to perform field mapping, take ``chip samples'', or conduct 
geophysical surveys on public lands? Will the staking of 
unpatented mining claims require advance ``notice level'' 
filings. If any of these issues are the case, we believe such a 
requirement will be overly restrictive, costly, and unduly time 
consuming for the nature of the impact such an activity will 
have on the public lands. These items are not adequately 
addressed in the new rules.
    Similar concerns may be expressed for the legitimate 
``small miner'' who operates in a environmentally sensitive 
manner, yet does not have the financial resources to engage a 
professional engineer to compile a ``notice level'' or more 
formal ``plan of operation'' for a small, under five (5) acre 
mining operation.
    Conclusion.
    The Minerals Exploration Coalition believes the new rule 
regarding bonding for mineral activity on the public lands 
deserve new public comment and reconsideration before 
implementation. The changes in applicable state regulations 
related to mineral exploration and mining activity have changed 
considerably since public comments were taken on proposed rule 
in 1991. These changes, without exception, have strengthened 
the requirements for mineral activity, including that on public 
lands. Adequate regulation exist in most states where 
exploration occurs on public land, thus the need to rush this 
new rule into effect is unnecessary.
    MEC is also concerned that the method of implementation of 
the rule on bonding indicates a disregard on the part of the 
Department of Interior for the normal rule-making process. This 
gives us much concern regarding the upcoming activities of BLM 
in revising 3809 Regulations.
    In conclusion, I would like to clearly state that MEC is 
not opposed to the posting of a bond for exploration activity 
if that bond is in a reasonable amount and is fairly 
administered. We already post such bonds for almost all our 
major exploration activities in the states in which we work. 
However, MEC believes adequate change has been demonstrated in 
both the need for and circumstances about the BLM rule on 
bonding to justify additional rule-making on this issue prior 
to a final rule being implemented. We strongly urge the BLM to 
withdraw this rule and re-institute normal rule-making 
procedures in this matter.

                                ------                                


  Statement of Karl L. Hanneman, President, Alaska Miners Association

    Introduction
    Good afternoon. My name is Karl Hanneman. I am President of 
the Alaska Miners Association (AMA), a nonprofit industry 
support organization with approximately 1000 members. I am also 
a mining engineer and President of Alaska Placer Development, 
Inc., a small private company that for the past 17 years has 
produced gold from federal claims in five locations in Alaska, 
both under notices and plans of operations. On behalf of the 
Alaska Miners Association, I would like to thank you for the 
opportunity to share our concerns about the BLM Final Rule on 
bonding.
    To summarize the importance of the mining industry in 
Alaska, it was the fourth largest industry in 1996. An 
important element of this industry is the approximately 200 
small placer miners that are scattered throughout the state. 
According to statistics from the State of Alaska, the average 
small placer miner employs 3 to 4 people. The mining industry 
provides one of the few private sector job opportunities in 
rural Alaska.
    My mining operation is conducted under a plan of operations 
near the town of Livengood, 70 miles north of Fairbanks. Unlike 
the previous locations I have worked, Livengood has the luxury 
of being accessible by road. We have been at this location for 
13 years and employ 10-15 people for 8 months per year and 3 
people year round. Although our annual disturbance is about 5 
acres, the large settling ponds that we need to recycle 100% of 
our process water and our overburden storage areas brings our 
total footprint to about 250 acres.
    My relationship with BLM Alaska personnel over the years 
has been positive and professional and it would be fair to say 
that this is representative for the industry as a whole on 3809 
issues. I have seen many improvements in mining practices in 
recent years, and by and large these have occurred in a 
constructive atmosphere with Alaska BLM. However, the AMA has 
serious concerns about the Final Rule now presented by BLM 
headquarters.

    Four Reasons that Final Rule should not be adopted.

    The following comments will focus on the procedural reasons 
that the Final Rule should not be adopted. Although the AMA has 
serious concerns about many of the provisions of the Final 
Rule, our review of specific provisions of the rule will not be 
exhaustive, but rather only certain portions will be discussed 
in order to highlight the fact that BLM needs additional 
information before being able to proceed with a proper rule.

    Six year old public process is stale

    The proposed rule was published on July 11, 1991, with the 
public comment period expiring on October 9, 1991. During the 
five and one half years that elapsed before notice of the Final 
Rule, important changes have occurred within the regulated 
community and much relevant information has not been properly 
evaluated. I cite the State of Alaska reclamation law and BLM 
field staff practices as examples.
    After closure of the comment period on the proposed rule, 
the Alaska State Legislature passed a State reclamation law. 
This Statute became effective in 1992 and applies to all land 
in Alaska, including state, federal, private, and municipal 
land. The law requires prevention of unnecessary and undue 
degradation of land and water and contemporaneous reclamation 
to a stable condition. The law requires plans with bonding for 
5 acres or more and notices with an annual statement of 
reclamation for less than five acres. A statewide bonding pool 
was established whereby a refundable deposit of $112.50 per 
acre is paid to create a surety and a nonrefundable fee of 
$37.50 per acre per year is paid to the bond pool. The bonding 
pool provides coverage for the full cost of reclamation.
    During creation of the bonding pool, the AMA worked with 
the BLM State Division of Mining, and the Alaska State 
Legislature to ensure that it was established in a manner that 
could be used by miners operating on federal lands. The BLM 
Director at that time encouraged the AMA to establish this 
bonding pool and get it in place as rapidly as possible. AMA is 
presently working with BLM Alaska and State of Alaska officials 
to determine if the State bonding pool can provide coverage 
under BLM's Final Rule without adding significant burden on the 
operators. Despite very positive attitudes by all directly 
involved, at this time there is no assurance that the effort 
will be successful.
    For the five year period since inception, there were an 
average of 104 bonded operations in Alaska. In 1996 there were 
112, 59 of which were on federal land. Since inception, there 
have been no bond forfeitures or draws against the bond pool. 
That is, since 1992, all operations larger than 5 acres have 
completed reclamation as required, including all those on 
federal land. During 1996, no notice operators, including 96 on 
federal land, established a record of noncompliance.
    This new data shows that there is no compelling need to 
adopt the Final Rule. It is interesting to note that the 
February 38, 1997 notice of the Final Rule indicated that 
``This Final Rule will advance the BLM's mission of protecting 
the public against unfunded liabilities''. I wonder who has 
established this as BLM's mission? Since the data does not show 
any such unfunded liabilities in Alaska, then what is BLM's 
real mission? In any event, it is clear that the five and one 
half years since the first comment period closed has simply 
been too long and BLM headquarters needs the benefit of this 
new data so that it can accommodate the successful statewide 
bonding program that is working in Alaska.
    BLM headquarters also needs to learn how closely BLM 
personnel work with the mining operators in Alaska to ensure 
and improve compliance. In this regard, the January 6, 1991 
memo from Secretary Babbitt states with respect to notice level 
operations: ``I understand that in practice it is relatively 
unusual for BLM to question what happens on these operations''. 
This statement demonstrates a lack of awareness for the input 
that BLM staff have on notice level operators in Alaska. It 
must first be noted that many operators scale their operations 
to stay just below the 5 acre annual disturbance threshold. In 
order to stay below this threshold year after year, reclamation 
must be conducted concurrently in such a fashion that the total 
unreclaimed acreage does not exceed 5 acres. The BLM authorized 
officer is the one that makes the determination as to when the 
reclamation is sufficient. To work toward this end, miners make 
frequent visits to BLM offices in the winter to work with BLM 
staff on permit applications and notices. Mining plans are 
developed to accommodate the requirements of the BLM staff. BLM 
staff make field visits in the summer and work with the 
operator depending upon what equipment and resources are 
available. No notice level operator is allowed to continue the 
next year under a notice unless the prior years reclamation is 
completed to the satisfaction of the BLM staff. Thus BLM staff 
clearly have significant input to notice operations in Alaska. 
That the Secretary would just a couple a months ago contend 
otherwise demonstrates that the policies embodied in the recent 
Final Rule are not being driven by current information.
    In stark contrast to statements from BLM headquarters, 
unfunded liabilities are not a significant issue in Alaska and 
BLM staff do in fact have considerable input to notice 
operations. These are just a couple of examples, but in order 
to allow BLM policy to be based on current data rather than 
suppositions, it is apparent that BLM should gather additional 
information before proceeding with a Final Rule.

    The Final Rule has substantive changes that could not have 
been anticipated from the proposed rule.

    The Final Rule has substantive changes that could not have 
been anticipated from the proposed rule. To highlight just too 
examples, I will review bond amounts and the type of financial 
instruments allowed.
    The proposed rule had a maximum bond amount of $2,000 per 
acre. The Final Rule has a minimum bond amount of S2,000 per 
acre with a maximum of 100% of estimated reclamation costs. 
This is a major change in approach, from one of a cap on 
potential bonding liability, to one that is completely open-
ended. In light of the BLM's stated desire to rewrite the 
reclamation standards, this open-ended nature becomes even more 
significant. Then in addition, reclamation costs must be 
calculated as if third party contractors were performing the 
reclamation after the site is vacated by the operator. In 
addition, the calculation must be certified at operator expense 
by a third party professional engineer. Each of these changes 
are substantive in themselves. Taken together, the effect is to 
raise the bond amount to a prohibitive level. To evaluate this 
effect on many operators in Alaska, it is important to note the 
logistics of typical sites in Alaska, including many that I 
personally worked at. Many have no road access. Access can be 
by many miles of winter trail, passable only when the ground is 
frozen. Often a barge trip along a river or the coast is 
required before the winter overland travel can begin. This 
might mean starting travel many months before any work could be 
conducted on the claims.
    Now consider the types of bonding instruments allowed. The 
proposed rule allowed a first-lien security interest for mining 
equipment and first-lien security interests for real property, 
including mining property. The Final Rule eliminated both of 
these options. For many of the small operators in Alaska, 
mining equipment and mining property are their major assets. 
Thus in this Final Rule, not only would the bonding amount be 
calculated completely different, but the assets most likely 
available to the miner to meet the bond are eliminated from 
consideration. This is indeed a substantive change that demands 
further review.

    Inappropriate to promulgate the Final Rule when revision of 
3809 regulations are pending.

    It is inappropriate to promulgate the Final Rule when 
review of the entire 3809 regulation is pending. On February 
25, 1997 BLM announced a task force to address (1) the use of 
best available technologies to prevent unnecessary and undue 
degradation of public lands; (2) performance standards for the 
conduct of mining and reclamation activities; (3) alternatives 
to the current exemption from reclamation standards for mining 
operators of five acres or less; and (4) ways to improve 
coordination between the BLM and state regulatory programs. 
According to the press release, BLM expects these issues to 
generate sufficient public interest and have effects 
significant enough to justify an EIS. It is therefore 
inappropriate for these same issues to be included in the 
present bonding rulemaking without similar solicitation and 
evaluation of public input.
    Existing 3809 regulations allow release of bonds in 
accordance with the approved plan. The Final Rule establishes a 
new policy that would release 60% of the bond upon 
``backfilling, regrading, establishment of drainage control, 
and stabilization and neutralization of leach pads, heaps, 
leach bearing tailings. The remaining 40% would be released 
only upon revegetation to establish a diverse, effective, and 
permanent vegetative cover and until any effluent discharged 
from the area has met, without violations and without necessity 
for additional treatment, applicable effluent limitations and 
water quality standards for not less than 1 full year.'' This 
language does not exist in the present 3809 regulations. Are 
these not new performance standards for the conduct of mining 
and reclamation activities? Are these not the same issues 
identified for the task force to review? In fact they are and 
it is premature to include them in a Final Rule at this time 
without full NEPA review.
    Similarily, existing 3809 regulations exempt compliant 
notice operators from bonding provisions. Not so with the Final 
Rule, which would require bonding to the full cost of 
reclamation of all notice operators and would not release such 
bonds until the new reclamation standards had been achieved. 
Are these not alternatives to the current exemption from 
reclamation standards for mining operations of five acres or 
less? Are these not the same issues identified for the task 
force to review? In fact they are and it is premature to 
include them in a Final Rule at this time without full NEPA 
review.
    The full 3809 review is also supposed to address ways to 
improve coordination between the BLM and state regulatory 
programs. It is clear that in the Final Rule, BLM does not have 
a good understanding of Alaska's successful reclamation law and 
bonding pool program. We encourage improved coordination in 
this regard. But if such an effort is important enough to be 
cited as an objective of the task force, to be conducted with 
full NEPA review, it should be completed in that forum and not 
bypassed by a six year stale rulemaking

    There was an inadequate analysis of the economic impact.

    BLM has inadequately analyzed the economic impact of the 
Final Rule. As stated above, BLM has not correctly considered 
the cost of getting third party equipment to remote Alaska 
sites. For notice operators, BLM assumed 2.5 acre disturbance 
per notice and $2,500 per acre reclamation costs. Last year I 
paid $2,300 just to haul a small bulldozer to and from a mining 
property that was on the road system. Access to remote Alaska 
sites by barge, winter trail, or air would be many times more 
expensive. Clearly BLM has missed by an order of magnitude the 
cost of transporting the equipment, let alone completing any 
work once on site. Contractors sending equipment to remote 
areas of Alaska for major parts of a year will demand standby 
rental rates that dwarf BLM's assumptions. A medium sized 
bulldozer will rent in Alaska for $10,000 to $15,000 per month 
and several months rental drives the calculated third party 
costs far beyond those estimated by BLM.
    Another inadequate economic analysis involves the BLM 
assumption that operators currently conducting plan level 
activities on mining claims that are excluded from State or 
native selections would relinquish their claims as a result of 
the new rule. BLM has not evaluated the economic impact to the 
operators who purportedly would relinquish their claims.
    BLM has inadequately estimated the cost to plan operators 
in Alaska. First, BLM incorrectly states that a statutory cap 
on bonds exists in Alaska when the bonding pool in fact 
provides full coverage. This again reflects a lack of 
understanding regarding the Alaska bonding program. 
Nevertheless, BLM estimates that plan operators will have to 
provide an additional $1,250 per acre in financial guarantees 
for a total of $470,000. For my operation alone, and since 
there is no assurance that the state bonding pool will be 
applicable, my company would have to come up with an additional 
$312,500. That is 66% of BLM's estimate for all of Alaska, and 
we are just one of 59 plans. Suffice it to say that BLM's 
economic analysis is inadequate.
    In trying to soften the blow of the Final Rule, BLM states 
that ``Again, in reality, the incremental costs associated with 
obtaining the surety would be...lower than the full value of 
the surety''. BLM incorrectly assumes that a surety could be 
obtained without collateralization of the full surety amount. 
Insurance agents in Alaska report that bonds are not available 
without full collaterization and then only for a limited 
duration, but not for the term of the lease or plan of 
operations.
    The BLM says that the proposal will not adversely affect 
investment or employment factors locally and any incremental 
cost associated with this rule will merely be absorbed without 
any effect. Certainly for my operation, there would be 
significant adverse effect and for many other operations as 
well there would be loss of jobs and economic activity in areas 
where there are few other job alternatives.
    BLM estimated that there will be a ``short term effect.. on 
approximately 498 notice operators nationwide, who when faced 
with the need to obtain a bond for reclamation will either move 
to other land, downsize their operations, or altogether cease 
activities.'' Given that BLM has underestimated the cost of 
reclamation using third party equipment it is clear that they 
have also underestimated the number of small entities that will 
be adversely affected.
    BLM estimated that the practical effect of the rule will be 
the ``removal of some properties from their inventory of 
holdings, making them available for other interested parties to 
develop. They may also quickly enter the marketplace and 
attempt to lease the operation out to a junior or major 
company...''. This statement demonstrates a lack of 
understanding about the structure of the Alaska industry. That 
notice operators are largely mom & pop operations is a function 
of that being all the properties can support. No junior or 
major company is interested in the meager cash flow generated 
by these small deposits. Any potential replacement operators 
are likely to be just as financially strapped as the originals. 
Thus the Final Rule is clearly designed to help usher the small 
operator out of business and the economic effect on the small 
operator has been grossly underestimated.

    Summary

    For the reasons cites above, the AMA believes that it was 
not provided the proper opportunity for meaningful comment 
prior to the rule becoming effective. On January 6, 1997. 
Secretary Babbitt announced the BLM has moved forward to 
complete ``a Final Rule on hardrock mine bonding to strengthen 
financial assurance requirements to meet reclamation 
responsibilities''. The Secretary also said ``It is plainly no 
longer in the public interest to wait for Congress to enact 
legislation.'' I submit that it is in fact Congress, not the 
Secretary, that should establish public policy in this regard. 
If Congress does not see fit to enact certain laws, on what 
basis does the Secretary gain justification for proceeding on 
his own? The AMA thinks that the recently issued Final Rule is 
flawed and we urge this Committee to do everything in its power 
to have it withdrawn.

                                ------                                


    Statement of Philip M. Hocker, President, Mineral Policy Center

    Chairman Cubin, members of the Subcommittee:
    My name is Philip M. Hocker; I am President of Mineral 
Policy Center. On behalf of the Center and of many other 
concerned citizens, I thank you for the opportunity to testify 
before this Subcommittee today regarding the Interior 
Department's issuance on 28 February 1997 of new bonding 
regulations for hardrock mining (``the new bonding rules '').

    Summary: ``The Tip of the Iceberg'' of 1872 Mining Law 
Reform:

    We support the publication of the new bonding rules. They 
are badly needed, and long overdue. The process by which they 
were promulgated has been adequate. We think the rules 
themselves are very weak and do not meet the Secretary's legal 
obligations to protect the public lands, but they are an 
important step forward. To put the rules and this hearing in 
context:
    These bonding rules are only the ``Tip of the Iceberg'' of 
reforming the 1872 Mining Law. We know much more lies 
underneath this beginning. Now that the berg is finally in 
motion, it must continue to move forward until all the pieces 
of comprehensive 1872 Mining Law reform are in place. Existing 
law gives the Administration the powers to accomplish important 
parts of this process; we urge the President and Secretary to 
use those powers vigorously. Still, some of the worst abuses 
the 1872 Mining Law makes legal--its giveaways of billions in 
gold with no royalty, its careless sale of valuable mineral 
lands for $5.00 per acre, and its free grant of a compensable 
``right to mine'' to anyone who can make a profit on the public 
lands--these can only be cured by Congress. I urge this 
Subcommittee to help this iceberg along by acting promptly to 
cure these abuses.

    Introduction:

    Mineral Policy Center is a nonprofit national citizens' 
organization of approximately 2,000 members. The Center is 
dedicated to the adoption of policies which serve the long-term 
national interest for environmentally-clean and fiscally-
responsible management of our mineral resources. The Chairman 
of our Board of Directors is Stewart L. Udall, who served with 
distinction in the House of Representatives, and as Secretary 
of the Interior from 1961 to 1969.
    Mineral Policy Center supports responsible mining in the 
United States and worldwide--mining which operates with sound 
environmental controls, mining which prevents environmental 
pollution while it is being conducted and which restores the 
lands after mining is finished, and mining which pays the 
American people a fair return for valuable public property 
which the industry exploits. Current laws do not ensure that 
all mining operations will meet those standards.
    Mining does cause massive, costly, enduring damage to the 
environment if not carefully controlled. Allowing mismanaged 
and irresponsible mining to continue damages both the 
environment, the Treasury, and the reputation of the many 
companies that are operating responsibly. Comprehensive reform 
is in everyone's best long-term interest.

    Information Required to be Disclosed:

    Mineral Policy Center's principal office is located at 1612 
K Street, NW, Washington, DC 20006. Our telephone number is 
202-887-1872--it's easy to remember. I am employed by the 
Center as its President and Executive Director. A summary of my 
professional qualifications and experience is attached to this 
testimony. Neither the Center nor I have received any financial 
support in the form of Federal grants or contracts since 
October 1, 1994.

    Adequate Bonding of Hardrock Operations is Needed:

    On 15 December 1992, a Canadian mining company gave the 
American people an early Christmas present: the Summitville 
Mine.
    The mining company walked away from its cyanide heap-leach 
gold mine site at Summitville, over 11,000 feet up in the 
Colorado Rockies, in the dead of winter. The U.S. EPA had to 
take over the site as an emergency measure, to keep the pipes 
from bursting and dumping millions of gallons of cyanide into 
the Alamosa River. Cyanide was not the worst of the Summitville 
Mine's environmental problems. That, together with acid mine 
drainage and copper-metal pollution caused by mining at the 
site, and other cleanup measures, will cost the American 
taxpayers more than $140 million dollars to repair. Those are 
dollars which cannot be spent to clean up Superfund sites in 
childrens' neighborhoods around the country, because there was 
not an adequate bond at the Summitville Mine.
    Mining has caused massive environmental damage in many 
areas of the United States. This is a problem of mining which 
is being done today, not just of mining in the past. Mining 
companies, not the general public, should be responsible for 
paying the costs of cleanup when mining sites cause pollution 
problems. America's largest Superfund site is a 120-mile 
section of the Clark Fork River in Montana. This site is 
contaminated with heavy-metal toxins left behind by sloppy 
mining in Butte. The most costly Superfund cleanup in the 
country has been projected to be the Torch Lake, Michigan, 
lakebed--smothered in the tailings dumped by copper mining 
operations. Copper is gravely toxic to aquatic life.
    The Iron Mountain Mine in California discharges, every day, 
waters which the mine has polluted with over a ton of copper 
and zinc metal. These waters have caused massive fish kills, 
contaminated water supplies, and polluted the environment. 
Costly action must be taken every day to keep these poisons 
from killing the salmon fishery in the Sacramento River. 
Officials predict that the discharge of pollution from the Iron 
Mountain Mine will continue for three thousand years.
    Adequate bonding is needed to protect the public from 
having to pay the massive costs of these cleanups. Bonding is 
an essential tool to ensure that the mining company, not the 
public, will take financial responsibility. Bonding is a 
preventive measure, not an after-the-fact process like 
Superfund.

    Bipartisan Background for the New Bonding Rules:

    Many studies and reports have demonstrated the need for 
improved bonding rules for Mining Law activities. The General 
Accounting Office (GAO) reported in ``Unauthorized Activities 
Occurring on Hardrock Mining Claims'' (August, 1990) that about 
1600 claims ``have known or suspected unauthorized activities 
occurring on them.'' In an earlier review of whether mining 
sites were being reclaimed, GAO reported that ``Of 246 sites 
that were inspected, 96 sites, or 39 percent, had not been 
reclaimed at the time of inspection.'' (``Interior Should 
Ensure Against Abuses from Hardrock Mining,'' March, 1986).
    The bonding rules which the Department of the Interior 
recently issued are based on action which was first proposed by 
the Bush Administration under Bureau of Land Management (BLM) 
Director Cy Jamison in 1991. The Bush Administration's proposal 
arose from a review of problems under the 1872 Mining Law, and 
a series of studies and Congressional hearings--such as the 
Oversight Hearing on 7 March 1989 on Mine Reclamation and 
Bonding which was held by this Subcommittee's predecessor under 
then-Chairman Rahall.
    The 1991 proposal to revise the Federal Regulations for 
bonding was an extension of earlier BLM agency action, 
including Instruction Memorandum 90-582, which recognized the 
need for increased financial assurance to protect the public 
from having to pay cleanup costs for irresponsible mining.

    Changes in State Requirements Since 1991

    The Subcommittee has invited comment on whether ``changes 
in State laws and regulations regarding reclamation make 
untimely the comments solicited [by DoI] in July, 1991.''
    It is true that there have been changes in state 
reclamation requirements and bonding rules since 1991. 
Yesterday, for example, the legislature of the State of Idaho 
raised the minimum bonding level in that state from $1,800 to 
$2,500. We have not had time to examine all changes in state 
reclamation laws and rules which may have occurred since the 
1991 comment period, but I am generally familiar with the 
progress that has been made in this area. Given the nature of 
the 28 February rules, and the nature of the concerns which 
were raised in 1991, I see no reason why comments made by any 
concerned interest group in 1991 would not still apply. Thus, I 
see no need for the Department of the Interior to have 
solicited fresh comments prior to issuing this final rule.
    Relevance of the Question: The new DoI bonding rules 
subordinate their requirements to relevant state requirements 
in many, we believe excessive, ways. Mineral Policy Center does 
not endorse this position. However, we note that the adoption 
of state reclamation rules is not being challenged here today. 
Since to a very large extent the new Interior rules allow state 
rules to be substituted for the new BLM requirements, there was 
clearly no need from the viewpoint of a mining operator for 
Interior to invite new comment after 1991 based on changes in 
state requirements. The operator is subject to state 
requirements in any event; the Interior rules make little 
change in that, so no new comment is needed.
    Bureau of Land Management's Responsibility vis-a-vis 
States: The Federal Land Policy and Management Act of 1976 
(FLPMA) requires the Secretary, and thus the BLM, to ``take any 
action necessary to prevent unnecessary or undue degradation of 
the lands.'' (Section 302(b)) The Interior Department's 
responsibility in this regard cannot be delegated to the 
states, though there may be inter-agency cooperation. BLM is 
obliged to base its bonding regulations on what is necessary 
for the Bureau to directly ensure that mining operators will 
provide financial resources to repair any damage they cause to 
the public lands.
    Shortfalls in State Regulations: Even if BLM did not have a 
unique responsibility, there are many significant gaps in state 
requirements which make them inadequate protection for the 
environment of federal lands. A few of the specific areas where 
state requirements fall short of minimum federal policy needs 
are:
    True Cost of Reclamation: The cost of reclaiming 
environmental damage at a mining site can be very large. 
Because cleanup of acid drainage or other water pollution may 
be required, the number of acres disturbed by a miner is often 
not a good gauge of the cleanup cost. The new BLM rules 
correctly require (except, unfortunately, for ``notice-level'' 
mining) that the financial guarantee be ``sufficient to cover 
100 percent of the costs of reclamation... calculated as if 
third party contractors were performing the reclamation after 
the site is vacated.'' This condition was requested in comments 
which the US Environmental Protection Agency, and many BLM 
staff, submitted on the draft rule which was proposed in 1991 
[according to Mine Regulation Reporter, 250ct91].
    However, the rules of many states only require a fixed or 
maximum amount of bond, calculated on a per-acre basis. Changes 
in state laws since 1991 have not removed this problem. Arizona 
passed a new mine reclamation and bonding law in 1994, but that 
law sets a maximum per-acre security level of $2,000, and 
allows discretionary reductions below that. Alaska allows 
miners, rather than posting any bond at all, to participate in 
a ``bonding pool,'' and the liability of the pool for 
reclamation is capped at $750 per acre. [llAAC 97.425(e)]
    Small-Acreage Operations: Small-acreage sites can create 
very costly or destructive environmental impacts, because size 
is not a good gauge of potential for damage. Nonetheless, some 
states do not require ``small operators'' to post any financial 
security. This leaves the public to bear the risk of 
substantial costs--to finance someone's hobby. Arizona exempts 
operations below five contiguous acres. [Sec. 49-1221] In fact, 
the Arizona law reassures miners by declaring ``Nothing in this 
chapter shall prevent an owner or operator... from creating a 
surface disturbance of five acres or less.'' [Sec. 49-1223] New 
Mexico exempts mines of two acres or less from bonding 
requirements.
    Scope of Comments vs. State Changes: The bonding 
regulations proposed in 1991 drew a large number and wide 
variety of comments. Some comments, including those of Mineral 
Policy Center, addressed broad policy issues relating to mining 
regulation. Others covered the specific impacts the proposed 
regulations might have on mining operators. These comments 
provided the Interior Department with public input which 
covered the entire scope of issues which needed to be addressed 
in regulations. The changes which have been enacted in state 
regulation in the intervening years have not created any 
qualitative change in the issues--any change which would 
require a reconsideration of issues not covered in the original 
proposal and comments.

    Opportunity to Comment in 1991:

    The Interior Department gave widespread public notice in 
1991 that new rules regarding bonding of hardrock mining 
operations were planned. The draft rules were published in the 
Federal Register on July 11th. The deadline for comments was 
extended from 9 September to 9 October 1991. The rulemaking 
proposal was widely discussed in both mining industry trade 
publications and in environmental organization circles.
    Mineral Policy Center submitted comments on the proposed 
rules in 1991. We felt that the rules proposed in 1991 were too 
weak to protect the public interest. We also felt that rules 
for bonding in isolation had limited usefulness, and that the 
underlying reclamation standards and permitting process in 43 
CFR 3809 needed to be revised to make new bonding meaningful.
    Many of the concerns the Center submitted in our comments 
1991 still apply to the final rule as issued. This 
Subcommittee's letter of invitation to testify asked whether 
the Center was ``given a meaningful opportunity to comment 
before publication of the final rule.'' I would have to say 
``yes, we were'' given that opportunity, since the comments we 
formally submitted still apply to the final rule.

    Content of the New Bonding Regulations, and the Need for 43 
CFR 3809 Revision:

    Mineral Policy Center commented in 1991 that the bonding 
rules which were proposed by BLM Director Jamison then were 
``like building a three-legged stool which is equipped with 
only one leg--and a short leg, at that.'' We commented that 
protecting the public interest required:
    * Covering all impacts from activities conducted pursuant 
to the 1872 Mining Law, including those of ``notice-level'' 
operations at any size, as well as casual use;
    * Establishing standards for the work to be covered by 
bonds, which would include water-quality protection and a 
definition of ``reclamation'' which would strengthen and 
clarify the weak and vague definition in the existing 
regulations at 43 CFR Sec. 3809.0-5(j).
    * Requiring that bonds be posted in liquid form readily 
accessible to the land manager.
    While the 28 February 1997 rules improve on the 1991 
proposal, none of the tests we called for in 1991 has been met. 
These new bonding rules still fail to protect the public 
interest, and they still fail to meet the Secretary's 
obligations under FLPMA.
    The complete body of rules adopted in 1980 under 43 CFR 
3809 are not adequate; these new bonding regulations only 
marginally improve that. We hope the revision process announced 
by Secretary Babbitt, to require ``best available technology 
and practices'' as a means to prevent ``unnecessary or undue 
degradation'' will be more effective than these bonding rules.

    Conclusion

    Madame Chairman, I thank you for inviting me to testify on 
this important subject. I look forward to working with you and 
the Subcommittee on these issues as the Administration proceeds 
with long-overdue overhaul and strengthening of the Code of 
Federal Regulations sections that apply to hardrock mining.
    As I said at the opening of my statement, these bonding 
rules are only the ``Tip of the Iceberg'' of reforming the 1872 
Mining Law. They must be supported by additional regulatory 
reforms adopted by the Interior Department as soon as possible. 
The Congress must also assist this process by passing 
comprehensive legislation to reform the 1872 Mining Law. I urge 
this Subcommittee to help accelerate this process, by 
scheduling hearings on H.R. 253, the comprehensive reform bill 
Representatives Miller and Rahall have introduced, as well as 
holding hearings on the other bills pending that address 
hardrock mining issues.
    $32 to $72 Billion Dollars is the estimate which Burden of 
Gilt, Mineral Policy Center's 1993 study, calculated must be 
paid to clean up the accumulated legacy of environmental 
destruction from hardrock mining. Bonding will not pay for that 
history, but it will keep it from growing in the future.
    I would like the record to show my deep thanks to Heather 
Langford and Sarah Dawson, of Mineral Policy Center's staff, 
for the important assistance they gave me which made it 
possible to compile and present this testimony.
    I would be pleased to respond to questions.

                               *    *   *

    Attachments to Statement: ``Mine's toxic leaks render river 
lifeless,'' The Denver Post, 11Nov91; ``Bankrupt mine costly to 
EPA,'' The Denver Post, 24Dec92; Philip M. Hocker--a brief 
biographical description.

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