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



 
                       HARDROCK MINING OPERATIONS

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY
                         AND MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

           Final Bonding Rule for Hardrock Mining Operations

                               __________

                     JUNE 19, 1997--WASHINGTON, DC

                               __________

                           Serial No. 105-24

                               __________

           Printed for the use of the Committee on Resources


                                


                      U.S. GOVERNMENT PRINTING OFFICE
 42-787 CC                   WASHINGTON : 1997
------------------------------------------------------------------------------
                   For sale by the U.S. Government Printing Office
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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               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  LLOYD DOGGETT, Texas
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 June 19, 1997.......................................     1

Statements of Members:
    Christian-Green, Hon. Donna M., a Representative in Congress 
      from the Virgin Islands....................................     9
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming...........................................     1
        Prepared statement.......................................     4
    Gibbons, Hon. Jim, a Representative in Congress from the 
      State of Nevada............................................     7
    John, Hon. Christopher, a Representative in Congress from the 
      State of Louisiana.........................................     8
    Romero-Barcelo, Hon. Carlos A., a Delegate in Congress from 
      Puerto Rico................................................     5

Statements of witnesses:
    Glover, Jere, Chief Counsel, Office of Advocacy, U.S. Small 
      Business Administration....................................    12
        Prepared statement.......................................    42
    Leshy, John, Solicitor, U.S. Department of the Interior......    10
        Prepared statement.......................................    39

Additional material supplied:
    Letter from the SBA to BLM...................................    41



 FINAL BONDING RULE FOR HARDROCK MINING OPERATIONS ON BLM-ADMINISTERED 
                              PUBLIC LANDS

                              ----------                              


                        THURSDAY, JUNE 19, 1997

        House of Representatives, Subcommittee on Energy 
            and Mineral Resources, Committee on Resources, 
            Washington, DC.
    The Subcommittee met, pursuant to notice, at 1 p.m. in room 
1334, Longworth House Office Building, Hon. Barbara Cubin 
(chairman of the subcommittee) presiding.
    Mrs. Cubin. The Subcommittee on Energy and Mineral 
Resources will please come to order. I would like to welcome 
our guests to the hearing today.

 STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF WYOMING

    Mrs. Cubin. Today, the Subcommittee continues its oversight 
of the Department of Interior's decision to publish on February 
28th of this year a final rulemaking on bonding of hardrock 
mining operations on public lands administered by the Bureau of 
Land Management. We first looked into this matter on March 20th 
after publication of the rule, but before it became effective 
on March 31st.
    At the initial hearing, the Subcommittee did not have the 
paper trail that we have now, albeit I still have document 
requests that have not been honored to my satisfaction by the 
Department. However, from the materials in the Subcommittee's 
possession, there appeared to be sufficient information to 
conduct further inquiry into why the Secretary of Interior has 
allowed this rulemaking to become final after such a long lapse 
without any new public input.
    Furthermore, information from the Small Business 
Administration's Office of Advocacy, the keeper of the faith, 
so to speak, on small business and the economic impacts of 
rules that regulations make, appears to question the legitimacy 
of the Department's compliance in this matter.
    Consequently, I have asked the chief counsel for that part 
of the SBA to testify before us today as well as the Secretary 
of Interior's designated representative and assistant within 
the Department, who has played an important policy-advising 
role; at least it appears that it has been that way.
    Let me say at the outset that I apologize to the other 
members here that we had to cancel the hearing last week. All 
day long markups and then the next day when we had to vote 23 
or 24 times on the floor certainly affected all of our 
schedules, and, fortunately, the witnesses were local people so 
no one had to make a trip in from out in the country. So I do 
apologize for the delay.
    However, let me make it clear to everyone that I do not 
apologize for conducting this oversight hearing, regardless of 
the now pending lawsuit brought on behalf of a mining trade 
association and its members, many of whom are small miners. At 
least they are small miners as described in the definition of 
the Small Business Administration.
    Correspondence from the Secretary of the Interior to 
Chairman Young, as well as from Solicitor Leshy to me and to 
staff counsel on the Full Committee, echoed by the Ranking 
Member of the Full Committee, would have us believe that to 
conduct a congressional oversight hearing in matters for which 
the Secretary is now being sued somehow imperils the good of 
the Nation.
    I don't buy that, and neither does the Chairman, which we 
stated in our letter of June 11th to Mr. Miller. The filing and 
prosecution of the Northwest Mining Association v. Babbitt in 
U.S. District Court does not bar our inquiry. If that were so, 
practically speaking, no congressional oversight could ever 
occur, for like most agency heads, Secretary Babbitt is 
routinely named in litigation, probably about every week.
    To quote Shakespeare, ``Ah, that is the rub.'' Why is it 
that citizens have to bring a Federal court case to be heard on 
an issue? Clearly, it is because of an unresponsive bureaucracy 
that said, quote, paraphrase, ``no comments are necessary. We 
know what is best for you.'' Thank you very much.
    Well, it must come as a shock to the Secretary, but there 
are those who disagree with that, and because no comment period 
was allowed on the redone rule, what avenue does the 
disenfranchised public have left? The Secretary has steadfastly 
refused to withdraw the rule and seek public comment. Public 
comment in any rulemaking, as we all know, is the foundation of 
the laws that we have to live by. Public comment is the most 
important aspect of it, and I cannot for the life of me 
understand why we would take a 6-year-old rule, change it, and 
just try to force it down the throats of our constituents.
    The Secretary has refused to withdraw those rules despite 
the fact that at least two Democrat Governors, at least one 
senator, a State Attorney General, the Nevada legislature and 
the county commissioners representing the biggest mining in 
that region have joined me in requesting that the rule be put 
out for comment. It seems inane that a constituent has to go to 
the courts to be able to have some input on rulemaking.
    In apparent contradiction to a statement from the 
Department that the Bureau of Land Management has reported no 
problems in implementing the rule, Governor Miller of Nevada 
has had to seek an amendment to the State law to try to fix the 
statewide bonding pool to fit the new regulatory requirements 
of the BLM in order to provide relief for small miners in his 
State.
    As our colleague, Jim Gibbons knows, Nevada has a biennial 
legislature, and unless they act fast, small miners out there 
could be left without any access to the pool for another 2 
years.
    I guess the BLM's ``no problems'' remark must mean that the 
Feds don't have any problems; they are doing fine. It is only 
the State legislators and the folks they represent that are 
having problems. And the pity is that the Department merely had 
to ask for comments to learn this beforehand rather than after 
the fact.
    Likewise, the new requirement for professional engineers to 
certify the calculation of reclamation costs has brought howls 
of protest by those who are unable to find engineers who are 
willing to do that. Is it a bad idea to require professional 
engineers certification? I don't know. That wasn't the 
question, but certainly it wasn't contemplated back in 1991 
when the Bush Administration published the proposed rule. So 
why would anyone have anticipated a need to tell the agency 
about it? No one at the receiving end of the proposed rule did 
that I can see, but somewhere along the line this 
Administration's policymakers decided it was necessary to keep 
the miners honest.
    Besides cost recovery concepts mandate mining operators 
either pay the BLM's own engineers to review such data, or they 
go outside and pay for government contractors, in essence, to 
do BLM's work. Again, let me emphasize that my complaint is 
with the Secretary's refusal to take public comment on this 
idea, not on the certification requirement, per se, although 
there certainly seems to be logistical problems worthy of 
making an analysis. But, I didn't find one in the rulemaking 
materials I have seen, which adress this issue at all.
    Again, a simple comment period might have given the BLM a 
heads up on the reluctance of the professional engineers to put 
their names and reputations on the line when they don't seem to 
know just what it is that the Feds want them to certify.
    Let me finish by noting that just 2 weeks ago the Clinton 
Administration named as a runner-up small businessman of the 
year a gentleman from Idaho, who owns a pumice mining company. 
My staff contacted the individual, Mr. J. Marvin Hess, to find 
out if he fit BLM's alleged definition of a small business 
entity. Mr. Hess says his 95-employee operation is all on 
private land with reserves encompassing 240 leased acres and a 
mill on additional private land.
    If we were to calculate his operation as if he were on 
public land, he would clearly exceed the 10 claims or fewer 
threshold for the so-called small miner exemption which BLM 
says they used in their economic analysis. Yet, the government 
agency charged with identifying and rewarding such 
entrepreneurs, the SBA, has decided that Mr. Hess is the 
epitome of a small business entity. Go figure.
    For my money, I will take the SBA's assessment of small 
business over that of the Department of Interior any time, or 
at least the Small Business Administration's view of the 
adequacy of the Department of Interior's economic analyses, 
which by any standard falls woefully short. But the bonding 
rule is only the tip of the 3,809 mining regulations iceberg. 
Five-sixths of the Secretary's hardrock mining strategy lies 
below view waiting to sink a passing ship crewed by small 
miners.
    I hereby ask one more time for the Department to swallow 
its pride, admit it was wrong to rebuff the public comment, and 
publish a new rule and set out the time for public comment. 
Failing that happening, I pledge to continue our inquiry with 
an eye toward drafting generic legislation to prevent this type 
of rulemaking abuse in the future. Passage of the Small 
Business Regulatory Enforcement and Fairness Act in the last 
Congress has finally given citizens the opportunity to sue 
agencies for noncompliance with the Regulatory Flexibility Act.
    I welcome the lawsuit brought by those affected persons who 
were denied a voice in this rulemaking. I just find it a very 
sad state of affairs that they had to do it.
    [The statement of Mrs. Cubin follows:]

Statement of Hon. Barbara Cubin, a Representative in Congress from the 
                            State of Wyoming

    Today the Subcommittee continues its oversight of the 
Department of the Interior's decision 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. We first looked into this matter on 
March 20th, after publication of the rule but before it became 
effective on March 31st. At the initial hearing the 
Subcommittee did not have the ``paper trail'' we do now, albeit 
I still have document requests at the Department which have not 
been honored to my satisfaction. However, from the materials in 
the Subcommittee's possession there appeared to be sufficient 
information to conduct further inquiry into why the Secretary 
of the Interior has allowed this rulemaking to become final 
after such a long lapse without new public input.
    Furthermore, information from the Small Business 
Administration's Office of Advocacy, the keeper of the faith, 
so to speak, for the statutory requirement that agencies fully 
analyze the economic impacts of rules they make, appears to 
question the legitimacy of the Department's compliance in this 
matter. Consequently, I have asked the chief counsel for that 
part of the SBA to testify before us today, as well as the 
Secretary of the Interior's designated representative and a 
special assistant within the Department who has played an 
important policy-advising role--or so it appears.
    Let me say, at the outset, I apologize to our Members for 
having to reschedule last week's announced hearing on this 
issue. Day-long mark-ups of reconciliation legislation, and 
last Wednesday's all-afternoon floor voting affected so many 
schedules, including mine, as to require postponement. 
Fortunately, our witnesses were all local.
    However, let me make clear to all, I do not apologize for 
conducting this oversight itself, regardless of the now-pending 
lawsuit, brought on behalf of a mining trade association and 
its members--many of whom are small miners (at least under the 
definition of the term as prescribed by the SBA). 
Correspondence from the Secretary of the Interior to Chairman 
Young, as well as from Solicitor Leshy to me and to staff 
counsel on the Full Committee, echoed by the Ranking Member of 
the Full Committee, would have us believe that conduct of 
Congressional oversight in matters for which the Secretary is 
now being sued somehow imperils the good of the Nation.
    I don't buy it, and neither does Chairman Young, as per his 
reply letter of June 11th to Mr. Miller. The filing and 
prosecution of the Northwest Mining Association v. Babbitt 
litigation in U.S. District Court does not bar our inquiry. If 
it were so, practically speaking, no Congressional oversight 
could occur, for like most agency heads, Secretary Babbitt is 
routinely named as a defendant in litigation every week.
    To quote Shakespeare, ``Ah, there's the rub.'' Why is it 
that ordinary citizens must bring a Federal court case to be 
heard on this issue? Clearly, its because an unresponsive 
bureaucracy said ``No comments are necessary, thank you very 
much. We know best who will be impacted and by how much.'' 
Well, it must come as a shock to the Secretary, but there are 
those who disagree. And, because no comment period was allowed 
on the redone rule, what avenue for the disenfranchised public 
was left? Why, the other two co-equal branches of government, 
Congress and the judiciary. The Secretary has steadfastly 
refused to withdraw the rule and seek public comment. He has 
done so despite the fact that at least two Democrat Governors, 
at least one Senator, a State attorney general, the Nevada 
legislature, and the county commissioners representing the 
biggest gold mining region in the country, joining me in 
requesting the rule be proposed for comment.
    In apparent contradiction to a statement from the 
Department that the Bureau of Land Management has reported no 
problems in implementing the rule, Governor Miller of Nevada 
has had to seek an amendment to State law to try to fix the 
statewide bonding pool to fit the new regulatory requirements 
of the BLM in order to provide relief for small miners in his 
State. As our colleague Jim Gibbons knows, Nevada has a 
biennial legislature, and unless they act fast, small miners 
out there could be left without access to the pool for another 
2 years. I guess the BLM's ``no problems'' remark must mean the 
feds are doing fine--only the State legislators, and the folks 
they represent, are having any problems.
    And the pity is that the Department merely had to ask for 
comments to learn this beforehand rather than after the fact. 
Likewise, the new requirement for third party professional 
engineers to certify the calculation of reclamation costs has 
brought howls of protest by those unable to find engineers 
willing to do so. Is it a bad idea to require P.E. 
certification? I don't know, but it surely wasn't contemplated 
back in 1991 when the Bush Administration published the 
proposed rule. So, why would anyone have anticipated a need to 
tell the agency about it? No one at the receiving end of the 
proposed rule did that I can see, but somewhere along the line 
this Administration's policymakers decided it was necessary to 
keep the miners honest. Besides ``cost recovery'' concepts 
mandate mining operators either pay BLM's own engineers to 
review such data, or they go outside and pay for government 
contractors, in essence, to do BLM's work. Again, let me 
emphasize my complaint is with the Secretary's refusal to take 
public comment on this idea, not the certification requirement, 
per se, although there certainly seems to be logistical 
problems worthy of an analysis. But, I didn't find one in the 
rulemaking materials I've seen which address this issue at all. 
Again, a simple comment period might have given the BLM at 
heads up on the reluctance of professional engineers to put 
their names and reputations on the line when they don't seem to 
know just what it is the feds want them to certify.
    Let me finish by noting that just 2 weeks ago the Clinton 
Administration named as a ``runner-up'' for ``small businessman 
of the year'' a gentleman from Malad, Idaho, who owns a pumice 
mining company. My staff contacted this individual, a Mr. J. 
Marvin Hess, to find out if he fit BLM's alleged definition of 
a ``small business entity.'' Mr. Hess says his 95-employee 
operation is all on private land with reserves encompassing 240 
leased acres and a mill on additional private land. If we were 
to calculate his operation as if it were on public land he 
would clearly exceed the ten claims or fewer threshold for the 
so-called small miner exemption which BLM says they used in 
their economic analysis. Yet, the government agency charged 
with identifying and rewarding such entrepreneurs--the SBA--has 
decided Mr. Hess is the epitome of a small business entity. Go 
figure. For my money, I'll take the SBA's assessment of the 
small business community over that of the Department of the 
Interior, or at least the SBA's view of the adequacy of DoI 
economic analyses, which by any reasonable standard falls 
woefully short.
    But the bonding rule is only the tip of the ``3809 surface 
management regulations'' iceberg. Five-sixths of the 
Secretary's ``hardrock mining strategy'' lies below view 
waiting to sink a passing ship crowed by small miners. I hereby 
ask one more time for the Department to swallow its pride, 
admit it was wrong to rebuff public comment, and publish the 
rule anew. Failing that happening, I pledge to continue our 
inquiry, with an eye toward drafting generic legislation to 
prevent this type of rulemaking abuse in the future. Passage of 
the Small Business Regulatory Enforcement and Fairness Act in 
the last Congress has finally given citizens the opportunity to 
sue agencies for noncompliance with the Regulatory Flexibility 
Act. I welcome the lawsuit brought by those affected persons 
who were denied a voice in this rulemaking. I just find it a 
very sad state of affairs that it has become necessary.
    I now recognize our Ranking Member, Mr. Romero-Barcelo, for 
any opening statement he may wish to give.

    Mrs. Cubin. Now, I welcome the Ranking Member, Carlos 
Romero-Barcelo and ask for his comments.

   STATEMENT OF HON. CARLOS A. ROMERO-BARCELO, A DELEGATE IN 
                   CONGRESS FROM PUERTO RICO

    Mr. Romero-Barcelo. Thank you, Madam Chair. The last time I 
had a hearing, I made it clear that I thought everyone should 
have been given a chance and should be given a chance, an 
opportunity. However, on this occasion I think we have a 
different issue at hand and we are pleased to welcome Mr. John 
Leshy, the Solicitor General, the Department of Interior, back 
to the Resources Committee.
    Now, in light of the legislation that is now pending 
against the United States on the bonding rule, we have certain 
misgivings related to the conduct of this hearing and the way 
that the documents are being requested and will be made--
presented to be made public.
    Last week, immediately prior to the postponed hearing on 
this matter, the senior Democrat on this Committee, George 
Miller, wrote to Chairman Young raising a series of concerns on 
issues about whether it is appropriate to release these 
documents that have been identified by the Solicitor as 
privileged.
    Unfortunately, the Majority has apparently chosen to 
disregard these concerns and is proceeding against the wishes 
and advice of the Solicitor and the Democrats on the Committee. 
I refer to the Chair's intention as noted in the Majority 
staff's letter of June 9 to the Solicitor, to release or place 
in the public record a number of confidential documents related 
to the bonding rule which were provided to the Committee by the 
Department of Interior.
    According to Congressman Miller's letter to the Chairman 
and advice from the Solicitor, Mr. Leshy, the release of 
documents transmitted to the Committee and related to the 
bonding rule which have been identified as privileged may 
jeopardize the fiscal and environmental interest of the United 
States independent litigation. Therefore, it is my duty to 
object to unanimous consent to use or include these privileged 
documents in the public record of this hearing.
    The only way that they should be used is if a vote is taken 
and then the Committee votes and the Majority have those 
documents to be made public so those proposed documents being 
made public could also be put on record that they oppose it, 
and also give the authority to the Department of the United 
States, the Solicitor General, to say these documents were made 
public upon, over and above their opposition, which then would 
allow them perhaps to litigate the issue in the court.
    Whereas, by not having this document made public without 
any objection, without going through a vote on the Committee, 
may give the court the opportunity to say that the issues have 
been waived and therefore that the documents can be used in the 
litigation. These documents were provided at the request of the 
Subcommittee Chair prior to the Northwest Mining Association 
suing the Secretary or the BLM's regulations, and now that the 
litigation has been filed, it is clearly inappropriate for the 
Subcommittee to release or make public the privileged 
documents.
    As Mr. Miller stated, to do so could create the impression 
that the Majority is using the power of Congress to conduct 
discovery for the mining industry, obtaining and disclosing 
materials that would not otherwise be available through the 
normal judicial process. To truly represent the interests of 
the public, we should focus our interests in this matter on the 
substance of the rule, not individual questions relating to the 
release of confidential documents. We must be mindful of the 
purpose of the bonding rule, because even if the Department 
erred substantively, the intent of the rule is clearly in the 
best fiscal and environmental interest of the United States and 
its citizens.
    The rule in question embodies the polluter pays principle. 
Under this rule, BLM requires all miners to hold financial 
bonds or guarantees for a full 100 percent of the cost of 
restoring public land that their activities have disturbed. And 
this is a significant change from the previous policy that 
exempted miners disturbing less than 5 acres of public land 
from providing proof of such protection.
    I am sympathetic to the plight of small miners operating on 
5 acres or less who find it difficult to find bonds to cover 
$1,000 per acre. However, this is the approximate dollar amount 
the BLM would need to clean up an area after an irresponsible 
miner who leaves an area without reclaiming the land. 
Therefore, in the interest of both the polluter pays and the 
cost recovery policies, it is not unreasonable for the 
government to require this amount.
    Reclamation is required to ensure that environmental 
damage, such as acid mine drainage and ground and drinking 
water contamination does not occur. Reclamation ensures that 
the land can be used for other uses like recreation after 
mining is complete. American taxpayers have too long borne the 
cost of cleaning up after unscrupulous miners and the bonding 
rule will ensure that the cost of cleaning up the disturbance 
caused by mining will be placed squarely on the mining 
communities' shoulders where it belongs.
    Mr. Leshy, Mr. Alberswerth, and Mr. Glover, we look forward 
to hearing from you. Thank you.
    Mrs. Cubin. Thank you. I do have to take a little 
Chairman's privilege here. I want to make it very clear that my 
objection to what is happening here is not the content of the 
rule. That is beyond my authority. My job is to see that the 
process is carried out and that the people of the United States 
of America have their right and avenue to have input into what 
happens to them into their government. It is strictly the 
process that I am addressing.
    I also have to point out that the lawsuit hadn't been 
signed when we had our first hearing, or the lawsuit hadn't 
been filed, and that is true. But I have to point out that 17 
hearings on the Endangered Species Act have taken place, while 
there are more than 200 lawsuits pending with documents being 
freely brought to the congressional committees and to the 
public. Now, I would like to ask Mr. Gibbons if he has an 
opening statement.

  STATEMENT OF HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF NEVADA

    Mr. Gibbons. Thank you very much, Madam Chair, and I would 
like to thank the gentlelady from Wyoming for her leadership on 
this Committee, her willingness to undertake a discussion, I 
think, which clearly demonstrates her understanding of the 
importance of this issue. These are important times. They are 
important times for the people of the United States, and they 
are important times especially for the people of the district 
that I represent in Nevada. And it has come to my attention, 
and it is my belief that the final rule on BLM hardrock bonding 
requirements is detrimental and unneeded.
    I would like to take a moment to dissect the issue before 
us today with information provided to me by the Nevada State 
legislature. The Bureau of Land Management proposed on July 
11th, 1991, to amend its policies governing bonding 
requirements for reclamation for mining operations on public 
land as set forth in the regulations involving surface 
management in Subpart 3, 3809, Supp., Code of Federal 
Regulations. However, the BLM recently adopted those proposed 
regulations with the publication of a final rule on February 
28th, 1997.
    Approximately 5\1/2\ years later, the newly amended 
regulation took effect on March 31st, 1997, and continued new 
policies that were not a part of the policies proposed on July 
11th, 1991, including requirements for certification of 
reclamation cost estimates by a third party professional 
engineer. It is also my understanding that the general public 
was not apprised of the substance of the final version of the 
regulation and the significant issues involved, and therefore 
had no opportunity to comment on the new policies included in 
the final rule, therefore violating the Administrative 
Procedures Act.
    It becomes very relevant to me and to the people of Nevada 
that this final rule has a negative impact on large and small 
miners, their suppliers, contractors, as well as the economy. 
With no opportunity for comment and with no increase in Federal 
funding, the final rule is increasing the workload for agencies 
in the State of Nevada that administer programs in the areas of 
environmental protection and minerals. Even more distressing 
and just as important is the circumvention of the Tenth 
Amendment of the United States Constitution.
    The final rule to place the BLM in the place of enforcing 
criteria for water quality, a task that rightfully belongs to 
the State Department of Conservation and Natural Resources, 
pursuant to the Nevada revised statutes as well as the Clean 
Water Act. Further, the BLM has provided no documentation or 
evidence of problems regarding the failure of miners to carry 
out required reclamation efforts in the State of Nevada and 
under existing State bonding requirements, and I believe that 
the BLM has acknowledged that Nevada is a leader in 
reclamation.
    Likewise, immediately after our last hearing on this issue, 
I was informed that all State bonding requirements within the 
last 2 to 5 years have properly ensured that miners carried out 
their reclamation requirements. If this is true, then why would 
we need this new rule?
    I am looking forward to the opportunity of discovering 
whether the BLM has successfully met all obligations that are 
required of a Federal agency before publishing a final rule. I 
will begin to ask the Secretary to withdraw the final rule for 
bonding requirements for reclamation of hardrock mining 
operation on public lands and open up the process to its 
established and intended requirements. And thank you, Madam 
Chairman.
    Mrs. Cubin. Thank you. Mr. John, do you have an opening 
statement?

    STATEMENT OF HON. CHRISTOPHER JOHN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. John. Just a brief opening statement. I, too, with 
respect to Mr. Gibbons want to look at this proposed rule and 
look at the merits, whether they are good or bad. But I think 
what we are looking at here is the substance of the proposed 
rule, whether it is good or bad, should be voted on on its 
merits and to, I believe, compromise some of the situations 
that we are looking at as far as some of this privileged 
information, and giving away our hand, we need to look very 
closely at that. And I am looking at this information requested 
by the Department to stay out of the public, which could really 
compromise our situation. So I am looking carefully at that.
    Mrs. Cubin. Thank you, Mr. John. My reaction to that is the 
assertion that they are making that somehow their position will 
be compromised by releasing the documents to us doesn't stand 
up to me, and that is because when they go to court, the judge 
will determine what documents will or will not be entered into 
the case. So what we have here in the public record or what we 
use may or may not be allowed in the court case, depending on 
how the judge would like it.
    Mr. Romero-Barcelo. Madam Chair, our concern is that the 
judge's decision can be based on whether the document has been 
made public or not, and we don't know how the judge is going to 
base his decision. As an attorney, I know in the case of 
privileged documents, in privileged matters, sometimes not 
having raised an objection in due time, you are deemed to waive 
it, and others not. So we don't know how the judge is going to 
rule. The Department is trying to save its position in terms 
that they consider these documents privileged, that if they are 
going to be released, that at least it would be because the 
Committee has a right to do it, but it has a right to do it by 
a vote.
    I don't think it should be released without bringing it up 
to a vote, so that those members of the Committee that want to 
vote against it can vote against it, and at least that would 
allow the Department to defend itself and raise its position in 
the court with more substantial documents. I think that is what 
we are trying to establish here.
    Mrs. Cubin. I think at this time I will not ask to put the 
documents in the record, but I reserve the right to do that 
later on in the hearing. I am astounded by the fact that the 
government is taking the Fifth here. It is just amazing to me 
that we have a government that cannot share with its people 
what it has done and what it is doing.
    Mr. Thornberry, do you have an opening statement?
    Dr. Green?

STATEMENT OF HON. DONNA M. CHRISTIAN-GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE VIRGIN ISLANDS

    Ms. Christian-Green. Thank you, Madam Chair, for giving me 
the opportunity to make a few brief opening remarks. We are 
here today to once again discuss the concerns raised by the 
Bureau of Land Management's final rulemaking on hardrock mining 
on public lands, and in particular, the requirement that all 
mining operators be required to obtain bonds or financial 
guarantees.
    As you know, Madam Chair, the Subcommittee held a hearing 
on this issue on March 20th of this year. At that time, the 
Department of Interior's Solicitor, John Leshy, testified that 
the proposed rule was necessary for BLM to meet its legal 
obligation to prevent unnecessary or undue damage to public 
land. Without the proposed changes to the rule, BLM would have 
to use taxpayer dollars to reclaim public lands in cases where 
mining claims and other operators failed to live up to their 
legal obligations.
    So I thank you, Madam Chair, for yielding me this time and 
I look forward to working with you and the Subcommittee. I feel 
this rule is unjust and we do appreciate the gentlelady's 
decision not to make public those documents at this time 
because I agree with my Democratic colleagues, that they are 
sensitive documents, they are privileged, and they are now 
involved in ongoing litigation.
    Mrs. Cubin. Mr. Brady.
    Mr. Brady. No statement.
    Mrs. Cubin. Mr. Cannon, did you have an opening statement?
    Mr. Cannon. No, thank you.
    Mrs. Cubin. Having concluded that portion of the hearing, I 
now would like to introduce our witnesses and thank them very 
much for being here and again apologize for the fact that we 
had to cancel that hearing last week.
    Mr. John Leshy, the Solicitor of the U.S. Department of 
Interior is with us here today; Mr. David Alberswerth, a 
Special Assistant to the Assistant Secretary for Land 
Management, and Mr. Jere Glover, Chief Counsel, the Office of 
Advocacy of the Office of Small Business Administration.
    As you three know, I routinely swear in witnesses who 
testify in front of this Committee, so before we start, I would 
like to do that. If you would stand and raise your right hand.
    [Witnesses sworn.]
    Mrs. Cubin. So, I think we will start the testimony with 
Mr. Leshy.

  STATEMENT OF JOHN LESHY, SOLICITOR, U.S. DEPARTMENT OF THE 
INTERIOR ACCOMPANIED BY DAVID ALBERSWERTH, SPECIAL ASSISTANT TO 
THE ASSISTANT SECRETARY FOR LAND AND MINERALS MANAGEMENT, U.S. 
                   DEPARTMENT OF THE INTERIOR

    Mr. Leshy. Thank you very much, Madam Chair and members of 
the Committee. I am here today once again to discuss the final 
rule on bonding for hardrock mining operations. With me is 
David Alberswerth, Special Assistant to the Assistant Secretary 
for Land and Minerals Management.
    I will be very brief and then we can go to questions. I 
just want to update the Subcommittee on various matters 
concerning the hardrock bonding rule which have occurred since 
the last hearing on March 20th. Before I do that, let me say 
there were several comments made in the opening statement which 
seemed to indicate that there had been no public comment or 
public participation in the development of this rule, and I 
just want to make sure that everyone understands that this 
rule, and as I went in some detail in my testimony on March 
20th, the evolution of this rule goes back to the Reagan 
Administration.
    There were scoping sessions and a long public comment 
period and many comments received on this rule. Those comments, 
as typical, were analyzed and taken into account in the 
development of the final rule, so this was from our standpoint 
a perfectly normal rulemaking process governed by the 
Administrative Procedure Act where there was a substantial 
period for public comment, that public comment was meaningful 
and taken into account in the final rule.
    The fact that there was a period of delay between the 
publication of the proposed rule and the publication of the 
final rule, again, in our view was perfectly normal, explained 
by the fact that at least during a part of that time Congress 
was actively reforming the mining law of 1872, and we felt it 
would be confusing to come out with a final rule in the midst 
of that debate.
    The rule was published in final form on March 30th and went 
into effect April 30th, and we have asked the BLM to keep an 
eye on the implementation of that rule. It has now been in 
effect for nearly 3 months. The BLM is reporting from various 
field offices that the rule is going into effect normally 
without any reports of major difficulty. Obviously, there is 
some change involved with the upgrading of the bonding 
standards, although I should know in a number of Western States 
there is no change at all because the new final bonding rule is 
no more stringent than existing State law, which already 
governed. So in a number of places, the implementation of this 
rule simply means no change at all.
    In at least one State, a State legislature has amended its 
State law to make it consistent with the bonding rule, so again 
in that State there is really no difference in between before 
the rule and after rule went into effect. That amendment, I 
think in Idaho, requires full cost bonding for hardrock mining 
operations just as this rule does.
    BLM is continuing its efforts to advance the mining 
industry's understanding about the rule and what is needed to 
comply with it. It is using, among other things, the Internet 
for this purpose. In Alaska, which is a State that has an 
active hardrock mining industry, the BLM has been working 
closely with the State of Alaska to develop a Memorandum of 
Understanding between the State and Federal Governments.
    Hopefully, that is not final yet, but hopefully it will be 
put in final and it will allow the miners in that State to use 
the bond pool that is available under State law to satisfy the 
requirements of the rule. So from our standpoint, as with any 
new rule, obviously there is sort of a startup, implementation 
period.
    We are in that period now without major, major difficulty. 
Some of the features of the rule, as I explained last time, are 
actually implemented in a phased manner. They do not all apply 
to small miners immediately. There is a startup period, and so 
it is proceeding basically pretty normally. Nothing unexpected 
in the implementation of this rule.
    The second thing I would mention by way of update is the 
lawsuit that was filed on May 12th by the Northwest Mining 
Association represented by the Mountain States Legal Foundation 
against the rule alleging that the rule, the Department in 
promulgating the rule failed to comply with the Administrative 
Procedure Act and the regulatory flexibility ability and that 
lawsuit is proceeding. We are defending the lawsuit because we 
believe we have fully complied with the law, and eventually the 
court will answer the question of whether we have or have not.
    The last thing I would say is while there has been concern 
here expressed about the process the Department used in 
adopting the rule and not the substance of the rule, it is very 
clear that were the Department to withdraw this rule as some 
have requested, the effect would be that the taxpayer would be 
at risk of paying, rather than the miner paying when the miner 
walks away and leaves a mess on the public lands.
    So it is important, in our view, because we think we have 
fully complied with the law and because we think as the Bush 
and Reagan Administrations thought that upgrading of the 
bonding requirements are important in order to protect the 
taxpayer's interest in not being saddled with unnecessary costs 
and the industry should bear this cost, that this rule remain 
in effect. That concludes my prepared testimony. I, of course, 
will be happy to answer questions. Thank you.
    [The statement of Mr. Leshy can be found at the end of the 
hearing.]
    Mrs. Cubin. Thank you very much, Mr. Leshy. Mr. 
Alberswerth.
    Mr. Alberswerth. I have no statement, Madam Chair.
    Mrs. Cubin. Oh, Okay. Thank you. Mr. Glover.

 STATEMENT OF JERE GLOVER, CHIEF COUNSEL, OFFICE OF ADVOCACY, 
               U.S. SMALL BUSINESS ADMINISTRATION

    Mr. Glover. Thank you, Madam Chair. Good afternoon Madam 
Chair and members of the Subcommittee. I am Jere Glover, U.S. 
Small Business Administration. I appear to you today to discuss 
the regulatory flexibility compliance. With me today are 
Jennifer Smith and Shawne Carter McGibbon, two of my staff 
attorneys who have been advising me on this matter. As always, 
I would like to note the views of the Office of Chief Counsel 
are the views of the Chief Counsel and may not necessarily 
represent those of the Administrator of SBA or the 
administration.
    The Regulatory Flexibility Act establishes that agencies 
shall endeavor to fit regulatory and informational requirements 
to the scale of business organizations in the governmental 
jurisdiction subject to their regulation. Under the law, 
Federal agencies are required to determine whether the 
regulation has a significant impact on a substantial number of 
small businesses. Agencies also are required to consider 
flexible regulatory alternatives for small entities and ensure 
that the proposals are given serious consideration.
    The Office of Advocacy reviews approximately 2,500 rules 
and proposed regulations each year. Of those, we file comments 
on 97, which is over a 100 percent increase over the previous 
historical average for the office. We are in a period of 
transition for the Regulatory Flexibility Act.
    As the Chairwoman mentioned, when the Act was first enacted 
16, 17 years ago, there was no judicial review. As a result, 
many agencies did not fully comply with the Regulatory 
Flexibility Act.
    Last year, the Congress did pass remediation providing for 
judicial review of the Regulatory Flexibility Act. As a general 
rule, compliance by the Federal agencies had been spotty. Some 
agencies have been very good, some have not been very good, and 
often agencies that are very good are very bad on a specific 
regulation in a specific situation.
    We are in a transition period where many regulations had 
already been proposed and are now being finalized after the 
judicial review provisions have been provided. In those 
situations, I am in a somewhat embarrassing situation. For 
example, my office did not comment when this legislation was 
originally proposed on the certification in 1991. Quite 
frankly, many agencies did not--they considered certification 
an easy way out of compliance with the Regulatory Flexibility 
Act and agencies did that without depending on a specific 
agency. That was a fairly common occurrence.
    Since judicial review has come into place, this is 
obviously much more important. In terms of transition period, 
we are seeing things develop. For example, legislative history 
does not make it clear what is a substantial number of small 
businesses or what is a significant economic impact. Those are 
things that we are working with the agencies.
    In the case of the Department of Interior, like many other 
agencies, their compliance with the Regulatory Flexibility Act 
has been spotty. We have been working with them very closely. 
We have had over 600 government officials attend training 
seminars put on by our office trying to educate the government 
officials on the requirements of the Regulatory Flexibility Act 
and we are working very hard.
    We have had two such sessions with the Department of 
Interior personnel in just the last few months. So I think that 
the long-term view is that we will see far better compliance by 
all agencies of the Regulatory Flexibility Act, but certainly 
compliance is spotty from time to time. I would be happy to 
answer any questions you might have.
    [The statement of Mr. Glover can be found at the end of the 
hearing.]
    Mrs. Cubin. Thank you, Mr. Glover. I think we will go ahead 
and start with the questioning and we will limit it to 5 
minutes and then just do further rounds, I think. I do 
appreciate your coming to testify today. The Small Business 
Administration is like a breath of fresh air to us, and all of 
the jumps that you have to go through we so appreciate.
    Do I understand it correctly that the Advocacy Office of 
the SBA is rather autonomous and your testimony is not subject 
to editing by the Office of Management and Budget?
    Mr. Glover. That is true. It was not submitted to anybody 
before we submitted it to you.
    Mrs. Cubin. And did you send them the testimony anyway?
    Mr. Glover. After we sent it to you, we did send it to 
them. We routinely do that.
    Mrs. Cubin. And did OMB return any comments to you about--
--
    Mr. Glover. We did not send it to OMB at all. As a 
courtesy, we send it to the Federal agency that is going to be 
testifying with us and, quite frankly, we asked for their 
testimony.
    Mrs. Cubin. And you did not receive any comments back.
    Mr. Glover. We did not discuss the testimony at all.
    Mrs. Cubin. Okay. I will just go ahead. Mr. Cannon, I know, 
has an interest in this area and I want him to be able to get 
his information together, so I will ask a couple more. Do you 
believe the agency met the requirements in the Regulatory 
Flexibility Act in this rulemaking that is in question.
    Mr. Glover. I am not sure. We would certainly like to have 
some clear factual basis for their certifications. Certainly, 
they did some things to accommodate the smaller businesses in 
their regulation, but the factual basis upon which a 
certification is made is not clear in the certification when we 
look at the information. We would certainly have liked to have 
had a clear statement as to what the certification was based 
on. We think that would have been better for us to make that 
determination.
    Mrs. Cubin. Thank you. I will yield the balance of my time 
to Mr. Cannon--oh, okay. I will go ahead and finish with this. 
Even if the Interior had made contact with the SBA prior to 
proposing the draft rule in 1991, how could it have made the 
argument, then, that this is a, quote, ``Congress has spoken on 
the definition of small miners,'' as Mr. Leshy replied to me in 
his writing this April, when the Act he cites didn't pass until 
1993?
    Mr. Glover. I am not sure on that. One of the interesting 
questions in this whole definition area is that the Small 
Business Act was amended several years ago, and it was provided 
that agencies should have a consistent definition of small 
business. We found every agency had a different definition that 
was causing confusion for the regulators. It was certainly 
causing confusion for small businesspeople, and so Congress 
decided that the Small Business Administration would be the 
central definition unless there was an agreement to change. 
Prior to the enactment of that legislation, there was a wide 
variety of definitions that were out there and it varied from 
situation to situation.
    Mrs. Cubin. More importantly, is it not improper for a 
Federal agency to attempt to retrofit compliance with 
Regulatory Flexibility by begging forgiveness for its 
inattention to this detail?
    Mr. Glover. I am not sure of that exact characterization, 
but certainly we try to work with agencies whenever we are 
asked to try to bring them in. Our job, quite honestly, we have 
a relatively small staff and the government to look at; we have 
to try to encourage compliance by the agencies. So we do an 
awful lot of work with the agencies to encourage them to 
comply.
    Mrs. Cubin. With respect to the economic impact analysis by 
the BLM, irrespective of its definition of a small business 
entity, do you or your staff have an opinion on the adequacy of 
that, the analysis?
    Mr. Glover. The analysis is certainly better than some we 
have seen and not as good as others. The Department of Interior 
hasn't done as good a job as perhaps the Environment Protection 
Agency has in doing those analysis. For the Department of 
Interior, this is one of the better ones. We still didn't see 
the kind of industry analysis we are expecting in the future, 
and we have advised them that we would like to see more factual 
analysis.
    We are collecting better information and trying to train 
the economists in the various agencies so they can do a better 
analysis across the board. We are trying to look at a more 
factual analysis of what they are doing, and we are for the 
first time having good factual information from the Census 
Department so we can share that with agencies. I wish I could 
tell you we were doing a better job in the past than we have 
done, but we are doing the best we can.
    Mrs. Cubin. My time has expired and we do have a vote on 
the floor. It is on the Solomon amendment to the rule, so I 
think we will recess long enough to go vote and come back. It 
is on the DOD bill. So we will be back as quick as we can get 
here. And thank you. I hope you don't mind waiting.
    [Recess.]
    Mrs. Cubin. We will call the hearing to order again. 
Please, I am sorry it took me so long to get back. Thank you 
for your patience. Mr. Glover, isn't it true BLM failed to 
comply with the Regulatory Flexibility Act requirement that it 
consult with the SBA prior to finalizing the rule?
    Mr. Glover. They, in fact, did not consult with us prior to 
finalizing the rule, that is correct.
    Mrs. Cubin. Does the RFA require such a consultation before 
the rule is finalized?
    Mr. Glover. It does not unless they vary and change some 
things. Many agencies don't contact us at all and finalize 
their regulation. If they are doing something different, they 
should consult with us, and I think here we were looking at 
other types of small business, looking at the impact and 
analyzing the impact on small business. In those situations, 
they probably should consult, and many agencies do consult with 
us. So in this case, they probably should and the agency 
cannot.
    Mrs. Cubin. Okay. I need to back up so I understand your 
answer. The agency did not consult.
    Mr. Glover. That is correct.
    Mrs. Cubin. And in your opinion, were their differences 
that required them to consult?
    Mr. Glover. I think that if this agency or any other agency 
is going to do an analysis that deviates from the form, 
traditional definition of small business, then they should 
consult with us about that.
    Mrs. Cubin. And in this case, the definition of small 
business is not the same that the Interior Department 
established, it is not the same that the SBA, not the same 
definition; is that correct?
    Mr. Glover. This is one of those really unique gray areas 
of the law. The law has two different standards. One is in the 
regulatory analysis, if they are going to deviate in their 
analysis from the small business definition, they consult with 
us in the analysis.
    In the final rule stage, if they are going to change the 
rule itself and use a different definition, then they have to 
consult with the administrator of SBA. In this case, it is a 
hybrid in between. They didn't change the rule definition of 
small business, they changed the way that it was applied. So I 
can't tell you with total certitude they should have come to 
us. I think it would have certainly been better policy had they 
done that and we certainly counseled them to make sure they do 
this in the future, but this is a gray area and I can't tell 
you with 100 degree certainty that legally they should have 
definitely come to us. I think I would have preferred it and we 
would all be--we would have saved ourselves a lot of time had 
they done that. We would have been able to point them in a 
better direction.
    Mrs. Cubin. Maybe we wouldn't be here. Have you or anybody 
at the SBA informed anyone in the Interior Department of their 
failure to comply with the RFA?
    Mr. Glover. Yes, we did. Some of my staff received a phone 
call from them asking for some advice on the definitions. We 
are looking at it in an abstract manner of how small businesses 
were defined, and on that there were some telephone 
conversations and some memos exchanged where we certainly 
pointed out that if they were using a different definition of 
small business, they were missing the point of the law.
    Mrs. Cubin. And there was written communications, I 
believe.
    Mr. Glover. Yes, there were telephone calls and written 
documents.
    Mrs. Cubin. I would like to make as part of the record the 
communications from the SBA informing the BLM that they had 
failed to comply with the consultation requirement. And since 
the Interior cannot request privilege, I think that it should 
be in order. I ask unanimous consent to put it in the record. 
Without objection.
    [The information referred to can be found at the end of the 
hearing.]
    Mrs. Cubin. I don't have any further questions right at 
this point in time.
    Mr. Romero-Barcelo?
    Mr. Romero-Barcelo. Thank you, Madam Chair. I would just 
like to ask Mr. Leshy, in his letter to the counsel of the 
Committee on Resources of the House, he talks about the 
documents requested, in part those covered by privilege, the 
attorney work product or deliberative process.
    Can you tell us more about your concerns on the disclosure 
of these documents?
    Mr. Leshy. Yes, I am happy to. The concern here is not 
about interfering in any way with Congress' oversight 
responsibility. We have made available numerous documents upon 
the request of this Committee. We have made available other 
documents for inspection in the Department of the Interior. 
Everything that we have that is covered by the request is 
available to this Committee to look at.
    Our principal concern in this area is the disclosure of 
some of the draft documents that are covered by a litigation 
privilege that we can assert in Federal court in the litigation 
that involves this very rule, and the concern is that if this 
Committee discloses those documents which are not disclosable 
to the court under the standard rules of evidence, the 
disclosure of those documents by this Committee simply waives 
our privilege, which means we are deprived of a defense and a 
privilege in the judicial proceedings that we could otherwise 
assert. And it is of particular concern in this particular 
context because, you know, we have an inquiry on this rule, and 
the inquiry of this Committee is two questions concerning that 
rule; that is, did we comply with the Administrative Procedure 
Act and did we comply with the Regulatory Flexibility Act. The 
litigation by one part of the mining industry raises exactly 
those two questions. They were filed virtually simultaneously 
with this Committee's inquiry.
    The concern is simply that this Committee's inquiry, not in 
terms of our supplying the documents to this Committee, but in 
terms of this Committee's putting those documents in the public 
record would constitute, we fear, a waiver of a privilege we 
would have in court. We have encountered--I say we in the 
general sense of the executive branch--encountered this 
situation in all sorts of different contexts over a period of 
years.
    It is an institutional relationship question between the 
executive branch and the legislative branch, and in the vast 
majority of situations we work out a protocol or a way of 
handling these documents to ensure that the dialog that is 
taking place between the legislative and executive branch do 
not strip the executive branch of a defense when they go to 
court.
    In this situation, we haven't worked out that protocol. Our 
concerns are particularly heightened because in another 
subcommittee of this Committee recently we made documents 
available to the Committee, noting that the judicial privilege 
attached to some of them and requesting the Committee to please 
talk with us before they put those documents in the public 
record so we could make the subcommittee aware of our concerns, 
and without any consultation whatsoever those documents were 
placed in the public record, in a situation similar to this one 
in the sense that we had an active lawsuit challenging the very 
decision that the Committee was inquiring into.
    So this concern is not at all about withholding information 
from the Committee. I can't say that too often. We have made 
available, and we will make available any documents within the 
scope of your request that we have. Our concern is what you do 
with those documents after you get them and your handling of 
them that could jeopardize a defense that the United States has 
in the litigation that is ongoing. So that is our concern.
    Mr. Romero-Barcelo. Thank you. I am running out of time.
    Mrs. Cubin. Mr. Gibbons.
    Mr. Gibbons. Thank you, Madam Chairwoman. I appreciate the 
opportunity to participate here today. As I stated earlier, I 
welcome the gentlemen to our hearing.
    Mr. Leshy, in your testimony that you presented to this 
Committee, the written testimony, page 1, paragraph 2, 
specifically, line 2, you state that the BLM staff has recently 
informally surveyed implementation efforts in nearly all of the 
Western States.
    In a number of States, you don't say how many, the new BLM 
regulations require no more than existing State law requires. 
Hence, there is no difficulty in implementation. The conclusion 
here is that there were no reports of difficulty. Is that what 
you intended to communicate to this Committee?
    Mr. Leshy. I believe my testimony as written says major 
difficulty, and orally here I said with any rule there are 
certain transition, startup events that happen. But the 
informal surveys we did, we basically just had the BLM call the 
State director's offices in each of these States.
    Mr. Gibbons. What is your definition of a major difficulty?
    Mr. Leshy. Some sort of crisis, people thrown out of work, 
major parts of the industry shutting down, pickets at the State 
offices. Things of that nature.
    Mr. Gibbons. Would you include the cost to the State for 
compliance with this rule?
    Mr. Leshy. The cost to the industry you mean?
    Mr. Gibbons. Yes, for the State in complying with your rule 
itself.
    Mr. Leshy. Well, the rule doesn't directly require the 
State to do anything. All it says is there is a Federal floor 
below, that if the State bonding laws do not come up to the 
Federal floor, then the Federal bonding rule applies on 
hardrock mining on Federal land.
    If the State bonding requirements that apply to all areas 
of the State meet or exceed that Federal rule, then there is no 
change that takes place as a result of the Federal rule going 
into effect. That is what the testimony means when it says----
    Mr. Gibbons. Mr. Leshy, when I go home to the State of 
Nevada, I talk to my constituents and they talk to people 
employed by your Department who reflect the attitude they 
themselves are very distressed, very upset and are opposed to 
this rule. These are people who work for the BLM. Have you done 
an economic impact study on damages that occur in the State of 
Nevada, has your agency?
    Mr. Leshy. You mean as a result of hardrock mining 
operations?
    Mr. Gibbons. Of this bonding rule.
    Mr. Leshy. We were certainly done, and I am happy to supply 
to the Committee the State director's office has produced a 
rather complete survey of mining reclamation problems on public 
lands that really show, in our view, the need for this final 
rule.
    Mr. Gibbons. Well, just give me a dollar amount for Nevada, 
what that report states.
    Mr. Leshy. It actually is specific to Nevada. The report 
is, with a cover letter that I will supply copies to the 
Committee, May 1st, 1997, from the State Director of BLM in 
Nevada to Assembly Woman Marcia de Braga, Nevada State 
legislature, and it is a three-page letter which basically----
    Mr. Gibbons. Is there a dollar amount in it, Mr. Leshy?
    Mr. Leshy. Well, there is actually, what it does is have an 
appendix of several pages of, I think, 154 different operations 
in Nevada where miners have walked away and left the Federal 
taxpayers with the----
    Mr. Gibbons. Within the last 2 years.
    Mr. Leshy. Offhand I can't tell you over what period of 
time.
    Mr. Gibbons. You are telling this Committee, then, that 
there has been a failure of the bonding requirements within the 
last 2 years, if that is what you are saying.
    Mr. Leshy. Well, let me read the State director's letter. 
Since 1981, BLM has processed about 10,000 notices for hardrock 
mining operations. Currently, about 2,400 of those are active 
in Nevada. There are about 90 mining sites or explorationsites 
where reclamation bond, had it been required, would have either 
probably prevented a new modern day problem or would have been 
used to reclaim an environmental problem. There are an 
estimated 225,000 to 310,000 abandoned mine sites in Nevada 
from over the past 125 years where there are cleanup problems.
    Mr. Gibbons. The statement does require a bonding 
requirement in this case, doesn't it?
    Mr. Leshy. I believe that the State does not. It has the 
same or had the same small miner exemption that the Federal 
rule had, and there was exactly this problem that we were 
trying to upgrade----
    Mr. Gibbons. Well, I understand that completely. I 
understand that Nevada does have a bonding requirement and has 
had one.
    Mr. Leshy. And a small miner exemption, I believe.
    Mr. Gibbons. Right. But the law is if there is a failure of 
bonding requirements under the State statutes, it would have 
been reported. Some of these issues that you are talking about 
occurred either prior to the State bonding requirements, rather 
than afterwards. Well, let me move on. Obviously, there is a 
question here, and Madam Chairman, if you would indulge me one 
small----
    Mrs. Cubin. Without objection, I will give the gentleman 5 
more minutes.
    Mr. Leshy. I am happy to supply you the detail on the 
bonding requirement, the Nevada law.
    Mr. Gibbons. And each of the failures that occurred with 
the bonding requirement since Nevada's law has taken place.
    Mr. Leshy. So I understand, which Nevada law?
    Mr. Gibbons. Bonding requirements.
    Mr. Leshy. Is there a recent one? How far back should I 
look?
    Mr. Gibbons. Five years.
    Mr. Alberswerth, you are awfully quiet.
    Mr. Alberswerth. I haven't been asked a question.
    Mr. Gibbons. What role did you play in it?
    Mr. Alberswerth. I reviewed the effects of the rule prior 
to its finalization.
    Mr. Gibbons. Did you ever submit memorandum or writings?
    Mr. Alberswerth. Yes.
    Mr. Gibbons. Is one of those dated June 19th?
    Mr. Alberswerth. I will take your word for it.
    Mr. Gibbons. Well, it may or may not be, but let me just 
ask you this question, then. In 1995, there was a document that 
stated the estimated economic impact of this rule on Nevada was 
reduced by $80 million, and the memorandum states that the 80 
million was, ``willed away as an act of management direction.'' 
Could you tell us what that or what action does this statement 
refer to?
    Mr. Alberswerth. Is this an e-mail message from a person in 
the BLM to some other people----
    Mr. Gibbons. Well, regardless of what it is, what would 
that refer to? Management direction is willed away.
    Mr. Alberswerth. I believe what it is referring to is the 
fact that under the final rule, an interpretation of the final 
language was made that the BLM would recognize the State of 
Nevada's State program.
    Mr. Gibbons. Was this a management attempt to influence the 
outcome of the economic analysis in order to avoid the more 
stringent procedural requirements for rules with an economic 
impact exceeding $100 million.
    Mr. Alberswerth. No, it was an attempt to make a 
determination of whether or not Nevada's existing bonding 
program would comport with the new regulatory requirements so 
that we could recognize Nevada's program.
    Mr. Gibbons. Mr. Leshy, what is your hardrock strategy 
referred to, if you could explain to this Committee, that was 
stated in your memorandum from Anita Cheek to Monica Burke 
dated June 7th, 1996.
    Mr. Leshy. This is not, I take it, a memo that I wrote.
    Mr. Gibbons. No, it is from Anita Cheek to Monica Burke, 
dated June 7th, but it refers to your hardrock mining strategy.
    Mr. Romero-Barcelo. May I make a parliamentary inquiry? Is 
this one of the confidential memoranda?
    Mrs. Cubin. It is not on the list. But we will stand at 
ease for a second and determine whether or not it is on the 
list. It is on the list.
    Mr. Romero-Barcelo. It is on the list. You are referring to 
the text of the message.
    Mr. Gibbons. The message just says hardrock strategy of Mr. 
Leshy. I am asking--it does not describe that, so I am not 
disclosing anything other than the fact that it references a 
strategy of Mr. Leshy. I want to know what Mr. Leshy's strategy 
is.
    Mr. Leshy. I have no idea what Anita Cheek was referring 
to, if she wrote that memo. I am not sure I have ever seen that 
memo, so I am unable to respond.
    Mr. Gibbons. On the last paragraph of page 1 and the first 
paragraph of page 2, you explain that the Mountain States Legal 
Foundation on behalf of the Northwest Mining Association filed 
suit against the Department because they failed to comply, 
they, meaning you, comply with the Administrative Procedures 
Act and the Regulatory Flexibility Act.
    You go on in the next paragraph to refute this claim, but 
only state that FLPMA directs the Secretary to prevent 
unnecessary or over or undue degradation of the public lands. 
Reading on, I do not see where you refute these claims, and I 
would like you to tell the Committee if you failed to meet the 
Administrative Procedure Act or the Regulatory Flex Act.
    Mr. Leshy. I would be happy to. The testimony actually, 
this describes the suit as alleging that we have failed to 
comply. It doesn't say that we have failed to comply. It 
simply, the complaint in this case alleges that we have failed 
to comply. Taking them one at a time, under the Administrative 
Procedure Act, as I understand the Mining Association's 
complaint here, it is that we should have allowed more public 
comment on the final rule or at least reproposed the rule as 
drafted rather than going to the final promulgation of the 
rule.
    The issue basically is whether or not there was adequate 
opportunity for public comment on our general proposal to 
upgrade hardrock mining operations with the intent to make sure 
the taxpayers were not saddled with the cost of unreclaimed 
operations when members of the industry walked away from mining 
operations. And the 1991 proposal makes it very clear that that 
was the proposal.
    As with all rulemaking, the final rule differed somewhat 
from the proposed rule and it differed from the proposed rule 
in substantial part because we responded to public comments we 
received on the proposed rule. Now, there are some people who 
believe that if you change a comma between a proposed and a 
final rule then you should repropose the rule and seek comment 
on changing that comma. The law is quite clear on this subject 
and we have looked very carefully at the law before we 
promulgate it.
    Mrs. Cubin. The gentleman's time has expired.
    Mr. Gibbons. Thank you, and I was going to ask whether the 
Chairwoman plans to have additional rounds?
    Mrs. Cubin. Yes, and I ask unanimous consent to extend the 
questioning period to 10 minutes, instead of 5, to make it a 
little easier.
    Mrs. Cubin. Mr. Romero-Barcelo, do you have any further 
questions? It is your turn.
    Mr. Romero-Barcelo. No further questions at this time.
    Mrs. Cubin. Thank you. Then it is my turn.
    Mr. Leshy, you just stated that some people think that 
adding a comma would be enough to require a new comment period. 
I want to follow that line of questioning a little bit. Could 
you identify for me the portion of the proposed bonding rule 56 
Fed. Reg. 31 602 July 11th, 1991, where the BLM provided notice 
to the public that an operator would have to obtain a third 
party professional engineer to certify reclamation cost 
estimates?
    Mr. Leshy. I don't believe that part of the proposal was in 
the draft rule. It was a proposal that was made, as I 
understand it, by the BLM professional staff in the development 
of the final rule in response to concerns that it would be 
difficult for both the industry and the regulatory agency to 
have a good idea of what the size of the bond would be without 
a----
    Mrs. Cubin. Do you consider that to be more than just 
adding a comma?
    Mr. Leshy. Well, it is certainly within the scope of the 
rule. The whole idea of the rule is to upgrade bonding 
standards and the whole thrust of the rule is to require bonds 
in the amount of the estimated cost of reclamation.
    Mrs. Cubin. Mr. Leshy, I would suggest to you that there 
are things about requiring a professional engineer's opinion 
about the cost of reclamation that public comment could have 
revealed to the policymakers. Number 1, there are very, very 
few professional engineers who are willing to put their name on 
the line as to how much reclamation will actually cost. So it 
isn't possible in many cases to get what this rule requests.
    Also, I am aware that in some States there isn't a 
definition, not a definition, there--professional engineer 
certificates or the certification is very different. And I 
think that public comment certainly would have brought some of 
the problems to be obvious if it had been allowed, which it 
wasn't.
    Could you identify the portion of the proposed bonding rule 
for me which provided the public with notice that the financial 
guarantees for notice level operators would be minimum amounts 
as opposed to the maximum amounts in the previous rule?
    Mr. Leshy. If I could go back to the professional engineer 
issue for just a second, the basic purpose of the professional 
engineer requirement was to get an accurate, the most accurate 
possible estimates of the cost of reclamation. So you could set 
the size of the bond. The basic purpose of the rule was to 
require the bond be in an amount sufficient, not in excess----
    Mrs. Cubin. Mr. Leshy, you continue to defend what is in 
the rule, and I made it very clear at the beginning of the 
hearing what is in the rule is not the problem here. The 
problem here is that the public has not had the opportunity 
that it is guaranteed under law to have to give input into this 
rule. And if the rule was changed--the first rule was proposed 
in 1991 and then it came out in 1997 as a final rule with no 
public input in between. And there are significant changes 
between the first rule and this final rule.
    So that is the discussion I want to have with you, not the 
good points or the bad points of this rule or how you derived 
at that. In my opinion, that is not the issue. Could you please 
identify the portion of the proposed bonding rule which 
provided the public with notice that the financial guarantees 
for plan level operators would be a minimum amount as opposed 
to maximum amounts?
    Mr. Leshy. Make sure I understand, you asked me before, I 
may be one question behind. The earlier----
    Mrs. Cubin. One was for notice, the other was for plan 
level.
    Mr. Leshy. Right. The proposed rule dealt with bonding 
requirements for notice level operations. The final rule had a 
somewhat different approach to that and the different approach 
was, frankly, specifically in response to public comments, 
including comments of States. For example, the State of New 
Mexico wrote a formal comment on the draft rule in which they 
questioned the approach of the draft rule on notice level 
bonding and said it, frankly, ought to be strengthened, ought 
to be made more clear. So in part, we were responding to the 
comments of the State of New Mexico as well as a number of 
other commenters in strengthening and clarifying that part. 
That is exactly the way the rulemaking process is supposed to 
work. You put out a proposal, you get comments on it, you take 
the comments into account----
    Mrs. Cubin. Was one of those, did one of those comments 
come from Mr. Alberswerth?
    Mr. Leshy. The comment I am thinking of came from a signed 
letter from the State of New Mexico. I would be happy to supply 
it.
    Mrs. Cubin. Would you say that Mr. Alberswerth was one of 
those or was not one of those?
    Mr. Leshy. I am not sure. I mean, Mr. Alberswerth may have 
signed a letter on behalf of the National Wildlife Foundation. 
I don't recall.
    Mrs. Cubin. I want to go back to the difference between the 
original rule and the final rule. Would you please identify the 
portion of the proposed bonding rule that provided notice to 
the public that BLM would require operators to provide a 
guarantee sufficient to recover 100 percent of estimated 
reclamation costs, and please remember, I think that it is 
probably a good thing for 100 percent of the reclamation costs 
to be bonded. That is not the point. The point is that I don't 
think it was in the original rule and now it is.
    Mr. Leshy. It is interesting to trace the history of this. 
The law, of course, that we are acting under says that the BLM 
and the Secretary are mandated to prevent unnecessary and undue 
degradation of the public lands----
    Mrs. Cubin. What I want you to do is identify the portion 
of the original rule.
    Mr. Leshy. Well, the original rule that went into effect in 
1980 or 1981 said that bond should be set taking into account 
the cost of reclamation, which is----
    Mrs. Cubin. I am talking about the 1991 proposed rule.
    Mr. Leshy. Right, I think it is important to put this in 
historical context. Under the 1980 or 1981 rules, bonds could 
be set at the actual amount of reclamation.
    Mrs. Cubin. So I guess what you are saying, you cannot tell 
me where that is in the proposed rule because it is not there.
    Mr. Leshy. In 1990----
    Mrs. Cubin. That is correct?
    Mr. Leshy. The Director of the Bureau of Policy Management 
put out a policy memorandum without seeking public comment 
which said that bond should be set with a $1,000 to $2,000 
maximum under plans of operations. The proposed rule that you 
have been mentioning here in 1991 followed the Jamison policy 
by recommending or proposing a $1,000 to $2,000 maximum, with 
certain exceptions, and the final rule simply took the maximums 
off and said there should not be maximums because if a miner 
walks away, the public shouldn't have to pick up any of the 
cost----
    Mrs. Cubin. Actually, what you did was absolutely reverse 
the original position. It went from a maximum to a minimum and 
that is totally opposite, and to me, Mr. Leshy, that was much 
more significant than adding a comma, what would require you 
not to take further public comment. But when you totally 
reverse the minimum, or the maximum to minimum, certainly a 
reversal ought to warrant more public comment.
    Mr. Leshy. I think the minimum idea came about because----
    Mrs. Cubin. I am not interested in that. I am interested in 
whether or not changing a maximum to a minimum would warrant 
more public comment, and I believe that it would.
    Could you please identify the portion of the proposed 
bonding rule which provided notice to the public that BLM will 
impose civil and criminal penalties for violations of the 
bonding requirements?
    Mr. Leshy. I believe here that the penalty provisions were 
essentially the same under either the proposed or the final. 
They were just made more clear in the final. In other words, 
and this may bring to mind the discussions that have taken 
place about the law enforcement regulations. There are actually 
mentality provisions in the statute and various parts of the 
regulation, and I believe what happened in the final 
regulations was that the penalties were simply made more clear.
    Mrs. Cubin. Mr. Leshy, there are no civil and criminal 
penalties. There is no portion of the proposed rulemaking that 
contain provisions for civil and criminal penalties. So to make 
nothing more clear makes no sense to me.
    My time has expired. Mr. Gibbons, do you have any further 
questions.
    Mr. Gibbons. Yes, Madam Chairwoman, I appreciate that. What 
I would like to do is to engage Mr. Glover in a brief 
discussion, if I could.
    Mr. Glover, could you define for this Committee the 
definition of a small metal mining company under your 
regulation, under SBA?
    Mr. Glover. Basically, SBA is under 500 employees, is the 
SBA's definition for a small metal mining company.
    Mr. Gibbons. So it would be an entity employing not more 
than or not less than.
    Mr. Glover. An entity with not more than 500 employees 
would be considered small business for purposes of the Small 
Business Act.
    Mr. Gibbons. Mr. Leshy, would you tell the Committee what 
BLM's definition of a small entity is that applies to this 
bonding rule?
    Mr. Leshy. The BLM's analysis of the economic impact of 
this rule did not use a--analyze the impact of the rule on the 
entire industry. It did not use a specific size standard at all 
to cutoff definitively between small and large. That is why I 
believe Mr. Glover testified that the discussion that has taken 
place about the size standard and whether BLM violated the size 
standard of the SBA in this rule is sort of beside the point 
because BLM economic analysis actually looked at the whole 
industry.
    I should also say in BLM's experience that the 500 employee 
cutoff as a small miner definition is rather amazing when you 
look at the productivity of very large mines that employ, 
including those in the State of Nevada, that employ well under 
500 employees. There are few mines in the country----
    Mr. Gibbons. Let me get the answer to this question before 
you get off on the sidetrack that you are dragging this 
discussion into. What is the BLM's consideration? What does it 
consider a small metal mining company or a small metal mining 
entity to be, specifically? Is it 50, is it 10, is it 100, or 
is it 499?
    Mr. Leshy. Well, I would note that Congress, in fact, 
addressed this question specifically in the Omnibus 
Reconciliation Act of 1993 and, in fact, defined small business 
was a miner that held 10 claims or less. So at least for that 
purpose, BLM would certainly have, as it is mandated by law to 
look at that, and 10 claims or less is a lot different than 500 
employees or less.
    Mr. Gibbons. I was just being informed that the mining or 
the omnibus laws that you were talking to are for purposes of 
the holding of a claim, rather than discussions under this Act.
    BLM considers a small entity to be an individual or limited 
partnership?
    Mr. Leshy. The determination of effects analysis for 
purposes of the final rule here did--let me see, give me a 
moment. I think I can produce a copy--actually dealt with the 
industry structure at some length on pages 8 and 9 of the 
determination of effects, pointing out that operators and 
mining claimants conducting work on Federal lands generally 
fall into one of three categories: Major corporations, junior 
companies, and small proprietorships and independent 
prospectors.
    The major corporations, obviously, are the American 
Barracks BHP and RTZ, although I would point out that a number 
of mines operated by those companies employ 500 or fewer 
people. Junior companies are the larger limited partnerships, 
venture capital-based mining companies. They tend to be 
producers of gold, generally in volumes of less than 100,000 
ounces per year.
    Then, the third class the BLM used in its analysis is sole 
professorship and individual prospector. Class of operators, 
mostly notice level operators, measured cash-flows in small 
amounts, often a fashion similar to average middle-class 
income, et cetera. So there is about two pages of analysis of 
the structure of the industry in the BLM's determination of 
effects.
    It does not use a specific employee cutoff or any other 
specific size standard, which is why, in our view, there was no 
legal obligation to consult with the Small Business 
Administration's Office of Advocacy because it is only when you 
change the size standard that you have to go consult with the 
SBA, and BLM was not changing the size standard. It was, in 
fact, not using any particular size standard in doing this 
analysis.
    Mr. Gibbons. We may disagree with your legal opinion on 
this and I am sure this is part of the court's understanding, 
as well. Mr. Glover, are you an attorney?
    Mr. Glover. Yes, sir.
    Mr. Gibbons. Would it be your understanding that if there 
was a failure on behalf of an agency to comply with the 
Regulatory Flexibility Act, that that would be reason enough to 
withdraw a proposed rule or an enacted rule?
    Mr. Glover. As someone charged with looking after that law, 
I would certainly have recommended that to agencies in the 
past. I will tell you historically we have not had anybody redo 
that. So there at least is a dispute as to whether some people 
do disagree with me on that issue. It is always the 
conservative thing to do, when you have a serious question, to 
consider starting over. There are other reasons people may 
choose not to do that.
    Mr. Gibbons. Do you have a personal opinion in this regard?
    Mr. Glover. I think it varies based on the facts of the 
situation----
    Mr. Gibbons. But in this specific factual situation, do you 
have a personal opinion?
    Mr. Glover. I really don't, because that is something that 
the agency is charged with, a separate mission. I am charged 
with the mission of pointing out if there is a problem with the 
compliance or a way to do it better, we do point that out. But 
the ultimate decision is with the agency itself. We don't have 
veto authority, we can't stop a rule.
    Our authorities are sort of focused. We certainly advise 
agencies when they have a problem and we encourage them to come 
into compliance. In fact, we have encouraged agencies after the 
regulation was in place to go back and do the analysis and at 
least put it in the record so they can do that. One recent case 
in the Environmental Protection Agency, we went out and argued 
that they ought to come into compliance and they went ahead and 
did that, after the fact.
    Mr. Gibbons. With your tenure in your position or any other 
position, has any other entity sued under similar circumstances 
to require a regulatory action to be rescinded.
    Mr. Glover. Yes, sir, there is another matter pending, also 
involving the Department of Interior as a secondary part, but 
basically the Transportation Department is the prime one. That 
is involving flying over the Grand Canyon. We have been looking 
at that particular situation. We know there is a lawsuit that 
has raised this issue.
    Mr. Gibbons. And that is the only other legal action that 
has been brought to rescind a regulatory action?
    Mr. Glover. There are a couple other pending matters. I 
think the methyl chloride rule is there and my staff mentioned 
the shark rule, which is NOAA has a rule out on shark fishing, 
which we think there has either been or is about to be filed 
judicial action on that.
    Mr. Gibbons. Madam Chairwoman, I will reserve the balance 
of my time and turn it back to you. Thank you.
    Mrs. Cubin. Thank you. I have to tell you, I don't get 
this. The remedy that the lawsuit asks for is a comment period. 
What we are asking for is a comment period. We are spending a 
lot of money going through this hearing trying to urge you to 
do that. The government is spending a lot of money defending 
the lawsuit. Why? Why does a 60-day comment period seem to be 
such an enormous burden that you can't grant the American 
people, and don't tell me it is because of degradation that is 
going to happen in the next 60 days, because I am not buying 
that.
    Mr. Leshy. It is not the degradation, it is the cost to the 
taxpayer that would result if the new improved bonding rules 
weren't in effect. I mean, I assume by a comment period you 
mean suspending----
    Mrs. Cubin. Do you know what that cost is?
    Mr. Leshy. Make sure I understand your proposal. Your 
proposal is for a comment period during which time the rules 
would be suspended and not be in effect.
    Mrs. Cubin. That is correct.
    Mr. Leshy. And if that is true, obviously there is a risk, 
we think a significant risk to the taxpayer that the taxpayer 
would be saddled with these costs instead of the industry.
    Mrs. Cubin. There is a bonding regulation. It is not as 
though there is no protection whatsoever. After all, you sat on 
it for 6 years.
    Mr. Leshy. We agree with the Reagan and Bush 
Administrations----
    Mrs. Cubin. You sat on this for 6 years. What would 60 days 
matter?
    Mr. Leshy. We agree with the Reagan and Bush Administration 
that these regulations are inadequate and need to be upgraded 
and----
    Mrs. Cubin. I think that you intend to not answer my 
question, so let's just save time. Could you give me, Mr. 
Leshy, could you provide the Committee with the name of any 
Federal case that supports your argument for keeping these 
documents that we talked about earlier out of the public record 
of this Committee?
    Mr. Leshy. There are--I assume what you are asking is that 
if this Committee were to disclose the documents that we are 
willing to provide the Committee and put them in the public 
record, would that waive the privilege that we could otherwise 
assert in litigation?
    Mrs. Cubin. No, I am asking you to name any Federal case 
that supports your argument. That is what I am asking.
    Mr. Leshy. Well, I want to make sure I understand what you 
think my argument is. Our concern is that documents----
    Mrs. Cubin. We understand your concern.
    Mr. Leshy.[continuing] made available to the Committee, if 
they are disclosed by this Committee, would strip us of the 
defense against disclosure of those documents in litigation 
that we would otherwise have. And there are, there is at least 
administrative decisions that say that----
    Mrs. Cubin. No, Federal court. I am asking Federal court.
    Mr. Leshy. As far as we can tell, we have not done 
exhaustive research on this, but when we have inquired of 
people who I think should know at the Justice Department and 
other places, they say it is quite likely that would be the 
result, but it couldn't come up----
    Mrs. Cubin. Yes or no, so you cannot name a Federal case 
for me.
    Mr. Leshy. Well, other than what happened a few weeks ago 
with a Subcommittee of this Committee where----
    Mrs. Cubin. Please limit.
    Mr. Leshy. Have said are of concern----
    Mrs. Cubin. Would you please submit later on an answer to 
that so we don't have to go through all this now? Would you 
just submit that to the Committee in writing, any Federal case 
that supports your argument for keeping these documents out of 
the public record of this Committee?
    Mr. Leshy. I am sure I can give you lots of occasions that 
says when a document in discovery----
    Mrs. Cubin. Has a Federal judge ever ruled that a privilege 
that can be asserted in court can be waived by release of a 
document by Congress?
    Mr. Leshy. As I said, I can give you lots of cases that say 
the disclosure of a document on which a privilege is claimed 
waives that privilege. That is black letter, fundamental----
    Mrs. Cubin. I would appreciate that answer in writing, as 
well. We will get the question to you. I have one more question 
of you, Mr. Leshy. I know you are glad. So am I. It is back to 
the differences in the original rule and the final rule. Could 
you identify the portion of the proposed bonding rule which 
provided notice that financial guarantees will not be released 
until water quality standards have been met?
    Mr. Leshy. On the release issue, I am working from a little 
chart here that I think we have supplied the Committee. The 
original 3809 rules adopted in 1981 authorizes complete release 
of the bond on reclaimed portions once they were reclaimed, and 
that remained true through the proposed bonding rule.
    The final bonding rule actually calls, and this is a change 
that was made in response to public comment, and industry 
comment, would allow phased release of bonds, which is actually 
of benefit to the industry. It means they got their bonding 
money back earlier, so there was a change where the proposed 
rule has changed between the proposed and the final in response 
to industry comments.
    In terms of water quality standards, that may have been 
specified more in the final rule than the draft rule. I don't 
have that in front of me, but I am happy to supply a written 
answer if you would like.
    Mrs. Cubin. Thank you very much. Mr. Alberswerth, have you 
been involved in the decisionmaking process on the BLM's 
proposed bonding regulations for hardrock mining? You have 
been, isn't that correct.
    Mr. Alberswerth. Yes.
    Mrs. Cubin. Did you make specific suggestions on how the 
proposed regulations should be modified to require increased 
bonding requirements and broader coverage?
    Mr. Alberswerth. Yes.
    Mrs. Cubin. If so, how and when were those recommendations 
made?
    Mr. Alberswerth. I think the Committee has been supplied 
with a couple of memorandums that articulate some 
recommendations. I don't have them in front of me at the 
moment, but yes; that is correct.
    Mrs. Cubin. Mr. Alberswerth, could you speak a little 
louder?
    Mr. Alberswerth. Sure.
    Mrs. Cubin. When I look at the documents that are marked 
confidential that were provided to the Committee, you seem to 
have developed some fairly strong opinions on these complex 
issues. I wonder, how long had you been working at the 
Department before making those recommendations?
    Mr. Alberswerth. I came to the Department in approximately 
late June or July 1993.
    Mrs. Cubin. So by 1994--I am going to quit that line of 
questioning. You came in 1993, and then you were asked for--I 
have trouble here because I am trying to work with you on not 
having the things put into the record, but still be able to ask 
the questions so that we can know what we need to. When did you 
first start working on the bonding regulations at the Interior 
Department?
    Mr. Alberswerth. I am not sure of the precise date. I can 
tell you, though, that I was, prior to working on the bonding 
regulations, I was involved as a staff member at the Interior 
Department in developing various proposals on the 1872 mining 
law reform, which, of course, you are familiar with, the 103d 
Congress spent a lot of time on, and during that period of 
time, there was really no work being done on the draft bonding 
regulations at the Department because our assumption was that 
Congress would pass mining law reform and we wished not to 
finalize those regulations and preempt Congress on those 
issues.
    Mrs. Cubin. If I--from one of these documents, said that 
August 1993 you were working on those regulations, would you 
accept that as being so?
    Mr. Alberswerth. August 1993, I don't think so.
    Mrs. Cubin. August 6th, 1993.
    Mr. Alberswerth. Are you referring to a document's date 
there?
    Mrs. Cubin. Pardon me?
    Mr. Alberswerth. Let's see, I simply can't recall. But if 
you have evidence of that, I will accept it.
    Mrs. Cubin. What I am wondering is after such a short time 
on the job, it appears that you had some very strong feelings 
about what should go into this final, into the rule, and I just 
wondered if you had been at the Department long enough to know 
all sides of the issue and to really understand whether or not 
enough public comment had been made to come up with this final 
rule. Obviously, you think that you did know enough.
    Mr. Alberswerth. Yes.
    Mrs. Cubin. I can see that my time has expired. Do you have 
anything, Carlos?
    Mr. Romero-Barcelo. No, Madam Chair, I have nothing.
    Mrs. Cubin. Mr. Gibbons, do you have some more?
    Mr. Gibbons. Yes, Madam Chairwoman, I do, and I want to go 
into current operations of the Bureau of Land Management under 
what is known in circles in the mining industry as the 3809 
Task Force. Could you describe for this Committee, Mr. Leshy, 
what this task force, or who is on this task force, the 
composition of the task force?
    Mr. Leshy. I am happy to supply a list of members. It is an 
internal task force composed primarily of BLM field people, 
career people in the field who work on hardrock mining 
regulation day-by-day. The task force came about in----
    Mr. Gibbons. Well, you have answered the question. Do you 
have contact with these individuals on this task force, have 
any conversations with them?
    Mr. Leshy. Me personally, no.
    Mr. Gibbons. Anybody in your staff?
    Mr. Leshy. There is a lawyer on my staff who provides some 
legal advice to the members of the task force as they need it. 
Frankly, I don't know how much they would need it and how much 
they have drawn upon him for advice, but it is primarily a BLM 
career staff field people task force.
    Mr. Gibbons. Now, what is--is the scope of this 3809 task 
force limited in any way?
    Mr. Leshy. Well, its basic charge is to address and review 
and assess the adequacy of the 2809 regulations, what we call 
the 3809 regulations.
    Mr. Gibbons. Right. Now, this bonding rule, does it fall 
within the 3809 regulation?
    Mr. Leshy. Well, the bonding rule and the issue of bonding 
is an issue that may be addressed by the task force.
    Mr. Gibbons. Does the bonding rule fall within the specific 
3809 regulations?
    Mr. Leshy. Well, the bonding rule is part of the 3809 
regulations.
    Mr. Gibbons. Thank you.
    Mr. Leshy. We took the same position that the Reagan and 
Bush Administrations took, which is that bonding is important 
enough as a separate matter to be addressed by a separate 
rulemaking. That decision was made in 1987, I believe, and 
continued through the next 10 years. So the bonding upgrade has 
always been a separate feature, done separately except at the 
time of rulemaking. That decision was made 10 years ago and we 
reaffirmed it.
    Mr. Gibbons. But it is not excluded from the scope of 
hearings in this task force, is it, yes or no?
    Mr. Leshy. Well, I assume and as I have said, I am not in 
contact with the task force, but I assume if the task force 
which has conducted and will conduct a lot more field hearings, 
talking to States, talking to environmental groups in the 
stakeholder and regulatory process and if they hear a lot of 
outcry good or bad about the bonding rule, I am sure----
    Mr. Gibbons. Let me make this question a little more 
specific, and I hope I am speaking clearly, and I hope that you 
understand what I am asking. Because obviously you get 
sidetracked on some of your answers and you don't go directly 
to the question. Is there any restriction on this 3809 task 
force from considering the bonding regulations as proposed or 
as enacted by the BLM.
    Mr. Leshy. The general charge to the 3809 task force is in 
memoranda, I think, we have already supplied to you, but I am 
happy to supply further copies of the Secretary's memorandum of 
January 1997 and then there was a BLM Director's memorandum of 
a few weeks later.
    Mr. Gibbons. Have you read that memorandum?
    Mr. Leshy. I am sure I have.
    Mr. Gibbons. Then you would know if the bonding 
requirements have been eliminated from their consideration or 
are not eliminated from their consideration; isn't that true?
    Mr. Leshy. Well, I believe my recollection is that bonding 
is not eliminated from consideration. As I said, they are 
holding hearings on the whole and examining the whole scope of 
regulation of hardrock mining, and if they hear during this 
process, which will take several months, a couple years 
probably to complete, that there is a problem with bonding 
rules, either that they are too stringent or not stringent 
enough, I am sure they will make recommendations to the 
Secretary about it.
    Mr. Alberswerth. Mr. Gibbons, could I help out with that? I 
have been in contact with the 3809 task force and meet with 
them frequently, and that group has met on a number of 
occasions with representatives of the mining industry, State 
regulators, environmental organization people, and we have told 
them, the 3809 task force has informed the mining industry 
that, in fact, if they would like to offer suggestions on how 
to improve the bonding regulation, we would certainly consider 
them in the context of the 3809 task force. So in effect, we 
have broadened the scope of the charge of the task force to 
deal with bonding, and I can't tell you if we received any 
input on that to date or not.
    Mr. Gibbons. Mr. Glover, one final question to you, and we 
appreciate your patience. I appreciate everyone's patience with 
us because this is an educational process to us as well as 
people who are interested in this process. Assuming again, and 
as an attorney you are well aware of making assumptions in a 
case and how things would flow, what would be required if there 
was a difference in a definitional phase, for example, small 
metal mining entity, between the agency proposing the rule and 
the SBA or your agency? What requirements, procedural steps 
would they have to go through if, in fact, there was a 
difference in the definition.
    Mr. Glover. The way it would work is during, in the 
preproposal stage they would come to us and say we are thinking 
about a different definition. We would discuss that, we would 
bring in the SBA people who do size determinations and discuss 
that with the agency.
    Mr. Gibbons. Now, we can assume that there is a different 
definition.
    Mr. Glover. That's right, assume that the agency wants to 
have a different definition. We can say for the purposes of 
your regulatory flexibility analysis, go ahead and use that 
definition, but we would give them some ranges and tell them to 
look at it in a broader area. They would propose their 
regulation laying out what they thought the right definition 
would be and ask for public comment.
    The SBA concurrently would look at that compared to its 
size determination and the criteria we normally look at for 
determining what is the appropriate size. The SBA uses 
different definitions from the same industry for different 
purposes. So we would look at that and say in case of mining, 
the argument is well, gee, 500 employees is way too big. Maybe 
it should be a smaller number. We would look at that number, 
propose it to the public, ask for public comment during this 
proposed period of time. Then, when the regulation was ready to 
be finalized, we would look at the public comments, the SBA's 
office of size standards would look at the public comments that 
addressed the issue of size, and consistent with what we had 
probably told them before, unless there was an outcry that that 
was a wrong definition, we would probably approve that and if 
the final regulation was finalized, that could happen 
concurrently. So there is a process, if you start this early 
enough, where we really don't hold up the agency in going 
forward in doing their analysis.
    What we found with most agencies is they don't think about 
small business until it is way down the process and one of the 
things I think this Committee has done today, and we all always 
look for the good side of things. One of the things you have 
done is helped not only educate the Department of Interior, but 
some other agencies that someone cares about small business and 
is looking at these issues, and it will make not only this 
agency, but other agencies in the future be more sensitive to 
small business concerns at the earliest stage.
    One of the reasons we want and the Regulatory Flexibility 
Act provides for early involvement and early concern about 
small businesses is what we found is the later small business 
is considered in the regulatory development process, the less 
likely the results are going to be fair to small business. So 
we want that process to occur as early as we can, and I want to 
thank the Committee and the Chairwoman for having this hearing, 
because it certainly has helped focus everybody's attention on 
the fact that Congress cares very much about small business and 
the Regulatory Flex Act.
    Mr. Gibbons. So let me just summarize what you have said, 
very eloquently, I might add, that if there is a difference in 
the definition, that it requires consultation, that there must 
be public comment and then it must be published in the Federal 
Register.
    Mr. Glover. That's right.
    Mr. Gibbons. In essence, those three things must be met.
    Mr. Glover. That is right, that is what the law requires.
    Mrs. Cubin. The gentleman's time has expired. I don't have 
many more questions. Mr. Alberswerth, did you file official 
comments for the National Wildlife Federation on the proposed 
bonding regulations when they were first proposed in 1991?
    Mr. Alberswerth. Yes, I signed comments that the Federation 
submitted to the BLM on that proposal.
    Mrs. Cubin. As I went over those comments, it looked like 
just about everything you asked for ended up in the final rule.
    Mr. Alberswerth. I don't think--unfortunately perhaps, that 
is not the case. Some of the comments did, I think, have an 
impact on the final rule. There were a number of those comments 
that were tracked by other commentators as well. For example, 
on the issue that you discussed earlier regarding the bonding 
amounts, the State of New Mexico submitted comments criticizing 
the draft proposal for being inadequate.
    Mrs. Cubin. Could you speak a little louder? Thank you.
    Mr. Alberswerth. Sure. And interestingly enough the State 
of Nevada submitted comments as well questioning whether or not 
that proposal provided the BLM with sufficient flexibility to 
impose bonds that would completely cover the cost of 
reclamation. So there were quite a few comments on that subject 
from commentators on that rule.
    Mrs. Cubin. I want--I asked you this question about--I 
didn't write the answer down. What date was it when you left 
your portion at the NWF?
    Mr. Alberswerth. I joined the Department, I am not sure of 
the exact date, but it was around the end of June, beginning of 
July 1993.
    Mrs. Cubin. And then that is when you joined the 
Department. How long--were you unemployed any time or did you 
go straight from the NWF to the Department?
    Mr. Alberswerth. Pretty much straight from the NWF to the 
Department, yes.
    Mrs. Cubin. So that was June or July you said that you 
started working at the Department, and then you started working 
on these bonding rules in August, it looks like, from some of 
this documentation that I have. Did you officially or 
unofficially notify your agency ethics officer about a possible 
conflict on any of the public lands issues having just been the 
Executive Director, I believe, of the NWF?
    Mr. Alberswerth. I was not the Executive Director. I was 
Director of the Public Lands and Energy Program for the 
Federation.
    Mrs. Cubin. Right.
    Mr. Alberswerth. No, I did not.
    Mrs. Cubin. Did you seek or receive prior authorization 
from your agency ethics officer to participate in the bonding 
regulations that you now had personally lobbied the Interior 
Department just months earlier or on any other issues?
    Mr. Alberswerth. I did not seek guidance on that from the 
ethics officer.
    Mr. Leshy. Could I interject here, Madam Chair? This issue, 
we have looked at this issue in many different contexts in the 
past. To the extent that you are raising a possible conflict of 
interest concern about someone coming in from outside into 
government to work on a matter, that is the same matter that 
they had represented or worked outside the government, in the 
rulemaking context, the rule and the principles are very clear.
    A rulemaking such as we are concerned with here with the 
bonding rule is a legislative matter, not an adjudicatory 
matter, so it is quite clear, and I can cite you and am happy 
to supply court cases that address the subject, that in a 
rulemaking kind of process, the fact that Mr. Alberswerth 
signed comments for an outside organization on a rule in no way 
limits his ability to work on the rule inside the government 
because it is considered a legislative type of function.
    And frankly, the purpose for that, and the courts talk 
about this, is it is important that the government at all 
levels, including the executive branch have access to 
expertise, and it is certainly an advantage to hire employees 
who know something about the issues that they are working on. 
And often the way those employees get that experience and 
knowledge is by working for industry associations or other 
environmental groups, and it would be a severe problem for the 
government generally, and that, again, goes to the legislative 
branch as well as the executive branch, if people were disabled 
from coming in and lending their expertise to rules that they 
participated in on the outside.
    So that is all assuming, by the way, that someone in Mr. 
Alberswerth's position is a real decisionmaker on the rules. 
Mr. Alberswerth obviously played a role here, but the 
decisionmakers on the rules, in fact, were the Assistant 
Secretary for Land and Minerals, the Director for the BLM. On 
the legal issues it was my office and obviously the Secretary 
ultimately has responsibility as decisionmaker on these rules.
    Mrs. Cubin. Thank you.
    Mr. Leshy. So the decisionmaker can certainly draw upon 
expert staff, and if they have had knowledge gained by outside 
experience, there is nothing wrong with that, and if you would 
like I can supply case law.
    Mrs. Cubin. I have two reactions to that. Number 1, I 
wonder if you would be as adamant in your response if it were a 
miner who got everything they asked for in comments in the next 
rule; and number 2, the proper way to cure conflicts of 
interests problems is to allow the public to comment on the 
rule before it goes final. In this case the public was not 
allowed to do that after Mr. Alberswerth became an employee of 
the Department of Interior.
    Mr. Alberswerth. But there is no conflict of interest here 
at all. I have no financial interest in this matter. The 
organization I worked for had no financial interest.
    Mrs. Cubin. I am not implying that there is a conflict of 
interest. I am not implying that at all.
    Mr. Alberswerth. Thank you.
    Mrs. Cubin. I merely bring that up because, like I said, 
the cure for this problem or perceived problem would be to 
allow public comment, because the appearance isn't very pretty. 
I mean, it really looks bad, and, it would be so easy to 
alleviate the whole problem by allowing other people to have 
their opinions in, not 6 years old, dealing with all of the 
issues I brought up earlier with Mr. Leshy, that are the 
differences in the original as opposed to the final rule, it 
would be so simple to take care of all that and I don't 
understand why you want to do it.
    Let's see, I just want you to respond to that? I think I 
do. Do you think that there could be an appearance of 
impropriety in the rules as they came out? When I look at--and 
this, I guess, is not additional as well, but the items that 
were in your testimony that ended up in--excuse me, the 
comments, I always say testimony--in your comments that ended 
up in the final rule that were changes from the original 
proposed rule, don't you think there is an appearance of 
impropriety at least?
    Mr. Alberswerth. I would say if I were the only commenter 
who made those comments, and if the agency had adopted every 
single comment that I had signed on to in exactly the way that 
I had proposed it, yes. But, see, that simply wasn't the case 
here. I mean, some of the comments that I had made as a staff 
person at the National Wildlife Federation were addressed in a 
fashion by the final regulation, and in addition there were a 
number of other commentators who made similar comments, both 
private individuals organizations and even State government 
agencies in at least one instance.
    If, on the other hand, I had been the only person and 
everything was exactly the same as I had suggested, I would say 
that there might be an appearance of, you know, something that 
was improper. But in this case, I really don't think that is 
the case, and what the BLM did is evaluate all of the comments 
they got in. They made changes to accommodate some of the 
mining industry's concerns, which we haven't discussed here at 
all, which were different from the draft proposal, as well as 
comments that came in from State agencies and others.
    Mr. Leshy. If I could just interject, I would point out 
that Mr. Alberswerth is not a lawyer, and when you talk about 
possible appearances of conflicts of interest, to the extent 
that has a legal cast to it, or a legal definition----
    Mrs. Cubin. I said impropriety, I didn't say conflict of 
interest. I clarified that earlier. I did not imply in any way 
that there was a conflict of interest. I do think that when you 
look at the environmental laws that we have in the Regulatory 
Flex Act, and when you put all of that together there, is a 
flaw here.
    Mr. Leshy. I just wanted to point out that in terms of how 
the courts look at appearance of impropriety in these 
situations, in rulemaking situations the courts don't consider 
there is any appearance of impropriety whatsoever. The same way 
that when a different party takes over Congress, that party may 
hire staff members predominantly from a particular industry, or 
if another party takes over, they hire my staff members 
predominantly from a different kind of interest group, and that 
is kind of the way life is, and that is no problem with that as 
long as----
    Mrs. Cubin. As long as your philosophy goes along with the 
person that is making the decision. I go back to if it were a 
miner, and that miner had a totally different philosophy about 
what should be in that rule, you might not be so magnanimous 
about saying, hey, this is no problem. And I go back to the 
bottom line that this is so easily done away with by allowing a 
60-day comment period, by withdrawing the rule and allowing a 
60-day comment period.
    Mr. Leshy. Again, just to make clear our position on this, 
I think what you are requesting is a 60-day comment period, and 
obviously to make that meaningful, we would have to look at the 
comments, evaluate them, and possibly make changes in the final 
rule. So it is not just 60 days; it is really effectively, I 
don't know, 9 months or a year.
    Mrs. Cubin. But it was 6 years from the time the public 
comment came until the rule was put out; 6 years, so this holds 
no water at all.
    Mr. Leshy. Well, in that respect we probably should have 
done it faster.
    Mrs. Cubin. I think so, and in retrospect when you look 
back on this, you are going to think you should have had public 
comment, too. You can't abuse the system sometime and expect it 
not to come back and abuse the environment or you or the agency 
another time. You have to preserve the system. And you have 
violated the system with this 6-year delay, and now a 60-day 
comment period is too long for you. I don't get this. I don't 
understand what is going on here.
    Mr. Leshy. Well, we don't think we have abused the system, 
and I guess a Federal court sitting in Washington, DC, actually 
just down the street, will tell us sooner or later whether we 
have complied with the law. We think we have. I guess we agree 
to disagree on that.
    Mrs. Cubin. How much do you suppose you will spend on this 
lawsuit?
    Mr. Leshy. It is actually a pretty simple lawsuit to try. I 
don't think it will take very much. Frankly, I think I can 
honestly say it will take less to defend this lawsuit than it 
would to reopen a comment period and do a new phase of the 
rulemaking, and it almost certainly would be far less than it 
could cost the taxpayer if we don't have stronger bonds during 
this bonding season.
    Mrs. Cubin. Again we have to agree to disagree.
    Mr. Cannon, do you have any questions of the witnesses?
    Mr. Cannon. Thank you, Madam Chairman, I apologize for my 
absence.
    Let me ask you directly, Mr. Leshy, are you considering in 
the Department at all the possibility of reissuing these rules 
for comment?
    Mr. Leshy. We have--after the last hearing when I told the 
Committee I would get back and we would take another look at 
this issue and I would talk to the Secretary about it, we have 
done so, and we believe that we are on very solid legal ground; 
that these rules are good and being implemented without 
disruption, and it would be, frankly, more disruptive to 
suspend the rules and go through another comment period.
    Mr. Cannon. Let me say that I have sensed significant 
disagreement on both sides of the aisle here on this Committee 
with that conclusion. Mr. Romero-Barcelo in the beginning of 
this hearing pointed out that--and in the end of the last 
hearing pointed out that when you get the participation of 
people who are governed, there is a tendency to go along better 
with the rules and regulations.
    Personally, I believe that given this time of rather tense 
relationships between the States and the Federal Government, 
that it would be a particularly--that care should be exercised 
in how you approach that relationship and what you cram down on 
the States and allow people who are interested to express 
themselves about it currently, not in the context of 5 years 
ago.
    So I would encourage you to rethink that just because I 
think it is a matter of good government. I think that the 
system works better when you have input from those who have to 
live under the regulation. Frankly, I have been a little 
confused about some of the testimony because you keep talking 
about how little--how easy to the implement this rule, how 
little the cost is, how most of the States already have 
systems, that other States have already changed their law. I 
think you mentioned that Alaska had changed its law, was it?
    Mr. Leshy. Idaho.
    Mr. Cannon. Idaho.
    And then I talked to Jim Gibbons of Nevada, and they 
changed their law, and given the fact that you have two of the 
major hard rock mining areas of the country with a stricter 
State law, it might be advisable to step back. Your suspension 
of your regulation would not affect those State laws.
    I am a little concerned about the conflict of interest or 
the appearance of proprietary issue that was talked about. Let 
me state what I think the issue is and get a response. I 
understand Mr. Alberswerth is not a lawyer, and therefore, the 
appearance of impropriety that lawyers are under a mandate to 
avoid is not relevant to him. But, in fact--and, of course, 
there is a distinction you made between legislative and 
adjudicatory, and an important and powerful distinction. But 
the Congress, as a legislative body there are times when there 
can be a conflict of interest, and certainly most legislators 
would try and make it clear by talking to legislative counsel 
or others about what those conflicts would be in advance so 
that they are cleared, and, in fact, what happens in that 
process is that people who may have a conflict have a public 
airing of that process.
    Maybe the rulemaking would be a good time to do that, but 
certainly I think the thrust of the Chairwoman's question was 
what kind of cleansing process have we gone through to evaluate 
the prior interests and the effect of those prior interests on 
the decisionmaking process of someone who is in a 
decisionmaking mode?
    So let me just ask that question: What did--and let me 
direct this to you, Mr. Alberswerth: What did you do to make it 
clear what your prior interests were and how that would affect 
your decisionmaking process in whatever capacity you were in in 
the Interior Department?
    Mr. Alberswerth. Well, my boss, Assistant Secretary 
Armstrong, was well aware of my previous employment and my 
interest in the whole issue of mining law reform.
    Mr. Cannon. Is he a lawyer?
    Mr. Alberswerth. Yes, he is an attorney, but----
    Mr. Leshy. He doesn't practice law.
    Mr. Cannon. Neither do I, thank heaven.
    Mr. Alberswerth. I would say, sir, that I think an 
analogous situation in terms of my role in the development of 
this rule is analogous to a congressional staff person's role 
in the development of a legislation. That is I make 
recommendations. My job is to make some recommendations to 
various individuals in the Department who had decisionmaking 
authority with respect to this matter. I was not the 
decisionmaker, and I made those recommendations, very similar 
to the congressional staff person making recommendations to a 
Member of Congress or a committee. And I think my role is very 
analogous in that regard, so I think what you might want to ask 
yourself is would you apply the same sort of standards to a 
congressional staff person as you would to me in this instance?
    Mr. Cannon. Well, I think the relevant regulations require 
that absent prior authorization, which requires--that is, 
someone in authority giving the authority to you to do this, an 
employee shouldn't participate in a particular matter involving 
the specific parties which he knows is likely to affect the 
financial interest of a member of his household, or if he knows 
a person with whom he has a covered relationship or represents 
a party, if he determines--it goes on.
    Mr. Alberswerth. I am quite confident of that.
    Mr. Cannon. Of what?
    Mr. Alberswerth. Of the fact that I have no financial 
interest in this matter.
    Mr. Cannon. The point is if you continue, you have a 
definition of covered relationship, including any person for 
whom the employee has within the last year served as financial 
or as officer, director, trustee, general partner, et cetera.
    It seems to me there are two issues here that I would like 
to understand. In the first place, you were employed by NWF and 
received a salary, and therefore had an interest; and in 
addition, I understand you were a director. Don't those with 
particularity qualify you as having to be in a position where 
you need a prior authorization before you participate in that 
process?
    Mr. Alberswerth. The National Wildlife Federation has no 
interest, no financial interest whatsoever.
    Mr. Cannon. You had a financial interest because they paid 
you a salary. You also had a covered relationship because you 
were a director. Is that true?
    Mr. Alberswerth. No, sir, I was a director of the program. 
I was not on the board of directors.
    Mr. Cannon. Oh, okay.
    Mr. Leshy. I should go back because I think there is a 
fundamental misunderstanding. First of all, he severed all his 
ties when he came to the Department. Second, the regulation you 
were quoting talks about a particular matter, and the rules and 
the case law in this are quite clear. A legislative rulemaking 
is not a particular matter. That was the point I was trying to 
make earlier.
    In other words, the principles and the constraints that you 
apply when you come into government or go out of government in 
terms of working on particular matters that you worked on in 
one place or another, a legislative rule is not a matter. It is 
well understood that that is the case. The courts basically 
said that. So we really don't have that kind of problem in this 
case.
    Everybody in the Department knew where Mr. Alberswerth came 
from and knew of his interest, but he has not, in our view, 
behaved inappropriately at all by working on this kind of rule, 
having worked on it outside, because it is not a particular 
matter involving a particular party.
    Mr. Cannon. Thank you. I yield back the remainder of my 
time.
    Mrs. Cubin. I don't think I have any further questions 
either. So I would like to thank the witnesses for being here 
today. It is a hard--it is a hard thing to disagree. And I 
appreciate your appearance and thank you again. I am sure I 
will see you again. I am sure we will disagree again.
    Mr. Leshy. It is hard for us, too, but thank you very much 
for letting us have the opportunity.
    [Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]
    [Additional material submitted for the record follows.]
     Statement of John Leshy, Solicitor, Department of the Interior
    Madam Chair and members of the Subcommittee, I am here today once 
again to discuss the final rule on bonding for hardrock mining 
operations. With me is David Alberswerth, Special Assistant to the 
Assistant Secretary for Land and Minerals Management. I will update the 
Subcommittee on various matters concerning the BLM's hardrock bonding 
rule which have occurred since your last hearing on this matter held on 
March 20, 1997.
    First, implementation ofthe rule, which took effect March 30, 1997, 
is proceeding without any reports of major difficulty. BLM staff have 
recently informally surveyed implementation efforts in nearly all the 
western States. In a number of States the new BLM regulation requires 
no more than existing State law requires; hence, there is no difficulty 
in implementation. At least one State has amended its mining 
reclamation law since the BLM rule became final. That amendment 
requires full cost bonding, just as the BLM rule does.
    BLM is continuing its efforts to advance the mining industry's 
understanding about the rule and what is required to comply with it. It 
continues to use, among other things, an Internet Newsgroup for this 
purpose. In Alaska, BLM and the State have been working on a proposed 
Memorandum of Understanding that would allow miners to utilize the 
State bond pool to satisfy the requirements of the new rule.
    Second, on May 12, 1997, the Mountain States Legal Foundation, on 
behalf of the Northwest Mining Association (NMA), filed suit against 
the Department seeking a withdrawal of the rule and an order enjoining 
the BLM from enforcing the rule against the members of the IRMA. The 
suit alleges that the Department failed to comply with the 
Administrative Procedure Act and the Regulatory Flexibility Act in 
promulgating the final rule.
    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).
    We continue to believe that this rule is a most reasonable forward 
step to carry out our mandate, given to us by Congress, to prevent 
unnecessary or undue degradation of the public lands from, among other 
things, activities conducted pursuant to the Mining Law of 1872. As I 
pointed out earlier, 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. It is in the interests of providing a deterrent to such 
environmental costs, and such fiscal costs to the Nation's hardworking 
taxpayers, that BLM promulgated its final bonding rule.
    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 
3 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 ofthe 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 percent 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 percent 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 percent 
bonding until they file a new notice. With past history as our guide, 
we expect that it will take 4 years before all notice level operators 
are covered.
    As I mentioned last time, 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 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.
                                 ______
                                 
                     Letter from the SBA to the BLM
    This is in response to the material that you sent by facsimile on 
April 18, 1997 which refers to a conversation that you had with the 
Office of Advocacy on April 2, 1997. The Office of Advocacy will review 
the rule and the Omnibus Reconciliation Act of 1993 and provide an 
``official'' answer to your inquiry by the close of business on 
Wednesday, April 23, 1997. In the meantime, below please find an 
unofficial response to your request that include the Bureau of Land 
Management's April 2nd consultation with Advocacy in your letter of 
response to Congresswoman Cubin.
    Our recollection of that conversation is that initially Advocacy 
told you that the Bureau of Land Management was not in compliance with 
the Regulatory Flexibility Act because you did not define a small 
entity in compliance with SBA's definition of a small entity in the 
mining industry. After giving you our initial opinion, you stated that 
the definition of a ``small miner'' was mandated by statute. We 
responded that if the definition of small miner was mandated by 
statute, then the statutory definition would prevail.
    After reviewing the letter from Congresswoman Cubin, it is 
Advocacy's opinion that the Bureau of Land Management did not comply 
with the Regulatory Flexibility Act (RFA). With regards to the 
``statutory mandate'', Advocacy was under the impression that the 
mandated definition was not from the ``Omnibus Reconciliation Act of 
1993''. Advocacy believed that the mandated definition was specific to 
the regulation that you were attempting to implement. Furthermore, you 
requested Advocacy's assistance in obtaining a new definition standard 
after the rule was in its final stages. The RFA requires consultation 
with the Office of Advocacy before determining a size standard 
definition that deviates from SBA standards. Consulting with Advocacy 
after the fact does not fulfill the requirements of the RFA.

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