[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]
NEW WORLD MINE PROPOSED BUYOUT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY
AND MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
MAY 20, 1997, WASHINGTON, DC, 1997
__________
Serial No. 105-40
__________
Printed for the use of the Committee on Resources
U.S. GOVERNMENT PRINTING OFFICE
44-977 CC WASHINGTON : 1997
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
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 Rica
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 May 20, 1997........................................ 1
Statements of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming; and Chairman, Subcommittee on Water and
Power Resources............................................ 1
Prepared statement of.................................... 2
Hill, Hon. Rick, a Representative in Congress from the State
of Montana................................................. 18
Prepared statement of.................................... 18
Romero-Barcelo, Hon. Carlos, Resident Commissioner from
Puerto Rico................................................ 3
Prepared statement of.................................... 4
Statements of witnesses:
Clark, Michael, Executive Director, Greater Yellowstone
Coalition.................................................. 10
Prepared statement of.................................... 39
Elers, Karl E., Chairman, Crown Butte Mines, Inc............. 8
Prepared statement of.................................... 34
McGinty, Kathleen, Chair, Council on Environmental Quality,
Executive Office of the President.......................... 4
Prepared statement of.................................... 31
Additional material supplied:
Combest, Hon. Larry, a Representative in Congress from the
State of Texas, prepared statement of...................... 58
Memorandum to Subcommittee members........................... 44
Newspaper article............................................ 55
NEW WORLD MINE PROPOSED BUYOUT
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TUESDAY, MAY 20, 1997
House of Representatives,
Subcommittee on Energy & Mineral Resources,
Committee on Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:30 a.m.,
Room 1324, Longworth House Office Building, Hon. Barbara Cubin
(Chairman of the Subcommittee) presiding.
STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WYOMING; AND CHAIRMAN, SUBCOMMITTEE ON WATER
AND POWER RESOURCES
Mrs. Cubin. Come to order. The Subcommittee is meeting
today to hear the testimony on the agreement reached by the
United States, the environmental community, and the mining
industry in the New World Mine proposed buyout.
Under Rule 4[g] of the committee rules, any oral opening
statements at hearings are limited to the Chairman and the
Ranking Minority Member. This will allow us to hear from our
witnesses sooner and help members to keep their schedules, so I
won't talk to the other members.
Today the Subcommittee meets in its oversight capacity to
review the agreement reached among the Clinton Administration,
Crown Butte Mines Incorporated and the Greater Yellowstone
Coalition to buy out the proposed New World mining project near
Cooke City, Montana. Until late last week, we had intended to
discuss the methodology proposed to buy out the old private
old-growth timber lands in the Headwaters Grove of Humboldt
County, California, as well. But this was because the
Administration had proposed to fund both of these deals via
schemes involving Mineral Leasing Act receipts. All that
changed when the White House and the Congressional negotiators
decided to add $700 million to fund priority land acquisitions
and exchanges to the 5-year budget agreement. Therefore, if the
budget resolution on the floor later today is adopted, the
funding for these two acquisitions would likely be through the
usual mechanism of an appropriation from the Land and Water
Conservation Fund and not the original plan to divert mineral
lease receipts. That is certainly something that I had
questioned earlier on.
So why are we here today? Because I believe that the
authorizing committee with jurisdiction over mining interests
generally has an obligation to hear this issue. Was a
legitimate property right of Crown Butte Mines, Incorporated,
threatened in a governmental taking by the endless delays in
the environmental documentation and permitting? Would
Yellowstone National Park likely have been imperiled by the
building of this proposed New World Mine? In sum, when the
facts are this case are brought to light, do they support this
buyout agreement?
Let me say at the outset that I am not urging the
permitting of a gold mine next door to a place that I cherish,
that I have gone to since I was a child. That is Yellowstone
National Park. But that doesn't mean that I am ready to
recommend to the Appropriations Committee to write a $65
million check to Crown Butte Mines. And, yes, I realize that
unless and until the owner of the private lands and the mineral
rights buys into the agreement, there really is no deal. But,
in my opinion, it is time to ask the parties to the agreement
to state for the record why they believe it to be in the best
public interest to do this deal.
Remember, just saying it is in the public interest to do
the deal doesn't make it so. That is why an environmental
impact statement was in the works, so that permitting decisions
would be made on a scientifically sound basis. Perhaps more
than anything else in the New World deal, the termination of
the EIS process bothers me greatly. Will ratification of this
deal by Congress in the context of a check made out to Crown
Butte Mines and drawn on the United States Treasury establish a
precedent for short circuiting the environmental process when
people become fearful that a permit might be imminent, whether
it is for a mine or trees of whatever?
Understanding the background leading up to the August 1996
agreement, I assure you, is critical to forging a willingness
to pay attitude here in Congress. It is time to stop doing this
deal behind our backs and then announcing a done deal. We are
fully capable of deciding whether or not to spend $65 million
of taxpayers' money to protect Yellowstone National Park, but
don't expect us to write a check on the basis of a handshake
between President Clinton, Director Clark and Chairman Elers.
[The prepared statement of Hon. Barbara Cubin follows:]
Statement of Hon. Barbara Cubin, a Representative in Congress from the
State of Wyoming
Today the Subcommittee meets in its oversight capacity to
review the agreement reached among the Clinton Administration,
Crown Butte Mines, Inc., and the Greater Yellowstone Coalition
to buy-out the proposed New World mining project near Cooke
City, Montana. Until late last week we had intended to discuss
the methodology proposed to buy out private old-growth timber
lands in the Headwaters Grove of Humboldt County, California,
as well. This was because the Administration had proposed to
fund both these deals via schemes involving Mineral Leasing Act
receipts. All that changed when White House and Congressional
budget negotiators decided to add $700 million to fund
``priority land acquisitions and exchanges'' to the five-year
budget agreement. Therefore, if the budget resolution on the
floor later today is adopted, the funding for these two
acquisitions would likely be through the usual mechanism of an
appropriation from the Land and Water Conservation Fund, and
not the original plan to divert mineral lease receipts.
So why are we here today? Because, I believe the
authorizing committee with jurisdiction over ``mining interests
generally has an obligation to hear this issue. Was a
legitimate property right of Crown Butte Mines, Inc. threatened
with a governmental taking by the endless delays in
environmental documentation and permitting? Would Yellowstone
National Park likely have been imperiled by the building of the
proposed New World mine? In sum, when the facts of this case
are brought to light, do they support this agreement?
Let me say at the outset that I am not urging the
permitting of a gold mine next door to a place I do indeed
cherish, Yellowstone National Park, but that doesn't mean I am
ready to recommend the appropriations committee write a $65
million check tomorrow to Crown Butte Mines. And, yes, I
realize that unless and until the owner of the private lands
and mineral rights buys into the agreement there really is no
deal. But, in my opinion, it is time to ask the parties to the
agreement to say for the record why they believe it to be in
the public interest to do this deal.
Remember, just saying its in the public interest to do this
deal, doesn't make it so. That's why an environmental impact
statement was in the works--so permitting decisions would be
made on a scientifically sound basis. Perhaps more than
anything else in the New World deal, the termination of the EIS
process bothers me greatly. Will ratification of this deal by
Congress--in the context of a check made out to Crown Butte
Mines and drawn on the United States Treasury--establish a
precedent for short-circuiting the environmental process when
people become fearful a decision to permit a mine (or log
trees, for that matter) appears imminent?
Understanding the background leading up to the August 1996
agreement, I assure you, is critical to forging a ``willingness
to pay'' attitude here in Congress. Its time to stop doing this
deal behind our backs and then announcing a done deal. We're
fully capable of deciding whether or not to spend $65 million
of taxpayers' money to protect Yellowstone Park, but don't
expect us to write the check on the basis of a handshake
between President Clinton, Director Clark and Chairman Elers.
Mrs. Cubin. I turn now to Subcommittee Ranking Member, Mr.
Romero-Barcelo, for any opening statement he might have.
STATEMENT OF HON. CARLOS ROMERO-BARCELO, RESIDENT COMMISSIONER
FROM PUERTO RICO
Mr. Romero-Barcelo. Thank you, Madam Chair. Madam Chair, we
appreciate the opportunity to hear from the Clinton
Administration, the Greater Yellowstone Coalition and the Crown
Butte Mine Corporation today on the proposal to protect
Yellowstone National Park from the adverse effects of the
proposed New World Mine. And we understand that this hearing
will not address the Headwaters proposal since the recent
budget negotiations have rendered our jurisdictional interest
moot.
Before I mention anything, I just want to bring forward
just a memory that I have. Whenever I think of the Yellowstone
National Park, I remember when I went there with my family and
our children were small. And we wanted to see--above all we
wanted to see Old Faithful. One of the children decided that
they had to go to the boy's room, and so we figured we had
enough time. So we went to take my son to the boy's room. We
came back out. Old Faithful had already steamed out and we were
so disappointed. Anyway, it was a wonderful experience to visit
Yellowstone National Park. It is a wonderful park.
We are pleased that the President and Republican leadership
chose to include the provision in the recently agreed to budget
for acquisition of the New World Mine's mining claim and also
to acquire the Headwaters Redwoods Forest through the Land and
Water Conservation Fund Act. Yellowstone is our nation's first
national park. The Headwaters Forest in California is the
largest unprotected stand of ancient old-growth redwood trees
in the world. Extreme and serious pressures that would have
severely affected these areas prompted, indeed even forced, the
Administration to step in and try to save them.
According to the Minerals Management Service, the revenues
generated by the Outer Continental Shelf Leasing program are
rising, up to nearly $6 billion this year, with anticipated
revenues more than $10 billion by the year 2000. One of the
more recent OCS lease sales brought in some 826 million to the
Federal Treasury in 1 day.
Since this is a primary source of funding for the Land and
Water Conservation Fund, it is indeed appropriate that the
Federal Government buy the New World and the Headwater
properties outright rather than resort to complicated land
exchanges.
Thank you, Madam Chair.
[The prepared statement of Hon. Carlos Romero-Barcelo
follows:]
Statement of Hon. Carlos A. Romero-Barcelo, a Resident Commissioner in
Congress from the State of Puerto Rico
Madame Chair, we appreciate the opportunity to hear from
the Clinton Administration, the Greater Yellowstone Coalition
and the Crown Butte Mine Corporation today on the proposal to
protect Yellowstone National Park from the adverse effects of
the proposed New World Mine. We understand that this hearing
will not address the Headwaters proposal since the recent
budget negotiations have rendered our jurisdictional interest
moot.
We are pleased that the President and the Republican
leadership chose to include provision in the recently agreed to
budget for acquisition of New World Mine's mining claims and
also to acquire the Headwaters Redwoods Forest through the Land
& Water Conservation Fund Act. Yellowstone is our nation's
first national park. The Headwaters Forest in California, is
the largest unprotected stand of ancient old-growth redwood
trees in the world. Extreme and serious pressures that would
have severely affected these areas prompted--indeed even
forced--the Administration to step in and save them.
According to the Minerals Management Service, the revenues
generated by the Outer Continental Shelf Leasing program are
rising, up to nearly $6 billion this year, with anticipated
revenues more than $10 billion by the year 2000. One of the
more recent OCS lease sales brought in $826 million to the
Federal treasury in 1 day!
Since this is the primary source of funding for the Land
and Water Conservation Fund, it is indeed appropriate that the
Federal Government buys the New World and Headwaters properties
outright rather than resort to complicated land exchanges.
Mrs. Cubin. Thank you, Mr. Barcelo. Now I will introduce
our panel of witnesses. We have Ms. Kathleen McGinty, Chair,
Council of Environmental Quality for the Executive Office of
the President; Mr. Karl Elers, Chairman, Crown Butte Mines,
Incorporated; and Mr. Mike Clark, Executive Director of the
Greater Yellowstone Coalition. And before we start, I would
like to swear in the witnesses. I believe that you were
notified that you would be sworn in. And I hope that is OK with
you. So would you mind standing and I will administer the oath.
[Witnesses sworn.]
Mrs. Cubin. Thank you. We do that for all witnesses in this
Subcommittee, so don't make any inference from it at all.
Let me remind the witnesses that under our committee rules
they must limit their oral statements to 5 minutes, but that
their entire statement will appear in the record. And that way
we can move along with our questioning more quickly.
The Chair now recognizes Ms. McGinty to testify.
STATEMENT OF KATHLEEN McGINTY, CHAIR, COUNCIL ON ENVIRONMENTAL
QUALITY, EXECUTIVE OFFICE OF THE PRESIDENT
Ms. McGinty. Thank you, Madam Chair and members of the
Subcommittee, for the opportunity to testify before you
regarding the President's effort to protect Yellowstone
National Park. The Yellowstone agreement was borne of and
reflects this Administration's commitment to preserve and
protect for future generations of Americans the world's first
national park and indeed the crown jewel of our national park
system. This agreement is reflective also of our commitment,
wherever possible, to work in partnership with industry and
other interest groups to achieve our environmental goals.
Let me express at the outset, Madam Chair, the President's
deep gratitude to the Congressional leadership who have now
joined us in this effort to protect Yellowstone by securing in
the budget agreement the funds necessary to get this job done.
Let me also, if I might, at the outset just recognize and
commend those whom I share the podium with here, Crown Butte,
now Battle Mountain, and the environmental groups represented
by the Greater Yellowstone Coalition. In every instance and at
every moment they have acted in absolute good faith and have
worked honorably to keep the best interests of Yellowstone and
the economy paramount.
As mandated by NEPA, my role is to advise the President on
environmental policy matters and coordinate activities of
Federal agencies and departments with regard to matters across
agency jurisdictional lines. Accordingly, I do chair the
Executive Committee and oversee the interagency team that is
assembled to ensure implementation of the Yellowstone National
Park agreement.
Madam Chair, to turn to some history here, in 1989 Crown
Butte Mines, Incorporated, a subsidiary of a Canadian mining
company, proposed a gold, copper and silver mining complex
located less than three miles from the northeast border of
Yellowstone National Park. The rights to minerals at the New
World Mine sight had been obtained under the 1872 Mining Act.
Under Federal law, therefore, the U.S. Government had no
choice. We were obligated to process the company's proposal to
mine these minerals and use Federal lands for a large tailings
impoundment.
Crown Butte submitted a plan for review that called for 15
years of operation, six major facilities, a 70 to 100 acre
tailings impoundment behind a proposed 90-foot tall dam. The
tailings impoundment would have been expected to contain the
highly acidic waste rock and metals in perpetuity.
The EIS process began in April 1993. The EIS was originally
expected to be issued as a draft in April 1994, however work
slowed when the preliminary findings began clearly to show that
major adverse impacts on Yellowstone were threatened,
specifically, significant environmental damage to the Clark's
Fork of the Yellowstone River, a federally designated wild and
scenic river, where identified risks to critical grizzly bear
habitat and to Yellowstone Park itself were highlighted.
Interagency review of the preliminary drafts of the EIS
also showed the need for new studies, and in particular to
examine groundwater flows. The preliminary draft EIS was made
widely available and reviewed not only in Montana but
throughout the United States. This occasioned the
identification of still more concerns. For example, many
analysts, including mining engineers, were critical of the
proposed submerged tailings system. Concerns were raised, among
other things, about seismological risks in the area. It was
highlighted, for example, that this area had experi-
enced more than 4000 earthquakes within a 180-mile radius. The
need for more analysis concerning containment of the 5.5
million tons of highly acidic waste rock that would be
generated by the mine was also raised as, again, were risks
associated with the tailings impoundment.
In March 1995, Wyoming Governor Geringer wrote to Montana
Governor Racicot to say that the alternative preferred by the
company could have a significant adverse impact on Wyoming
water resources and suggested that the tailings impoundment be
subjected to a wholly separate review. Moreover, again because
of the highly acidic nature of the ore body, Governor Geringer
called for a 75 to 100 million dollar bond to be posted to
cover any potential liabilities from damages.
As concerns about the EIS grew, court battles were also
beginning. Crown Butte was embroiled in a citizen's suit
brought under the Clean Water Act by a coalition of 14
environmental groups. In October 1995, the company was found
liable by a Federal District Court. Simultaneously, legislation
was introduced in both the House and the Senate to interfere
with or block the mine. With concern therefore growing all
around and from all fronts, it became abundantly clear that
there would be years of contentious litigation over the mine
regardless of whether the Federal Government approved or denied
the company's application.
Faced with this potential for costly and resource intensive
litigation, the environmental groups and the company entered
into discussions in an effort to identify creative options to
address their differences. In February 1996, Crown Butte, their
parent Hemlo Gold, and the Greater Yellowstone Coalition came
to Washington, approached CEQ together to explore whether the
Administration would be willing to consider a novel approach to
the problem. And that is exchanging Federal assets in exchange
for the company's agreement to cease and desist further pursuit
of the mine.
At that point, my staff formed a small interagency working
group to assess implications and possible elements of such an
approach. They concluded that there were enough common
interests among the parties that we should pursue more detailed
discussions. All parties agreed that confidentiality was
necessary and appropriate because the discussions would involve
issues regarding ongoing and potential future litigation and
because premature release of information could adversely affect
the company's stock.
In April 1996, the Administration appointed Mr. John
Schmidt, who was then the Associate Attorney General of the
United States, and Mr. Jim Pipkin, Counselor to the Secretary
of Interior, to further the discussions with the environmental
group and the company. Regular discussions were held focusing
primarily on, first, the value of the mine, second, the cleanup
and restoration of environmental impacts associated with many
years of small scale mining in the area, resolving protracted
legal proceedings, and finally, resolving potential Federal
enforcement actions.
In August 1996, the discussions came to fruition. At that
time President Clinton, Crown Butte Mines and a coalition of
environmental groups announced that the parties had reached an
agreement in principle to protect Yellowstone and the
surrounding area. Moreover, the agreement would ensure that
environmental impact of historic mining in the area would be
remediated and that years of costly and contentious litigation
would be avoided. The August 12 agreement, therefore,
represented a major milestone in the effort to protect
Yellowstone. However, the agreement did not complete the job.
Rather, as an agreement in principle it laid out a plan of
action, actions when completed would protect the park.
Two of the most significant action items included, first,
the undertaking of the Federal Government to identify $65
million of Federal assets to be exchanged to Crown Butte, and
second, Crown Butte's undertaking to acquire the property it
currently leases from Ms. Margaret Reeb, a Montana resident and
the other major landowner in addition to Crown Butte in the
area.
To turn briefly to the Federal Government's undertaking,
immediately upon conclusion of the agreement in principle, the
Federal agencies began the work of identifying the necessary
assets. In the course of this effort, we reviewed surplus
military installations, General Services Administration surplus
property, National Forest timber lands, leased and unleased
coal lands and other Federal lands. We actively participated in
and supported Governor Racicot's Montana Initiative to explore
a mix of timber and coal lands in Montana.
For various reasons, each of these properties ultimately
proved unsuitable for the exchange. Some properties were
contaminated, for example. Others had previously been committed
to other uses, while still others were opposed by various
interest groups.
After this exhaustive search and rigorous effort, we
therefore proposed to divert mineral royalties from existing
mines in Montana. While diversion of royalties was generally
favorably received, the required offset we chose, the
Conservation Reserve Program, proved to be controversial. It
was in this context that the President and Congressional
leadership took the issue up in the balanced budget
negotiation. To reiterate what I expressed at the outset, the
President is extremely appreciative of the leadership support
in securing the funds now necessary to protect Yellowstone for
future generations.
To summarize that budget provision relevant to this matter,
an additional $700 million is proposed to be reserved from the
Land and Water Conservation Fund on top of the President's
request for the fund for this year. Of that amount, $315
million is reserved for priority Federal land exchanges, namely
$65 million for the completion of this agreement to protect
Yellowstone and $250 million to secure the Headwaters Forest in
Northern California. The budget agreement is, therefore, a
major milestone in the effort to protect Yellowstone. These are
new and additional funds so other priorities will be protected.
And indeed, the remaining $385 million can be put to priorities
agreed by the Congress and the Administration.
However, several more steps need to be completed before the
Yellowstone agreement can be implemented. First, Crown Butte
must fulfill its obligation to acquire the property it leases
from Ms. Reeb. Second, evaluation of the property must be
completed. And finally, the budget resolution must be passed
and then acted upon by the Appropriations Committee.
Madam Chair, I am confident that this is a fair way to
resolve a potentially long, bitter and expensive battle to save
Yellowstone. We in the Administration have been proud to work
with the environmental groups represented here and with the
Crown Butte Company, all who have acted honorably, in good
faith and with the best interests of Yellowstone and the
economy in mind. Madam Chair, saving Yellowstone does require
that many people come together to find common ground on behalf
of this truly national treasure. You have spoken eloquently
about Yellowstone and indeed, the need to find bipartisan
solutions. I hope that we can work closely with you and other
Members of Congress now to finish this important job.
Thank you for the opportunity to speak to this important
initiative, and I am certainly available to take whatever
questions you might have.
[The prepared statement of Kathleen McGinty may be found at
end of hearing.]
Mrs. Cubin. Thank you very much. Mr. Elers.
STATEMENT OF KARL E. ELERS, CHAIRMAN, CROWN BUTTE MINES, INC.
Mr. Elers. Thank you, Madam Chair and the members of the
Subcommittee. My name is Karl Elers, and I am Chairman of the
Board of Directors of Crown Butte Mines, Inc, a Montana
corporation. I assumed that position in March of this year.
This is my first appearance before a Congressional committee,
and I appreciate the invitation to be here.
The letter of invitation to testify indicated the
committee's interest in the agreement reached between Crown
Butte, the Administration and certain environmental interest
groups in August 1996. Crown Butte found the decision to enter
into the August exchange agreement a difficult one. A brief
chronology of the events leading up to our decision to execute
the agreement will shed some light on why Crown Butte decided
on this course of action. And toward this end, I think I will
be giving a lot of the same chronology as Ms. McGinty, but from
the perspective of Crown Butte, obviously.
The area in dispute, known as the New World Mining
District, is a historic district dating back to 1869. In 1978,
the U.S. Congress specifically considered and excluded the New
World District from the Absaroka-Beartooth Wilderness due to
past mining activity and the present mineral potential.
Proposing a state-of-the-art mine with a strong reclamation
plan to remediate historic mining disturbances made sense, yet
Crown Butte became the focus of a national and international
debate.
The permitting process for the New World property began
formally over 6 years ago in November 1990 when Crown Butte
submitted its operating permit application. The permitting
process for the New World property proved to be complex and
time consuming and was met with unusually high opposition. In
all, more than 25 separate state, Federal and county permits
would be required prior to approval of the project. A revised
operating permit application was resubmitted to the lead
agencies in 1992 following extensive changes resulting from the
decision by Crown Butte not to use cyanide in the processing.
Crown Butte responded to a total of six reviews of the
operating permit application before it was declared complete in
1993 and the EIS process began. Crown Butte was initially
informed that the draft EIS would be available in late 1994.
This date was not met. In 1994, Crown Butte was advised by the
agencies that a draft of the EIS would be issued by the end of
the second quarter of 1995. This date was not met and Crown
Butte was subsequently advised by the State of Montana that the
draft EIS would be released in the fall of 1995. This date was
also not met. In March 1996, Crown Butte was advised by the
lead agencies that the draft EIS would be released by late
spring or early summer of 1996. The draft EIS had not been
released by August 12, 1996, when Crown Butte executed the
exchange agreement. The EIS process has been suspended pursuant
to the terms of the exchange agreement.
As I mentioned earlier, the Crown Butte District is in a
historic mining area. Crown Butte's activities at the site have
included reclamation of historic mining activities. And in
December 1992, the company received an excellence award for
outstanding commitment to environmental protection from the
U.S. Forest Service. This award recognized the company's
innovative and successful efforts to mitigate historic adverse
environmental impacts.
In 1994, following a complaint by special interest
environmental groups, the Corps of Engineers alleged that some
of the company's reclamation activities had been in violation
of the Clean Water Act. Crown Butte responded that it did not
believe these allegations were accurate, and in September 1995
the Corps issued Crown Butte a Section 404 permit authorizing
future reclamation activities.
Under the Comprehensive Environmental Response and
Liability Act, or CERCLA, the EPA initiated an investigation of
continuing environmental impacts from previous activities in
the Henderson Mountain vicinity.
In January 1995 interest groups filed a complaint against
the company with the Department of the Interior contesting
Crown Butte's mineral patent applications, which effectively
asked that the patents not be issued.
In February 1995 the groups requested the U.N. World
Heritage Committee to investigate whether Yellowstone qualified
for inclusion on the list of world heritage sites in danger.
Such determination would require the U.S. to take unspecified
steps to protect Yellowstone.
In June of that year, a senior Interior Department official
stated that Yellowstone was in danger. The U.N. committee
visited Yellowstone in September 1995, and the National Park
Service, a cooperating agency in the New World EIS, hosted the
event. In December 1995, the committee declared Yellowstone a
world heritage site in danger.
By June 1995, Crown Butte had exhausted its cash resources
and has since been forced to rely on loans totaling
approximately $5 million to date to sustain day-to-day
operations.
In August of that year the President took an aerial tour of
the mine site. The tour was followed by the Secretary of the
Interior withdrawing an area of approximately 19,000 acres,
including the New World property, from location under the
Mining Law.
In October 1995, the District Court ruled on a complaint
filed by the interest groups, finding that Crown Butte was in
violation of the Clean Water Act for not yet having obtained an
NPDES permit for water coming from historic mine workings. A
trial was set but has been stayed in light of the exchange
agreement.
Madam Chair and members of the Subcommittee, I am sure you
can readily see that what began as an attempt to build a
modern, state-of-the-art mine in an area where historic mining
has occurred for over a century and which was specifically
excluded from wilderness designation by the Congress, quickly
became a battle of national and international proportions.
By mid-year 1996, Crown Butte had already been in the
permitting process for almost 6 years and promised dates for
the release of the DEIS had consistently not been met. Crown
Butte had run out of cash and the whole process had become
fraught with delays and uncertainty. The company found the
decision to enter into the exchange agreement a difficult one.
Crown Butte has always believed its proposal to build and
operate safely and responsibly a small state-of-the-art
underground gold mine at New World was not only environmentally
sound of itself, but also represented the best way to remediate
historic mining activities which date back more than 100 years.
In the end, the exchange agreement provided a practical
solution to a unique set of circumstances. The protracted
permitting delays, legal challenges facing ongoing development
and potential liabilities related to historic mining caused the
economics of the project to deteriorate. Crown Butte's
management ultimately decided the agreement was in the best
interests of the shareholders and would compensate them, in
some measure, for the amount they have spent to date in
acquiring, exploring and attempting to permit the property.
Madam Chair and members of the committee, that concludes my
statement and I, too, would be pleased to respond to questions.
[The prepared statement of Karl Elers may be found at end
of hearing.]
[Supplemental information of Karl Elers may be found at end
of hearing.]
Mrs. Cubin. Thank you, Mr. Elers. The Chair now recognizes
Mike Clark.
STATEMENT OF MICHAEL CLARK, EXECUTIVE DIRECTOR, GREATER
YELLOWSTONE COALITION
Mr. Clark. Thank you, Madam Chair and members of the
Subcommittee. My name is Michael Clark. I am the Executive
Director of the Greater Yellowstone Coalition, a Bozeman,
Montana-based group with field offices in Cody, Wyoming, and
Idaho Falls, Idaho. We are 14 years old. We have a membership
of 7400 members, 119 corporate members and 120 organizational
members. Our mission is to preserve and protect the Greater
Yellowstone ecosystem and the communities it sustains.
Today I also represent the Beartooth Alliance, the Gallatin
Wildlife Association, Montana Wildlife Federation, the Wyoming
Wildlife Federation and the Wyoming Outdoor Council. Each of
these groups has worked closely with us on the New World Mine.
Thank you for the invitation to testify on the agreement
negotiated in 1996 between the Clinton Administration, Crown
Butte companies and the conservation community. Congress now
has the key role in creating and approving legislation that
will resolve this issue permanently. We welcome your
leadership. We look forward to working with you in completing
the agreement.
We continue to believe that the New World agreement is a
good deal for the American people. We also acknowledge that it
has been far more difficult to achieve than we had originally
thought, but it is still a valid way of resolving this
situation. Without the agreement, the mining companies and the
conservation community would still be locked in a major
confrontation over the threat of a gold mine outside
Yellowstone. The agreement provides a method for ending this
battle and for allowing each of us to move on to other issues.
The agreement provides the company with a fair exchange for
its assets. It creates a $22.5 million reclamation fund to
clean up and restore the polluted lands on Henderson Mountain.
It provides research funds to study the situation, offering the
possibility that the cleanup could benefit other polluted
mining sites in the interior west. And it ensures that the wild
character of the lands adjacent to Yellowstone and the
Absaroka-Beartooth Wilderness will be protected from industrial
development for the region's wildlife and for the benefit of
future generations.
We are supportive of the efforts recently to use the Land
and Water Conservation Fund to complete this agreement. We now
look to the leadership of Congress to conclude the deal by
passing new legislation that will resolve this situation.
I would like to ask that you add to my written testimony
recognition of two groups that worked with us that were not
included in that testimony. These are the Mineral Policy Center
and the National Parks and Conservation Association, which
worked with us very closely on this situation.
Thank you. I will be glad to answer any questions.
[The prepared statement of Michael Clark may be found at
end of hearing.]
Mrs. Cubin. Thank you. Thank all of you very much. I think
I will start the questioning. Let us go ahead and put the light
back on so that we will limit our questions to 5 minutes each.
I would first of all like to ask unanimous consent to allow
Rick Hill, Representative from Montana, to sit with us and to
question the witnesses. OK, hearing no objection.
OK, I will start out. Ms. McGinty, I applaud your efforts
for working with all the parties involved and in reaching an
agreement. I think it helps everyone when that can happen. I do
have some concerns and questions. I do indeed recognize that
the budget negotiators have agreed to $700 million of
additional funds available through the LWCF for priority land
acquisition. My math, and yours too, says that this deal costs
$315 million, and yet the price tag is 700 million. I would
like to know what other things you plan to spend it on,
particularly if part of the buyout will be private oil and gas
rights that are adjacent to the Everglades, and also if part of
the money is intended to go to Escalante to buy out the school
sections and the lands that are not Federal lands there.
Ms. McGinty. Yes, thank you. There are several parts to
this aspect of the budget agreement. As the committee is aware,
the Land and Water Conservation Fund itself is a fund with a
balance on the order of, I think as the Ranking Member noted in
his opening remarks, on the order of $11 billion. What this
budget agreement says is that of that $11 billion balance $700
million will be reserved in 1998 in addition to the President's
request for fiscal year 1998 for two things. One is 315 million
of that 700 million will go to the priority land exchanges, 65
million for New World Mine and 250 million for Headwaters.
The balance, Madam Chair, to get more specifically to your
question, will--is available for unidentified purposes, but for
purposes that the Congress in consultation with the
Administration may identify other priorities. It will just go
through the normal process that the Congress in consultation
with the Administration follows every year in allocating the
Land and Water Conservation Fund.
Mrs. Cubin. It just seems so extravagant based on our
current financial situation. It stymies me. While I might agree
that--and do agree that if the buyout takes place it ought to
come from the Land and Water Conservation Fund, but then I am
asked to put in an additional $315 million for something I
don't even know what it is. That is troublesome to me, but I
applaud you. You have done a good job based on your priorities
and your job is. I think it is the budgeters and the
negotiators, maybe, that I need to take this up with.
Ms. McGinty. It will come back, just to be clear. That
money will be--the remainder, the 385 million of the 700----
Mrs. Cubin. Right.
Ms. McGinty [continuing] as opposed to the two things for
Yellowstone and Headwaters. That will be up to the Congress in
the normal course to decide how those moneys should be
appropriated in consultation----
Mrs. Cubin. Sure.
Ms. McGinty [continuing] with the agencies.
Mrs. Cubin. I realize that. However, I still think it goes
a little bit farther than I would like to see it go.
I recognize that this deal and Headwaters both involve
corporate interests being bought out of their permitting
dilemmas, and I believe at this stage that Crown Butte may have
been unfairly treated during the process in terms of delays and
all of the problems that they run into. But my question is
this. Would an individual miner or small landowner have
received compensation as Crown Butte appears to be going to?
My Chairman Don Young, for example, has small miners in
Denali Park in Alaska and in another area that have wrestled
with the Federal Government for over 15 years trying to get
their just compensation. And I just wonder why Battle Mountain
Gold's interests are to be bought out and John Q. Public
appears to be sent packing in this area.
Ms. McGinty. Well, I will take the first part of the
question, Madam Chair. The imperative here was to protect
Yellowstone National Park, and what we attempted to do, again
in partnership with the company and the environmental groups
that were involved was to say is there a way to resolve what
has at this point become quite a heated battle over this issue,
resolve it in an amicable way that both protects the
environment, Yellowstone Park, and is respectful of the
company's legitimate property interests. And that is why we
were--we came together to forge this agreement.
Mrs. Cubin. Mr. Elers, let me say up front that I realize
you were not in your current position when this agreement was
brokered, when it was proposed. Therefore when I say you, I am
not talking about you. I am talking about the collective you,
which would be your company.
I believe that too much misinformation and manipulation
relating to the development of this mine has occurred. I
believed, as did a vast majority of my constituents, that the
Administration in an attempt to stop development of this mine
intervened in the established EIS process and stopped it by
offering a deal to Crown Butte. It is commonly believed in my
state that the EIS was coming out to be favorable for the
development of the mine and that the President would go to any
legal means to prevent that from happening, therefore, if not
violating the process at the very least compromising it.
It is also very commonly believed that the CEQ held a
metaphorical gun to your head by telling you that the mine
would never be developed and so your only alternative was to
take the deal. Then 1 day some representatives from the
Administration came to my office and I learned from them that
in fact Crown Butte approached CEQ with the brokering and
assistance, admirably so, of the Greater Yellowstone Coalition.
Therefore, for virtually months I had been relating
misinformation to my constituents and to the press and never
once did anyone from Crown Butte bother to come forward and
say, no, the Administration didn't step in and stop this, we
made the first move.
I am sure that the truth lies somewhere between Crown
Butte's out of the clear blue coming in and saying I want to
make a deal and ``that you will never get your mining permits
so you better deal.'' I am sure that the truth lies somewhere
in between there. I suppose we will never know exactly what it
is.
I understand that the Department of Interior provided this
Subcommittee with a box of documents, mostly related to how the
deal to divert oil, gas and coal leases, coal lease revenues
from the U.S. Treasury to the mining company to pay for the
deal. The Forest Service also sent up a huge box of things. And
I--because they didn't come until late Friday night, I haven't
had the opportunity to go through them and I don't know when I
will, but what I do know is that before this Subcommittee makes
any recommendations on this buyout I will personally go through
every single document that is furnished to us, and that could
take a very, very long time.
Having said that, I would like to ask you the question. In
your statement, and this is a quote, it says the draft EIS had
not been released by August 12, 1996, when Crown Butte
executed--oh, excuse me, that is not the one I wanted to ask.
When you say that the Park Service hosted the U.N.
committee on the world heritage at Yellowstone National Park in
1995, does that mean that they paid for the heritage committee
to come over here? Do you know the answer to that?
Mr. Elers. I don't know the answer to that, Madam Chair.
Mrs. Cubin. Do you know the answer to that, Ms. McGinty?
Ms. McGinty. No, I don't, Madam Chair.
Mrs. Cubin. While I am concerned that Crown Butte has been
less than forthcoming in this matter, I am also concerned that
Crown Butte wasn't exactly getting the fair deal that they are
guaranteed under the Constitution. The Administration appears
to have been dealing with a stacked deck. It appears that all
of the resources of the Department of Interior and CEQ were
ready to be used if necessary against the mining company, the
State of Montana or any other citizen who was against
development of the mine. The President even interrupted his own
vacation to take an aerial tour of the site, so there is little
doubt in my mind that the EIS was not going to be published by
a Federal agency with a preferred alternative to allow the mine
to be developed.
So let me ask you, Mr. Elers, and then I better give up my
time. Is your parent company's gold mine in South America
subject to this same kind of treatment by the Bolivian
Federales?
Mr. Elers. No, Madam Chair, they are certainly not. The
Bolivian government, with whom we have had a relationship now
for about 10 years--about 9 years--has been very supportive of
our mining activity and anxious to see it through to
development. I might also point out that we were subject to the
covenants of international lending agencies, the Bolivian
government's environmental standards, as well as our own
corporate standards of environmental protection in developing
that mine. But that mine was developed very expeditiously.
Mrs. Cubin. So is it fair for me to say that the New World
Mine is just another example of why so much investment capital
is moving out of the United States into other countries?
Mr. Elers. That is a fair assessment. Certainly speaking
for our own parent company organization, we have moved most of
our exploration activities outside of the United States.
Mrs. Cubin. Thank you very much. Mr. Barcelo.
Mr. Romero-Barcelo. Thank you, Madam Chair.
Ms. McGinty.
Ms. McGinty. Yes.
Mr. Romero-Barcelo. I enjoyed your testimony.
Ms. McGinty. Thank you, sir.
Mr. Romero-Barcelo. I would like to ask a question. I
realize that you are not the Administration's expert witness on
the Mining Law of 1872, so I ask that you refer this question
to the Department of Interior.
Ms. McGinty. Yes.
Mr. Romero-Barcelo. For a written response.
Ms. McGinty. I would be happy to.
Mr. Romero-Barcelo. My question is as follows. Is Mr. Elers
correct in his assertion that application of the comparative
value test would be contrary to the longstanding practice of
the Department of the Interior?
Ms. McGinty. Well, sir, you have guessed right. I am not
the expert on that, but I would be happy to have the Department
respond to you in writing immediately.
Mr. Romero-Barcelo. And more to the point, is imposition of
this test consistent with law and legal precedent?
Ms. McGinty. I will also have to have the Department
respond.
Mr. Romero-Barcelo. And finally, the other question is
also, can Crown Butte's patent applications be approved under
the patent moratorium put in place by Congress?
Ms. McGinty. Similarly, I will need to provide a written
response from the Department.
Mr. Romero-Barcelo. I would appreciate that. And now, Mr.
Elers, this question relates to the Crown Butte's patent
applications under the 1872 Mining Law. Why do you say in your
testimony that the imposition of the comparative value test
would be contrary to the longstanding practice of the
Department of the Interior in determining whether or not to
grant Crown Butte's application to patent or to acquire the
mining claims in question?
Mr. Elers. The patent applications, we believe, were
subjected to a lot more challenge than a normal patent
application would be subjected to due to their proximity to
Yellowstone.
Mr. Romero-Barcelo. That is the reason why you make that
statement, in other words?
Mr. Elers. I believe that is the primary reason.
Mr. Romero-Barcelo. And also in your testimony you state
that Crown Butte's proposal for the New World Mine would have
represented the best way to remediate the effects of hundreds
of years of mining disturbances. How would Crown Butte have
accomplished this?
Mr. Elers. Through water treatment, through remediation of
the longstanding leakage of acid mine drainage from existing
historic mines, and also in surface disturbances through
continuing to reclaim areas that were surface mined,
particularly, I believe, during World War II for copper. A lot
of that work has been done. A lot of work yet remains to be
done.
Mr. Romero-Barcelo. Thank you very much, Mr. Elers.
Mr. Elers. Thank you, sir.
Mr. Romero-Barcelo. And, Mr. Clark, I would like to ask
you--Ms. McGinty and Mr. Clark, would you care to respond to
Mr. Elers' explanation of the remediation and how it would work
on the New World site? First of all Mr. Clark.
Mr. Clark. I am sorry, sir. I couldn't hear everything you
asked.
Mr. Romero-Barcelo. I said would you care to respond to Mr.
Elers' explanation of the remediation and how it would work at
the New World site, what he just said.
Mr. Clark. Well, the company proposed to use its milling
operations to clean up that site if it were in full operation.
Obviously with the mine not going ahead, that will not occur,
but the reclamation agreements that we negotiated allows for
$2\1/2\ million to be spent on the site. That is a huge amount
of money for our region, and we think that that amount of money
will go a long way toward cleaning up the existing pollution on
that site. So we think that when this is over that site will be
much better than it was and we will be able to walk away with
it, all of us, with our heads held high.
I am also hopeful that research activities that are
proposed to be conducted there will have application in other
parts of the interior west where historic mining sites also
occur.
Mr. Romero-Barcelo. Thank you very much. And, Ms. McGinty,
you agree with Mr. Clark's statement?
Ms. McGinty. Yes, absolutely, sir. In fact, I think one of
the most important parts of this agreement is that that money
that Crown Butte has put on the table will be available
immediately to begin the cleanup job that even today is
affecting water quality in the area. It will create jobs in
terms of getting the cleanup job underway and I think it will
be a very important step forward for the area.
Mr. Romero-Barcelo. Thank you, Ms. McGinty. And finally,
Mr. Clark, for the record, why did the Greater Yellowstone
Coalition and other environmental groups consider the New World
Mine unacceptable?
Mr. Clark. I have only been at the Greater Yellowstone
Coalition for 3 years. The decision to fight the mine that was
made by the Greater Yellowstone Coalition was made before I was
there, but I believe that decision was made in 1993 or 1994. So
it was well underway by the time I arrived. The early
determination was that a mine of that size poised on the
mountains above Yellowstone and above the Clarks Fork River was
an unacceptable risk because it would create irreversible
impacts in the region.
And I think that is an important distinction for us,
because, for example, we do think that logging should go on. We
think that grazing in the public lands should go on. We think
that activities like that, as long as they are not
irreversible, are ones that could occur on the public lands if
these are not major environmental consequences. But in that
site, at that location, we thought that a mine of that size
operating the way it was proposed was an unacceptable risk to
Yellowstone. And we concluded that no risk was acceptable to
the Yellowstone Park, so we made a determination that is quite
different from the way we ordinarily look at industrial
proposals in our region.
Mr. Romero-Barcelo. In other words, there is no way, in
your opinion, that a gold mine could be created and operated
safely at the New World site?
Mr. Clark. We would be against an industrial scale gold
mine operating at that site, sir.
Mr. Romero-Barcelo. Thank you very much.
Mrs. Cubin. Thank you. Mr. Duncan.
Mr. Duncan. Ms. Cubin, I am going to yield my time back to
Mr. Hill, because he is--this is involving his state. But I do
want to say that I continue to be concerned about the secrecy
that is involved in some of these situations. Just a few days
ago we held a hearing in another Subcommittee of this committee
about the Utah land grab of the Grand Staircase Escalante, the
property that you mentioned earlier. And that went on for
months and there was intentional efforts made in that case to
keep that hidden from the public and keep that secret.
And now I read that there was the same type of secrecy in
the Headwaters situation in California. And I don't know
anything about that situation out there, whether it would have
been good or bad, but I can tell you that we are told that some
of these laws like the antiquities law and others have been
used for many years but they have not been used with the
secrecy that is going on at this time. We have never had things
like this happen in this country before. And apparently there
are too many people at high levels in this government who are
so arrogant and so elitist that they think they should be
allowed to run this country with no input from the Congress or
from the people. And I think it is a very sad situation, a very
sad day in this country.
And with that, I yield my time to Mr. Hill.
Mrs. Cubin. I think Mr. Hill wants the time altogether, so
I ask unanimous consent----
Mr. Duncan. He can have my time.
Mrs. Cubin [continuing] to recognize Mr. Dooley and then
put yours altogether.
Mr. Dooley. Thank you, Mrs. Cubin. And I apologize for
being delayed as I had a conflict. And I really don't have any
questions at this time, so I will be brief. I would say,
though, that I really, you know, want to commend Ms. McGinty
and the Administration for the work that they have done in
specific reference to the Headwaters. This is an issue that I
have been involved in in a legislative capacity for the last,
oh, I guess it was almost 6 years where we have tried to find a
way that we can ensure that we provide an adequate level of
protection for what is a fairly unique natural resource.
And the reason I am commending the Administration is that I
think in this case that they approached this with the
objectives of trying to ensure that we would respect the
private property rights of an individual and at the same time
achieve the objective of what I think that most of us would
agree would be embraced by the majority of the American people
in preserving the Headwaters Forest. And I am very pleased that
in the process of negotiating the budget agreement that they
were able to secure the potential that this can be purchased.
I had some concerns about the original plan in terms of the
sale of some Federal assets, even oil and gas leases, which
while in itself might not have been impossible to orchestrate
and to achieve, though certainly would have added an additional
degree of complexity to consummating this Headwaters purchase.
I would hope that the Administration, though, would be very
diligent in ensuring that we reach an agreement on the HCP for
the Headwaters as well as the sustained yield, which are also
integral components of bringing this Headwaters issue to
conclusion.
But I think it is, you know, with Mr. Duncan's concern
certainly we can't have--we need to have openness in this
process. I felt pretty, you know, kept apprised of this and
certainly I appreciate the Department of Interior's interest in
working with a lot of the local oil producers in my district. I
just hope that come October that we have finished this and it
is off the table and out of the political arena.
And I think we could probably--I could certainly say the
same with the Crown Butte Mines issue, that hopefully we can
resolves that and achieve, I think, the objective, which will
be reflecting the values of the American people, and at the
same time demonstrating our commitment to respect the private
property rights of individuals. So thank you.
Mrs. Cubin. Thank you, Mr. Dooley. I ask unanimous consent
for Mr. Hill to be able to give an opening statement.
Mr. Hill. Thank you, Madam Chairman.
Mrs. Cubin. No objection.
STATEMENT OF HON. RICK HILL, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF MONTANA
Mr. Hill. I want to thank you, Madam Chairman, for holding
the hearing today and for allowing me to take part as an ex
officio member of the Subcommittee. The people of Montana have
not been given very much information on the substance of the
proposed New World Mine buyout, and I am hoping today that we
can get to the bottom of some of the issues and questions that
I have received on this.
Most of the discussions and negotiations have taken place
behind closed doors, so today maybe we will have the
opportunity to be privileged to what some of those discussions
were.
The opinion of Montanans is mixed about whether the
proposed buyout is good or bad for Montana. Much of the
confusion over this buyout can be attributed to the lack of
knowledge. And given the latest development, Montanans remain
puzzled. It is my hope today that our witnesses will shed some
light on whether the proposal the President signed is still in
play or whether they are now considering other options. I hope
also that they will shed some light on how we got to this
point, how were the interests of Montana and taxpayers and the
environment weighed in the negotiations.
I remain optimistic that we can see a way clear to resolve
the issue. And I believe an important first step is the
completion of an environmental impact statement. I have asked
in a letter to the President, which I ask unanimous consent to
have inserted in the record, that the environmental impact
statement on the New World Mine be completed. Before we ask the
taxpayers to pay for a property, it only seems right that the
taxpayers know what they are buying.
I have not yet received a response to my request, and I
hope today that Ms. McGinty can shed some light on the
President's views on the importance of completing an
environmental analysis on this proposal. The people appearing
in front of us today have worked long and hard on the effort.
No one wants to see that effort wasted, including this member.
Through the conversations we have today I would hope--it would
be nice if we can discern a path toward a common goal of doing
what is good for the people of Montana and Yellowstone Park.
[The prepared statement of Mr. Hill follows:]
Statement of Hon. Rick Hill, a Representative in Congress from the
State of Montana
I want to thank Chairman Cubin for holding this hearing
today and for allowing me to take part as an exofficio member
of this subcommittee. The people of Montana have not been given
much information on the substance of the proposed New World
Mine buy-out and I hope that through this hearing today we can
get some important questions answered.
Most of the discussions and negotiations have taken place
behind closed doors, so I am interested in hearing from those
who have been privy to the discussions. The opinion of
Montanans seems to be mixed as to whether the proposed buy-out
is good or bad for our state. Much of the confusion over the
buy-out can be attributed to a lack of knowledge. Given the
latest developments, Montanans are all a little puzzled.
It is my hope that our witnesses today can shed some light
on whether the proposal the President signed is still in play
or if they are now considering other options. I also hope we
can shed some light on how we have come to this point. How were
the interests of Montana the U.S. taxpayers and the environment
weighed in the negotiations?
I remain optimistic that we can see a way clear to resolve
this issue. I believe an important first step is the completion
of the environmental impact statement. I have asked in a letter
to the President, which I ask unanimous consent to have
inserted in the record, that the environmental impact statement
on the New World Mine project be completed. Before we ask the
taxpayers to pay for a property, it only seems right that the
taxpayers know what they are buying. I have yet to receive a
response to my request and hope that Ms. McGinty can shed some
light on the President's views on the importance of completing
the environmental analysis.
The people appearing in front of this committee today have
worked long and hard on this effort. No one wants to see that
effort wasted. Through the conversation we have today it would
be nice if we can discern a path toward our common goal of
doing what's best for the people of Montana and Yellowstone
Park.
Mr. Hill. As this process has gone forward, I have actually
tried to help make this agreement complete. I believe that the
agreement is incomplete. The President's political priorities
have been addressed in this agreement. The Greater Yellowstone
Coalition's narrow priorities have been represented in this
agreement. Crown Butte's economic priorities have been
represented in this agreement, but the people of Montana have
not been represented in this agreement or even had the
opportunity to be represented in any capacity in any stage of
the negotiations.
The concerns with the people of Montana and the concerns of
the State of Montana and the communities who have been impacted
or will be impacted are very important to me. I have
participated and tried to develop the Montana Initiative that
Ms. McGinty referred to, yet nothing in this proposal, nothing
in this proposal at this stage reflects any of the values that
were part of that negotiation.
We have had one proposal that involved the trading of
public lands in Montana, which has now been jettisoned. We had
another proposal that involved using the CRP, the Conservation
Reserve Program, as a mechanism for this. That has now been
jettisoned. I have to tell you frankly, although I have tried
to be helpful in this process, it seems like this is a moving
dynamic situation. And not one single instance has anybody from
the White House or any of the parties involved tried to consult
with me in the process.
So anyway, I would ask that that statement be inserted in
the record, and I do have some questions. Starting with you,
Ms. McGinty, let me understand this. Is the purpose of this
buyout to avoid legal liability on the part of the government?
Is that part of the motivation here?
Ms. McGinty. Sir, I am not aware of any legal liability on
the part of the government. The motivation is to protect
Yellowstone, but to do it in a way that is respectful of
private property rights.
Mr. Hill. So it is your view, then, that the U.S.
Government does not have any liability or any potential
liability as a consequence of the activities that occurred here
with regard to the New World Mine, either on the part of Crown
Butte or on the part of Greater Yellowstone Coalition.
Ms. McGinty. I am not aware of any legal liabilities that
the Federal Government would have in this case, no, sir.
Mr. Hill. OK, so then the purpose of the buyout is to
protect Yellowstone Park from environmental damage, is that
correct?
Ms. McGinty. Yes, sir, and in a way that is respectful of
the company's rights.
Mr Hill. But one of the objectives is to protect
Yellowstone Park from potential harm?
Ms. McGinty. I would say a paramount objective, certainly.
Mr. Hill. And so could you tell me on what objective
criteria the assessment was made that there was potential
environmental damage to Yellowstone Park?
Ms. McGinty. Certainly. The work that had been done
pursuant to the environmental impact statement had produced a
significant amount of commentary that, for example, expressed
concern about the seismological risks in the area, 4000
earthquakes had occurred in this area. The ore body is highly
acidic. Those earthquakes combined with acidic ore body posed a
grave threat to, for example, the Clark's Fork of the
Yellowstone River, a wild and scenic river. Critical grizzly
bear habitat concerns were raised about that habitat being
adversely impacted. The record is replete with concerns raised
by many, including Governor Geringer of Wyoming, very concerned
that Wyoming's water resources would be severely damaged if the
mine were sited in, for example, some of these other things
like an earthquake would have or could have happened at the
site.
Mr. Hill. And the purpose of the environmental impact
statement was to make--to raise those environmental risks and
require Crown Butte to propose how it would mitigate those
risks, is that correct?
Ms. McGinty. In the face of Crown Butte's proposal to the
government to assess what the environmental impacts of that
proposal might be, yes, to itemize them clearly, to see if they
could or could not be mitigated. Some of these concerns, for
example seismological risk, there is not a way necessarily to
stop mother nature from having earthquakes. So some could be
mitigated, some could not, but that certainly is the work that
was underway, yes.
Mr. Hill. Obviously Crown Butte does not have the power to
stop earthquakes, but certainly they would have within their
power to develop the mine in a fashion that would mitigate the
potential environmental risks associated with an earthquake.
Wouldn't that be part of what they would be required to address
in their environmental impact statement?
Ms. McGinty. Part of the process is to see if such a result
could be achieved, yes.
Mr. Hill. And so all of the risks that you just described,
which may or may not be valid risks, but they are risks that
were raised in the scoping process and the environmental
assessment----
Ms. McGinty. Yes.
Mr. Hill [continuing] were part of the responsibility of
Crown Butte as we go through the environmental impact process
to address in some fashion. Would that not have been part of
that process or the expectation of that process?
Ms. McGinty. Well, it would be part of Crown Butte's
responsibility, but also other parties to the EIS process. For
example, the Park Service certainly would have a responsibility
to ensure that Yellowstone Park was not threatened. The Forest
Service similarly that Gallatin National Forest was not
threatened.
Mr. Hill. And all those agencies were invited to be
participants in this process, is that not correct?
Ms. McGinty. Yes, and they were participating.
Mr. Hill. I think the superintendent of Yellowstone Park
kind of withdrew from that process toward the end because of
his opposition, but aside from that--so in the end, at the time
the environmental impact statement would be completed, we would
then have a complete picture of what those environmental risks
are and what efforts were possible to deal with those risks, is
that correct? Is that what the expectation of that would have
been?
Ms. McGinty. That would have been the effort, yes. I think
it would have been a very significant undertaking yet to put
that picture together.
Mr. Hill. And at that point in time when that would have
been completed, had Crown Butte not been able to address those
environmental hazards that you have described as the
President's concern, this mine wouldn't have gone forward,
would it?
Ms. McGinty. I suppose if the risks could not be mitigated,
that various parts of the permitting process--the EIS itself
would not necessarily have said yes or no to the mine. What
would follow from the analysis there were various permitting
activities, whether, for example, the Corps of Engineers would
be able to issue a wetlands permit.
Mr. Hill. So what you are saying is that the various
permits, probably a dozen or more permits, the decision on
those permits would have been based upon whether or not the
environmental risks could or could not have been mitigated. My
question to you, then, is that if in fact this mine poses all
the risks that cannot be mitigated that you have identified as
the reason for the President taking this action, why in the
world should the taxpayers pay anything for this?
Ms. McGinty. Well, I wouldn't assume, sir, that actions
couldn't be taken somehow to minimize some of those risks. That
is the calculation that we all were faced with. The issue was
there is a chance that a mine could be sited in this area.
There is a chance that it might not. Balancing those risks, we
thought that this agreement that both ensured the protection of
Yellowstone Park, ensured the protection of the economies
around Yellowstone Park that have been built up over the last
century and a quarter, and ensured the company's rights, was
the best balance of interests that could be achieved.
Mr. Hill. So you--if I might have one last question on this
line. So the White House is in possession, then, of documents,
material, the environmental impact statement at this stage. I
believe maybe other agencies have done assessments of their
involvement in this process and evaluation of these hazards. If
I might--this is just a yes or no question. Will you make and
will you instruct all those agencies to make that information
available to this committee, any information that is in the
possession of any of the agencies that deals with these
environmental evaluations that you examined objectively, so
that this committee could also do that objective analysis?
Ms. McGinty. Yes, and I would remind you, sir, that the EIS
is, and all of these assessments are fully public and have been
throughout the process.
Mr. Hill. In any agency, any other agency that has done any
internal evaluations of this both--I mean, involving this
particular project?
Ms. McGinty. Yes, any analysis that was done to comment on
the proposal being made----
Mr. Hill. No.
Ms. McGinty [continuing] to assess the----
Mr. Hill. I want any subsequent analysis as well. I mean,
any analysis of this whole thing that has been done by various
government agencies. Is there any reason this committee can't
have--be in possession of that?
Ms. McGinty. I can't imagine a reason. And in fact, as the
Chairman pointed out at the opening, we have already produced,
I think, a significant amount of documents from various
agencies on this matter.
Mr. Hill. And if there are others that we can identify----
Ms. McGinty. We would be happy to work with you on that,
certainly.
Mr. Hill. Thank you. Thank you, Madam Chair.
Mrs. Cubin. Yes, and I would ask also that you would work
with the committee staff to identify documents we have and what
you don't. So thank you for that.
Mr. Cannon.
Mr. Cannon. Thank you, Madam Chair. If my colleague from
Montana would like to continue asking questions, I would be
happy to yield my time to him.
Mr. Hill. Thank you. Thank you very much. Going on, Katie,
I don't mean to be--I am not picking on you here. I just want
to get this thing all fleshed out here.
Ms. McGinty. That is fine. That is fine.
Mr. Hill. Because I seriously do want to be part of the
solution, but I can tell you that I don't believe that the
people of Montana have been considered in this solution at this
point. And I am not convinced yet that the people in those
communities have. I am not arguing here to try to make this
project a reality. I am trying to find a way for the people of
Montana to be treated fairly in the process. Now I know that
you and I might disagree about whether that has occurred or
not, but that is what I am after here. And I am also trying to
flesh this out.
In your testimony you list conditions for a fair and
equitable deal. Let me read to you what they were. That there
be a reliable long-term protection of Yellowstone Park. And I
think that is a value that we all share. That Crown Butte
receive reasonable value for its investment with Federal assets
of sufficient liquidity to meet the company's needs. Reasonable
value, I think we may have some disagreement about. That the
company should pay for the cleanup of contamination, past
contamination. That the company get reposed on the pending
litigation and that the plan recognize the uniqueness of
Yellowstone and the importance of mining to the economy.
And it is that question that I want to just talk about a
little bit in that last point, and that is the uniqueness of
Yellowstone and the importance of mining to the economy. It is
my understanding that the use of the Land and Conservation Fund
does have, at least historically, provisions for the completion
of some economic assessment, how is the local economy going to
be impacted, that it has of course an evaluation of the
environmental risks and that there be a determination of
recreational value if that is its historical purpose.
And so do I have your assurances that if in fact--and
incidentally, the budgeteers are not quite of the mind set you
are that the intention of this money that is being put into the
Land and Conservation Fund was for this purpose. But presuming
that you intend to use it for that purpose, which you have been
clear here, are we going to see the Administration require the
completion of those steps before this deal would be
consummated?
Ms. McGinty. Two things. First of all, the President has
the commitment of the Congressional leadership on this matter.
Second, absolutely, and the agreement itself is expressly
conditioned on the completion of the kind of analyses that you
highlight. A full assessment will be done so that pursuant to
law we can make the determination that this exchange is in the
best interests of the American people.
Mr. Hill. So if Congress made some attachment to this
proposition that clarified that, at least in principle the
Administration would not have any objection to that?
Ms. McGinty. Well, I would be interested to discuss it with
you.
Mr. Hill. OK.
Ms. McGinty. I would just remind----
Mr. Hill. I am just talking in general terms at this point,
obviously. So are you suggesting that there is an agreement
with the leadership in the negotiations with the President that
is different from the agreement that is represented in the
budget agreement that we are about to vote on today? Because
the budget agreement is not specific with regard to this. Is
there some written agreement between the President and the
leaders in Congress with regard to specifically that that $700
million provision, part of that is to be earmarked for this
transaction?
Ms. McGinty. In fact, the budget resolutions now passed by
the committee, the budget committees in the House and Senate,
specifically earmark $315 million for priority land exchanges.
That $315 million figure is derived from $65 million for the--
in order to protect Yellowstone and the balance, 250 million--
--
Mr. Hill. Is there some written communication that confirms
that between the White House and Congressional leadership?
Ms. McGinty. As part of the overall budget agreement, yes.
Mr. Hill. No, I mean independently. The agreement doesn't
specify this transaction. You are saying it is your
understanding that that is what it means, but there is nothing
that is specific to this transaction in the budget resolution.
Ms. McGinty. This is part of the agreement that the
Congressional leadership reached with the President of the
United States.
Mr. Hill. Is that agreement in writing independent of the
budget?
Ms. McGinty. The budget agreement is indeed in writing,
yes, sir.
Mr. Hill. I mean independent of the budget resolution.
Ms. McGinty. Whatever documents have been produced, the
agreements reached between the President and the Congressional
leadership has been part and parcel of all of that effort, yes,
sir.
Mr. Hill. As you know, I wrote to the President. I made
reference to it, that I believe the environmental impact
statement should be completed for the reasons that I have
described. You just recently indicated that you would agree
that economic assessment and some environmental assessment is
required under the Land and Conservation Fund. Will the EIS be
completed or not or will some alternative environmental
assessment be completed prior to the consummation of this deal
if it is consummated?
Ms. McGinty. Because there is no proposal, we do not
intend, no, sir, to complete the EIS that was pending at the
time the agreement was reached in August 1996. Now, there is an
EIS underway that analyzes the impacts of the withdrawal of
some lands in this area that Mr. Elers referred to from mining
activity. That is underway, but the EIS relevant to the former
proposal to site a mine is not underway pursuant to our
agreement with the company. And we do not have the intention to
bring that back up.
Mr. Hill. OK.
Ms. McGinty. Thank you.
Mr. Hill. Thank you very much. As you know, Margaret Reeb
was not included as a party to the agreement, and she is
actually the owner substantially of this property and of the
mineral deposit, is that correct? I am a little concerned that
in the conversation that has occurred here there has been some
suggestion that this project was allowed to go forward because
of Crown Butte's ability to patent mining claims under the 1872
Mining Act. It is true that Margaret Reeb's claims are patented
claims, but these are claims that were made substantially in
the past that she has acquired over some several years. I think
decades, is that correct?.
So it is not really the application of the 1872 Mining Law
that is dealing with those mineral deposits, is that correct?
Ms. McGinty. The original claims derived from the 1872
mining law----
Mr. Hill. Right. I mean, there are property all over the
West that people own homes on and everything that are old
patented mining claims.
Ms. McGinty. Sure. Many, many people have secured interests
pursuant to the 1872 Mining Law.
Mr. Hill. Right, but this isn't something that is current.
This isn't a current--this is not an effort to in the current
state to try to add some patented mining claims. In fact, what
we are looking----
Ms. McGinty. Oh, no, there are no new proposals. No.
Mr. Hill. I just wanted to clarify that just, you know, for
the record.
Can you give us some suggestion of the timing of the
announcement of this?
I am sorry, Madam Chairman. I will----
Mrs. Cubin. We will do a second round, Rick.
I asked the question earlier and I think you answered it,
but I didn't get the answer well enough to write it down here.
Do you plan in the future, Katie, to buy out those oil and gas
rights that are adjacent to the Everglades? Is that part of the
priority list with the extra $385 million?
Ms. McGinty. We have no proposal currently in mind to that
end, no.
Mrs. Cubin. And what about the oil and gas, what about the
interest in the Escalante Grand Staircase? Is that to be--I am
just trying to get an idea of what--$385 million is a whole
bunch of money and I am just trying to get an idea of what sort
of things that extra money is for besides the Headwaters and
the Crown Butte.
Ms. McGinty. Yes. We have specifically in mind only the
Yellowstone agreement and the Headwaters agreement. The balance
of the $385 million would be subject to discussions between the
various committees and the agencies to identify priorities that
would be of mutual agreement.
Mrs. Cubin. But as of this time there has been no
discussion at all about what that money will be spent for?
Mrs. McGinty. No, ma'am.
Mrs. Cubin. Well, then I have to congratulate you on the
job you did all the more, because you beat the guys, I will
tell you. Let us go to--it is true. I am impressed.
Let us go back to the World Heritage Committee of the
United Nations that came into Yellowstone Park, if you can
answer this question. Do you know if a cooperating agency has
ever before hosted an international committee to come here and
make judgment about a site outside the normal process like they
did this time? Has that ever happened before?
Ms. McGinty. It may. I am not personally aware of an
instance.
Mrs. Cubin. Did anyone in the Administration believe that
the U.N. committee and their decision was of--I mean, I don't
know exactly how to say this. I guess the point I am going to
make is for 6 years professionals from agencies from the two
prime agencies that were doing the study, cooperating agencies,
for 6 years a decision was not able to be made as to whether or
not the development of the mine would jeopardize Yellowstone.
And, you know, I think we are all singing out of the same book
on saving Yellowstone, but then in 3 days the U.N. committee
came in and determined that it was going to be a threat. Now
did anybody in the Administration really think that signified
anything more than political maneuvering? I mean, how much
substance, how much weight did that carry?
Ms. McGinty. I have to say, Chairman, I can't speak to it
in detail because I actually was unaware of it and didn't learn
about it until after the committee had come and gone and issued
its recommendation.
Mrs. Cubin. Mike, do you know any--what is your feeling on
that? Do you think that that is a real substantive decision
made after 3 days when, as I said, for 6 years professionals
couldn't decide and thousands and hundreds of thousands of
dollars had been spent? Was that a political thing or was there
any substance to it, do you think?
Mr. Clark. Well, the committee made a decision based not
simply on the threat of the mine but its perception that there
were many activities occurring around the edge of the park that
would affect the long-term viability of the park. And that
included not just mining but private land development, logging,
issues like that that could affect the habitat. The commission
is empowered to carry out a treaty----
Mrs. Cubin. Right.
Mr. Clark [continuing] which is largely symbolic. Other
sites include the pyramids of Egypt and the Galapagos Islands,
the Eiffel Tower. It is largely a symbolic situation, I think,
but it does direct attention. It has the power to say to the
public there is something wrong here or there is something that
needs to be considered carefully.
Mrs. Cubin. So, but, in my opinion, it is just sort of
grand-standing. The timing and everything was--this is why I
feel that Crown Butte, you know, maybe wasn't treated quite
fairly, because of this kind of grand-standing and any amount
of money and any amount of resources that the government might
have, since we paid for those people to come here, I think, was
being used against Crown Butte. And I don't exactly think that
is fair. While, you know, I don't necessarily disagree with the
agreement that was made, I wouldn't like those things to
continue on. We have to open up clear open and honest channels
for communication and I don't think that this demonstrated that
very well.
Mr. Hill.
Mr. Hill. Thank you, Madam Chair. Mike, your interest in
this and your concern with regard to this proposition,
obviously there is the threat to the value of the park, but
also contamination at the site and existing contamination of
water, surface water and groundwater, and also potential risks
to the Clark Fork from the mine waste site. Is that a fair
characterization of----
Mr. Clark. Those are certainly some of our concerns, sir.
Mr. Hill. And would you identify this site as a site
involving some serious environmental problems, existing
problems?
Mr. Clark. The historic mining pollution which exists there
is significant for the area around the mine and has been for
many years.
Mr. Hill. And part of the reason that you were part of this
transaction and your insistence was that part of Crown Butte's
responsibility here would be to clean up that site.
Mr. Clark. That is correct, sir.
Mr. Hill. Mr. Elers, as you went through the process of
trying to obtain--complete the EIS for the purpose of moving
toward permitting, were there suggestions made to you that this
could be listed as a Super Fund site or that EPA could be
brought in to magnify your liabilities as some sort of a
leverage to try to bring you to the table?
Mr. Elers. Congressman, I am not sure if that occurred
during the permitting process or if it were brought up during
the early stages of trying to hammer out an agreement as
ultimately occurred, but certainly there was a fear that Super
Fund designation could be applied to the site with or without
our mine ever being developed.
Mr. Hill. And, I mean, I get a sense sort of by hook or by
crook they were going to stop this mine. And eventually that--
you became--you realized that, that that is what brought you to
the table.
Mr. Elers. Well, I don't think it would be argued by anyone
that the Administration was very concerned about there being a
mine developed and they were open and clear in their discussing
with us their opposition to it.
Mr. Hill. And if this was listed as a Super Fund site, the
liabilities could have been immense, is that correct?
Mr. Elers. Super Funds are not minor affairs, that is
correct, sir.
Mr. Hill. Katie, I would ask you, do you know of a single
instance where the Land and Water Conservation Fund has been
used for the purchase of a toxic waste site?
Ms. McGinty. Well, sir, this site will not be a toxic waste
site.
Mr. Hill. No, I am asking you the question. Do you know of
an instance where the Land and Water Conservation Fund was used
for the purpose of purchasing a toxic waste site?
Ms. McGinty. I am not an expert on the usages.
Mr. Hill. You are not aware----
Ms. McGinty. I am not personally----
Mr. Hill. The answer is that you are not aware of any?
Ms. McGinty [continuing] aware, not off the top of my head,
no.
Mr. Hill. I guess, you know, maybe there is something
unique about government. In business you use money to buy
assets, not liabilities. And one of the concerns that I have,
and I have expressed it repeatedly here, is the Federal
Government buying a liability, not an asset. I mean if in fact
this site and the development of this site poses all the risks
and hazard that you have described, then it seems to me that
the taxpayers should have no liability whatsoever.
Katie, I----
Ms. McGinty. Well, sir, most of those--excuse me. Most of
those risks and hazards were potential and would have been
eventuated if the mine were sited.
Mr. Hill. But some of them would have been managed, as Mr.
Clark pointed out.
Ms. McGinty. Sure.
Mr. Hill. The development of the site was also going to
manage some of those risks. IN fact, one of the reasons that
the provisions of the agreement are the way they are is because
mining wasn't going to take place and so some alternative
method of mitigating the current existing hazards had to be
dealt with. But, Katie----
Ms. McGinty. That is why----
Mr. Hill [continuing] let me ask you a question then. There
is an article--I guess this is in Time magazine May 12, dealing
with Margaret Reeb, who is the owner of the property. And
incidentally, she is not a party to this agreement, is she? Was
Margaret Reeb a party to the agreement between the President,
Greater Yellowstone Coalition and Crown Butte?
Ms. McGinty. No, she is not a party to the agreement.
Mr. Hill. But she does own--substantially, she owns the
mineral interest here, is that correct?
Ms. McGinty. I believe she has both land and mineral
interests in the area, yes.
Mr. Hill. And she has expressed, I know, to me and to my
staff, concern and opposition to this agreement going forward.
Have you ever had any conversations with her?
Ms. McGinty. I have not spoken with her personally, no,
sir.
Mr. Hill. Mike, have you ever had a conversation with her?
Mr. Clark. I have tried to, sir. Two days after the
announcement, she approached two of my staff in the parking lot
in Livingston and asked why we had not talked to her prior to
the announcement. I called her up the next day and asked for a
luncheon and she agreed to that. On the day of the luncheon she
called and left word that on advice of her attorneys she could
not talk to me because she was carrying on confidential
negotiations with Crown Butte.
Mr. Hill. You have never suggested to her that she should
get on board?
Mr. Clark. She has thus far been unwilling to meet with me,
sir.
Mr. Hill. But, I mean, you have never communicated to her
that kind of an expression that states basically you should get
on board?
Mr. Clark. I have tried to meet with her, but she has on
advice of her attorneys been unwilling to do so.
Mr. Hill. OK, Katie, I would just ask--there is a quote in
here. I will first ask if it is accurate. It says that Katie
McGinty, the Chairman--Mrs. Reeb is saying that she doesn't
want to be part of this agreement and she is concerned about
it. In fact, she says she went into shock when she read about
it. But let me quote from this. It says it may be that all she
will end up with title to her property and no opportunity to
mine. Katie McGinty, the Chairwoman of the White House Council
on Environmental Quality says ominously there are other ways
for us to arrange this agreement. What did you mean by there
are other ways? Are you suggesting that you will just leave her
out of the transaction, that she will be left without any value
left in her asset?
Ms. McGinty. Not at all. And in fact, this agreement is
expressly conditioned at our insistence as well as the
insistence of the parties to the agreement that Ms. Reeb's
interest will be respected. It is expressly a part of this
agreement. And the agreement is conditioned on that principle.
Mr. Hill. I would like to ask some more questions later
about that, if I could, Madam Chairman.
Mrs. Cubin. I just have one last question for Mr. Clark.
Our Subcommittee oversees most of the actions of the USGS, as
you know. And one of their strong suits now, we are told, are
the scientists that they have and their ability to predict acid
mine drainage potential and to suggest remediation strategies.
I wonder why doesn't the GYC trust the USGS to make judgment
about the reclamation potential for Henderson Mountain in the
context of permitting the New World Mine?
Mr. Clark. Well, we would welcome any agency that has the
capacity to take a look at that situation. And we were glad to
see USGS and other scientists looking at that situation. In
addition, we hired our own consultants to look at it to give us
an independent analysis of what might occur there. And when we
looked at the mine, we looked at all those factors. We looked
at all the information we could obtain, but we also used our
own consultants. And incidentally, we looked at reclamation
activities there in terms of the actual cost and the methods of
doing it. Our estimates by our consultants were very much
similar to that of the company's as we entered into the final
round of negotiations. So we were in agreement with the company
on how the cleanup could occur and roughly how much it would
cost.
Mrs. Cubin. The reason I asked the question is because GYC
didn't like the results of the USGS study on the thermal--the
geothermal features of, you know, pumping the water out of
there. And so I just wondered if you were just going to choose
in the future to not regard USGS's opinions and their science
opinions and just get your own or whatever.
Mr. Clark. Well, in regard to the geothermal situation,
which is a proposal by a landowner to drill a deep well and use
the hot water near Mammoth, there were a number of conflicting
opinions about that. We used a number of senior scientists who
had spent their whole careers looking at the geothermal fields
around Mammoth, and their conclusion was that there was some
risk if that well was developed commercially it might well
affect the Mammoth Hot Springs area. I think in all these
situations there is a range of opinion amongst the scientists,
and we just believe that you should always take the most
conservative perspective and minimize the risk to the park.
Mrs. Cubin. So you are not saying if you give us the answer
we want, then that is the one we will take and if you don't
give us the answer we want, we won't take it, we will keep
looking until we find someone that will give us what we want?
That is what that sounds like to me.
We do have a vote. Rick, if you have just a question or
more, I would like to adjourn the meeting before we go to vote,
and then we will submit any questions in writing that we
weren't able to ask today if that is OK.
Mr. Hill. If I might, Madam Chairman, three short
questions. Mike, I would just ask you is your organization
opposed to mining on public land?
Mr. Clark. Mining on?
Mr. Hill. Public lands.
Mr. Clark. No, sir, we are not.
Mr. Hill. So it is not the goal of your organization to
prevent mining in Montana?
Mr. Clark. This is the only mine that we have ever opposed.
Mr. Hill. What is the appropriate buffer for non-mining
activities surrounding Yellowstone Park?
Mr. Clark. I am sorry, sir, what?
Mr. Hill. What is the appropriate buffer for non-mining
activities surrounding Yellowstone Park.
Mr. Clark. We have never said there should be a buffer
around the park. We have said that we should look at each
proposal that potentially could have an impact on our region
and assess that proposal itself.
Mr. Hill. OK, so you don't have any specific, I mean, two
miles, three miles, five miles, ten miles? You just--you look
at it site by site?
Mr. Clark. The only buffer that I am aware of that we have
ever supported is a band of land around the geothermal fields.
Mr. Hill. OK.
Mr. Clark. But that is dealing with a specific piece of
legislation.
Mr. Hill. I would ask you, Katie, Mrs. Reeb seems pretty
insistent that she is not going to be party to this deal. What
happens if she doesn't come to terms with the agreement? Does
that vacate the whole agreement, in your view?
Ms. McGinty. Well, sir, as part of the agreement the Crown
Butte Company is in regular contact with her. I know----
Mr. Hill. But if they can't deliver on that provision of
the agreement, you said it is a requirement of the agreement,
does that vacate the whole deal?
Ms. McGinty. Well, I wouldn't want to speculate on it. I
have full confidence that the company will fulfill its
obligations under the agreement. The company has worked in good
faith and I have confidence that they will produce this part of
their obligation as well.
Mr. Hill. So can I be assured at this point there are no
discussions going on in any capacity that indicate that there
might--in the event that she doesn't reach agreement, that
there will be some alternative? Those discussions are not going
on right now?
Ms. McGinty. Well, we will continue to have as a top
priority the protection of Yellowstone. Right now we are----
Mr. Hill. No, but I am just asking about the contingency in
the event that she doesn't agree. Is there discussions going on
right now with regard to a contingency if that would occur?
Ms. McGinty. There are not.
Mr. Hill. OK, thank you very much, Madam Chairman.
Mrs. Cubin. I thank the witnesses for their valuable
testimony. I thank you for coming up here today. As I said
earlier, the members of the Subcommittee will present
additional questions in writing and the hearing record will be
kept open for that purpose.
If there is no further business, then this meeting is
adjourned.
Ms. McGinty. Thank you, Madam Chair, Mr. Hill.
Mr. Elers. Thank you.
Mrs. Cubin. Thank you.
[Whereupon, at 3:05 p.m., the Subcommittee was adjourned;
and the following was submitted for the record:]
Statement of Kathleen A. McGinty, Chair, Council on Environmental
Quality, Executive Office of the President
Madame Chair, members of the Subcommittee, thank you for
the opportunity to testify before you regarding the role of the
Council on Environmental Quality (CEQ) in the Administration's
proposal for the protection of Yellowstone National Park. The
Yellowstone agreement was borne of and reflects this
Administration's commitment to preserve and protect for future
generations of Americans the world's first national park and
the crown jewel of our national park system. And, the agreement
is reflective of our commitment, wherever possible, to work
with industry and other interest groups in partnership to that
end.
As mandated by the National Environmental Policy Act
(NEPA), my role is to advise the President on environmental
policy matters and coordinate activities of the Federal
agencies and departments with regard to environmental matters
that cross agency jurisdictional lines. Accordingly, I chair
the Executive Committee and oversee the interagency team
assembled to ensure implementation of the Yellowstone National
Park agreement.
YELLOWSTONE NATIONAL PARK
In 1989 Crown Butte Mines, Inc., a subsidiary of a Canadian
mining company, proposed a gold, copper and silver mining
complex located partially on private property and partially on
public lands managed by the Forest Service, less than three
miles from the northeast border of Yellowstone National Park.
The Forest Service and the State of Montana started preparing
an environmental impact statement on the proposal to assess the
environmental effects of Crown Butte's proposed plan of
operations for the mine or another mine alternative. Crown
Butte submitted a plan that called for 15 years of operation,
with six major facilities, plus a 70-100 acre tailings
impoundment behind a 90 foot tall dam. The tailings impoundment
would have been expected to contain the highly acidic waste
rock and metals in perpetuity. The Forest Service also faced a
decision regarding whether to issue Pacific Power Company a
Special Use permit to construct and operate a 69 KV power line
on National Forest land.
The rights to the minerals at New World Mine had been
obtained under the 1872 Mining Act. Under Federal law, the U.S.
Government was therefore obligated to process the company's
proposal to mine these minerals using Federal lands for a large
tailings impoundment and other ancillary facilities. As a
necessary prerequisite to this decision process, the company
was required to fund data gathering and analysis for the
Environmental Impact Statement (EIS) under the provisions of
NEPA.
The EIS process began in April 1993. The EIS was originally
expected to be issued as a draft in April 1994. However,
because the preliminary findings showed that there could be
major adverse impacts on the Clark's Fork of the Yellowstone
River, a federally designated Wild and Scenic River, on grizzly
bear habitat, and on Yellowstone National Park itself, work on
the draft was extended. Interagency review of preliminary
drafts of the EIS also showed a need for critical additional
studies, including groundwater studies better to characterize
the conditions at the proposed New World Mine site. These
studies were needed to inform the Federal and state permitting
agencies' analysis of the potential impacts of permitting the
mine, and, if a mine were permitted, whether specific
additional operating conditions were warranted. In addition,
certain Federal agencies determined that additional information
was needed for a risk assessment relating to the proposed
tailings impoundment.
The preliminary draft EIS was made widely available and
reviewed, not only in Montana, but throughout the U.S. Many
analysts, including mining engineers, were critical of the
submerged tailings system (see the Engineering News-Record
editorial of March 14, 1994). Comments were raised concerning,
among other things, seismological risks in an area that had
experienced more than 4000 earthquakes within a 180 mile
radius; the need for more analysis concerning containment of
the 5.5 million tons of highly acidic waste rock that would be
generated by the mine; the risks associated with the tailings
impoundment; and importantly, the lack of information necessary
to assess the potential impact of the proposed mine on
groundwater. In fact, in March 1995, Wyoming Governor Geringer
wrote Montana Governor Racicot to say that the alternative
preferred by the company could have Wyoming water resources and
suggested that the tailings impoundment should be the subject
of a separate review. By late 1995, it was clear to everyone
that there were significant issues involved with the
development of the proposed New World Mine.
Because of the highly acidic nature of the ore body at the
New World mine, for example, the Governor of Wyoming suggested
that $75-$100 million was the appro-
priate bonding level. In addition, since the plan of operation
called for ``dewatering'' a portion of Henderson Mountain, the
Yellowstone Water Compact, a negotiated agreement between the
State of Montana and the Department of the Interior regarding
rights to water flowing into and out of Yellowstone National
Park may have required Crown Butte to replace the diverted
water. Moreover, Crown Butte was embroiled in a citizen's suit
brought under the Clean Water Act by a coalition of 14
environmental groups in a Federal District Court in Montana. In
October 1995, the company was found liable by the Federal
District Court, and it was therefore abundantly clear that
there would be years of contentious litigation over the mine,
regardless of whether the Federal Government approved or denied
the company's application.
Faced with this potential for costly and resource intensive
litigation, the environmental groups and the company entered
into confidential discussions in an effort to identify creative
options to address their differences. In February 1996, Crown
Butte, Hemlo Gold, and the Greater Yellowstone Coalition
approached CEQ together to explore whether the Administration
would be willing to consider a novel approach to the problem:
exchanging Federal assets to Crown Butte in exchange for the
company's agreement to cease and desist further pursuit of the
mine. My staff formed a small interagency working group to
discuss the implications and possible elements of such an
approach. They concluded that the proposal could provide a
solution to the New World Mine problem that was fair and
equitable for all concerned if the following conditions were
met: (1) there be reliable, long-term protection for
Yellowstone Park; (2) Crown Butte receive reasonable value for
its investment with Federal assets with sufficient liquidity to
meet the company's needs; (3) the company should pay for the
cleanup of contamination at the site, with appropriate
oversight and participation by Federal and State agencies and
public interest groups; (4) the company get repose on the
pending litigation and potential Federal environmental claims;
and (5) the plan recognize the uniqueness of Yellowstone and
the importance of mining to the economy. Based on the work
group's analysis and their discussions with the company
throughout February 1996, we concluded there were enough common
interests and that we should pursue more detailed discussions.
Before entering into any detailed discussions, however, Crown
Butte insisted, and the parties agreed, that the talks be
strictly confidential. Confidentiality was necessary and
appropriate because the discussion would involve issues
regarding ongoing and potential future litigation and because
premature release of information could adversely affect the
value of the company's stock.
New World Mine is located in an area approximately 19,000
acres in size. Much of the area involves intermixed parcels of
public and private lands patented under the 1872 Mining Law,
and Federal lands subject to unpatented mining claims under
that law. Most of the private lands at issue here are held by
Crown Butte or Ms. Margaret Reeb, a Montana resident, who
leased her lands to Crown Butte. Although there are other
patented and unpatented claims in this general area that are
owned by others, these claims are not critical to the
development of the New World Mine or relevant to the goals of
the Agreement.
To followup on the overture of the company and the
conservation organizations, in April 1996, we appointed Mr.
John Schmidt, the Associate Attorney General, and Mr. Jim
Pipkin, Counselor to the Secretary of the Interior, to open
discussions with the President of Crown Butte and the Chairman
of Hemlo Gold, the Crown Butte parent company. Over the next
several months, they held regular discussions with Mr. Ian
Bayer, Chairman of Hemlo Gold and Mr. Joe Baylis, President of
Crown Butte. These discussions focused primarily on (1) the
value of the mine; (2) the cleanup and restoration of the
environmental impacts associated with many years of mining; (3)
resolving the protracted lawsuit, referenced above, brought
against the company by certain environmental organizations; and
(4) resolving potential Federal enforcement actions.
On August 12, 1996, President Clinton, Crown Butte Mines
and a coalition of environmental groups announced that the
parties had reached an agreement to protect Yellowstone and the
surrounding area, to address the environmental impacts of
historic mining in the New World Mine District, and to resolve
pending or potential litigation and enforcement. The essential
details of the Agreement are as follows: Crown Butte will forgo
development of the New World Mine, the United States will
transfer to Crown Butte $65 million in Federal assets in
exchange for title to all of the lands essential to development
of the mine, specifically including patented and unpatented
mining claims held by Crown Butte and fee title to lands leased
by Crown Butte from Margaret Reeb; the company will place $22.5
million in a trust fund to remediate historic environmental
contamination in the New World Mine District; and the parties
will enter into a consent decree implementing the cleanup and
restoration actions, and settling the existing litigation by
the environmental groups and potential environmental claims by
the Federal government. Although there are a number of
conditions contained in the Agreement, the two major
contingencies are (1) identification by the United States of
$65 million of Federal assets that can be exchanged to Crown
Butte, and (2) Crown Butte's acquisition of the property it
leases from Margaret Reeb. The agreement also stipulates that
the United States will also work with the State of Montana, the
environmental groups and the public appropriately to address
contamination in the New World Mine District; and will perform
a title search. In addition, the United States will subject
this exchange to a valuation to verify the value of the
property offered by Crown Butte. The agreement expressly
stipulates that ``consummation of the transfer of property is
subject to confirmation by a valuation that the District
property has a fair market value of at least $65 million.''
As you know, the Administration proposed a diversion of
Federal royalties from currently producing coal, oil and gas
operations in Montana to fulfill the terms of the agreement.
When we made this proposal to Crown Butte on March 11, 1997, we
underscored that this type of asset required Congressional
approval. We proposed this approach after a rigorous analysis
of the alternatives. In the course of this effort we reviewed
surplus military installations. General Services Administration
surplus property, National Forest timber lands, leased and
unleased coal lands, and other Federal lands. We also actively
participated in and supported Governor Racicot's ``Montana
Initiative'' (discussed further below) to explore a mix of
timber and coal lands entirely in Montana. For various reasons,
each of these properties ultimately proved unsuitable for the
exchange. Some properties were contaminated, for example.
Others had previously been committed to other uses, while still
others were strenuously opposed by various interest groups.
After an exhaustive search and rigorous effort, we proposed to
divert mineral royalties from existing mines in Montana. While
diversion of royalties generally was favorably received, the
required budget offset we chose, the Conservation Reserve
Program, proved to be controversial. After consultation with
many Members of Congress, we reexamined the possibility of
using the Land and Water Conservation Fund and have concluded
this is an appropriate method.
Current Status
Complete details of the agreement to protect Yellowstone
were made fully and publicly available on August 12, 1996. In
September 1996, Mr. Schmidt and Mr. Pipkin briefed
Congressional staff on the terms ofthe agreement. In October
1996, I traveled to Montana with Mr. Schmidt and other
Administration officials personally to brief the Governors of
Montana and Wyoming, as well as Senator Conrad Burns. Since
that time we have apprised the Governors, Members of Congress
and congressional staff, of all relevant developments. On March
13, we provided the Interior Subcommittee of the House
Appropriations Committee answers to questions they posed
regarding the agreement.
Immediately after the August 12, 1996 agreement was
reached, a Federal interagency group worked to identify Federal
assets to use in an exchange with Crown Butte. In late
November, Governor Racicot asked the Federal Government to
consider a ``Montana Initiative'' (noted above) to satisfy the
terms of the agreement. Administration officials met with the
Governor and encouraged the development of such an initiative.
Moreover, noting the timeframes outlined in the Agreement, the
Administration dedicated considerable resources to assist the
Governor in the development of the initiative. Specifically,
the Administration offered technical help through the Bureau of
Land Management and the Forest Service to support the
initiative. When it was clear that the Montana Initiative would
not reach fruition in the necessary timeframe, the
Administration agreed with Crown Butte's proposal that the
United States extend the relevant deadline for 30 days.
Despite these efforts, however, as details of the ``Montana
initiative'' became public, every potential property discussed
proved to be highly controversial with various Montana
constituencies, including ranchers, Indian Tribes, small mill
owners, conservationists, and some local governments. Because
of the deadlines under the Agreement, it became apparent to
Crown Butte and to the government that properties identified
through the Montana Initiative could not properly be evaluated
and delivered to Crown Butte within the time frames called for
in the Agreement. Therefore, in order to meet our March 12
obligation to identify exchange property to Crown Butte, the
Administration determined the most appropriate asset to be the
Federal share of royalties from federally owned mineral
estates--coal, oil and gas--that are currently under lease and
production in Montana. In proposing this asset to Crown Butte,
the United States underscored that Congressional approval would
be necessary if the agreement were to be concluded on these
terms.
As you know, Madame Chair, the Administration and
congressional leaders have reached an agreement on a detailed
budget agreement that establishes basic parameters for
revenues, savings, and spending levels (both mandatory and
discretionary) and will obviate our proposal to divert coal,
oil and gas royalties. When the details of the agreement are
final, there should be sufficient funds to acquire these high
priority national resources without having to divert Federal
coal, oil, and gas royalties or requiring any other offset.
Within the discretionary levels, the agreement reserves $700
million in fiscal year 1998 budget authority for priority
Federal land acquisitions and exchanges. The Administration's
top priorities are New World mine and Headwaters Forest
proposals. Together with the Congressional leadership, we plan
to work with the Budget and Appropriations Committees to
achieve these goals.
Several more steps need to be completed before this
agreement can be implemented. First, Crown Butte must
demonstrate that it can fulfill its obligation to acquire the
property it leases from Ms. Reeb. Second, a valuation of the
property must be completed. And, finally, the budget resolution
must be passed and then acted upon by the Appropriations
Committee. I am confident this is a fair way to resolve a
potential long, bitter and expensive battle to save
Yellowstone, and we in the Administration are very appreciative
of the support of the Congressional leadership to see this
effort through.
Madame Chair, saving Yellowstone requires that many people
come together to find common ground on behalf of this truly
national treasure. You have spoken eloquently about Yellowstone
and indeed, the need to find bipartisan solutions. I hope we
can work closely with you and other Members of Congress in
protecting Yellowstone, and address the many critical issues
related to this challenge. Thank you for the opportunity to
speak to this important initiative. I would be pleased to
answer any questions you may have.
------
Statement of Karl E. Elers, Chairman of the Board, Crown Butte Mines,
Inc.
Madam Chairwoman and the Members of the Subcommittee, my
name is Karl Elers and I am Chairman of the Board of Directors
of Crown Butte Mines, Inc., a Montana corporation. I assumed
that position in March of this year. This is my first
appearance before a congressional committee and I appreciate
the invitation to be here.
The letter of invitation to testify indicated the
committees' interest in the agreement reached between Crown
Butte, the Administration and certain special interest groups
in August 1996. Crown Butte found the decision to enter into
the August 12, 1996 Exchange Agreement a difficult one. By mid-
year 1996, Crown Butte had already been in the permitting
process for almost 6 years, promised dates for the release of
the Draft Environmental Impact Statement had consistently not
been met and the whole process had become fraught with delays
and uncertainty. The Exchange Agreement provided a practical
resolution to a unique set of circumstances and Crown Butte's
management decided that the Agreement was in the best interest
of the shareholders of the Company.
A brief chronology of the events leading up to our decision
to execute the agreement will shed some light on why Crown
Butte decided on this course of action. I hope it will assist
the Committee in a better understanding of the current
regulatory processes and the challenges they pose for those of
us trying to operate in a responsible manner.
The area in dispute, known as the New World District, is a
historic mining district dating back to 1869. A number of small
mines and a copper smelter operated in this area intermittently
until 1951. Sporadic exploration and development continued from
l955 until 1987 when the property was acquired and the issues
now under review began.
I think it is also worth noting at this point, that in 1978
the Congress specifically considered and excluded the New World
District from the Absaroka-Beartooth Wilderness due to past
mining activity and mineral potential. Proposing a state-of-
the-art, underground gold mine with a strong reclamation plan
to remediate historic mining disturbances made sense. Yet,
Crown Butte became the focus of a national and international
debate.
To fully appreciate what has transpired during the process
I would like to divide my remarks into two areas. First, the
Permit & EIS Process which will highlight the events directly
related to the permitting process, and second, Additional
Concerns which will briefly describe a variety of other
activities specifically designed to thwart the project. From
this discussion, I hope you will be able to understand the
circumstances that lead to Crown Butte's willingness to execute
a settlement agreement in August 1996.
Permit & EIS Process
The permitting process for the New World Property began
formally over 6 years ago in November 1990 when Crown Butte
submitted an eleven volume document as its Operating Permit
Application. This permitting process and related environmental
studies continued to be Crown Butte's main project activities
up to August 1996. The permitting process for the New World
Property proved to be complex and time consuming and it was met
with unusually high opposition.
Mining activities on Federal lands within the state of
Montana fall under the jurisdiction of both Federal and state
agencies. The Gallatin and Shoshone National Forests were
designated as the lead for the Federal agencies and the Montana
Department of Environmental Quality was designated as the lead
state agency for review of the application and development of
an EIS for the project.
A number of other state and Federal agencies were
designated as cooperating agencies. These include the U.S.
Environmental Protection Agency (``EPA''), the U.S. Army Corps
of Engineers (``the Corps''), the National Park Service, the
U.S. Bureau of Land Management (BLM), the U.S Bureau of
Reclamation, the Montana Department of Health and Environmental
Sciences and the Wyoming Department of Environmental Quality.
In all, more than 25 separate Federal, state and county permits
would be required prior to approval of the project. The major
permits cover site construction, power line construction, mine
operation, reclamation, modification of wetlands, water
discharge, stormwater run-off and erosion control, air quality,
and occupational health and mine safety.
As part of the Operating Permit Application, baseline
studies was completed on a number of resource areas including
aquatics, hydrology, wetlands, old growth, and wildlife.
Geotechnical drilling and analyses were completed on both the
proposed and alternative tailings disposal areas. Initial base-
line and geotechnical work was completed for each alternative
to address both regulatory and public concerns regarding the
location of the tailings impoundment. Proposed plant and road
locations were similarly evaluated.
During the very early stages of the permitting process
opposition arose over the potential use of cyanide in Crown
Butte's processing at the site. In 1992, Crown Butte's
metallurgical testwork demonstrated that gold, copper and
silver could be recovered without the use of cyanide. The
revised process would use only gravity separation and froth
flotation with gold recoveries indicated to be approximately 88
percent to 92 percent. As a result, Crown Butte withdrew two
low grade surface mineable deposits (Como and McLaren) and the
Fisher Mountain deposit from the permit area.
The Operating Permit Application was resubmitted to the
Lead Agancies in November 1992 following extensive changes
resulting from the decision to not use cyanide and to amend the
Application to exclude the three deposits and to be responsive
to agency review and comments upon the initial Application. The
Lead Agencies completed, and Crown Butte responded to, a total
of six reviews of the Operating Permit Application before the
revised Operating Permit Application was declared complete on
April 2, 1993.
A determination of completeness of the Operating Permit
Application allowed the EIS process to begin. The EIS is
required by state and Federal law and involves an assessment of
the project's proposed operating plan, a review of alternatives
to this plan, potential impacts of the plan, and methods to
mitigate significant impacts. Responsibility for conducting
public scoping meetings, writing the EIS document and issuing a
decision rested with the Lead Agencies. They retained an
independent third party consultant, paid for by Crown Butte, to
assist in the process.
During 1993, a scoping document which determined what was
going to be evaluated in the EIS process was prepared, and
public comment was solicited. A number of potential
environmental issues were identified for further study. The
Lead Agencies then initiated the process of determining the
impact of Crown Butte's proposed plan, identifying possible
alternatives and comparing these alternatives. During the
process, the Lead Agencies would select a preferred alternative
and produce a draft of the EIS. The Draft EIS would include a
biological assessment which evaluates potential impacts to
threatened or endangered species.
Crown Butte was initially informed that the Draft EIS would
be available in late 1994. This date was not met. In 1994 Crown
Butte was advised by the Lead Agencies that a draft of the EIS
would be issued for public comment by the end of the second
quarter of 1995. This date was not met and Crown Butte was
subsequently advised by the State of Montana that the Draft EIS
would be released in the Fall of 1995. This date was also not
met.
During the period from January to August 1996, Crown Butte
continued its efforts in the permitting process. A study on
endangered species was completed and additional studies of
wetlands and water quality issues were conducted. All requested
data was provided to the Lead Agencies and internal drafts of
sections of the Draft EIS were circulated by the Lead Agencies
to the cooperating agencies, Crown Butte and the public for
review and comment. None of the drafts made available to Crown
Butte or the public identified the Lead Agencies' preferred
alternative. In March 1996, Crown Butte was advised by the Lead
Agencies that the Draft EIS would be released for public
comment by late spring or early summer of 1996. The Draft EIS
had not been released by August 12, 1996 when Crown Butte
executed the Exchange Agreement. The EIS process has been
suspended pursuant to the terms of the Exchange Agreement.
Additional Concerns
As I mentioned earlier, the New World District is a
historic area. Crown Butte's activities at the site have
included reclamation of historic mining activities and the
Company's recent exploration activities. In December 1992 Crown
Butte received an Excellence Award for Outstanding Commitment
to Environmental Protection from the United States Forest
Service. This award recognized the Company's innovative and
successful efforts to mitigate adverse environmental impacts.
In 1994, following a complaint by special interest groups, the
Corps alleged that some of the Company's reclamation
activities, conducted over the preceding 3 years, had been in
violation of Section 404 of the U.S. Clean Water Act. Crown
Butte responded that it did not believe these allegations were
accurate. In September 1995, the Corps issued Crown Butte a
Section 404 permit authorizing future reclamation activities.
Under the Comprehensive Environmental Response and
Liability Act (``CERCLA''), the EPA initiated an investigation
of continuing environmental impacts from previous activities in
the Henderson Mountain vicinity. The investigation covers 6,720
acres of land, of which the New World Property is a part. Under
CERCLA, certain sites are ``listed'' on the National Priorities
List for cleanup under Superfund legislation. To determine
whether a particular site is listed, EPA conducts a series of
investigations and then using the results ranks the potential
hazard of the property. The ranking determines the need for
future action. A Preliminary Assessment was submitted to the
EPA in August, 1994, a Field Sampling Plan for an Expanded Site
Inspection was completed in July, 1995, and an Analytical
Results Report was presented to the EPA in April, 1996. While
the Henderson Mountain vicinity has been through preliminary
investigations, it has not been completely evaluated or ranked
based on potential hazard and is not currently listed on the
National Priorities List for Superfund cleanup.
On January 13, 1995, two special interest groups and an
individual filed a complaint against the Company with the U.S.
Department of the Interior in connection with Crown Butte's
Mineral Patent Application. The complaint requests that the
Secretary of the Interior take immediate jurisdiction over the
Patent Application, that the Secretary take any other action
necessary, including intervention in the proceeding, to protect
the public interest by preventing the issuance of the patent,
that the Secretary deny the Patent Application, or in the
alternative, that the Secretary stay any action on the Patent
Application until completion of the EIS then being prepared by
the Lead Agencies. This complaint effectively asks that patents
not be issued. Crown Butte has moved to have the complaint
dismissed for numerous reasons. The complainants have claimed
that the ``comparative value test'' should be applied in
determining whether Crown Butte's claims are supported by a
discovery, although imposition of the so-called ``comparative
value test'' would be contrary to the long-standing practice of
the Department of the Interior. There have been no actions or
developments related to this matter since 1995 and the Company
can not at this time predict the ultimate resolution of this
matter.
In February 1995, a number of special interest groups
requested that the World Heritage Committee (the
``Committee''), formed pursuant to the United Nations 1972
Convention Concerning the Protection of World Cultural and
Natural Heritage, investigate whether Yellowstone National Park
qualified for inclusion on the ``List of World Heritage in
Danger.'' Such a determination would require the U.S.
Government, a signatory to the convention, to take unspecified
steps to protect Yellowstone National Park. This request was
followed in June 1995 by a letter from a senior official in the
office of the United States Department of the Interior stating
that Yellowstone National Park was in danger. The Committee
visited Yellowstone National Park in September 1995. The
National Park Service, a co-operating agency in the New World
EIS, hosted the event. The Committee enumerated both
``ascertained threats'' and ``potential threats'' to the Park.
The ascertained threats included endemic Yellowstone cut-throat
trout, sewage leakage and waste contamination, road
construction and visitor pressures year-round. The potential
threats included impacts on quantity and quality of surface and
ground water and other past and proposed mine-related
activities, and proposed control measures to eradicate
brucellosis in the bison herds. In December 1995, the Committee
decided that Yellowstone National Park should be placed on the
List of World Heritage in Danger and asked for continuing
reports on the progress of the New World EIS and mitigating
actions being taken to ensure in due course the removal of the
site from this list.
By June 1995, Crown Butte had exhausted its cash resources
and has been forced to rely on loans totaling approximately
five million dollars to date to sustain day to day operations.
Crown Butte intended to go to the equity markets upon release
of the DEIS to raise the funds necessary to begin development
of the site. The protracted delays placed Crown Butte in an
unexpected cash bind.
In August 1995, the President interrupted a holiday in
Wyoming for an aerial tour of the mine site. The tour was
followed on September 1, 1995, by the Secretary of the United
States Department of the Interior publishing a Notice of
Proposed Withdrawal in the Federal Register with respect to an
area of approximately 19,100 acres including the New World
Property in Park County, Montana. The Notice resulted in a two-
year moratorium on the location of new mining claims or
millsite claims in such area. In September 1996, a notice of an
amended withdrawal application was published. The amendment
added an additional 2,960 acres of land and included a
withdrawal of any private mineral interests that might be
acquired by the United States pursuant to the Exchange
Agreement. Pursuant to the requirements of the National
Environmental Policy Act (``NEPA''), the Department of the
Interior has prepared a Draft EIS to evaluate the potential
impacts associated with the withdrawal. The Draft EIS was
circulated for public comment and comments were accepted
through April 28, 1997. After reviewing the comments, the
Department of the Interior will publish a Final EIS and the
Secretary of the Interior is expected to make a final decision
on the proposed withdrawal no later than August 31, 1997. The
Company has located millsites for necessary facilities as
proposed in the Company's Application for a Hard Rock Operating
Permit and Proposed Plan of Operations, but has not located
millsites for all alternative facility locations that were
being analyzed in the NEPA process. During the period of any
moratorium or withdrawal, the Company could not locate
additional millsites on withdrawn ground, whether in new areas
or to replace millsites in the event they were found to be
invalid.
In September 1993, several special interest groups filed a
complaint against Crown Butte and others in U.S. District
Court, District of Montana, alleging that certain discharges
from the New World Property were in violation of the U.S. Clean
Water Act (CWA). On October 13, 1995, the District Court issued
a Memorandum and Order ruling that Crown Butte and one other
defendant were in violation of the CWA for not yet having
obtained a CWA National Pollutant Discharge Elimination System
permit for water coming from historic workings. The Company had
applied for a CWA stormwater permit in October 1992. Crown
Butte requested that the District Court allow an immediate
appeal of the decision be taken to the Ninth Circuit Court of
Appeals, which request was granted in January 1996, and the
Company filed a petition with the Court of Appeals. On May,
1996, the Court of Appeals denied the Company's petition for
permission to appeal, and the District Court subsequently set
the matter for trial on the issues relating to civil penalties.
A trial was scheduled for November 1996, but the District
Court has stayed all proceedings in this case in light of the
Exchange Agreement.
Conclusion
Madam Chairwoman and Members of the Subcommittee, I'm sure
you can readily see that what began as an attempt to build a
modern-day state-of-the-art mine, in an area where historic
mining has occurred for over a century, and which was
specifically excluded from wilderness designation by the
Congress of the United States, quickly became a battle of
national and international involvement.
By mid-year 1996, Crown Butte had already been in the
permitting process for almost 6 years, promised dates for the
release of the Draft Environmental Impact Statement had
consistently not been met and the whole process had become
fraught with delays and uncertainty. Even if Crown Butte had
received the Draft EIS, it would still have been a long way
from the issuance of the requisite Final EIS. Uncertainties
with respect to Crown Butte's ability to obtain the necessary
permits would have continued and the effort to obtain such
permits would probably have taken many years. The economic
realities of continuing in the face of well organized, well
funded opposition and international organizations necessitated
tough decisions. Costs and delays associated with permitting,
litigation with significant potential liabilities and appeals
had become unduly burdensome given the project economics.
Nevertheless, Crown Butte, as an environmentally
responsible mine developer, found the decision to enter into
the August 12, 1996 Exchange Agreement a difficult one. Crown
Butte has always believed that its proposal to build and
operate safely and responsibly a small state-of-the-art
underground gold mine at New World was not only environmentally
sound of itself, but also represented the best way to remediate
the historic mining disturbances which date back more than 100
years.
In the end, the Exchange Agreement provided a practical
resolution to a unique set of circumstances. The protracted
permitting delays, legal challenges facing ongoing development,
and potential liabilities related to historic mining in the New
World District caused the economics of the project to
deteriorate. Crown Butte's management decided that the
Agreement was in the best interest of the shareholders because,
if consummated, it would provide an end to the long permitting
process which might otherwise continue for many more years with
no guarantee of success or economic return to the shareholders
and provide assets that could be liquidated relatively promptly
and which would compensate the Company for the amount it has
spent to date in acquiring, exploring and attempting to permit
the property.
------
CURRICULUM VITAE
KARL E. ELERS
Chairman of the Board of Directors
Crown Butte Mines, Inc.
Karl E. Elers began his mining career in 1962 as a Mining
Engineer at Duval Corporation's Carlsbad, NM, potash
properties. He advanced through a series of management
positions, including Resident Manager assignments for potash
and sulphur properties, and Vice President of Project
Development. He worked on numerous mineral programs in the Far
East, Australia and Latin America in his development work for
Duval, and later, as Vice President of Production, directed the
company's copper, gold and industrial minerals operations. In
1985, he served as Senior Vice President of Operations of
Pennzoil Sulphur Company, and later that year became the
initial Managing Director of Western Ag-Minerals Company, an
industrial minerals mining and marketing firm.
Elers joined Battle Mountain Gold Company in May, 1987 as
Executive Vice President, and became President in May, 1988. He
was named Chairman and Chief Executive Officer of Battle
Mountain Gold in April 1990. In March, 1997 he retired from the
CEO's office, but continues to serve as Chairman of the Board
of Directors of Battle Mountain Gold. Also in March 1997, Elers
was named Chairman of the Boards of Directors of Crown Butte
Resources Ltd. and Crown Butte Mines, Inc.
He earned bachelor's degrees in both geological engineering
and mining engineering from the University of Arizona College
of Mines, and completed the Program for Management Development
at Harvard's Graduate School of Business Administration.
Elers is on the Board of Directors of the National Mining
Association and the SME Foundation of A.I.M.E and was formerly
on the Board of Niugini Mining Ltd. He has previously served on
the Board of Directors of the Fertilizer Institute, the
Northwest Mining Association, was Chairman of the Western
Governors' Mining Advisory Council, and was President of the
New Mexico Mining Association. He currently serves on a number
of international relations and Houston civic boards, and is a
member of the American Institute of Mining, Metallurgical and
Petroleum Engineers, and the Canadian Institute of Mining. He
was awarded the Order of Simon Bolivar by the President of the
Republic of Bolivia for services to that nation. He and his
wife Sandy reside in Houston, Texas.
------
Supplemental Sheet
to the Written Testimony of Karl E. Elers
Name: Karl E. Elers, Chairman of the Board, Crown Butte Mines,
Inc.
Address: 333 Clay Street, 42nd Floor, Houston, Texas 77002-4103
Telephone No.: (713) 653-7244
Summary of Comments:
Crown Butte, the Administration and certain special
interest groups entered into an Exchange Agreement on August
12, 1996. Mr. Elers testimony recounts the chronology of events
that occurred leading up to the agreement.
------
Statement of Michael S. Clark, Executive Director, Greater Yellowstone
Coalition
Madam Chair and members of the Committee. Thank you for inviting me
to testify today. My name is Michael Clark and I am the Executive
Director of the Greater Yellowstone Coalition, a Bozeman, Montana-based
organization with field offices in Cody, Wyoming and Idaho Falls,
Idaho. Fourteen years old and with a membership of over 7400
individuals, 119 corporate members and 120 organizational members,
GYC's mission is to preserve and protect the Greater Yellowstone
Ecosystem and the communities it sustains.
The Greater Yellowstone Ecosystem consists of the two national
parks, Yellowstone and Grand Teton, and seven national forests, and
numerous thriving gateway communities. The area totals some 18 million
acres of public and private land. It is the only largely intact
ecosystem in the Lower 48 states.
Today I also represent the Beartooth Alliance, Gallatin Wildlife
Association, Montana Wildlife Federation and the Wyoming Outdoor
Council. Each of these conservation groups has worked closely with us
on the New World Mine situation.
Thank you for the opportunity to testify today on the New World
Mine Agreement negotiated in 1996 between the Clinton Administration,
Crown Butte companies and the conservation community. Congress now has
the key role in creating and approving legislation that will resolve
this issue. We welcome your leadership and look forward to working with
you in completing this Agreement.
This is an agreement that lays to rest one of the most
controversial and contentious public lands battles in the West in
recent years. It does so by breaking new ground in resolving conflicts
through forming a consensus solution with three very different partners
that protects the interest of each party. It does so by removing the
threat of a huge mine from the mountains above Yellowstone Park. It
does so by providing a fair market value for the company's property.
And it does so by providing funds for reclamation of the historic
mining lands at the site.
Eighteen months ago the idea that the mining companies and the
conservation community would come to you with a common position and a
common perspective would have been unthinkable.
We believe this agreement is a fair deal for the company, for the
public and for the ecosystem which the conservation Unity seeks to
protect.
It provides a useful example of how other environmental battles
might be settled. To better understand how we came to this agreement,
it may be useful to look at the actual proposal to create the gold mine
at Henderson Mountain within the New World Mining District.
First, let me say that neither GYC nor the conservation community
are in the business of opposing mines. For GYC, this is the first one
we have ever opposed. We did so because we thought the mine threatened
to create irreversible direct and indirect impacts to Yellowstone Park.
We chose to fight against these impacts just as we have opposed the
potential irreversible impacts that could have been caused by proposals
to develop geothermal acquirers near the Park's boundaries.
The mine plans called for extracting $800 million in gold, silver
and copper from Henderson Mountain, which lies at the head of three key
drainages in Greater Yellowstone: Miller Creek, a tributary of the
Lamar River which flows through Yellowstone Park and joins the
Yellowstone River within the Park, Fisher Creek; which flows into the
Wild and Scenic Clarks Fork of the Yellowstone; and Daisy Creek, which
flows north into the Stillwater River. All of these rivers are
tributaries of the Yellowstone River.
The mine would carve deep tunnels under Henderson Mountain into an
ore body containing very high concentrations of acid-producing
materials. It would create a mill site and a year-round work camp for
175 persons during the 15-18 year mine life. And it would build a
tailings impoundment the size of 70 football fields, containing 5.5
million tons of acidic mine wastes. It would do all of this in an
earthquake-prone area, at altitudes above 8,000 feet, where snow often
falls 10 months of the year. In addition, the presence of an
industrial-scale mining operation on the edge of Yellowstone Park and
adjacent to the Absaroka-Beartooth Wilderness would change the wild
nature of the place forever.
The mine proposal sparked almost universal opposition in local and
regional communities and across the nation. Cooke City residents
organized a local group, the Beartooth Alliance, which formed the early
core of opposition to the mine. Regional and national groups such as
GYC and American Rivers provided scientific and technical support in
the permitting process and carried out a public education program aimed
at the general public and the media. The Gallatin Wildlife Association,
Montana Wildlife Federation, Sierra Club, Northern Plains Resource
Council, Northwest Wyoming Resource Council, Wyoming Wildlife
Federation and Wyoming Outdoor Council worked with their members to
educate the public about the mine proposal. The Sierra Club Legal
Defense Fund provided legal assistance. Many other conservation groups
and community groups expressed concern about the proposal to mine gold
near Yellowstone.
Early on, Senator Max Baucus voiced his concerns and that of many
constituents when, in 1993, he sent a letter to the mining companies
which said, in part, ``I am not willing to gamble with a national
treasure for short-term gain.'' The National Park Service came out
against the mine, saying it feared the operations might harm
Yellowstone National Park.
A 1995 poll revealed that Montanans opposed the mine by a 2 to 1
margin. Indeed, by 1995, practically every newspaper in Montana and
Wyoming had editorialized against the mine. In Cody, Wyoming, 67
percent of the members of the Chamber of Commerce said they opposed the
mine.
Leading national publications, including the NY Times and US News
and World Report, editorialized against the mine and called for a trade
or buy-out of the operation.
Wyoming's Senator Craig Thomas announced his opposition to the mine
in 1996, in a press release stating, ``There is only so long you can
withhold your opinion when in fact you have a strong conviction that
this might be the worst place to site a mine.'' His statement met with
broad support in the region.
These kinds of activities and statements led to the joint agreement
in August of last year to halt the mine proposal and seek a new
solution.
The New World Mine Agreement, announced by the President in
Yellowstone Park on August 12, 1996, calls for Crown Butte to cease its
efforts to develop the New World mine and to transfer all of its
holdings in the New World Mining District to the Federal Government.
In return, the company was promised Federal assets worth $65
million. Of this total, $22.5 million would be set aside in an escrowed
account to underwrite reclamation of historic mining pollution at the
New World mine site. In addition, plaintiffs in the Federal Clean Water
Act lawsuit Beartooth et al. v. Crown Butte Mines et al. agreed to seek
a quick and equitable settlement of their lawsuit consistent with the
Agreement.
On April 12, 1997, the Clinton Administration offered to the mining
companies an exchange of Federal royalty payments from Montana coal,
oil and gas operations equal to the $65 million value in the Agreement.
One month later Crown Butte Mines said it would accept the offer if it
could be assured that Congress would approve the overall deal.
Under the agreement, Crown Butte's property has to be appraised
under the National Standards Act which requires a fair market appraisal
of property purchased or exchanged by the Federal Government. If the
appraisal determines that the company's property is less in value than
the $65 million, a new agreement may be called for. If the appraisal
says the company's property is worth more on the market, the total
amount to be paid by the Federal Government to Crown Butte cannot
exceed $65 million, thus capping the amount for which the Federal
Government is responsible.
If the Federal Government transfers property to Crown Butte, these
lands must also be appraised using standard Federal appraisal
measurements. This approach assures all parties that a market-based
assessment is utilized.
To complete the deal, Crown Butte has to also provide to the
Federal Government title to all of its holdings in the New World Mining
District, including relevant leased assets owned by other parties. If
this is not possible, the agreement calls for the three parties to seek
a new understanding based upon the assets which each side can provide.
Thus far, Crown Butte has not been able to reach an agreement with
Margaret Reeb, a landowner who had previously signed a long-term mining
lease with Crown Butte to develop her part of the New World ore body.
If Crown Butte cannot reach an agreement with Ms. Reeb, the three
parties to the Agreement will then determine how to conclude the
original agreement.
You have asked me to specifically explain how the agreement was
negotiated.
The roots of this unique understanding between the conservation
community, the mining companies and the Administration lie in a complex
chain of events which took place in the summer and fall of 1995.
In September, 1993, nine groups, utilizing the Sierra Club Legal
Defense Fund as counsel, filed suit against several Crown Butte and
Noranda companies charging that they had violated the Clean Water Act
in their operations at the mine site. The Plaintiff Group is composed
of: Beartooth Alliance, Greater Yellowstone Coalition, Gallatin
Wildlife Association, Montana Wildlife Federation, Northwest Wyoming
Resource Council, Northern Plains Resource Council, Sierra Club,
Wyoming Wildlife Federation, and the Wyoming Outdoor Council. The trial
date was set for November, 1996.
The Crown Butte EIS had been delayed for several years due to the
complexity of the proposal and its possible impact on the area. Co-led
by the U.S. Forest Service and the State of Montana and financed by
Crown Butte mining companies, the EIS had attracted national attention
due to concerns about the possible impact of the proposed mine on
Yellowstone Park and the Clarks Fork of the Yellowstone, Wyoming's only
Wild and Scenic River. As the EIS process continued, major concerns
surfaced that had not been adequately addressed by the EIS drafts.
Growing public concern about the mine's threatened impact upon
Yellowstone National Park were expressed in thousands of letters, e-
mail and phone calls to the White House and Federal elected officials.
In rapid succession, the following took place:
On August 20, 1995, President Clinton flew over the site and then
met with conservation community leaders. He expressed his own doubts
about the wisdom of a mine next to Yellowstone and announced a two-year
moratorium on mining claims in the New World Mining District.
In October, 1995, Federal district court Judge Jack Shanstrom ruled
that Crown Butte and its affiliated companies were violating the Clean
Water Act for failing to obtain permits for ongoing water pollution at
the New World Mining District. The companies faced a November, 1996
trial date to assess civil penalties for those violations.
The President's announcement and the events related above generated
major new media attention on the mine, which resulted in numerous
newspaper and TV features on the mine battle.
As these events unfolded, the conservation community began to seek
ways to communicate informally with top leadership at Noranda. We
indicated that if they wished to withdraw from the operations, we would
cooperate with them in seeking a consensus on halting the mine and
stopping the lawsuit. Finally, we asked for a meeting with them. In
November, 1995, officials at Crown Butte and Hemlo Gold agreed to a
private meeting with representatives of the conservation community.
On December 15, 1995, the meeting took place at Noranda
headquarters in Toronto. GYC proposed to the company that it should
withdraw from the mining venture and that, if it did so, there might be
a way of exchanging company's assets at the mine site for Federal
assets in other places.
These discussions resulted in the following agreements:
The company would continue the dialog as long as the
talks were kept confidential;
The company would consider a GYC offer to initiate
conversations with the Clinton Administration to explore a
mutual interest in reaching an agreement to trade out company
assets for Federal assets:
GYC asked for a written statement from the companies
authorizing GYC to make an approach to the Clinton
Administration about a possible halt to the mine and an
exchange of assets; and
GYC and the mining companies mutually agreed that the
companies believed they could permit the mine and operate it
safely and that GYC believed that a safe mine was not possible;
therefore, each party would continue its respective efforts
until we could discover if an agreement was possible. The
company would do everything possible to get the mine permitted,
the conservation community would do everything in our power to
stop approval of the mine.
On January 8, 1996, Crown Butte sent a letter to GYC authorizing an
approach to the Clinton Administration about a possible exchange of
assets if the New World mine was halted.
We immediately asked the staff of the Council on Environmental
Quality at the White House to meet with us and the companies to
consider whether or not an exchange of assets was of mutual interest if
the New World mine was halted.
On February 1, 1996, representatives of Hemlo Gold and Crown Butte
and representatives of the conservation group of plaintiffs met with
CEQ staff in Washington DC to discuss a halt to the New World Mine and
an exchange of assets. There was mutual agreement that talks should be
pursued. All parties agreed to keep the talks confidential. The prior
agreements between GYC and the company to continue their respective
efforts to either permit or halt the mine remained in effect.
In March, 1996, the Clinton Administration created a special task
force on the New World Mine led by Associate Attorney General John
Schmidt and Ambassador James Pipkin of the Interior Department. In the
meetings which followed, Ian Byer, Chairman of Crown Butte and CEO of
Hemlo Gold, and Joe Baylis, President of Crown Butte Mines, LTD, and
General Counsel of Hemlo Gold, represented the company. Doug Honnold,
Managing Attorney of the Northern Rockies office of the Sierra Club
Legal Defense Fund and lead counsel for the plaintiffs in the Clean
Water Act lawsuit, and I represented the conservation community and
plaintiffs in our lawsuit.
Discussions among the three parties began immediately and continued
through the spring and early summer of 1996.
In March, 1996, the Wyoming Legislature passed a law giving
authority to the state to deal with out-of-state solid waste coming
into Wyoming under its Industrial Siting Act. The law imposed a fee of
$10 per ton on any waste created in another state that would be stored
in Wyoming. It was described on the floor of the Wyoming Senate as a
``rifle shot'' aimed at the proposed Noranda mine and the possibility
of using Wyoming land as a storage facility for the mine's wastes.
In June, 1997, Hemlo Gold announced that it was merging with Battle
Mountain Gold Company of Houston, Texas and that its ownership in Crown
Butte would transfer to Battle Mountain Gold. Talks continued during
this period.
The discussions reached a new intensity in late July since it
seemed that an agreement was within reach. Face-to-face talks began in
August and culminated on August 12, 1996 with President Clinton's
announcement that an agreement had been reached to halt the mine, to
trade assets, to settle the existing Clean Water Act lawsuit, and to
clean-up the historic mining pollution at the site.
Once the agreement was signed, the government began an immediate
search for suitable properties to be used in the exchange. This special
effort was led by the BLM. Our plaintiff groups were not intimately
involved in that search although we did ask for periodic reports and we
were given very generic descriptions of the progress. We developed a
set of criteria to guide our response to any proposal. Key to this was
the belief that we did not want to solve a problem on the edge of
Yellowstone only to see it become a major environmental problem for
some other community.
In December, 1996, Montana Governor Marc Racicot opened discussions
about a possible trade involving timber lands in western Montana and
coal lands in eastern Montana. We met with Gov. Racicot,
representatives of the mining companies and members of the Federal task
force on the Crown Butte Agreement to learn of the proposals. The
Montana Wildlife Federation, the Montana Wilderness Association and the
Northern Plains Resource Council were the primary groups that evaluated
these potential exchange lands for the conservation community. They
examined the proposals in detail and concluded that neither proposal
was acceptable. Simultaneously, the proposals created a major public
outcry over the sale of public lands in Montana and the proposals were
withdrawn.
On April 12, 1997, after a one-month extension of the search,
agreed to by all three parties to the Agreement, the Administration
offered royalties from energy deposits in Montana as the method for
exchanging $65 million in Federal assets for the mining companies'
property. One month later Crown Butte said that it would accept this
approach provided that the assets were approved by Congress. Which
brings us to the present time.
Some questions have been raised about why the Crown Butte EIS was
halted by the Agreement. NEPA sets up a process for evaluating and
assessing a specific proposal which might have an impact upon the
environment. Once the companies decided to halt their proposed mine,
there was nothing to do an EIS on. However, the BLM and the Forest
Service are completing an EIS on the proposed withdrawal of public
lands within the New World Mining District from further mining
activity.
We believe the approach incorporated in the New World Agreement is
a valid one which has addressed a multitude of very complex concerns
about a long-running and highly contentious public land dispute. This
consensus approach, which protected the interests of the public and the
mining companies, may have relevance in similar situations elsewhere.
We continue to believe that the New World Agreement is a good deal
for the American people. We also acknowledge that it has been far more
difficult to achieve than we had originally anticipated, but it is
still a valid way of resolving the New World Mine situation. Without
it, the conservation community would still be involved in a highly
confrontational and litiguous confrontation with the mining com-
panies and the battle would still be playing out in the front pages of
newspapers and tying up untold hours of time for many Federal public
servants.
The Agreement provides a method of ending a long and difficult
battle over the proposed gold mine that threatens Yellowstone Park and
the Clarks Fork of the Yellowstone River.
It provides the company with a fair exchange for its assets.
It creates a $22.5 million reclamation fund to clean-up and restore
the polluted lands on Henderson Mountain and it provides research funds
to study the situation, offering the possibility that the clean-up
could benefit other polluted mining sites in the interior West.
And it ensures that the wild character of the lands adjacent to
Yellowstone and the Absaroka-Beartooth Wilderness will be protected
from industrial development for the region's wildlife and for the
benefit of future generations.
We now look to the leadership of the Congress to conclude the New
World Agreement by creating and passing legislation which permanently
resolves this situation.
Thank you for the opportunity to testify. I will be glad to answer
any questions.
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