[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
RESPONSIBLE DOMESTIC RESOURCE DEVELOPMENT AND ECONOMIC STABILITY--THE
ROLE OF THE HARD ROCK MINING INDUSTRY
=======================================================================
OVERSIGHT FIELD HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
Monday, September 29, 2003, in Reno, Nevada
__________
Serial No. 108-62
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
or
Committee address: http://resourcescommittee.house.gov
_____
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COMMITTEE ON RESOURCES
RICHARD W. POMBO, California, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska Dale E. Kildee, Michigan
W.J. ``Billy'' Tauzin, Louisiana Eni F.H. Faleomavaega, American
Jim Saxton, New Jersey Samoa
Elton Gallegly, California Neil Abercrombie, Hawaii
John J. Duncan, Jr., Tennessee Solomon P. Ortiz, Texas
Wayne T. Gilchrest, Maryland Frank Pallone, Jr., New Jersey
Ken Calvert, California Calvin M. Dooley, California
Scott McInnis, Colorado Donna M. Christensen, Virgin
Barbara Cubin, Wyoming Islands
George Radanovich, California Ron Kind, Wisconsin
Walter B. Jones, Jr., North Jay Inslee, Washington
Carolina Grace F. Napolitano, California
Chris Cannon, Utah Tom Udall, New Mexico
John E. Peterson, Pennsylvania Mark Udall, Colorado
Jim Gibbons, Nevada, Anibal Acevedo-Vila, Puerto Rico
Vice Chairman Brad Carson, Oklahoma
Mark E. Souder, Indiana Raul M. Grijalva, Arizona
Greg Walden, Oregon Dennis A. Cardoza, California
Thomas G. Tancredo, Colorado Madeleine Z. Bordallo, Guam
J.D. Hayworth, Arizona George Miller, California
Tom Osborne, Nebraska Edward J. Markey, Massachusetts
Jeff Flake, Arizona Ruben Hinojosa, Texas
Dennis R. Rehberg, Montana Ciro D. Rodriguez, Texas
Rick Renzi, Arizona Joe Baca, California
Tom Cole, Oklahoma Betty McCollum, Minnesota
Stevan Pearce, New Mexico
Rob Bishop, Utah
Devin Nunes, California
Randy Neugebauer, Texas
Steven J. Ding, Chief of Staff
Lisa Pittman, Chief Counsel
James H. Zoia, Democrat Staff Director
Jeffrey P. Petrich, Democrat Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
BARBARA CUBIN, Wyoming, Chairman
RON KIND, Wisconsin, Ranking Democrat Member
W.J. ``Billy'' Tauzin, Louisiana Eni F.H. Faleomavaega, American
Chris Cannon, Utah Samoa
Jim Gibbons, Nevada Solomon P. Ortiz, Texas
Mark E. Souder, Indiana Grace F. Napolitano, California
Dennis R. Rehberg, Montana Tom Udall, New Mexico
Tom Cole, Oklahoma Brad Carson, Oklahoma
Stevan Pearce, New Mexico Edward J. Markey, Massachusetts
Rob Bishop, Utah VACANCY
Devin Nunes, California VACANCY
Randy Neugebauer, Texas Nick J. Rahall II, West Virginia,
Richard W. Pombo, California, ex ex officio
officio
------
C O N T E N T S
----------
Page
Hearing held on Monday, September 29, 2003....................... 1
Statement of Members:
Cannon, Hon. Chris, a Representative in Congress from the
State of Utah.............................................. 6
Faleomavaega, Hon. Eni F.H., a Delegate in Congress from
American Samoa............................................. 3
Gibbons, Hon. Jim, a Representative in Congress from the
State of Nevada............................................ 4
Pombo, Hon. Richard W., a Representative in Congress from the
State of California........................................ 1
Prepared statement of.................................... 2
Statement of Witnesses:
Abbey, Bob, Nevada State Director, Bureau of Land Management,
U.S. Department of the Interior............................ 7
Prepared statement of.................................... 10
Chavis, James A., Vice President, U.S. Government Relations,
Placer Dome America........................................ 37
Prepared statement of.................................... 39
Coyner, Alan R., Commission on Mineral Resources, State of
Nevada..................................................... 20
Prepared statement of.................................... 21
Dobra, Dr. John, Director, Natural Resources Industry
Institute, University of Nevada, Reno...................... 23
Prepared statement of.................................... 24
Fields, Russ, President, Nevada Mining Association........... 33
Prepared statement of.................................... 35
Taylor, Dr. Tony P., President and CEO, Millennium Mining
Corporation................................................ 43
Prepared statement of.................................... 44
OVERSIGHT HEARING ON ``RESPONSIBLE DOMESTIC RESOURCE DEVELOPMENT AND
ECONOMIC STABILITY--THE ROLE OF THE HARD ROCK MINING INDUSTRY''
----------
Monday, September 29, 2003
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Resources
Reno, Nevada
----------
The Subcommittee met, pursuant to call, at 11 a.m., Washoe
County Commission Chambers, 1001 East Ninth Street, Reno,
Nevada, Hon. Richard Pombo presiding.
Members Present: Representatives Pombo, Cannon, Gibbons,
and Faleomavaega.
Mr. Pombo. The Oversight Hearing by the Subcommittee on
Energy and Mineral Resources will come to order. This Committee
is meeting today to hear testimony on Responsible Domestic
Resource Development and Economic Stability, the Role of the
Hard Rock Mining Industry.
And as we begin, I would like to recognize the Vice
Chairman of the Full Committee and the host of our field
hearing today, Congressman Jim Gibbons.
Mr. Gibbons. Thank you very much, Mr. Chairman, and before
we get to opening remarks, I would like to introduce a Boy
Scout Troop today, that's the Boy Scouts of the Nevada Area
Council. It's a mixture of several troops, that they're going
to come down here and help lead us in the Pledge of Allegiance.
So, gentlemen, if you will come down.
Boy Scout. Please place your right hands over your heart.
Bugler sound off.
[Whereupon a bugler played.]
Boy Scout. Ladies and gentlemen, please join me in the
Pledge of Allegiance.
[Whereupon the Pledge of Allegiance was recited.]
Boy Scout. Ladies and gentlemen, you may be seated.
STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Pombo. I want to thank our Boy Scouts for leading us in
the Pledge this morning.
We are holding this hearing today to discuss the important
role the domestic mining industry plays in our Nation's
economic and national security. It is particularly important to
hold this hearing in Nevada, the Nation's leading producer of
hard rock minerals.
Hernando DeSoto, the author of the ``Mystery of Capital:
Why Capitalism Triumphs in the West and Fails Everywhere
Else,'' attributes the West's success to the development of
property rights laws in Western Europe and the United States
over the past 200 years. These laws came from the ground up, a
true grassroots effort that brought about significant change in
how capital grows, creating tremendous prosperity in the
vibrant market economies the West enjoys.
One of the two examples he uses from the United States is
what he describes as this premier mining law of 1872. The law
came directly from lode mining regulations from the Grass
Valley Mining District, in my home State of California, in the
gold mining mountain district here in Nevada.
The mining law, a land tenure law, provides the security of
title to mining companies so that investors have confidence in
providing the capital needed to develop the mine projects.
During the 1990s, Congress passed a moratorium on mineral
patents, the process that allows miners to purchase the surface
rights to claims, and the Department of Interior issued new
mining regulations in the Millsite Opinion. The Millsite
Opinion reversed 125 years of practice, instilling uncertainty
into the operating plans for new projects and mining
expansions.
With the security of tenure in jeopardy, coupled with
permitting uncertainties and lawsuits brought by environmental
groups, the U.S. Has lost its market share of the exploration
dollars to other companies.
This morning we will examine solutions to these problems
facing the domestic mining industry. I look forward to hearing
from our witnesses here today.
[The prepared statement of Mr. Pombo follows:]
Statement of The Honorable Richard Pombo, Chairman,
Committee on Resources
We are holding this hearing today to discuss the important role the
domestic mining industry plays in our Nation's economic and national
security. It is particularly important to hold this hearing in Nevada,
the Nation's leading producer of hardrock minerals.
Hernando de Soto, the author of ``The Mystery of Capital, Why
Capitalism Triumphs in the West and Fails Everywhere Else'' attributes
the West's success to the development of property rights laws in
Western Europe and the United States over the past 200 years.
These laws came from the ground up, a true grassroots effort that
brought about significant change in how capital grows creating
tremendous prosperity and the vibrant market economies the West enjoys.
One of two examples he uses from the United States is what he
describes as ``...this premier mining law'' of 1872. The law came
directly from the Grass Valley Mining District in my home state of
California and the Gold Mountain Mining District here in Nevada.
The mining law, a land tenure law, provides the security of title
to mining companies so that investors have confidence in providing the
capital needed to develop the mine projects.
During the 1990's Congress passed a moratorium on mineral patents,
the process that allows miners to purchase the surface rights to
claims, and the Department of Interior issued new mining regulations
and the millsite opinion. The millsite opinion reversed 125 years of
practice instilling uncertainty into the operating plans for new
projects and mine expansions.
With the security of tenure in jeopardy, coupled with permitting
uncertainties and lawsuits brought by environmental groups, the U.S.
has lost its market share of the exploration dollars to other
countries.
This morning we will examine solutions to these problems facing the
domestic mining industry. I look forward to hearing from our witnesses.
______
Mr. Pombo. I would like to now recognize Congressman
Faleomavaega for his opening statement.
STATEMENT OF THE HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN
CONGRESS FROM AMERICAN SAMOA
Mr. Faleomavaega. Thank you, Mr. Chairman, and I appreciate
your calling this hearing this morning. I certainly would like
to offer my commendation and thanks to the gentleman from
Nevada who is hosting us in this Committee hearing, Mr.
Gibbons, for the hospitality and the graciousness of the staff
in helping us with logistics and enabling us to be here this
morning.
I think that with all the problems that we're facing today,
sometimes we need to pat ourselves on the back and say what a
great nation that we live in. And what I mean by this, Mr.
Chairman, is the fact that our country is one of diversity, so
many different interests and a tremendous amount of resources.
And I think this has also attributed to the fact that this is
the reason why we're the best and most powerful country in the
word economically, as well as militarily.
The sad part of the aspects of our function and working as
members of this Committee is the fact that many members don't
know some of the specific facts that you have just reiterated,
which I think is very important.
My understanding of the geological survey estimates that
the total domestic mineral production last year was about $38
billion, and which would affect some 55,000 people, as far as
working in this important industry.
And when you process this amount of minerals that are being
done domestically, it--the total value comes to some $373
billion. And then when you go a little further and combine that
with 60 mineral materials and estimate a value beyond the--when
we--the major industries in consuming the processing of these
minerals, it comes to--and I hope I read this correctly--$1
trillion 700 billion, as far as our total gross domestic
product.
And I am surprised that I didn't know that Nevada is the
source of almost 81 percent of the Nation's gold, and 31
percent of the silver production domestically. My gosh. Do
people know that this is the gold state? Maybe Mr. Gibbons will
help me find a pan and start going out there and looking for
gold.
I suspect a lot of the gold is probably contaminated with
all the nuclear testing that was conducted years ago. I know
something about nuclear testing, Mr. Chairman, because we had
it in the Pacific, two sides, in the Marshall Islands and also
in Tahiti, in French Polynesia, where the French government
conducted well over 220 nuclear detonations. And to this day,
we're still bearing some very serious and sad commentaries of
what happened in that era.
Mr. Chairman, I know probably some of my colleagues will
wonder, well, what is a Pacific Islander doing here, other than
the fact that a couple of our boys do play for the UNLV
football team. We do export probably more NFL players than any
other place that I'm aware of here in our country.
But truly, I think it's very important, and I commend you
and the members of this Committee, to find out what the status
and the health situation is of our domestic mineral industry.
And, of course, we're always confronted with the problem of
overregulation and the problem of no regulation. That always
seems to be the issue that we go through every year in the
Congress.
And my point, Mr. Chairman, is, why am I interested in
minerals? I suspect that many Americans don't realize that we
have what is known as seabed minerals in the Pacific. I know
for a fact in the Cocos Islands, a recent survey was conducted,
and they had probably well over $200 billion worth of seabed
nodules. These nodules contain cobalt, nickel, copper and
manganese. The sad part about it, Mr. Chairman, is that our
country is not in the forefront as far as developing the
technology to harvest hundreds of billions of dollars worth of
seabed nodules out there in the Pacific.
So I'm very happy to be here, Mr. Chairman, to learn
something about our domestic production and how much I could be
of help to the gentleman from Nevada to see that when we have
issues come in front of the Committee, unfortunately, that not
very many members of our Committee should have been here to get
a real education about the status and the health of our mineral
resources. And I couldn't think of a better state than Nevada
to conduct these hearings.
Again, Mr. Chairman, thank you, and I look forward to
hearing from our witnesses. Again, I thank my good friend from
Nevada for hosting us for this hearing.
Mr. Pombo. Thank you.
Mr. Pombo. And I would now like to recognize the gentleman
from Nevada Mr. Gibbons.
STATEMENT OF THE HON. JIM GIBBONS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Mr. Gibbons. Thank you very much, Mr. Chairman. It is
indeed an honor and privilege for me to welcome you, Mr. Pombo,
from California here. I want to thank you for your leadership
and, of course, for your willingness to hold this very
important hearing for Nevada and the industry, which means so
much to, not just Nevada, but to this country, and it deals
with an issue that is so significant and so important, that
sometimes we take for granted a number of these issues that we
will be talking about today, and it's important that we allow
for the public to hear them as well.
I am also happy to welcome my friend, Mr. Faleomavaega from
American Samoa, who has been to Nevada on several occasions,
one of which was a hearing on wild horses, which we previously
held, and he's been a very helpful colleague. He's also been a
great friend of Nevada, and including the Yucca Mountain
nuclear waste issue, which he has a great sensitivity to Nevada
on, and I'm always grateful to have him here in Nevada, as well
as I am happy to have our colleague and friend Chris Cannon
from the First--or is it the Third?
Mr. Cannon. Third.
Mr. Gibbons. --Third District in Utah. And Chris serves
with us here on this Committee and is a classmate of mine, and
someone who has a very bright intellect when it comes to the
issues with regard to the subject matter.
And last, Mr. Chairman, I want to thank all the witnesses
who have come here today to spend their morning educating this
Subcommittee on the role of hard rock mining and the industry
and the many challenges that are facing us.
And before I give my opening remarks here, I want to say
that many of us read an article this morning in the Business
Section of the Reno Gazette-Journal on--and some environmental
groups have complained that they weren't invited, and one in
particular was the Great Basin Mine Watch. They were not happy
that they were not invited, Mr. Chairman.
I want you to know that, and them to know, that this
Committee accepts all written testimony. We're happy to do
that. And it will remain open for 2 weeks--or 10 days, for them
to submit their written testimony as well.
But that being said, let me set the record straight with
regard to what the article said, because I think it was a
little misinformed.
We've heard on numerous occasions from Great Basin Mine
Watch on these mining hearings. They have testified before. The
purpose of our invitation to other groups was to get other
environmental groups that have not testified before our
Committee, invited to testify before you, the public, and
before this Committee. They declined to do so.
And the reason that Great Basin is upset is because we had
elected to invite those organizations that have not previously
testified. So we would have been hearing from the choir had we
heard from Great Basin, we would have heard what they've
already said before.
So I wanted to clear that up for the record, Mr. Chairman,
before we committed.
But, Mr. Chairman, as you know, I have a personal
background and experience in the mining industry as a
geologist. I spent many years out in Nevada in hard rock
mineral exploration and other activities. And over the past 30
years, I've witnessed the attack on the industry gain momentum
as various special-interest groups, mostly radical
environmental organizations not from Nevada, and some
government entities, even, create arbitrary obstacles with the
intention of preventing any mining from occurring in this
country. And it is a sadly misguided assault against one of our
Nation's oldest, most responsible and important industries.
Examples of these arbitrary barricades include the 1997
Solicitor General's Opinion on millsites. This opinion, Mr.
Chairman, has created substantial uncertainty for hard rock
miners, deterring the development of mines on public lands, and
contributing to this Nation's ever increasing reliance on
foreign minerals. Another example is the '94 Mining Patent
Moratorium, which prevents the BLM from processing any new
mining patents, resulting in a forced mass exodus of American
mining companies to foreign markets.
The EPA has vilified the mining industry with its
outrageous requirements to report the transfer of rocks as
toxic releases into the environment, and yet they do not
address the farming industry, which tills up probably far more
soil and far more overburden and moves it--but that's not why
we're here. Thank you, Mr. Chairman, for reminding me.
But in any event, every week I receive letters and phone
calls from individuals conveying the horror stories of trying
to get a mining project permitted. In fact, the mining
companies have been trying for over a decade and still do not
have a drill in the ground, in some instances. And for those
companies that have been fortunate enough to finally make it
through the permitting process, they often get slapped with
frivolous lawsuits only to delay the process for a few more
years.
Mr. Chairman, the fact is that our technologically advanced
society depends on the mine, on mining, for phones cars,
medical equipment and, yes, indeed, food substances, such as
the filling in Oreo cookies. Our national security also depends
on a viable domestic mining industry, and that couldn't be any
more important than it is today with the history of this
country and the fight that we're undertaking now.
Our military needs minerals for airplanes, computers,
weapons. The United States would be left, I believe, quite
vulnerable if we were forced to depend on critical minerals
from foreign countries. Consequently, mining must continue to
occur in our nation so that we do not become dependent on
foreign countries for our mineral development like we have
become dependent on our foreign oil supplies.
And the question here is, Mr. Chairman, will a hostile
regulatory atmosphere in the U.S. force our domestic industry
to move entirely offshore, or will this government come to
recognize the magnificent benefits a flourishing domestic
mining industry can provide, including jobs, economic growth
and stability, industrial independence, and a high standard of
living?
This hearing is a step in the right direction. We, as
members of Congress, can take the information presented here
today and use it to make sound policy decisions.
Again, thank you, Mr. Chairman, for holding this hearing in
Reno today. My constituents and I are very grateful, and
appreciate your commitment to this important issue. And I want
to once again thank everybody for being here today.
Mr. Pombo. Thank you.
Mr. Pombo. Mr. Cannon?
STATEMENT OF THE HON. CHRIS CANNON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF UTAH
Mr. Cannon. Thank you, Mr. Chairman. I would like to
associate myself with the comments of Mr. Faleomavaega and Mr.
Gibbons in their thanks to you, and Mr. Faleomavaega's thanks
to Mr. Gibbons for hosting us here today.
You know, I read the article this morning in the Reno
Gazette-Journal about the whining by the Great Basin Mine Watch
Group. I thought that was a pretty good article, good for you,
Jim, but then I may be a little harsher. It seems to me you
referred to them as a choir, but if they are a choir, there's a
tendency, I think, there to focus on dissident music.
Anyway, we did an interesting thing the other day. I'm the
Chairman of the Western Caucus, which loves to be supported
with what this Committee is doing. I'm the chairman of this
committee--or the former chairman of the Western Caucus. And we
have been working with certain lots and groups, including a
group called Partnership for the West, which held a meeting in
Denver a couple of days ago.
And so we had--the Western Caucus is a Republican caucus.
It's a white camel, so you have Senators and Congressmen, but
it's only Republicans.
And so I spoke and, unfortunately, I suppose, I was a
little bit partisan. Fortunately, Mark Udall, who is a Democrat
from Colorado, came after I finished speaking, so I was not
offensive to him personally. But his presence there was, I
think, interesting. He came knowing what the agenda was,
knowing what the mission statement of that group was, said,
``We need to work together to solve these problems.''
And by the remark, I count him as a friend. But he is sort
of on the other side of these issues philosophically from me.
But he has indicated in the past his interest in working on
issues like our public roads and wilderness issues. So his
presence there, I take as a great sign. In fact, I think if you
look at America today and where we are politically, now is the
time that we need to resolve some of these long-standing
issues, and we need to do things a little better all the way
around.
But we don't resolve them by taking away the ability of
regulation and Federal costs piled on this industry. We do it
by doing things more efficiently, smarter, more scientifically.
And so I look forward to the testimony of our witnesses today
to help us understand where we are and where we're going, and
perhaps help us figure out how we do it more efficiently with--
with lower costs and more production and more independence and
a better economy and more jobs. Yield back to you, Mr.
Chairman.
Mr. Pombo. Thank you.
Mr. Pombo. I would like to call up the first panel to
testify today, Mr. Bob Abbey, who is the BLM Nevada State
Director. And before you sit, as is customary, on the Resources
Committee, we swear in all the witnesses. So if I could have
you raise your right hand.
[witness sworn.]
Mr. Pombo. Let the record show he answered in the
affirmative. Thank you very much for being here.
STATEMENT OF BOB ABBEY, NEVADA STATE DIRECTOR,
BUREAU OF LAND MANAGEMENT
Mr. Abbey. It's kind of a lonely panel up here by myself,
but, Mr. Chairman, and Members of the Subcommittee, certainly
the Department of Interior appreciates the opportunity to
participate in this hearing and responding to issues regarding
the Bureau of Land Management's role in helping provide
responsible mineral development and economic stability.
The Bureau of Land Management is keenly aware of the
challenges facing the mining industry today, and we all agree
that there are compelling reasons to encourage investment and
support for development of our mineral resource.
I know our time this morning is quite limited, and you have
several people that you want to hear from, so what I plan to do
is give you a very brief overview highlighting some of the
actions that the Bureau of Land Management is taking to
implement our agency's mining law administration program.
However, I request that my written statement, which has been
submitted to the Members of this Committee, be included as part
of the record.
Mr. Pombo. Without objection, your entire written testimony
will be included in the record.
Mr. Abbey. Thank you, Mr. Chairman.
First let me begin with a brief description of the Bureau
of Land Management's surface management regulations, also known
as the 3809 Regulations. Under the previous administration,
revised 3809 Regulations were issued on November 21st, 2000,
and became effective on January 20, 2001. That rule was
subsequently revised in October of 2001 to remove several
provisions that Secretary Norton felt were unnecessarily
burdensome. These changes took effect on December 31, 2001.
The overall purpose of the regulations continue to be the
protection of our environment while providing for reliable and
affordable supply of minerals.
An important change implemented in the January 2001 rule
that has been retained is the bonding of exploration and mining
operations on public land. We believe that a strong financial
guaranteed process is necessary to ensure that taxpayers are
not left paying for the cost of any necessary clean up.
All operations, including notice-level operations, those
with five acres or less, that will cause more than a negligible
disturbance are now required to have a bond or other form of
acceptable financial guarantees that cover all anticipated
reclamation costs.
The new regulations disallow the use of new corporate
guarantees while honoring those in place prior to January 20,
2001. Increases to existing corporate guarantees and transfer
of corporate guarantees to another operator are no longer
allowed.
The September 11, 2001, disaster-related losses, as well as
the recent forfeitures of major corporations have had a
significant impact on the surety industry. Because of these
losses, companies have become more cautious in reducing their
exposure to financial risk. These actions have had a direct
impact on the minerals industries' ability to secure required
bonding.
This problem is of particular concern to the Department of
Interior. A bonding task force was established last year to
review the availability of surety bonds or other mechanisms to
meet Federal and tribal financial assurance requirements for
mineral extraction industries. We anticipate that this task
force report will be completed soon and will be forwarded to
the Secretary for her consideration. In the interim, BLM is
striving to assist the industry where possible in meeting
requirements to provide financial guarantees for outstanding
reclamation and other liabilities.
BLM is working with State agencies to set up mechanisms,
such as bond pools to assist small miners in obtaining
coverage. Nevada is one of three states that currently employs
State bond pools.
Several BLM state offices, including Nevada, have been
working with states to simplify the reclamation costs
estimating process, Colorado, Montana, Utah, as well as Nevada,
are all exploring opportunities for the State to take over
implementation of certain aspects of the 3809 Regulations.
You mentioned this morning the congressionally mandated
mineral patent program. Well, I'm pleased to report that this
process is nearing completion. The Bureau began this program in
October 1994 with 405 grandfathered applications. Today we've
made decisions on 343 of those applications, and have another
67 applications more to complete.
Of those 67 applications, 25 require remaining field work,
that is, performing on-the-ground mineral examinations. We
expect the field work to be completed in October of 2003, and
we anticipate that all remaining adjudication actions will be
completed by October of 2004.
One area of great interest to the industry is the pending
review of the 1997 Solicitor's Millsite Opinion, which outlines
the number and use of millsites. The BLM was aware of the
potential for this opinion to place constraints on large mining
operations and associated support facilities, such as mills,
waste rock disposal, tailing ponds, and transportation
facilities.
The 1997 Opinion is currently under review by the Office of
Solicitor, and we would expect that the Secretary would make a
determination of whether or not that 1997 Solicitor's Opinion
should be changed. That decision should be coming probably
within the next month or two.
As the BLM State Director in Nevada, the remainder of my
testimony, which is very short now, will focus on BLM mineral
activities on public lands in Nevada.
As you mentioned, Nevada ranks first in the Nation and
third in the world in production of gold. We're also the
Nation's leading producer of barite, lithium carbonate, and a
significant contributor to other important hard-rock minerals.
Public lands in Nevada play a significant role in providing
minerals to our nation. Mining has enriched our nation by
creating jobs, stimulating manufacturing, contributing energy,
and expanding our economies. It does fall upon our shoulders,
working with local governments and state governments, to ensure
that all mining operations conduct themselves in an
environmentally friendly manner.
I'm pleased to report, Mr. Chairman, and Members of this
Committee, that the Bureau of Land Management in Nevada has a
great working relationship with the State of Nevada and the
agencies that we work with, including Federal agencies like
your Environmental Protection Agency, to ensure that our
responsibilities are met.
Based upon the number of active notices and plans of
operations in Nevada, we have 50 percent of the Bureau's
national total in the service management programs. Mining
activities in Nevada require a plan of operation, also require
a permit from the State of Nevada, Division of Environmental
Protection. The Bureau of Land Management in Nevada and the
state agencies work together to provide the industry with a
joint permitting and bonding process.
In the last three years, the State and the BLM have
mitigated safety hazards on more than 900 abandoned mine sites.
We're partnering with the Nevada Mining Association and the
Nevada Division of Minerals in backfilling mine sites. Sites
near urban areas, such as Las Vegas, are given our highest
priority.
Good stewardship, if I may, is exemplified by the mining
industry and the State of Nevada through their efforts in
reclamation. There were 13 nominees from Nevada for the 2003
National Reclamation in Sustainable Mineral Development Award,
nominees including individual operators, as well as the Nevada
Mining Association. The nominations of individual operators
focused on their successful site reclamation efforts.
The Nevada Mining Association has routinely been recognized
for its very active involvement with the Bureau of Land
Management and the State to reclaim abandoned mine sites that
have hazardous open shafts and other public safety concerns.
Mr. Chairman, the Bureau of Land Management is committed to
Secretary Norton's Four C's Guiding Principles of
communication, consultation and cooperation, all in the service
of conservation as we pursue our mission to be good stewards of
our Nation's public land and work cooperatively with the Nevada
mining industry.
We appreciate the opportunity to testify here today, and I
welcome any questions that you might have.
Mr. Pombo. Thank you. Thank you for your testimony.
[The prepared statement of Mr. Abbey follows:]
Statement of Robert V. Abbey, State Director, Nevada State Office,
Bureau of Land Management, U.S. Department of the Interior
Madam Chairman and Members of the Subcommittee, thank you for the
opportunity to participate in this hearing and to respond to issues
regarding responsible domestic resource development, economic
stability, and the role of the hard rock mining industry. The Bureau of
Land Management (BLM) is keenly aware of the challenges facing the
mining industry today. We all agree that there are compelling reasons
to encourage investment that supports development of our mineral
resources.
3809 Regulations
I would first like to discuss the BLM's surface management
regulations, also known as the 3809 Regulations. Under the previous
administration, revised 3809 Regulations were issued on November 21,
2000, and became effective January 20, 2001. That rule was subsequently
revised in October 2001 to remove several provisions that were
unnecessarily burdensome; these changes took effect on December 31,
2001. The overall purpose of the regulations continues to be the
protection of our environment while providing for a reliable and
affordable supply of minerals. One important revision to the January
2001 regulations was the elimination of the ``substantial irreparable
harm'' provision. We determined that BLM has other statutory and
regulatory means to prevent irreparable harm to significant resources
and, therefore, this provision was not needed.
The reference to ``joint and several'' liability was also removed.
We recognized that neither the Federal Land Policy and Management Act
nor the Mining Law expressly provided for joint and several
liabilities. Therefore, BLM will rely on surety bonds and other
financial guarantees to ensure against incomplete reclamation
responsibilities.
A third substantive change to the January 2001 rule was the removal
of a provision that established administrative civil penalties. Again,
clear authority to impose such penalties was uncertain and appeared to
require Congressional authorization.
An important change implemented in the January 2001 rule that has
been retained is the bonding of exploration and mining operations on
the public land. We believe that a strong financial guarantee process
is necessary to ensure that taxpayers are not left paying for the costs
of cleanup. All operations, including notice-level (5 acres or less)
operations that will cause more than negligible disturbance, are now
required to have a bond or other form of acceptable financial guarantee
that covers all anticipated reclamation costs. In addition, the new
regulation disallows the use of new corporate guarantees, while
honoring those in place prior to January 20, 2001. Increases to
existing corporate guarantees and transfer of corporate guarantees to
another operator are no longer allowed.
Bonding Task Force
The September 11, 2001, disaster-related losses, as well as the
recent forfeitures of major corporations, have had a significant impact
on the surety industry. Because of these losses, companies have become
more cautious and are reducing their exposure to financial risks. These
actions have had a direct impact on the mineral industry's ability to
secure bonds. This problem is of particular concern to the Department
of the Interior. A Bonding Task Force was established last year to
review the availability of surety bonds or other mechanisms to meet
Federal and Tribal financial assurance requirements for mineral
extraction industries. The Task Force's charge was: 1) to gather
information and statistics; 2) to evaluate the problem; 3) to determine
its severity and scope; 4) to identify regulatory impediments that may
make it difficult to obtain surety bonds; and 5) to make
recommendations to the Secretary, as appropriate. The Task Force is in
the process of evaluating all the comments received and exploring
various administrative options. We anticipate the report will be
completed soon and will be provided to the Secretary for her
consideration.
In the interim, BLM is striving to assist the industry, where
possible, in meeting requirements to provide financial guarantees for
outstanding reclamation and other liabilities. In compliance with the
bonding requirements of the January 2001 regulations, BLM adopted the
policy that financial guarantees would not be required from
``grandfathered,'' small notice-level (less than 5 acres) mining
operations until 60 days after BLM formally notifies the operator of
the required bond amount. This allows notice-level operators to
continue to operate, pending BLM acceptance of the required financial
guarantee. BLM is working with states to set up mechanisms, such as
bond pools, to assist small miners in obtaining coverage. Nevada is one
of three states that currently employs state bond pools.
In an effort to deal with many of the uncertainties created by
changes in the surety market, combined with the new regulatory
requirements, BLM has been actively preparing internal guidance. At the
local level, BLM has been working with state and local agencies to
streamline the review and approval process for new operations. For
example, BLM - Nevada has a cooperative agreement with the Nevada
Division of Environmental Protection that allows the operator to make a
single submission for a proposed operation to both agencies. In
addition, the agreement provides for coordinated review and approval by
both the BLM and the state agency of the submission. Several BLM state
offices, including Nevada, have been working with states to simplify
the reclamation cost estimating process. Colorado, Montana, Utah and
Nevada are all exploring opportunities for the state to take over
implementation of certain aspects of the 3809 Regulations.
In another area, the Congressionally-mandated Mineral Patent
Program is nearing completion. The Bureau began this program on October
1, 1994, with 405 grandfathered applications. To date, we have made
final decisions on 343 applications and have 67 applications more to
complete. Of those 67 applications, 25 require fieldwork--that is,
performing on-site mineral examinations. We expect the fieldwork to be
completed by October 2003. The remaining applications are in various
stages of review by the BLM and the Office of the Solicitor. We
anticipate that all adjudication actions will be completed by October
2004.
One area of great interest is the pending review of the 1997
Solicitor's ``Mill Site'' opinion, which outlines the number and use of
mill sites. The BLM is aware of the potential for this opinion to place
constraints on large mining operations and associated support
facilities, such as mills, waste rock disposal, tailings ponds, and
transportation facilities. The 1997 opinion is currently under review
by the Office of the Solicitor.
Hard Rock Mineral Resources in Nevada
As BLM State Director in Nevada, the remainder of my testimony will
focus on BLM's mineral activities on public lands in Nevada. Today,
Nevada ranks 1st in the Nation and 3rd in the world in the production
of gold. Nevada is also the Nation's leading producer of barite,
lithium carbonate, and mined magnesite, and a significant contributor
to other important hard rock minerals. Public lands in Nevada play a
significant role in providing minerals to our Nation. Mining has
enriched our Nation by creating jobs, stimulating manufacturing,
delivering energy, and expanding our economy. The benefits of hard rock
mining accrue on a local as well as National scale. For example, in
February 2002, the Board of County Commissioners of Elko County,
Nevada, in response to the Department's pending rulemaking to revise
the 3809 Regulations, stated, ``this activity [hard rock mining]
generates substantial economic benefit to our County consisting of
direct mining and mineral exploration jobs, indirect jobs associated
with other businesses in the County, property taxes, and other
community support from the mining industry.''
Mining is the second largest industry in Nevada, and BLM employees
in the state have workloads to prove it. BLM Nevada annually records
more than 50 percent of the new mining claims in the Nation and
maintains nearly half of the Bureau's active recorded mining claims.
There are currently 105,465 active mining claims on public lands in
Nevada.
Based on the number of active Notices and Plans of Operations in
Nevada, we have 50 percent of the Bureau's National total in the
surface management program. We have 321 approved Plans of Operations on
public lands in Nevada. In addition, there are 353 active Notice
operations and 1,733 recently expired Notices. In cooperation with the
state, BLM manages $465 million in financial guarantees for active
Notices and Plans of Operations. $220,000,000 of those financial
guarantees are in the form of grandfathered corporate guarantees.
The boom and bust cycle of mining is well-known in Nevada. Through
the 1980s and 1990s, the state saw a boom in gold and silver mining,
although there was a slight downturn in the latter part of the 1990s
and early 2000. Presently, Nevada is experiencing renewed activity in
claim staking, exploration and several new mines being proposed for
development. Claim staking has increased nearly three-fold over the
previous two years with a corresponding increase in exploration Plans
and Notices. At the same time, it is evident that the boom cycle of the
1980s has matured. Several mines are now in closure and several more
are in their final years of operation. However, the BLM's workload has
not decreased. We are actively involved with mine closures, bonding
(for both Plans and Notices), mine bankruptcies, abandoned mine
closures, as well as new Plans for exploration and mine development.
Mining activities in Nevada requiring a plan of operation also
require a permit from the State of Nevada, Division of Environmental
Protection. BLM Nevada and the state agencies work together to provide
the industry with a joint permitting and bonding process. A staff
position, funded in part by industry fees paid through the State of
Nevada, and in part by BLM, serves as a liaison with the state's
Division of Environmental Protection. The BLM in Nevada, the state, and
EPA are developing new guidelines for mine closures. BLM has also
developed guidelines for bonding, re-vegetation, water modeling and
risk assessment for new mining plans. This guidance is intended to
clarify the process for all parties and hopefully expedite the review
and approval process.
In the last three years, the state and the BLM have mitigated
safety hazards on more than 900 abandoned mined sites. For example, BLM
is partnering with the Nevada Mining Association and the Nevada
Division of Minerals in backfilling mining sites. To protect public
health and safety, sites near urban areas, such as Las Vegas, are given
priority. Almost 80 sites have been cleared for closure in Clark
County.
Good stewardship is exemplified by the mining industry in Nevada
through their efforts in reclamation. There were 13 nominees from
Nevada for the 2003 National Reclamation and Sustainable Mineral
Development awards. Nominees included individual operators and the
Nevada Mining Association. The nominations of individual operators
focused on their successful site reclamation efforts. The Nevada Mining
Association has routinely been recognized for its very active
involvement with the BLM and the state to reclaim abandoned mine sites
that have hazardous open shafts and other public safety concerns. With
a rapidly growing population and increasing demand for recreation on
public land, reclaiming and securing abandoned mine land sites around
campgrounds, off-highway racecourses, hiking trails and popular
recreation areas is a priority.
Conclusion
Madam Chairman, BLM is committed to Secretary Norton's 4C's guiding
principles of Communication, Consultation, and Cooperation--all in the
service of Conservation, as we pursue our mission to be good stewards
of our Nation's public lands and work cooperatively with Nevada's
mining industry.
Thank you for the opportunity to testify before you today. I
welcome any questions the Subcommittee may have.
______
Mr. Pombo. I am going to defer to Mr. Gibbons to ask the
first round of questions.
Mr. Gibbons. Thank you very much, Mr. Chairman. And,
Director Abbey, thank you very much for taking time out of your
day to be here to testify to us.
I mean, in fact, your testimony today is literally a good-
news story, as I see it, for the industry. There's no doubt,
and I am sure you would agree, that historical mining practices
20, 30, even 50 to 100 years ago, weren't as successful in
dealing with the environment as mines are today.
The fact that we have 13 nominees from Nevada for the 2003
National Reclamation and Sustainable Mineral Development
Awards, I think speaks highly for an industry that is very
conscious of the fact that the environment is indeed something
that they are concerned about.
My question goes back to your testimony about bonding. You
indicated that the--you're working to improve the availability
of bonding assurances that are out there. Have you been aware,
or are you aware, of a reduction in the willingness of entities
to provide bonding assurances for mining operations in the last
couple of quarters?
Mr. Abbey. I'm not aware of any lack of willingness to
provide the bonding that we require. The industry is definitely
in trouble, the surety industry is definitely in trouble, and
it's becoming more and more difficult for mineral extraction
industries, as well as many other types of industries, to
secure those bonds that we require.
Mr. Gibbons. So the actual availability depends upon the
cost of that bond to the individual mining companies, and I'm
sure that that is rising each and every time they make an
application for a bonding and permitting process.
Mr. Abbey, there are some that will ask you about the delay
in the permitting process, and I think it would--reasonable
certainty, some companies have had an unusual long delay in
getting their permitting completed here in Nevada.
What can you tell us about the BLM's effort to work toward
getting those permitting applications completed and finished up
for some of these companies?
Mr. Abbey. Congressman Gibbons, I believe that there are
some legitimate concerns that have been voiced by the industry
regarding the timeframes that it takes to get to all the
necessary permits required for mining. We have tried to
streamline the process to the degree that we can by working
with the State of Nevada for a joint permitting process so that
the industry can apply only one time, and then we work together
with the State to issue one permit.
Mr. Gibbons. Mr. Abbey, could you tell us, just briefly,
how many permits a mining company has to go through in order to
get--
Mr. Abbey. Congressman Gibbons, I certainly do not know.
Mr. Gibbons. Is there more than one?
Mr. Abbey. I would imagine it is. There's plenty of permits
they have to receive in order to pursue their operations. I'm
sure the industry folks here today will be happy to provide you
that information.
I will say this, that the timeframe has certainly been
extended significantly by the amount of litigation that we see.
Almost every decision that we make regarding an application or
proposal for a new mine is either protested, appealed or
litigated, and in most cases, all three. That certainly adds to
the timeframe that it takes for issuing a permit from the
Bureau of Land Management to proceed with the mining operation.
Mr. Gibbons. So what you are saying is that after they've
gone through the process that you've outlined, or the BLM has
outlined, that they're required to go through in order to
achieve a permit, to explore, to drill, to operate a mine, once
you have gone through that step-by-step process to make
assurances that it meets your standards, they then are subject
to protest, appeals and litigation?
And how many years on average does that course of action
add to the time that a company can finalize its permit?
Mr. Abbey. It can add several years to the process.
Mr. Gibbons. So if a company is out there with a $400
million investment looking to help amortize that by getting
their operation going, they can expect that their return on
their investment could be delayed significantly, years and
years into the future?
Mr. Abbey. Yes, sir, it could. And I believe that the
mining industry--and again, I will let them speak for
themselves, but I am sure that they plan for that timeframe as
part of their proposals. Unfortunately, you know, it--we will--
we can address a protest fairly quickly. An appeal to the
Interior Board of Land Appeals can take up to two or three
years before a decision is issued by the Interior Board of Land
Appeals. And even when we go through that process, that does
not preclude anyone from filing a lawsuit.
Mr. Gibbons. Thank you, Mr. Chairman. Thank you, Mr. Abbey.
Mr. Pombo. Mr. Faleomavaega.
Mr. Faleomavaega. Thank you, Mr. Chairman. And I appreciate
Mr. Abbey's testimony this morning.
Just a couple of questions in refreshing my memory, also.
The total percentage of the public lands in the State of Nevada
is owned by the Federal Government. Well, I would like to know,
what is the percentage of the public land that is owned by
Uncle Sam?
Mr. Abbey. The Bureau of Land Management manages 48 million
acres in the State of Nevada. That's 68 percent of the state.
The total land base that's managed by the Federal Government in
the State of Nevada comes to 87 percent.
Mr. Faleomavaega. So you might say there is a tremendous
influence as far as Federal involvement with the use of the
lands in the State of Nevada in that regard?
Mr. Abbey. Some might say that.
Mr. Faleomavaega. Putting it mildly; right?
I know that under your administration it--and I don't know,
maybe I'm wrong--dividing these public lands some for mining,
obviously, permits for agriculture and those for ranching, what
percentage of this goes to mining, of the 45 million acres that
we have here in Nevada?
Mr. Abbey. Of the 48 million acres, most are available for
mining. We have withdrawn some lands, primarily through
legislation, like wilderness legislation, designations of
National Conservation Areas that have been withdrawn from--from
mineral entry.
Mr. Faleomavaega. I indicated earlier in my statement that
there is always this nagging problem of extreme situations,
where we find ourselves to be overly regulated, to the point
where there's no regulation. I would like to describe myself as
a sentry. I would like to think that there should be some kind
of a balance in--in doing both.
And I wanted to ask you, do you think that the previous
administration was a little too hard at being overly--filling
up the books with regulations as compared to the current
administration?
Mr. Abbey. I have worked for the administration that's in
office at any given time, so I will watch my response to that.
Mr. Faleomavaega. Well, you're a career person. You don't
have to worry about that.
Mr. Abbey. I sort of believe that the industry itself would
suggest that they felt there was an overregulation of the
industry during the past administration. I think Secretary
Norton has done a good job of trying to weigh the pros and cons
of what our responsibilities are of managing these public lands
in an environmentally sensitive manner, at the same time to
provide opportunities for these much-needed resources to be
developed.
Congressman, as you suggest, there is a--there is a
balance, and the balance is what we're pursuing. My experience
with today's mining industry has been one that's most
favorable. They understand their responsibilities, they
understand that many of us are still living with the legacies
of yesterday, and we're going to great lengths working together
to address those sad legacies that were caused by historic
mining practices throughout the Western United States.
Today we are making much progress toward the types of
balance that we both wish. So I would say that Secretary Norton
has done a good job of addressing the need to balance our
protection of the environment with the need to provide
additional resources for this nation.
Mr. Faleomavaega. As I said earlier, I was surprised that
81 percent of the production of gold here in our country comes
from the State of Nevada, and I know that gold is not found in
mother lodes, you can't get out a whole bunch of gold
somewhere. And I'm curious, because I know that the largest
gold mining operation in the world is at west Papua New Guinea,
as you are probably familiar with that, and is currently
operated by a mining company from Louisiana and also from
Australia. And they've literally had to move mountains for--
tons and tons of dirt to produce one ounce of gold.
And I'm curious, to produce one ounce of gold in the
current mining operations in the State of Nevada, how much--how
much dirt do they have to lift to get that?
Mr. Abbey. Significant. It--you know, I certainly would
invite you to, next time you come to Nevada, to take a tour of
some of our large mining operations in Northern Nevada.
Mr. Faleomavaega. I am going to definitely ask Mr. Gibbons
permission to do that. And I just want to mention, because my
time is up and I don't want to take this further, this
operation on west Papua New Guinea is a disaster, as far as
everyone is concerned, unfortunately, and I'm glad to hear that
there are very sensitive--there's a tremendous sensitivity
toward environmental aspects of mining for gold in the State of
Nevada. This is not the case in west Papua New Guinea. But I
will hopefully get a chance to visit your mining operations
here in the state.
Mr. Chairman, I know my time is up. Thank you. Thank you,
Mr. Abbey.
Mr. Pombo. Mr. Cannon.
Mr. Cannon. Thank you, Mr. Chairman.
You know, Utah, if you didn't have Nevada, Utah would be
this huge gold producer, maybe 20 percent of the Nation's gold,
which represents about a twentieth of what is produced in
Nevada. It truly boggles the mind what we're doing.
Let me just point out that one of the problems that I have
with some of the environment--extreme environmental controls of
mining in America is we tend to export our disasters to areas
where they don't have the technical or other capabilities to
control what happens, which is one of the reasons I would like
to have a development here in Utah--you said an interesting
thing, Mr. Abbey, you said, most of your decisions are
protested, appealed or litigated.
Do you have a sense of what percentage of BLM's budget
overall around the country goes toward that, either the
litigation or appeal or protest process?
Mr. Abbey. Congressman Cannon, we're trying to track those
actual costs right now. We've done a poor job of being able to
account for all the dollars that it takes us to deal with the
protests, appeals, and litigation. So, sir, I do not have a
dollar amount for you.
Mr. Cannon. I have heard that between the Forest Service
appeal and the Fish and Wildlife Service that between 48 and 58
percent of the budgets of those agencies are going toward
litigation. Would that be ballpark for BLM?
Mr. Abbey. I would certainly think that about 20 to 25
percent of our total costs are going to address protests,
appeals or litigation. What we do not account for is the amount
of time that is lost while we are going through those
processes.
Mr. Cannon. Right. Which might double that 25 percent?
Mr. Abbey. Yes, sir.
Mr. Cannon. I think that's probably where that 50 percent
more or less comes from.
You're aware that Senator Daschle asserted in, I guess it
was last year's Omnibus Bill a few years ago, a limitation on
Federal court jurisdiction over appeals of decisions made in
the Black Hills Forest? Are you familiar with that?
Mr. Abbey. Yes, sir.
Mr. Cannon. Is that something we need to do more broadly in
America?
Mr. Abbey. I would certainly support--and I'm speaking for
myself--I could certainly support such an action by Congress.
Mr. Cannon. Are you familiar with the Forest Hill
Initiative?
Mr. Abbey. Yes, sir.
Mr. Cannon. And the limitation on jurisdiction there?
Mr. Abbey. Yes, sir.
Mr. Cannon. Do you feel that those are appropriate in that
regard?
Mr. Abbey. I sure do.
Mr. Cannon. Let me just offer, Mr. Chairman, my
Subcommittee on Judiciary oversees the commercial and
administrative law aspect of this, and that means what we do
administratively with the rules and regulations that result
in--and this matter of litigation seems to be actually working
on something to reduce that cost so that we can move dollars
into oversight and management and away from these frivolous
lawsuits.
In addition, let me just point out that this is a--a net
benefit gain for some of these environmental groups who don't
have to pay anything if they lose, and they can lose many, many
lawsuits and then they get extraordinary attorneys' fees on the
other side if they win one, so that it's a self-funding
process, which has done nothing but tie up the administration,
this administration, the last administration, the
administration before that, as far back as I can remember, in
costly litigation, costly in terms of dollars and costly in
terms of time, costly in terms of the resources we're not
developing, and costly in terms of what we're not managing and
how we're not managing it.
So let me just make an offer that we ought to be working
together on that issue. And I yield back to you, Mr. Chairman.
Mr. Pombo. Thank you. Mr. Abbey, how long have you been
involved in regulating the mining industry?
Mr. Abbey. Mr. Chairman, I have 21 years of experience
working for the Bureau of Land Management, and the BLM being a
multiple-use agency, I've been involved in some aspect of
regulating mining for all 21 years.
Mr. Pombo. And in--in your testimony and in answering the
questions from Mr. Gibbons, you talked about the changes in the
mining industry. One thing I'm interested in pursuing a little
bit is, how have things really changed over those 21 years in
terms of what a mining company does when they actually go in
and start a new mine, and what they leave when they're done?
Mr. Abbey. From my experience, it certainly will start with
the amount of time that it takes to review proposals that are
coming from industry and for us to issue a decision. It
certainly has, over the years, has expanded to include an
average of four to five years to issue a permit after
addressing the protests, appeals and litigation I mentioned
earlier.
What I see primarily is that we have all learned over the
years. The proposals that we're receiving from the mining
companies are certainly much better proposals, there's more
specifics, so we have a better idea of what the lasting
consequences of these actions are. We have a lot more
experience under our belts relative to the modeling that we use
now to assess and evaluate anticipated impacts from these
operations and the likely consequences of the--that's going to
be left as a result of mine closures, and how those impacts can
be mitigated.
So I believe that we've all learned over those years, and
we all benefit from that lesson, or those lessons. So I think
for the most part, as I suggested to Congressman Gibbons, is
that the industry today does a much better job than what they
were doing 10 to 15 to 20 years ago.
Mr. Pombo. What--when you talk about how long it takes to
get a permit, what is the biggest delay? Is it just working
their way through your bureaucracy or what slows it down?
Mr. Abbey. I think to some degree we can accept the
legitimate criticism that it takes us too long to review
proposals. On behalf of our employees, I must say that we try
to--we fully understand that every decision we make is going to
be protested, appealed or litigated, so sometimes we may go to
the extreme to try to address any question or every question
that we believe might be raised as part of those processes.
As a result, the requirements that we place upon industry,
as far as helping us to--to come up with the information that
we need in order to incorporate into the environmental impact
statements, that we must do to assess potential impacts from
these operations, that instead of just addressing those known
issues, we're addressing much more than just the known issues,
we're addressing the perceptions of what other issues might
surface during the protest, appeals, litigation.
Therefore, the amount of time it is taking us to complete
an Environmental Impact Statement is much longer today than it
was three, four or five years ago.
Mr. Pombo. When you--when the system, you didn't do it, but
when the system was set up--
Mr. Abbey. Some people may think I've done that.
Mr. Pombo. Well, Congress bears a big part of the
responsibility here. But when the system was set up and someone
wants to go onto public lands and start to mine, and they have
to go through this process, and you have all the environmental
assessments and environmental impact statements, all of the
different things that they have to go through, your agency has
to go through consultation with other agencies, all of these
steps that we have to go through, you're saying that it could
take four or five years to go through that process. Isn't there
something wrong with the system if, at the end of all of that,
it's still open to lawsuits?
Mr. Abbey. Well, again, speaking for myself, it's very
frustrating to go through the process and get to the point of
issuing a record decision, only to see that decision delayed by
litigation. And we're on-hold from that point forward until the
Federal court will rule on the accuracy of our decision.
So certainly it is very frustrating for us as members of
this agency, who are responsible for administrating the law, in
carrying out the mandates that we have from the Department of
Interior and from Congress. So I don't know about whether the
system is broken, but I do know it's very frustrating to work
within the system.
Mr. Pombo. What percentage of the--of the ones that are--of
the permits that are challenged, what percentage of those do
they actually overturn the permit or stop the permit from going
forward?
Mr. Abbey. Tom Wessendock, who certainly Congressman
Gibbons knows, he's a former Deputy State Director for our
mineral resources here in the Bureau of Land Management in
Nevada, was fond of saying that the Bureau of Land Management
never lost an appeal to the Interior Board of Land Appeals in
mining issues. That's not to say that it may not change, but we
have certainly not faired as well in Federal litigation. Even
now in Federal litigation, though, our success rate is very,
very high. I don't have the percentages that you are asking
for, but I do know that our success rate in Federal court has
been very high.
Mr. Pombo. Can you provide that for the record for the
Committee, because it--I think, as we look at mining law in the
future, we really do need to look at the way this system works.
And if all it has become is a way of delay and raise money,
then maybe we need to look at doing something a little bit
differently.
Mr. Abbey. Mr. Chairman, I would be happy to provide that
information to this Committee.
Mr. Pombo. I would also like to ask you about the patent
moratorium. At what point does BLM come to Congress and ask to
lift that moratorium?
Mr. Abbey. Sir, that--I think that's the decision Secretary
Norton would have to make. I certainly believe that if the
current moratorium is a hindrance to this industry, then the
industry themselves should be meeting with Secretary Norton to
convey to her their concerns, and she would be the one that
would have to make that determination and come back before the
Congress.
Mr. Pombo. And just before I excuse you, I would just say
that at one point I had dinner with a foreign minister of one
of our allies, and he had a theory on what was going on in the
United States. And it was his theory that the United States had
made a--a conscious decision to deplete the natural resources
of the rest of the world first, and that's why we were stopping
mining and timber and oil extraction, resource extraction, in
this country, because we wanted to go after all of the
resources in the rest of the world first, and then we would be
the only one with the mining resources and timber and oil
resources left. And he was serious, he really did think that
that's why we were doing this. So his perspective in looking
at--at laws in this country from the outside was that it made
so little sense, what we were doing, that we had to be doing
this and it had to be a conspiracy just to deplete the rest of
the world's resources.
And in listening to the stories that we've heard in doing
these field hearings all over the country, whether we were
talking about coal or timber or hard-rock mining or oil and
gas, I'm beginning to wonder if maybe he wasn't onto something,
because it sure doesn't make sense from--from where I'm
sitting.
But I appreciate your testimony. If there are any further
questions that members of the Committee have, they will be
submitted to you in writing. If you could answer those in
writing for the Committee so that they can be included in the
record?
Mr. Abbey. We'll be happy to. Thank you for this
opportunity.
Mr. Pombo. Thank you very much.
I would like to call up our second panel of witnesses. We
have Mr. Alan R. Coyner, State of Nevada Commission on Mineral
Resources, Dr. John Dobra, Director of Natural Resources
Industry Institute, University of Nevada, Reno.
And before you gentlemen sit down, if I could just have you
stand and raise your right hand.
[Witnesses sworn.]
Mr. Pombo. Let the record show they answered in the
affirmative. Thank you very much for being here today. If I can
begin with Mr. Coyner.
STATEMENT OF ALAN R. COYNER, STATE OF NEVADA,
OMMISSION ON MINERAL RESOURCES
Mr. Coyner. OK. Thank you, Mr. Chairman, and Members of the
Subcommittee. My name is Alan Coyner, and I am the
Administrator of the Nevada Division of Minerals. And on behalf
of Governor Guinn, allow me to welcome the Subcommittee to the
State of Nevada.
Today I will present information from Nevada that I believe
exemplifies responsible mineral development. I will also
provide information that demonstrates an ongoing concern
whether Nevada is competitive in the global competition for
exploration dollars. These exploration dollars are critical to
the new mineral discoveries that will provide economic
stability in the future for Nevada, and especially to our rural
communities.
It's worth repeating, Nevada is the Nation's leading
producer of hard rock minerals. We lead the United States in
gold, silver and several other mineral commodities. Mining is
our State's second largest industry with a total value of
mineral production in 2002, of approximately $2.8 billion, with
precious metal production accounting for 2.5 million of that
total.
The 7.7 million ounces of gold that poured from Nevada's
mines in 2002, makes us the third largest producer in the
world, behind only South Africa and Australia.
Our major producing region, the Carlin Trend, has surpassed
50 million ounces of total gold production, a record equaled
only by four other mining districts on this planet. With
Nevada's vast mineral endowment, clearly the future of hard
rock mining in this country and the future of Nevada are
inextricably entwined.
Responsible development and modern mining are synonymous.
Reclaiming the land after mining has ceased is now standard
practice, and has been for many years. For the past 13 years,
the Governor has presented the Nevada Excellence in Mine
Reclamation Awards, and during that time, recognized 45
projects and three individuals for outstanding accomplishes in
restoring and preserving Nevada's environment. The rewards are
given cooperatively by state and Federal agencies, making the
selection process a true collaboration.
Many of the projects are unique in the United States, if
not the world. Each year the regulatory bar that defines above
and beyond reclamation performance standards has been raised,
and each year Nevada's mining industry has responded with ever
higher levels to commitment to excellence and mining
reclamation.
At this very time, as you've heard, several Nevada projects
are being considered for the first BLM National Hard Rock
Mineral Environmental Awards, and I am hopeful that a Nevada
project will be selected.
Economic stability in hard rock mining would seem to be
incompatible. Most maps of Nevada show many places labeled
``sites,'' which are, in reality, mining ghost towns, places
where people lived and worked but moved on when the ore ran
out. If ore bodies are finite and mines have lives, how can
mining provide economic stability?
The answer to that question can be approached from many
aspects, but I will focus on one. The continuation of economic
stability, therefore sustainability, relies heavily on the
discovery and development of new mines. New mines are found
through the investment of exploration dollars in search of new
ore bodies. And Nevada is in a global completion for
exploration dollars.
The Division of Minerals tracks exploration activity in
Nevada through filings made by mining companies in the state
mine registry. Two of the main indicators of activity are
exploration expenditures and the number of active mining claims
held by companies and individuals.
In 2002 respondents to the survey reported spending 64.6
million in Nevada. While this number is up slightly from 2001,
it is significantly less than the 154 million reported in '94.
Over the past 7 years, Nevada's largest mining companies have
spent, on average, less than 20 percent of their exploration
dollars in this state, sending nearly all of the remainder
overseas.
Mining claims in Nevada peaked at 425,000 in '91, and have
declined steadily ever since. A one-time loss of approximately
200,000 claims occurred in '93 after the enactment of a Federal
mining claim maintenance fee. The 100-dollar fee per claim paid
annually by Nevada miners continues to flow to the Federal
Treasury. It is not shared with the state of origin, like other
mineral fees, and could be put to a more productive use, such
as the reclamation of historic Nevada mine lands.
Active claims in Nevada reached a 25-year low, of 88,124 in
2002; and nationwide, claims dropped below 200,000 for the
first time since BLM began publishing claim records in 1978.
Simply put, fewer claims means less activity, and less activity
means fewer discoveries. That, Mr. Chairman, directly impacts
the economic stability of Nevada.
Recent increases in the price of gold have led to renewed
optimism among exploration companies and individual
prospectors. Early reports for 2003 claim data indicate the
downward trend has stabilized or even reversed. Hopefully this
will translate into a resurgence of exploration and in mineral
development in Nevada. However, constant vigilance is required.
Burdensome mining fees, duplicative regulations and unnecessary
permit delays lead to economic instability, not stability. We
are in a global competition for responsible mineral
development, and Nevada cannot afford to fall behind. Thank
you.
Mr. Pombo. Thank you.
[The prepared statement of Mr. Coyner follows:]
Statement of Alan R. Coyner, Administrator,
Nevada Division of Minerals
Thank you, Mr. Chairman and members of the Subcommittee, I
appreciate the opportunity to testify today regarding the role of the
hardrock mining industry in the responsible development of our domestic
mineral resources and the economic stability afforded by mineral
development. My name is Alan Coyner and I am the Administrator of the
Nevada Division of Minerals, and on behalf of Governor Guinn, allow me
to welcome the Subcommittee to the State of Nevada.
The theme for this hearing is very much in keeping with the
division's mission, which is to further the responsible development and
production of Nevada's mineral resources to benefit and promote the
welfare of the people of Nevada. Today I will present information from
Nevada that I believe exemplifies responsible mineral development. I
will also provide information that demonstrates an ongoing concern
whether Nevada is competitive in the global competition for exploration
dollars. These exploration dollars are critical to the new mineral
discoveries that will provide economic stability in the future for
Nevada, and especially to our rural communities. It is entirely
appropriate that this hearing be held in Nevada, the Nation's leading
producer of hardrock minerals. We lead the United States in gold and
silver production, as well as barite, lithium and magnesium compounds,
and several other mineral commodities. Mining is our state's second
largest industry, with a total value of mineral production in 2002 of
approximately $2.8 billion. Precious metal production accounted for
about $2.5 billion or 90% of that total. The 7.7 million ounces of gold
that poured from Nevada's mines in 2002 makes us the third largest
producer in the world, behind only the countries of South Africa and
Australia. Our major producing region, the Carlin trend, surpassed 50
million ounces of total gold production in 2002, a record equaled by
only four other mining districts on the planet. With Nevada's vast
mineral endowment, clearly the future of hardrock mining in this
country and the future of Nevada are inextricably entwined.
Responsible development and modern mining are synonymous.
Reclaiming the land after mining has ceased is now standard practice
and has been for many years. For the past 13 years the Governor has
presented the Nevada Excellence In Mine Reclamation Awards and during
that time recognized 45 projects and three individuals for outstanding
accomplishments in restoring and preserving Nevada's environment. The
awards are given cooperatively by the Nevada Division of Minerals, the
Nevada Division of Environmental Protection, the Nevada Division of
Wildlife, the Bureau of Land Management, and the United States Forest
Service, making the selection process a true collaboration. Many of the
projects are unique in the United States, if not the world. Each year
the regulatory bar that defines ``above and beyond mandated reclamation
performance standards'' has been raised, and each year Nevada's mining
industry has responded with ever-higher levels of commitment to
excellence in mine reclamation. At this very time, several Nevada
projects are being considered for the first BLM National Hardrock
Mineral Environmental Awards, and I am hopeful that a Nevada project
will be selected.
If responsibility includes leadership, Nevada's mining industry
again sets the standard. Annually over the past five years,
approximately $100 million in taxes of various types have been paid by
the Nevada mining industry, and a substantial portion remains in
counties where the mines are located. Whether it is donations to the
McCaw School of Mines in Henderson, where schoolchildren can have an
underground mine experience, or help for the Elko Little League in the
heart of mining country, Nevada's miners strike pay dirt for leadership
in civic responsibility.
Economic stability and hardrock mining would seem to be
incompatible. Orebodies, which is rock from which a valuable
constituent, usually a metal, can be profitably extracted, are finite.
In fact, most maps of Nevada show many places labeled ``sites,'' which
are, in reality, mining ghost towns. Places where people lived and
worked, but moved on when the ore ran out. If orebodies are ``finite''
and mines have ``lives,'' how can mining provide economic stability?
The answer to that question can be approached from many aspects,
but I will focus on one. The continuation of economic stability, and
therefore sustainability, relies heavily on the discovery and
development of new mines. New mines are found through the investment of
exploration dollars in search of new orebodies, and Nevada is in a
global competition for exploration dollars. For the past 9 years, the
Division of Minerals has tracked exploration activity in Nevada through
filings made by mining companies to the state mine registry. Two of the
main indicators of activity are exploration expenditures and the number
of active mining claims held by companies and individuals. In 2002,
respondents to the survey reported spending $64.6 million on Nevada
exploration activities. While this number is up slightly from 2001, it
is significantly less than the $154 million reported in 1994. Over the
past seven years Nevada's largest mining companies have spent on
average less than 20% of their exploration dollars in the state,
sending nearly all the remainder overseas.
The other major indicator of activity is the number of active
mining claims. Mining claims in Nevada peaked at 425,000 in 1991 and
have declined steadily ever since. A one-time loss of approximately
200,000 claims occurred in 1993 after the enactment of a Federal mining
claim maintenance fee. The $100 fee per claim paid annually by Nevada's
miners continues to flow to the Federal Freasury. It is not shared with
the state of origin like other mineral fees, and it is not put to a
productive use, such as the reclamation of historic abandoned mine
lands. According to BLM's Public Land Statistics, active claims in
Nevada reached a 25-year low of 88,124 in 2002, and nationwide claims
dropped below 200,000 for the first time since BLM began publishing
claim records in 1978. Simply put, fewer claims means less activity,
and less activity means fewer discoveries. That, Mr. Chairman, directly
impacts the economic stability of Nevada.
Recent increases in the price of gold have led to renewed optimism
among exploration companies and individual prospectors. Early reports
for 2003 claim data indicate the downward trend has stabilized or even
reversed. Hopefully this will translate into a resurgence of
exploration and mineral development in Nevada. However, constant
vigilance is required. Burdensome mining fees, duplicative regulations,
and unnecessary permit delays lead to economic instability, not
stability. We are in a global competition for responsible mineral
development, and Nevada cannot afford to fall behind. Thank you.
______
Mr.Pombo. Dr. Dobra?
STATEMENT OF JOHN DOBRA, DIRECTOR, NATURAL RESOURCES INDUSTRY
INSTITUTE, UNIVERSITY OF NEVADA, RENO
Dr. Dobra. Yes, sir. Thank you for having me here, Mr.
Chairman. And some of what I've got in my prepared testimony
repeats some of the things that Alan has said, so I'll skip
around a bit.
But every year I prepare a presentation for the--an
overview of the industry, its economics. And the way I began
this year was by noting that 2002, in the first half of this
year, generally being very good years for the mining industry
if for no other reason than the price of gold starts with a
three. Because we had gone through four years where the price
was down for various reasons, and was finally starting to
recover in 2002. The price averaged $310 the first half of
2003, the price averaged about $350, and it currently sits
around $380.
In terms of what that does for the health of the industry,
really can't be understated. It's tremendous. You heard Mr.
Coyner talk about increases in exploration activity, and he at
one point--I wanted to reiterate that he made--is that, even
though we see exploration activity up, it's still well, well
below the levels that it attained in the early '90s before
regulatory reform and the Millsite Opinion and all these other
things came about.
In spite of that generally good trend, we have some
concerns. First of all, our production costs are rising
significantly. Goldfield Mineral Services is a worldwide noted
expert on mineral economics. They pointed out in their 2003
report that in a matter of a few short years, Nevada has gone
from the cheapest place to produce gold in the world to the
most expensive, and that refers to production costs averages.
There are a number of reasons for that. One is the decline
in ore grades. That's the result of going through a period of
time where, in order to survive, the mines had to choose the
highest-grade ores to drive their costs down. Those have now
been depleted and so now our ore grades are falling, which
raises our costs.
Another significant issue is energy costs. Goldfield
estimates that our--well, our costs went from $179 average per
ounce in 2001 to $206 per ounce in 2002. Excuse me. I said that
wrong. 2001 to 2002. Probably half of that increase in
production costs came from energy alone, the price of diesel
and electricity. So there's definitely an issue that needs to
be addressed.
Another significant issue is what you've heard about
already, so I'll be brief about it, is the rise in insurance
and bonding costs. That's been significant. We've had surety
companies go bankrupt and leave, at least in one case, a mine
without coverage and in violation of its permit due to no fault
of their own. So the insurance industry is a significant issue.
And the third factor we talked about, as well, is that we--
we face this un-- sort of unending process of appeals and
litigation every time a permit is issued. Our--those delete the
mine's overhead costs. And we saw in 2002, overhead costs of
production rise about 30 percent. So that's a significant
increase in costs, and what attributes our rise in costs to.
Finally, I guess I should say that the bottom line is that
Nevada mine managers have to go to their bosses and present
claims that are being competitive for the use of capital with
other places in the world. And to keep Nevada competitive, we
need to address those three main issues. Thank you.
Mr. Pombo. Thank you.
[The prepared statement of Dr. Dobra follows:]
Statement of John L. Dobra, Ph.D., Director, Natural Resource Industry
Institute, Associate Professor of Economics, University of Nevada, Reno
2002 and the first half of 2003 were generally good for Nevada's
mining industry if, for no other reason than for the first time in four
years, the annual average price of gold started with a ``3.'' After
averaging in the $270 per ounce range for the previous three years,
gold averaged $310 per ounce in 2002 and $350 in the first half of 2003
and is over $380 per ounce at the time this testimony is being
prepared. This additional $40 per ounce in 2002 and $80 per ounce in
the first half of 2003 makes an enormous difference in an industry
producing around eight million ounces of gold per year. The current
price in the $380-$390 range is responsible for a significant increase
in exploration expenditures as companies seek to expand existing
reserves and find new deposits.
Nevada gold mines produced 7.73 million ounces of gold in 2002,
down slightly from 8.13 million ounces in 2001. Silver production was
also down in 2002 at 13.6 million ounces from 17.5 million ounces in
2001 and over 23 million ounces in 2000. The declines in production of
both metals were the result of declining ore grades and mine closures
or temporary closures.
In spite of declining production, gross proceeds of Nevada mines
(including geothermal and oil production) increased to $2.7 billion in
2002 from $2.5 billion in 2001. Approximately $2.4 billion, or 89
percent, of these 2002 gross proceeds were generated by gold and silver
production. Net proceeds of mines also increased in 2002 to $533.7
million from $438 million in 2001. This increase resulted in a
corresponding increase in Net Proceeds of Minerals tax revenue from
$21.4 million in 2001 to $25.6 million in 2002, a 20 percent increase.
Gold price increases in the first half of 2002 offer the prospect that
these revenues flowing to the local and state coffers as well as
revenues from other taxes paid, especially sales and use tax and
property tax, will reverse their recent course.
Although mining employment has not yet recovered, if prices remain
in their current range, we can expect that mining employment will begin
to recover. Employment in mining as in the rest of the economy tends to
lag behind investment.
Other positive developments that are largely attributable to
increasing gold prices are several expansions of operations that are
currently in the permitting phase, that is, where operators are
currently seeking operating permits from federal and State regulatory
authorities. Glamis Gold is seeking permits to expand operations at its
Marigold mine in Humboldt County; Newmont is seeking permits to develop
its Phoenix deposit in Lander County as well as expanding its
operations at Gold Quarry in Eureka County; and Cortez Gold Mines Joint
Venture is seeking permits to expand its Pipeline operations in Lander
County. In addition, Hecla Mining has entered into an agreement with
Great Basin Gold Ltd. to develop Great Basin's Ivanhoe prospect at the
north end of the Carlin Trend in Elko County; and Placer Dome has
reopened its Getchell Mine in Humboldt County.
In spite of these positive developments, Nevada's gold industry
faces some significant technical and regulatory challenges. One
disturbing trend in Nevada's gold industry in 2002 was the increase in
operating costs. The weighted average cash cost per ounce for mines in
Nevada increased from $179 per ounce in 2001 to $206 per ounce in 2002,
a $27, or 15 percent, increase. Gold Fields Mineral Services (GFMS)
estimates that energy cost increases for diesel fuel and electricity
alone account for between $5 and $10 per ounce of this increase.
1 Other factors raising Nevada producers' costs have been
declining grades in older operations and the shift from open-pit
surface mining to more costly underground mining. Approximately 27
percent of 2002 Nevada gold and silver production came from underground
mining compared to 20 percent in 2001 and that trend will continue for
the foreseeable future.
---------------------------------------------------------------------------
\1\ Philip Klapwijk, et al., Gold Survey 2003, Gold Fields Mineral
Services Ltd., London, April 2003, p. 45.
---------------------------------------------------------------------------
All of these factors, as noted by GFMS, have resulted in U.S. and
Nevada producers going from among the lowest-cost producers to the
highest-cost producers in the world.
Nevada's gold producers face other challenges that have a bearing
on production costs. One of these challenges is the rising cost of
insurance for bonding for reclamation expenses. Recent changes in
federal regulations have required cash bonds for reclamation for both
exploration and operating permits. The problem of rising insurance
costs is exacerbated by what some have called a ``crisis'' in the
insurance industry as a result of insurance company stock market losses
and the rising costs of lawsuits in various industries.
However, it should be noted that bonding for exploration is, on the
whole, a reasonable requirement and the industry has generally
supported it. In the case of bonding for exploration, the cash amounts
are generally small because of the small scale of disturbances. The
main problem, particularly for smaller operators, has been delays in
getting BLM approval of bond amounts. In the mining business, like
other businesses, time is money and these delays add to project costs.
Another problem facing the industry is the rising costs of legal
action in the permitting process for operators. Environmental groups
are routinely challenging applications for virtually all permits in the
administrative process and then, if permits are granted, they file
suits against the State and Federal agencies responsible for issuing
permits. These actions tie up development plans and, like insurance
costs, add to operators' overhead costs. In most cases these appeals
are rejected and lawsuits are either lost or dropped. The appeals and
suits are simply attempts to slow exploration and mine development and,
in my opinion, constitute an abuse of the NEPA process.
The increase in Nevada operators' overhead costs in the past year
has been as notable as the increase in cash operating costs noted
above. In 2001 cash operating costs, as noted above, were $179 per
ounce, and total costs were $226 per ounce, indicating non-cash costs
of $47 per ounce. In 2002, cash operating costs were $206 per ounce and
total costs were $266 per ounce, indicating non-cash costs of $60 per
ounce, a significant 28 percent increase in non-cash costs.
Nevada producers ended 2002 with approximately 69 million ounces of
proven and probable gold reserves, which is gold contained in ore that
can be mined at a profit. This is down slightly from year-end 2001
reserves of 72 million ounces but suggests that all but three million
of the 7.73 million ounces produced in 2002 were replaced by
exploration and discovery of new ores. The increase in exploration
spending in the State reported by the Nevada Division of Minerals from
$51.2 million in 2001 to $64.6 million in 2002 along with higher gold
prices make it likely that Nevada's reserve base will increase in the
future. While this trend is favorable, total exploration expenditures
still lag far behind expenditure levels in the early 1990's when they
were over twice the 2002 level.
These industry developments clearly show that Nevada's minerals
industry is seeing a reversal of a downward trend over the last five
years that has been an economic challenge. In general, the Nevada
mining industry is realizing a healthier bottom line at many
operations, especially for producers of precious metals. The North
American precious metals industry has worked its way through the
difficult period of the late 1990's and is in much healthier financial
condition. Nevada remains a major player in the world gold industry.
Moreover its large reserve base and existing capital investment make it
likely that it will remain a major player for the foreseeable future.
Nonetheless, the bottom line is that Nevada's mineral industry has
to compete for exploration and development capital with other parts of
the world. North American mine and exploration managers have to
convince their bosses to sink scarce capital into Nevada rather than
other parts of the world. For this investment to continue, the
industry, with the assistance of public policymakers, need to find
solutions to problems like high energy costs, access to bonding for
reclamation, delays in permitting, and abuse of the NEPA process.
______
Mr. Pombo. Mr. Gibbons.
Mr. Gibbons. Thank you very much, Mr. Chairman. And to Mr.
Coyner and Dr. Dobra, again, welcome to the Committee. It's a
pleasure to see you. We've had many times where we've met and
had conversations on all of these issues in the past, and I
appreciate you bringing them forward to this Committee.
Dr. Dobra, you spoke about production costs, including the
decline in ore grade, the energy costs. We're anticipating an
energy shortfall in the western part of the United States this
fall. Do mining companies actually predict what their costs are
going to be? Do they buy in advance as they would in futures?
How do they adjust for that rise? For example, in the natural
gas costs which is going to spike this winter, which will then
have an effect on the electrical energy that's supplied to them
in terms of costs which go to their milling processes, how do
they adjust for that? Because we're talking about a fixed
commodity here in price. I mean, the mining company doesn't
produce an ounce of gold and present it to the market and say,
``This is what you will have to pay for it.'' They're stuck,
are they not, with a commodity price, and have to deal within
that commodity to make a profit?
Dr. Dobra. Yes, that's correct, they have no control over
price, but there are strategies for controlling costs, and I
think most of the companies do it, which would be going into
the futures market and purchasing, you know, options to buy
fuel oil, natural gas, in advance.
Unfortunately, there is not a good market for that, like
electricity itself, but, you know, if you have contracts to
acquire fuel, oil, and so forth, those generally go up in value
when the price of electricity goes up. So they--they're able to
offset some of that increase in costs through ledgering.
Mr. Gibbons. Mr. Coyner, you mentioned the abandoned mines
program in the State of Nevada. How is that progressing? I know
there's a number of abandoned mines which are problematic both
to the safety and to the environment from historical practices
as far back as the 1860s in this State. What is the State of
Nevada doing to address the abandoned mine problem?
Mr. Coyner. OK. Thank you, Mr. Gibbons. Let me phrase my
answer in two ways, first with the physical hazards and the
second with environmental hazards.
With regard to physical hazards, we still have a very
progressive program in this state. We are probably the leading
state with regards to addressing those, with the help of many
partners, including the Nevada Mining Association and the BLM.
We currently have about 10,000 of those sites identified,
and about 7,000 of them secured. That is funded through a fee
that is levied on mining claims. So as you saw in my testimony,
it was reflected in there, I have quite a concern over the drop
in mining claims, because that impacts my ability to get my job
done with securing physical hazards in the State. We continue
to put every effort and resource we can to that problem.
Let me say next about the environmental hazards, the State
of Nevada has been quite progressive there, too, in terms of
forming an environmental task force comprised of 12 State and
Federal agencies to begin to address this problem in Nevada.
Because, as you know, we are not a coal mining state, we
receive no SMCRA, Surface Mining Reclamation Act, dollars to
help with that problem.
We have recently secured some Federal funding with the help
of Congressman Gibbons through the Army Corp. of Engineers to
begin our work on environmental cleanup at some of our
abandoned mine sites.
Mr. Gibbons. Dr. Dobra, you talked about litigation and
appeal. What--what effect does a delay in the permit process
have on a mining company's ability to operate, to recover its
investment?
And finally, in the brief time that you have to answer
this, let me ask you a question, as a professional. Would you
support a bonding requirement for those people that appeal if
there is damages to, for example, the delay in getting a mine
operating?
Dr. Dobra. Well, from an economic standpoint, a delay of
two to three years in getting a permit, basically makes it--
makes it very expensive to do business here versus other places
where you can get a mine constructed and started in, say, 18
months.
About 10 years ago, a mine here in Nevada discovered an ore
body, got its permits and reported its first foray in 18
months. Now it's taking, you know, a matter of a series of
years, as you heard from Mr. Abbey.
Mr. Gibbons. OK. Thank you, Mr. Chairman. And to our
witnesses again, thank you.
Mr. Pombo. Mr. Faleomavaega.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Gentlemen, as I said earlier, the greatness of our nation
is based on this diversity and so many of its resources and all
different aspects of what makes up America as it is, and the
reality--and correct me if I'm wrong, Mr. Chairman--I--I
represent a constituency that is basically surrounded by the
Pacific Ocean. And when we talk about mining among the 50
members of Congress that make up this Committee, it's almost
like talking about fisheries. In the same sense of getting the
attention of the members in our collective will, if you will,
among the members of Congress, it's almost like speaking Greek
to other members.
And I know my good friend Mr. Gibbons is constantly faced
with this problem in educating other members how important this
industry is, just as it is that I have to say that I have the
largest tuna canning facility in the world, where we export
about $500 million worth of canned tuna. So I'm a tuna man, as
it is to my friend Mr. Gibbons, he's a mining man. Can you see
the problem that we're having in the Committee?
And as you mentioned--you know, I'm very impressed that
Nevada produces $2.8 billion--and forgive my ignorance. When
you say ``hard rock,'' does this mean you have to crack the
rock to get the minerals, or can it be dug up in dirt? Can you
educate me on that, Mr. Coyner? When you said, ``hard rock
production,'' anything that is mined--that can be mined; is
that correct?
Mr. Coyner. I'm happy to, Congressman Faleomavaega. And I'm
sure that--tuna comes in metal cans, so there is a relationship
there.
When we talk about hard rock mining in the United States,
we are generally referring to those minerals that are processed
on hard rock mining rather than coal mining.
Mr. Faleomavaega. OK.
Mr. Coyner. That's sort of the discretionary use of those
two terms, and mostly, that is found in the western United
States.
Mr. Faleomavaega. And you mentioned that we're in a global
competition, being competitive globally. So when you say that
you produce $2.8 billion worth of minerals in your production,
how much is that exported domestically, if I can put it in
those terms? I mean, does a great percentage of your production
go to foreign countries or do we absorb the mining operation--I
mean, absorb it in the sense that we're selling it
domestically. It doesn't have to go to other foreign countries.
Mr. Coyner. I would say for most of the mineral commodities
in Nevada, they are for internally, in the United States, with
the exception of our largest, which is gold, which is 2.5
billion of that total, and by having that amount of gold
produced out of Nevada, the United States then becomes a net
exporter of that value, which certainly helps with our trade
deficit, so most of that gold is exported.
Mr. Faleomavaega. Because I remember in the 1950s, at least
my readings of it, that we were such a self-sufficient country,
we didn't need to--to import so many of the resources or
minerals and whatever, because we were able to do it
domestically. Now we are an interdependent country, especially,
as always, the issue of fuel, where 100 percent I think of our
fuel at inception has to be imported from foreign countries. I
suppose the same problem deals with mining. And so you really
don't have that much that you're exporting to foreign
countries, it is for local consumption, so to speak?
Mr. Coyner. Other than gold, I would say that's true.
Dr. Dobra, would you care to comment?
Dr. Dobra. Well, the last time I checked, the U.S. exported
about five-and-a-half million ounces of gold per year, so
that's, as Mr. Coyner said, that's a significant amount of
gold, and it improves our balance of payments.
Mr. Faleomavaega. And in the trend that you mentioned last
year of $2.8 billion, is the trend decreasing in terms of the
production or is it increasing from previous years? I--I am a
little--
Mr. Coyner. The total is down slightly from previous years.
We peaked at just over 8 million ounces of gold production
about three years ago, so we have been declining slightly. Some
of that is due to the price, some of that is due to the fact
that we are seeing more underground gold production from our
State, which generally produces less volume.
Mr. Faleomavaega. And, Dr. Dobra, you mentioned that all
the increases in costs and just about everything and anything
dealing with the mining industry, but this is probably true
with mostly all the agencies as well, increase in insurance
costs if you are a doctor, increase in costs in just about
anything. And I was just curious in terms of when you said
there's a tremendous--is it to the point where now, many
companies have to file bankruptcy and they can no longer
operate, or is it just to say that there are increases, but not
to the extent where it's so severe that--that you're facing a
very critical situation with the mining industry here in
Nevada?
Dr. Dobra. Well, over the past several years before the
price started to rebound, we did see companies go into
bankruptcy and forced into mergers and some consolidation as a
result of low prices.
As I said in my opening statement, I mean, the biggest news
in the mining industry in Nevada is that the price of gold
starts with a three, and that--you know, our costs have gone
up, yes, but the price has gone up more, so...
Mr. Faleomavaega. And 60,000 people in the State of Nevada
depend for employment--
Dr. Dobra. It's not quite that many, but it's in the 50
range, yeah, either directly employed or employed in businesses
that supply goods and services to the industry.
Mr. Faleomavaega. Well, I hope we can employ more. Thank
you very much, sir.
Dr. Dobra. Sure.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Mr. Pombo. Mr. Cannon.
Mr. Cannon. Thank you, Mr. Chairman.
Mr. Coyner, you mentioned you had about 10,000 abandoned
mine sites. Can you tell me about your process of
prioritization? Are you taking the most hazardous sites? Are
you taking the closest? And then, also, how many of those sites
have you actually taken care of?
Mr. Coyner. Thank you, Congressman Cannon. Yes, the State
of Nevada Legislature has a prescribed methodology for ranking
those physical hazards. So our work crews in the field discover
the hazards and log them in, inventory them, and take a number
of criteria to use to determine how hazardous they are. We then
address the most hazardous sites first.
We also keep the County governments informed of the
progress of our work. So, again, of the 10,000 or so that we've
logged in, we've actually physically secured about 7,000 of
those, so we have about a 3,000-site backlog.
The universe of sites is something like perhaps 50,000
sites in Nevada, of a total number of possible sites of perhaps
200,000. We won't know until we visit them whether they're part
of that group that will have to be addressed.
Mr. Cannon. Do you mitigate those sites? Do you include in
your process of prioritization the cost of mitigation so that,
if it's not a very hazardous site but it's cheap to mitigate,
you go in and clean those up?
Mr. Coyner. Actually, the cost really isn't too big of a
factor unless we choose to backfill the site. Backfilling,
they're actually physically filling up the site, which is a
fairly permanent solution. As you might expect, it is somewhat
more costly. But in terms of the fencing, which is our normal
procedure, most of those sites are fenced. The driving force
is, how hazardous is it, a vertical shaft versus a horizontal
shaft, and so forth.
Mr. Cannon. Have you had any AML funds from the coal mining
abandoned mine lands funds at all for that project?
Mr. Coyner. No. The State of Nevada receives no Surface
Mine Reclamation Act dollars.
Mr. Cannon. You guys don't have any coal at all?
Mr. Coyner. Well, we've got a little bit of coal down at
Coaldale Junction, as Congressman Gibbons knows. We've
discussed the possibility of mining just a little bit of it so
that we can qualify for those funds.
Mr. Cannon. It would be sort of nice if you could marry
Wyoming, which has huge coal dollars and not many sites that
need it. Thank you very much. Yield back to you, Mr. Chairman.
Mr. Pombo. I wanted to, Mr. Coyner, you talked about in
your testimony, the mining companies that are investing 20
percent of their dollars here and the rest overseas. What's the
impact on the United States, in general, of more and more of
our infrastructure being located in other countries?
Mr. Coyner. Certainly, taking a very parochial view, a
State of Nevada view, those rural communities--and remember,
Mr. Chairman, that Nevada is the most urbanized state in the
United States. Nearly 2 million residents, nearly 1.4 million
of them live in Las Vegas, and really don't know much about
mining, maybe .3 or so up here and .2 out there in rural
Nevada. And they have a very strong dependence on mining and
agriculture for their economies.
So that lack of exploration dollars not flowing into Nevada
means fewer motel stays, fewer drillers working, fewer assay
labs, fewer bulldozers creating roads to mining claims, it has
a very dynamic impact on rural Nevada. The magnitude of that,
it's in the hundreds of million of dollars, and it depends on
what sort of timeframe you want to look at. But it's been
certainly less in the '90s and the latter part of the '90s and
the beginning of 2000s, than it has been in the '80s, as we
indicated.
Mr. Pombo. Dr. Dobra, I would like to ask you basically the
same question, because we had a hearing last week in Southern
California, the Lake Arrowhead area, talking about the
condition of San Bernardino National Forest. And one of the
things that came out in the hearing was that the dead trees
that they were taking out of San Bernardino National Forest,
they were putting in a landfill because they no longer had a
sawmill anywhere near San Bernardino National Forest that was
capable of handling the trees that were being taken out of
there.
And I--it makes me wonder, when you talk about mining and
so much of our investments going overseas and so much of the
very infrastructure that the industry depends on being
relocated, what's the long-term economic impact on this country
of exporting our mining industry?
Dr. Dobra. Well, the mining industry is a--you know,
provides strategic critical materials. Our main output here,
gold, is largely viewed as a source of jewelry and most of it
does go into that, but it's also extremely important in the
electronics industry and so forth.
Losing the ability to mine these resources domestically,
you know, in the case of gold is not really that big of a deal,
because there's 8,000-plus tons of it sitting in Fort Knox, and
a lot more than that, you know, in other central banks. So
we're not really losing a strategic material if we drive it
offshore.
But what we are driving offshore are a lot of very high-
paying jobs that support people. You know, the average, I
believe last year in--for the metal mining industry in Nevada
was over a 62,000-dollar job. And so that's a significant
factor.
Mr. Pombo. The average was 62,000?
Dr. Dobra. Yes.
Mr. Pombo. In Rural Nevada?
Dr. Dobra. Yes.
Mr. Pombo. Which is a significant income?
Dr. Dobra. Yes. And it compares with under--I want to say--
I'm not sure about the number--but I would say maybe $28,000 on
average in this state, in terms of, you know, earnings. So it's
a substantial difference, you know, and that does spur economic
activity in the rural areas and in the urban areas too, when
people come to Reno to shop and so forth.
So it's a small industry. People like to say it's the
second largest industry, but if you want--and that's in terms
of its export, you know, how much money it brings into the
State. But on the other hand, if you look in terms of the
number of jobs, it's one of the smallest industries. You have,
you know, a very small, highly skilled work force generating a
lot of value.
Mr. Pombo. When you talk about the economic factors that
are forcing companies to make the decision to locate elsewhere,
in your testimony, you talk about the costs of production here
versus other states, other countries. Does the permitting
process, that bureaucratic process and the delays, is that the
number-one factor in driving up costs?
I mean, if you look at the immense amount of money that's
necessary today to start a new mine and the possibility of
being delayed four or five years or more before you can start
pulling out, then that has to have a major impact on decisions
that are made by--by companies.
Dr. Dobra. Oh, absolutely. You know, you're looking at two
comparable resources, in terms of ore bodies, and one is in
Peru and one is in Nevada. You're going to get your money back
a lot quicker in Peru. And that's what financial planners
demand of their investments.
So this, you know, these delays, you know, significantly
tilt the field--the field against us. We're still seeing
development, mine development expansion in Nevada, because
we've got the capital here already. So developing comparable
ore bodies in Chile versus Nevada, you have to--you know,
Nevada still has some advantage. But still, if you try to go
into a whole new property, you're looking at--you know, the
delay seriously discourages investment here.
Mr. Pombo. But if you have a company or a--yeah, if you
have a company that looks at Chile and the government of Chile
says you can be extracting ore in 12 months, and they look at
Nevada and they say it's going to be five years if we're lucky,
that is--that has to be a deciding factor in terms of moving
some of that highly skilled labor and that investment out.
Dr. Dobra. Oh, absolutely. There's no question about it.
And that's why--you know, Mr. Coyner mentioned that only 20
percent of exploration dollars are being spent here in the
U.S., in Nevada, in particular. If you went back 10 years, it
would be--that number would have been more like 50 percent. I
mean, these companies want to do business here because, first
of all, it's their home, and we've got a rule of law and all
the advantages, you know, that you can think of, that's here.
But, you know, when you are looking at 12 months versus 5
years, that radically changes the economics for an investor.
Mr. Pombo. Finally, I would just like to--and either one of
you can answer this if you--if you can. And I don't know how
familiar you are with the mining industry in other countries. I
have had an opportunity to see the mines, some of the mines in,
like South Africa and South America.
What are some of the differences in terms of environmental
standards and health and safety standards in the mines in other
countries versus what we have here in this country?
Mr. Coyner. Mr. Chairman, with all due respect, you'll be
hearing from an international mining company later today, and
they can certainly answer that question better than I can.
Mr. Pombo. Well, I'll save it for them then.
Dr. Dobra. I would like to add, though, that, you know,
most countries around the world require that operators going in
will meet or exceed U.S. Environmental Standards, and it's
generally a condition of the financing. If you go to a bank and
ask them for $200 million to put a mine someplace, they're
going to say, ``OK, fine, but you've got to meet or exceed U.S.
Environmental Standards because we don't want to get sued and
lose our money.''.
So I think there's significant differences, particularly
historically, between labor standards and environmental
standards, you know. But anymore, companies going abroad aren't
really fleeing environmental or human health and safety
regulations, they're the same.
Mr. Pombo. Well, I won't debate with you as to whether or
not they're the same, but I've been through mines in this
country and I've been through mines in other countries and
they're not the same. Their standards may be the same, but the
level of enforcement may be a little different.
Dr. Dobra. That's very true.
Mr. Pombo. Thank you very much for your testimony.
Mr. Faleomavaega. Mr. Chairman, I just have one quick
question.
Mr. Pombo. Sure.
Mr. Faleomavaega. I'm sorry. I know that we're limited in
time.
I just wanted to ask Mr. Coyner, how many--what's the total
number of mining companies that do business here in Nevada? And
what percentage of that is foreign? And also, I would like to
know what--are there any mining companies owned by Native
American companies?
And if you don't have the answer, we'll just let you submit
that for the record. I would like to--
Mr. Coyner. I can certainly come up with finite answers for
all of those at a later date, but off my cuff, which I will do
as well, the number of mining companies actively producing in
this state of major consequence are somewhere around 20,
depending on where you draw your cutoff, and depending on
whether you are talking about metal mining or nonmetal mining.
As to the question of how many are foreign-owned, very few,
if any. Because, as is commonly known, most of these companies
are publicly traded. So if you in fact own any large mutual
fund, as I do, you are a participant in owning part of the gold
mining industry in Nevada.
Mr. Faleomavaega. When you say very few, two or three;
correct?
Mr. Coyner. Yes, perhaps. And I would say those are more
actively involved in exploration activities in this state right
now rather than production.
Mr. Faleomavaega. Thank you. Thank you, Mr. Chairman.
Mr. Pombo. Thank you.
Mr. Pombo. I would like to call up our third panel, Mr.
Russ Fields, President of the Nevada Mining Association; James
A. Chavis, Vice President, U.S. Government Relations, Placer
Dome America; and Dr. Tony P. Taylor, President and CEO of
Millennium Mining Company. Would you raise your right hand.
[Witnesses sworn.]
Mr. Pombo. Thank you. Let the record show they answered in
the affirmative.
Mr. Fields, I'm going to begin with you.
STATEMENT OF RUSS FIELDS, PRESIDENT,
NEVADA MINING ASSOCIATION
Mr. Fields. OK. Thank you, Mr. Chairman, Members of the
Subcommittee. My name is Russ Fields and I'm president of the
Nevada Mining Association. On behalf of our 300-plus members, I
appreciate the opportunity to testify here today before you,
and also thank you very much for coming to our state to hear of
these issues.
My focus today will be on my suggestion for land transfers
as a possible means to address the potential problems that
we've all heard about this morning. Many of these concerns can
be addressed by land transfers.
With close to 90 percent of the land in Nevada being
managed by the Federal Government, Nevada is at an economic
disadvantage compared to the other 49 states. It has a smaller
property tax base with which to pay for services it provides to
its growing population. In fact, it is the fastest-growing
population in the United States for over the last decade.
Among the 48 conterminous states it has the smallest
percentage of private-land base from which to launch any
expansion of its economy. And due to the large amount of public
land, it has an ever-growing stream of Federal regulations that
limit conditional economic development, such as ranching and
mining on these lands.
Although regulatory reform would provide some relief, it
usually is slow and somewhat ineffective. On the other hand,
the sale of certain Federal lands directly to the private
sector through direct congressional legislation is neither slow
nor ineffectual. For example, the proposed sale of public lands
in Northeastern Nevada found in H.R. 2869, called the Northern
Nevada Rural Economic Development and Land Consolidation Act of
2003, sponsored by Congressman Gibbons, will immediately place
much-needed land in the property tax base of various Nevada
counties. It will also streamline a duplicative Federal/State
permitting process.
Mining is important to Nevada, especially to the rural
communities that depend on the development of natural resources
for their livelihoods, a livelihood that, by the way, provides
many of the raw materials that sustain this country's overall
quality of life.
You've already heard that mining provides these communities
with very high-paying jobs, nearly twice as high as the State's
average. These jobs in turn, of course, pay for homes, they buy
food, goods and services, and these all generate tax revenues
for both the local and State government.
A key component to the economic stability of rural Nevada
is the sustainability of the mining industry. In Nevada,
nothing is more critical to sustainability than access to
public lands for exploration that will eventually lead to the
replacement of mined-out reserves. Yet duplicative regulations
at the Federal and State level, unsubstantiated delays in the
issuance of permits for exploration and development plans and
arbitrary limits on access to lands, cumulatively tend to drive
exploration out of Nevada and, indeed, out of this country.
We are confident that the transfer of public lands like
those in H.R. 2869 to private ownership will do much to
encourage and facilitate exploration and development.
You've talked about the moratorium and the patenting
process. As this Committee knows, that has been nearly at a
standstill since 1994. Although we hope it will be lifted soon,
there is no viable mechanism to date in which mine operators
can obtain private ownership of land, public land. A type of
ownership that provides operating certainty is a critical issue
for any major, long-term capital investment by a mining
company.
Meanwhile, the sustainability of rural communities depends
on the continuity of economic development that will fill the
void once the mines play out. Yet mines, by their very nature,
are rich in industrial infrastructure, and they can play a
vital role in post-mining economic development, as long as this
residual infrastructure can be utilized by other industries,
industrial development that certainly can include, and we think
will include in the future, renewable energy projects which
hold potential for the State of Nevada.
Most importantly, the transfer of public lands through a
non-Federal ownership will place the decisionmaking down at the
level with the greatest accountability, which is the elected
State officials and their agency appointees. It provides, with
the elected State legislature, the opportunity to develop laws
and regulations that oversee the activity for the prudent use
of this land, land that even in private ownership remains
subject to the Federal acts that are so important in the mining
industry will always remain subject to, that is, the Clean Air
Act the Safe-Drinking Water Act, Clean Air Act, and others that
would remain in effect through any delegated State program.
In addition, as evidenced by State and Federal and private
awards, mining in Nevada has demonstrated over and over again
that it can be a good steward of the land and a good steward of
its people. Besides unshackling the economy of Nevada,
additional benefits of these transfers include a reduction in
the number of project-by-project NAPO reviews, which lead to
many of the delays that you've been discussing this morning,
more efficient facilitation of the bonding, unburdening of the
regulatory and judicial systems from costly environmental
appeals and litigation, and finally, saving State and Federal
taxpayers' money.
Now we certainly understand that not all public lands in
Nevada would fall subject to consideration for transfer. You
notice I said ``certain public lands.'' Those that remain under
public jurisdiction by land managers, such as the Bureau of
Land Management--which, by the way, does an outstanding job of
working through its process. Where it does get hung up is in
these appeals that we've been discussing.
But one area that, as Director Abbey mentioned, we are
working on is the transfer of some of the authorities that
currently reside with the BLM under CFR 43 Section 3809. We're
working with both the State and the Federal Government on the
delegation of bond cost calculations. We think there's an
opportunity to streamline that process.
By the way, Mr. Chairman, since--the revised Section 3809
does provide for such delegation.
Nevertheless, without progressive legislation and continued
streamlining of the administrative process that I've called for
here in this testimony, these rural communities here in the
State of Nevada will find it increasingly more difficult to
keep Nevada as the world's largest--third largest producer of
gold.
In closing, I urge this Committee to continue its efforts
to free up our country's economic engine in a wise and prudent
manner, and to support the implementation of current laws like,
for example, the Lincoln County Land Act of 2000, and future
legislation, as I mentioned previously, H.R. 2869. Both of
these facilitate the transfer of public lands into private
ownership.
In Nevada, for example, we think this legislation would put
control of Nevada's economic future and viability back into the
hands of Nevadans. Thank you, Mr. Chairman.
Mr. Pombo. Thank you.
[The prepared statement of Mr. Fields follows:]
Statement of Russ Fields. President, Nevada Mining Association
Thank you, Mr. Chairman and members of the Subcommittee. My name is
Russ Fields and I am the President of the Nevada Mining Association. On
behalf of the 300-plus member companies that make up the Nevada Mining
Association I appreciate the opportunity to testify today regarding the
role of the hardrock mining industry in the responsible development of
our domestic mineral resources and the economic benefits afforded on
all citizens by mineral development. In spite of the existence today of
various topics directly affecting hard rock mining in Nevada, my focus
today will be on the need for land transfers and the benefits to
Nevadans.
With close to ninety percent of the land in Nevada being managed by
the federal government, Nevada is at an economic disadvantage compared
to the other 49 states. It has a smaller property tax base with which
to pay for the services it provides to its growing population; the
fastest growing for the past decade. Among the 48 conterminous states
it has the smallest percentage of private land base from which to
launch any expansion of its economy. And due to the large amount of
public lands, it has an ever-growing stream of federal regulations that
limit traditional economic development, such as ranching and mining on
these lands.
Although regulatory reform would provide some relief, it is usually
a slow and somewhat ineffective process. On the other hand, the sale of
federal lands directly to the private sector through direct
Congressional legislation is not slow or ineffectual. For example the
proposed sale of public lands in northeastern Nevada found in H.R.
2869, ``Northern Nevada Rural Economic Development and Land
Consolidation Act of 2003,'' sponsored by Congressman Gibbons, will
immediately place much needed land into the property tax base of
various Nevada counties. It will also streamline a duplicative Federal/
State permitting process.
Mining is important to Nevada, especially to the rural communities
that depend on the development of natural resources for their
livelihood. A livelihood that by the way provides many of the raw
materials that sustains this country's overall quality of life. Mining
provides these communities with high-paying jobs. Almost twice as high
as the state's average annual wage. These jobs in turn pay for homes,
buy food and services, all of which generate tax revenues for both
local and state government.
A key component to economic stability is the sustainability of the
mining industry. In Nevada nothing is more critical to sustainability
than access to public lands for exploration that will eventually lead
to the replacement of mined out reserves. Exploration is the lifeline
of mining. Yet, duplicative regulations at the Federal and State
levels, unsubstantiated delays in the issuance of permits of
exploration plans, and arbitrary limits on access to lands cumulatively
tend to drive exploration out of Nevada. We are confident that the
transfer of public lands, like those in H.R. 2869, to private ownership
will do much to encourage and facilitate exploration.
Furthermore, in 1994 the first moratorium against patenting of
mining claims was put into place. As this Committee knows, patenting
activity has been at a standstill ever since. Although we are hopeful
that this moratorium will be lifted soon, there is nevertheless no
viable mechanism today for mine operators to transfer public lands into
private ownership. A type of ownership that provides operating
certainty, a critical issue for major long-term capital investments by
mining companies.
Meanwhile, the sustainability of a rural community depends on the
continuity of economic development that will fill the void once the
mines play out. Yet mines, by their very nature, are rich in industrial
infrastructure and can play a vital role in post-mining economic
development as long as this residual infrastructure can be utilized to
attract other industries. The transfer of public lands to private
ownership will facilitate the utilization of this residual
infrastructure (i.e., roads, substations, power lines, lakes, etc.) for
industrial development. Industrial development, that due to Nevada's
climate and topography could include renewable energy farms.
But most importantly, the transfer of public lands into non-federal
ownership will place the decision-making process on land use squarely
where it belongs, at the local level. It is here where the greatest
accountability resides: with the elected state officials and their
agency appointees. It resides with the elected state legislature and
with the state and local process of constructing regulations and
implementing them. Finally it resides with those communities whose very
existence depends on the wise and prudent use of the land. Land that
even in private ownership remain subject to Federal Acts, such as the
Clean Water, Clean Air, Safe Drinking Water, and others that would
remain in effect through delegated approved state programs.
In addition, mining in Nevada has demonstrated over and over again
that it can be a good steward of the land, and its people. Mining
companies in Nevada are recognized annually by both State and Federal
regulatory agencies for excellence in reclamation, and for the safety
and health of its workers. A number of these companies competed this
year for BLM's first national reclamation award.
Besides unshackling the economy of Nevada, additional benefits of
these transfers include:
LA reduction in the number of project-by-project NEPA
reviews;
LFacilitation of bonding and the eventual releases of
reclamation bonds;
LUnburdening of the regulatory and judicial systems from
costly environmental appeals and litigation; and
LSaving State and Federal taxpayers' money.
Recognizing that not all public lands in Nevada are currently under
consideration for transfer, a second topic I wish to apprise you of is
our ongoing effort in Nevada to seek the partial delegation of BLM's
responsibilities under section 3809 of CFR 43 Hardrock Mining
Regulations dealing specifically in the area of reclamation bond
calculations. Like other Federal agency delegations of program primacy
to states, this delegation must include the pass through of program
funds to the appropriate state agencies.
Efforts to date include the identification of duplicative
activities between the State agencies and the BLM that unnecessarily
prolong the permitting process, such as the estimation of reclamation
costs. Since the state already does most of this work, it would save
all parties time and money to have mutually acceptable standard
reclamation costs and have only one agency do the calculations. It is
anticipated that future opportunities for streamlining the permitting
process will be identified, along with additional program delegation.
Nevertheless, without the progressive legislation and continuous
streamlining of the administrative process called for in this
testimony, these rural communities will find it increasingly difficult
to keep Nevada as the world's third largest producer of gold. A
strategically important component in the electronics industry, an
industry that in turn is of strategic importance to the defense of this
nation.
In closing, I urge this Committee to continue its efforts to free
up our country's economic engines in a wise and prudent manner, and to
support the implementation of current laws like PL 105-263, also known
as the ``Lincoln County Land Act of 2000,'' and future legislation,
like previously mentioned H.R. 2869, that facilitate the transfer of
public lands into private ownership. In Nevada, for example, such
legislation would put control of Nevada's economic viability back in
the hands of Nevadans.
______
Mr. Pombo. Mr. Chavis?
STATEMENT OF JAMES A. CHAVIS, VICE PRESIDENT,
U.S. GOVERNMENT RELATIONS, PLACER DOME AMERICA
Mr. Chavis. Good afternoon, Chairman Pombo, Members of the
Committee. My name is James Chavis. I'm Vice President of
Government Relations for Placer Dome America. I would like to
thank you for holding these hearings here in Nevada and giving
the citizens that are dependent upon this industry for a living
an opportunity to come and address you.
I moved to Denver--I need to give you a little commercial.
I moved to Denver just a couple of months ago out of the State
of Nevada, but I had spent over half of my professional career
in Elko, Nevada, and I raised three children there, and I
educated them in this state, two of whom remain in Southern
Nevada and have families there. So I still have a vested
interest in this state.
I have submitted a longer and more-detailed statement for
the record as per Chairwoman Cubin's instructions, and
following is a brief summary of my comments.
Placer Dome has been a major employer in Nevada since 1960.
We have almost 800 employees at our operations and exploration
offices in Nevada. To offer some indication of the economic
impacts of these operations, our gross payroll for 2002 was
almost $40 million. However, the fact that our existing Nevada
mines are flourishing, obscures the reality that we and other
companies have been operating for the last decade and for a
long period of regulatory uncertainty, and we've been saddled
with the regulatory burdens within the United States.
Today's hearing is focused on the role of the hard rock
mining industry and responsible domestic resource development
and economic stability. In northeastern Nevada, especially, at
least for the foreseeable future, the hard rock mining industry
is a prime source of that economic stability.
The hard rock mining industry depends on worldwide markets
and demands for metals. It is also a fact of life in the mining
business that the industry and the jobs must go where the
resource is, not the other way around. Nevada has many old
mining camps that once flourished and died when the metals
prices collapsed or when the deposits failed to live up to
their promise.
The realities have not changed, but the mining industry is
somewhat better equipped to deal with them than we were in the
past. It's a different mining industry and a different time in
history. In 1998, Placer was one of the first multinational
mining companies to adopt a formal policy guiding global
activities and sustainability.
At our operations, we are really committed to the sound
environmental practices that leave a chemically, physically and
ecologically stable site when the operation is closed. By
emphasizing a safe and healthy workplace, we involve our
employees and other stakeholders in major decisions that affect
the community, and also in providing for investments in
education, Public Health and other community causes.
I have included for the record, a copy of Placer's most
recent sustainability update, which includes a copy of the
company's sustainability policies.
Examples of how the company has worked toward these goals
include our 2001 agreement with the Duckwater Shoshone tribe.
Our Bald Mountain Mine agreed--operation agreed with the tribe
to facilitate a business, growing locally hardened and adapted
plants from local seeds in the tribe's greenhouse. These plants
were used in reclamation efforts at Bald Mountain Mine. The
reclamation has been very successful and has ripened into a
larger business whereby our Cortez Mine now buys seedlings from
this facility, as do other operations in the State.
We also donated about 32 acres of land, valued in excess of
$100,000, to the Elko County School District in Carlin. We also
contributed $100,000 to the Great Basin College that same year.
These are just examples of the types of activities that the
mining companies do in rural Nevada and how we help the
communities where we work.
Today's industry is more stable and less characterized by
the old west boom-and-bust image than ever before. However,
every person in Northern Nevada knows that in the past five
years, things have been very challenging for this industry.
Hundreds of people were laid off, marginal mines have been
closed, companies merged or acquired and, in some cases, the
companies became insolvent.
Unless today's mines are to be replaced by future mineral
development, Northern Nevadans face a very difficult future. A
decline in Nevada's hard rock mining industry is not
inevitable. Everyone agrees that Nevada is and will remain one
of the most promising areas in the world geologically to
explore for gold and silver, not to mention other valuable
minerals.
However, the total amount expended last year on
exploration, around $60 million, is about half of what it was
in 1996. It's difficult to quantify all the reasons for this
decreased investment, but it's clearly the result of some of
the policies of the prior administrations.
I go into these policies in depth in my written testimony,
but I'll quickly list a few of them now for you. The policies
include an open hostility toward the mining law, the 3809
Regulations, the Millsite Opinion, as mentioned previously, a
slow-down in the permitting process, and a duplication of
Federal and state permitting.
To summarize, if the mining industry is to have a
significant future as an employer and economic engine in the
State of Nevada and the Western United States, these regulatory
uncertainties left over mainly from the prior administration,
will have to be addressed and resolved.
The most important of these issues, of course, to our
company is, once again, the Millsite Opinion. And if the
Millsite Opinion is not reversed and the law on this subject
remains unclear, major companies, including Placer Dome, will
be reluctant to make future investments in new projects in
Nevada or elsewhere in the United States.
We look forward to a clearer, more positive and more
settled legal environment in which to operate in Nevada and
elsewhere in the U.S. And in the future. I appreciate this
opportunity to make our views known. Thank you very much.
Mr. Pombo. Thank you.
[The prepared statement of Mr. Chavis follows:]
Statement of James Chavis, Vice President of Government Relations,
Placer Dome America, Denver, Colorado
Good Morning, Chairman Pombo, Congressman Gibbons and other members
of the Subcommittee. I am Jim Chavis, Vice President of Government
Relations for Placer Dome America. I thank you for holding these
hearings here in Nevada, and for allowing the views of the citizens of
Nevada to be heard on this important topic. I moved to Denver a couple
of months ago, but up until then, I had spent most of my professional
life--over twenty years--as a resident of Nevada and an employee of the
mining industry. My children were raised and educated in Elko. My two
oldest children and their families still reside in the state and as a
family, we will always consider Nevada home.
Elko and all of Northern Nevada would be a very different place if
it were not for the excellent high-paying and high-tech jobs available
here because of the hardrock mining industry. Placer has been a major
employer in Nevada since the 1960's, when the Company acquired an
interest in the Cortez Mining District. Since then, we have developed
the Cortez Mine in 1968, and the Pipeline and South Pipeline deposits.
Exploration and development in the Cortez District is being done as a
joint venture with Kennecott Minerals. Placer is the operating partner
in the venture where we currently employ about 415 workers at the
operation. In addition to the large payroll at Pipeline, we will spend
about $7 million this year developing the resource and $21 million
exploring for additional reserves around the existing operations and in
grassroots exploration programs. This is one example of the large
amounts of money--in payroll and capital investment--that others and we
invest in Nevada. A little later I will explain how we spent over four
years and $5.5 million getting our most recent expansion of Pipeline
permitted. These kinds of costs and permitting delays are very much a
part of our decision-making process about where to invest our money in
the future.
Placer also owns and has operated the Bald Mountain Mine in White
Pine County, Nevada, since 1983, and currently employs 115 workers at
that operation. Finally, Placer acquired the long-operating Getchell
Mine in Humboldt County in 1998, but was forced to suspend operations
in 2001 because of low gold prices and the need to conduct an
aggressive exploration program to define reserves. In April 2003, with
significantly improved gold prices, the Company announced plans to
restart the Getchell operation and is now doing so. We currently have
250 persons employed at Getchell, up from 57 people just over one year
ago. To offer some indication of the economic impact of these three
operations, our gross payroll in 2002 for the Nevada operations was
almost $40 million.
Placer also operates the Golden Sunlight Mine in Montana, which
just announced an extension on mine-life and production of four
additional years. The Company is advancing the Donlin Creek property in
Alaska, evaluating the potential for a mine there with a measured and
indicated resource of 11.1 million ounces and inferred resources of
14.3 million ounces.
Placer's recent increase in Nevada employment--we now have almost
800 employees at our operations and exploration offices in Nevada--can
be attributed to past exploration successes and to the recent increased
demand for gold in the world marketplace. However, the employment
increase at Placer Dome's mines is not necessarily an indication of the
long-term health of the mining industry in Nevada. The fact that our
existing Nevada mines are flourishing obscures the reality that we and
other companies have been operating for the last decade in a prolonged
period of regulatory uncertainty and regulatory burdens in the United
States. The failure of the United States to provide a stable regulatory
environment and straightforward permitting process inevitably
influences our investment decisions and those of other major companies.
However, the significant effects of these decisions are not readily
visible in our current operations or those of other companies, because
the major investments in these existing operations were already made.
The consequences of recent federal mining policy will only become
evident in the future, when the expansions of existing mines and the
opening of new mines do not occur because the necessary underlying
investments in exploration were not made.
Responsible Domestic Resource Development
Today's hearing is focused on the role of the hardrock mining
industry in responsible domestic resource development and economic
stability. In Northern Nevada, at least for the foreseeable future, the
hardrock mining industry is the prime source of that economic
stability. I am sure Dr. Dobra will provide more information on the
economics of the industry in Nevada, but for starters, the Nevada
Division of Minerals estimates that almost 9,000 people were directly
employed in the mining industry in Nevada in 2002, and 44,000 people
were in jobs providing goods and services to the mining industry.
(Nevada Minerals Industry Fact Sheet--2002.) These are high-paying jobs
with extensive health, retirement and other benefits. As a personal
note, I have seen local families grow up in Nevada's mining industry
with two, and sometimes three generations working in the mines and
making strong communities.
The hardrock mining industry depends on worldwide markets and
demands for metals. It is also a fact of life in the mining business
that the industry and jobs must go where the resource is, not the other
way around. When a mineral deposit plays out and no more minerals are
to be found, there is little to do but close down the operation and
move on. The early map of the western United States is blanketed with
mining towns that lived with these hard realities. Nevada has many old
mining camps that once flourished and then died when metals prices
collapsed or when deposits failed to live up to their promise.
These two realities have not changed, but the mining industry is
somewhat better-equipped to deal with them than it was in the past. It
is a different industry operating in a different time in history.
1. LEnvironmental Protection: In the 19th and early 20th Centuries,
little was known about the potential effects of mining wastes on the
environment and it was legal and accepted industry practice to
discharge process wastewater and tailings untreated onto land and into
streams. Modern mining, in contrast, is heavily regulated by federal
and state governments, and responsible industry practice now results in
protection of water, air and other environmental media throughout the
life of the mine, reclamation and closure--including extensive
treatment and containment of any waste that is generated. Responsible
mining companies maintain a corporate policy that essentially imposes
such standards wherever in the world they operate, whether required by
law or not.
2. LSustainable Development: Generally, sustainable development
means development that is sensitive to the environment, to local
residents and indigenous peoples, that share the benefits of the
enterprise with these people, and that looks beyond the economic life
of the project to longer-term economic development that benefits the
community. Placer is working to incorporate sustainable development
practices and principles into all of our operations. At Placer's
operations, we are focusing on the following:
LSound environmental practices that leave a
chemically, physically and ecologically stable site when the
operation is closed;
LEmphasis on a safe and healthy workplace;
LInvolvement of our employees and other stakeholders
in all major decisions that affect the community; and
LInvestments in education, public health and other
important community causes.
In some respects, the goals of sustainable development are more
crucial and the needs for them more acute at our operations in
developing countries, but we are incorporating these principles into
our operations at every one of our facilities, including those in
Nevada. Those efforts include:
1. L2001 Agreement with Duckwater Shoshone Tribe: Our Bald Mountain
facility agreed with the Tribe to facilitate a business growing locally
hardened and adapted plants from local seeds in the Tribe's greenhouse.
The plants were to be used in reclamation efforts at Bald Mountain. The
relationship has been successful, and has ripened into a larger
business in which the Tribe supplies seedlings not only to Bald
Mountain but also to Pipeline and to other mining companies for their
operations. In doing business with our neighbors, we aim to make a
positive impact in the community that extends beyond the direct
economic impacts of employment and capital investment. We see this as
investing in the future of people who were in Nevada long before we
started mining, and who will remain after our mining operation is
successfully closed;
2. LDonation of Land to the Carlin School District: We donated
about thirty-two acres of land to the School District in 2002 for its
various needs. The land is valued in excess of $100,000; and
3. LContribution to Great Basin College: We contributed $100,000 to
Great Basin College in 2002.
I am including for the record a copy of Placer's most recent
Sustainability Update, which includes a copy of the Company's
Sustainability Policy.
The economics of the hardrock mining industry over the last several
decades has resulted in larger, worldwide companies. This trend has not
resulted in the elimination of small companies, but does mean that most
small companies focus on exploration and leave the riskier, capital-
intensive operations to large companies. These large companies are able
to weather adverse financial conditions and low metals prices better
than smaller companies could in the past, in part because of their own
internal resources and in part because of their access to capital
markets and risk management tools (such as hedging contracts, and other
derivatives instruments and risk management strategies). Today's
industry is therefore more stable, and less characterized by the old
West boom-and-bust image, than ever before.
Every person in Northern Nevada knows that the past five years have
been very challenging for this industry. Hundreds of people were laid
off, marginal mines closed, and companies merged, were acquired, or, in
some cases, became insolvent. Throughout this period our Pipeline Mine,
the Bald Mountain Mine and other larger projects kept operating,
providing much-needed jobs and other benefits to the economy. Imagine a
future in Northern Nevada after these and other projects have reached
the end of their project lives. Unless today's mines are to be replaced
by future mineral development, Northern Nevadans face a very different
and difficult future. Unless the federal government stabilizes its
policies regarding hardrock mining on federal lands, this will be
Northern Nevada's future.
Future Mineral Development In Nevada
A decline in Nevada's hard rock mining industry is not inevitable.
Everyone agrees that Nevada is, and will remain, one of the most
promising areas in the world geologically to explore for gold and
silver, not to mention other valuable minerals. The Nevada Division of
Minerals' Ninth Annual Nevada Exploration Survey 2002 shows that
exploration budgets are up across the board, and there is increased
optimism in the industry about future exploration prospects. This
optimism clearly results in part from the improved gold prices of the
last 18 months. However, it is also the case that the total amount
expended last year on exploration--about $60 million--is half what it
was in 1996. Mining companies are spending much less than they used to
in Nevada to find new resources.
Nevada's experience is not unique. In general for public lands in
the United States, since 1997, both exploration for new minerals and
mine development on discovered minerals have all declined
substantially:
1. Notices filed with the BLM for exploration on public lands have
declined by 70%;
2. Exploration spending in the U.S. has dropped by 66%;
3. New mining claims have declined by 74%;
4. Plans of operations for new mines and expansion of existing
mines have declined by almost 60%; and
5. Investment in exploration and mine development has in many
cases shifted overseas.
It is difficult to quantify all the reasons for this decreased
investment, but some of it is clearly the result of the policies of the
prior Administration, which was openly hostile to the General Mining
Law of 1872, the law that governs mining on public lands. These
policies included:
1. Open Hostility to the Mining Law:
LThe Clinton Administration attacked the longstanding
General Mining Law and lobbied Congress aggressively for its
repeal or reform;
LThe Department of Interior refused to carry out its
legal duties under the law, most dramatically illustrated by
its refusal to issue mineral patents to a Nevada gold producer
that by all accounts had earned the patents under federal law.
The Department finally had to be ordered by a federal court to
issue the patents;
LIn an attempt to restore stability, the mining
industry united behind a reasonable reform proposal that
included royalties and restrictions on privatization of federal
land, and which was enacted by Congress. President Clinton
vetoed the measure; and
LThe struggle in Congress lasted for years and
continues, rendering uncertain the stability of investments in
the U.S. under current rules.
2. 3809 Rules: In 1997, Interior proposed sweeping changes to the
rules that govern access to public lands for exploration and mining
operations. By Interior's own admission, the rules were intended to
accomplish ``administratively'' what Congress refused to do
legislatively. Interior's rules were adopted at the end of 2000;
fortunately, Secretary Norton made targeted revisions to the rules that
removed the most onerous and most legally questionable of their
provisions, notably the so-called ``mine veto.''
3. Millsite Opinion:
LIn 1997, the Interior Solicitor issued a legal
opinion purporting to overturn an important longstanding
interpretation of the Mining Law. Simply stated, Interior has
long read the Mining Law to permit the location on federal
lands of ``millsites'' next to mining claims so that minerals
can be milled and processed. Traditionally, Interior has
allowed the location of as many millsites as necessary to
conduct the operation. As ore grades have decreased and
improved mining techniques have allowed greater recovery from
lower grades of ore, the amount of material to be processed and
disposed of in accordance with today's environmental
regulations has increased dramatically, and the number of
millsites located by companies has increased correspondingly.
In the Millsite Opinion, the Interior Solicitor claimed this
practice was illegal, reading the Mining Law to limit the
number of millsites to 1 per each valid mining claim;
LThe effect of this ruling on Placer was dramatic
because it threw the claims required for the Pipeline Project
into question and provided project opponents one of their main
issues for the pending appeal; and
LMore importantly, the opinion endangers the
practicability of any future project on public lands, because
there is no way such a project could be situated on the number
of millsites that would be allowed if the Leshy Millsite
Opinion remains in place. This is a very important issue for
Nevada.
4. Slowdown in Permitting: The regulatory process during the
Clinton Administration drastically slowed down mine and exploration
permit approvals, delaying and, in some cases, endangering the
viability of new projects. In the case of our Pipeline Project, the
original federal approvals took four years, even though the operation
was to be constructed and operated adjacent to a process facility that
had existed for twenty years and in a district that has been mined
since the end of the 19th Century. A subsequent expansion proposal,
first submitted in 1996, cost over $5 million and again took four years
to approve, and is still under appeal at the Interior Board of Land
Appeals.
5. Duplication of Federal and State Permitting: Operations on
federal lands are subject to both federal land management and state
laws. In the past, federal and state governments have made some effort
to work together and reduce duplication and burdens, but this
cooperation lagged significantly during the Clinton Administration. A
hallmark of this failure to work together was the proposed 3809 rule I
just described. In that rule, Interior proposed to repeal the existing
regulatory relationship that stressed compliance with existing state
laws, replacing it with one in which the federal government dominated
to the exclusion of the views and wishes of state regulators. This
aspect of the 3809 rules was strongly opposed by industry and by state
regulators, and, fortunately, was withdrawn by Interior. Still, the
dual levels of regulation exist, and it remains a challenge for federal
and state regulators to work together to minimize regulatory burdens.
To summarize, if the mining industry is to have a significant
future as an employer and economic engine in the State of Nevada and
the western United States, these regulatory uncertainties left over
mainly from the prior Administration will have to be addressed and
resolved. The most important of these issues left to resolve is the
Millsite Opinion. If the Millsite Opinion is not reversed and the law
on this subject remains unclear, major companies, including Placer,
will be reluctant to make future investments in new projects in Nevada
or elsewhere in the United States.
Placer Dome's Future in Nevada
Like every other major mining company in the world, Placer Dome is
an international company, with mines and projects in South and Central
America, Canada, Africa, Asia and Australia, in addition to its mines
in the United States. Placer is committed to its operations in the
United States and to its employees here, and continues to budget
significant resources for Nevada exploration. An important part of our
annual exploration budget is expended on our ``Minex'' program, in
which we explore for minerals at or near our existing operations. It is
Minex expenditures that have expanded the reserves and prolonged the
life of the Pipeline Operation, and that have enabled us to reopen the
Getchell mine. Placer's worldwide budget for exploration in 2003 is $60
million, with $36 million of that going to the Minex program. Of our
total exploration budget, $21 million will be expended in the United
States. Over the last 10 years, Placer has spent over $180 million in
the U.S. in exploration leading to the discovery of Pipeline, plus
expansions at Bald Mountain Mine and the Golden Sunlight Mine in
Montana.
Like other companies, Placer's Nevada growth is happening primarily
at existing properties. As explained above, it makes sense to focus
exploration efforts where you can use existing processing facilities
rather than build new ones, so to us this strategy is just good
business. However, it also reflects in part the reality that new
projects are enormously expensive and difficult to develop and build
with uncertain permitting. We must choose to direct scarce exploration
capital to places where it promises to yield the most financial benefit
for the Company at the least risk. When we decide where to explore, we
must reckon with the fact that there is now significantly more
political risk in the United States than existed when we made our
investments in Bald Mountain, Pipeline and Getchell. Whether we explore
and develop new projects in Nevada will depend on a complex calculus of
factors that include metals prices, the status of the Mining Law, the
Millsite Opinion and related legal precedents, and the difficulty and
length of federal and state permitting processes.
We are, above all, committed to being good corporate citizens in
Nevada and wherever we operate. Placer looks forward to a clearer, more
positive and more settled legal environment in which to operate in the
United States in the future. I very much appreciate this opportunity to
make our views known.
______
Mr. Pombo. Dr. Taylor?
STATEMENT OF TONY P. TAYLOR, PRESIDENT AND CEO,
MILLENNIUM MINING CORPORATION
Mr. Taylor. Yes. Thank you, Mr. Chairman, and the Committee
Members for this opportunity to assist in your deliberations.
My name is Tony Taylor. I'm president of a home-grown
exploration company called Millennium Mining, which we've
developed over the last five years here in Reno.
So we're an exploration company. We recently completed a
reverse takeover of a Canadian public company called Gall
Summit Mines, and raised $1.6 million for exploration, which at
the moment we're going to choose to spend in Nevada, although I
must say, having heard some of the--some of the things today,
I--I wonder whether that's a wise decision.
I am--I've been in the exploration business for almost 40
years around the world, many commodities in many countries. And
so I represent what is known as the junior mining sector, and
an endangered--an endangered species of the mining industry,
which is the profession of exploration and geology.
I make this point in that--that the minds of money and the
ability to work in places like Nevada has had a serious impact
on our profession. There aren't many of us left in the world.
At any rate, I wanted to get this opportunity to get that point
over.
Now the junior mining sector raises high-risk money for
exploration. Now, the majority of that money is raised through
Canadian institutions, and it's spent worldwide. So to explore
in Nevada, we have to go and raise money with the help of the
Canadians, who understand much more, the business of mining.
It's a very important part of their economy.
So having raised the money, we choose to explore in Nevada
because--because of what I believe to be the almost unlimited
geological potential, particularly for high-grade underground--
for high-grade veins, which are going to be mined from
underground, which is the future of mining in Nevada. We've
already heard that something like 30 percent of the production
is coming from underground mines. This percentage is going to
increase, and this is where the future is in Nevada.
So we come here because of it's good geology, an excellent
infrastructure, roads, and--and now, a lot of mining
infrastructures, mills and so on, that you can take your ore
to, a productive and well-trained work force. The U.S. has a
stable political climate in contrast, say, to Peru, which is a
country we heard about earlier. And there's a long-established
mining code and regulations, which we've heard discussed.
However, there are some negative aspects. I think I would
say--I would determine as a confusing interaction between
Federal and state agencies, which we've heard some examples of.
And I have given you a brief example in my written testimony
to--to make the point that, you know, we--we never really know
where these interactions will affect us.
So in summary, miners are responsible people and we are
working to provide mankind with essential minerals for living.
It's not a matter of choice, these are essentials, and it's not
necessarily space-age materials. I like to use the example of
sheetrock in your house, which is made of gypsum, which comes
out of a hole in the ground somewhere.
And we are as much concerned about our environment as
anyone. I've traveled around many places in the United States.
I've seen a lot more of this country than most people who sit
in offices, and so on. And I'm--it's not something I like to
see, but we--we as a society require these minerals.
So what we seek are clear rules and regulations, even
enforcement. And I'm only reinforcing what others have said,
but I think the point is that, if that doesn't appear to be the
case, then the shareholders are going to say, well--and quite
rightly--``You should go and spend your exploration dollars
elsewhere.''
But for the moment, I believe that we can--that this is
the place we're going to be for--for the next--well, certainly
with the money that we've already raised. Thank you very much.
Mr. Pombo. Thank you.
[The prepared statement of Mr. Taylor follows:]
Statement of Anthony P. Taylor, President/CEO, Millennium Mining Corp.,
Reno, Nevada
I was educated in the United Kingdom with a B.Sc. and Ph.D. degrees
from the Universities of Durham and Manchester, respectively, and have
been a member of the Society of Economic Geologists for over 25 years.
My professional career as an Exploration Geologist, mostly for major
international mining companies, encompasses a variety of commodities in
many different geological hosts on four continents and many countries
including lead-zinc in Europe; nickel in Australia; platinum, copper
and zinc in South Africa; gold-silver-copper-zinc-diamonds in the
Americas. I have lived in Nevada for most of the last 25 years and
participated in exploration and mining of gold here for much of that
time. I currently serve on the board of Hecla Mining Company, listed on
the New York Stock Exchange.
I turned to the junior mining sector in 1996 with the demise of
exploration within the major international corporations with a long-
harbored wish to develop my own exploration company. After a five-year
struggle, in a very tough financial market with a few devoted local
investors, our private Nevada company, Millennium Mining Corporation,
succeeded in attracting the attention of the investment community in
Toronto who engineered a reverse take-over of a public vehicle, Gold
Summit Corporation, while raising $C1.6 million.
We choose to concentrate our efforts to explore for high-grade gold
vein systems in Nevada because of:
1) LThe almost unlimited potential for discovery of a new
generation of underground mines; and
2) LThe political stability, excellent infrastructure and the
efficient, productive workforce available in the United States.
The mines we hope to discover will succeed the large open-pit gold
operations that are the economic backbone of rural Nevada. With the
inexorable decline in production from the world's largest gold-
producing mines in South Africa, Nevada has the geological potential to
largely supplant this coming shortfall.
There are, of course, other important gold-producing countries in
the world but many carry unacceptable political risk and less certainty
of mineral tenure. Many do, however, have a less-tangled regulatory web
and hold out a welcoming hand to the mining industry.
I have long espoused the dictum that, in the mining industry ``the
sum of all difficulties is equal.'' So the balance, for us, goes to
Nevada.
Having raised money in Canada to explore in Nevada with the
argument that the regulatory labyrinth can be negotiated we applied to
the appropriate Federal agency for a drilling permit to start our
exploratory work. They responded in a responsible, helpful and
efficient manner.
But we are delayed by misunderstandings between two federally
funded agencies, one of which is operated by the State of Nevada
together with completion of a survey of any bats that might live in
nearby old mine workings. The concern, on one hand, is to preserve an
old mining artifact, a Stamp Mill (ca 1906); on the other hand the
possibility that an endangered species chose an adit as home.
Miners are responsible people who produce materials that are
essential to mankind. They are not a luxury, unless we return to live
in caves and hunt for food on foot with bows and arrows. We seek clear
regulatory pathways to produce minerals in an environmentally
responsible manner. I trust your Committee will work to help untangle
the ``Gordian Knot'' of legislation and rule making that is slowly
suffocating the mining industry in America.
______
Mr. Pombo. Mr. Gibbons?
Mr. Gibbons. Thank you very much, Mr. Chairman.
And, Dr. Taylor, let me say that if the geological
exploration industry fails you, you too can become a member of
Congress.
Gentlemen, thank you very much for your time here today and
the testimony you've presented to us. And I would like to begin
with Mr. Fields, and to a long-standing friend out there who
has worked hard in this industry, I thank you very much for
what you've done to promote the industry in the State of
Nevada.
Oftentimes we talk about permits as if they're the kind of
permit that you go down to your County office to build a house,
to improve your driveway or to add a room onto your home, and
you put your money down and show them your plans and get your
little permit and go home and start working.
But that's not the case in mining, is it, Mr. Fields? There
is much more involved in the permitting process than that. And
could you help us by understanding--or telling us for our
understanding, the number, the types of permits that a mine
must go through and the process that it must go through to get
a permit, and how much you understand that process costs a
mining company to complete?
Mr. Fields. Thank you, Congressman. And when I was with the
State of Nevada, we used to track, as the Division of Minerals
now tracks, the number of permits that are required in order to
conduct exploration or mining in Nevada. And if you were
working on public lands, I seem to recall that the number is
somewhere in the high 20s or low 30s, in terms of the numbers
of permits. These range everywhere from a permit from the fire
marshal to--to own and store explosives that are used in the
mining process, to the very substantial permits that you must
obtain from the State and Federal Government for the
opportunity to mine.
Most mining operations in the State of Nevada, by virtue of
the fact that 90 percent of the land is somehow owned or
managed by the Federal Government, require a NEPA process,
that's the National Environmental Policy Act, and that requires
scoping. This naturally requires public comment along the way.
But more importantly, it requires a third-party consultant in
most cases to do the work, to develop an Environmental Impact
Statement, which will lead to a plan of operation, that is the
permit that's approved finally by the Bureau of Land
Management. This can cost in the millions of dollars, 6 million
is not unusual for a major mining operation, it could be much
more than that.
But more importantly is the time that we've been
discussing, potentially years. A major mining operation taking
five years to obtain all of the necessary permits to operate
can be a huge disincentive.
So the quick answer to your question, the numbers are in
probably the 30s, and the costs are in the millions of dollars
for major undertakings.
Mr. Gibbons. Mr. Chavis--I guess we lost the mike.
Mr. Chavis, I've had the pleasure to inspect your company's
operations in South America, South Africa and Nevada, and I've
noticed there that the responsibility of your company has been
overwhelming to the environmental issues that go on with a
mine. In fact, in areas that I would have anticipated you to be
lax in, you were strong in, across the board. You met the IOC
10,004 standards in areas which are an international standard
for environmental mines.
Do you have--does your company have a standard operating
policy for every mine, no matter where it's located, when it
comes to environmental issues, safety issues, et cetera?
Mr. Chavis. Many years ago, Congressman, we embarked on an
undertaking to determine just how we were going to apply our
standards in countries where we operate. In many countries that
we go into, there are very few regulations, if any, and one of
the things that we have to do is build environmental
regulations as we go in.
What we've kind of done is we've taken the U.S. standards,
the U.S. environmental standards--leave NEPA here, we try to
leave NEPA back here in the United States where it belongs. And
we take the other rules and regulations, the air quality and
the water and the other regs that we fall under, and we apply
those same standards, or as closely as possible, we adhere to
those standards.
Mr. Gibbons. Mr. Chairman, if you will indulge me one final
question, because of the value of these witnesses here--and I
apologize to Dr. Taylor, because I wanted to ask a question
about the Millsite Opinion, but I realize Dr. Taylor is in
exploration, but if he can answer this, that would be great.
But I would sure like, also, Mr. Chavis to answer this.
What effect has the Leshy Millsite Opinion had on both
exploration and operation from a company's standpoint?
Mr. Chavis. Well, quite frankly, Congressman, I--I hesitate
to get in, too deeply into another company's, you know, area,
but the Millsite Opinion has been used to derail operation, an
operation in another state after they had gone through the
extensive permitting for the property.
Now in more particular with our operation, our--we have, of
course, an appeal that has been filed before the International
Board of Land--Interior Board of Land Appeals. Part of that
appeal is now based on the Leshy Opinion of the millsite ratios
that are out there. And quite frankly, the Leshy Opinion gives
that appeal some feet that it didn't have before. We feel that
the Leshy Opinion is adverse to the law.
We're sitting on pins and needles right now, to be quite
frank with you. It's been a little over two years since the
appeal was filed. The IBLA has a rule of thumb it takes
somewhere between two and three years before they hear a case.
It's right there at that window right now, so--so we're a
little nervous. This is our biggest operation in the world that
we are talking about, in our company, that--that is under this
appeal, so it will have a tremendous effect if that appeal
comes in--if they give it any weight in the decision, which I
hope they don't.
Mr. Gibbons. Dr. Taylor, do you have an opinion?
Mr. Taylor. Just a comment that I think any change in
what's perceived to be the rules and regulations are adverse
when it comes to raising money. Investors don't like to hear
about changes in rules and regulations.
Mr. Gibbons. Thank you, Mr. Chairman.
Mr. Pombo. Mr. Faleomavaega.
Mr. Faleomavaega. Thank you, Mr. Chairman, and I again,
commend the members of the panel for their testimony.
I just want to ask Mr. Fields, as the Chairman of the--of
the Nevada Mining Association, do you sense a consistency among
the 20 major mining companies here in the State of Nevada in
terms of their good-faith effort in complying with the
environmental standards, both federally as well as with the
State government?
In other words, you know, they're all right there and, I
mean, I don't want to be pointing fingers to say the worst
abusers versus the most environmentally conscious company, but
I just wanted to ask, you might have a better opinion on this,
obviously. Among the 20 major mining companies, do you sense
that they're about an even keel in complying or making very
sincere efforts in complying with environmental standards, et
cetera?
Mr. Fields. Thank you, Congressman. I'm not exactly sure.
As I look around my Board of Directors, I think we've got about
15, what I would consider, major mining companies. As Allen
Coyner suggested, it sort of depends on where you draw the line
between major, middle and small.
One of the functions of the Nevada Mining Association is to
provide a venue that leads to the consistency that you're
asking about. Through our committee structure, we have a
variety of standing committees, one of which is the
environmental committee, a subsection of environment has been
reclamation, water, air. These are all part of the
environmental committee.
And what--what that committee does is it meets on a very
regular basis, at least monthly, in our offices here in Reno,
or in other offices out in Elko or Winnemucca, mining
communities, and it's to work on issues that are of common
interest to all of these companies. And it's also to exchange
ideas on how Company A is dealing with a situation that perhaps
Company B has not had yet to deal with.
So I think through that process, my answer to your question
is, yes, they are all striving very well to--to meet not only
the letter of the law, but to go beyond in some areas and
through innovation they advance the field, for example, of
reclamation. So I think we've got a very strong situation here
in Nevada.
Mr. Faleomavaega. We've kicked around several major issues
that seem to affect the operations of a mining issue, not only
here in Nevada, but nationally. And what I would term
respectfully to Mr. Chavis and Dr. Taylor, that you're the
farmers out there, this is no economic theorist out there,
whether it's going to be a bust or a boom for this major
industry.
And I wanted to ask both of you, if you were to list a
sense of priorities--because you're right down there in the
forefront--what major issue or the highest priority that you
can serve to accomplish and address now and not wait another
two or three years--maybe my good friend Mr. Gibbons can
propose a bill that might be a partial answer. But if you were
to really say one, two, three, let--I'll just deal with the
highest priority, what would you consider to be the major
obstacle that Congress should address now if we are really
serious about saving the mining industry, not only here in the
State of Nevada, but nationally? What should we address?
Mr. Taylor. That's a--I'm not probably the best qualified
to answer that.
Mr. Faleomavaega. As a major explorer.
Mr. Taylor. As a major explorer?
Mr. Faleomavaega. Yeah. What do you consider the biggest
problem that you've been faced with on that?
Mr. Taylor. I think in the--I think the--I think the
permitting processes are--the agencies that oversee them, I see
an awful lot of overlap. And this little example I gave you in
the written testimony is a good example of something that we
didn't anticipate at all. We applied for a permit to drill, and
out of the woodwork comes a requirement that the state--this
is--this is Forest Service land, regulated, along comes a
requirement for, I believe a federally funded agency, the State
Historic Preservation Society, to make sure that we don't drill
into an old staff mill that's onsite.
And we then come across the situation where we have to do a
bat survey and some more workings and added. We don't even know
if there are any bats in there. But today we've had a bill for
$6,000 to--to do a bat survey. And we're--we're more than happy
to--to do that, and we don't want to--we don't want to endanger
any more bats.
But the fact that these things have appeared out of the--
out of the woodwork is--is disturbing, so I--I would say in
general terms, that--and I get the impression, rightly or
wrongly, that the various agencies don't quite know what the
other one is doing or is supposed to be doing.
Mr. Faleomavaega. Thank you. Mr. Chavis, just real quickly
if I could ask you.
Mr. Chavis. Well, my company's biggest issue is the
Millsite Opinion, but I want to be clear, I don't believe that
that is the Congress' issue, an issue of the Congress. I
believe that that issue was created by the Administration and
by Interior, and Interior should clean it up. OK.
But now, back to your original question. With that aside, I
think mining law reform needs to be number one on the agenda,
mining law reform, whether or not there's going to be
royalties, are you going to calculate them, etc. We're in favor
of going forward with mining law reform. And I'm sure any of us
in the industry would be there to support you and help you
within that goal. Number two would be the removal of the patent
moratorium.
Mr. Faleomavaega. With my good friend from Nevada being a
geologist, I am going to depend very much on his opinion and
his expertise in this area.
And again, Mr. Chairman, thank you, and I want to thank
these gentlemen for their testimony.
Mr. Pombo. Mr. Cannon.
Mr. Cannon. Thank you, Mr. Chairman. And thank you all for
being here today, we appreciate that.
Let me just point out, Mr. Chavis, this is--the Millsite
Opinion is an Interior problem, I agree with that, but it is my
experience the head of EPA, the head of Interior, for them a
good day is they don't get a headline. And so our job in
Congress is to make sure they do the right thing. We'll give
them the latitude of choosing the day they get the headline.
But we see ourselves, I think--maybe we see ourselves as being
in the position of pushing those decisions to see that they
actually happen, and they happen in a relatively timely
fashion.
Mr. Fields, you--you're aware, of course, we do a lot of
trades or consolidations between the Federal Government, the
States and occasionally, all too rare, we actually do a sell of
Federal lands, although we have accumulated or identified 5
million acres of surplus BLM lands that we would hope could be
sold some day.
But do I understand you as saying in your testimony that
you would like to see the Federal Government or the Interior
Department sell lands to mining companies instead of leasing
lands for mining?
Mr. Fields. Yes, I--I think that's exactly the point of my
testimony. Not only mining companies, but others that are in a
position to do something that results in economic development
that is of benefit to rural Nevada or rural Utah or rural,
wherever we're talking about for the purposes of economic
development.
It so happens that in an industry in which I'm very
familiar, those are mines, and that is a big economic
development issue in Nevada. So, yes, mines could be
purchasers, you know, giving fair value to the Federal
Government, certainly, but...
Mr. Cannon. But also removing some of the headaches that go
with it, well preserved in the laws that constrain appropriate
use.
Mr. Fields. Exactly, exactly. It will be no less of a
regulated industry under the proposal that I make. It's still
subject to State, local requirements, as well as your Federal
requirements for clean air, clean water, but remove a lot of
that duplication.
Mr. Cannon. Well, I personally think that's a really good
idea. Are you familiar with the APPLE project started by a
Speaker of the House in the State of Utah, where he's looked at
the western states, the public-land states versus the eastern
states that don't have near the source of land, public lands,
and evaluated from every perspective what percentage we spend
on education. The ``E'' in APPLE stands for education, I don't
know what the rest of it is, but I am sure that he spent a lot
of time getting the acronym APPLE, about education.
But the amazing thing is that we spend a larger percentage,
we spend a larger percent of our income, a larger percent of
our State budgets, and we have overwhelmingly, across the board
and across every state, which is different, each state is
different from the others, but in the west we are generally
spending more money per capita and less per student than in the
east.
And the reason for that is because we have 90 percent,
depending on the state--Utah is about two-thirds, here it's
much higher than that--in land that's held by the Federal
Government. In other words, most of the public--most of the
land is public, and therefore not taxed. We're not even getting
a fair shake on our payment in lieu of taxes with our counties.
The result of that is that Westerners--that includes
California, it includes Alaska, it includes everybody or every
state that has public lands--is paying a significantly
disproportionate share to educate our kids whereas eastern
states don't suffer the same problem.
And it seems to me, the only way you can solve that is by
actually selling lands, subjecting them to private ownership
and taxation. So I appreciate your testimony in that regard. It
was thoughtful, well-presented, and made it very clear that
we're not trying to take this land and rape it and put it in
private hands. So I appreciate that testimony. Thank you. Thank
you. Yield back to you, Mr. Chairman.
Mr. Pombo. Thank you. I too want to thank this panel for
their testimony. It was very informative. I would like to start
with Mr. Chavis, if I may.
One of the--it appears that one of the real problems that
we have is the--is the uncertainty in going through the
process. And what I'm hearing you say and others say is not
that we want to roll back any of the laws that are in
existence, we just want some certainty so we know what the
rules are.
Mr. Chavis. That's correct, Mr. Chairman. We don't expect
rules to be--laws to be rolled back. That's not realty, that's
not the way it's going to be. What we would like to see is, we
would like to be able to start a permitting process and
complete that process under the same set of rules. Just like a
college catalog when you enter on a college curriculum, we
would like to have that same opportunity.
And I know it's part of the political system, the political
world we live in, that when there's an election if we get a
change at the top or in the middle, things change. But that is
what we would like to see addressed, and I don't know just how
to do that.
Mr. Pombo. Well, the only way that--that I see to do it is
to follow-up on your suggestion, in that we have to reform our
mining laws. And there has to be a set process that's in place,
and if you are in a mine here, you are going to have to meet
all of those rules and regulations. But going into it, you will
at least know what you have to do in order to get there.
Mr. Chavis. That's correct.
Mr. Pombo. When you look at operating in Nevada versus a
foreign country--
Mr. Gibbons. California.
Mr. Pombo. Yeah, California. We're not there yet, Jim.
We're working on it, though.
But when you look at operating in Nevada versus a foreign
country, when you go into a foreign country, do you--do you
basically know what the rules are going to be when you go in
there, or do you have the same kind of process in place that
you have those uncertainties, or is that somewhat unique to the
United States?
Mr. Chavis. We do what's called a Country Risk Assessment,
along with other type--using other analytical tools. But the
Country Risk Assessment will generally give us a feel for what
environmental regs are or are not present. It also gives us a
political assessment, to give us an idea as to whether the
individual that's in power or the party that's in power, what
their chances are two years down the road when the elections
are scheduled and what the effect could be on mining.
We also send our environmental teams and our engineering
teams and other technical disciplines in early, in the early
stages, not--not immediately at exploration, but once they've
got a sniff of a mineral being present, to give us an idea of
the types of challenges that are involved there. That's all
done, generally, in our Feasibility Study, which is done prior
to really making the large leap, the large investment. And that
same thing is actually done in the United States.
Mr. Pombo. Can you give--
Mr. Faleomavaega. Mr. Chairman?
Mr. Pombo. Yes.
Mr. Faleomavaega. In a foreign country it is called a
contribution and donation, but in our country it's called
extortion and bribery.
Mr. Pombo. That may be the case.
Mr. Taylor, or Dr. Taylor, when you look at doing
exploration, and the changes that you have seen in the period
of time that you've been in the business, how much better are
you today at being able to determine where a mineral is and the
extent of that find, versus 40 years ago? Has technology
changed the business, or is it like in the old movies where you
go out and smell a rock and you know whether it's there or not?
Mr. Taylor. Well, the technology has changed enormously in
40 years. Advances in geochemistry, geophysics and our
understanding of geology have grown enormously. But there's
still--there are still mines being found by guys out there with
their boots on, whacking rocks. And so I--the technology is
greatly improved and, of course, there are less chances of
finding the surface outcropping material, the deposits. And so
we're--we're forever--or we're--the future is the ability to
see deeper and deeper down into the earth with more--less
direct methods, such as--such as geophysics and our
understanding of the geology.
Mr. Pombo. If, as you look at--at the future and the
ability of the mining industry to expand in this State of
Nevada using the technology that--that's available today, what
is the role that the moratorium is playing right now?
Mr. Taylor. I'm sorry, which moratorium?
Mr. Pombo. The patent moratorium that we've been talking
about.
Mr. Taylor. Oh. Well, as I said before, I think any--
anything that is perceived to be a blockage in the permitting
process of the mining end is going to deter people from
investing in exploration. But I don't--I think--I think to some
extent, some of these difficulties and the changes that--
changing of law or the changing interpretation of laws and
regulations, some are overweighed by the geological potential
that you find in a state like Nevada. There aren't very many
places on the planet where we can expect to find, continue to
find good high-grade gold deposits. You know, those--those
places are fixed and limited. So to some extent that, I would
say, overrides the concerns. But at any rate--I'm not sure that
really answered your question.
Mr. Pombo. Well, thank you. I want to thank the panel for
their testimony. I want to thank Mr. Gibbons for hosting us
here today and giving us the opportunity to come in.
One of the efforts that we have made on the Committee this
year is to get out and do as many field hearings as we possibly
can to give people the opportunity to testify before Congress,
but also to give us a chance to hear from people that are
actually on the ground and doing the work, and those who have
to deal with, on a firsthand basis, with some of the
bureaucracies. So I thank you all for being here.
I want to thank Mr. Faleomavaega for making the effort to
come out and participate in the hearing, as well as Mr. Cannon.
It is always extremely difficult to have members take time away
from their districts and their other responsibilities to do the
field hearings, so I appreciate both of you making the effort
to be here.
If there is no further business before the Committee, I am
going to adjourn, and again thank the panel for their
testimony.
I just wanted--again, to the members of our audience who
may wish to offer written testimony to appear in the record, I
will hold the hearing record open for 10 days to give everybody
a chance to submit those to the House Resources Committee, and
that will be included as part of the record. Thank you.
[Whereupon, the Subcommittee was adjourned.]