[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
H.R. 2262, THE HARDROCK
MINING AND RECLAMATION
ACT OF 2007 -- PART 1
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
Thursday, July 26, 2007
__________
Serial No. 110-37
__________
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COMMITTEE ON NATURAL RESOURCES
NICK J. RAHALL II, West Virginia, Chairman
DON YOUNG, Alaska, Ranking Republican Member
Dale E. Kildee, Michigan Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American Elton Gallegly, California
Samoa John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas Chris Cannon, Utah
Frank Pallone, Jr., New Jersey Thomas G. Tancredo, Colorado
Donna M. Christensen, Virgin Jeff Flake, Arizona
Islands Stevan Pearce, New Mexico
Grace F. Napolitano, California Henry E. Brown, Jr., South
Rush D. Holt, New Jersey Carolina
Raul M. Grijalva, Arizona Luis G. Fortuno, Puerto Rico
Madeleine Z. Bordallo, Guam Cathy McMorris Rodgers, Washington
Jim Costa, California Bobby Jindal, Louisiana
Dan Boren, Oklahoma Louie Gohmert, Texas
John P. Sarbanes, Maryland Tom Cole, Oklahoma
George Miller, California Rob Bishop, Utah
Edward J. Markey, Massachusetts Bill Shuster, Pennsylvania
Peter A. DeFazio, Oregon Dean Heller, Nevada
Maurice D. Hinchey, New York Bill Sali, Idaho
Patrick J. Kennedy, Rhode Island Doug Lamborn, Colorado
Ron Kind, Wisconsin Mary Fallin, Oklahoma
Lois Capps, California Kevin McCarthy, California
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth Sandlin, South
Dakota
Heath Shuler, North Carolina
James H. Zoia, Chief of Staff
Jeffrey P. Petrich, Chief Counsel
Lloyd Jones, Republican Staff Director
Lisa Pittman, Republican Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
JIM COSTA, California, Chairman
STEVAN PEARCE, New Mexico, Ranking Republican Member
Eni F.H. Faleomavaega, American Bobby Jindal, Louisiana
Samoa Louie Gohmert, Texas
Solomon P. Ortiz, Texas Bill Shuster, Pennsylvania
Rush D. Holt, New Jersey Dean Heller, Nevada
Dan Boren, Oklahoma Bill Sali, Idaho
Maurice D. Hinchey, New York Don Young, Alaska ex officio
Patrick J. Kennedy, Rhode Island
Hilda L. Solis, California
Nick J. Rahall II, West Virginia,
ex officio
------
CONTENTS
----------
Page
Hearing held on Thursday, July 26, 2007.......................... 1
Statement of Members:
Costa, Hon. Jim, a Representative in Congress from the State
of California.............................................. 1
Heller, Hon. Dean, a Representative in Congress from the
State of Nevada............................................ 4
McMorris Rodgers, Hon. Cathy, a Representative in Congress
from the State of Washington, Statement submitted for the
record..................................................... 97
Pearce, Hon. Stevan, a Representative in Congress from the
State of New Mexico........................................ 37
Rahall, Hon. Nick J., II, a Representative in Congress from
the State of West Virginia................................. 3
Sali, Hon. Bill, a Representative in Congress from the State
of Idaho................................................... 5
Statement of Witnesses:
Bisson, Henri, Deputy Director, Bureau of Land Management,
U.S. Department of the Interior............................ 13
Prepared statement of.................................... 14
Champion, William, President and CEO, Kennecott Utah Copper
Corporation................................................ 80
Prepared statement of.................................... 82
Craig, Hon. Larry E., a U.S. Senator from the State of Idaho. 7
Prepared statement of.................................... 10
Dean, Tony, Sportsman, and Producer and Host of ``Tony Dean
Outdoors''................................................. 65
Prepared statement of.................................... 67
Ellis, Steve, Vice President, Taxpayers for Common Sense..... 51
Prepared statement of.................................... 53
Horwitt, Dusty, Public Lands Analyst, Environmental Working
Group...................................................... 55
Prepared statement of.................................... 57
Leshy, Hon. John D., Former Solicitor General, U.S.
Department of the Interior................................. 17
Prepared statement of.................................... 19
Response to questions submitted for the record.......... 22
Marchand, Hon. Michael E., Chairman, Confederated Tribes of
the Colville Reservation, Washington State................. 71
Prepared statement of.................................... 72
Response to questions submitted for the record........... 75
Proposed Modifications to H.R. 2262...................... 77
Additional Proposed Modifications to H.R. 2262........... 79
Martin, Jennifer L., Commissioner, Arizona Game and Fish
Commission................................................. 28
Prepared statement of.................................... 29
Tangen, J.P., Former Regional Solicitor, Alaska, on behalf of
the Alaska Miners Association.............................. 30
Prepared statement of.................................... 33
Wilton, Ted, Executive Vice President, Neutron Energy Company 85
Prepared statement of.................................... 86
Additional materials supplied:
Cibola County, New Mexico, Resolution submitted for the
record..................................................... 104
Uranium Producers of America, Statement submitted for the
record..................................................... 98
Washington Times article ``China powering world economy''
dated July 26, 2007, submitted for the record.............. 102
LEGISLATIVE HEARING ON H.R. 2262, TO MODIFY THE REQUIREMENTS APPLICABLE
TO LOCATABLE MINERALS ON PUBLIC DOMAIN LANDS, CONSISTENT WITH THE
PRINCIPLES OF SELF-INITIATION OF MINING CLAIMS, AND FOR OTHER PURPOSES.
``THE HARDROCK MINING AND RECLAMATION ACT OF 2007''
----------
Thursday, July 26, 2007
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, D.C.
----------
The Subcommittee met, pursuant to call, at 10:05 a.m. in
Room 1324, Longworth House Office Building, Hon. Jim Costa
[Chairman of the Subcommittee] presiding.
Present: Representatives Costa, Pearce, Rahall, Grijalva,
Gohmert, Heller, and Sali.
STATEMENT OF THE HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF CALIFORNIA
Mr. Costa. The Subcommittee on Energy and Mineral Resources
hearing this morning on H.R. 2262 will now come to order. This
legislation is an important bill that has been introduced by
the Chair of the Natural Resources Committee, our good friend,
a gentleman from West Virginia, Congressman Mr. Rahall, an area
that he has worked on long and hard.
But before we get to the substance of this matter, I have a
few preliminary items I need to address. Under Rule 4[g], the
Chairman and Ranking Members may make opening statements. If
any members have any other statements, they will be included in
the record under unanimous consent.
Additionally, under Committee Rule 4[h], additional
material for the record should be submitted by members and
witnesses within 10 days of the hearing. I have asked in
previous hearings that those witnesses please try to expedite
their efforts and assist because it is helpful. The cooperation
makes a difference, in responding to any questions that have
been submitted to the witnesses.
Now let me make a couple of other comments. Mr. Heller is
our Ranking Member de jour, and Mr. Pearce will be here I
suspect later this morning. He is in another committee with
markup, and so we understand sometimes we have overlapping
responsibilities. Nonetheless, we have an ambitious hearing
this morning with I believe 11 witnesses, and we must be
mindful of other people's time so we will begin. I know Mr.
Heller will fill in well on behalf of Mr. Pearce.
It is an important issue that we have here today. This
kicks off an effort to reform the 1872 Mining Law. There
probably are not a lot of other cases in American law where a
Congress enacts a piece of legislation, a President signs it--
in this case President Ulysses Grant--and then for a period of
over 100 years, if you do the math over 130 years, the law is
not changed, and certainly we all have different perspectives
on law but we know a lot has changed in our country, and as it
relates to the subject matter, and in fact I think many of us
do believe it is time that we take into account the changes and
look at modifying the 1872 law, and that is what Mr. Rahall's
measure does.
Even by international standards, when we look at 110
different nations throughout the world, over the last 20 years
there have been numerous changes in mining laws, and analysis
according to the World Bank and others reflect that. Many
committee members and many of those testifying today have much
of the history with mining law. I am very pleased that two of
those individuals, Chairman Rahall, as well as Congressman
Miller, for two decades have sought reform.
Senator Craig, who will be testifying momentarily, used to
be a member of this committee, used to be a member of the
Subcommittee with Chairman Rahall. So, this is a bit of a
reunion of sorts, and certainly their combined in-depth
knowledge of mining issues reflects--if you look at Idaho as an
important mining state in the country--over 140 years of legacy
of hardrock mining. In the Senate version of the mining law,
this is an area that Senator Craig has obviously had a great
interest in as well.
Since the late 1980s, as we look at the legislation before
us, there have been over 30 oversight and legislative hearings
on this subject, yet no changes. Some of the newer hardrock
mining issues I think are important that this committee take
the opportunity to learn. The Subcommittee will be holding a
hearing, a field hearing in Nevada in August with Senator Harry
Reid. I believe the date is August 21 in Elko, Nevada, for
those of you who want to come to Nevada.
The economic issues, of course, in hardrock mining
companies among many that we will be discussing is the issue of
royalties and royalty payments. How to bring a fair return to
taxpayers while also looking at ensuring the sustainability of
the mining industry. We also have other environmental issues
that include water, wildlife and recreation impacts.
I believe there is a need to be transparent but have
workable criteria on how we proceed with the continued
important resource of mining, the economic benefits and yet at
the same time that balancing act that I always talk about, and
that is to ensure--as this Subcommittee attempts to do--the
environmental issues because we must be good stewards of the
environment.
When you talk about the environment, it is a sad note but
the fact is that there is estimated to be over $32 billion
backlogged in abandoned cleanup for mines. That is a large
number. There are thousands of sites throughout the country. We
have many of them in California. The adequacy of the law and
the regulations in light of the current efforts to develop new
mining claims throughout the West I think makes it more urgent
than ever that we do this work.
For example, in my state alone, in California, there are
new claims in the following areas: 29 Palms, the Joshua Tree
National Park, and Big Bear Lake in the San Bernardino
Mountains not far from the City of Portola. Clearly those
examples can be I think illuminated in other parts of the West.
So, I think what is important is that this subcommittee do
its work. That we get the information, the very best
information we possibly can. People say that the West has
changed, and in my view I think it is time to change the 1872
Mining Law. So, for all of those reasons, we want to take
everybody's input and expertise and do our due diligence to try
to do the best work product we possibly can.
With that, I note that we have some additional opening
statements of Mr. Heller, and then we will defer to the
Chairman of the Committee, and you are going to submit your
statement, Mr. Chairman?
Mr. Rahall. No. Just very quickly--
Mr. Costa. Very quickly. Let us have the Chairman speak
first.
STATEMENT OF THE HON. NICK J. RAHALL, II, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Mr. Chairman. I certainly want to
commend you and the Ranking Member, Mr. Heller, for conducting
these hearings today on H.R. 2262, legislation reform of the
Mining Law of 1872. It is a particular honor and delight to
welcome back former Ranking Member of your subcommittee
actually, Mr. Chairman, our colleague from the other body,
Larry Craig of Idaho, a dear friend. I have been in his
district and been in his state on this issue and other issues
before our committee when he so ably served here but he saw fit
to go over to that other body, but that is his problem.
I have been at this for so long that I guess I am almost at
a loss of words, and therefore I am going to be brief because
frankly I have said everything that I need to say about the
need to reform the Mining Law of 1872 over the past 20 years or
more. As the first Chairman of this Committee, under the first
Chairman under whom I served, Mo Udall, used to say, everything
that needs to be said has been said but not everybody has said
it.
So without further ado, let me note that I certainly
recognize it is a changed landscape out there in terms of what
constitutes a hardrock mining industry in this country, in
terms of how that mining is done, and in terms of the
expectations of the people that reside in the area. A lot has
indeed changed not only since 1872 but since we last visited
this legislation in the Congress.
I also recognize that the principles behind this
legislation and I am certainly not locked in stone with every
word and provision, but the principles remain valid. The people
of the United States, the true holders of these lands, deserve
to receive a payment in return for the disposition of the
resources we all own. Nobody in their right mind would allow
timber, oil, gas, coal or copper to be cut, drilled for or
mined on lands they own without some reimbursement and neither
should the United States.
In all cases we do require payment except in the case of
hardrock minerals such as copper, silver and gold. People of
the U.S. also deserve to see that the lands they own are
properly managed, whether it be forest lands in the east or
public lands in the West. Certainly the states have stepped up
to the plate in terms of hardrock mining on Federal lands and
the regulations thereof but they are, when all is said and
done, Federal lands owned by all of the people of the United
States, and it seems to me that it is appropriate to have
Federal guidelines on hardrock mining and reclamation
operations.
Certainty is what we strive for here to remove the cloud of
uncertainty that currently exists over the industry so that
indeed financial decisions can be made for the future. The
pending legislation is a proposition to accomplish these goals
despite the fact that it is premised on decades of similar
bills including those which twice passed the House of
Representatives in a bipartisan fashion. It is still, to coin
the title of a book authored by John Leshy, a study in
perpetual motion.
So again, I welcome Senator Craig to our committee today as
well as the other witnesses, many of whom have traveled long
distances to be with us, to share with us their expertise on
this issue, and again I thank you, Subcommittee Chair Costa,
for holding this hearing today. Thank you.
Mr. Costa. Thank you, Mr. Chairman, and hopefully we will
transition this from a study in perpetual motion to a work in
progress as we move along. The Ranking Member this morning is
the gentleman from Nevada, Mr. Heller. I recognize him for an
opening statement.
STATEMENT OF THE HON. DEAN HELLER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEVADA
Mr. Heller. Thank you, Mr. Chairman, and thank you for your
time in bringing this particular piece of legislation. I want
to thank Chairman Rahall also for his dedicated time and energy
over the 20 years of bringing this bill forward, and I know
this goes back and forth quite a bit, and there is a lot of
energy expended on this particular bill, and I am certain that
that will change during this cycle also.
I want to thank Senator Craig for being with us here today.
I also want to thank the other 10 members that will be on this
panel for your time and energy and efforts to be here. I would
like to point out Ted Wilton specifically since he is from my
district, from Spring Creek, just outside of Elko and welcome
him here today.
I do not think there is any state that is affected more by
this piece of legislation than the State of Nevada.
Approximately 85 percent of the lands in Nevada are controlled
by the Federal government. Hardrock mining on public lands in
Nevada provides high wage jobs that benefit many of the rural
communities in my district. Mining employees pay income taxes.
They shop at local stores. They eat at local restaurants.
These wages are critical to many local economies in Nevada.
However, under the Hardrock Mining and Reclamation Act of 2007,
thousands of jobs will be threatened in my district if this
piece of legislation becomes law. This bill seeks to establish
a royalty structure that will make mining operations less
economical. The jobs in mineral production could be exported to
other countries. It could force operators to relocate their
operations offshore causing domestic production of needed
commodities to be eliminated or reduced.
It creates a bypass of Congressional authority for approval
of land withdrawals and creates the potential of expanding
administrative authority to close vast amounts of public lands
and access not only to mining operations but access to the
general public. It establishes unattainable environmental
regulations that could mire any mining claim in litigation,
should it be able to move forward despite the excess of cost
and bureaucratic red tape.
My district encompasses over 110,000 square miles. Of that,
mining operations are less than 6,000 square miles. There is
still over 100,000 square miles for other land uses. Mining has
been a good steward of the public lands, and has benefitted
many of the communities in my district. I urge the Chairman to
take a more measured approach to any reforms having to do with
the Mining Law of 1872. Thank you, Mr. Chairman. I yield back.
Mr. Costa. Thank you, gentleman from Nevada. I will now
recognize----
Mr. Sali. Mr. Chairman?
Mr. Costa. Yes.
Mr. Sali. Can I make a brief statement?
Mr. Costa. Yes, when I recognize you. We have the gentleman
from Arizona who is the Chairperson of the National Parks,
Forests and Public Lands who I was going to recognize at this
time.
Mr. Grijalva. Thank you, Mr. Chairman, and let me just
thank you for your indulgence in allowing me to sit in on this
meeting. I appreciate that very much. My statement I will
submit for the record, and the overlap on the public lands and
the very important piece of legislation that our committee
Chairman has brought forth, 2262, is a vital piece of
legislation. It affects the public lands in this country in a
very direct way, and the taxpayers in a very direct way, and I
am grateful to you and the Ranking Member for holding this
hearing. Thank you.
Mr. Costa. Thank you, the gentleman from Arizona and my
friend and colleague. I will now recognize Mr. Soto for a brief
statement.
STATEMENT OF THE HON. BILL SALI, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF IDAHO
Mr. Sali. That actually will be Mr. Sali.
Mr. Costa. I am sorry.
Mr. Sali. Well, Mr. Chairman, as with most things in life,
it really boils down to your perspective, and while I
appreciate the fact that the good Chairman has been to Idaho, I
think it makes a difference when you actually live in the West,
and with due respect, West Virginia is not the West.
It makes a difference when you have actually been engaged
in mining. I have. It makes a difference when you have been
involved in mining trying to turn a profit. That gives you a
special perspective. I have. Mr. Chairman, there are some
issues that I think are problematic with the bill draft that
has been introduced by the Chairman.
Number one, there is really going to be a discouragement of
mining with the provisions that have been added here, as the
Ranking Member points out. The fees and royalties that will be
charged are going to be a discouragement to mining for those
who are trying to actually make a mine work and earn a profit
from it. There are no incentives that are set in place to
offset those things that will discourage mining.
It will only serve to further regulate one of the most
regulated industries in the land, and as a result of all that,
I think it will have two results. The first is it will increase
our dependence on minerals from foreign sources, and I think
the thing that we ought to compare that to is, for example, our
importation of oil and gas in this country. When we import 60
percent of our oil from foreign countries and then we gripe
about the fact that OPEC is actually the one that is setting
our prices that we pay at the pump, we need to consider very
strongly setting a similar policy for mining in this country.
Finally, the end result will be if we discourage mining in
this country we will not only end up with that shortage of
domestic mining--which will be a national security issue--we
will at the end of the game export a number of jobs. Many of
those are high paying union jobs which will go away in this
country. I think we have to keep all of those perspectives in
mind as we proceed with the hearing of this bill. Thank you,
Mr. Chairman.
Mr. Costa. Thank you, Mr. Sali, and certainly the gentleman
from Idaho is entitled to his opinion. I am not going to get
into a debate at this time. I would hope that your concerns
with regards to the legislation does not at all attempt to
impugn or question the author's sincere desire to make changes
and reform. We can agree to disagree. We have an industry that
has had record profits, and I would submit to you that our
importation--which we all I think lament of energy--is not
because we do not encourage energy development in the United
States or limit it. We consume more energy than we have in the
United States is part of our problem, at least the energy we
like to use which is cleaner burning energy.
But again I am not going to get into a debate because we
want to hear our witnesses. Senator Craig, who called last week
and talked about his desire to testify before the Committee,
his long history as the distinguished Senator from the great
State of Idaho, who has long worked in this issue as well as
many other issues that he and I have worked on together,
indicated that he would very much like to be here and to see
his old friend, Mr. Rahall, and to give us the benefit of his
insights on how we might deal with this issue.
So, we are very much looking forward to his testimony, and
the Chair will now recognize the Senator from the great State
of Idaho for five minutes.
STATEMENT OF THE HONORABLE LARRY E. CRAIG,
A U.S. SENATOR FROM THE STATE OF IDAHO
Senator Craig. Well, thank you very much, Mr. Chairman.
Should I say Chairmans all?
Mr. Costa. We have a few here.
Senator Craig. Yes, you do, and I appreciate that. It is a
great opportunity for me, and I thank you for allowing me this
opportunity. Mr. Chairman, you are correct. We have worked on a
variety of issues together and continue to do so. Chairman
Rahall has spoke a bit of our history together as we have
worked on this issue, and I would agree between he and I
together we collectively probably have as much or more
knowledge on 1872 Mining Law, other than Jim Zoia sitting in
the back of the room over there, and I have always blamed the
Chairman's ill-gotten direction on this issue to Zoia, not to
him. So it is understandable.
But having said that, let me also recognize my Congressman
Bill Sali for being here this morning. He resides over a
district that at one time was one of the largest mining
Congressional districts in the nation, and I was its
Congressman, and it was the second largest economy of that
Congressional district when I was its Congressman in 1980.
Mining is probably now fourth, possibly fifth.
As a result of international markets and access to public
land mining base resource, our world changed dramatically. Last
I checked in Idaho, a few moments ago, the average wage was
nearly $30,000 but the mining wage was $44,000 a year. So the
point made is an important point as it relates to bits and
pieces of the economy, Mr. Chairman, but let me talk this
morning in a broader sense and specifically in general to what
you are attempting to do here because I am one of those who
believes that great nations rely first upon themselves and
second upon the nations around them.
I am concerned because I do think we have an energy crisis
in this country that we have grown increasingly reliant on
foreign sources and less on our own. I am increasingly
concerned that that might happen in our food supply, and you
and I have engaged in that as we cannot get a policy together
that allows our large specialty crop producers, primarily, to
have access to a labor force that allows them to farm and
supply for the retail markets of our country, i.e., our
consumers. You have a migration going on in your district
today, and it has not happened in Idaho yet because of our type
of cropping but that migration is to take American capital,
American know-how and move it offshore because we cannot do it
here.
I believe--and let me put it in this vernacular because I
think that Chairman Rahall understands it--I believe that
mining is not the canary in the coal mine but it is the canary
of an economy. It is an indicator of whether a nation can
sustain its economies. Now for example, we are interested in
energy. Copper today is a major component in hybrids, in
automobiles. It will continue to be, if we move our country
toward electric transportation, ever increasingly valuable, and
as a result of that I think it is tremendously important that
we recognize the value of that mineral once again.
Silver connectivity. When Chairman Rahall and I were
debating silver 20-plus years ago, it was a value added. It was
a numismatic metal. Today it is an industrial metal. It
connects our fingertips to the digital world. Increasingly
valuable.
Gold still is little industrial, largely numismatic, but
extremely valuable to the economy and the base resources of our
state, and as Congressman Heller has said it, a big piece of
his economy in his state. So, for just a moment, let me look at
the bill that is before you. I am very familiar with some of
its provisions. Let me lay out a couple of thoughts.
First, in order for a domestic industry to succeed it must
be allowed a profit, and I think it is tremendously important
that we recognize profitability, and I have supported a royalty
on hardrock metals. We did in the last dust up that we tried to
get to some years ago but how we formulate a royalty, how we
calculate it in relation to investment and return on investment
and capital realized is going to be very, very critical or we
will blight the ability of our industries to perform.
That coupled with the reality of the cost of doing business
today, a world of difference from the cost of doing business
even 20 years ago when we first started debating this issue in
this room and in this subcommittee, that world and those costs
have changed dramatically, and I think we have to be
increasingly aware of that reality. Discovery. Very important.
The allowance of discovery.
I always really laughed a little bit kind of down inside
when the environmental community would say, ``Well, we will
block this land off over here and you can go mine there.'' They
had forgotten the age old adage that the gold is where you find
it and, once found, the principle of the 1872 Mining Law was
once discovered development and the right to do so under a
patenting process.
The right of discovery remains important today but more
important than all of that, once discovered, is tenure. How do
we secure tenure for a company to make the kind of long-term
investment it takes to sustain an operation and to continue to
produce through the life of the resource itself? So, I am going
to look a little less at patenting and a lot more at tenure and
the stability of tenure than I maybe once did because I am
willing to adjust to the economies and realities of the
industry.
At the same time, I understand the importance of what we
are about. Now, having said that, I brought an organization to
Idaho some years ago called the Center for the New West. So you
see, Mr. Chairman, I believe there is a new West out there, a
much different appreciation for our lands and all of their
resources than there was in 1872, than there was in 1982 and
1984 and 1986 when I was here in this committee.
At the same time, there is a reality of balance. If we look
at the old 1872 Mining Law itself and say, ``Here it is. Here
are the books,'' then let us also put all of the case law with
it that would fill this table, and then--and you are going to
be hearing from the BLM that is the primary land steward of the
subsurface right. They are the ones that sit down with the
mining company and develop a mining plan and put it together
and link it to bonding and link it to how they will practice
upon the land as it fits with all the resources around in an
environmentally sound way.
So dovetailed into the 1872 law is the Clean Air Act and
the Clean Water Act and the Endangered Species Act and on and
on and on. The 1872 Mining Law as Grant signed it is a very
different law today. Its primary premises remain but it has
grown to be a very different law in a very different world in a
very different public land environment, and that is something
that is extremely important.
And so in recognizing all of that I think it is important
that we write something that is clear, that is practical, that
is reasonable and understandable, that returns to the owners of
that public land, the American citizenry some value for the
resource that they have allowed development of. I have no
difficulty with that. But I am going to make sure that the
bird, that canary when it breathes deeply does not fall over on
its side and die because I do believe that mining must remain a
basic part of the fundamental reality of what we do.
Good Samaritan liability coverage. OK. Let us see what we
can do to handle that. Reclamation. Absolutely. Abandoned mine
lines, a legacy of the past. How can we deal with it in a way
that lessens the human liability and in some instances
environmental liability from mine seepage and all of the kinds
of things that can and do happen in certain mining settings?
Let me close with this thought. Senator Reid and I are very
close on this issue and have worked closely on this issue for
some time, and I visited with Senator Reid prior to coming over
because I want to make myself very clear. It is suggested by
Chairman Rahall that while the House has passed on several
occasions mining law reform that maybe we have been the enemy
of the good. Over on the Senate side I would like to suggest
that maybe we are the caretakers of the future. The viability
of the economy of a mining industry.
But having said that, both Senator Reid and I agree that if
change can be made we ought to make it, but I would hope we
would work together to do so because a bill that does not
represent the reality of where we are but has a message more
than a practicality probably does not get as well received in
the Senate as it might ought to. I am Ranking on the Public
Lands Subcommittee. We will give it due diligence.
At the same time, I think both Senator Reid and I are
extremely concerned that the Carlin trend remains viable. That
the economies of my state, the economies of Nevada, are in
large part fed by the resources of those joint areas of natural
phenomena, basically known as microscopic gold, and I do not
want to blight that, and we will not blight that in any way.
Last, thank you again for your diligence, your tolerance,
the time you have offered. Both Senator Reid and I were at a
press conference yesterday, and we were looking at a fire
burning in Idaho and in northern Nevada called the Murphy
Complex. As of yesterday it burned 628,000 acres. It may have
gotten to 700,000 acres last night, a very large fire burning
across the borders of Nevada and Idaho.
We had it up on a wall on a map, and we were talking with
the Secretary of Interior and the acting Director of the BLM,
and it was just a spot on a map in a very big area but to bring
it into context at 620,000 acres it was 80 percent the size of
Rhode Island, and it was hardly a spot on a map in the State of
Idaho and Nevada. I think that the Congressman from Idaho and
what the Congressman from Nevada are saying is let us not lose
our perspective as to the reality of what we deal with, and in
doing that, we will work together to see if we cannot modernize
a very valuable law to our country. Thank you.
[The prepared statement of Senator Craig follows:]
Statement of The Honorable Larry E. Craig,
a U.S. Senator from the State of Idaho
Chairman Costa and Ranking Member Pearce and members of the
subcommittee, I appreciate you allowing me to testify on a subject that
I have not only been a proponent of, but also involved in since I was a
member of this subcommittee.
I believe it is appropriate that I begin this discussion by
pointing out our increasing reliance on foreign mineral sources. Not
unlike energy, Americans depend heavily on a variety of mineral sources
for everything from the cars we drive, to the pharmaceutical drugs we
take.
This country must wake up and realize that energy and minerals are
a key component of national security. Transportation, national defense,
and growing economies are all subject to domestic energy and mineral
resources. In fact, some have used hybrids as a piece of the energy
savings pie, but hybrids require significantly more copper than our
traditional cars. As legislators, we must recognize our vulnerability
and ensure that we do not make it worse.
According the USGS, the U.S. reliance on mineral imports has nearly
doubled over the past decade, and with the rising economies like China,
it will only get worse. Looking into the 21st Century and the
continuing development of the U.S., China, and other countries, our
needs and dependence will not diminish--they will intensify. That is
why America and its economy can't survive without mining policy that
promotes domestic mining in a way that is environmentally responsible.
In 2006, U.S. metal mines produced $23.5 billion worth of metal
ores and generated some 170,000 jobs. In Idaho, mining often provides
some of the highest paying jobs to our communities and is generally the
sole driver to those rural economies.
As you know, Mr. Chairman, most of our country's hardrock minerals
are located on federally owned lands, which hold the highest
environmental standards. Many opponents of mining point to the years
before most of our time and the mining practices that have occurred
then, and not the practices that are in place now.
We often talk about the 1872 Mining Law as a legacy, but outdated
law. However, since Eisenhower signed what has become a valuable piece
of legislation, many other presidents have signed laws that many would
argue have strengthened environmental law including the 1872 act. The
Clean Water Act, Clean Air Act, NEPA, FLPMA, RCRA, not to mention
agency directives and the mounting litigation are all part of the
myriad policies that direct what does and does not happen on our public
lands.
I know this is a legislative hearing on Chairman Rahall's bill, and
I would like to take this opportunity to provide some thoughts on a few
concepts raised in this legislation, in no particular order.
First, in order for a domestic industry to succeed, it must be
allowed to profit. Having said that, we are at a time where public land
royalties are a necessary for mining law reform to pass. Whether you
are cutting timber, grazing cattle, or drilling for oil, you pay a
royalty, and mining shouldn't be any different.
However, the royalty must be carefully set and be reasonable to
avoid choking out our domestic industry. An eight percent net smelter
return royalty doesn't mean anything if there isn't an industry to
apply it to. Additionally, it should not be the intent of this Congress
to apply this royalty to already-discovered minerals and change the
rules in the middle of the game.
Second, while patenting may be the practice of the past, the
investment longevity isn't. In order for this industry to continue
developing its resources, investments will have to be stable and long
lasting. I am sensitive to my state, which generally promotes access
for recreation, hunting, and grazing. However, we must look for ways to
secure tenure to the companies that continue to provide the needed
minerals our economy depends on.
Third, Congress must be very careful not to bottle neck the lands
open to location. Again, limiting our domestic ability to locate and
mine essential minerals will only increase our reliance on foreign
sources.
Fourth, the American people insist on financial assurance and the
ability of industry to reclaim lands. Recent changes to the financial
assurance regulations for mining on federal lands have made a
difference. I believe the mining industry today has captured the
confidence of the people who have taken the time to visit and research
current mining practices and reclaiming techniques.
And lastly, we must improve our ability to reclaim and restore our
land and water resources by improving the way abandoned mine land funds
are distributed and creating comprehensive Good Samaritan liability
coverage. In order to address old practices, we must provide resources
to return portions of our public lands back their historic beauty.
I believe many of the concepts addressed in this legislation are
important and must be debated. However, I am very concerned that this
legislation could kill a very important domestic industry.
I have watched over the years as robust logging, ranching, and
mining industries suffer over what I believe have been unintended
consequences by the interpretation of federal laws by activist judges.
We must be cognizant of our past mistakes and ensure we do not repeat
those same mistakes. We can avoid that by clearly laying out the intent
of this Congress.
I am the Ranking Member on the Public Lands and Forestry
Subcommittee in the Senate, and I hope to address many of the issues I
have raised here. Senator Reid and I have worked together on mining
reform for many years, and we continue to work to ensure that Congress
moves legislation that can work for industry while balancing
environmental concerns.
We hope to work in a bicameral fashion and pass overdue mining
reform this Congress. Again, I appreciate the opportunity to
participate here today, and I look forward to working with you on this
important issue. With that Mr. Chairman, I conclude my testimony.
______
Mr. Costa. Thank you very much, Senator Craig, for your
very comprehensive statement, and we will look forward to
working with you. I know the author of this legislation, as I
am, is very mindful of the fact that I have never seen a one-
house bill be successfully signed into law. Consequently, we
are going to have to work together, and you bring a great deal
of knowledge to the table, and we will look forward to working
with you and Senator Reid. It is one of the reasons that I
decided to hold the Subcommittee field hearing in Nevada
because of our recognition of the importance to the issue of
not only Nevada but other western states. So, we will look
forward to continuing to work with you.
Senator Craig. Well, thank you. I know Senator Reid has
said he will be at the hearing, and I am going to try and make
it down for it. So, we will hope to see you. Where is that
going to be?
Mr. Costa. Elko, Nevada.
Senator Craig. Elko.
Mr. Costa. Not far from Idaho.
Senator Craig. You will love Elko.
Mr. Costa. I know. I have been there before.
Senator Craig. All right.
Mr. Costa. They have great cowboy poetry there in the
wintertime.
Senator Craig. That they have.
Mr. Costa. Yes. All right.
Senator Craig. Thank you.
Mr. Costa. If members have some questions that they would
like to opine of you, I am sure you will respond. The issue of
royalties I would like to get more thoughts from you as we deal
with oil and gas, what comparatively would be a level of
fairness in hardrock and the other issues on cleanup I am
interested in your thoughts as well. All right. OK. We will
move on.
Mr. Rahall. Mr. Chairman?
Mr. Costa. Yes.
Mr. Rahall. Mr. Chairman, may I just say in response to the
Senator that I appreciate his testimony this morning and the
manner in which he expressed a willingness to work together. I
also have visited with Majority Leader Reid on this issue
alone, and he has expressed a willingness to work together. In
the testimony he gave, there is not much I could disagree with.
Certainly we all want to see industry make profits. I
represent the coal industry. As you know, Larry, we have
traveled throughout the West when I was Chairman of this
subcommittee, visited about every mine I can think of whether
it be silver, copper, uranium, regardless. We had an extensive
set of hearings on this legislation.
We are going to have some more hearings under Chairman
Costa, and I think in response to the gentleman from Nevada,
just because I am from West Virginia I know a little bit about
mining in the West too, having been in those mines, and we have
a mining industry in my state too, which we did not devastate
by any Federal surface mining law 30 years ago almost this very
day. So we can have Federal legislation and not put the
industry out of business. Thank you.
Mr. Costa. Thank you, Senator, and thank you Chairman
Rahall. In conversation with the gentleman from Nevada, I know
he knows that you know about mining. It was the gentleman from
Idaho who was not certain of your acumen in over 30-plus years
of mining in West Virginia, but I know sometimes those guys out
in the West all look alike. I want to get on with our testimony
here.
We have our first panel, and that involves the witnesses
Mr. Henri Bisson, Deputy Director of the Bureau of Land
Management; Mr. John Leshy, former Solicitor General of the
Department of Interior; Ms. Jennifer Martin, Commissioner of
the Arizona Game and Fish Commission; Mr. J. P. Tangen, former
Regional Solicitor of the Department of Interior for Alaska. I
think we have everybody who we have asked to testify in this
first panel.
You have all come forward as you have, and as I look at the
table I know that there is a lot of expertise that we will
benefit from and also experience in testifying before
Congressional committees. With that said, we have those lights
that are in front of you, and they are there for a reason,
notwithstanding sometimes our unwillingness to comply with
them. But we would appreciate the witnesses keeping their
statements within five minutes.
Certainly that is why we provide the opportunity for longer
written statements to be submitted for the record and for us to
benefit in more in-depth information that you may have and want
to provide the Committee and, of course, we will ask questions
beyond the time that is allowed for this first panel, and we
will submit those in writing to you for any follow up. With
that said, the Chair now recognizes Mr. Bisson, who will now
testify for five minutes.
STATEMENT OF HENRI BISSON, DEPUTY DIRECTOR,
BUREAU OF LAND MANAGEMENT
Mr. Bisson. Thank you, Mr. Chairman and Chairman Grijalva
and members of the Subcommittee. My name is Henri Bisson. I am
the Deputy Director of the Bureau of Land Management. I thank
you for the opportunity to present the views of the Department
of the Interior on H.R. 2262, the Hardrock Mining and
Reclamation Act of 2007. On October 25, 2001, the Department of
the Interior urged Congress to resolve contentious issues
surrounding the mining law that had been raised by the states,
industry and the environmental community in a way that provides
stability to the industry and improves our environment.
While H.R. 2262 provides comprehensive revisions to the
General Mining Act of May 10, 1872, as amended, we do not
believe it accomplishes these goals. Instead, this bill could
harm the domestic production of mineral resources. These types
of mineral resources are essential to economic growth, advanced
industry and technology and improve the quality of everyday
life for Americans. We therefore cannot support the bill as
drafted.
We often take for granted the availability of computers,
telephones, clothing, toothpaste, cosmetics, medicines, cars,
sports and recreation equipment, appliances and sundry other
items that make our homes safe, convenient and comfortable.
None of these would exist without the types of minerals
produced under the 1872 Mining Law. The phenomenal advance of
culture, science and technology remains dependent on mineral
resources.
Any legislation that increases the cost of domestic metal
production could affect the availability of these materials
domestically with potential adverse security and economic costs
to our citizens. In contrast, some of the benefits from the
production of these minerals can be very local, providing jobs
in small communities throughout the West where employment
opportunities are limited. For every direct job in mining,
three supporting jobs are created.
BLM has the responsibility to ensure that minerals
production is conducted in a responsible manner that serves the
social and economic needs of the Nation and protects the
environment. BLM has accomplished this through the principles
of sustainable development, the promulgation of surface
management regulations and the issuance of policy guidance.
Despite the BLM's efforts to administratively improve
mining operations, certain issues cannot be resolved without
additional statutory authority. Unfortunately, H.R. 2262 does
not adequately resolve these issues. Four examples are: H.R.
2262 proposes to prohibit the Secretary from issuing patents
except for those grandfathered under a moratorium. The
Department believes this issue warrants additional
consideration and would like to work with the Committee toward
resolution.
The Department believes the perspective application of a
royalty or production payment merits further discussion. We are
concerned that imposing a royalty on existing mining claims
could raise constitutional concerns. We believe the legislative
restatement and expansion of existing environmental laws and
standards and codification of the BLM's permitting requirements
in H.R. 2262 is both unnecessary and redundant. This would only
complicate BLM administration of its program and operator
compliance.
We support full and transparent public participation at
appropriate stages. Under NEPA and FLPMA, Congress established
a public process that did not give an individual the ability to
block Federal actions unnecessarily. Certain provisions of H.R.
2262 appear to do just that. The Department remains committed
to continuing to find administrative solutions to emerging
issues as well as working with the Congress and other
interested parties to find legislative solutions to those
problems that cannot be resolved administratively including the
future role of mineral patenting and requiring some form of
prospective royalty or production payment.
Because H.R. 2262, in our view, does not present workable
solutions on these issues, we look forward to working with the
Congress to consider other options. I would be happy to answer
any questions. Thank you.
[The prepared statement of Mr. Bisson follows:]
Statement of Henri Bisson, Deputy Director, Bureau of Land Management,
U.S. Department of the Interior
Thank you for the opportunity to present the views of the
Department of the Interior on H.R. 2262, the Hardrock Mining and
Reclamation Act of 2007.
On October 25, 2001, the Department of the Interior urged Congress
to resolve contentious issues surrounding the Mining Law that have been
raised by the States, industry, and the environmental community in a
way that provides stability to the industry and improves our
environment.
While H.R. 2262 provides comprehensive revisions to the General
Mining Law of May 10, 1872, as amended, we do not believe that H.R.
2262 accomplishes these goals. Instead, this bill could harm the
domestic production of mineral resources; these types of minerals are
essential to economic growth, advance industry and technology, and
improve the quality of every day life for Americans. We, therefore,
cannot support the bill as drafted. We do remain committed to
continuing to find administrative solutions to emerging issues as well
as working with the Congress and other interested parties to find
legislative solutions to those problems that cannot be resolved
administratively. We look forward to working with you toward that end.
Background
For over 135 years, the 1872 Mining Law has served to assure a
reliable and affordable domestic supply of the minerals--gold, silver,
copper, lead, zinc, and uranium--critical to our economy and national
security. The 1872 Mining Law also promoted the settlement of the
western United States by providing an opportunity for any citizen of
the United States to explore the available public domain lands for
valuable mineral deposits, stake a claim, and, if the mineral deposit
could be mined, removed, and marketed at a profit, patent the claim.
Patenting results in the claimant acquiring ownership not only of the
mineral resources but also of the lands containing these mineral
deposits at the statutory price of $2.50 or $5.00 per acre.
By 1976, when the Federal Land Policy and Management Act (FLPMA)
was enacted, settlement of the West was no longer the primary force
driving federal land and resource management policies. FLPMA provides
that the Secretary shall take any action necessary to prevent
unnecessary or undue degradation of the lands. Today, the provisions of
the 1872 Mining Law are implemented alongside the multiple use mandate
of FLPMA.
Mining's Importance to the United States
We often take for granted the availability of gold, silver, copper,
lead, zinc and other minerals and their contribution to the quality of
life we enjoy in this country. In 2006, the total value from domestic
metals production was approximately $23.5 billion. Computers,
telephones, clothing, toothpaste, cosmetics, medicines, cars, sports
and recreation equipment, appliances that make our homes safe,
convenient, and comfortable--none of these would exist without the
types of minerals discovered and developed under the 1872 Mining Law.
As much as we enjoy these conveniences and luxuries, it is the
mineral products used in areas such as agricultural production,
communication, transportation, technology, and national defense that
make a truly profound contribution to our way of life. The phenomenal
advance of culture, science and technology remains dependent on mineral
resources. In an example that is close to home for Americans, the
automobiles most of us drive every day contain nearly 60 pounds of
copper, and the newly popularized hybrid vehicles use nearly three
times as much copper as the average automobile. Furthermore, most
vehicle manufacturers specify that the copper used be ``new'' copper.
In another example, the calcium contained in the vitamin supplements
many of take every day comes from mined calcium deposits.
Metal mining is an international business, with purchasing and
sales conducted through the London Metals Exchange and the New York
Commodities Exchange and secondary exchanges. Metal marketing operates
within a free market system, in which the price is determined by what a
willing buyer and a willing seller agree upon. The international prices
for the metals are fixed daily on the exchanges, and costs of
production control the economics of particular companies.
In contrast, some of the benefits from production of these minerals
can be very local, providing jobs in small communities throughout the
West where employment opportunities are often limited. For every direct
job in mining, three supporting jobs are created. Producers must buy
fuel, pipes, wire, and other industrial products, and as a general
rule, these requirements are contracted out to local fuel distributors,
hardware suppliers, and related businesses. Producers pay Federal,
State, and local taxes, both income and property taxes.
BLM's Management and Regulation of Mining
BLM has the responsibility to ensure that, as with other multiple
uses, minerals production on Federal lands is conducted in a
responsible manner that serves the social and economic needs of the
nation and protects the environment. BLM has accomplished this through
the principles of sustainable development, the promulgation of surface
management regulations, and the issuance of policy guidance.
Sustainable development is the basis for a policy framework that
ensures that minerals and metals are produced, used, and recycled
properly. In the context of mining, the United States joined 193 other
nations in 2002 in signing the Sustainable Development Plan of
Implementation applicable to mineral resources.
BLM's surface management regulations were issued under the
authority of FLPMA in 1981 and amended in 2000 and 2001. The
regulations seek to provide protection of the public lands from
unnecessary or undue degradation during hardrock mining and reclamation
of areas disturbed during the search for and extraction of mineral
resources.
The 2000 and 2001 revisions to BLM's surface management regulations
incorporated many of the recommendations of the Congressionally-
mandated study by the National Research Council (NRC) Board on Earth
Sciences and Resources in its report, ``Hardrock Mining on Federal
Lands (1999).'' The study examined the environmental and reclamation
requirements relating to mining of locatable minerals on public lands
and the adequacy of those requirements to prevent unnecessary or undue
degradation of public lands.
Under the regulations, all mining and milling activities are
conducted under a plan of operations approved by BLM, and following
environmental analysis under the National Environmental Policy Act
(NEPA). BLM must disapprove any mining that would cause unnecessary or
undue degradation of the public lands. A mining operator, as well as an
exploration operator (exceeding casual use), must provide financial
guarantees covering the full cost to reclaim the operation. BLM may
require an operator to establish a trust fund or other funding
mechanism to ensure the continuation of long-term treatment to achieve
water quality standards and for other long-term, post-mining
reclamation and maintenance requirements after a mine is closed. In
response to previous GAO recommendations, the BLM has implemented a
tracking system under which BLM state directors are required to certify
each fiscal year that the reclamation cost estimates for proposed and
operating mines have been reviewed and are sufficient to cover the cost
of reclamation. Currently, the BLM holds financial guarantees in excess
of $900,000,000 to cover the costs of reclamation of mining operations
on BLM-managed public lands.
BLM policy guidance was set out in 1984 and updated by the BLM
Director in 2006. The guidelines promote balancing environmental,
social, and economic needs while practicing environmental stewardship
and promoting stakeholder participation. These efforts include:
reviewing and processing notices and plans of operations
to prevent unnecessary or undue degradation;
requiring financial assurances to provide for reclamation
of the land; and
considering alternative forms of reclamation after a mine
is closed such as using the land for landfills, wind farms, biomass
facilities and other industrial uses, in order to attract partnerships
to utilize the existing mine infrastructure for a future economic
opportunity.
In 2005, the Administration completed an assessment of the BLM
Mining Law Administration Program that, in addition to highlighting
options for BLM management improvements, reiterated the point that the
program suffers from deficiencies relating to its enabling legislation,
the 1872 Mining Law. In particular, this review noted that the program
is operating under several temporary authorities, producers do not
compensate the government for minerals extracted from Federal lands,
and the program lacks clear authority to assess administrative
penalties.
Congressional Moratorium on Patenting
In the FY 1995 Interior Appropriations Act (and in each succeeding
year to date), Congress prohibited the Department from accepting new
mineral patent applications or processing those applications which had
not reached a defined point in the patent review process. Congress
authorized the Department to continue to process those applications
that were grandfathered under the moratorium and also required an
annual report to Congress on the status of BLM's progress. When the
moratorium was first put into effect in 1994, 626 patent applications
were pending, of which 221 were subject to the moratorium and 405 were
grandfathered and not subject to moratorium. Of those 405 grandfathered
applications, 38 remain for BLM to process as of this date. The
Department transmitted the most recent status report on mineral
patenting to Congress on June 27, 2007.
H.R. 2262
Despite the BLM's efforts administratively to improve mining
operations, certain issues cannot be resolved without additional
statutory authority. Unfortunately, H.R. 2262 does not adequately
address these issues. We offer four examples for discussion in this
testimony.
Patents on Mining Claims
Under the 1872 Mining Law, any citizen who can prove to the
satisfaction of the Secretary of the Interior the discovery of
commercially exploitable hardrock mineral deposits on the public lands
and who has complied with all other applicable requirements may obtain
a property right in both the minerals and the surface lands within the
boundaries of the mining claim. This provision encouraged explorers and
settlers to move West during the decades following the Civil War. H.R.
2262 proposes to expand on the current annual appropriations moratoria
and permanently eliminate the issuance of patents, except for those
grandfathered under the moratorium that began in 1994. While expansion
of the West is no longer relevant, the Department believes this issue
warrants additional consideration and would like to work with the
Committee toward resolution.
Royalty
A second key aspect of the 1872 Mining Law is that it grants
citizens the right to develop and extract hardrock minerals from the
public lands. Under the 1872 Mining Law, a hardrock mining operator is
not required to pay the government any percentage of the value of the
minerals extracted in the form of a royalty or production payment,
although profits from mining operations are subject to Federal and
state income tax. At least until 2008, payment of a $125/year
maintenance fee also is required by the Mining Law, as amended by
various Appropriations Acts.
In contrast, Federal coal and onshore oil and gas resources remain
in Federal ownership and are leased by the Federal government subject
to a royalty, as provided under applicable laws. In 2006, the Federal
government collected more than $3.6 billion in royalty payments from
these onshore (non-Indian) leases.
The Department believes that the prospective application of a
royalty or production payment issue merits further discussion. However,
we are concerned that a royalty or production payment applied to
existing claims could raise Constitutional concerns.
Environmental Compliance
Hardrock mining operators on public lands are required to comply
with existing state and Federal laws, including the Clean Water Act;
Clean Air Act; Endangered Species Act; Federal Land Policy and
Management Act (FLPMA); National Environmental Policy Act (NEPA); and
National Historic Preservation Act. We believe that these existing
statutes and related regulations provide sufficient authority to
regulate mining operations when properly monitored and enforced by
state and Federal regulatory agencies. BLM's 2000 and 2001 revision to
its surface management regulation discussed earlier provide a sound
framework to prevent unnecessary or undue degradation of the public
lands and are consistent with the recommendations of the National
Academy of Sciences. These regulations were upheld by the D.C. District
Court in 2003. We believe the legislative restatement and expansion of
the existing environmental standards and permitting requirements in
H.R. 2262 are both unnecessary and redundant and would only complicate
BLM administration of its program and operator compliance.
Procedural Concerns
We support full and transparent public participation at appropriate
stages. Under such landmark statutes as NEPA and FLPMA, Congress
established a role for members of the public and structured a process
by which the public could make their views known about a proposed
governmental action--approval of a mining plan of operations, for
example--to agency decision-makers. This role has been appropriately
implemented through BLM regulations and policy. What Congress did not
do in those statutes was give an individual the ability to block
Federal actions unnecessarily. Certain provisions in H.R. 2262 appear
to do just that.
Congress has entrusted to the Secretary of the Interior the final
decision as to whether a petitioning party has met the requirements of
the law concerning the issuance of a lease, right-of-way, or the
granting of a land or mineral patent. The Secretary exercises this
authority judiciously. For example, of the 405 grandfathered patent
applications, the Secretary has contested the validity of 99
applications, and another 80 were withdrawn by the applicants, at least
in part due to concerns raised by the Department. We see no purpose in
disturbing the Secretary's long-established authority in this area of
public land administration.
Conclusion
The Department remains committed to continuing to find
administrative solutions to emerging issues as well as working with the
Congress and other interested parties to find legislative solutions to
those problems that cannot be resolved administratively, including the
role of mineral patenting and requiring some form of prospective
royalty or production payment. Because H.R. 2262, in our view, does not
present workable solutions on these issues, we look forward to working
with the Congress, industry, the environmental community, and other
interested parties to consider other options. I will be glad to answer
any questions.
______
Mr. Costa. Thank you, Mr. Bisson, and at the appropriate
time I believe there will be questions for you. The Chair would
now recognize Mr. Leshy to testify for five minutes.
STATEMENT OF THE HONORABLE JOHN LESHY, FORMER SOLICITOR, U.S.
DEPARTMENT OF THE INTERIOR
Mr. Leshy. Thank you, Mr. Chairman. I appreciate your
invitation to testify here today, and it is nice to be back in
this room, and nice to be addressing this issue in the Congress
again as we all have for many years. I want to make three
points. First, why is reform of the mining law important? The
mining law is actually applicable to somewhere between 3 and
400 million acres of Federal land. That is about four times the
size of California, and it can affect many more acres than that
because mining, like it or not, is a dirty and disruptive
business. It involves moving vast amounts of earth. It involves
chemicals like cyanide and mercury. It can have great effects
on water pollution, wildlife habitat, et cetera.
It is also a major industry. It is a multi-billion dollar
industry, and it can, the mining law can, absent annual action
by Congress, lead to the privatization of public lands, and in
fact over the years something more than 3 million acres of
public land, an area about the size of Connecticut, has been
privatized under the mining law.
Second, what is wrong with it? Well, to reiterate points
that have already been made, one thing that is wrong with it is
that the mining law does allow a privatization, and in this it
is really terrifically out-of-step with just about every other
public land policy. This country made a decision dating back
seven or eight decades ago to essentially keep public lands in
public hands, and the mining law is sort of the last remaining
glaring exception to this policy.
Second, another glaring exception to contemporary public
land policy, the owners of these minerals are not compensated
for their extraction and use. That is the owners being the
American public, the American taxpayers. The mining law makes
the Federal lands about the only place on this planet where the
owners of the minerals are not directly paid when the minerals
are removed. If you mine on private lands, if you mine on state
lands, if you mine in any country elsewhere in the world, you
are paying the owner of the mineral a royalty. The Federal
lands under the Mining Law of 1872 is about the only place
where this does not happen.
Today, as we all know, every other user of the public
lands, whether it is a rancher, a hunter, a fisherman, a timber
harvester, all pay the United States something for the
privilege of using and extracting that resource. Not so under
the mining law.
Third, the mining law has some or at least grafted onto the
mining law has been some environmental regulation but that
environmental regulation is unfortunately inadequate. It is not
comprehensive. It does not address things like balancing the
use of Federal lands for mining against other uses such as
wildlife habitat, and it has regulatory holes in it such as
groundwater and groundwater pollution which are not regulated
under the Clean Water Act and other environmental laws. So
there are some big problems with the mining law, and this has
been recognized by study commissions, blue ribbon commissions
that go back 100 years.
Third, why now? Why is now an important time, an
appropriate time to reform the mining law? First of all, I
think industry or at least more progressive segments of the
industry are ready for it. They understand that it is
increasingly difficult to defend these kinds of special
exemptions from contemporary policy, a contemporary public land
policy. Second, the West where the mining law operates and only
operates has changed dramatically in the last 20 years since
this Congress last seriously considered reform.
The West has changed. It is the fastest growing and most
urban region in the country. Its politics have changed. Now
there are hunters and fishermen and local governments and
ranchers and farmers who are concerned because the mining law
still applies to about 60 million acres of land where the
Federal government owns the minerals but not the surface.
So ranchers and farmers find themselves looking out on
their lands and companies are staking mining claims on it to
get at the Federal minerals underneath. The surface owners have
inadequate ability to deal with those mining proposals. The
tourism industry, which is a huge industry in the West now, and
the residents of the West, generally whose quality of life
depends on those open spaces, all look at mining differently
today. They all look at it and say, ``Why are these special
exemptions justified?''
So that these special favors that the mining industry
enjoys under the mining law really are increasingly difficult
to defend. So for that, I applaud this committee in taking on
this really important public land issue. Reforming the mining
law would be a huge legacy issue for future generations of
Americans, and it would bring this industry into the 21st
century. Badly needed. Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Leshy follows:]
Statement of John D. Leshy, Harry D. Sunderland Distinguished Professor
of Law, University of California, Hastings College of the Law
I appreciate your invitation to testify today, and I especially
appreciate this subcommittee taking the initiative to address reform of
the Mining Law of 1872. There is no more important task among the
constellation of issues raised by our public lands, which encompass
nearly one-third of the Nation's real estate and a much larger portion
of its valuable natural resources, including minerals.
I appear here today as a private citizen, expressing my own views,
and not representing any group. I have worked on Mining Law issues for
thirty-five years, in academia, in government and in the nonprofit
sector. I hope in this testimony to provide some larger perspective on
the effort you have initiated with the introduction of H.R. 2262.
Calls to reform the Mining Law date back to a few years from its
passage, and have been made by many U.S. Presidents, from Republicans
like Theodore Roosevelt and Richard Nixon to Democrats like Jimmy
Carter and Bill Clinton. Almost forty years ago, as Stewart Udall was
stepping down after eight years as Secretary of the Interior, he called
its repeal the biggest unfinished business on the Nation's natural
resources agenda.
Signed into law by President Ulysses S. Grant four years before the
telephone was invented, this antiquated relic is the last statutory
survivor of a colorful period in the Nation's history that began with
discovery of gold in the foothills of the Sierra Nevada in 1848. The
mining ``rushes'' that ensued accelerated the great westward expansion
of settlement. And they swept to statehood California (the golden
state), Nevada (the silver state), Montana (the treasure state), Idaho
(the gem state) and eventually Arizona (the copper state). The same era
witnessed the enactment of numerous other laws filling out the
framework for that great movement--laws like the railroad land grant
acts and the Homestead Act of 1862. A generation later, Congress
followed up with landmark laws like the National Forest Organic Act in
1897 and the Reclamation Act of 1902, and a generation after that, with
the National Park Organic Act of 1916 and, in 1920, the Mineral Leasing
Act and the Federal Power Act.
All of those other laws have long since been repealed, replaced, or
fundamentally reformed, often more than once. Today the public lands
and resources are managed under laws like the Federal Land Policy &
Management Act of 1976, the Federal Coal Leasing Amendments of 1976,
the Surface Management Control and Reclamation Act of 1977, the
National Forest Management Act of 1978, the Reclamation Reform Act of
1982, and the Federal Oil and Gas Leasing Reform Act of 1987.
Amazingly, despite the fact that, since 1872, the population of the
U.S. has grown more than seven-fold (from less than forty million to
more than 300 million), the population of the eleven western states
plus Alaska (where the Mining Law principally applies) has grown from
about one million to nearly 70 million, and our society and economy
have changed in ways beyond comprehension, the Mining Law has escaped
fundamental overhaul.
It is not for lack of trying. It has long been recognized that the
Mining Law is thoroughly out of step with evolving public resource
management principles. Indeed, the first Public Land Commission created
by Congress to assess public land policies recommended in 1880 that it
be thoroughly rewritten. That recommendation has been echoed by many
blue-ribbon commissions since. There is widespread agreement that the
Law's three most important shortcomings are as follows:
First, the Mining Law allows privatization of valuable public
resources, at bargain-basement rates. This so-called patenting
feature is the last vestige in federal law of nineteenth
century public land disposal policy. Much abused for purposes
that have nothing to do with mining, it has resulted in an area
of federal land larger than the State of Connecticut passing
into private ownership, much of it in scattershot inholdings
that continue to complicate land uses throughout the West to
this day. While Congress has since 1994 enacted appropriation
riders to forestall new applications for patents, it must do so
each year, or patenting resumes.
The fragility of these riders was driven home in the fall of
2005 by the now-infamous Pombo-Gibbons legislative proposal
that would have lifted the moratorium on new patents and
greatly liberalized the terms of patenting. That ill-conceived
proposal--which passed the House but then died under a storm of
protest--could have resulted in the privatization of more
millions of acres of federal lands.
As long as privatization remains a core feature of the Mining
Law, the temptation remains for future mischief-makers to try
similar stunts. Patenting is not necessary to mine; indeed, the
Supreme Court recognized in 1884 that the ``patent adds little
to the security of the party in continuous possession of a mine
he has discovered or bought.'' Many large mines are found at
least partly on un-patented federal lands. It is time for
Congress to repeal, once and for all, the Mining Law policy
allowing willy-nilly privatizing of the federal lands.
Second, the Mining Law fails to produce any direct financial
return to the public. Mining companies are charged no rental,
pay no royalty, and make no other payment that recognizes that
the people of the U.S. own the minerals being mined. This is
unique in two ways. First, virtually all other users of the
public lands--oil and gas and coal developers, timber
harvesters, energy companies that run transmission lines across
the federal lands, cattle grazers, and even, these days,
hunters, anglers and other recreationists--pay the government
something (in most cases, something like market value) for the
publicly-owned resources being used or removed. Second,
everywhere else hardrock mining companies operate on this
earth--on state or private lands in the U.S., and just about
everywhere abroad--they pay royalties to the governments and
others who own the minerals.
It is time for Congress to close this glaring loophole.
Whatever justification might once have been offered for such a
giveaway of public property--such as when gold had strategic
value and the West was sparsely settled--has long since
disappeared. Today 85% of the gold mined is used to make
jewelry, and the West has long been the fastest-growing region
of the country.
Third, the Mining Law results in inadequate protection of the
environment and other uses of the public lands. All other users
of the public lands who can cause significant environmental
disruption are subject to a straightforward system of
regulation which requires them to minimize the environmental
effects of their activities and clean up any mess they create.
And all other users are subject to the fail-safe authority of
the government to say no to proposed activities that threaten
major environmental harm which cannot be prevented or mitigated
appropriately.
The Mining Law itself is utterly silent on environmental
regulation. While it is the case that operations carried out
under it no longer escape regulation, thanks to laws like the
Clean Water Act, these other laws do not comprehensively
address the myriad of environmental threats posed by hardrock
mining (such as groundwater depletion and pollution and
disruption of wildlife habitat), nor do they weigh the value of
mining against other values and uses of the public lands. The
hardrock mining industry has long used the silence of the
Mining Law on such issues to stoutly contest the reach of the
government's authority over its activities.
The industry has long had powerful allies in the government
on these matters. For example, just within the last few years
my two immediate successors as Solicitor of the Interior
Department issued legal opinions agreeing with the industry
that the Mining Law hamstrings government authority. One
concluded that the government lacks authority to say no to
Mining Law hardrock mining operations proposed for the public
lands even if they pose huge threats to the environment.
Another concluded that the Mining Law gives the mining industry
the right to use as much public land as it thinks it needs as a
dumping ground for the residue of its vast hardrock
operations--operations which these days can involve hundreds of
millions of tons of waste from gigantic open pits several miles
across and a mile or more deep. It is no wonder that the
federal land management agencies continue to feel cowed when
they contemplate exercising regulatory controls over this
industry.
Mining is a dirty business, and must be carefully controlled
to prevent environmental disasters. History teaches not only
that things can go bad with hardrock mining operations, but
when they do, the costs to repair the damage can be enormous.
Well over a century of mining under the Mining Law of 1872 has
saddled the Nation's taxpayers with a cleanup cost for
thousands of abandoned mines that, according to some estimates,
approaches fifty billion dollars. While the industry is now
subject to some regulation, bad things still happen. Montana
and U.S. taxpayers are paying millions of dollars to clean up
the Zortman-Landusky mine in Montana--a mine which was approved
under so-called ``modern'' regulatory standards that the
industry argues are adequate and don't need strengthening.
It is long past time to close these regulatory loopholes and
eliminate these ambiguities so as to make clear to all in the
industry--as well as to federal land managers--that the
hardrock mining industry will be held to the same standards,
and be subject to the same kinds of regulatory authority, that
apply to all other users of the public lands.
* * *
About fourteen years ago, the House of Representatives handily
approved a comprehensive reform proposal introduced by Chairman Rahall
and others. That effort nearly succeeded, failing in the last hours of
the 103rd Congress. In the years since then, much has changed. Today,
Mining Law reform is both more imperative and, in my judgment, more
achievable. I'd like to take a few moments to explain why.
First, the industry structure, operations and economic impact have
evolved considerably. The domestic hardrock industry now produces much
more gold than it ever did--the U.S. is the third leading producer in
the world. And the industry is heavily concentrated, with many fewer
companies and many fewer mines than ever before. More than four-fifths
of U.S. gold production now comes from a single state--Nevada. The four
largest mines, all in Nevada, account for well over half the total
domestic production. The thirty biggest mines (more than half in
Nevada, including twelve of the fifteen largest) yield 99% of total
production. Barrick Gold, a Canadian company, is the biggest,
accounting for about 40% of domestic U.S. (and 8% of world) gold
production. Production of copper and other precious metals are
similarly concentrated. Moreover, the hardrock industry now operates
with such ruthless efficiency that it employs far fewer people than it
used to. Its workers may be relatively well-paid, but they are far
fewer in number and much more geographically concentrated than they
ever were.
In the meantime, the economies of the western states have evolved
rapidly away from their historic roots dependent on resource
extraction. Today the regional economy where the Mining Law applies--
the western states in the lower 48 plus Alaska--has changed
dramatically. While mining used to be a dominant industry in many
western locales, today in most places its impact is small, even
minuscule. The West is now the most urban and fastest growing region in
the country. Moreover, its dynamic growth and economic health are
fundamentally linked to the quality of life provided by the open spaces
and recreational amenities of the public lands.
As a result, the politics of the region have changed at the ground
level. Westerners are increasingly unsympathetic to the idea that the
hardrock mining industry deserves these special exemptions from the
laws and policies that apply to everyone else. It is not surprising,
then, that when the mining industry seeks to exploit its favored
position under the Mining Law, more and more local people--ranchers,
hunters, anglers, retirees, land developers, tourist industry
officials, municipal water providers and other local government
officials--are asking why this nineteenth century policy still exists.
And their concerns are growing because soaring mineral prices,
particularly for gold, copper and uranium, have led to a new rush of
claimstaking under the Mining Law in areas with high values for other
uses.
People in the west are also more familiar than most with the
consequences of failing to control the industry. They live with the
thousands of abandoned mines scattered throughout the region, and are
familiar with the sorry legacy of polluted streams and disrupted
landscapes that will require billions of dollars to repair. And they
resent the fact that, under the current regime, the dollars to pay for
this cleanup will come more from taxpayers than from the industry that
created the mess.
Another noteworthy change in recent years is that, for the first
time, the hardrock mining industry is facing some pressure to reform
from the demand side--the jewelry industry that consumes much of its
product. With leadership from Tiffany and other major jewelers, this
movement has helped persuade some major mining companies, concerned
about their reputations as well as their impacts, to work to improve
their practices and make other accommodations to modern social and
environmental values. In short, the industry is no longer so monolithic
and so reflexively hostile to change.
It bears repeating that the H.R. 2262's reforms do no more than put
in place practices and policies that oil and gas operators, coal
miners, electrical utilities, ski areas, and other intensive users of
the federal lands have operated under quite successfully for decades. I
have no doubt that the innovative, progressive companies in this
industry--and there are some, who have flourished around the world by
being so--will adapt readily to such reforms, just like other public
land users have.
I am also confident that reforming the archaic Mining Law will
not--as some industry spokespeople have ritually maintained--put an end
to the domestic hardrock mining industry. Every year Canada's Fraser
Institute surveys mining industry executives and uses the results to
rank the most favorable jurisdictions in the world for hardrock mining,
considering a variety of factors, including political stability. The
American West is always at or near the top of the rankings.
Furthermore, skyrocketing mineral prices means the industry is thriving
as never before, and any modest increase in production costs that might
result from reforms like H.R. 2262 can readily be absorbed.
Once again, I commend your leadership for taking up this important
issue. You have the best opportunity in a generation to achieve a
landmark legacy in public land policymaking. I stand ready to help any
way I can to move this forward, and I would be happy to answer any
questions you may have.
______
Response to questions submitted for the record by John D. Leshy, Harry
D. Sunderland Distinguished Professor of Law, U.C. Hastings College of
the Law, San Francisco, California
Question 1: The BLM's current ``Part 3809'' Regulations governing
surface management of hard rock mining on federal lands have
been in place since 2001. What is your assessment of the
adequacy of these regulations in terms of protecting the
environment in hardrock mining operations?
Answer: In my judgment, the current Part 3809 Regulations are not
adequate, for several reasons.
First, early on the Bush (II) Administration weakened these
regulations significantly, removing a number of key provisions that had
been added by the Clinton Administration. Compare 65 Fed. Reg. 69,998
(2000) with 66 Fed. Reg. 54,837 (2001). One of the most important was
to eliminate the federal government's so-called ``right to say no'' to
proposed hardrock mines that threaten devastating, uncontrollable
effects on the natural and cultural resources of the public lands.
The Bush Administration acted on the basis of a Solicitor's Opinion
issued by my successor, which overruled an opinion I had issued in
1999. These legal opinions differed on how to interpret a key phrase in
the Federal Land Policy and Management Act of 1976 (FLPMA), where
Congress expressly amended the Mining Law to require the Interior
Secretary to protect the public lands from ``unnecessary or undue
degradation'' (emphasis added). 43 U.S.C. Sec. 1732(b).
My legal opinion was that ``or'' means ``or,'' so that BLM has a
responsibility to regulate hardrock mining on the public lands to
protect against ``undue'' degradation, even if that degradation is
regarded as ``necessary'' to mining. My successor's legal opinion was
that ``or'' really ought to be construed as meaning ``and.'' Thus, in
his view, BLM has no authority to prevent hardrock mining that causes
``undue'' degradation if such degradation is ``necessary'' to mining.
Environmental groups asked a federal court to settle this dispute.
After full briefing and argument, the court ruled that my reading of
FLPMA was correct, and the Department has the responsibility to say no
to proposed hardrock mines that cause ``undue'' degradation even if it
is ``necessary'' to mining.
Somewhat bizarrely, however, the court decided not to set aside the
Bush Administration's removal of the express ``right to say no'' from
the 3809 regulations. Conceding the question was ``indeed extremely
close,'' the court was persuaded by the Department of Justice's
argument that, even if my view was correct and the Bush Solicitor's
view incorrect, those regulations need not contain an express right to
say no because they could still be interpreted as allowing the
Department to prevent ``undue'' degradation. Environmental groups
could, the court reasoned, challenge Interior's implementation of those
regulations if they believed the Department was allowing ``undue''
degradation in particular cases in the future. Mineral Policy Center v.
Norton, 292 F. Supp. 2d 30, 46 n. 18 (D.D.C. 2003). Neither side
appealed this ruling.
In my judgment, this is too important a matter to be left in this
current muddled state. H.R. 2262 would require the BLM and the Forest
Service to deny approval of proposed operations unless they determine
that ``there will be no undue degradation of natural or cultural
resources. (Sec. 303(d)(1)(H); see also Sec. 301(1) (mineral activities
shall be required to ``protect the environment, public health, and
public safety from undue degradation''). By disjoining ``undue'' from
``unnecessary,'' H.R. 2262 makes clear that the government has the
responsibility to say no to a proposed hardrock mining operation if it
finds severe, un-mitigatable adverse impacts would be visited on other
public resources and values.
As I said in my statement to this Committee on July 25, I believe
the public interest requires no less. Every other user of the public
lands--oil or coal company, forest products company, rancher, hunter,
angler, or hiker--is held to that common-sense standard. Hardrock
mining, which has the potential to cause more serious disruption than
any of these others, deserves no special exemption.
The current Part 3809 regulations have other shortcomings. For
example, they inadequately address hardrock mining's potential for
adverse impacts on surface and groundwater supplies, which can be
considerable. The Ninth Circuit recently ruled that existing federal
law did not require BLM to protect water supplies in approving hardrock
mining plans. Great Basin Mine Watch v. Hankins, 456 F.3d 955 (9th Cir.
2006).
They also do not apply to national forest land, and the counterpart
U.S.F.S. regulations (36 C.F.R. Part 228) are even weaker. This is not
surprising, for the Forest Service was long reluctant to do any
regulation of hardrock mining on national forests. Congress gave the
U.S.F.S. express authority to regulate mining to prevent destruction of
the national forests way back in 1897 (see 16 U.S.C. Sec. Sec. 478,
551), but the agency waited more than three-quarters of a century to
adopt its first regulations on the subject. The regulations it finally
adopted in 1974 were relatively tepid and have changed very little
since, despite the vast changes in hardrock mining technology and
practices.
Among other things, they claim authority only to ``minimize''
adverse impacts to the forests. In other words, the Forest Service,
like the Interior Department, currently takes the position that the
government cannot say ``no'' to a proposed hardrock mine on lands it
manages that threatens dire environmental harm. The courts have agreed
that existing law applicable to the Forest Service requires no more.
Okanogan Highlands Alliance v. Williams, 236 F.3d 4676 (9th Cir. 2000).
Neither the BLM nor the Forest Service do a very good job
regulating small-scale mining operations--so-called ``notice only''
mines and wildcat explorations. These kinds of operations can devastate
fish and wildlife habitat, because some of these operators mishandle
toxic chemicals and use earthmoving equipment carelessly. Yet many
times the government land managers (as well as other users of federal
lands and the public) do not even get notice in advance of these
operations, and compliance with laws like NEPA, the Clean Water Act or
the Endangered Species Act are often wanting.
Finally, there is the matter of ``bonding,'' where the government
requires operators to provide financial assurance for cleanup so that
the taxpayer does not foot the bill if the operator defaults or goes
bankrupt. The Part 3809 regulations are better than they used to be on
bonding. (To its credit, the Bush Administration did not water down the
Clinton Administration's stiffening of bonding standards in the Part
3809 regulations intact.) The Forest Service regulations here too are
not as good, leaving it with much more discretion on bonding.
As several governmental reports document, bonds are still sometimes
set at inadequate levels, putting the taxpayers at risk. See, e.g.,
Hardrock Mining: BLM Needs to Better Manage Financial Assurances to
Guarantee Coverage of Reclamation Costs (GAO # 05-377, June 2005)
(reporting on a 2004 survey showing 48 mining operations on public
lands had closed without cleanup since BLM began requiring financial
assurances; in more than half the cases, the financial assurance was
inadequate, to the tune of at least $56 million, to cover the cleanup
costs); see also Environmental Liabilities: Hardrock Mining Cleanup
Obligations (GAO #06-884T, June 14, 2006) (recommending hardrock mining
be given a high priority in developing financial assurance
requirements, because it presents taxpayers with an especially serious
risk of having to pay cleanup costs, with some mine owners defaulting
on multiple occasions, leaving taxpayers to bear cleanup costs);
Environmental Liabilities: EPA Should Do More to Ensure that Liable
Parties Meet Their Cleanup Obligations (GAO #05-658, August 17, 2005);
U.S. EPA, Office of Inspector General, Nationwide Identification of
Hardrock Mining Sites (Report No. 2004-P-00005, March 31, 2004).
Federal officials require financial assurances in the amount
sufficient to repair and reclaim what they forecast will be the adverse
effects of the proposed mine, but their forecasts often prove to be
unduly optimistic. Recent studies show they often underestimate the
amount of environmental degradation from proposed hardrock mines,
particularly from disruption and pollution of water supplies. See Ann
Maest and Jim Kuipers, Comparison of Predicted and Actual Water Quality
at Hardrock Mines: The Reliability of Predictions in Environmental
Impact Statements (2006); and Predicting Water Quality at Hardrock
Mines: Methods and Models, Uncertainties, and State-of-the-Art (2006).
The cost to repair or control that kind of damage can be high, and the
bond amount--which is often calculated simply on the basis of moving
dirt, replacing soil and reestablishing a vegetative cover--can be
woefully insufficient to cover it.
Question 2: Do you think there are any circumstances under which
patenting, or transferring title to federal land to hardrock
mining companies, is ever justified?
Answer: I have thought hard about this question over the years. At
one time, I thought the answer was clearly no--patenting was never
justified. But as I have continued to ponder the matter, I have come to
a somewhat different conclusion, and believe that privatization of the
federal lands involved in large hardrock mining operations can be
justified under certain carefully defined conditions.
I start with the proposition that many, perhaps even most, major
hardrock mining operations in the West are on lands in a mixture of
ownerships--private, state and federal. Often the federal lands,
particularly those where the ore body is found, may be mere slivers or
odd-shaped parcels intermixed with others. See, e.g., Mineral
Resources: Value of Hardrock Minerals Extracted From and Remaining on
Federal Lands (GAO/RCED-92-192, August, 1992).
Giving mining companies title to federal lands involved in these
active, major, heavily capitalized mining operations would consolidate
and simplify ownership and reduce regulatory and other complexities.
After major hardrock mining operations cease, the lands involved often
serve very little public value for other uses. Moreover, continuing
federal ownership can cloud the responsibility for protecting public
health, safety, and the environment from pollution endemic to these
sites.
On the other hand, I can think of at least two federal interests
that ought to be protected.
First, taxpayers have an interest in getting a fair return on
valuable publicly-owned resources. But I see no reason why the U.S.
could not protect this fiscal interest while still privatizing these
lands. Congress could make privatization contingent upon the mining
operation making a payment (lump sum or periodic) to the Treasury to
capture an appropriate share of future income streams made possible by
the use of these federal lands in these mining operations.
Mining companies have sometimes showed a willingness to entertain
such arrangements and pay real money to simplify and secure their land
positions. In the last Congress and again in this one, for example,
legislation has been introduced to approve a complex series of land
exchanges in Arizona between the United States and the Resolution
Copper Company (a joint venture between BHP Billiton and Rio Tinto).
According to news reports, Resolution is seeking to tap a large deep
underground copper deposit. While it already owns or controls
considerable land in the area, it wants title to some federal land
(which may or may not include part of the ore body) to facilitate the
operation. To gain title (through a proposed congressionally-approved
exchange), Resolution is apparently willing to pay the United States
substantially more than it would be required to pay to gain title under
the Mining Law (assuming Congress failed to renew the annual moratorium
on patenting, and assuming Resolution qualified for patents). That is,
Resolution has acquired title to and is offering to trade to the United
States considerable land of high conservation and recreational value.
Not having examined the details of this proposal, I am not prepared to
comment on whether the arrangement represents a fair return to the
federal taxpayer. But it is an example of a major mining entity being
willing to pay genuine value for privatizing federal land in order to
facilitate a major mining operation.
Second, the U.S. should ensure that privatization does not unduly
threaten the environment in general, and nearby federal lands in
particular. So long as the U.S. retains title to some of the lands
affected, some environmental regulations and procedures that attach
only to activities on public lands would continue to apply--such as
NEPA, Endangered Species Act Sec. 7, National Historic Preservation
Act, Native American consultation and protection laws, and parts of the
Clean Water Act. Here too, however, I believe it should be possible,
with some creativity, to fashion ways to protect this federal
environmental interest. For example, privatization could be conditioned
on working out an agreement or compact between state and federal
regulators that establishes a regulatory framework to allow this
interest to be protected.
For these reasons, I think privatizing federal lands involved in
major hardrock mining operations can be considered. I hasten to point
out that Mining Law patenting has a long and sorry history of abuse.
Most of the 3.2 million acres patented have in fact never been used, or
used very little, for mining. Instead, they have been used for
residential or other kinds of development, as private recreational
retreats, spas, golf courses, and many other things. Given that record,
any legislation that retains some opportunity to privatize lands in
connection with hardrock mining must be very carefully drawn.
In short, I think privatization is an option worth considering, so
long as it (a) is narrowly tailored to apply only to active or approved
bona fide major mining operations; (b) retains for the U.S. the
discretion to decide whether, under all the circumstances, the public
interest is better served by deeding the land to the mining company
rather retaining it in public ownership; (c) provides appropriate
compensation to the United States for the fair value of the federal
lands and minerals involved in the land being privatized; and (d)
accommodates federal interests in protecting federal lands and
resources not being privatized through some arrangement worked out in
advance with state regulators.
Question 3: Should uranium be treated separately from other Mining Law
minerals?
Answer: I believe a very powerful case can be made that uranium
ought to be treated more like the fossil fuels and other energy
minerals. Coal, oil and gas, tar sands, oil shale, and geothermal
resources are all governed by leasing systems, most of them dating back
to 1920. These industries have generally flourished under leasing
systems, and the public's fiscal and environmental interests are (at
least for the most part) adequately protected. Uranium is the only
energy mineral treated differently, and only to some extent, for some
federal uranium is already subject to leasing rather than to the Mining
Law--a result of some post World War II withdrawals of some federal
land on the Colorado Plateau which transferred jurisdiction to the
Atomic Energy Commission (the Department of Energy has since succeeded
to this jurisdiction). Moreover, uranium is often found in geological
beds and thus shares characteristics with the other fossil fuels.
Furthermore, there is no justification for continuing to subsidize
the domestic uranium industry (and with it the civilian nuclear power
industry) by allowing publicly-owned uranium to be mined without a
royalty or other payment to the Treasury. As with hardrock mining, past
uranium mining and milling has left a big cleanup bill for the
taxpayer. The government is currently spending many millions of
dollars, for example, to move a large mill tailings pile away from the
banks of the Colorado River adjacent to Moab, Utah, and has spent much
public money in cleaning up uranium mines and mills in the past. And
there is more to do. Consumers of uranium should pay these bills, not
taxpayers. Finally, there is no strategic argument for subsidizing
domestic uranium production (some of which might in fact be exported).
Canada and Australia, two friendly countries, have abundant uranium
resources.
For all these reasons, I believe the idea of simply putting uranium
under the Mineral Leasing Act ought to be given very serious
consideration. It would be a welcome part (but only a part) of Mining
Law reform.
Question 4: What improvements might be made to H.R. 2262? What are
your thoughts on the bill's treatment of the royalty issue?
Answer: As I read H.R. 2262, it applies a royalty only to mineral
ore extracted from federal lands. It does not apply any kind of rental
(other than the claim holding fee already in law) or royalty to the use
of federal lands to support minerals that have already been patented.
Yet it is very common, as I noted in response to question 2, above, for
there to be a jumbled mixture of private, state and federal ownership
of large hardrock mines. Sometimes all or most of the actual ore body
is on non-federal land (often, because it has already been patented
under the generous terms of the Mining Law).
Even where the U.S. no longer owns any part of the ore body, the
federal lands play a key role in bringing the ore body into
production--by providing lands for mineral processing, for dumping
waste rock and mine tailings, and so forth. The United States should,
in my judgment, receive a return for the use of its land in these
circumstances that reflects its contribution, both past and present, to
the overall operation.
Suppose, for example, that the ore body of a large producing mine
was 75% in private ownership, having been previously patented under the
Mining Law, and 25% federal land. And suppose that thousands of acres
of federal land are being used as waste rock dumps and tailings piles
for the mining operation. It seems to me that a royalty or payment to
the Treasury which is limited to the 25% of the ore body still in
federal ownership is inadequate return to the public for this use of
the public's resources. Mine operators who use thousands of acres of
federal land as a dumping ground ought to pay something more than a
nominal fee. Their payment ought to reflect some measure of the value
these federal lands contribute to the entire mining operation. I would
be happy to work with the committee to try fashion something that would
do that.
Regarding other improvements in H.R. 2262, I would note that
previous reform bills addressed various matters connected with claim
location, claim size and the like, trying to simplify the red tape that
has long plagued the on-the-ground implementation of the old Mining
Law. I devoted some attention in my book on the Mining Law to some of
these anachronistic--even silly, to modern eyes--features, such as the
distinction between lode and placer claims. The Mining Law also
contains, in my judgment, inadequate protection for legitimate
explorers against claim-jumping by rival miners, and has some limits on
claim size that seem arbitrary and anachronistic. H.R. 2262 is silent
on these matters. It is worth considering whether to address these
matters in reform legislation.
As I said in my written statement to the Committee, I believe the
most important reasons to reform the Mining Law are to end the
opportunity for wholesale patenting, to capture some revenue for the
public which owns the minerals and land involved, and to hold the
hardrock mining industry to the same kinds of environmental standards
and regard for other uses of the federal lands that are routinely
applied to all other users of the federal lands.
If the legislation contains adequate measures on these three
points, I believe it is appropriate for the Congress to consider and
incorporate any reasonable suggestions the hardrock mining industry has
to make the Law more simple and efficient from its perspective. The
Congress should, however, take care to ensure such improvements do not
undermine or defeat the thrust of the legislation on the three most
important points.
Finally, I have one other suggestions for improvement in H.R. 2262.
Section 307 is a generally thoughtful attempt to mesh federal and state
regulatory authority and responsibility by providing for a ``common
regulatory framework.'' Sec. 307(c)(2). As I noted in response to
question 2, this is especially important because many large mines are
on a mixture of federal and state or private lands. So long as federal
lands are involved, however, the federal government needs to have the
right unilaterally to inspect and enforce federal regulations, and this
should not be left to implication, as it is now. Therefore, I recommend
adding, at the end of this subsection, a new sentence along the
following lines: ``Under this common regulatory framework the United
States shall retain the right independently to inspect the mining
operations and to bring enforcement actions.''
Question 5: At the hearing on July 26, the Administration suggested
that applying a royalty to existing mining claims might be
unconstitutional. What are your views on this? In your answer,
please address generally the extent to which Congress's
authority to apply reforms of the Mining Law to existing mining
claims might be limited by constitutional protections for
private property.
Answer: There are very few limits on Congress's ability to apply
reforms to existing mining claims. First of all, it has long been
clear--and reaffirmed in many decisions of the U.S. Supreme Court--that
a mining claim located on the federal lands does not automatically
carry with it a constitutionally protected property right. Mining
claims where there has not yet been a ``discovery'' of a ``valuable
mineral deposit'' are mere licenses to occupy the federal lands. Their
legal status is no different from that of a hunter or angler or other
recreational user of federal lands. ``[I]t is clear that in order to
create valid rights...against the United States [under the Mining Law]
a discovery of mineral is essential.'' Union Oil v. Smith, 249 U.S.
337, 346 (1919); see also Cole v. Ralph, 252 U.S. 286, 296 (1920).
The locator of a claim on which a discovery is lacking does have
the right to exclude other miners from the claim, so long as the
original locator is actively exploring for a mineral. This is the
``pedis possessio'' (foothold) doctrine recognized by the Supreme Court
almost ninety years ago. Union Oil v. Smith, supra. But the locator has
no rights against the United States until a discovery is made. This
means the United States can change its policy or rules, and even
effectively extinguish such claims, at any time before a discovery is
made, without any obligation to pay compensation.
In practice, almost all mining claims are located in advance of
discovery, to provide a foothold on public lands in order to explore
for valuable mineral deposits; that is, people locate mining claims in
speculation that a mineral might possibly exist and be profitably mined
from the claimed land. But hopes and speculations, the courts have long
made clear, are not tantamount to a ``discovery.'' See, e.g., United
States v. Coleman, 390 U.S. 599 (1968); Sullivan v. Iron Silver Mining
Co., 143 U.S. 431 (1892). Thus most mining claims do not carry with
them constitutionally protected property rights, and Congress retains
practically unfettered authority to change the rules regarding them.
With regard to mining claims that are buttressed by a ``discovery''
of a ``valuable mineral deposit,'' the analysis is a little different.
These contain property rights that are good against the government, so
that if the government utterly prevents or shuts down mining
operations, the claimant may--and I emphasize may--have a legal
argument for compensation. Whether the argument for compensation is
successful depends on a case-by-case, fact-intensive analysis. See,
e.g., Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional
Planning Agency, 535 U.S. 302 (2002). It is clear, for example, that
the government retains ongoing regulatory authority over even
unpatented mining claims that have a discovery and a property right.
The government can tighten up regulations or impose new regulations if
it has a reasonable case for doing so. The U.S. Supreme Court addressed
this exact question in 1985, and its guidance is worth quoting at some
length:
Even with respect to vested property rights, a legislature
generally has the power to impose new regulatory constraints on
the way in which those rights are used, or to condition their
continued retention on performance of certain affirmative
duties. As long as the constraint or duty imposed is a
reasonable restriction designed to further legitimate
legislative objectives, the legislature acts within its powers
in imposing such new constraints or duties. ***
This power to qualify existing property rights is
particularly broad with respect to the ``character'' of the
property rights at issue here. Although owners of unpatented
mining claims hold fully recognized possessory interests in
their claims, we have recognized that these interests are a
``unique form of property.'' *** The United States, as owner of
the underlying fee title to the public domain, maintains broad
powers over the terms and conditions upon which the public
lands can be used, leased, and acquired. See, e.g., Kleppe v.
New Mexico, 426 U.S. 529, 539 (1976). ***
Claimants thus take their mineral interests with the
knowledge that the Government retains substantial regulatory
power over those interests. *** In addition, the property right
here is the right to a flow of income from production of the
claim. Similar vested economic rights are held subject to the
Government's substantial power to regulate for the public good
the conditions under which business is carried out and to
redistribute the benefits and burdens of economic life.
United States v. Locke, 471 U.S. 84, 104-05 (1985). As the last-quoted
sentence makes clear, the government retains the right to require a
payment (whether labeled a tax, royalty, fee, or something else) from a
holder of a mining claim on federal lands, even one with a discovery
and a property right, as part of its continuing redistribution of the
benefits and burdens of economic life.
Finally, it is important to note that the discovery creating a
property right against the government is dependent upon the
marketability of the mineral. This means it may disappear--and with it
the property right against the government--as a result of changing
market conditions and other factors relevant to marketability. As the
Supreme Court has held, a ``locator who does not carry his claim to
patent...does take the risk that his claim will no longer support
issuance of a patent.'' Best v. Humboldt Placer Mining Co., 371 U.S.
334, 336 (1963).
In this connection, the Interior Department and the federal courts
have long held that, in determining whether a discovery exists, the
cost of complying with environmental laws and regulations must be taken
into account. The courts have recognized that adding environmental
restrictions may in fact affect claim validity, and thus in effect
reduce or eliminate the government's obligation to compensate
claimants. See, e.g., Clouser v. Espy, 42 F.3d 1522 (9th Cir. 1994)
(``virtually all forms of [government] regulation of mining claims--for
instance, limiting the permissible methods of mining and prospecting in
order to reduce incidental environmental damage--will result in
increased operating costs, and thereby will affect claim validity.
However, the...case law makes clear that such matters may be regulated
by the government''); Reeves v. United States, 54 Fed. Cl. 652 (2002)
(person who located mining claims in a wilderness study area had no
compensable property right to have a mining plan approved).
For all these reasons, I believe it is well settled that the
government has nearly unfettered authority to apply newly enacted laws
and regulations, including a royalty, to mining claims that are not
accompanied by a discovery; that is to say, most of the several hundred
thousand claims currently of record. It also has very considerable
power to apply to new regulations to mining claims that have a
discovery without creating any obligation to compensate the claimants.
Because of the strength of the case for congressional authority, I
was wholly unpersuaded by the rather casual assertion in BLM Deputy
Director Bisson's testimony on July 26 that a royalty on existing
claims would raise constitutional ``takings'' questions. Given the
analysis I set out here, I recommend the Committee give no weight to
his assertion unless the executive branch--and I would include here the
Department of Justice as well as the Solicitor's Office of the Interior
Department--supplies the committee with a legal memorandum backing up
Mr. Bisson's statement and refuting my analysis.
______
Mr. Costa. Thank you very much, Mr. Leshy. Our last witness
on this panel is Mr. Tangen, who will testify for five minutes.
I am sorry. Ms. Martin. I am getting ahead of myself. I
apologize. Ms. Martin, and then we will have Mr. Tangen.
STATEMENT OF JENNIFER MARTIN, COMMISSIONER,
ARIZONA GAME AND FISH COMMISSION
Ms. Martin. Thank you, Mr. Chairman, and members of the
Subcommittee. My name is Jennifer Martin, and again I am a
member of the Arizona Game and Fish Commission, and I
appreciate this opportunity to voice support for House
Resolution 2262. The Southwest is the nation's richest store of
minerals and industrial metals, and Arizona ranked first in
mineral production in the U.S. in recent years. Mineral
development remains a major component of the economy throughout
the West.
The General Mining Act of 1872 was highly effective in
settling the West and providing economic growth not just to the
West but to the nation, and it is in the public interest to
continue to benefit from our mineral resources. However, the
focus on westward migration in the 1872 act is antiquated. The
question is not if the 1872 act needs to be updated to address
current natural resource issues but how it needs to be updated
so that the mining industry can continue to fulfill its vital
economic role while providing sound stewardship of the land and
opportunities for outdoor recreation.
While mining has boosted western economies over many
decades, it has also impacted the West's natural resources
including native wildlife and habitat and vital springs,
streams and wetlands. The 1872 act was written when some of
today's most valuable mineral resources and most expedient
extraction techniques were completely unknown and when the
American West was a vast and seemingly endless continuum of
wide open space.
One hundred and thirty years later westward expansion is
clearly not the national priority that it was. Those seemingly
endless open spaces have been transformed. Urban development
continues to spread throughout the West, and the remaining open
public lands compete for many uses. It is the charge of each of
us to balance those uses in the public's best interest.
The 1872 act contains no measures for environmental
impacts. That was simply not the concern then that it is now.
Because no mechanism for cleanup and restoration following
extraction was identified, the Environmental Protection Agency
now estimates that 40 percent of western headwaters are now
contaminated by a combination of acidity, heavy metals and
sediment resulting from abandoned mines. H.R. 2262 addresses
this issue by creating a fund derived from royalties placed on
mining revenue to reclaim and restore natural systems and
watersheds following mining activities.
Since bonding programs established at the state level vary
widely throughout the West and in many cases fall well below
the actual cost of reclamation, taxpayers carry the burden of
restoring our public lands. The proposed legislation would
establish a consistent and more adequate standard and funding
mechanism for reclamation. This is especially crucial in
relation to watersheds in the arid Southwest.
Water availability is a critical issue and water
contamination has severe implications for human health as well
as wildlife. The majority of our Federally listed endangered
species in Arizona are aquatic wildlife which are highly
sensitive to watershed contaminants, and 75 percent of all of
Arizona's wildlife species depend on riparian systems during
some portion of their life cycles. H.R. 2262 takes positive
steps toward ensuring that mining activities will be conducted
in a manner that allows for the continuation of wildlife
species.
Because H.R. 2262 requires reclamation of not only
developed sites but also exploration activities, road systems
and other exploration impacts that have been left unmitigated
in the past will be addressed in the future. While H.R. 2262
proposes to provide a mechanism for restoring mined areas, it
also protects special places from initial impacts. Title 2
identifies national monuments and parks, wilderness and
roadless areas and other sensitive places ineligible for mining
activities, and this will provide a tremendous benefit to
wildlife and outdoor recreation by setting aside our remaining
relatively untouched areas.
Studies indicate that hunting, angling, wildlife viewing
and other outdoor activities generate an economic impact of
approximately $5 billion annually to the State of Arizona,
roughly equalling that of hardrock mining enterprises, yet the
1872 law is interpreted to identify mining as the best and
highest use of public land where minerals have been located.
That may well have been the case at the time but the need
clearly exists to prioritize mining activities as they relate
to the economy and the public interest as they stand today.
H.R. 2262 accomplishes this by protecting special places,
establishing environmental standards and implementing fiscal
reforms. I am glad to be here discussing this topic today, and
I applaud your interest in updating the 1872 act, and I urge
you to continue to move forward on this issue. Thank you.
[The prepared statement of Ms. Martin follows:]
Statement of Jennifer L. Martin, Arizona Game and Fish Commission
Mr. Chairman and members of the Subcommittee, my name is Jennifer
Martin, and I am a Member of the Arizona Game and Fish Commission. I
appreciate this opportunity to voice support for House Resolution 2262,
the Hardrock Mining and Reclamation Act of 2007.
The Southwest is the nation's richest store of minerals and
industrial metals, and Arizona ranked first in mineral production in
the U.S. in recent years. Mineral development remains a major component
of the economy throughout the west. The General Mining Act of 1872 was
highly effective in settling the West and providing economic growth not
just to the West, but to the nation. It is in the public interest to
continue to benefit from our mineral resources. However, the focus on
westward migration in the 1872 act is antiquated. The question is not
if the 1872 act needs to be updated to address current natural resource
issues, but how it needs to be updated so that the mining industry can
continue to fulfill its vital economic role while providing sound
stewardship of the land and opportunities for outdoor recreation.
While mining has boosted western states' economies over many
decades, it has also impacted the west's natural resources, including
native wildlife and habitat, and vital springs, streams and wetlands.
The 1872 act was written when some of today's most valuable mineral
resources and most expedient extraction techniques were completely
unknown, and when the American West was a vast and seemingly endless
continuum of wide open space.
130 years later, westward expansion is clearly not the national
priority that it was. Those seemingly endless open spaces have been
transformed. Urban development continues to spread throughout the west,
and the remaining open public lands compete for many uses. It is the
charge of each of us to balance those uses in the public's best
interest.
The 1872 act contains no measures for environmental impacts. That
was simply not the concern then that it is now. Because no mechanism
for cleanup and restoration following extraction was identified, the
Environmental Protection Agency now estimates that 40 percent of
western headwaters are contaminated by a combination of acidity, heavy
metals and sediment resulting from abandoned mines. H.R.2262 addresses
this issue by creating a fund derived from royalties placed on mining
revenue to reclaim and restore natural systems and watersheds following
mining activities. Since bonding programs established at the state
level vary widely throughout the west, and in many cases fall well
below the actual cost of reclamation, taxpayers carry the burden of
restoring our public lands. The proposed legislation would establish a
consistent and more adequate standard and funding mechanism for
reclamation.
This is especially crucial in relation to watersheds in the arid
Southwest. Water availability is critical issue, and water
contamination has severe implications for human health as well as
wildlife. The majority of our federally listed endangered species in
Arizona are aquatic wildlife, which are highly sensitive to watershed
contaminants. 75% of all of Arizona's wildlife species depend on
riparian systems during some portion of their life cycles. H.R. 2262
takes positive steps towards ensuring that mining activities will be
conducted in a manner that allows for the continuation of wildlife
species.
Because H.R. 2262 requires reclamation of not only developed sites,
but also exploration activities, road systems and other exploration
impacts that in the past have been left unmitigated will be addressed
in the future.
While H.R. 2262 proposes to provide a mechanism for restoring mined
areas, it also protects special places from initial impacts. Title II
identifies National Monuments and Parks, Wilderness and Roadless Areas
and other special and sensitive places as ineligible for mining
activities. This will provide a tremendous benefit to wildlife and
outdoor recreation, by setting aside our remaining relatively untouched
areas.
Studies indicate that hunting, angling, wildlife viewing and other
outdoor activities generate an economic impact of approximately $5
billion annually to the State of Arizona, roughly equaling that of
hardrock mining enterprises. Yet the 1872 law is interpreted to
identify mining as the best and highest use of public land where
minerals have been located. That may well have been the case at that
time, but the need clearly exists to prioritize mining activities as
they relate to the economy and the public interest as they stand today.
H.R. 2262 accomplishes this by protecting special places, establishing
environmental standards, and implementing fiscal reforms.
I am glad to be here discussing this topic today. I applaud your
interest in updating the 1872 act, and I urge you to continue to move
forward on this issue.
Thank you.
______
Mr. Costa. Thank you, Ms. Martin, for your testimony, and
we will look forward to the Q and A when that time arrives. Now
we have last, but certainly not least on this panel, Mr.
Tangen, who will testify for five minutes.
STATEMENT OF J.P. TANGEN,
FORMER REGIONAL SOLICITOR, ALASKA
Mr. Tangen. Thank you, Mr. Chairman. My name is J. P.
Tangen. I am a practicing attorney in Alaska, and I have
represented mining clients from 1975 until 1990. In 1990, I
became Regional Solicitor for the Department of the Interior
serving under Secretaries Lujan and Babbitt and working for my
good friend John Leshy, and in 1994 I left the Department to
become President of a publicly traded Canadian gold mining
company. In 1998 I returned to the private practice of law, in
which I have been engaged ever since.
The Alaska Miner's Association, who I am representing
today, is an organization of approximately 1,000 members
consisting of a broad array of individuals, mining companies
and supporting businesses. Alaska hosts the largest amount of
public land in the United States, including the two largest
national forests. Alaska also hosts five large operating lode
mines and over 100 placer mines generally of a smaller ``mom
and pop'' size.
Alaska boasts the largest silver producing mine in North
America and the largest producing zinc mine in the world. We
also lay claim to be what may become one of the largest copper
properties in the world and several exploration projects with
production potential well in excess of a million troy ounces of
gold.
Every operation in the state is under intense scrutiny from
Federal and state agencies, and in many instances there is
intense local scrutiny as well. Alaska has an active community
of nongovernment organizations that monitor mining operations
and aggressively use the courts and the media to advance their
agenda. Alaska has an excellent record for reclamation
operations at Valdez Creek, Poker Flats, Illinois Creek and
numerous small placer mines have been properly cleaned up
following the completion of successful mining operations.
Likewise, Alaska is sensitive to local concerns. The A. J.
Mine in Juneau was not reopened despite an extensive investment
primarily due to public opposition. The Kensington project,
also in the Juneau area, remains in a preproduction mode
because of intense public scrutiny for over 20 years. Mines in
other populated areas on the other hand, such as the Fort Knox
mine in Fairbanks and the Rock Creek project in Nome, while
having been held to strict standards and careful evaluation,
have generally been greeted with local acceptance.
Presently nearly 50 million acres of prospecting land in
Alaska remains potentially available for mineral development.
Although geologists believe there are many opportunities to
develop mines on Federal lands in Alaska, the number of Federal
claims has diminished. For many years Federal mining claims
were attractive because of two cornerstone qualities: self-
initiation and security of tenure.
Under the current law, any qualified person can locate a
mining claim on vacant, unappropriated public domain without
prior governmental consent. Under H.R. 2262, the explorer would
have to secure a permit, with attendant cost delays, before
conducting any noncasual mineral activities. A mining claim is
not valid unless it contains a certain minimum amount of
mineralization. Ascertaining whether adequate mineralization is
present will require such a permit. That means to get a permit
the applicant will have to have knowledge he cannot gather
without a permit, a classic ``Catch-22.''
The bill eliminates patents. That in itself is not a
barrier to the location of Federal claims but it has resulted
in many Federal claimants losing their claims and their
investments as a result of inadvertent clerical failures under
the current law. H.R. 2262 also imposes a royalty on mining
operations. A royalty is a tax on gross income. It is analogous
to taxing a bank solely on its deposits.
The true benefit of a mine is often that it brings jobs,
goods and services to areas where such things are scarce.
Furthermore, there is usually a long delay between exploration
and commencement of production. Typically a decade or more
passes before a return on investment is realized. Only after a
mine is permitted, construction is complete and production
begins is capital investment realized. An unfair royalty delays
pay back, makes mining less attractive and competitive
investments.
There are lots of other problems with the bill. Title 3 has
a lot of problems in it as far as how people can manage it.
Title 5, the administrative provisions particularly are going
to precipitate litigation but on behalf of the Alaskan Miner's
Association let me simply summarize by saying we regard 2262 as
anti-environment because it may induce operators to relocate
offshore where they are not going to be faced with the same
high standards of environmental protections as is found in the
United States.
It will cause the loss of high paying mining jobs because
relocating mines offshore will result in the loss of thousands
of jobs. It is a risk to the health and safety of mine workers
because miners know the countries may not be able to get the
benefit of our stringent health and safety laws. It will
contain an unfair royalty requirement because the proposed
royalty is calculated on gross receipts. It is wasteful because
a gross royalty will encourage operators to leave lower grade
mineralized material in the ground.
It is a threat to national security because domestic
production of needed commodities will be reduced or eliminated.
It is unlikely to generate substantial revenue in the United
States because mining operators move offshore. They will not
pay royalties, taxes and fees. It will create three large, new
unfunded bureaucracies because the BLM will have to staff up to
deal with a huge volume of additional paperwork created by
applicants, all of which must be reviewed and adjudicated.
The bill will require a significant new law enforcement
inspection arm to oversee on-the-ground compliance, and the
bill will require a separate new bureaucracy to adjudicate the
royalty matters. It is likely to foster litigation because
NGO's are encouraged to sue. It is anti-Alaskan because a large
percentage of the vacant and unappropriated public domain is in
Alaska.
It is anti-business because mines in foreign countries will
purchase equipment, supplies and services locally bypassing
U.S. suppliers. It is anti-small miner because small miners
simply cannot afford the cost of compliance, and it is a
violation of the ANILCA clause, Alaska National Interest Lands
Conversation Act clause because by making it possible to
declare certain lands special places there is a risk that
additional lands will be placed under restrictive land use
status.
Mr. Chairman, I thank you for the time and attention. I
respectfully request that this bill not be passed as it is
written.
[The prepared statement of Mr. Tangen follows:]
Statement of J. P. Tangen, on behalf of the
Alaska Miners Association
Good Morning Mr. Chairman.
My name is J. P. Tangen; I am appearing hear today at the
invitation of the subcommittee on behalf of the Alaska Miners
Association.
The Alaska Miners Association is an organization of approximately
1,000 members consisting of a broad array of individuals, mining
companies and supporting businesses.
Alaska hosts the largest amount of public land in the United States
including the two largest National Forests.
Alaska also hosts five large operating lode mines and over 100
placer mines generally of a smaller, ``mom and pop'' size. Alaska
boasts of the largest silver producing mine in North America and the
largest producing zinc mine in the world. We also lay claim to what may
become one of the largest copper properties in the world and several
exploration projects with production potential well in excess of
1,000,000 Troy ounces.
Alaska mines and prospects are located on state land, private land
and federal public land. Every operation in the state operates under
intense scrutiny from federal and state agencies. In many instances,
there is additional local oversight of the mining operations as well.
Alaska has an active community of non-governmental organizations that
monitor mining operations and aggressively use the courts and the media
to advance their agenda.
Alaska has an excellent record for reclamation. Operations at
Valdez Creek, Poker Flats, Illinois Creek, and numerous small placer
gold mines have been properly cleaned-up following the completion of
successful mining activities, and the affected areas has been restored
to a landscape that makes the detection of the past mining operations
literally impossible.
Likewise, Alaska is sensitive to local concerns. The A.J. Mine in
Juneau was not reopened despite an extensive investment, primarily due
to public opposition, and the Kensington Project, also in the Juneau
area, remains in a pre-production mode because of intense public
scrutiny for over twenty years.
Other mines in populated areas, on the other hand, such as the Fort
Knox Mine in Fairbanks and the Rock Creek Project in Nome, while having
been held to strict standards and careful evaluation, have been
generally greeted with local acceptance.
In a word, there are many mining success stories in Alaska, and
those stories embrace a history of nearly 150 years. Ours is a proud
industry that has produced many of the commodities that America has
demanded and required and has excellent prospects for doing so into the
future.
Much of the land selected by the State pursuant to the Alaska
Statehood Act and by Alaska Native Regional Corporations pursuant to
the Alaska Native Claims Settlement Act was chosen because of its
mineral potential. However, even after those large tracts were removed
from the public domain and National Forests and after another 108
million acres were set aside for inclusion in National Parks,
Preserves, Wildlife Refuges, Monuments, Wilderness and Wild and Scenic
River System Areas, nearly fifty million acres of prospective land
remains potentially available for mineral development. It is those
fifty million acres that would be among the lands targeted by H.R.2262.
Although geologists believe that there are many opportunities to
develop mines on federal lands in Alaska, the number of federal mining
claims has diminished in recent years to only approximately 8,000.
Prospectors and developers have demonstrated a preference to look to
state and private land rather than to hassle with the federal
government.
The attractive qualities of federal claims have been diminishing in
recent years. Initially, a federal mining claim, whether placer or
lode, was an attractive choice because of two cornerstone qualities:
self-initiation and security of tenure. By self-initiation I mean that
any qualified person, under the law, could locate a federal mining
claim on vacant and unappropriated public land without a permit or
prior governmental consent. By security of tenure, I mean that the
locator would have prior rights against all the world, and under the
statute, have the right to purchase the fee title to that land from the
United States once their time, talent and effort established that
minerals existed and were economically mineable. These basic rights
will disappear if H.R. 2262 becomes law.
H.R. 2262
Under H.R. 2262, instead of citizens having the right to go onto
public lands and locate mining claims, the explorer would have to
secure a permit, with attendant costs and delays, before conducting any
mineral activities. Since a mining claim is not valid unless it
contains a certain minimum amount of mineralization, and since
ascertaining whether that minimum mineralization is present in a given
location, meaningful exploration would require a permit.
Ironically, the issuance of a permit to conduct such mining
activities appears to be dependent upon the applicant having knowledge
about the property that he cannot gather without having a permit in
hand. In essence, this initial hurdle will bring an end to most
exploration activity on public land.
Patents
The bill terminates the possibility for issuing patents. Since the
moratorium imposed by the United States Senate in 1994 and renewed each
year since then in the Interior Appropriations Acts, new patent
applications have not been processed by the Department of the Interior.
In an environment of rising commodities prices, that in itself has not
constituted a barrier to the location of federal mining claims;
however, when combined with the stringent reporting requirements
enacted by FLPMA, many federal claimants have lost their claims and
their investment as the result of inadvertent clerical failures.
Royalties
Concomitant with these two negative qualities, H.R. 2262 also would
impose an overwhelmingly burdensome royalty on mining operations. This
royalty, although called a ``net smelter return'' royalty, is defined
to be a gross income royalty, which means that no deductions, not even
those customary in the industry, would be allowed. This is analogous to
taxing a bank on its deposits and or a grocery store on its total value
of inventory. Generally, because mining is a labor intensive industry
that employs local people in remote locations, the true benefit of a
mining operation is that it brings jobs, goods and services to areas
where such things are scarce, not that it can generate a revenue stream
through royalties or taxes.
In addition, because there generally is a very long delay between
initial exploration and the commencement of production, typically a
decade or more passes before a return on investment is realized. It is
only after a mine is permitted, construction is completed and
production begins that the capital investment can be rewarded. A
royalty based on gross production will unnecessarily delay payback and
dilute the return on investment, making an operation less attractive
than competitive investments. If the royalty is too high, it alone will
make the project uneconomic.
Any royalty imposed on a mining operation should always be based on
net profits and never on gross receipts. I understand that the State of
Nevada has a net profits tax law that might be readily adaptable for
federal use. Miners are not opposed to paying fair royalties and taxes,
but are opposed to paying punitive royalties and taxes where there are
no operating revenues available to satisfy the government's demands.
In another sense, however, the imposition of a royalty on mining
operations in the United States is very bad public policy because
American mines compete on a global market. Domestic production of
commodities sold around the world directly reduces our adverse balance
of trade. Production of metals and mineral products inside the United
States benefit the nation; but, producers have to be competitive.
Mineral deposits are scattered around the globe in a pattern that
is independent of political boundaries. Some governments are more
solicitous of the health and welfare of their people and the
environment than others. In the United States, where we have stringent
health and safety laws, environmental and natural resource laws, and
wage and hour laws to protect our workers and the environment, the per
pound or per ounce cost of production is going to be higher than in
places that do not impose or enforce such legal requirements.
America is a favored target for exploration because of government
stability, but if the costs of production outweigh the risks of
nationalization, for instance, then it follows that mining companies
will migrate off-shore. In a very tangible sense, an excessive
financial burden on domestic mining has two palpable consequences: 1.)
mining companies will emigrate to places where the strictures are not
so oppressive and; 2,) mining companies will be dissuaded from
maximizing the return from a given deposit.
Inducing mining companies to move offshore engenders a cascade of
problems. Where the operating standards are not as stringent as they
are in the United States, wages may be lower, worker safety may be
compromised, and the environment may be threatened.
This is not to imply that global mining companies are unscrupulous.
On the contrary, the common experience is that once a global company
establishes profitability in a third world nation, it becomes at risk
for nationalization or aggressive efforts on the part of the host
government to sequester as much of that profitability as possible. In
such cases, it is the host country rather than the mining company that
is externalizing the social costs. Working profitably in industrialized
countries with sophisticated social mores, therefore, is good for the
planet and the people on it. As a nation, we ought to be exporting our
standards and not our mining industry.
To clarify the second point--mineral deposits are often
concentrated in a central core with grades tapering out toward the
periphery. Efficient operations recover as much as they profitably can.
The higher the operating cost, the more likely that low grade material
will be left behind. Royalties and taxes are an arbitrary operating
cost; therefore, such royalties and taxes directly beget waste of the
mineral resources on an area.
The Demise of Self-Initiation
H.R. 2262 has a lengthy section specifying the requirements for a
permit to conduct non-casual mining activities on federal public lands.
These requirements are deliberately stacked to ensure that compliance
is overwhelmingly burdensome financially, if not physically impossible.
To illustrate, under section 304(b) of the bill, the Secretary is
required to suspend an operating permit if he determines that any
affiliate of any claimholder is in violation of any regulation
promulgated under this Act. In other words a sister company holding a
single mining claim in Arizona could be the cause of a major mine
shutting down in Alaska simply because the Arizona affiliate committed
a minor violation of a regulation. This is not discretionary, and under
Section 504 providing for citizen suits any person may sue to compel
the Secretary to suspend such a permit.
The bill specifies that a permit application must contain details
in twenty-two information categories, including: violations of various
environmental and mining laws by the applicant or an affiliate within
the preceding five years; all forfeitures or revocations of any mining
bonds or permits by an applicant or an affiliate; all permits ever
issued under SMCRA or FLPMA; the type and method of mineral activities
proposed; the anticipated starting and termination dates of each phase;
maps; information on facilities; soils and vegetation; topography;
water supply intakes and surface water bodies; biological resources;
measures to exclude fish and wildlife; predisturbance monitoring of
groundwater; an assessment of cumulative impacts on the hydrology; a
description of the monitoring and reporting systems; accident
contingency plans; compliance with any land use plans; cumulative
impacts; evidence of financial assurance; site security; information on
soils and geology; a copy of the applicant's required public notice;
and such other environmental baseline data as the Secretary may
require.
Any person who may be adversely affected by the proposed mineral
activities may request a public hearing to be held near where the
mineral activities are proposed. After a public hearing, the Secretary
must formally determine whether the application is complete; whether
the proposed reclamation is likely to be accomplished by the applicant;
whether the land can be returned to a productive use; whether the area
is open to location; whether the applicant has obtained all necessary
Federal, State, and local permits; whether the cumulative impacts to
human health, water resources, wildlife habitat, and other natural
resources will not cause undue degradation; whether the applicant has
given adequate financial assurance; whether there will be no undue
degradation of natural or cultural resources; whether the applicant or
any affiliate is ineligible to receive a permit; and whether ten years
following mine closure, treatment of surface or ground water will be
required. Permits cannot be issued for more than ten years at a time,
must be reviewed every 3 years, and are subject to modification by the
Secretary.
What was once a prime virtue of the federal mining law, under H.R.
2262 will now be completely eliminated and virtually no one would be
well-advised to seek mining opportunities on federal public lands.
There is nothing in Title III that that is needed to improve the safety
or environmental quality of mining in the United States. This Title
should not be enacted into law.
Title V--Administrative Provisions
The ``administrative provisions'' set forth in Title V of H.R. 2262
provide an enforcement regimen that further deters mining activities on
federal public lands. The provisions of Title V grant unusual and
pervasive powers to the Secretary and the general public.
For instance, ``[a]ny person who knowingly--engages in [an activity
incidental to mineral exploration] without a permit required under
title III--shall, upon conviction, be punished by a fine of not more
than $50,000, or by imprisonment for not more than 2 years, or both.''
Sec. 506(g-h). The Secretary is granted the authority to issue and
enforce cessation orders or ``take such alternative enforcement action
[without limitation] against the claim holder or operator (or any
person who controls the claim holder or operator) as will most likely
bring about abatement in the most expeditions manner possible.''
Anyone, ``without regard to--the citizenship of the parties'' can
commence a civil action ``against any person'' to compel compliance
with any provision of this Act or any regulation promulgated under
title III.
[A]ny authorized representative [of either the Secretary of
Agriculture or the Interior] may--without advance notice, stop and
inspect any motorized form of transportation that such Secretary has
probable cause to believe is carrying locatable minerals--for the
purpose of determining whether the operator of such vehicle has
documentation ``if such documentation is required under [Sec. 102(b)(4)
of] this Act....''
These illustrations are not exhaustive. The draconian powers
afforded the Secretaries put prospective claimholders at such risk and
to such expense as to ensure that no one could conceivably justify
seeking a permit under this bill as a reasonable business proposition.
Special Places
In addition to the foregoing burdens which would be placed on the
mining industry by this bill, virtually anyone could preclude a
mineralized site from being developed by identifying it as a ``special
place'' under the provisions of title II. Special places include lands
recommended for wilderness designation; lands designated as wilderness
study areas or National Monuments; lands in, under study for inclusion
in, or eligible for inclusion in the National Wild and Scenic Rivers
System; lands segregated from mineral entry; lands designated as Areas
of Critical Environmental Concern; lands identified as sacred sites in
accordance with Executive Order 13007; and lands identified in the
Roadless Area Conservation rule of January 2001.
Summary
This bill, if enacted, would prevent all further mining and
exploration and on federal public lands in the United States. The steps
necessary to get permission to engage in mineral activities are
extensive, burdensome, unnecessary and very expensive. The risks, for
even the slightest violation by affiliates remote from an operation of
the most inconsequential regulation, include loss of all rights as well
as possible fines and imprisonment. Even operating mines have only a
maximum of three years to either close or bring themselves into full
compliance. The rewards for successfully complying with the proposed
law are severely curtailed through the imposition of a disproportionate
gross royalty.
From the perspective of the Alaska Miners Association, there is
nothing positive included within this bill and we regard it as:
Anti-Alaska, because a large percentage of the vacant and
unappropriated public land in the United States is in Alaska and, to
the extent that this bill adversely impacts the hardrock mining
industry, it impacts Alaska the most;
Anti-small miner, because many of Alaska's miners are mom
and pop placer operators and they cannot possibly afford the cost of
compliance;
Anti-environment, because it will force operators to
relocate their operations off-shore where there are not the same high
standards of environmental protection as are found in the United
States;
Anti-worker, because many prospects will not become mines
and will not create new jobs in this country;
Anti-business, because mines in foreign countries will
purchase equipment, supplies and services locally, by-passing U.S.
suppliers;
Wasteful, because by charging a high gross royalty on
mining operations, it will encourage operators to mine only the high-
grade areas of a deposit and leave lower grade mineralized material in
the ground;
A threat to the national security, because, by
encouraging operators to relocate off-shore, domestic production of
needed commodities will be eliminated or reduced, as is currently the
case with oil and gas;
Causing the loss of high-paying mining jobs, because
workers at major mines in the United States today often earn $50,000
per year or more while relocating mines off-shore will result in the
loss of thousands of those mining jobs;
A risk to the health and safety of mineworkers, because
miners in the United States benefit from stringent laws that protect
their health and safety, while miners in other countries may not be
able to get the benefit of such laws;
Unlikely to generate substantial revenue for the United
States, because if mining operations move off-shore, they will not pay
royalties, taxes or fees;
Creating three large, new bureaucracies, because the BLM
will have to staff up to deal with the huge volume of additional
paperwork created by applicants, all of which must be reviewed and
adjudicated, the bill will require a significant new enforcement and
inspection arm to oversee on the ground compliance, and the bill will
require a separate new bureaucracy to adjudicate the royalty
calculations;
Containing an unfair royalty requirement, because
royalties are calculated on gross receipts;
Likely to foster litigation, because NGO's are encouraged
to sue to enforce the statutory requirements; and
A violation of ANILCA's ``no more'' clause, because by
making it possible to declare certain lands ``special places'' there is
a risk that additional lands will be placed into a restricted land use
status.
We respectfully request that this bill not be enacted.
______
Mr. Costa. Mr. Tangen, we will list you doubtful, and you
exceeded the time that was allotted by a minute and 15 seconds.
So I am feeling very charitable this morning.
Mr. Tangen. I appreciate that. Thank you, sir.
Mr. Costa. That completes the testimony of this panel. We
will move to questions but, before we do, I misstated. The
gentleman from Nevada was not the Ranking Member de jour. He
was only the Ranking Member for a half an hour. Maybe 45
minutes. The Ranking Member from New Mexico, the gentleman from
New Mexico has been able to rejoin us, and we appreciate that,
and I will allow him to make a brief opening statement.
STATEMENT OF THE HON. STEVAN PEARCE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW MEXICO
Mr. Pearce. Thank you, Mr. Chairman. Yesterday, as you
know, we had a full committee oversight hearing on the Surface
Mining Control and Reclamation Act of 1977 to look at what has
transpired in the 30 years since the law was enacted. The
testimony provided by the witnesses was informative. Today we
are meeting for the first of what I assume will be several
legislative hearings on H.R. 2262, the Hardrock Mining and
Reclamation Act of 2007. Many of the provisions in H.R. 2262
are similar to the provisions in SMCRA.
In other words, it is like SMCRA for hardrock mining. The
problem is that this is unnecessary, and the more plumbing you
have the more ways there are to clog up the drain. Hardrock
mining already has its own set of reclamation standards that
were promulgated after the National Forest Management Act and
the Federal Land Policy and Management Act were enacted in
1976, a year before SMCRA.
These laws are the statutes that directed the respective
agencies to develop regulations governing hardrock mining on
the Forest Service and BLM managed lands. This was and is
appropriate, and as the vast majority of hardrock mining is in
the West, it is on Federal land. Primarily in most western
states the majority of the land is owned by the Federal
government.
It is a very different playing field in coal mining, which
is primarily located on private lands in the Midwest and the
eastern states at the time the Surface Mining Act was enacted.
These land management statutes are coupled with other
environmental laws to manage mining activities on Federal
lands. The environmental regulations include the Clean Air Act,
the Clean Water Act, the Endangered Species Act, the Resource
Conservation Recovery Act, the Comprehensive Environmental
Response Compensation Liability Act and the Toxic Substance
Control Act, and finally the National Environmental Policy Act.
These laws provide for public notice and comment
opportunities, citizen suit provisions and various appeal
processes that allow the public and affected communities to
fully participate in the mine processes. In fact, all of these
opportunities to challenge mining projects have served to draw
out the permitting process on Federal lands, and it can take 12
years or more to get final approval to operate a mine.
Proposed provisions in Title 3 and 5 of H.R. 2262 would
greatly exacerbate already cumbersome permitting processes. Any
company trying to operate would be in perpetual permitting
nightmare. Every three years a permit would be subject to
review. Compare this to hydroelectric facilities that are
permitted for 50 years or nuclear facilities that are permitted
for 40 years. I doubt that we would see any revenue to the
Federal Treasury for mines on Federal lands under H.R. 2262.
The only individuals that appear to be getting rich off this
scheme are the environmental trial lawyers. There certainly
will not be any money for hardrock abandoned mine land
programs.
This is not the direction that we should be taking in our
national minerals policy. With the economic growth and
industrialization we are seeing in China and India, the demand
for all commodities worldwide has skyrocketed. This will
continue in the future. I would ask unanimous consent to submit
for the record today's Washington Times front page article that
says that China is powering the world's economy. They have
surpassed the United States. At a time when we face very
difficult circumstances in our economic future, we are going to
take steps that will make hardrock mining more difficult.
The main thing that we have in New Mexico as hardrock
mining is copper. The copper resources need to be available if
we are going to continue to, for instance, use hybrid cars
because they use 100 percent more copper than a standard full-
size vehicle. Copper is not the only significant resource that
we are mining. Clearly we are moving in the wrong direction on
national minerals policy. We should be holding hearings to
identify what needs to change to encourage domestic mineral
development not on bills that will drive it offshore.
I fear that if this bill passes we will not see these
resources developed. We will export these high paying family
wage jobs with benefits offshore and undermine our economic and
national security. I thank the witnesses for their testimony
and look forward to hearing from them. Thank you, Mr. Chairman.
Mr. Costa. Thank the gentleman from New Mexico. I will
begin with the first line of questioning. Mr. Leshy, you
testified in your opening statement about the three issues that
you think need to be addressed: The privatization of public
lands impact; the direct financial return, i.e., royalties;
and, of course, the protection of the environment as it relates
to cleanup. As a number of my colleagues have stated in their
comments, opening statements, notwithstanding the fact that the
law has not changed since 1872, there have been other laws that
have been enacted that do impact hardrock mining and
regulations that have been implemented governing surface
management of hardrock mining. I am talking BLM's current part
3809 that was issued, I believe, in 2001.
What is your assessment of the adequacy of these
regulations and the other overlapping laws that others claim
adequately provide the protection?
Mr. Leshy. Thank you, Mr. Chairman. First of all, I would
say that the BLM 3809 regulations have been the subject of
controversy and litigation and in the Clinton Administration we
tightened up those regulations, and then one of the very first
things the Bush Administration did was to essentially gut most
of the reforms that we tried to put into place.
So they really do inadequately consider the environmental
impacts of hardrock mining in several key ways, particularly
concerning--as I mentioned in my opening statement--
groundwater, and I should also point out in this connection
that the Bush Administration also reversed a couple of legal
opinions that I wrote--which is their prerogative--which says
that their legal position is that the government has no
authority under the Mining Law of 1872, despite all of these
other environmental laws that have been mentioned.
It has no legal authority to say ``No'' to a proposed
hardrock mining operation on public land, no matter how
devastating the effect on the environment. If it cannot be
controlled, if it cannot be mitigated, no matter how
devastating the effect, the mining law prohibits the government
from saying no.
Another legal opinion that they have signed takes the
position that the hardrock mining industry has the right under
the mining law to use as much public land as it thinks it needs
as a dumping ground for the residue of its vast hardrock
operations. Tailings piles, waste dumps, et cetera. If it needs
10,000 acres, the mining law gives it the right to have those
10,000 acres.
Mr. Costa. All right. Mr. Leshy, I do not want to occupy
all my time on that area but I will submit some additional
questions, and you can provide additional information. This
issue of patenting I am interested in or the privatization of
Federal lands as it relates to the hardrock mining. Do you
think there are any circumstances under which the patenting
makes sense, and if so, please explain briefly?
Mr. Leshy. The issue of patenting is an interesting one,
and frankly it is one I thought about a lot over the last 30
years and have somewhat changed my position on frankly. I
believe that generally speaking that the patent provision in
the mining law has been frankly much abused. I mean the
historical record is clear about that. The 3 million acres have
been patented. Almost none of them are actually used for
mining. Most of them are used for weekend cabins and that sort
of thing.
So there is a big problem with abuse of that patenting
provision. But your question, I think, really focuses on with
an actual ongoing mining operation does it make sense for the
government to keep title to that land, if it is in the middle
of a big open pit, for example, and I think there are two
interests of the government in keeping title. One is because of
the need to make a financial recovery. That is get a royalty or
some sort of financial payment for that.
The second is to make sure that the environment is
protected in the mining operation. The Federal title gives the
government regulatory authority.
Mr. Costa. All right. Let me----
Mr. Leshy. Both of those things can be----
Mr. Costa. How about the issue of uranium? Should it be
treated differently than other mining law minerals?
Mr. Leshy. Well, you know it is interesting. Uranium is the
only energy mineral that is not leasable. Every other mineral
that the Federal government owns that has energy value, whether
it is oil shale, oil and gas, coal, tar sands, everything else
is leasable. Uranium is not. It is under the old mining law
although interestingly some uranium is leasable because the old
Atomic Energy Commission actually reserved some lands and
leases the uranium on those lands.
So uranium is in this oddball category. It is very
different from the other hardrock minerals, and I think you
could make a pretty powerful case that uranium really does not
belong under the mining law at all--that it ought to be
leasable like the other energy minerals are.
Mr. Costa. My other questions I will submit to you for the
record, but I would like you to at a later date provide
recommendations how this proposed legislation could be
improved. My time has expired. I will have another round but I
will defer now to the Ranking Member, the gentleman from New
Mexico, Mr. Pearce.
Mr. Pearce. Thank you, Mr. Chairman. Mr. Leshy, when I
contemplate your testimony do you think that we are doing a
very bad job then with respect to the stewardship of the public
lands and hardrock mining, specifically where they intersect?
Mr. Leshy. We could do a much better job, especially if you
compare how hardrock mining is regulated and sort of fits into
the public land landscape compared to other uses, whether it be
oil and gas, coal, timber harvesting, cattle grazing. Hardrock
mining really stands out.
Mr. Pearce. Are there examples worldwide of countries who
do that better?
Mr. Leshy. I have not made a careful study but I think if
you look at other countries they do a better job. They
certainly do a better job of getting money from their ownership
of hardrock mines. As I said in my statement, the United States
public lands are the only place in the world I think where the
owner of the mineral does not get a financial return on the
extraction.
Mr. Pearce. So you do not really think that there should be
a move to withdraw hardrock mining from Federal lands? In other
words, that would not be the end result of what you are
suggesting?
Mr. Leshy. No. I think the industry is a very viable
industry. It is making record profits. It is producing more
hardrock minerals than ever before. The talk has been, for
example, about the importance of patenting. To some, you know
there has been no patenting for the last 13 years because of
the annual moratoria that Congress has put on and production
has gone way up.
Mr. Pearce. When you consider the record profits, does it
concern you that the profits--there are only about three major
mining corporations left in the country, and I was looking at
rates of return on assets which is in the 8 percent range. As a
business owner, I can tell you that that is extraordinarily
low. Now there are some companies worldwide who do have
tremendous returns. Now does it concern you that the U.S. firms
appear to be weakened tremendously economically and may even go
the direction of other companies previously that have simply
had to cease operations because the environment in the U.S. is
not very open to profit making?
Mr. Leshy. The Frazier Institute in Canada takes a survey
every year of mining industry executives and looks at all
jurisdictions around the world in terms of is this a good place
to do business? The United States always ranks at or near the
top of those surveys.
Mr. Pearce. Mr. Bisson, I have a follow-up question. Say 10
years ago, what rank was the U.S. in total exploration dollars
10 years ago and what is it today?
Mr. Bisson. Mr. Pearce, it is my understanding from some
statistics I have looked at recently that the U.S. currently
ranks at about 8 percent of the total mining exploration
dollars spent in the U.S. Ten years ago, it was about 20
percent.
Mr. Pearce. So worldwide it looks like investment is
evacuating out. Twelve percent has evacuated out of the U.S.
Mr. Bisson. In mining exploration.
Mr. Pearce. That is 12 percent of the total world market
used to be here but now it has left here. Mr. Tangen, any
reason why you can imagine that that capital is fleeing the
U.S.? How much are we talking about? How many dollars are we
talking about that 12 percent drop in investment in U.S.
properties? Would you have a clue how big the industry is?
Mr. Tangen. I cannot answer that.
Mr. Pearce. Mr. Bisson, do you know approximately?
Mr. Bisson. In 2006, the total amount was something like
$13.9 billion. So it is 8 percent of that. If it is anywhere
near----
Mr. Pearce. So it is in the billions?
Mr. Bisson. It is close to a billion dollars.
Mr. Pearce. OK. Mr. Tangen, I am sorry I interrupted. So
why would that capital be saying we are not going to invest any
more in the U.S.?
Mr. Tangen. I expect it is probably----
Mr. Pearce. Is your microphone on?
Mr. Tangen. I am sorry. I expect there are a couple of
reasons. Number one is that there is better opportunities
elsewhere where the governments are trying very hard to invite
them into the country, and a lot of people feel oppressed by
the regulatory regimen that is in place in the United States
right now that I know of.
Mr. Pearce. So you are saying that other countries have an
inviting atmosphere, and would you describe the atmosphere here
as not inviting?
Mr. Tangen. I believe that it depends on the
Administration. It varies from time-to-time. It is a lot more
friendly. It has been a lot more friendly in some years than it
has been in others.
Mr. Pearce. Thank you, Mr. Chairman. I see my time has
expired. I will have a second round if you go that way.
Mr. Costa. Yes. Thank you. Next is the gentleman from
Arizona, the Chairman of the Subcommittee on National Parks and
Forestry, Mr. Raul Grijalva.
Mr. Grijalva. Thank you, Mr. Chairman, and I think somebody
used the analogy in the agonizing people are doing over
royalties that it is like taxing a bank, and I think there is
some data that is important for us to be aware of that there
were 207,000 active claims in 2005 in this country. Two hundred
and forty-five billion is the value of minerals that have been
extracted since the law went into effect.
Zero is the amount of royalties we have collected on that
extraction and on those patents on those private lands. There
are half a million abandoned hardrock mines in this country.
The Interior Department itself said that the reclamation, the
cleanup price tag is $32 billion, and we have collected zero in
royalties in the past. So I think that you know while royalties
are the issue to some extent here, the patenting process is the
issue here, there is an attendant cost to the taxpayer of this
country that is also part of this legislation, and I think we
need to be aware of it as well.
But a couple of quick questions. Mr. Bisson, are there
examples for where taxpayers have had to pay millions of
dollars to buy back critical lands, say, for a wilderness area,
a national monument that has already been patented under the
mining law? Do we have any figures about how much the Federal
agencies have spent in this recovery process, for lack of a
better word?
Mr. Bisson. Your question is directed at me, sir?
Mr. Grijalva. Yes. I am sorry.
Mr. Bisson. I am vaguely aware of some instances where that
has happened but I do not have any specifics today but would be
happy to provide that information.
Mr. Grijalva. I think that would be important information
for the Committee to know what that cost has been and look
forward to that information. Mr. Leshy, we received some
testimony that says that Congress really does not have the
ability to affect existing mining claims. I would like your
thoughts on that. Are there really limits on the ability of
Congress to apply reforms to existing mining claims?
Mr. Leshy. Mr. Chairman and Mr. Grijalva, I think the
Federal government, that Congress has a very broad authority to
regulate the existing mining claims including putting a royalty
on existing mining claims, and on that point I disagree with
the suggestion of the Interior Department on this. I would be
happy to submit a legal memorandum that explains this further
but I think one essential point to understand is that a mining
claim in and of itself is not any kind of property interest
against the government.
This has been clear in Supreme Court decisions for 100
years. A mining claim without a proven discovery is essentially
a license to occupy the lands. A mining claimant without a
discovery is in the same position as a hiker on the Federal
lands from a property standpoint. Most mining claims do not
have a discovery. Therefore, most mining claims there is really
no constitutional restraint on what Congress could do.
Mr. Grijalva. Thank you. And let me ask a question of Ms.
Martin from the great and wonderful State of Arizona. Under the
Commission, Arizona Game and Fish Commission, when there is a
fish kill or a migratory bird treaty act violation that occurs
as a direct result about mining, what happens? What is the
Commission's role? What is the Commission's ability to
mitigate?
Ms. Martin. Chairman, members of the Subcommittee, it is
certainly our role to manage wildlife to try to address those
issues as best we can. We really do not have financial support
from any sources relating to where the impact was generated
typically to deal with that. Our funding sources come from the
supporting community, Federal funds that are devoted to nongame
wildlife and those kinds of sources.
So we work on habitat. We manage wildlife. We reintroduce
species when necessary, and the type of situations that you are
talking about that frequently has occurred in the State of
Arizona that there have been fish kills and streams
contaminated by mining activities, migratory waterfowl using
tailing ponds at stopover points. There have been high
mortality there.
In some cases when the EPA or DEQ gets involved there are
citations. Agencies that have the authority to do so can assess
fines, and sometimes then some of those funds will go back to
reclamation of those sites. Sometimes there is litigations and
a ruling will take money from the industry and put it back into
that site but I think what legislation like this could do would
be streamline that process and preclude the need for
litigation, preclude the need for those agencies to issue
citations, and just initially have legislation that identifies
where the funding will come from to address those kinds of
issues.
Mr. Grijalva. Thank you very much. Mr. Chairman, my time is
up, and thank you for the opportunity to be part of this
hearing.
Mr. Costa. Thank you, gentleman from Arizona. We always
like your participation in our hearing. Next we have the
gentleman from Texas I do believe, Mr. Gohmert, my classmate,
for five minutes.
Mr. Gohmert. Thank you, Mr. Chairman. I do appreciate all
the witnesses being here and it seems like a rather fortuitous
confluence of circumstances. I heard somebody use that term
before. We previously had hearings this year on the Deep Water
Royalty Relief Act of 1995, and Mr. Leshy, I see that you were
Solicitor during the Clinton Administration from 1993 to 2001,
and so you may be able to fill in a gap here.
There was some conflicting testimony whether the failure to
include the price thresholds in leases issued in 1998 and 1999
may have been a mistake or not, and since you were the
Solicitor I just wanted to ask were you involved in that
process, in the negotiation of those leases in 1998 or 1999?
Mr. Costa. Would the gentleman yield for a moment?
Mr. Gohmert. Yes, sir.
Mr. Costa. Is this related to the hardrock mining?
Mr. Gohmert. Well, it is related from this standpoint.
Attorneys and judges generally know a witness' credibility is
always at issue, and it would go to that.
Mr. Costa. But we are not in a courtroom, and we are not--
--
Mr. Gohmert. I realize that.
Mr. Costa. You are a very effective Congressperson, and I
suspect those days that when you sat on the bench, you were a
very effective judge. I have no doubt but we are here to get
information and testimony on the subject matter before the
Committee. The Chair will rule that we maintain germaneness as
it relates to the subject matter. You and I----
Mr. Gohmert. So credibility is not an issue here? You are
saying I cannot find out about the credibility of this witness'
judgment when he has come in here and he has told us about what
we should and should not do, what would and would not be
effective, and we do not know if he just cost this country $10
billion? I think that is important.
Mr. Costa. Well, I do not doubt that the gentleman thinks
it is important. The fact is that the majority and minority try
to fairly determine who the witnesses will be, and it is not
our intent, it is not this Chair's intent, to impugn the
integrity of any of the witnesses. I may disagree with their
statements. I may take issue with their points of view, and you
may do so as well. That is perfectly within the rules but none
of these witnesses here today are being cross-examined about
their sincerity as to their testimony.
Mr. Gohmert. Sir, I have never questioned the sincerity,
and I have never impugned the integrity. That was not part of
my question. I was not doing that whatsoever. The question is
one regarding credibility and credibility of judgment, and that
is always an issue, and my understanding of the rules, the
administrative rules in these hearings is that they are not
nearly as strict as the rules in court, and that what in the
minds of a relevant person would be relevant would come into
play.
I understand your ruling but I did not impugn his
integrity. It is not an issue of integrity. It is an issue of
judgment, and we have just heard his judgment on a number of
these issues, and I felt like if perhaps his call cost this
country $10 billion it could be relevant, and it could affect
the way that we looked at these leases.
Mr. Costa. Well the----
Mr. Gohmert. But I appreciate your defense of the
gentleman, and I will move on with respect to your ruling.
Mr. Costa. Then the gentleman from Texas has had an
opportunity to make his point of view known.
Mr. Gohmert. I did not find out the answer though.
Mr. Costa. Well, the point is that I want to ensure that we
have comity and we have cooperation on a bipartisan fashion
with this hearing, and I just think it is important that we
stay to the subject at hand, and I just think that the question
was moving beyond the germaneness of this legislation that we
are talking about here.
Mr. Pearce. Would the Chairman yield?
Mr. Costa. Yes, I will yield to the gentleman from New
Mexico.
Mr. Pearce. Thank you. First of all, I would note that I
would hope the gentleman from Texas has his time restored to
the point at which we began the discussion. Also on the case of
impugning, I remember in this hearing room, in this year that
Johnnie Burton came as a witness and her entire character was
called into question and whether or not she was adequately
discharging the responsibilities of her job. Also I had to
stand and defend Mr. Bisson at an earlier hearing. So the fact
that we will or do not impugn character is one that would stand
for open discussion itself.
Mr. Costa. Well, I hope the gentleman from New Mexico
believes that I have been fair in my application of allowing
members to express their views and to ask question as they see
fit and to have an opportunity----
Mr. Pearce. Absolutely do.
Mr. Costa. So I would like to get on with the hearing.
Mr. Pearce. You bet. I just wanted to make some
observations.
Mr. Costa. I would like to explore the opportunity for the
gentleman from Texas to continue his questions, and I am not
sure where he was at the point of the time where I----
Mr. Pearce. He was probably about----
Mr. Gohmert. I would be glad to go back to that point.
Mr. Pearce.--three and a half. I would guess at about the
3:45.
Mr. Gohmert. I know exactly where I was. I could go right
back to it. But----
Mr. Costa. No. I am talking about your----
Mr. Gohmert. Since you ruled otherwise.
Mr. Costa. I am talking about in terms of your time.
Mr. Gohmert. Well, Mr. Leshy, I noted that you had
commented earlier. In my years on the bench, sometimes you
notice the look in a person's eye, the way they say things.
Your comment that the Bush Administration had gutted many of
the regulations that you had put in place seemed to be with
some sense of disdain, even though you followed up by saying,
of course, that is any Administration's right. You were not
pleased about the Bush Administration's gutting some of the
regulations that perhaps you had worked on, is that correct?
Mr. Leshy. That is correct.
Mr. Gohmert. OK. Thank you. I did want to ask, Mr. Bisson,
do you happen to know what percentage of the known coal
reserves in the United States are available for lease in
mining?
Mr. Bisson. I do not have that figure but I would be happy
to research it and get that information for you, sir.
Mr. Gohmert. Do you have any kind of estimate?
Mr. Bisson. No. Because all of my work has been in the
West. I am really unfamiliar with coal resources in the eastern
part of the United States where there are substantial
resources. I am aware that as an example in Alaska, the
International Petroleum Reserve Alaska, that 40 percent of the
nation's coal reserves are there, and they are currently
withdrawn from being made available.
Mr. Gohmert. Right. And that was my understanding, when we
were talking about mining, that we have tremendous reserves,
and then for some reason the Clinton Administration, for
example, I know put much of our coal reserves off limits, and I
have always been intrigued how we pay so much to countries that
hate us for our energy when we keep shooting ourselves in the
foot in putting things off limit that would allow us to
discontinue paying people that hate us.
But with regard to mining policies, I would like to say I
have seen a couple of letters submitted here who have typed
names and that always makes me concerned. I never used to
accept those as a judge but here again normally in court the
rules of evidence are much more strict than they are at a
hearing like this.
Mr. Costa. They are.
Mr. Gohmert. Under most circumstances. Obviously there are
some exceptions but I would like to submit that when I see that
letters are speaking for the millions of hunters and anglers of
which I am one, and though I may agree with most of the things
in these letters, having things in there spoken on my behalf, I
would just like the record to reflect they are not speaking for
me on all issues, and that also you know having a lot of
natural resources in east Texas where I am from we see two ways
of doing things, and one is you can mine, you can extract
resources that God has blessed this nation with, and require
with adequate regulations an environment which actually is
better after the mining than before, and everybody comes out a
winner, and we have seen situations where there is actually
companies coming in and extracting resources that allowed the
area to be improved after it was over.
It was all a matter of what was enforced and what was
required. So I am not against mining, extracting resources,
getting off the dole from the----
Mr. Costa. I think the gentleman has clearly made his
statement. We will take that as a statement, not a question, of
course; and I might remind the gentleman that coal is not under
the 1872 Hardrock Mining Act.
Mr. Gohmert. Well, in view of some of the comments, I still
felt it was relevant because some of those seem to be alluded
to as the biggest polluters. It still applies.
Mr. Costa. I understand your point.
Mr. Gohmert. Thank you.
Mr. Costa. Let us move on. It is my turn, and a quick
question for Ms. Martin from Arizona. Why do you think the
Superfund is not sufficient to address the impacts of mining in
Arizona and elsewhere?
Ms. Martin. Mr. Chairman, the Superfund is an excellent
tool for----
Mr. Costa. Speak closer to the mic, please.
Ms. Martin. I am sorry. Thank you, sir. The Superfund is an
excellent tool for addressing sites with very high contaminant
concentrations but that still neglects the majority of mined
areas. Because the fund is limited, the criteria that need to
be met to make it on the national priority list, which guides
allocations of those funds, it is very difficult to get a site
placed on that list.
In Arizona, we have over 100,000 abandoned mine sites, 55
of those proposed to maybe someday be on the NPL, 9 sites
actually are Superfund sites in the State of Arizona, and sites
with relatively low levels of contamination can have severe
wildlife impacts to waterfowl and also throughout the food
chain because contaminants have a tendency to concentrate as
they move up the food chain.
In addition to that, the Superfund addresses only hazardous
waste. So there is a public safety issue that is clearly not
addressed by the Superfund. We have 80,000 open mine shafts
scattered throughout our public lands.
Mr. Costa. In essence, the problem is much bigger than the
Superfund is capable of handling? I mean is that your bottom
line?
Ms. Martin. That is correct, sir.
Mr. Costa. All right. Mr. Bisson, I want to move over to
you. As was discussed by both Senator Craig and in the question
that I addressed earlier to Mr. Leshy, the issue of patents, of
course, is part of the discussion in this legislation. As you
know, the annual Congress imposed moratorium since 1994 but
notwithstanding that there are or were patents in the pipeline.
Can you tell me roughly how much acreage has been covered since
1994 on patents?
Mr. Bisson. I do not know that I have the acres with me. I
could follow up with you.
Mr. Costa. Please provide that information.
Mr. Bisson. But I can tell you that in fact we have issued
over the 405 cases we had when the moratorium was put in
effect, more than 90 percent of the patents have been
addressed, and we only have 38 left to complete.
Mr. Costa. OK. At $2.50 to $5.00 per acre, how much money
did those patents reflect?
Mr. Bisson. I do not have that information with me.
Mr. Costa. Can you provide that for us too?
Mr. Bisson. Yes.
Mr. Costa. My understanding--and I do not know how in-depth
your knowledge is on it--but that the Bureau of Land Management
must disapprove of the mining or any mining that would cause
unnecessary or undue degradation of public lands. To your
knowledge, do you know how many times the Bureau of Land
Management has disapproved any of those permits?
Mr. Bisson. I cannot tell you the exact number but I am
aware of a particular mining situation in California where the
Bureau has taken the position to prevent the mining from
happening, and it is in the courts right now.
Mr. Costa. OK. In 2005, and this relates to the regulations
3809 that we spoke of earlier, there was a report that not all
hardrock mining operations on BLM lands had required the
financial assistance in place and that some lacked reclamation
plans or current cost estimates as it related to the
requirements under the law. Could you tell me your response to
that government accountability report?
Mr. Bisson. I can tell you that at this point in time we
have close to $1 billion in financial assurances in place for
the mines that are on public lands. We require financial
assurances that cover the complete cost of reclamation, and we
have the ability to require establishment of a trust fund to
address any follow up monitoring of water quality or any other
issues into the future once a mine is closed.
Mr. Costa. Our research tells us that there are about 48
hardrock mining operations that have been closed due to
bankruptcy, and it is estimated that there may be a $50-
million-plus cleanup that the taxpayers may inherit on that. Do
you think there is a problem as it relates to the Bureau of
Land Management's efforts to require that the 3809 regulations
were implemented so that the guarantees that were required as a
part of those permits that those costs would be maintained? Do
you see a problem there?
Mr. Bisson. It is my understanding that the bulk of those
bankruptcies occurred on operations that were preexisting,
using past practices. I am not aware of any specific
bankruptcies where lands remain to be reclaimed that have gone
into and have been mined while the 3809 regulations we are
dealing with right now have been in place but I can do some
more research.
Mr. Costa. We would like you to look at that and find out
because I am not sure that is not the case but between now and
our hearing in Elko in August if you could provide that
information and the other information. My time has expired but
to know what percent of the operating mines and how many mines
does the Bureau of Land Management inspect each year, and you
can submit that later on.
Mr. Bisson. Yes, sir.
Mr. Costa. OK. And the next witness is the gentleman from
Nevada, the once Ranking Member of this committee, Mr. Heller.
Mr. Heller. Thank you, Mr. Chairman.
Mr. Costa. You did a very good job.
Mr. Heller. Thank you. It was an honor. I will yield my
time to the Ranking Member.
Mr. Costa. OK.
Mr. Pearce. Thank you. I thank the gentleman for yielding.
Mr. Leshy, when I read in Section 505, the Administrative and
Judicial Review, subparagraph [b][6][b], I read that
notwithstanding the decision of the United States Court of
Appeals for the 10th Circuit in the High Country Citizens
Alliance v. Clark that the appropriate Federal District Court
has jurisdiction to hear any judicial challenge to the
Secretary's actions described in subparagraph [a], and it
continues on. So are you familiar with that case at all?
Mr. Leshy. Yes, I am.
Mr. Pearce. Has that case ever been heard in court?
Mr. Leshy. Yes. It was a decision of the 10th Circuit Court
of Appeals I think.
Mr. Pearce. Was it heard before the 10th Circuit?
Mr. Leshy. Yes, and it was decided by the 10th Circuit.
Mr. Pearce. It went to District Court--Federal District
Court.
Mr. Leshy. Federal.
Mr. Pearce. And what was decided there?
Mr. Leshy. Yes. The 10th Circuit Federal Court of Appeals.
Mr. Pearce. No. What did the District Court decide?
Mr. Leshy. I cannot remember actually. I know----
Mr. Pearce. Actually, I think I have that information
surprisingly enough, and they decided against, against the
request by the plaintiffs I think.
Mr. Leshy. Well, I know what the----
Mr. Pearce. And then it was appealed. Was it not appealed
to the 10th Circuit?
Mr. Leshy. Yes.
Mr. Pearce. So if you were not familiar with what decision
was made why would it be appealed?
Mr. Leshy. No.
Mr. Pearce. What is your relationship to the case as a
matter of fact?
Mr. Leshy. Well, I followed it as an academic. The 10th
Circuit decided the case. The case is over.
Mr. Pearce. Did you ever or were you involved specifically
in the case?
Mr. Leshy. I believe I signed onto an amicus brief that
asked the Supreme Court to----
Mr. Pearce. So you signed on, and you were acting in some
consulting fashion, and you were not familiar with the first
decision?
Mr. Leshy. Well, I cannot remember what the first decision
was but I know what the 10th Circuit----
Mr. Pearce. But would it be appealed? You are a lawyer. I
am not. The appeal process I would consider it is only going to
be appealed if there is some decision that is contrary to the
beliefs of the people who bring the suit. So of giving that,
let us move on. So what the 10th Circuit Court did is basically
they said yes or no, we are going to agree or disagree?
Mr. Leshy. This was a case where a local community of
Crested Butte, Colorado----
Mr. Pearce. Yes, I appreciate knowing that but I am asking
what the Court decided, sir.
Mr. Leshy. The case was the local community of Crested
Butte, Colorado----
Mr. Pearce. If you would tell me what the 10th Circuit. I
have five minutes, sir. What did the 10th Circuit say?
Mr. Leshy. Asked the Court to review the decision of the
Department of Interior to issue a patent for a mountaintop
overlooking the town. They did not want that land to be
privatized under the Mining Law of 1872.
Mr. Pearce. Was that review done?
Mr. Leshy. The 10th Circuit said in its final decision and
the final decision of the Courts was that under the old mining
law because of its peculiarities no citizen had the right to
bring a Court action to review the government's decision to
issue that patent. That, in my judgment and the judgment of
about 25 other law professors who signed this brief, was
totally out of step with the law. What the law ought to be.
Mr. Pearce. So you then had remedy, and the remedy was?
What remedy did you take then?
Mr. Leshy. The remedy is in this legislation.
Mr. Pearce. The remedy. You did not go to the Supreme
Court?
Mr. Leshy. The Supreme Court denied review.
Mr. Pearce. So the request was made for the Supreme Court
to look at it?
Mr. Leshy. Right.
Mr. Pearce. And they said we do not feel any facts that are
compelling?
Mr. Leshy. They did not say anything. They said, we deny
review.
Mr. Pearce. We are not going to review?
Mr. Leshy. Right.
Mr. Pearce. So we have now----
Mr. Leshy. The issue----
Mr. Pearce.--carried this to the District Court, and they
found against. We have carried it to the Appellate Court, and
they found against. It went to the Supreme Court, and they
said, we do not really see a problem that would rise to that
level. And you here testifying today have been signed onto that
for whatever you call that, and now I find the legislative fix
that would bypass every Circuit, every decision made up to this
point. It is amazing. Stunning.
Mr. Leshy. Every----
Mr. Pearce. Did you talk with anybody about this section?
Have you in any time in your history conferred with anybody,
staff or anybody about this section and the inclusion in the
bill or has that just kind of come out of the blue?
Mr. Leshy. No. I have talked to the staff about this.
Mr. Pearce. You have talked to staff.
Mr. Leshy. Yes.
Mr. Pearce. So you were signing on in Court. You were a
participant through all processes. You know that the Court
system found. Mr. Bisson, did the agency ever take a look at
that request?
Mr. Bisson. I am not aware of it, sir.
Mr. Pearce. OK. Do you have any regulatory status on such
things?
Mr. Bisson. On the----
Mr. Pearce. On such reviews.
Mr. Bisson. Not that I am aware of. Are you talking about
the patent review?
Mr. Pearce. Yes.
Mr. Bisson. We do have regulatory requirements for patent
review and standards that we have to comply with.
Mr. Pearce. I thank the gentleman. I see that my time has
expired. I thank the gentleman for yielding his time.
Mr. Costa. Thank you, gentleman from New Mexico. I will add
that whether one is a private citizen or whether one serves in
the legislative or executive branch or the judicial branch I do
not think one gives up their rights as citizens to participate
in the legislative process, and certainly, Mr. Leshy, you are
viewed as valuable to the Chairman in writing any legislation,
and your views are opined that is certainly the privilege that
we all can take of all the people who have expertise here.
So I want to thank you, and I want to thank this panel for
your testimony, and we need to move on because we have a lot of
things going on on the Floor, and we have another panel that is
patiently waiting, and we would like that new panel to come
forward. We have I believe five witnesses on the new panel, and
we will look forward to hearing your statement. No, there are
three of us. So we are going to run through regular order here.
I was wrong. We have six members of this panel. Well, we
are pleased to have all of you, and let me make sure that I am
on the proper page here. Our next panel involves the following
witnesses: Mr. Steve Ellis, Vice President of Programs for
Taxpayers for Common Sense; Mr. Dusty Horwitt from Public Lands
Program Analyst for Environmental Working Group; Mr. Tony Dean,
Sportsman and Radio Host of Tony Dean Outdoors; Mr. Michael
Marchand, Chairman of the Confederated Tribes of Colville--
Colville I am told, is that proper pronunciation--Reservation;
Mr. William Champion, President and CEO of Kennecott Utah
Copper Corporation; and Mr. Ted Wilton, Executive Vice
President of Neutron Energy Company.
I think I have included everyone, and so we will begin with
Mr. Ellis and recognize him for five minutes. As I told the
previous panel, for those of you who may not be familiar with
the process here testifying in Congress, we have a five-minute
rule. I try to apply that equally. Some days more successfully
than others.
Nonetheless, we would appreciate your following within that
five-minute rule, and if you go beyond that, I will politely
let you know that you need to wind up. So we appreciate your
time and the distance you traveled and any further information
obviously will be submitted for the record. Mr. Ellis for five
minutes.
STATEMENT OF STEVE ELLIS, VICE PRESIDENT OF PROGRAMS, TAXPAYERS
FOR COMMON SENSE
Mr. Ellis. Thank you. Good morning, Chairman Costa, Ranking
Member Pearce, members of the Subcommittee. Thank you for
inviting me to testify this morning on H.R. 2262, the Hardrock
Mining and Reclamation Act of 2007. I am Steve Ellis, Vice
President of Taxpayers for Common Sense, a national nonpartisan
budget watchdog group. Since its inception in 1995, TCS has
pushed for the reform of the General Mining Act of 1872. It is
a relic of an entirely different era and high time it is
amended to reduce its exorbitant taxpayer subsidies.
Taxpayers for Common Sense supports H.R. 2262 as a strong
step toward reigning in the excesses of the Mining Law of 1872.
I will detail some of these reasons. The 1872 Mining Law
enables entitles to patent or buy Federal land for a pittance.
Under the law you would pay in 1872 dollars less than 31
cents to buy an acre of Federal land. So you end up with
examples such as in Crested Butte, Colorado where the Federal
government sold 155 acres to the Phelps Dodge Mining Company
for approximately $790, despite a company estimate that the
land could produce up to $158 million in after tax profits over
11 years. This is an area where land prices range as high as a
million dollars per acre.
In 1994, Congress began enacting one-year patent
moratoriums. However, continuing the decade-long process of
one-year extensions makes little sense for anyone. H.R. 2262
rightly throws patenting of Federal land onto the ash heap of
history. Despite the private sector extracting public assets
from the ground, under the Mining Law of 1872 taxpayers receive
no compensation whatsoever.
Since enactment of the mining law, the total value of
minerals that have been taken without compensation is an
estimated $245 billion. That is the equivalent of emptying Fort
Knox of all its gold two and a half times over. By comparison,
the oil and gas industry generally pays 12 and a half percent
in royalties on what they extract from onshore Federal lands.
H.R. 2262 requires an 8 percent royalty on net smelter returns.
Net smelter is essentially the gross revenue for the mineral
product that the mine receives from a refinery or smelter.
This ensures that the royalty automatically adjusts to
changes in the market and does not over- or undercharge. TCS is
aware of other proposals such as net revenue or net profits
royalty but we believe these offer too much opportunity for
gamesmanship on what the deductible costs will be.
Mineral Business Appraisal, a self-described geologic and
mining expert in the appraisal of all types of mineral property
describes net profits royalty indicating, ``There are virtually
no buyers for this type of royalty because of the creative
accounting that the mining operator can use to depress the
royalty payment. The distinguishing feature of net profits
royalty is that depending upon the exact definitions in the
mining lease in the actual calculations, it will very often be
zero.''
According to Mineral Business Appraisal, net smelter
royalty payments are ``also fairly simple to calculate and
administer, in that only the selling price and the quantity of
mineral product produced or sold are required for the
determination.'' In addition, ``this type of royalty will
usually have the highest market value of all the royalty
types.''
One significant change that Taxpayers for Common Sense
would like to see in H.R. 2262's royalty structure is to
increase the payment to at least 12-and-a-half percent, which
would harmonize it with high rates for other extractive
industries. All too often after the minerals have been removed
mining operations split town and leave communities with a mess
and taxpayers holding the bag for cleanup. It is a big bag.
A 2004 report by the EPA put the cost of remediation of
hardrock mines at $20-to-$54 billion. To address these unfunded
liabilities, H.R. 2262 tightens existing regulations requiring
financial assurance and operation plans and restricts mining
from areas where the risk of an expensive cleanup is too great.
Over the years, the Department of Interior has been prodded
repeatedly to require adequate financial assurances in the form
of surety bonds and other tangible assets. To help taxpayers
deal with the existing fiscal hangover, H.R. 2262 uses the
royalty payments to establish two trust funds. One would
receive two-thirds of the royalty payments to clean up areas
where the mining industry left communities and taxpayers with a
costly mess. The other would receive one-third of the royalty
payments to help states, communities and Indian tribes that are
socially and economically impacted by past mineral activities.
Both of these trust funds would remain on budget and would
be subject to future appropriations. These two trust funds
absorb the entire revenue generated by the royalties in H.R.
2262. As the bill progresses toward enactment, TCS urges
Congress to enable a portion of the revenue generated by the
bill to be deposited in the general treasury. The minerals
extracted from the land are owned by all of us, and all
Americans should reap the financial benefits.
In conclusion, taxpayers have waited for far too long for
real reform of the Mining Law of 1872. Public lands are
taxpayer assets and should be managed in a way that preserves
their value, ensures a fair return from private industry using
them for profit, and avoids future liability. Thank you very
much, and I would be happy to take any questions that you might
have.
[The prepared statement of Mr. Ellis follows:]
Statement of Steve Ellis, Vice President, Taxpayers for Common Sense
Good morning Chairman Costa, Ranking Member Pearce, members of the
Subcommittee. Thank you for inviting me to testify this morning on H.R.
2262, The Hardrock Mining and Reclamation Act of 2007. I am Steve
Ellis, Vice President of Taxpayers for Common Sense, a national non-
partisan budget watchdog group.
Since its inception in 1995, TCS has pushed for reform of the
General Mining Law of 1872. We are not advocating modernizing this law
simply because it is 135 years old. After all, our Constitution is well
over 200 years old and we all think that it is a very fine document.
However, we have amended the Constitution 27 times over the years for
good reasons. The Mining Law of 1872 is a relic of an entirely
different era and it is high time it is amended to reduce its
exorbitant taxpayer subsidies.
Subsidies are simply a tool to encourage behavior that might
otherwise not occur. The subsidies in the Mining Law of 1872 were
intended as an incentive to populate the West and encourage economic
development and production that Congress and President Grant believed
would not otherwise occur. H.R. 2262 recognizes that the law is an
anachronism, and now it is time to ensure that taxpayers aren't forced
to continue picking up the tab.
Taxpayers for Common Sense supports H.R. 2262 as a strong step
toward reigning in the excesses of the Mining Law of 1872. I will
detail some of these excesses and describe how H.R. 2262 addresses
them.
Giveaway of Federal Land
Under the Mining Law of 1872, a claimant can ``patent'' or purchase
a claim for either $2.50 or $5.00 per acre. Just to put that in
perspective, the 2006 purchasing power of $2.50 from 1872 is just 15
cents. $5.00 is 31 cents. That's how little we are valuing taxpayer's
property. Staking a claim on federal land simply requires an annual
maintenance fee of $125 per acre plus an additional $30 location fee
and $15 new mining claim service fee for first timers.
A couple examples of taxpayers getting soaked by patenting:
In Crested Butte, Colorado the federal government sold
155 acres to the Phelps Dodge mining company for approximately $790,
despite a company estimate that the land could produce up to $158
million in after-tax profits over 11 years. This is in an area where
land prices range as high as $1 million per acre.
In Nevada, in 1994, American Barrick paid $9,765 for
1,950 acres that contained an estimated $10 billion in gold.
In some cases, it appears that mining patents have been little more
than a ruse for developers to get their hands on valuable federal
property before flipping it for other, more lucrative uses. A few
examples:
In 1983, the Forest Service sold 160 acres near the
Keystone, CO ski resort for $400. Six years later the land sold for $1
million.
In 1970, a businessman bought 61 acres in Arizona for
$153. Just ten years later he sold it to a developer for $400,000 plus
an 11% share in future profits.
In FY1995, Congress began enacting one-year patent moratoriums.
Patent applications that were in the pipeline have been grandfathered,
but new patents have not been issued. However, continuing the decade-
long practice of one-year extensions makes little sense for the mining
industry or taxpayers. H.R. 2262 rightly throws patenting of federal
land onto the ash heap of history. The Congressional Research Service
points out a critical fact: ending the practice of patenting ``will not
stop the production of valuable mineral resources from the public
lands, but will prevent the further transfer of ownership of public
lands to the private sector.'' Transfer of public lands to the private
sector at bargain basement prices should be stopped permanently.
Gold and Other Valuable Minerals for Free
After charging a pittance for the land, the Mining Law of 1872
essentially ignores that mining is about recovering valuable minerals
from the land. Despite the private sector extracting public assets from
the ground, taxpayers receive no compensation whatsoever. Since
enactment of the mining law, the total value of minerals that have been
taken without compensation is an estimated $245 billion. That's the
equivalent of emptying Fort Knox of all its gold two and a half times
over.
By comparison, the oil and gas industry generally pays 12.5% in
royalties on what they extract from onshore federal lands. States
appear smarter than the federal government on this issue as well, with
many of them requiring royalties for mining on state lands.
H.R. 2262 requires an 8% royalty on net smelter returns. Net
smelter return is essentially the gross revenue for the mineral product
that the mine receives from a refinery or smelter. This ensures that
the royalty automatically adjusts to changes in the market and does not
over- or undercharge. TCS is aware of other proposals such as net
revenue or net profits royalty, but we believe these offer too much
opportunity of gamesmanship on what the deductible costs will be. I am
reminded of naive film investors that agree to take a share of the
profits--after the expenses, there are no profits.
Mineral Business Appraisal, self-described geologic and mining
experts in the appraisal of all types of mineral property, describe net
profits royalty, indicating ``[t]here are virtually no buyers for this
type of royalty because of the creative accounting that the mining
operator can use to depress the royalty payment amount. The
distinguishing feature of a net profits royalty is that, depending upon
the exact definitions in the mining lease and the actual calculations,
it will very often be zero.''
According to Mineral Business Appraisal, net smelter ``royalty
payments are also fairly simple to calculate and administer in that
only the selling price and quantity of mineral product produced or sold
are required for their determination.'' In addition, ``this type of
royalty will usually have the highest market value of all the royalty
types.'' Simple, predictable, and valuable, that sounds like it is in
the taxpayer's interest.
One significant change Taxpayers for Common Sense would like to see
in H.R. 2262 royalty structure is to increase the payment to at least
12.5%, which would be more commensurate with other extractive
industries. A key point to remember is that the 12.5% royalty would
still be based on current markets and still represents a very small
share of the gross return.
Sticking Taxpayers with the Fiscal Hangover
All too often, after all the minerals have been removed, mining
operations split town and leave communities with a mess and taxpayers
holding the bag to pay for clean up. A 2004 report by the U.S.
Environmental Protection Agency (EPA) Inspector General indicated that
the Superfund National Priority List contained 63 hardrock mining sites
and another nearly 100 sites could be added in the future. The price
tag for cleaning up all of these sites was $7-$24 billion, with more
than half of that amount likely to be stuck on taxpayers. Because
clean-up takes such a long time, it is likely that some of the
businesses currently on the hook will no longer remain viable and the
taxpayer's share of clean-up will increase.
The potential unfunded liability from hardrock mining sites is even
larger. A 2004 report by the EPA put the cost of remediation of hard
rock mines at $20-$54 billion. Although regulations for bonding were
tightened with Section 3809 rules, they are still too weak to
adequately protect taxpayers. According to a June 2005 report by the
Government Accountability Office (GAO), the Bureau of Land Management
(BLM) indicated that 48 hardrock operations on BLM land had ceased
without reclamation since the agency began requesting some form of
financial assurances in 1981. BLM estimated the costs of reclaiming 43
sites at $136 million, which the GAO indicated is a low-ball estimate.
To address these unfunded liabilities, H.R. 2262 requires financial
assurance and operation plans, and restricts mining from areas where
the risk of an expensive clean-up is too great. Over the years, the
Department of Interior has had to be prodded repeatedly to require
adequate financial assurances in the form of surety bonds and other
tangible assets. Clearly, further legislation to ensure taxpayers are
not stuck with the tab for cleaning up mining messes is required.
To help taxpayers with the fiscal hangover, H.R. 2262 uses the
royalty payments to establish two trust funds. The Abandoned Locatable
Minerals Mine Reclamation Fund would receive two-thirds of the royalty
payments and other fees and related collections. The Locatable Minerals
Community Impact Assistance Fund would receive one-third of the royalty
payments. Both of these trust funds would remain on budget and would be
subject to future appropriations.
The abandoned mines fund would essentially tap mining industry
royalties and other payments to clean up areas where the mining
industry left communities and taxpayers with a costly mess. The
community impact assistance fund would help States, communities and
Indian tribes that are socially or economically impacted by past
mineral activities.
These two trust funds absorb the entire revenue generated by the
royalties and other fees associated with H.R. 2262. As the bill
progresses toward enactment, TCS urges Congress to enable a portion of
the revenue generated by the bill to be deposited in the General
Treasury. The minerals are extracted from land owned by all taxpayers,
and all taxpayers should reap the financial benefits. Moreover, TCS
believes that the standards for both funds should be clarified and
tightened. Clean-up standards should be strong and explicit, and
restrictions placed on the community impact fund to ensure that it
doesn't become a long term subsidy, but rather a time-limited tool to
help communities redirect their economy in the wake of a mining
operation.
An additional provision in H.R. 2262 prevents bad actors from being
involved in future operation of mines. This will hopefully put an end
to the racket where shell companies and foreign subsidiaries make a
business decision to declare bankruptcy or close shop only to sprout up
with another mine in a different location.
Conclusion
Taxpayers have waited far too long for real reform of the Mining
Law of 1872. Public lands are taxpayer assets, and should be managed in
a way that preserves their value, ensures a fair return from private
interests using them for profit, and avoids future liability. H.R. 2262
certainly advances that cause, which is why Taxpayers for Common Sense
supports the bill. As it moves through the legislative process we will
work to ensure that taxpayer protections are strengthened, some
percentage of the royalty payments are returned to the treasury, and
that the royalty rates are increased to match those for oil and gas.
______
Mr. Costa. Thank you, Mr. Ellis, and thank you for staying
within the five-minute rule. Our next witness before us is Mr.
Horwitt, who I will ask to testify for five minutes, please.
STATEMENT OF DUSTY HORWITT, PUBLIC LANDS PROGRAM ANALYST,
ENVIRONMENTAL WORKING GROUP
Mr. Horwitt. Thank you, Mr. Chairman, distinguished members
of the Subcommittee. My name is Dusty Horwitt. I am a Public
Lands Analyst with Environmental Working Group. We are a
nonprofit research organization here in Washington and Oakland,
California. Thank you for this opportunity.
As we speak, there is a land rush in the West for mining
claims that is driven by the sky high price for uranium and
other metals and caused by demand from our own nation, China,
India and other countries around the world. For the last
several years, Environmental Working Group has analyzed mining
claims on Federal lands using a computerized database from the
Bureau of Land Management. Our work has appeared in
publications around the country--The Arizona Republic,
Albuquerque Journal, Fresno Bee, Denver Post, New York Times,
and The U.S. News and World Report.
Mr. Chairman, what we have found is that each and every day
there is a frenzy of claims escalating throughout the West.
This threatens a crisis for the Grand Canyon, where there has
been an explosion of uranium mining claims. I would like to
show a graph that is up on the screen.
Our research has found that in 12 western states mining
claims have increased more than 80 percent since January 2003.
Over an eight-month period from last September to this May, the
BLM has recorded 50,000 new mining claims. This land rush is
sweeping the West, despite the remnants of an earlier
generation of uranium mining that left a legacy of death and
disease, despite the fact that mining is our leading source of
toxic pollution, and despite the fact that valid mining claims
give the claim holders a property right that the Federal
government has interpreted as superseding efforts to protect
the environment and preserve our American heritage.
What this means is that speculative Chinese demand for
uranium has more influence over the fate of mining in the West
than people who work and live there. I would like to show a few
images that show the threats to some of our treasured places,
show areas that bear the legacy of past uranium mining, and
remind us that mining impacts can spread across great
distances.
Up on the screen is an image of Grand Canyon National Park.
The claims are featured in blue on the North and South Rims.
What we found is that as of July of this year mining interests
hold 815 claims within five miles of the park, 805 of those
stakes since January 2003, and most of these are for uranium. A
Canadian company, Quaterra Resources, has already proposed to
drill exploratory holes for uranium north of the Canyon. This
operation would include a helicopter pad to carry supplies in
and out in already crowded air space.
Next let us look at a map of the canyon country in southern
Utah and Nevada. Here we can see many claims that are also for
uranium. Arches National Park in Utah has 869 claims within
five minutes of its boundary, 864 of them stakes since January
2003. Canyonlands National Park, 233 claims within five miles,
all of them staked since January 2003.
Some of the claimed land that you can see on the Colorado
side are areas treasured for their scenic and recreational
values. You will note the town of Moab, Utah, near the top left
corner of the map. The Department of Energy has started a
decade-long project there to clean up 12 million tons of
uranium mine waste near Moab that has contaminated the land
near the Colorado River. This waste is a threat that could
contaminate drinking water for millions of people. The cleanup
costs are estimated anywhere from $412 million to $697 million.
One other place I would like to show is Yosemite National
Park in California. Here you will see 83 claims within five
miles of the park, 50 of them staked in the last four years.
Without proper protections for our public lands, these claims
can be costly. In 1996, the Federal government paid $65 million
to buy out patented claims just three miles from Yellowstone
National Park. These claims would have been a mine at the
headwaters of three streams that flow into the park.
What this incident shows is that mine pollution can spread
across great distances. In 1992 in Summitville a spill of
cyanide heavy metal laden water killed some 20 miles of the
Alamosa River in Summitville, Colorado. The area is now a
Superfund site. Other towns in the West currently face mine
proposals that could affect their drinking water.
H.R. 2262 would help address these problems by providing
standards to protect water quality, permanently ending the sale
of public land for no more than $5 an acre, and empowering land
managers to balance mining with other values and resources,
just like they do with other industries that operate on Federal
land. Mining provides materials essential to our economy but it
must be conducted in a way that strikes a balance with other
resources, especially increasingly scarce water supplies in the
West.
When hundreds of mining claims are pushing up to the edge
of the Grand Canyon, it is time to draw the line. We need
reform, and we need it now. Thank you.
[The prepared statement of Mr. Horwitt follows:]
Statement of Dusty Horwitt, JD, Public Lands Analyst,
Environmental Working Group
Background
Mr. Chairman, distinguished Members of the Subcommittee: My name is
Dusty Horwitt, and I am a Public Lands Analyst at Environmental Working
Group (EWG), a nonprofit research and advocacy organization based in
Washington, DC, and Oakland, California. I thank the members of the
subcommittee for this opportunity to testify.
The Washington Post recently reported that China plans to spend $50
billion to build 32 nuclear power plants by the year 2020. Some experts
predict that China may need 200 or even 300 plants by 2050. And China
is hardly alone in its desire to increase the use of nuclear power.
At first glance, this issue would appear to have little to do with
today's hearing on reforming the Mining Law of 1872. But there's a land
rush in the West for mining claims and it's driven by the sky-high
price of uranium and other metals caused by speculative demand from
China, the United States and players around the globe.
Today, in the world of U.S. mining law, speculative Chinese demand
for nuclear fuel has more influence over the fate of mining in the
American West than the people who work and live there. Short of buying
out the claims or other congressional intervention, the federal
government interprets mining law as providing virtually no way to stop
uranium or other hard rock mining, even when it is in plain view of
national parks such as the Grand Canyon, once a claim is staked.
For the last several years, the Environmental Working Group has
analyzed mining claims on federal land, using computerized data
provided by the Bureau of Land Management. Our work has been reported
in dozens of news outlets including the Albuquerque Journal, Arizona
Republic, Fresno Bee, Denver Post, and Seattle Post-Intelligencer (see
attachment #1 for full list).
Mr. Chairman, what we have found is a frenzy of claim staking that
is escalating each day and threatens a crisis for the Grand Canyon,
where there has been an explosion of uranium mining claims. A mining
claim gives the claim holder the right to mine on federal land.
[GRAPHIC] [TIFF OMITTED] T7014.001
.epsOur research shows that in 12 Western states, the total number
of active mining claims has increased from 207,540 in January 2003 to
376,493 in July 2007, a rise of more than 80 percent. Over an eight-
month period, from last September to this May, the BLM recorded more
than 50,000 new mining claims. Current claims cover an estimated 9.3
million acres.
Source: Environmental Working Group analysis of Bureau of Land
Management's LR2000 Database, July 2007 download.
We have seen this increase in every Western state, with claims for
all metals increasing by 50 percent or more in Arizona, Colorado, New
Mexico, Nevada, South Dakota, Utah and Wyoming.
[GRAPHIC] [TIFF OMITTED] T7014.002
.epsMany of the new claims are for uranium. The BLM reports that
the estimated number of uranium claims staked in Colorado, New Mexico,
Utah and Wyoming combined increased from less than 4,300 in Fiscal Year
2004 to more than 32,000 in Fiscal Year 2006.
[GRAPHIC] [TIFF OMITTED] T7014.003
.epsMany of these claims are being staked by foreign mining
companies and speculators who could mine the land or sell to
multinational corporations who often extract minerals using techniques
involving toxic chemicals, giant earthmoving equipment, sprawling road
networks and vast quantities of water where water is a precious, scarce
resource.
This land rush is sweeping the West despite the remnants of an
earlier generation of uranium mines that have left a legacy of death
and disease, despite the fact that mining as a whole is our leading
source of toxic pollution and despite the fact that mining claims give
companies a property right that effectively supercedes efforts to
protect the environment and preserve our American heritage.
In the face of a landslide of global economic forces that threaten
many of our most valued natural places and the health of people all
across the American West, the 1872 Mining Law offers the legal
equivalent of a pick and a shovel.
The following photo images were produced by EWG by linking federal
data on mining claims with Google Earth satellite photos of national
parks. They show the clear threats to just a handful of our most
treasured national parks and depict areas that bear the legacy of past
uranium mining pollution. They remind us that mining impacts can spread
across great distances carried by wind and water.
[GRAPHIC] [TIFF OMITTED] T7014.004
.epsThis satellite image of Grand Canyon National Park from our
website shows mining claims featured in blue, clustered on both the
north and south rims. We found that as of July, mining interests hold
815 claims within five miles of the Park, 805 of them staked since
January 2003. Many of these claims are for uranium.
A Canadian company, Quaterra Resources, has already proposed to
drill exploratory holes for uranium on claims just north of the Canyon.
The operation would include a helicopter pad to carry supplies in and
out. The idea of uranium mining near America's greatest national
treasure is troubling and the thought of helicopter flights of
radioactive material in an area already crisscrossed by dozens of
tourist flyovers a day is even more disconcerting.
The same explosion of claims has occurred in the canyon country of
southern Utah and Colorado.
[GRAPHIC] [TIFF OMITTED] T7014.005
.epsMany of these claims are also for uranium. Arches National Park
in Utah has 869 claims within five miles of its boundary, 864 of them
staked since January 2003. Nearby, Canyonlands National Park has 233
claims within five miles, all staked since January 2003. Many of the
claims on the Colorado side are near lands treasured for their scenic
and recreational values.
The Legacy of Uranium Mining
Near the top left of the map is the town of Moab, Utah. The
Department of Energy has begun a decade-long project to clean up 12
million tons of radioactive uranium mine waste near Moab that have
contaminated land near the Colorado River. The waste is a threat that
could pollute drinking water for millions. Cleanup estimates range
between $412 million and $697 million.
You'll also note the town of Monticello, Utah at the far south of
the map. Colorado's Grand Junction Daily Sentinel recently reported
that residents of Monticello claim unusually high rates of cancer they
believe were caused by a now-closed uranium mill.
The Los Angeles Times reported in a landmark series last year how
uranium mining has left a legacy of cancer and a degenerative disease
known as Navajo Neuropathy on the Navajo reservation that includes
Arizona, Colorado, Utah and New Mexico.
The last image shows Yosemite National Park in California.
[GRAPHIC] [TIFF OMITTED] 37014.006
.epsHere, there are 83 claims within five miles of the Park, 50 of
them staked in the last four years. You can see the five-mile boundary
in a lighter shade of green. And there are still more national parks
and monuments that face threats from mining.
[GRAPHIC] [TIFF OMITTED] 37014.007
.epsWithout proper safeguards for our public lands, protecting
national parks from these claims can be very costly. In 1996, the
federal government paid $65 million to buy out patented claims just
three miles from Yellowstone National Park that would have been the
site of a major gold mine. The mine would have been located at the
headwaters of three streams that flow into the park.
Mining is the Nation's Leading Source of Toxic Pollution
The increase in claims including those near our most treasured
places is cause for concern given the significant impacts of mining for
uranium and other metals. According to the U.S. Environmental
Protection Agency's Toxics Release Inventory (TRI), metal mining is the
leading source of toxic pollution in the United States--a distinction
the industry has held for eight consecutive years (1998-2005), ever
since mining was added to the TRI list.
The EPA has also reported that more than 40 percent of Western
watersheds have mining contamination in their headwaters. The total
cost of cleaning up metal mining sites throughout the West is an
estimated $32 billion or more.
Unearthing Pollution
The extraordinary pollution generated by metal mining is caused
largely by digging and the sheer size of contemporary mining
operations. Modern mining practices are a far cry from the use of mules
and pick axes that were common during the late 1800s when the Mining
Law was written. In part, the techniques have changed because
concentrated deposits of gold and other metals are largely gone. Mining
companies now excavate ``mineralized deposits,'' or ore that contains
microscopic amounts of precious metal.
To extract the amount of ore they desire, modern mining operations
typically have to remove enormous quantities of rock and dirt with
heavy, earthmoving equipment. The holes they dig can exceed one mile in
diameter and 1,000 feet in depth.
Mining companies commonly use cyanide or other chemicals to extract
metal from tons of low-grade ore excavated in modern mining operations.
In this process, known as heap leaching, companies excavate huge
quantities of rock and earth filled with microscopic particles of
precious metal. They place the earth on a plastic-lined heap leach pad
and then spray or drip cyanide over the earth. As the cyanide trickles
through the heap, it binds to the precious metal. The mining company
then collects the metal from the cyanide solution in liquid-filled pits
at the base of the rock pile
Cyanide and other chemicals can poison water, land and wildlife
near mines, but most mining pollution results from digging. When mining
companies dig for metals, they expose sulfur-laden rock to air and
water, resulting in the formation of sulfuric acid. The acid often
drains away from the mine site into ground or surface water where it
makes the water so acidic that fish and other organisms cannot survive.
This phenomenon is known as acid mine drainage. At California's
abandoned Iron Mountain mine, for instance, scientists discovered the
world's most acidic water with a pH of -3.6, 10,000 times more acidic
than battery acid.
The acid itself is not the only problem. When the acid comes in
contact with rock, it dissolves toxic metals including arsenic,
cadmium, lead and mercury, and carries those metals into water sources.
Acid mine drainage from the Iron Mountain Mine, for example, has
periodically released harmful levels of heavy metals into the
Sacramento River and has virtually eliminated aquatic life in several
nearby creeks. Roughly 70,000 people use surface water within three
miles of Iron Mountain Mine as their source of drinking water. Acid
mine drainage laden with heavy metals is a problem throughout the West
from past and present mines.
Once it begins, such pollution is very difficult to stop. For
example, Roman metal mines are still draining acid in Europe. Closer to
home, the EPA wrote that Newmont's Phoenix proposal in Nevada ``will
likely create a perpetual and significant acid mine drainage problem
requiring mitigation for hundreds of years.'' Furthermore, reclaiming
acid draining mines after mining ceases is a huge financial liability.
That State of New Mexico estimates that one copper mine will cost more
than a quarter billion dollars to clean up.
Spreading Pollution
It is important to understand that mining pollution often spreads
far beyond the site of the mine. For example, in Summitville, Colorado
in 1992 a spill of cyanide and heavy metal-laden water killed some 20
miles of the Alamosa River. The area is now a Superfund Site. Taxpayers
have already spent $190 million to clean up the area and will likely be
tapped for millions more in the future.
Another example of extended mining impacts is the plume of
contaminated groundwater beneath the Bingham Canyon mine. The EPA
reports that the plume extends for 72 square miles. The mine is part of
the Kennecott South site about 25 miles southwest of Salt Lake City
that has been proposed for Superfund status. The mining watchdog group,
Earthworks, estimated that the Bingham Canyon mine will leave taxpayers
with the largest liability of any mine in the United States: more than
$1.3 billion.
A third example comes from Arizona in 2006, where dust from a 400-
foot-high tailings pile at Phelps Dodge's Sierrita Mine spread over a
two- to four-and-a-half-mile radius, coating homes and lawns in nearby
Green Valley with white powder. The company said it sampled the
tailings several years earlier and found no cause for concern but the
state cited the company for failing to prevent the dust from blowing
onto homes.
Residents of Crested Butte, Colorado, Boise, Idaho and other towns,
are currently facing significant mine proposals that could threaten
local water supplies and other resources.
The threat we face today, however, is more serious than in years
past. The specter of uranium mining operations is looming over the
Grand Canyon and many other treasured national parks and monuments, and
the 1872 Mining Law provides inadequate tools to control it. Indeed,
the 1872 Mining Law does the opposite: it directly facilitates the
problem by granting property rights with huge speculative incentives
for staking claims, providing weak standards for protecting water, and
creating a potential bonanza with no royalty payments if the claim pans
out. Under current law, speculative plans to increase the use of
uranium by nuclear industry officials and political leaders around the
globe can place our public lands at risk and leave Westerners and
federal land managers at the mercy of multinational mining companies.
When mining threatens to scar if not destroy places like the Grand
Canyon, it is time to draw the line. We no longer need to subsidize the
mining industry, particularly when other extractive industries operate
on our public lands without the mining industry's special treatment and
particularly when our national parks and monuments are at risk. We need
reform, and we need it now.
HR2262 Would Bring Much-Needed Improvements to Mining Law
We recommend a number of changes to mining law, several of which
parallel provisions contained in HR2262.
Royalty payments: Mining companies should pay taxpayers a
royalty on the value of the metal they extract. Currently, mining
companies pay no royalty unlike every other extractive industry
operating on federal land.
Abandoned mine cleanup fund: Cleaning up abandoned mines
is estimated to cost $32 billion or more. Congress should create a fund
to accomplish this important task.
Tougher standards for mine cleanup: Mining companies
should be required to prevent perpetual water contamination and put up
enough money before operations begin to cover the full costs of cleanup
should the company go bankrupt or abandon the site.
An end to mining's tax break: In addition to being able
to mine royalty-free, mining companies can claim a tax break on up to
22 percent of the income that they make off hardrock minerals mined on
federal public lands. Congress should close this loophole.
No more land giveaways: For years, mining interests have
been able to buy claimed land from the federal government for $2.50 or
$5.00 an acre. Since 1994, Congress has placed a moratorium on these
giveaways that must be renewed annually. Congress should enact a
permanent ban.
Mining provides materials essential to our economy, but it must be
conducted in a way that strikes a balance with other values. We look
forward to working with the subcommittee to ensure that mining on our
public lands is conducted in a responsible manner.
Thank you for this opportunity to testify.
______
Attachment #1
Coverage of EWG Mining Research Has Appeared in the Following
Outlets:
ABC News
Albuquerque Journal
Argus Leader (Sioux Falls, South Dakota)
Arizona Daily Star (Tucson)
Arizona Republic (Phoenix)
Ashville Citizen-Times (North Carolina)
Associated Press
Billings Gazette
Boston Globe
Christian Science Monitor
The Daily News (Los Angeles)
Duluth News-Tribune (Minnesota)
Denver Post
Deseret Morning News (Salt Lake City)
Eugene (Oregon) Register-Guard
Fresno Bee (California)
The Gazette (Colorado Springs)
Houston Chronicle
Idaho Statesman (Boise)
International Herald-Tribune
Las Vegas Review-Journal
Modesto Bee (California)
New York Times
Philadelphia Inquirer
The Press-Enterprise (Riverside, California)
The Record (Stockton, California)
Reno Gazette-Journal (Nevada)
Rocky Mountain News (Denver)
Sacramento Bee
Salt Lake Tribune
San Francisco Chronicle
Seattle Post-Intelligencer
Spokesman-Review (Spokane, Washington)
The Star-Ledger (Newark, NJ)
St. Louis Post-Dispatch
St. Paul Pioneer Press (Minnesota)
St. Petersburg Times (Florida)
U.S. News & World Report
Ventura County Star (California)
Washington Post
Attachment #2
At the request of the Committee on Natural Resources Subcommittee
on Energy and Minerals, we have included tables that show the
distribution of mining claims among Congressional Districts.
[GRAPHIC] [TIFF OMITTED] 37014.008
.eps[GRAPHIC] [TIFF OMITTED] 37014.009
.eps__
Mr. Costa. Thank you, Mr. Horwitt. I appreciate your
testimony. Our next witness here is Mr. Dean to testify for
five minutes.
STATEMENT OF TONY DEAN, RADIO HOST, SPORTSMAN,
TONY DEAN OUTDOORS
Mr. Dean. Chairman Costa and members of the Subcommittee,
thank you so much for the opportunity to speak today. I
consider it an honor to address this committee. My name is Tony
Dean. I am a sportsman, conservationist and producer and host
of radio and television outdoor shows. I live in Pierce, South
Dakota. I am also a member of Sportsmen United for Sensible
Mining, a campaign led by the Theodore Roosevelt Conservation
Partnership, Trout Unlimited and the National Wildlife
Federation, and with all due respect to the gentleman from
Texas who is not with us, I think he was referring to my
written testimony.
I am going to say that I am here on behalf of millions of
hunters and anglers with the exception of the gentleman from
Texas at his request, and others who recreate on and enjoy our
public lands to address the need for reform of the general
Mining Law of 1872.
I want to make clear of the fact we are not anti-mining. In
fact, we support responsible mining. I have a letter with me
today that is signed by 22 national hunting and fishing
organizations, including the Congressional Sportsmen's Caucus,
calling for commonsense reforms to the hardrock mining law, and
I respectfully request that letter be submitted for the record.
If there is an overriding theme in what we have to say it
is simply keep the public lands in public hands. The lands
managed by the BLM and the Forest Service harbor some of the
most important fish and wildlife habitat and provide some of
the very finest angling and hunting opportunities in the
country. Fifty percent of our blue ribbon trout streams are
found on public lands administered by the BLM and Forest
Service.
More than 80 percent of the critical elk habitat in America
is found on lands managed by the Forest Service and the BLM.
Unfortunately, more than three million acres of our public
lands, along with the extraordinary habitat they once provided,
have essentially been given away to mining companies for as
little as two and a half dollars to $5 an acre under the
patenting provisions of the Mining Law of 1872. I want to
applaud Chairman Costa and Chairman Rahall for introducing this
legislation which would prohibit the continued forced sale or
patenting of public lands and help keep public lands in public
hands.
In addition to ending the forced sale of our public lands,
this bill does protect special places on our public lands by
declaring certain types of lands too special to ruin with
industrial development. In addition to those listed in my
written testimony, we would hope you could also include
national wildlife refuges.
Sportsmen simply want biologists and resource professionals
of the BLM and the Forest Service to have the authority to deny
permits for mining in areas that are vital to fish, water and
wildlife, and we strongly believe that mining should be on a
level playing field with other resources when it comes to
deciding where and how to develop our public lands. The Mining
Law of 1872 does not require protection of natural resources.
Mining activities and their harmful impacts on water quality,
habitat and other resources are governed by a vague and weak
patchwork of a combination of Federal and state laws.
At least $32 billion is estimated to be needed for mine
waste cleanup in the United States. Sportsmen support a fair
royalty on the mining industry with the returns going to states
to help restore fish and wildlife habitat. I want to point out
some places where mining done in a relatively irresponsible
manner has caused some real problems. How not to mine in the
West.
The Zortman Landusky Mine in Montana will be generating
acid mine drainage for thousands of years, and will probably
take tens of millions of taxpayer dollars and long-term water
quality treatment. Then there is Mores Creek, just north of
Boise, Idaho, which has literally been turned upside down by
mine waste. The Stibnite mine on the Payette National Forest in
southern Idaho pours arsenic, arsenic into the Salmon River.
The Silver Butte Mine in Oregon decimated 18 miles of
Middle Creek, Rock Creek and Kentucky as a blue-ribbon trout
stream but in stretches it is essentially dead because of coal
mining, and the mines in the Coeur D'Alene River Basin in Idaho
ruined thousands of acres of important wildlife habitat and
miles of valuable fisheries but the example I am personally
most familiar with is in my state, South Dakota.
In the early 1970s, I traveled to our lovely Black Hills to
do some trout fishing in some of the Black Hills streams, and
for the first time I saw Whitewood Creek, going on the
outskirts of Lead and Deadwood, South Dakota. Deadwood, of
course, is relatively famous. I think they named a TV series
after it or maybe they named Deadwood after the TV series. I am
not sure.
But there I saw Whitewood Creek which looked like any other
trout stream in that it tumbled over rocks and had what we fly
fishermen call pocket water but it had something else. It had
the foulest looking color I have ever seen. It was like dirty
dishwater gray. I would not dare cast a fly into that water,
and I did some nosing around. What is causing this? And I was
told it was the mine tailings from Home Stake Gold Mine, and I
remember saying to my wife, ``How can anyone allow something
like this?''
Well, they did allow it, and frankly it was not until
Governor Bill Janklow, our former Governor and a former member
of this body and then Attorney General took Home Stake to court
and, of course, I should preface it by saying every time
somebody questioned what Home Stake was doing they trotted out
the old argument, well maybe we will close the mine and take
all these jobs with us, and that would usually shut up the
local population.
But Governor Janklow, then the Attorney General, took Home
Stake to court and won an out-of-court settlement which state
biologists used to restore the stream, and just this past
spring I caught and released two 20-plus-inch browns in
Whitewood Creek, and it now boasts a good population of wild
brown trout.
I want to thank you most sincerely for this opportunity to
express my views to the Committee. We strongly support these
efforts. We look forward to working with you to ensure that
mining on public lands is modernized to the benefit of fish,
wildlife and water resources. Thank you.
[The prepared statement of Mr. Dean follows:]
Statement of Tony Dean, Sportsman,
Producer and Host of ``Tony Dean Outdoors''
Chairman Costa, and members of the Subcommittee, thank you for the
opportunity to speak today. It is an honor to address this committee.
My name is Tony Dean. I'm a sportsman, a conservationist, the producer
and host of a radio and television talk show on the Great Outdoors, and
a resident of South Dakota. I am also a member of Sportsmen United for
Sensible Mining, a campaign led by the Theodore Roosevelt Conservation
Partnership, Trout Unlimited and the National Wildlife Federation. I am
here on behalf of the millions of hunters and anglers, fish and
wildlife professionals and others who recreate on and enjoy our public
lands to address the urgent need for reform of the General Mining Law
of 1872.
The Mining Law of 1872 is an antiquated statute that allows mining
companies to take valuable hardrock minerals from our public lands
without paying any royalties to taxpayers--often while degrading water
quality, destroying fish and wildlife habitat, and limiting recreation
opportunities. The law also offers up our cherished public lands for
forced sales to mining companies for as little as $2.50 to $5 per acre.
The Mining Law of 1872 contains no requirements for protection of
natural resources, such as water quality and wildlife habitat, and has
resulted in a monumental legacy of environmental degradation. Many
current and abandoned hard rock mines are sources of acid mine drainage
and toxic pollutants such as cyanide, arsenic, mercury and lead.
According to the EPA, 12,000 miles of streams and 180,000 acres of
lakes and reservoirs have been polluted by mine waste and at least 40
percent of the headwaters of western rivers and streams are degraded
from mineral activities. There are more than 500,000 abandoned hard
rock mines in the U.S. Many cause extreme environmental degradation and
are hazardous to public safety. An increasing number of mines will
require water quality treatment in perpetuity. It is time that Congress
addressed the enduring legacy of hard rock mining's impacts on our
nation's fish and wildlife and other natural resources.
Signed into law by President Ulysses S. Grant, the Mining Law of
1872 was intended to attract settlers and prospectors to the frontier
to open the West. Historically, mining played an important role in the
social and economic well-being of many communities, and it was vital in
the development and settlement of the western United States. Today, the
West has been settled and is home to many of the fastest growing cities
in the country. Mining companies currently enjoy record prices for gold
of nearly $700 per ounce. Times have changed, and now--after 135
years--it's time to update this archaic legislation.
That is why the Theodore Roosevelt Conservation Partnership, Trout
Unlimited and the National Wildlife Federation launched the Sportsmen
United for Sensible Mining campaign yesterday. I have a letter with me
today signed by several national hunting and fishing organizations
calling for common sense reforms to hard rock mining law. I
respectfully request that this letter be submitted for the record.
I had my own experience with a stream damaged by gold mining. I
moved to South Dakota in 1968, and several years later, traveled to the
Black Hills to fish trout. I came across Whitewood Creek near Lead and
Deadwood and was astonished at its appearance. It was ugly, dishwater
grey, and devoid of fish life. It was only after Homestake closed the
mine, and the State of South Dakota initiated court action, did they
accept their stewardship responsibilities and rehabilitate the creek.
Today, Whitewood Creek runs clean and clear and supports a good
population of wild brown trout. But why was it necessary to initiate
court action to get a huge company to accept their stewardship
responsibilities? I wondered at the time, how many other Whitewood
Creeks existed across the Western United States. As it turns out, there
are far too many.
For many years, Congress has considered reform of the General
Mining Law of 1872. We urge you to take action on modernizing the 135
year old mining law this Congress, and we offer our assistance and
support.
Keep Public Lands in Public Hands
One of the most important reasons to reform the Mining Law of 1872
is to ``Keep Public Lands in Public Hands.'' Public lands managed by
the Bureau of Land Management (BLM) and the Forest Service harbor some
of the most important fish and wildlife habitat and provide some of the
finest hunting and angling opportunities in the country. For example,
public lands contain well more than 50 percent of the nation's blue-
ribbon trout streams and are strongholds for imperiled trout and salmon
in the western United States. More than 80 percent of the most critical
habitat for elk is found on lands managed by the Forest Service and the
BLM, alone. Pronghorn, sage grouse, mule deer, salmon, steelhead, and
countless other fish and wildlife species, as well as the nation's
hunters and anglers, are similarly dependent on public lands.
America's hunters and anglers depend upon public lands and waters
for habitat managed for the sustainability of fish and wildlife
resources and open access to pursue their tradition of hunting and
fishing. American families have enjoyed hunting, fishing and other
forms of recreation on our public lands for generations.
More than 270 million acres of federal land are open to hardrock
mining under the 1872 Mining Law, mostly in the Rocky Mountain West and
Alaska. Because the1872 Mining Law has not been meaningfully reformed,
many of America's most treasured public lands are at risk--important
wildlife habitat and hunting areas, valuable fisheries, sensitive
roadless areas and popular recreation sites.
Unfortunately more than three million acres of our public lands--
along with the extraordinary habitat they once provided--have been
practically given away to mining companies for as little as $2.50 to $5
per acre under the patenting provisions of the Mining Law of 1872. I
applaud Chairman Costa and Chairman Rahall for introducing legislation
in the form of H.R. 2262, the Hardrock Mining and Reclamation Act of
2007, which would prohibit the continued forced sale or ``patenting''
of public lands. Title I of this legislation eliminates the issuance of
patents for vein, lode, placer and mill site claims.
Protection of Special Places and Crucial Wildlife Habitat
In addition to ending the forced sale of our public lands, the
Hardrock Mining and Reclamation Act of 2007 protects special places on
our public lands by declaring that certain types of lands shall not be
open to the location of mining claims, subject to valid existing
rights. Special places protected under Title II of this legislation
include Wilderness lands, Wilderness Study Areas, Inventoried Roadless
Areas, National Parks, Wild and Scenic Rivers and National Monuments
and Areas of Critical Environmental Concern on BLM lands. I recommend
that these protections be extended to National Wildlife Refuges as
well, subject to valid existing rights. These special places include
some of the best fish and wildlife habitats in the U.S. and many of
them offer spectacular hunting and fishing opportunities. These areas
are among the crown jewels of our public lands and should be off-limits
to new mining.
Sportsmen simply want biologists and resource professionals of the
BLM and the Forest Service to have the same authority to examine the
potential impacts of mining in areas that are vital to fish, water, and
wildlife resources, and to be able to deny a permit if those values
would be compromised by mining activities. The U.S. Forest Service and
Bureau of Land Management should have the authority to determine at
both the site permitting level and during the planning process that
areas with crucial fish and wildlife values are not compatible with
mining. Resource professionals who know on the ground conditions the
best should be able to maintain the status quo on public lands that
harbor endangered species; crucial calving, lambing and winter range
used by elk, mule deer, pronghorn, big horn sheep and other game
species; sage grouse leks and buffers surrounding leks; and waters that
are strongholds to imperiled native trout and salmon species.
Environmental Considerations and Multiple Use
The Mining Law of 1872 does not require protection of natural
resources. Mining activities and their harmful impacts on water
quality, wildlife habitat and other natural resources are governed only
by a vague and weak patchwork of federal and state laws. Sportsmen
support strengthening protections for fish, wildlife and water
resources against the adverse impacts of mining activities.
H.R. 2262 takes vitally important steps to address the
environmental costs of hardrock mining and return balance to the
management of our public lands by establishing environmental standards
for mining activities. Title III ensures that the Secretary of the
Interior shall require that all mineral activities on mining, millsite
and tunnel claims shall ``protect the environment, public health and
public safety from undue environmental degradation.'' Title III also
requires that the Interior Secretary assure that all mineral activities
are conducted in a manner that recognizes the value of such lands for
other uses including recreation, wildlife habitat and water supply.
H.R. 2262 affirms the critical principal of multiple use management
of BLM lands that is laid out in the Federal Land Policy and Management
Act (FLPMA). FLPMA's multiple use provision requires BLM to balance
competing resource values to ensure that the public lands are managed
in a manner that will best meet the present and future needs of the
American people. FLPMA mandates that BLM manage for multiple uses in a
manner that protects the quality of ecological, environmental, air,
water and other values.
Unfortunately, the Mining Law of 1872 doesn't allow for multiple
use management and protecting ecological, environmental, air, water and
other values. BLM has insisted that it must approve all mining
activities on public lands, even when undue environmental degradation
will result. Title III of H.R. 2262 firmly establishes that BLM must
manage mineral activities in the context of multiple use and other
values, including providing wildlife habitat, hunting, fishing and
other forms of recreation. This much needed authority is not new, it
simply aligns the 135 year old Mining Law with public land laws passed
in the 1970s. For example, the Forest Service and BLM routinely deny
grazing permits or timber sales because those activities could imperil
water resources or compromise important fish and wildlife habitat. H.R.
2262 allows those agencies the right to deny a mining permit if mining
will cause an unacceptable amount of environmental degradation.
This common-sense provision will allow federal resource
professionals discretion to deny mining permits in areas of high fish
and wildlife value such as the Nine Mile Creek watershed about 30 miles
west of Missoula. The Forest Service, Trout Unlimited and a lot of
other groups have spent a lot of time and money on mining-related
restoration in the watershed and are beginning to make some headway.
Then several months ago, a miner purchased an old claim at the mouth of
the creek to suction dredge from July to October of this year, in the
very same stretch of creek that is being restored. Agency geologists
say there is no chance he can make any money with the venture. But he
will make a mess, add sediment to the creek, kill some fish and create
a bunch of big holes in the stream channel--because he can. It happens
time and time again. But the agency's hands are tied--if he submits a
valid plan of operations, there is basically nothing they can do to
stop him.
H.R. 2262 also requires that any active mining permits contain
reclamation plans and evidence that companies have adequate financial
resources to assure that reclamation will take place. It requires that
lands be restored to a condition capable of supporting their prior
uses, including providing quality fish and wildlife habitat. The
environmental framework established by Title III will help to prevent
the long-lasting water quality contamination and other environmental
problems that have resulted in a staggering backlog of challenging and
costly mine cleanups. For example, just north of Boise, Mores Creek, a
tributary to the Boise River, has been turned upside down by past
mining activities. The area could and should support a recreation-based
economy, but because the state and federal government have no resources
to clean up the past damage and restore the area, the nearby
communities suffer. The Zortman Landusky mine in Montana will generate
acid mine drainage for thousands of years, and will likely require tens
of millions of taxpayer dollars in long term water quality treatment.
Unfortunately the Zortman Landusky Mine, Whitewood Creek and Mores
Creek are not isolated examples. Sportsmen across America have
experienced the tragedy of dead streams and ruined wildlife habitat.
The Stibnite mine on the Payette National Forest in southern Idaho
pours lethal arsenic into the Salmon river, the Silver Butte mine in
Oregon decimated 18 miles of Middle Creek, Rock Creek in Kentucky is a
blue ribbon trout stream but is devoid of life in stretches due to coal
mining, the mines in the Coeur D'Alene river basin in Idaho ruined
thousands of acres of important wildlife habitat and miles of valuable
fisheries. These examples are just the tip of the proverbial iceberg.
H.R. 2262 would help to prevent such environmental problems by
establishing a solid environmental framework to regulate hardrock
mining under a single, strong federal law.
Reclamation and Restoration of Fish and Wildlife Habitat
At least $32 billion is estimated to be needed for clean-up costs
to address the legacy of hard rock mining stemming from the more than
one half million abandoned mines in the U.S. Of particular importance
to sportsmen is the need for a reclamation fund to restore fish and
wildlife habitats that are adversely affected by past mining
activities. H.R. 2262 establishes an Abandoned Locatable Minerals Mine
Reclamation Fund which would be funded by fees and royalties from
active hardrock mining. Expenditures from this fund would be available
for the restoration and reclamation of land and water resources.
Sportsmen support a fair royalty on the mining industry with the
returns going to states to help restore fish and wildlife habitat and
improve hunting and angling opportunities. Since 1977, the coal
industry has contributed more than $7 billion to recover lands affected
by abandoned coal mines. Hunters and anglers in the West think it's
time the hard rock mining industry contributed to the recovery of lands
and waters damaged by mining. Unlike the coal, oil and gas industries,
the hardrock mining industry currently pays no royalties on the
taxpayer-owned minerals it mines on federal lands. It is estimated that
the U.S. government has given away more than $200 billion in mineral
reserves through royalty-free mining and the give-away of our public
lands.
I would recommend to the committee that a set amount from the
Abandoned Locatable Mine Reclamation Fund be made available each year
for restoring fish and wildlife resources. These funds should be made
available to state fish and wildlife departments, conservation
organizations, and others to implement fish and wildlife habitat
improvement projects associated with past mining.
Little restoration of abandoned hardrock mine lands occurs in the
West today because there is little money available for clean-up, and
because of liability concerns associated with handling mine waste.
Sportsmen support ``Good Samaritan'' protections for communities and
others that wish to conduct restoration activities and that have no
connection to the abandoned mine waste. Sportsmen groups know how to
work with local communities and states to clean up abandoned mines, but
the status quo provides an enormous disincentive for action. For
example, it took Trout Unlimited two years to secure permits to clean
up several piles of abandoned mine waste in Utah's American Fork Creek.
The waste was harming a state-sensitive fish species, the Bonneville
Cutthroat Trout. After two years of haggling with EPA over permits, it
took Trout Unlimited about a month to conduct the clean-up. With the
proper incentives, sportsmen and conservation organizations can provide
a helping hand to address the much needed reclamation of abandoned
hardrock mining sites.
Conclusion
Thank you, most sincerely, for this opportunity to express my views
to the Committee. I applaud Chairmen Costa and Rahall for the
introduction of H.R. 2262, and for addressing the urgent need for
reforming the Mining Law of 1872. Sportsmen strongly support these
efforts and we look forward to working with you to ensure that mining
on public lands is modernized to the benefit of fish, wildlife, and
water resources.
______
Mr. Costa. Thank you, Mr. Dean, and we appreciate your
testimony, although you did exceed your timeline. Nonetheless,
we appreciate your being here. Now I would like to recognize
the following witness, Mr. Marchand, to testify. Mr. Marchand.
STATEMENT OF MICHAEL MARCHAND, CHAIRMAN, CONFEDERATED TRIBES OF
THE COLVILLE RESERVATION, WASHINGTON STATE
Mr. Marchand. Good morning, Chairman Costa, Ranking Member
Pearce and members of the Subcommittee. My name is Mike
Marchand, and I am testifying today on behalf of the
Confederated Tribes of the Colville Reservation in Washington
State. I am Chairman of the Colville Business Council, the
governing body for the Tribes. The Tribes appreciate this
opportunity to testify regarding our experiences in dealing
with the proposed mineral development on Federal public lands
under the 1872 law.
The lands that we have in question today are what we call
the old ``North Half'' of the Colville Reservation where the
Colville Tribes have reserved hunting and fishing rights under
an 1891 agreement with the United States. As a result of our
experiences, we have learned that the 1872 Mining Law must be
reformed. We believe the current bill is an excellent beginning
for that reform but it needs to be modified to include specific
provisions to protect tribal reserved rights.
We have submitted detailed written testimony and also
intend to provide some suggestions for provisions to protect
tribal reserved rights. I want to focus my points on the
following. History of the North Half. The Tribes are a
confederation of 12 original Tribes from the northwest which
includes such Tribes such as Chief Joseph's Nez Perce people.
The Colville Reservation is located in north central
Washington. It was established in 1872 by executive order.
At that time, it consisted of three million acres. The
entire area is rich in mineral resources, particularly the
northern portion. In 1891, the Colville Tribes entered into an
agreement with the United States to cede the North Half of this
reservation, roughly 1.5 million acres of the original three
million. We were paid about $1 per acre under that agreement.
The Tribes were promised and reserved the hunting and
fishing rights throughout this North Half that we ceded. The
agreement was ratified by Congress, and in the 1975 Antoine v.
Washington case the United States Supreme Court affirmed our
hunting and fishing rights for the North Half. The North Half
continues to be a very important cultural and hunting and
fishing area for my people.
Many of our Tribal members depend on food for the meat and
fish under these rights. The Colville Tribes exclusively
regulates Tribal member hunting and fishing on the North Half
to ensure sustainability of the wildlife resources. Any
development in the North Half that could affect our wildlife
habitats or fish habitats, water resources and native plants is
a matter of serious concern to our people.
Recent attempts at mining development on the North Half. In
the early 1990s, Battle Mountain Gold Company proposed an open
pit gold mine for Buckhorn Mountain on the North Half. The
Federal agencies involved were the Forest Service, Bureau of
Land Management and the law was the 1872 Mining Law. The Tribes
had very serious concerns about this proposal and repeatedly
sought Federal agencies to uphold your trust responsibility to
protect the resources in which we hold reserved rights in the
wildlife and habitat, stream flows and water quality.
The Federal agency position was essentially that the
company had a right to mine under the mining law, and that the
agency's trust responsibilities consisted only of ensuring that
general laws were complied with. In other words, the trust
responsibilities that we were promised apparently meant nothing
in this case.
The Colville Tribes and other groups managed to block this
open pit mine through various lawsuits. Washington State
Appeals Board concluded that the company's water quality stream
flow mitigation plans were fundamentally flawed under state
law. This shows that our concerns about the mine were
justified. We were unable to show in our Federal litigation
that the Federal agencies had violated any Federal laws.
It troubles us that such a flawed project did not raise any
red flags under Federal law or under the special trust
responsibility promised to us to protect our rights. An Indian
Tribe should not have to depend on a state law to protect its
fundamental rights promised to us by the Federal government.
Recommendations for H.R. 2262. The bill is commendable and
a comprehensive effort to reform the mining law but it lacks
any procedural and substantive safeguards for Tribal reserved
rights that could be affected by mining development. We will be
providing suggestions for language to be added to Section 303
of the bill to provide those Tribal rights safeguards. In
addition, we will provide some suggestions for clarifying the
references to the apparent waiver of sovereign immunity in
Section 504 savings clause.
So in conclusion I would just like to thank you for this
opportunity to testify today. Thank you.
[The prepared statement of Mr. Marchand follows:]
Statement of The Honorable Michael E. Marchand, Chairman, Colville
Business Council, on behalf of the Confederated Tribes of the Colville
Reservation
Good morning Chairman Costa, Ranking Member Pearce, and members of
the Subcommittee. My name is Mike Marchand, and I am testifying today
on behalf of the Confederated Tribes of the Colville Reservation
(``Colville Tribes'' or ``Tribes''). I am the Chairman of the Colville
Business Council, the federally recognized governing body of the
Colville Tribes. The Colville Tribes appreciates this opportunity to
testify regarding our experiences in dealing with proposed mineral
development on federal public lands in which the Tribe has reserved
rights, specifically a large portion of the Reservation that was opened
to the public domain in the late 1800s that we refer to as the ``North
Half.'' It is this experience that shapes our view of how the General
Mining Act of 1872 (``1872 Mining Law'') needs to be reformed.
As explained in more detail below, the Tribes has learned firsthand
that the 1872 Mining Law does not provide adequate environmental
safeguards for fish and wildlife habitat, hydro-geologic conditions,
water quality, and post-mining reclamation. In this regard, H.R. 2262
represents badly needed reform for most of these problems. However, the
legislation does not in its current form address another shortcoming of
the 1872 Mining Law: its failure to provide any consideration of
special tribal rights and interests in the natural resources of federal
public lands and the corresponding federal trust duty to safeguard
those rights.
A brief legal history of the Colville Tribes and Colville
Reservation is necessary to set the context for our experiences and
views on the 1872 Mining Law and H.R. 2262. Under its Constitution,
which was first approved by the Department of the Interior in 1938, the
Confederated Tribes of the Colville Reservation is a single tribe and
tribal government formed by confederating 12 smaller aboriginal tribes
and bands from all across eastern Washington State. The Colville
Reservation today encompasses approximately 2,275 square miles (1.4
million acres) in north-central Washington State. The Colville Tribes
has nearly 9,300 enrolled citizens, making it one of the largest Indian
tribes in the Pacific Northwest. About half of the Tribes' citizens
live on or near the Colville Reservation.
The North Half and Its Importance to the Colville Tribes
The Colville Reservation was established in the same year as the
Mining Law, by the Executive Order of July 2, 1872. At that time, the
Colville Reservation consisted of all lands within Washington Territory
bounded by the Columbia and Okanogan Rivers, extending northward to the
U.S.-Canadian border. As established by the Executive Order, the
Colville Reservation encompassed approximately 3 million acres.
During the 1880s, the Colville Tribes came under increasing
pressure to cede the North Half of the Colville Reservation, in large
part because it was rich in minerals. A federal delegation was
dispatched to the Reservation to seek a cession of the Tribes' lands.
In 1891, many of the various aboriginal Indian tribes and bands of the
Colville Reservation approved the Agreement of May 9, 1891 (``1891
Agreement''), under which the Tribes ceded the North Half, which
consists of roughly 1.5 million acres. The North Half is bounded on the
north by the U.S.-Canadian border, on the east by the Columbia River,
on the west by the Okanogan River, and on the south is separated from
the south half of the Colville Reservation by a line running parallel
to the U.S.-Canadian border located approximately 35 miles south
thereof.
The 1891 Agreement reserved to the Colville Tribes and its citizens
several important rights to the North Half, including (a) the right of
individual Indians to take allotments within the ceded territory, which
allotments would be held in trust for their benefit and excluded from
the public domain; (b) payment by the United States for the ceded lands
of $1.5 million (one dollar per acre); and (c) express reservation in
Article 6 of the Agreement of tribal hunting and fishing rights
throughout the ceded lands, which rights ``...shall not be taken away
or in anywise abridged...The reservation of these rights in Article 6,
in turn, preserved instream and associated water rights for fish and
wildlife that a federal appeals court decision, in the Walton case
discussed below, found were secured in the 1872 Executive Order.
Congress, however, did not immediately ratify the entire 1891
Agreement or provide the payment promised to the Colville Tribes.
Instead, in the Act of July 1, 1892, 27 Stat. 62, it restored the North
Half to the public domain and opened the lands to settlement. Then, in
the Act of February 20, 1896, 29 Stat. 9, Congress provided that the
mining laws of the United States, including the 1872 Mining Law, would
apply throughout the North Half. Thus, Congress opened the North Half
to the public domain and applied federal mining laws to the North Half
before it actually paid the Tribes for the ceded lands. Congress did
not fully ratify the 1891 Agreement to affirm the hunting and fishing
rights or pay the Colville Tribes for the North Half until it passed a
series of appropriations acts from 1906 through 1910.
The history of the ratification of the 1891 Agreement and the
nature of the tribal rights reserved are set forth in the U.S. Supreme
Court's decision in Antoine v. Washington, 420 U.S. 194 (1975). The
specific issue in Antoine was whether the State of Washington could
regulate hunting and fishing on the North Half by citizens of the
Colville Tribes. The Court held that the hunting and fishing rights
reserved by the Colville Tribes in the 1891 Agreement were in full
force and effect, and that Congress's method of ratification had the
same Supremacy Clause effect as a treaty to pre-empt State regulation
of tribal hunting and fishing activities. Also, it is important to note
that the U.S. Court of Appeals for the Ninth Circuit has examined the
events leading up to the establishment of the Colville Reservation
under the 1872 Executive Order, and has emphasized the elements of a
bargain, analogous to a treaty, between the Indians and the United
States. Confederated Tribes of the Colville Reservation v. Walton, 647
F.2d 42, 44, 46-7 (9th Cir. 1981). In Walton, the Court concluded that
one of the inducements for the Indians to confine themselves to the
Colville Reservation (and give up valuable tracts of land with
improvements outside the Reservation) was to secure access to
traditional salmon fisheries in the Columbia River and its tributaries.
Accordingly, the Court found that the 1872 Executive Order reserved
federal water rights to the Tribes for fisheries preservation and
irrigated agriculture. 647 F.2d at 47-48. As noted above, the Tribes'
federal water rights for fish and wildlife were preserved for the North
Half in the 1891 Agreement.
Today, the North Half remains a critically important subsistence
and cultural hunting area for Colville tribal citizens. The area is
remote and mountainous, with substantial forest resources, much of it
in federal public lands administered by the U.S. Forest Service or the
Bureau of Land Management. The Colville Tribes exclusively regulates
North Half hunting by tribal citizens in much the same manner as it
regulates on-Reservation hunting, and coordinates with the Washington
Department of Fish and Wildlife for habitat and population surveys.
Deer, elk, and moose from the North Half continue to be an important
source of food for tribal families. Although the construction of the
Grand Coulee Dam in 1940 immediately eliminated salmon from the
Columbia River on the North Half, salmon are still present in the
entire length of the Okanogan River and the Tribes is actively working
to restore their abundance in that river.
The fish, wildlife, and ground and surface water resources of the
North Half are of critical cultural and legal importance to the
Colville Tribes. The federally protected rights in these resources that
the Tribes has preserved from its original ownership of the North Half,
together with the potential impact within adjacent Colville Reservation
watersheds from development activities on the North Half, make the
Tribes' interests in this area unique. And of course, mineral
development entails a very high level of environmental impact.
Mining Development in the North Half in the Last Decade
During the 1990s and continuing today, the Colville Tribes has been
very actively involved in responding to attempts to develop a gold
deposit located on Buckhorn Mountain, near the Canadian border within
the North Half. In the early 1990s, Battle Mountain Gold Company
proposed the Crown Jewel project--a huge open-pit, cyanide leach
process mine for the Buckhorn Mountain and its vicinity. This proposal
was governed by the 1872 Mining Law.
The Colville Tribes actively opposed the Crown Jewel proposal
because it would have caused great disruption to wildlife in an area
where many tribal members hunt and would have permanently altered the
geohydrology and water quality in the mine area and adjacent streams.
It would have created a large, permanent pit lake of dubious water
quality, and left hundreds of tons of potentially toxic waste rock and
tailings in the vicinity of the mine. This would have adversely
affected our hunting, fishing, and water rights under the 1891 North
Half Agreement, and also seemed in direct conflict with the basic
cultural values of the Colville Tribes.
In opposing the Crown Jewel proposal, we filed at least two major
lawsuits in federal court, a patent protest with the Department of the
Interior, and two appeals in Washington State administrative and
judicial tribunals. Ultimately, Washington State law provided the basis
for defeating the open-pit proposal. A state administrative appeal
board reversed the 16 water rights permits that had been granted by a
state agency, on the grounds that the company's mitigation plan in fact
did not mitigate for streamflow depletions and shifts in groundwater
behavior. Okanogan Highlands Alliance, Colville Tribes, et al. v. State
of Washington, Dept. of Ecology et al., Pollution Control Hearings
Board, State of Washington, No. 97-146 (Final Findings of Fact,
Conclusions of Law and Order, Jan. 19, 2000). That same appeal tribunal
also found fundamental flaws in the company's proposed water quality
protection plans. The company ultimately decided not to pursue all its
appeal opportunities for the adverse state decisions, and instead
abandoned the open-pit proposal.
Despite success under State law, we were very disappointed to
discover during the course of our efforts against the Crown Jewel
proposal that federal agencies--including the Bureau of Land
Management, but in particular, the U.S. Forest Service--took the
position that the 1872 Mining Law all but gave the company a right to
mine in whatever manner it deemed necessary to promote its economic
interests. At best, the Forest Service paid lip service to the concept
that as the lead federal agency responsible for the Environmental
Impact Statement, it also had a special trust responsibility to
safeguard the Colville Tribes' rights and interests in the natural
resources of the North Half. The Forest Service took the position that
its special trust responsibility was in fact not special at all, and
could be entirely satisfied by complying with other federal statutes
related to natural resources protection. The federal courts essentially
agreed. Okanogan Highlands Alliance et al. v. Williams, 236 F.3d 468
(9th Cir. 2000). In other words, a project that was found to be
fundamentally flawed under state law triggered no red flags or trust
responsibility concerns under federal law. This remains deeply
troubling to the Colville Tribes, and serves as an example of why H.R.
2262 needs to include some provisions specific to the reserved rights
of tribes.
More recently, the Kinross Gold Company has been pursuing an
underground mine proposal for the Buckhorn Mountain gold deposit.
Although it seems apparent that the underground mine would eliminate
some of the more grossly adverse environmental impacts (for instance,
there will be no huge open-pit lake that would fill with water likely
to violate Washington water quality standards for several heavy
metals), this proposal still involves potentially serious adverse
impacts to the Colville Tribes' interests. At this point, we have not
launched an all-out campaign of appeals and litigation to block this
project, but that does not mean we actively support the proposal or
that we are satisfied it can be implemented without potentially serious
harm. We are attempting to work with Washington State agencies to
develop acceptable mitigation requirements for certain key permits that
have not yet been issued. In general, the federal presence on the
project is minimal compared to the open-pit proposal, in part because
the lands for the project have been patented in the past few years. If
H.R. 2262 had been the law governing the underground proposal,
patenting would not have occurred and federal responsibilities would
have been greater.
Mining Development on Tribal Lands
It should also be noted that since the late 1970s, the Colville
Tribes has on three occasions formally considered development of its
own mineral resources (which is governed not by the Mining Law but by
statutes specific to Indian lands). In each case, however, the Tribes'
governing body--recognizing the significance of the mining issue--has
sought the input of tribal citizens. One such proposal involved a
molybdenum mine at Mt. Tolman on the Colville Reservation. That project
was initially approved by a referendum vote of tribal members in the
late 1970s. The Tribes subsequently entered into a lease agreement with
Amax Mining Co. (now an affiliate of the Phelps Dodge Corporation) to
proceed with the project. Amax walked away from the project in the
early 1980s, however, in response to a severe depression in the
molybdenum market.
The recent rise in molybdenum prices has prompted renewed interest
in Mt. Tolman. In 2006, the Tribes conducted another referendum vote of
Colville tribal citizens for guidance on whether to revive the Mt.
Tolman project. Despite the need for governmental revenue and jobs, the
referendum was overwhelmingly rejected, and the Tribes' governing body
has no plans at this time to consider it further. In addition, in the
1990s, the Tribes conducted a series of public meetings to ascertain
the views of its citizens regarding gold development on the
Reservation, again because of the potential for governmental revenue
and jobs. The response at that time was also strongly against such
development.
Recommendations for H.R. 2262
If H.R. 2262 had been the governing law for the Crown Jewel open
pit proposal, there is no question that the federal agencies would have
had to do more to identify potential impact on the natural resources of
the North Half in which the Colville Tribes holds reserved rights, and
to do more to require mitigation for those impacts. So this bill is
undeniably a good effort at reform.
H.R. 2262, however, does not have any provisions (a) requiring
mining applicants to identify potential tribal rights in the area to be
affected by a proposal; or (b) requiring federal agencies to understand
the nature of those rights and how they are currently exercised, or to
ensure that mitigation is required for impacts to those rights.
Conclusion
The Colville Tribes has grave concerns about mining on the North
Half, particularly under the terms of the 1872 Mining Law, and we have
also been wary of proceeding with any mineral development within the
Reservation (where the Mining Law does not apply). However, the
Colville Tribes is not driven by an anti-mining ideology. We cannot
rule out that the Tribes or its citizens may one day conclude that
there is a way to have responsible mineral development on the Colville
Reservation. We are pragmatists, not romantics or ideologues, and we
appreciate from our experiences in managing our forest resources the
value of sustainable natural resources development. For us, the key
concepts are pragmatism and sustainability, consistent with the
protection of basic tribal rights and values. Mineral development in
the 21st century under a 19th century Mining Law is neither pragmatic
nor sustainable.
The Colville Tribes appreciates the opportunity to testify. We will
be providing the Subcommittee with our proposed changes to H.R. 2262
that will address the issues we raise in this testimony, and look
forward to working with the Subcommittee on these and other issues
affecting Indian tribes. At this time, I would be happy to answer any
questions the Subcommittee may have.
______
Response to questions submitted for the record by the
Confederated Tribes of the Colville Reservation
(Note: the Colville Tribes has submitted in a separate document
recommendations on how, in its view, H.R. 2262 should be modified)
(1) How would the Tribe benefit from the ability of land managers to
balance mining with other land uses as proposed under H.R.
2262?
The balancing of mining with other land uses by federal agencies as
proposed under H.R. 2262 would generally benefit the Confederated
Tribes of the Colville Reservation (``Colville Tribe'' or ``Tribe'') by
providing the Tribe with an opportunity to comment on a claim holder's
response to the new substantive criteria established by the Act,
specifically those listed in Section 303(b). Although the criteria in
Section 303 do not explicitly mention Indian tribes or tribal reserved
rights, they would provide an opportunity for the Tribe to participate
in the general public comment process on issues that impact the Tribe's
interests.
(2) What other key issues from the Tribe's perspective should mining
law reform address?
As noted in the Tribe's written testimony, H.R. 2262 is a solid
beginning for much needed comprehensive reform of the General Mining
Law of 1872, but it does not include any provisions specific to the
special reserved rights of Indian tribes or the corresponding federal
trust duty to protect those rights. This is not surprising, as the 1872
Mining Act applies only to those lands in the public domain. Most
tribal landholdings are either Indian reservations or other categories
of land falling within the statutory definition of ``Indian country''
as set forth at 18 U.S.C. Sec. 1151. These lands are not in the public
domain and are, therefore, outside the purview of the 1872 Mining Act.
The Tribe has submitted to the Subcommittee a document with
specific recommendations on how H.R. 2262 should be modified to more
specifically address tribal interests. These recommendations are
therefore only summarized here.
First, many Indian tribes in many cases possess treaty or reserved
rights on ceded lands that may no longer be part of the tribes' land
bases. Such is the case with the area that we refer to as the North
Half. As noted in our suggested changes to H.R. 2262, the Colville
Tribe believes that the legislation should be amended to include
substantive criteria in Section 301(b) that address the reserved rights
in these instances.
Also, the Tribe believes that the apparent waiver of tribal
sovereign immunity in Section 504(e) should be clarified to provide
that nothing in the Act shall be construed to waive tribal sovereign
immunity. Finally, the Tribe believes that it is appropriate to include
tribal-specific provisions in the Reclamation Fund sections of the
bill.
(3) What are your thoughts on Title II, including Section 201(b)(6)?
Have the tribes had any experience declaring a site sacred
under Executive Order 13007?
The Tribe supports title II, which provides that certain lands
shall not be open to the location of mining claims under the general
mining laws on or after the date of enactment of the Act. Specifically,
Section 201(b)(6) excludes lands identified as ``sacred sites'' in
accordance with Executive Order 13007. EO 13007 generally provides that
in managing federal lands, each executive branch agency with statutory
or administrative responsibility for the management of federal lands
shall, to the extent practicable, (a) accommodate access to and
ceremonial use of Indian sacred sites by Indian religious practitioners
and (b) avoid adversely affecting the physical integrity of such sacred
sites. EO 13007 defines ``sacred sites'' as those sites identified by
an Indian tribe. The Tribe strongly supports this provision because EO
13007 acknowledges and reaffirms the government-to-government
relationship between the United States and Indian tribes.
The Tribe has not had occasion to formally declare a sacred site
under EO 13007. Rather, the Tribe has--by tribal resolution and by
agreements with various federal agencies--assumed responsibility under
Section 106 of the National Historic Preservation Act (NHPA) for
administering the pertinent provisions of that Act for all lands within
the boundaries of the Colville Reservation and all off-reservation
trust allotments. The NHPA and its implementing regulations provide for
specific treatment of sacred sites. The Tribe has generally had its
concerns adequately addressed in the Section 106 process. Hence, the
Tribe has not had a need to cite the more general EO 13007 provisions
in connection with the sacred site issues that our technical staff
generally becomes involved with.
______
Confederated Tribes of the Colville Reservation
Proposed Modifications to H.R. 2262
September 12, 2007
Consistent with the Confederated Tribes of the Colville
Reservation's (``Tribe's'') testimony at the July 26, 2007 Energy and
Minerals Subcommittee hearing, the Tribe submits the following
recommendations for modifying H.R. 2262. As noted in our written
testimony, H.R. 2262 is an excellent beginning for much needed
comprehensive reform of the General Mining Law of 1872. As introduced,
however, the bill does not include any provisions applicable to the
special reserved rights of Indian tribes or the corresponding federal
trust duty to protect those rights. In general, H.R. 2262 treats Indian
tribes the same as any other member of the general public. In instances
where mining activity has the potential to affect tribal reserved
rights, the Tribe believes that those rights should be addressed
specifically in this bill.
Section 303. Proposed New Subsections.
Section 303 includes many new requirements for applicants,
operators, and the Secretaries of the Interior and Agriculture. There
are several places where new provisions to safeguard tribal reserved
rights should be incorporated, as indicated below (language offered
with subsequent subsections to be renumbered accordingly):
``[New Subsection 303(b)(9).] A description of any rights in
natural or cultural resources reserved by treaty, statute, executive
order, or other federal law by or on behalf an Indian tribe that may be
affected by planned mineral activities, and measures planned to
protect, or mitigate for impacts to, such resources, including how the
affected tribe is to be involved in the development and implementation
of such measures.''
``[New Subsection 303 (c)(7).] An explanation of how the proposed
condition of natural or cultural resources in which an Indian tribe
holds rights reserved by treaty, statute, executive order, or other
federal law will be adequate to protect the affected tribe's use of
such resources or to mitigate for impacts to the affected tribe's use
of such resources.''
``[New Subsection 303 (d)(1)(D).] The condition of natural or
cultural resources in which an Indian tribe holds rights reserved by
treaty, statute, executive order, or other federal law, after the
completion of mineral activities and final reclamation, will be
adequate to protect, or to mitigate for impacts to, the affected
tribe's use of such resources.''
Section 402. Proposed New and Modified Subsections.
Sections 401-405 establish a Reclamation Fund and provide for its
use, and sections 421-423 establish a Community Impact Assistance Fund
and provide for its use. Both of these funds represent an innovative
approach to reclamation and impact assistance derived from proceeds of
mineral activity. The Colville Tribe acknowledges and appreciates the
provisions for expending the Reclamation Fund to restore Indian lands
(Section 403(a)), for making Reclamation Funds available to Indian
tribes performing reclamation activities (Section 404), and for
providing Impact Funds to affected tribes (Section 422).
In addition, consistent with our rationale for adding tribal-
specific provisions to Section 303, the following tribal-specific
provisions should be added to Section 402 with respect to uses of the
Reclamation Fund.
``[New Subsection 402(a)(8).] Restoring and enhancing land, water
resources, fish and wildlife habitat, and cultural resources in which
an Indian tribe holds reserved rights under a treaty, statute,
executive order, or other federal law.''
``[Modified Subsection 402(b)(3) [New language in italics]. The
restoration of land, water, fish and wildlife, and cultural resources
previously degraded by the adverse effects of past mineral activities,
including, but not limited to, such resources in which an Indian tribe
holds rights reserved under a treaty, statute, executive order, or
other federal law.''
Section 504(e). Waiver of sovereign immunity of Indian tribes, Proposed
Modification.
The last sentence of 504(e) currently reads, ``Nothing in this Act
shall be construed to be a waiver of the sovereign immunity of an
Indian tribe except as provided in section 303.''
It should be rewritten to read, ``Nothing in this Act shall be
construed to be a waiver of the sovereign immunity of an Indian
tribe.''
Discussion of Sovereign Immunity Provision.
The sovereign immunity of an Indian tribe from unconsented suit is
a very significant, carefully guarded attribute of tribal sovereignty.
Tribes routinely negotiate voluntary waivers of immunity in a variety
of contractual instruments, with the scope and nature of the waiver
tailored to the circumstances of the transaction. Some tribes have
enacted statutes to specify the circumstances under which immunity is
waived. Congress has on occasion also waived the immunity of tribes.
See Blue Legs v. United States Bureau of Indian Affairs, 867 F.2d 1094,
1096-1097 (8th Cir. 1989) (holding that the Resource Conservation and
Recovery Act of 1976 authorizes suits against Indian tribes by private
parties).
Federal courts have routinely held that a Congressional waiver of
immunity will not be lightly found, but must be clear, express and
unequivocal. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58-59 (1978).
As drafted, the bill's waiver provision is vague and confusing. In
addition, for Congress to waive tribal immunity in the context of
comprehensive reform of the 1872 Mining Law, there should be a clear
policy rationale for doing so, and none is apparent in the case of H.R.
2262.
It seems clear by the plain language that 504(e) intends to waive
tribal sovereign immunity in certain instances, with reference to
section 303. But a clear view of the scope of the waiver does not
emerge from a review of section 303. Section 303 is a long section
containing a variety of requirements that apply variously to
``persons,'' ``applicants,'' ``operators,'' and the Secretaries of the
Interior and Agriculture. None of the many requirements in section 303
expressly apply to Indian tribes, and there is no language anywhere in
section 303 that refers to a waiver of tribal immunity. Accordingly,
Section 504(e) is either in error when it refers to section 303 (and
the actual intent is to refer to some other section for the immunity
waiver), or somehow intends to waive tribal immunity to allow suit
against a tribe for violating section 303.
H.R. 2262 could be interpreted to authorize such a broad waiver.
The Definitions section of the bill, Section 2(a), includes definitions
of ``Indian tribe,'' ``person,'' ``applicant,'' and ``operator.'' The
definition of ``person'' includes Indian tribes. ``Applicant'' and
``operator'' are both defined with reference to the term ``person,''
which, as noted, includes ``Indian tribes.'' The citizen suit
provisions in Section 504 authorize any ``person'' to sue any
``person'' (including but not limited to the Secretary of Agriculture
or Interior) for violation of ``any of the provisions'' of the Act.
That would include any of the many requirements in Section 303 that
apply to ``persons,'' ``applicants,'' or ``operators.'' Arguably, then,
tribal sovereign immunity is waived for a situation where a tribe, or
perhaps a tribal corporation, is applying for, or has received, a
permit to carry out mining activities on federal public lands and is
alleged to be in violation of one of the many provisions of section
303.
The Colville Tribe is unaware of any situation where an Indian
tribe or tribal corporation has ever sought to carry out mining
activities on federal public lands under the 1872 Mining Law (as
apparently recognized in Section 2 (a)(10)(B) of the bill, mining
activities on tribal lands are carried out under other statutes). If
further review confirms that Indian tribes do not seek to engage in
mining development on public lands, then the bill's purported waiver of
tribal sovereign immunity would seem to be a solution in search of a
problem.
If a tribe or tribal corporation were to apply to conduct mining
activities under the Act, it would be more appropriate for the
Secretary to promulgate regulations that provide how remedies may be
had under the Act with respect to such tribe or tribal corporation
under such circumstances. Such remedies could include a negotiated
waiver of immunity tailored to the circumstances of the transaction or
permit process that the tribe in question may be involved in. That is
how remedies are handled for contracts with Indian tribes that are
subject to 25 U.S.C. Sec. 81, which require the approval of the
Secretary of the Interior. See 25 U.S.C. Sec. 81(e) (requiring the
Secretary of the Interior to promulgate regulations identifying the
types of contracts or agreements subject to Secretarial approval); 25
C.F.R. Part 84 (regulations implementing 25 U.S.C. Sec. 81).
The Colville Tribe believes that existing law authorizes the
Secretary to promulgate such a regulation. The Tribe, however, would
not object to a provision in H.R. 2262 to make that authority explicit
with respect to promulgation of a remedies regulation for tribes or
tribal corporations that engage or intend to engage in mineral
development activity under the 1872 Mining Act and this bill.
Finally, the Colville Tribe is concerned that the purported waiver
of tribal sovereign immunity in the citizen suit provision could be
abused by organizations or individuals seeking to influence a tribe.
For example, a citizen group composed of tribal members or non-members,
or both, could sue or threaten to sue a tribe in order to force that
tribe to become involved in opposing or supporting a mineral
development project--even if the tribe desired to remain uninvolved or
desired to be involved in a manner contrary to the desires of the
citizen group.
______
Confederated Tribes of the Colville Reservation
Additional Proposed Modifications to H.R. 2262
October 11, 2007
Consistent with the Confederated Tribes of the Colville
Reservation's (``Tribe's'') testimony at the July 26, 2007, Energy and
Minerals Subcommittee hearing, the Tribe submits the following
recommendations for modifying H.R. 2262. These proposed recommendations
supplement the recommendations we submitted to the Subcommittee on
September 12, 2007.
Section 201(b): Section 201(b) provides that mining claims cannot
be located on certain categories of lands after enactment of the Act.
Among other categories of land excluded are ``[l]ands identified as
``sacred sites'' in accordance with Executive Order 13007.'' Executive
Order 13007 defines ``sacred site'' as:
[A]ny specific, discrete, narrowly delineated location on
Federal land that is identified by an Indian tribe, or Indian
individual determined to be an appropriately authoritative
representative of an Indian religion, as sacred by virtue of
its established religious significance to, or ceremonial use
by, an Indian religion; provided that the tribe or
appropriately authoritative representative of an Indian
religion has informed the agency of the existence of such a
site.
We understand that certain interests have expressed concern that this
provision could result in a situation where a mining company (or other
person) expends significant resources in connection with locating a
mining claim, only to have the site of the claim later be declared a
sacred site by an Indian tribe or Indian individual.
Upon further examination of this Section 201(b), and to preserve
and clarify the government-to-government relationship with Indian
tribes, we recommend striking the current language in Section 201(b)(6)
and replacing it with the following, which is a variation on the
definition of ``sacred sites'' in Executive Order 13007:
Any delineated location on federal land that is identified by
an Indian tribe as sacred by virtue of its established
religious significance to, or ceremonial use by, an Indian
religion; provided, however, that this subsection shall not
apply when the identifying Indian tribe consents to the
location of the mining claims or mineral activities.
This language would retain some of the definition of ``sacred
sites'' in Executive Order 13007, but would also include language that
ensures that Indian tribes may also identify sites that have cultural
significance. A redline of the changes in the proposed language above
to the ``sacred sites'' definition in Executive Order 13007 is shown
below:
[A]ny specific, discrete, narrowly delineated location on
Federal land that is identified by an Indian tribe, or Indian
individual determined to be an appropriately authoritative
representative of an Indian religion, as having traditional
religious or cultural importance; provided that the tribe or
appropriately authoritative representative of an Indian
religion has informed the agency of the existence of such a
site. provided, however, that this subsection shall not apply
when the identifying Indian tribe consents to the location of
the mining claims.
The omission of the words ``specific,'' ``discrete,'' and
``narrowly'' is intended to allow for Indian tribes to designate areas
on federal lands within which a sacred site is located without being
required to specifically identify the sacred site. This is a concern
for the Tribe, as the Tribe has a policy of not identifying the exact
locations of sacred sites. Instead, when applicable, the Tribes will
delineate an area that includes the sacred site but that is large
enough so as to not reveal the sacred site to outsiders. Many Indian
tribes, including the Colville Tribes, have experienced instances where
sacred sites have become known to the general public and, in turn,
defaced by vandals or plundered by grave-robbers.
The addition of the language ``as having traditional religious or
cultural importance'' is taken from Section 101(d)(6)(A) of the
National Historic Preservation Act of 1966. This language is intended
to allow Indian tribes to identify sites that also have traditional
cultural importance, as opposed to just religious significance. Sites
that have cultural significance may include archaeological sites,
burial sites, traditional food or plant gathering sites, rock art
sites, sites associated oral tribal traditions or legends, or any other
site deemed culturally important by an Indian tribe.
The omission of the language relating to ``Indian individuals''
would ensure that any sacred site designation is made by an Indian
tribal government, not an individual Indian. The government-to-
government relationship memorialized in executive orders such as
Executive Order 13007 signifies a special relationship between the
United States and Indian tribal governments. Such a political
relationship generally does not exist with an individual Indian acting
in an individual capacity. Clarifying that only Indian tribal
governments may designate sacred sites also avoids the need to resolve
two issues not addressed in Executive Order 13007: (a) whether an
Indian individual is an ``appropriately authoritative representative''
of an Indian religion; and (b) which entity should make that
determination.
One can envision any number of scenarios where an individual Indian
could claim to be an authoritative representative of an Indian religion
for purposes of declaring a sacred site. A declaration of a sacred site
by such an individual, or the qualifications of the individual making
the declaration, could then be challenged by a third party (including a
mining applicant or even perhaps an Indian tribe), and federal agencies
or courts would be left to sort out the aftermath. Any determination or
inquiry by a federal agency or a court of whether a person is an
``authoritative representative of an Indian religion'' could implicate
First Amendment considerations. Limiting the designation of sacred
locations to Indian tribal government avoids these difficult issues.
The addition of the proviso allows for persons who intend to locate
mining claims on lands where sacred sites are located to consult with
the identifying Indian tribe and secure the tribe's consent. As
introduced, H.R. 2262 could be construed to prohibit the location of
mining claims on lands where sacred sites may be located--even where an
Indian tribe and a mining company have agreed to a mitigation plan and
the tribe has consented to the location of the claim. Allowing Indian
tribes to consent to such activities, should they so choose, respects
tribal sovereignty.
Finally, we recommend the inclusion in an appropriate section of
the Act a provision that requires the Secretary of the Interior to
provide Indian tribes with actual notice of any proposed or pending
mining activities on federal lands over which the tribes may possess
reserved rights. Such a provision could read:
The Secretary shall provide actual notice of any valid existing
rights, mineral activities, or new claims under the general
mining laws to any Indian tribe where such valid existing
rights, mineral activities, or new claims are located (a) on
lands in which the Indian tribe holds rights reserved by
treaty, statute, executive order, or other federal law; or (b)
on lands identified by an Indian tribe as having traditional
religious or cultural importance.
The addition of this new language would ensure that Indian tribes
are notified as early as possible of any potential mining claims or
activity on lands in which they may have an interest. Conversely, this
provision would also provide third parties with notice as early in the
process as possible of potential tribal rights and sacred sites on
areas within which mining claims might be located.
______
Mr. Costa. Thank you very much, and we do appreciate your
coming the long distance that you did. Our next witness to
testify is Mr. Champion for five minutes. Put the mic close so
we can hear you.
STATEMENT OF WILLIAM CHAMPION, PRESIDENT AND CEO, KENNECOTT
UTAH COPPER CORPORATION
Mr. Champion. Thank you very much for the opportunity to
testify this morning. My name is Bill Champion. I am the
President and CEO for Kennecott Utah Copper. Kennecott is a
copper mining, smelting and refining company located in Salt
Lake City, Utah. I am here today at my capacity as the Vice
Chairman for the National Mining Association representing many
of my colleagues in the hardrock mining business. The mining
industry is committed to work very proactively and productively
with Congress for the development and the implementation of a
fair, a predictable and an efficient national minerals policy
because U.S. mineral resources are vital to the nation's
economic well-being.
The cornerstone of NMA's policy objectives is a predictable
legal and regulatory framework that will provide long-term
stability that we need to protect existing investments but also
to attract new investment capital to domestic mining. There are
several essential elements to mining law reform that we are
committed to discuss and engage with. We recognize the
necessity for a reasonable and fair return to the public for
payment of minerals produced from new mining claims on Federal
lands.
We recognize that there are different methodologies by
which to accomplish that. Chairman Costa, you referenced in
your opening comments a World Bank royalty study that was
recently completed that looked at various methodologies to
return a fair return to the public. If you will, the conclusion
from that is that mining is particularly sensitive to royalty
effects because of our cost structure in the industry and also
the vulnerability that we have based on the dynamics of our
markets and the price swings that we oftentimes see.
National Mining is supportive of an approach that looks at
net income production payments, not one on gross royalties. We
believe net income is a better approach that will satisfy the
needs of our entire business cycle. We also recognize and
support that the production payment should be applied to the
cleanup and reclamation of many of the abandoned mine sites
that exist throughout the nation. These sites which are mined
and left in an unreclaimed state before the advent of modern
environmental practices can be addressed by using these funds
to assist in the safe cleanup and reclamation of these historic
sites.
Chairman Rahall also discussed in his opening comments the
necessity for certainty. As an investor, I think all of us
would appreciate and would require certainty in the investments
we make, and our industry is no different than that. Having
security of land tenure or title from the initial exploration
through the development and operation of our mining sites and
ultimately through the reclamation and closure is really an
essential component of a modern mining law to provide certainty
for private investment in mineral development and ensure the
integrity of closure and reclaimed operations.
We need continued access to public lands and Federal
minerals to ensure that the country's mineral needs continue to
be met. As has been pointed out by many people previously, we
are dependent on a number of different imported minerals
already today. That need and that dependency continues to grow.
Probably in the neighborhood of 50 percent or more of the
Federal lands are already excluded from mining. We believe that
the issue of suitability can best be handled by the existing
processes that are in place. Legislative processes that review
suitability of mining appear to be working quite well.
The final issue has to do with environmental standards. We
should recognize very clearly the comprehensive framework of
Federal and state environmental laws that currently exist. In
1999, Congress convened a panel of experts from the National
Academy of Sciences to take a look at the effectiveness of
existing environmental regulations and laws and the results of
that clearly show that the existing laws and existing
regulations were more than adequate to protect against mining
related environmental impacts, and in fact the study suggested
that new legislation or new regulations or new laws were not
needed but simply implementing those that were currently
available would be the best way forward.
Thank you very much for the opportunity to speak with you
today. I would be happy to answer any questions that you might
have. Thank you.
[The prepared statement of Mr. Champion follows:]
Statement of William Champion, President and CEO of Kennecott Utah
Copper Corp., on behalf of the National Mining Association
My name is William Champion, President and CEO of Kennecott Utah
Copper Corporation. I am testifying today on behalf of the National
Mining Association (NMA). NMA appreciates the opportunity to testify
before the Subcommittee on this issue of great importance to the
domestic mining industry.
NMA is the principal representative of the producers of most of
America's coal, metals, industrial and agricultural minerals; the
manufacturers of mining and mineral processing machinery, equipment and
supplies; and the engineering and consulting firms, financial
institutions and other firms that serve our nation's mining industry.
Our association and our members, which employ or support 170,000 high-
wage jobs, have a significant interest in the exploration for, and
development of, minerals on federal lands. The public lands in the
Western states are an important source of minerals, metal production
and reserves for the nation's security and well-being. Mining on
federal lands provides for high-wage employment, vitality of
communities, and for the future of this critical industry.
NMA is committed to the development of a fair, predictable and
efficient national minerals policy through amendments to the Mining Law
of 1872. Because the vitality of the modern American economy is firmly
rooted in the ready availability of metals and minerals that are
essential to our way of life and our national security, our efforts in
the end should result in a mining law that:
Secures a fair return to the government in the form of a
net income production payment for minerals produced from new mining
claims on federal lands;
Establishes an abandoned mine lands clean-up fund
financed with revenue generated from a net income production payment;
Provides the certainty needed for private investment in
mining activities on federal lands by ensuring security of title and
tenure from the time of claim location through mine reclamation and
closure;
Recognizes the existing comprehensive framework of
federal and state environmental laws regulating all aspects of mining
from exploration through mine reclamation and closure; and
Recognizes existing authorities for closing or declaring
unsuitable for mining those federal lands with unique characteristics
or of special interest.
The cornerstone of NMA's policy objectives is a predictable legal
and regulatory framework to provide the long-term certainty and
stability needed to protect existing investments and to attract new
capital necessary to maintain a healthy and sustainable domestic mining
industry. The importance of the domestic mining industry to our
economy, our way of life and our national security cannot be ignored.
Indeed, it is irresponsible for us to ignore the vast mineral resources
we have within our nation's boundaries when our domestic needs are so
great.
The United States has an abundance of natural resources including
78 metals and minerals that are the foundation of our modern industrial
economy. Only the combined countries of the former Soviet Union and
Australia rank higher than the United States in the global distribution
of 15 metals with critical uses.
Fair Return
A progressive and responsible approach to modernizing the Mining
Law can achieve a fair return to the public and fund the restoration of
abandoned mine lands, while encouraging the private investment required
to develop and carry out environmentally and socially responsible
mining operations.
The imposition of a production payment or royalty has the potential
to have significant economic consequences on existing and future mining
operations, but the impact will vary depending upon the type of
production payment or royalty imposed. Determining the type of royalty,
the rate and its application to existing claims are critical. As noted
in the World Bank royalty study, mining is ``particularly sensitive to
[royalty] effects because of its cost structure and vulnerability to
substantial market-driven demand and price swings.'' Otto, James.
Mining Royalties: A Global Study of Their Impact on Investors,
Government, and Civil Society. Washington, DC: World Bank, 2006, p.
xiv.
A net income production payment produced from new mining claims on
federal lands would provide the public with a fair return and with
funds for restoring abandoned mine lands. This type of production
payment or royalty most appropriately balances the need to both provide
a fair return to the public and to foster a strong domestic minerals
industry. Gross royalties, or certain royalties based on a net smelter
return, on the other hand, may result in significant losses to state
and federal treasuries, mine closures, job losses and discouragement of
new mines. The World Bank study appropriately cautions against gross
royalty approaches as compared to approaches based on ability-to-pay or
profit-based approaches: ``Nations should carefully weigh the immediate
fiscal rewards to be gained from...high levels of royalty, against the
long-term benefits to be gained from a sustainable mining industry that
will contribute to long-term development, infrastructure, and economic
diversification.'' Id. at 3. This type of royalty also encourages
operators to leave lower grade (less profitable) ore in the ground,
resulting in wasted public resources.
The net income production payment should only apply to claims
located after the enactment of the production payment or royalty
provision. Such an approach protects settled financial expectations and
sunken investments and prevents ``takings'' litigation.
Abandoned Mine Lands
Using revenue generated from net production payments on new claims
to fund the clean-up or rehabilitation of abandoned mine lands (AML) is
an essential aspect of amending the Mining Law. AML sites, which were
mined and left in an unreclaimed state before the advent of modern
environmental laws and reclamations practices should be addressed by:
using funds generated through a production payment or royalty to assist
in clean-ups; coordinating existing federal and state AML funds and
programs; and Good Samaritan liability protection to promote voluntary
clean-ups. The funds should be used for the actual clean-up and
rehabilitation of abandoned mines and not to cover administrative
overhead costs.
Certainty/Security of Tenure
Ensuring long-term security of tenure (or title) is an essential
component of a modern mining law necessary to encourage the private
sector to invest in mineral activity on federal lands. In the past,
such security was provided by the patenting process, which allowed mine
claimants to obtain ownership of the lands being mined or used for
mining purposes. While the current congressional moratorium on
patenting has not brought mining on public lands to a halt, it
highlights the need for additional security of tenure in the mineral
and the surface while claims are being held in advance of, as well as
during, development and operations. Inclusion of language in the Mining
Law is needed to clarify the rights to use and occupy federal lands for
mineral prospecting, exploration, development, mining, milling, and
processing of minerals, reclamation of the claimed lands, and uses
reasonably incident thereto.
Furthermore, security of tenure is critical in obtaining the
financing necessary for mining projects. Investors need to know that a
mining project in the United States can obtain approval and proceed
unimpeded as long as the operator complies with all relevant laws and
regulations. Mining projects--from exploration to extraction to
reclamation and closure--are time- and capital-intensive undertakings,
requiring years of development before investors realize positive cash
flows. Uncertainty in the legal regime applicable to mining projects
can chill the climate for capital investments in domestic mining
projects. Potential investors must know their expectations will not be
turned upside down by fundamental alteration of laws, regulations or
policies. As the World Bank recently found, to attract such
investments, governments need to adopt the fundamental principle of
``no surprises,'' such as changes in laws, regulations or policies. Id.
at 73.
Because mining operations by their very nature require long-term
and substantial commitments of capital, the stability of the statutory
and regulatory framework plays a crucial role in decisions to invest in
a mining project. As a result, the investments critical for bringing a
mine to fruition tend to migrate toward projects planned in countries
that offer predictable regulatory climates that correspond to the long-
term nature of mining operations.
Despite reserves of 78 important mined minerals, however, the
United States currently attracts only eight percent of worldwide
exploration dollars. As a result, our nation is becoming more dependent
upon foreign sources to meet our metal and minerals requirements, even
for minerals with adequate domestic resources. The 2007 U.S. Geological
Survey Minerals Commodity Summaries reported that America now depends
on imports from other countries for 100 percent of 17 mineral
commodities and for more than 50 percent of 45 mineral commodities.
2007, U, 2007, p. 7. This increased import dependency is not in our
national interest. Increased import dependency causes a multitude of
negative consequences, including aggravation of the U.S. balance of
payments, unpredictable price fluctuations, and vulnerability to
possible supply disruptions due to political or military instability.
Our over-reliance on foreign supplies is exacerbated by competition
from the surging economies of countries such as China and India. As
these countries continue to evolve and emerge into the global economy,
their consumption rates for mineral resources are ever-increasing; they
are growing their economies by employing the same mineral resources
that we used to build and maintain our economy. As a result, there
exists a much more competitive market for global mineral resources.
Even now, some mineral resources that we need in our daily lives are no
longer as readily available to the United States.
Environmental Standards
Under current law, a mineral exploration or mining operation on
federal lands is subject to a comprehensive framework of federal and
state environmental laws and regulations including: the Clean Water
Act; the Safe Drinking Water Act; the Clean Air Act; the National
Environmental Policy Act; Toxic Substances Control Act; the Resource
Conservation and Recovery Act; the Endangered Species Act; and the
Bureau of Land Management (BLM) and Forest Service surface management
regulations for mining. These laws and regulations are ``cradle to
grave,'' covering virtually every aspect of mining from exploration
through mine reclamation and closure. According to the 1999 report on
issued by the National Academy of Sciences (NAS) panel of experts
convened by Congress, this existing framework for mining is ``generally
effective'' in protecting the environment. Hardrock Mining on Federal
Lands, National Academy of Sciences, National Academy Press, 1999, p.
89.
That 1999 NAS report also found that ``improvements in the
implementation of existing regulations present the greatest opportunity
for improving environmental protection....'' Id. at 90. Notably, the
Department of the Interior's 2000 and 2001 regulations governing mining
and reclamation on BLM lands significantly strengthened the standards
for mining on federal lands, including new provisions on guaranteeing
reclamation through financial assurances.
Importantly, the NAS panel of experts cautioned against applying
inflexible, technically prescriptive environmental standards stating
that ``simple ``one-size-fits-all'' solutions are impractical because
mining confronts too great an assortment of site-specific technical,
environmental, and social conditions.'' Id. Furthermore, recognition of
the existing comprehensive framework of federal and state environmental
and cultural laws that already regulate all aspects of mining from
exploration through mine reclamation and closure avoids unnecessary and
expensive duplication. Additional standards or enforcement mechanisms
are not needed to protect the environment.
Importance of Access
Access to federal lands for mineral exploration and development is
critical to maintain a strong domestic mining industry. As stated in
the 2006 BLM Minerals Policy Statement: (1) except for Congressional
withdrawals, public lands shall remain open and available for mineral
exploration and development unless withdrawal or other administrative
actions are clearly justified in the national interest and (2) with few
exceptions, mineral exploration and development can occur concurrently
or sequentially with other resource uses.
Federal lands account for as much as 86 percent of the land area in
certain Western states. These same states, rich in minerals, account
for 75 percent of our nation's metals production. As the 1999 NAS
report to Congress noted, the ``remaining federal lands in the western
states, including Alaska, continue to provide a large share of the
metals and hardrock minerals produced in this country.'' Id. at 17.
Efforts to amend the Mining Law must recognize existing authorities
to close certain ``special places'' to mining activity. Congress has
closed lands to mining for wilderness, national parks, wildlife
refuges, recreation areas, and wild and scenic rivers. Congress also
has granted additional authority to the Executive Branch to close
federal lands to mining. The Antiquities Act authorizes the president
to create national monuments to protect landmarks and objects of
historic and scientific interest. Finally, Congress authorized the
Secretary of the Interior to close federal lands to mining pursuant to
the land withdrawal authority of the Federal Land Policy and Management
Act. As a result of these laws and practices, new mining operations are
either restricted or banned on more than half of all federally owned
public lands. These existing laws and authorities are adequate to
protect special areas. New closures of public land, based on vague and
subjective criteria without congressional oversight, would arbitrarily
impair mineral and economic development.
Conclusion
The United States needs a robust minerals production industry to
help meet the needs of American consumers. Unfortunately, America is
ceding to others the responsibility for meeting our minerals needs.
Increased import dependency created by lack of U.S. mineral development
is not in our national interest and causes a multitude of negative
consequences, including aggravation of the U.S. balance of payments,
unpredictable price fluctuations and vulnerability to possible supply
disruptions due to political or military instability. The U.S. mining
industry has fully embraced the responsibility to conduct its
operations in an environmentally and fiscally sound manner. It hopes
and expects that Mining Law legislation will recognize and honor both
this commitment and the industry's contribution to our national well-
being.
NMA appreciates the opportunity to provide this testimony.
______
Mr. Costa. Thank you, Mr. Champion, and I appreciate your
testimony. There are a couple of areas that I am interested in
coming back and getting your thoughts on, but we have one more
witness and the final witness in this panel is Mr. Wilton. We
ask you to testify please for five minutes.
STATEMENT OF TED WILTON, EXECUTIVE VICE PRESIDENT, NEUTRON
ENERGY COMPANY
Mr. Wilton. Thank you, Mr. Chairman and members of the
Committee. I would like to express my appreciation to this
committee for the invitation to speak before you today. My name
is Ted Wilton. I am from Spring Creek, Nevada. I am a minerals
geologist. I have been one for 39 years. I previously served on
the Nevada State Board for Multiple Use of the Public Lands,
and I am a former member of the BLM's Great Basin Resource
Advisory Council.
I am not here today to represent any particular
organization but I am here to speak on behalf of an awful lot
of men and women, many thousands of men and women who produced
the minerals that fuel our economy. People who work in mines
from Missouri to Nevada, from Alaska to New Mexico. Together we
are the ones who produce the minerals for the American economy.
We work and live in the areas where mining is carried out, and
we are the ones who are going to bear the immediate
consequences of H.R. 2262, and we are affected perhaps more so
in an immediate term than anybody else by this proposed
legislation.
We feel that the bill will have some profound and lasting
effects on our livelihood, on the industry, and we feel that
the bill as is currently structured presents a severe and real
threat to the livelihood of the American mining industry. We
have concerns about the nature and level of the royalty. We are
concerned about the permit review and renewal process, and we
are concerned about the complexities as they relate to the
environmental processes review and standards that are included
in this bill.
In particular, that concern is based on the fact that the
U.S. mining industry is the most regulated from the perspective
of health and safety and from environment of any mining
industry on the planet. Why are we concerned about this? If the
industry is threatened, as it appears under this bill, our jobs
go away. That is plain and simple.
Now you might say that this is a bit of a boy crying wolf.
Well, I want to say to you that I, for one, am one who had his
job exported overseas in 1997, and I had the privilege of
working in such wonderful places as Colombia, Guatemala,
northern Argentina, the Russian far east. I worked in the
Solomon Islands on the Island of Guadalcanal and Papua New
Guinea. I had the privilege of working in essentially every
continent on the planet, except for Africa during that time. So
I believe it is a valid thing to say that our jobs can be
exported overseas because I have seen that happen, and this is
a concern that is not just Ted Wilton's concern. It is a
concern that many of my friends and neighbors in northeastern
Nevada have.
When I left Elko, Nevada on Tuesday morning to fly over
here, when I checked in at the airport, the gate agent asked me
what are you going to Washington for, and I explained to her
why I was coming, and it was to testify on this bill. Well,
when I went to the gate and she took my boarding pass, she said
to me, Ted, make sure that you speak firmly and clearly because
even though I do not work in mining, if the mines in the Elko
area are closed, my job goes away as well.
We live in an area that has got a very vibrant economy. We
have very good jobs. We are paid more than just a living wage.
We have health and hospitalization insurance not just for
ourselves but for all of our family members. The economic
consequences of this bill are such that it threatens those
jobs. It threatens the small businesses in rural America in the
areas of mining, and we are deeply concerned about this.
We believe that there is a need to look at the Mining Act
and to refine it to make it more modern but please, as you
consider your votes on this bill, please consider the
unintended consequences as well. I would like to thank the
Committee for the opportunity to make this testimony today, and
if I can answer any questions I would be happy to do so.
[The prepared statement of Mr. Wilton follows:]
Statement of Ted Wilton, Spring Creek, Nevada
Mr. Chairman and Members of the Committee ``
I would like to express my appreciation to the Committee for the
invitation to speak before you today. My name is Ted Wilton, and I am
from Spring Creek, Nevada; I am a minerals geologist, and I have been
one for more than 39 years. I am a member of the Board of Trustees of
the Northwest Mining Association, one of the nation's largest
organizations representing the interests of the mining industry. I have
previously served on the Nevada State Board for Multiple Use of the
Public Lands under then-Governor Bob Miller, and as a member of the
U.S. Bureau of Land Management's Northwest Great Basin Resource
Advisory Council. Today I would like to take this opportunity to convey
my views and the thoughts of many of thousands of men and women who
work at mines in such diverse localities as Pilot Knob and Ste.
Genevieve, Missouri; Fairbanks, Alaska; Republic and Kettle Falls,
Washington; Douglas, Wyoming; Naturita, Colorado; Challis and Kellogg,
Idaho; Grants and Silver City, New Mexico; Superior, Arizona; and my
friends and neighbors throughout rural Nevada. Together, we are the
ones who produce the minerals that are the raw materials for many of
America's products and the nation's energy requirements. We work and
live in the areas that mining is undertaken, and together we will bear
the consequences of H.R. 2262 more so than any other group in the
United States.
H.R. 2262 would, if enacted dictate profound changes in the conduct
of mineral exploration, mining and processing of ``locatable minerals''
on the Public's lands, as well as upon State and privately-owned
properties under certain circumstances. Together, the provisions of
H.R. 2262 represent profound and sweeping changes to one of the most
fundamental components of the American economy.
The inclusion of an 8 percent royalty, on top of a multitude of
existing State and Federal fees and taxes adds yet another substantial
cost for doing business to the domestic mining industry. As we all
know, mining and mineral producers do not set the prices for their
commodities. Commodity prices, which are highly volatile at the best of
times, are not set or driven by the American miner who produces them;
instead they are driven by global forces well beyond the control of
individual companies. This considerable additional cost to the
producers of just this royalty will result in closure of mines, and
many other mines will never open at all. Those few mining operations
that will have the ability to absorb this additional burden, and remain
competitive with cheaper foreign minerals producers, will have to raise
their cut-off grades to maintain a semblance of economic viability with
the result being that many valuable mineral resources, some of which
are critical and strategic, will never be mined from a secure domestic
source. And yet, even if these mines remain competitive in the
marketplace, the economic and operational lives of these mines will be
shortened significantly.
Provisions of the bill requiring periodic review and renewal of
operating permits (over three to ten year periods), even when the mines
are complying with, or exceeding the requirements of their approved
plans of operation, will create a high degree of uncertainty as to the
sustainability of these operations. For an industry that requires
significant levels of capital investment from third-parties for
construction and equipment purchases, these levels of uncertainty
created by this provision of H.R. 2262 will have a chilling effect
within the investment community, and this bill will weaken the
industry's ability to finance project expansions or development of new
domestic sources of minerals and metals.
America's mining industry has developed, in concert with State and
Federal personnel, the most consistently effective environmental
programs of any country in the world. Together we have developed
techniques to mitigate the effects mining and mineral processing
activities have upon surface and groundwater resources, and we continue
to refine and advance these mitigation methods and reclamation
procedures. The domestic mining industry has achieved a higher level of
environmental performance than at any time in our nation's history, and
the environment is the better for this progress. Successful mine
reclamation is practiced on a daily basis on a large scale, restoring
previously mined lands to other productive uses. The United States
mining industry presently operates within a complex web of State and
Federal environmental laws, rules, and regulations that set the
framework for the protection of air, surface and groundwater resources,
provides for the protection of cultural and historical resources, and
gives the American public a significant opportunity to work with
regulators and the mining companies to develop measures to minimize and
mitigate the impacts of mining activities. Provisions of H.R. 2262 will
add an additional unnecessary and costly level of complexity to a
system of rules and regulations that already works very well.
The bill includes sweeping provisions for placing large blocks of
the Public's lands ``off-limits'' to mineral exploration and mining
activities. This method of creating de-facto wilderness is particularly
troubling, and substantially changes the current procedures for Public
Land management and access. These provisions eliminate the public's
rights for input into the decision-making process, a key component of
our participatory democracy, and the bill places into the hands of a
select few the decisions that affect many--a concept that violates one
of America's basic foundations.
The enforcement provisions of H.R. 2262 are extremely troubling to
me--collectively, the various elements of the bill that deal with
record keeping, the ability of the Federal government to examine the
records of law-abiding companies without formal notice, the presumption
of guilt of the mining companies until they prove themselves innocent,
``stop and search'' powers to determine if locatable minerals are
contrary to the free society that our nation is.
Summary:
It is my opinion, and that of all of us who work in the domestic
mining industry, that H.R. 2262 would have a profoundly detrimental and
lasting effect upon the American mining industry. Provisions of this
bill are so onerous that not only the vitality, but the very existence
of the American metals mining industry will be in considerable jeopardy
if the bill is enacted:
It will force the closure of many, if not most of the mines that
produce a broad range of mineral commodities necessary to provide the
goods and services that American society requires;
America will be placed into a position of nearly 100 percent
reliance upon foreign sources of minerals, from such distant and
insecure places as the Democratic Republic of the Congo, Mongolia,
Bolivia, Zimbabwe, Kazakhstan, Namibia, Peru, and South Africa;
Domestic sources for the fuel that produces 20 percent of our base-
load electrical power--uranium for nuclear energy--will be further
reduced, resulting in an even greater reliance on foreign energy
sources than before;
This bill will result in a nearly total closure of metal mines in
the United States. It will result in the loss of many thousands of high
paying jobs: jobs that provide far more than a ``living wage'', jobs
that provide health and hospitalization insurance for not only
employees, but all members of their families. These jobs provide access
to financial support for education of our children, and these jobs
provide participation in retirement plans, which include financial
contributions by our employers;
The many small businesses that have grown up in our towns where
mining is the cornerstone of the local economies--businesses that
embody the dreams and investments of many Americans who are not
directly employed by mining companies, will also bear the consequences
of H.R. 2262, and the likely shut-downs of the mines;
Our prosperous and friendly towns, most of which are situated in
rural America, will suffer greatly. Local economies will be
significantly impacted, and our nation will be worse off for this loss.
While I do not dispute the notion that some refinement and reform
of the General Mining Law might be needed, H.R. 2262 does not achieve
this goal. It is a bill that punishes not only mining companies, it
punishes the investors in these companies and the communities that
depend on mineral production for their very existence. It jeopardizes
national security by creating an otherwise unnecessary and dangerous
reliance upon foreign sources of metals and minerals.
The unintended consequences of H.R. 2262 are profound, and they are
far-reaching. The impacts upon the economy, the nearly total reliance
on foreign sources for raw materials, the loss of jobs--each is
significant in its own right, and together these consequences outline a
situation that is highly unfavorable for America. At the same time,
H.R. 2262 fails to meet its stated goal--to reform and modernize the
American mining industry.
______
Mr. Costa. Thank you very much for your focused and
personal view as to the impacts of your experiences and your
interest as we try to be mindful in our due diligence on
considering this legislation. Now, we are at the question
period. Question and answers, and so I get a chance to start
first. Mr. Dean, you obviously are an outdoor enthusiast and
have testified to that effect.
You talk about acid mining drainage being harmful to
surface and groundwater. Have any of your organizations done an
inventory as to the impact of the acidity that has been
impacted throughout the West as it relates to mining?
Mr. Dean. I do not know the answer to that, Mr. Chairman.
Mr. Costa. OK. What is the sort of activity that takes
place in terms of the consideration? I mean among your talk
show and others is this an issue that really gets much
discussion among your outdoor enthusiasts?
Mr. Dean. Well, the show I do is not essentially a talk
show whereby listeners are invited. I script it out, and then I
do the show each day, and frequently interview people from all
walks of life but I would like to shed some light on what some
hunters and anglers are saying. Last week when I knew I was
going to be coming to Washington, there was a group of hunters
and fishermen that I coffee with about once a week at the Ram
Coda Hotel in Pierce, South Dakota, and I mentioned I was going
to be in Washington, D.C. to testify on reform of the Mining
Act of 1872, and someone said----
Mr. Costa. I bet you got an earful.
Mr. Dean. Interestingly the majority of them did not know
anything about the Mining Act of 1872. So I started explaining
what it did and what it enabled mining companies to do, and
once they understood it there was a sense of general outrage
that they could take public lands and do what they did with
public lands, and in some cases destroy streams with
irresponsible mining.
Mr. Costa. All right. But that is anecdotal, and I do
appreciate your comment.
Mr. Dean. Thank you.
Mr. Costa. Let me move on. Mr. Champion, the comments you
made as related to the World Bank, I am trying to figure out in
this legislation if we look at oil and gas where royalty fees
are paid, what would be applicable that would be fair as it
relates to the issue of trying to provide money?
I do appreciate your comment that if some agreement is
reached and enacted into law that it should be dedicated first
priority to clean up those existing and abandoned mines. I
concur with that but give me a sense of what you think is the
best way to approach this. You talked about net income versus
royalties and fees of anywhere from 8 percent--and some have
talked as high as 12 percent--the tradeoffs.
Mr. Champion. I think you need to be cautious with regards
to comparing oil and gas to hardrock mining. Generally
speaking, those markets are considerably different. Mostly
regional in the case of oil and gas. When it comes to hardrock
mining, our markets and our competition is really global
competition. So anything that----
Mr. Costa. Could you not say that is true with oil and gas?
Mr. Champion. Pretty much I would say that, yes.
Mr. Costa. What?
Mr. Champion. Yes, I would.
Mr. Costa. OK.
Mr. Champion. With regards to hardrock mining, our
competitors are really global competitors. So anything that has
an impact on increasing our cost base disadvantages us
significantly. So the approach that we have looked at and the
one which we would support would be a net income approach.
Recognizing that the cost structure of our business, about 80
percent of our cost is fixed cost, so even while the price of
our metals can fluctuate, it is more difficult to remove costs
from our operations, and so we are overly burdened when prices
of the metals are at lower----
Mr. Costa. OK. I have that but how do you monitor the net
costs? How do you apply that, if in fact that were to be viewed
acceptable?
Mr. Champion. Well, you know we do calculations, of course,
on a monthly basis in terms of what our net income is. So there
is a very transparent way to be able to----
Mr. Costa. And that is transparent. The issue of attempting
to try to deal with outside patenting or selling lands to
corporations, do you think there are some other ways in which
we could deal with a tenure issue? As you noted, Senator Craig
talked about the patent issue and this issue of tenure. Your
thoughts?
Mr. Champion. Well, we recognize that that is a key issue
with regards to this legislation, and I think it deserves some
attention. It deserves some review. I do not have the answer
today for that but I think a productive conversation is needed,
and one that we are certainly welcome to engage with as an
industry.
Mr. Costa. Mr. Ellis, if this legislation were enacted and
became law, what do you think a fair rate of return would be,
and do you have any comment on the net income versus a royalty?
Mr. Ellis. Sure. Well, first we certainly have looked at
oil and gas, and oil and gas is really the original global
commodity. I mean the prices are set on a worldwide market. It
is a price that is dictated to.
It is not necessarily a local competition, and certainly we
looked at comparing it to the royalty rate for onshore
production rather than offshore production on the outer
continental shelf which is more than 16 percent but then also
part of when you set the royalty rate--and there are a variety
of different ways of calculating the royalty--it is clear that
it makes it easier to be transparent if it is the net smelter
rate that was envisioned in the bill rather than having one
where you have certain allowances, you deduct certain costs,
you look at just the profits.
I mean those are all going to be much more difficult to
calculate, and it is certainly something that was brought up in
the World Bank study that those are more difficult to calculate
as well.
Mr. Costa. All right. My time has expired. I will defer to
the gentleman from New Mexico.
Mr. Pearce. Thank you, Mr. Chairman. Large panel. I hope we
have two rounds at least. A lot of questions coming up. Mr.
Dean, you had made a quote about a Congressional group that had
signed on to your letter. Who was that that signed that?
Mr. Dean. The Congressional Sportsmen's Caucus.
Mr. Pearce. That is the reason my staff came running up
here. I am the Vice Chairman of the Congressional Sportsmen's
Caucus, and they were wondering if I had signed something
without their knowledge. I would question whether or not the
Congressional Sportsmen's Caucus has signed your letter, sir.
Mr. Dean. I believe the Congressional Sportsmen's
Foundation has.
Mr. Pearce. If you would like to change that officially in
the record, I would appreciate that.
Mr. Dean. I would be happy to.
Mr. Costa. We will for the record clarify.
Mr. Pearce. Thank you.
Mr. Costa. And submit the correction.
Mr. Pearce. Thank you. Mr. Ellis, the gold for free. Where
does that line form? I would like to head out there as soon as
we get through. Where does the line form for free gold?
Mr. Ellis. Well, it has been forming since 1872 as far as
what you extract from the earth.
Mr. Pearce. OK. So now $9,765----
Mr. Costa. You have just got to find it first.
Mr. Pearce. It is just finding the line. Nine thousand
seven hundred and sixty-five dollars and you get $10 billion in
free gold. Did you ever kind of in the middle of the night
think about trying to get $10,000 of your own money and
throwing this career behind you that you are pursuing now and
get $10 billion free? Is that an accurate representation of the
real situation?
I mean $10 billion of gold for free. Gold and other
valuable minerals for free. I am reading your testimony here on
page--it is not numbered but the second page. And I just
wonder, is that an accurate reflection of what is actually
going on? Did not the company that----
Mr. Ellis. Well, you are talking about American Barrack in
Nevada. Is that the one you are talking about, sir?
Mr. Pearce. It does not ever enter your mind that maybe
your mother-in-law could go out and apply for you? I do not
know. That is a billion free.
Mr. Ellis. My mother-in-law is a physician.
Mr. Pearce. It seems like that we would have----
Mr. Ellis. I think she is doing all right.
Mr. Pearce. Thank you. It seems like that we would have
lines of people stacked up to get this free gold. It seems like
that maybe----
Mr. Ellis. Sir, I am not suggesting that mining is not a
difficult industry, and I certainly recognize that, that it is
not----
Mr. Pearce. How much did----
Mr. Ellis. The----
Mr. Pearce. If I could reclaim my time, sir. How much did
American Barrack have to invest before they could even start
the mining process to harvest that $10 billion in gold?
Mr. Ellis. I do not have that information.
Mr. Pearce. Let me give it to you. It is $1 billion. Are
you familiar with returns on investment? Anything like that?
Are you familiar with----
Mr. Ellis. Of course I am, sir.
Mr. Pearce. OK. So basically the mining industry, let us
say, 20 percent return on investment. So you get $10 billion.
You get 20 percent rate of return. That is $2 billion, if I am
doing the math right. Two billion to cover $1 billion
speculative cost, and if the price of minerals dropped just
incrementally your fixed costs in a mine remain very high, and
when I read your testimony, sir, I think it is very, very
uncharacteristic of what is going on. We are driving these
mines out of our midst, and you are testifying that we are
giving away minerals for free.
Mr. Horwitt, do you believe that we should not have mines
on public lands or are you thinking that we did not get the
final gist and final point that you are making?
Mr. Horwitt. Not at all. We are not opposed to mining on
Federal land.
Mr. Pearce. You just think that we should do it more
responsibly?
Mr. Horwitt. That is correct.
Mr. Pearce. OK. Mr. Champion. Sorry. Mr. Wilton, thank you
for your testimony, and again we hear lots of people up here
and to hear someone actually take it down to the field level
and talk about the people and when you talk about the jobs that
have been outsourced, careers that you are in, I think I share
your fears that we are outsourcing a lot.
Mr. Champion, you have worked all over the world. You have
heard the claims earlier by Mr. Leshy that this country does
pretty bad compared to the scale. I mean we did not get any
percentages but he said there are a lot of countries that do
better. Which countries? You have worked all over the world.
Which countries do better or are there any countries that do
better in environmental stewardship?
Mr. Champion. Well, I am not aware of any countries that do
a better job than the United States with regards to
environmental stewardship, and certainly as you travel around
the world one of the things that does disadvantage us is----
Mr. Pearce. Let me pull the poster up over here. That one
from Russia. I like to do this because I really think it is
critical because we have a lot of people who are critical of
industry, and they say that we do a bad environmental job. This
is in Russia where they have a high government stake. They have
a high government take, and I agree with you that I think the
U.S., as bad as it might be when we complain among ourselves,
that this is what we see in the countries that have high
government takes. Thank you, Mr. Chairman. I would look for a
second round if we get it.
Mr. Costa. The eye is in the beholder and as was once said
a picture is worth a thousand words. I would suggest that that
was a case where government had no concern about the outcome of
the resource except getting it but either way you slice and
dice it, it is not good. My question to a couple of the folks,
Mr. Wilton, the current testimony was that the overlapping law
with the Clean Water Act and other issues is suffice to cover
the job.
There was a scientific study that I will find here if you
need the quote but said that three out of four major mining
operations in the U.S. failed to meet water quality standards
according to current law and regulations. What do you think the
problem is?
Mr. Wilton. I am not an environmental specialist, Mr.
Chairman. However, I would first raise the question of are
these historical issues that date back to the pre-dating of the
Clean Water Act? Are these issues that deal with the EPA Gold
Book standards? I do not know the answer to your question.
Mr. Costa. We will submit you the information, and you can
respond in written testimony. How does that sound?
Mr. Wilton. I would be pleased to do that, sir.
Mr. Costa. Mr. Ellis, you talked and I had asked the
question earlier about net income versus a royalty payment, and
then there was the comment that was made--I am not sure if it
was by you or the gentleman from Kennecott, Mr. Champion--about
net smelter versus other royalty types. Could you in more
detail give your thoughts on the pros and cons?
Mr. Ellis. Well, certainly. I mean net smelter as indicated
is relatively simple to calculate in the fact that you are
looking at what is the actual cost as you are seeding it into
smelter, and what is the amount of money that is there, whereas
the net revenue is going to adjust for some of the costs that
are incurred by the company bringing that mineral to market.
And so you are essentially figuring out some of the deductions
as you go along for the net income which according to the World
Bank study is one where there is more room for manipulation or
where it is much less transparent to the taxpayer that they are
actually getting the money that they were promised.
Mr. Costa. So in essence you would prefer the net smelter?
Mr. Ellis. Yes, sir.
Mr. Costa. OK. Mr. Horwitt, I appreciated your maps, and
you know for a lot of us you know when it kind of becomes local
it comes home. Yosemite National Park I used to represent and
for all of my colleagues who are within the area we all
consider it our own backyard so to speak, even though it is the
trust of the people of the United States but it is obviously a
very special place. The map that you showed talked about 50
staked claims since January 2003. I must say that I am somewhat
surprised or very surprised. What is the nature of those
claims? What kind first?
Mr. Horwitt. Well, the Bureau of Land Management does not
record generally the type of metal the claims are staked for.
Wyoming is the one state that requires claimants to declare the
type of metal they are going after. So you know I can only
speculate. I know that California has historically been a gold
mining region, and the prices of gold are high so they could be
for gold. But essentially that information is not included in
the Bureau of Land Management records.
Mr. Costa. We have seen a lot of increase, as you noted in
your testimony, of those various mining claims. It has
increased actually I believe 80 percent in the last four years.
Do you think this is historically--if you have done the
research, if you have not just tell me--a high rate of claims
that have been made or is it average or is it below average in
terms of other times within the 20th Century?
Mr. Horwitt. Certainly the highest rates we have seen in
recent years since the Federal government began charging an
annual fee from claim holders. There were many, many more
claims staked before I believe it was 1993 when the Federal
government required claim holders to pay an annual fee to hold
their claims, and at that point many claims dropped off. So the
numbers that we see now are the highest in many, many years.
Mr. Costa. OK. My time is expiring here but I want to know
about the notion of foreign companies that are staking many of
these claims. There have been issues of outsourcing jobs
abroad. Do you think there is a distinction when foreign
companies come to the United States and make these claims, and
do you think H.R. 2262 would make any difference?
Mr. Horwitt. The short answer is yes. I think the foreign
claim staking raises two issues. One, it clearly shows with so
many foreign and multinational companies operating on Federal
land that this is not the 1800s anymore. It is not people going
out with picks and shovels. It is you know sophisticated
companies with huge earthmoving equipment staking these claims,
and we need our law to be updated accordingly.
Also it raises the potential that if a mine were to be
established by a foreign company and that mine were to go
bankrupt which is a fairly common occurrence in the industry,
the Federal government would have more difficulty tracking down
the assets of that company if there were a shortfall between
what the company put up and the cleanup costs.
Mr. Costa. OK. My time has expired. Mr. Heller.
Mr. Heller. Thank you, Mr. Chairman, and again thanks to
the panelists, everybody that is here. I really appreciate your
time and efforts to get here and personally I want to welcome
Mr. Wilton here from Spring Creek, from my district. I have a
couple of questions. I am kind of listening to this whole
process over the last couple of hours, and though I may
disagree I certainly do not want to make it such that it is
challenging anybody.
But we continually hear about record profits. I have heard
panelists talk about record profits. Some of us up here have
talked about record profits. I think gold prices right now are
trading at about $686 an ounce right now. I do not know what it
was five or six years ago. It was half that much.
I think at that time, if I recall visiting eastern Nevada,
very little research and development going on at that time
because they could not afford it because of the price of gold
at that time. Would it be fair to say, Mr. Wilton, that the
economy of Spring Creek, Nevada, the economy has a lot to do
with the price of gold?
Mr. Wilton. Yes, sir. That is as true a statement as you
will be able to make about that today.
Mr. Heller. You know unlike oil and gas where they have a
governing body that sets prices, we do not set gold prices
worldwide. I think there is quite the difference between trying
to compare those two resources. Let us move just quickly to
environmentally sensitive. I have heard too many panelists talk
about whether or not the industry here beats some of these
environmental responsibilities, and going through a short list
these are the following Acts that they have to follow, and this
is just a partial list.
Hardrock mines must comply with the National Historic
Preservation Act, the Air Quality Act, National Environmental
Policy Act, Clean Air Act, Federal Water Pollution Control Act,
Clean Water Act, Endangered Species Act, Federal Land Policy
and Management Act, Resource Conservation Act, the Toxic
Substance Control Act, the Clean Water Act Amendments of 1977,
Archeological Resource Protection Act. I mean we can go on and
on. Super fund Amendments Reauthorization Act. Clean Air Act
Amendments of 1990.
I want to hear it again, Mr. Champion. Is there any other
country that does a better job environmentally as this industry
here in America?
Mr. Champion. None that I am aware of, sir.
Mr. Heller. Let us move to economic return. A prior
panelist said that mining law has no direct financial return to
the public. The senator, good Senator Craig from Idaho,
mentioned that the average salary for a member employed in the
industry was $42,000. I think that was a few years ago because
I think in Nevada it is around $60,000.
As I mentioned in my opening statement, they pay income
taxes. I think that has a financial return to the public. They
do shop at local stores. They eat at local restaurants. I think
that in itself also has direct financial return to the public.
I think these wages are critical to many as we mentioned
earlier, to the local economies here in Nevada.
They also pay net proceeds to the State of Nevada. They are
taxed in Nevada. So it just raises the question if there is any
economic benefit mining has. If there is any financial return.
I have to disagree with the comments of previous panelists.
Finally, estimated acreage. It was said by one of the
panelists--I think it is the free gold guy sitting over here--
that there is a compiled chart showing the number of mining
claims in my state with the estimated acreage. My district I
think was on the top of that list with over three million acres
of mining claims, and that does seem like a lot of lands, and I
think actually it was Mr. Dean. I think you were mentioning
that.
However, I do not know if that is real accurate. If you do
the math, you break it down, that is 5,736 square miles, three
million acres. My district is 110,000 square miles. I would
think that 100,000 square miles is enough space for wildlife
habitat to flourish. As a hunter and fisherman myself, I would
mention that those that apply for hunting licenses in the State
of Nevada we get three times as many applicants as we actually
have tags. I do not think anybody is complaining about the
100,000 square miles not being enough space for wildlife
habitat. So is there anything that I have said that is
inaccurate, Mr. Champion, at this point?
Mr. Champion. Not that I am aware of, sir.
Mr. Heller. Anybody else on the panel? Thank you. I will
yield.
Mr. Costa. Thank you. The gentleman from New Mexico and I
have made a Solomon-like decision, and that is that we are
going to share this last round of five minutes. I am going to
take 2 minutes and 30 seconds, and the balance, and then we
will bring the hearing to a close. As I said, we are going to
have a follow-up hearing in Nevada at Elko during the week of
August 21, and we will obviously continue the discussion. We
are looking at the past hearings and the oversight, but we do
have a busy schedule on the Floor with appropriations measures
and also the Reauthorization of the 2007 Farm Bill. So we do
have a lot of items on our plate today and tomorrow and the
rest of this month.
So let me begin. Mr. Marchand, we have not intended to
neglect you. You talked about the challenges facing the
Confederated Tribes of Colville Reservation in trying to assert
your rights on the crown jewel proposal. How would you suggest
that the Tribe would benefit from the land managers to balance
the mining with land uses if in fact this proposed legislation
were to become law?
Mr. Marchand. We have a lot of experience with other
developments such as hydropower and we have worked out
mitigation of things on the river system, and I think similar
things could be applied to mining, and I think mining is
probably you know a reality but we just would like to see it be
more responsible and give some consideration to our interests
and issues for our Tribe.
Mr. Costa. All right. But is this on sovereign land? I am
not familiar with the actual site and proposal.
Mr. Marchand. It is----
Mr. Costa. It is adjacent to sovereign land?
Mr. Marchand. It is debatable. We have reserved rights to
hunt and fish affirmed by the Supreme Court on these lands.
Mr. Costa. All right. OK.
Mr. Marchand. We will buy it back for a dollar an acre if
you want to give it back to us.
Mr. Costa. All right. We will take that under
consideration. Mr. Horwitt, you identified hundreds of claims
that have been within five miles of national parks beyond
Yosemite. What do you think land managers can do to address
these claims?
Mr. Horwitt. I think they are in a difficult situation.
There are several options that are not that great. One, they
could buy out the claims but that tends to be very expensive.
Mr. Costa. Very expensive.
Mr. Horwitt. I mentioned that happened at Yellowstone, and
it was $65 million.
Mr. Costa. Right.
Mr. Horwitt. Also they could challenge the validity of
these claims. That also tends to be expensive and time-
consuming. There is a case in Oregon right now that has gone on
for several years, and it is still not over. Or they can you
know operate in the current system which has proven to be
inadequate to address the impacts of mining.
Mr. Costa. Thank you very much. My time has expired. The
gentleman from New Mexico. Holly, he has 2 minutes and 30
seconds.
Mr. Pearce. I thank the gentleman for that, and I would--
just not to be contentious--but I would lobby on behalf of not
cutting the baby in half. I would lobby for the full five
minutes. So the Solomon deal you were talking about. Mr. Dean,
again the same question I had for Mr. Horwitt. Do you feel like
there is too much activity, too much mining activity on public
lands--too much mining activity on Federal lands? You are
talking constantly and your letters say that we like the open
spaces.
Mr. Dean. I do not recall saying that.
Mr. Pearce. OK. So you do not have an objection to mining
occurring? OK. Real fine. Mr. Champion, the law itself, up or
down, do you believe that this would facilitate more jobs or
fewer jobs in the country?
Mr. Champion. As written, it would result in fewer jobs.
Mr. Pearce. Fewer jobs and a healthier or weaker industry?
Mr. Champion. Significantly weaker industry.
Mr. Pearce. Mr. Wilton, you have been in the industry
almost all your life. The bill in front of us is 2262. Is it
going to improve the industry? Is it going to make the jobs of
the people you know on a first name basis stronger or weaker?
Mr. Wilton. It will make it weaker, Congressman.
Mr. Pearce. Mr. Ellis?
Mr. Wilton. It will make the industry weaker. It will make
jobs go away.
Mr. Pearce. And the royalty provision itself is a key
concern to both of you? Yes or no?
Mr. Wilton. Yes.
Mr. Pearce. Yes. Mr. Ellis, these are guys who live in the
industry. This does not concern you? In other words, does not
worry you that you are hearing from the people who make the
jobs that it is going to make the industry weaker is not a big
concern to you?
Mr. Ellis. Sir, I am certain that it is going to have some
effect on the industry. I mean they have not had to pay a
royalty for the 135 years of existence but that does not mean
that industries cannot grow stronger and modify and adapt in
these different situations, and so I mean to me this is
something that taxpayers have been left out of the loop for
awhile, where they have not been getting any return from the
gold as we were talking about before, and so certainly I think
that this is a legitimate step forward on behalf of taxpayers,
and that the mining industry will adapt and go forward, and I
mean that happens to companies and industries across this
country.
Mr. Pearce. I would refine that all down to be you do not
see a concern if they report that companies would be weaker
that you in fact believe that by some method they will just
simply get stronger, and I would appreciate that observation.
Thank you, Mr. Chairman. I appreciate it. We have a few
questions to submit in writing.
Mr. Costa. Very good. And I want to thank you, and I want
to thank all of the members of the Subcommittee for your
participation this morning. I want to thank the witnesses.
Mr. Pearce. I have a couple of UC requests I forgot to do.
One of the local county commissions has submitted a resolution,
and then also the Uranium Producers of America have a document
they would like submitted.
Mr. Costa. OK. Yes. And we really did not get a chance. I
am very interested in how uranium is treated on this issue, and
I suspect we will get more into that detail at the subsequent
hearing. But again I want to thank you, and I want to thank the
members of the Subcommittee, and those witnesses who were
patient and testified and who answered the questions to the
best of their ability, and we will look forward to continuing
this dialogue.
I know the Chairman is very interested, as he said in his
opening statement, on taking input from everyone. So at this
time this concludes the Subcommittee hearing on Energy and
Mineral Resources dealing with the Hardrock Mining and
Reclamation Act of 2007. This committee is adjourned.
[Whereupon, at 12:55 p.m., the Subcommittee was adjourned.]
[Additional material submitted for the record follows:]
[The prepared statement of Mrs. McMorris Rodgers follows:]
Statement of The Honorable Cathy McMorris Rodgers, a Representative in
Congress from the State of Washington
The 1849 California Gold Rush found Okanogan County and the Methow
Valley in the middle of a chain of prospectors that stretched from
California to Alaska. From 1896 until the great depression, gold
business boomed in the towns of Ruby, Conconully, Barron, and Loomis.
Today there are some tailings and a few old buildings that survive.
Thousands of claims remain from Pateros to Hart's Pass, but almost none
are being worked, yet it was gold that helped bring some of the first
people to Northeastern Washington.
Today the mining industry in Washington state is vital to our
economy. The combined direct and indirect economic impact was $2.5
billion dollars in 2005. Across the United States, hardrock mining
employs or supports 170,000 high paying jobs and has an output valued
at more than $40 billion.
The United States is one of the world's largest producers and
consumers of minerals and metals. We use them in our everyday life--
they are essential to our economic and national security. However, I am
concerned that we are becoming increasingly dependent upon foreign
countries to provide critical minerals that are needed to make Boeing
airplanes, superconductors, or military equipment. In fact, according
to the U.S. Geological Survey, reliance on mineral imports has nearly
doubled in the past decade. And it may not even be necessary. The
United States possesses vast undeveloped minerals that far exceed many
of our industrial competitors. For example, according to the National
Mining Association, the U.S. possesses 550 million tons in identified
and undiscovered reserves of copper. Yet, the U.S. produces only half
the copper it consumers despite the fact that the price of copper is at
record levels. And with the demand for hybrid cars increasing, the need
for copper will continue since hybrid cars use four times the amount of
copper of a conventional car.
One reason for declining development of mineral resources in this
country is an increasingly burdensome regulatory structure. There are
more than 15 federal environmental laws that apply to any major mining
project. Yet this bill contains additional environmental requirements
that are duplicative and sometimes conflict with existing state and
federal environmental law. In 2005, I was appointed to chair a task
force on updating and strengthening the National Environmental Policy
Act (NEPA). NEPA was hailed as visionary when it was signed into law in
1970, yet has since become a process that is too often used to delay,
if not halt projects, and has produced unintended consequences.
I can't say I ran for Congress on a platform to update and improve
NEPA. However, whether it is important transportation and public works
projects, oil and gas development, healthy forests, mining, grazing or
any other federal project, NEPA is required and oftentimes the tool to
delay or to shutdown projects.
Battle Mountain's Crown Jewel project is located in Okanogan
County. It has undergone an excruciating seven year permitting process,
received more than 53 state and federal permits, and was issued a
favorable Record of Decision (ROD) in January 1997. The project has
withstood administrative challenges to every permit and the ROD as well
as several legal challenges. In December 1998, a federal district court
upheld the EIS and ROD. After spending more than $85 million on the
project, Battle Mountain Gold was on the verge of receiving its
operating permit when it was taken hostage by the Department of the
Interior and its Solicitor, who has attempted to change 127 years of
law with the stroke of his bureaucratic pen. Fortunately, through the
efforts of Senator Gorton, Representatives Nethercutt and Hastings, and
many others, Congress rightfully intervened and set the project back on
track.
This is one of many examples that point to the need to reform the
NEPA process to provide firm time guidelines and deadlines, to provide
sideboards and bring accountability to the process, and to require the
losing party to pay all costs and attorney fees if they challenge
agency decisions in court. Without these reforms, the mining industry
will continue to seek opportunities outside the U.S.
This is simply unacceptable. We live in a resource rich country and
we should not be strangling ourselves economically by not utilizing the
resources we have been given or by putting them off limits. We need to
work together to support common sense solutions to establish and
maintain regulatory certainty and predictability for the mining
industry and reduce excessive, duplicative and expensive permitting
delays.
______
[The statement submitted for the record by the Uranium
Producers of America follows:]
Statement submitted for the record by the Uranium Producers of America
The Uranium Producers of America (``UPA'') was founded in 1985 to
promote the viability of the domestic uranium industry. Current members
include Energy Metals Corp., Power Tech Uranium Corp., UR-Energy USA,
Inc., Uranium Energy Corp, UREX Energy Corp., Denison Mines Corp.,
Laramide Resources Ltd., Mestena Uranium LLC, Power Resources, Inc.,
Strathmore Minerals Corp., Uranium Resources Inc., Neutron Energy,
Inc., Western Uranium Corp., and U.S. Energy Corp. UPA member companies
are actively pursuing exploration, development and production of
domestic uranium resources in Wyoming, Colorado, Texas, South Dakota,
Arizona, Nebraska, Nevada, Utah and New Mexico. We appreciate the
opportunity to provide a statement concerning H.R. 2262. The UPA
strongly urges that any changes to the existing Mining Act be made only
after careful consideration of the devastating impacts such changes
could have on our nation's ability to become more energy independent.
UPA's position is that domestic uranium production is vital to the
national security and energy independence of the United States and
will, once again, play a key and sustaining role in the front end of
the nuclear fuel cycle.
Today in America, and indeed worldwide, there is truly a nuclear
power renaissance. And this renaissance requires as its foundation the
essential fuel--uranium. Policymakers are recognizing the vital role
that nuclear energy must play to meet our nation's electricity demands
in an inexpensive, clean manner. UPA believes the following facts must
be considered as the United States embraces the role that uranium must
play to ensure our country's secure energy future:
The country needs an energy independence policy that
includes nuclear power as a centerpiece of implementation. Legislation
such as H.R. 2262 is counterproductive to that goal;
70% of the American public is in support of nuclear
energy \1\ essentially because of their concern over rising gasoline
and natural gas prices and the growing concern over CO2
gases and global warming. Legislation such as H.R. 2262 is not at all
responsive to these public concerns;
---------------------------------------------------------------------------
\1\ Nuclear Energy Institute Survey 2005.
---------------------------------------------------------------------------
20% of America's electricity is currently generated by
clean nuclear power, and this amount must grow in order for us to reach
energy independence. H.R. 2262 will stifle this growth;
In order to even simply maintain the current 20% level of
America's baseload electricity generation that comes from nuclear
power, more uranium must be produced, both domestically and worldwide,
and H.R. 2262 will certainly unduly impede such production in America;
Some of the most ardent environmentalists, such as
Patrick Moore, Norris McDonald and James Lovelock, urge that nuclear
energy is the most efficient means of addressing their greenhouse gas
concerns because nuclear energy production is free.
The United States currently derives 20% of its electricity from
nuclear power. In order to generate this electricity, domestic nuclear
utilities consume approximately 56 million pounds of uranium in the 104
commercial reactors that they operate. In order to break our nation's
addiction on foreign oil and substantially reduce greenhouse gas
emissions, nuclear power generation must play an increasingly larger
role in generating base-load electricity in our country. Since
worldwide demand for uranium is rapidly increasing and has far
outstripped supply for many years, it is imperative that the rebounding
domestic uranium mining industry discover and produce new sources of
uranium from within the United States. Much of the resources that have
been discovered in the past and that will be found and mined in the
future are on U.S. public lands. The Department of Energy recently
noted in its Environmental Assessment to open DOE controlled lands for
uranium leasing, that expansion of its leasing program in Colorado
would be supportive of the goals of the Energy Policy Act of 2005.
(Public Law 109-58). The Act emphasizes the reestablishment of nuclear
power as a major source of energy.
Our nation's energy demands must be fulfilled to keep our economy
growing. On May 8, 2006, the House Committee on Government Reform
produced findings on a committee study on securing America's energy
future. Finding 8 from this report stated ``[n]uclear energy must
become the primary generator of baseload electricity, thereby relieving
the pressure on natural gas prices and dramatically improving
atmospheric conditions.''\2\ This finding is based on the fact that
electricity generated from nuclear power is inexpensive and clean.
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\2\ Seeking America's Energy Future, Majority Staff Report to Comm.
on Government Reform, Chairman Tom Davis, and Subcommittee on Energy
and Resources, Chairman Barrell E. Issa, Comm. on Government Reform,
U.S. House of Rep., May 2006.
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In order to grow the nuclear power industry in the United States,
as it is growing in the rest of the world, we must provide for a
significant portion of the basic fuel for our reactors to come from
within our borders. The uranium resources are available. At today's
prices, domestic uranium producers can compete with foreign producers
to supply a meaningful portion of domestic nuclear utilities needs. At
this time, government policy makers should be doing everything
reasonably possible to encourage new production, not put up barriers to
this production. Foreign nations such as Kazakhstan and Russia are
spending millions to encourage the production of nuclear fuel. In the
United States, private industry and investment will fund the effort to
reestablish domestic uranium production. However, until mines can be
permitted and new processing plants licensed and constructed, it is
critical that additional impediments to this industry be minimized.
H.R. 2262 contains such impediments.
Dating back to the early days of the Atomic Energy Commission, the
Federal Government has played a leading role in the development of the
domestic uranium producing industry. The Federal Government partnered
with private companies to create this industry. Unfortunately, the
Federal Government also played a leading role in the demise of the
industry. Early enrichment contract practices and liquidation of
massive quantities of government uranium stockpiles created
circumstances in which the market price of uranium had little to do
with the cost of producing uranium. The result was to decimate the
domestic uranium production industry over a period spanning a quarter
of a century. We are deeply concerned that H.R. 2262 will turn back the
clock on the uranium industry and thwart its success just as it
recovers from over twenty-five years of critical struggles.
An industry which in the 1970's provided over 18,000 jobs and
operated over 300 mines and 26 mills in the U.S., had shrunk by 2001 to
less than 400 jobs, three mines and only one operating mill. Further,
44 million pounds of uranium was produced annually from mines in the
U.S. the 1970's, and only about 5 million pounds will be produced in
2007. This level of production meets less than 10% of the current
demands on our country's nuclear power industry. With today's great
geopolitical uncertainty, production of such a small fraction of U.S.
nuclear utility demand from domestic sources should become a matter of
significant concern. The UPA urges Congress to spur increased
production and not place impediments on the domestic uranium production
industry that will prevent it from providing domestic fuel supply to
what Congress has urged to become a growing U.S. nuclear power fleet.
Much of our annual domestic uranium resources currently come from
fast-depleting inventories that U.S. utilities purchased in past
decades or from uranium imported from foreign sources. The majority of
the fuel for domestic reactors currently comes from blended down
uranium from Russia's nuclear arsenal. This program ends in 2013.
However, renewed interest in nuclear power, coupled with the
recognition that there is simply not enough existing uranium production
to meet reactor requirements has created a demand for new domestic
uranium production, and UPA is poised to meet a substantial portion of
this demand. This critical contribution of fuel from within our
national borders is a vital component of national energy security.
The Energy Information Administration and the International Atomic
Energy Agency have projected that there will be a significant
difference between known supply and demand for uranium worldwide for at
least the next ten years. The gap between 2007's worldwide production
of about 106 million pounds and current worldwide demand of an
estimated 185 million pounds is not likely to shrink. Indeed, it is
likely to grow and rapidly. The number of new reactors currently
planned or under construction is estimated at over 140, adding nearly
one-third to the current total of 440 reactors worldwide. In the near
future, current and newly constructed reactors will require 275 million
pounds of uranium annually. Uranium production must grow both
domestically and worldwide to meet the increased demand.
Even assuming the current ``best case scenario'' for anticipated
production, the worldwide market (and by extension the U.S. market)
will still be ``short'' 100 million pounds over the next decade. New
production could fill a significant portion of this gap, perhaps as
much as 20% of total western and U.S. demand.
New exploration and production, however, is already subject to many
barriers, such as increased prices for equipment, the cost of
chemicals, fuel and labor, and a shortage of drill rigs, as the oil and
gas industry is keeping these rigs and their crews busy around the
clock as that vital industry works to do its part to provide U.S.
energy security. Regulatory standards are much more stringent than in
the past, and several of the western states have enacted mining laws
that provide for closure plans and bonding that will assure operations
that will protect workers, the public and the environment. This fact
was recently recognized by the Department of Energy Environment
Assessment for uranium leases. DOE found that concerns about past
uranium production practices were not relevant to future mining because
current regulations and standards would adequately protect workers, the
public and the environment.\3\ New technologies and a modern
understanding of the impacts associated with uranium production are in
place to assure that permitted and licensed operations will benefit the
communities in which they operate.
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\3\ Finding of No Significant Impact for the Uranium Leasing
Program, U.S. Department of Energy, Office of Legacy Management, July
2007.
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Today, as prices of uranium rebound in response to this supply gap,
they still remain below the inflation-adjusted prices of the 1970's.
Still, a renaissance of the domestic production industry has begun.
Today's higher prices have enabled new companies to enter into
exploration and will, in turn, stimulate competition as they work to
provide U.S. utilities with greater variety of secure domestic supply
for their nuclear fuel. Previous exploration in New Mexico alone has
been established by geologists at over 600 million pounds of unmined
uranium resources, much of this on public lands, and it is certain that
future exploration and mining will expand on this number.\4\ The
resources in other public lands states are significant, and these
resources can be produced in an environmentally responsible manner
following today's existing standards and regulations for mining.
Extremely conservative estimates by the Energy Information
Administration (2004 show uranium resources by state based on $50 per
pound prices to be:
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\4\ See McLemore and Chenoweth, Uranium Resources in the San Juan
Basin, New Mexico, New Mexico Geologic Society, 2003.
Wyoming 363 million lbs.
New Mexico 341 million lbs.
Arizona, Colorado, Utah 123 million lbs.
Nebraska, South Dakota 40 million lbs.
Texas 23 million lbs.
UPA believes EIA estimates will be greatly exceeded as exploration
and development proceeds.
The renewed exploration of uranium has energized rural communities
in the western United States. These former mining communities are
welcoming the domestic uranium mining as they anticipate many high-wage
jobs and significant economic development investments in their towns
and counties, as well as increased tax revenues to support
infrastructure, educational and social needs.
Uranium also fills an important role in the reduction of greenhouse
gases that cannot be replicated by base-load power generation. The 104
U.S. nuclear power plants produce no CO2 emissions, nor do
they produce emissions of other greenhouse gases. Nuclear energy is the
only large-scale and cost-effective energy source that can reduce
greenhouse gas emissions, while continuing to satisfy the growing
demand for reliable base-load generated electricity in the U.S. Many in
the environmental community have embraced nuclear power as the only
source of electricity to meet our growing energy demands while
diminishing the greenhouse effect. To increase the number of nuclear
power plants, we must increase the fuel to power these reactors.
Domestic sources, many of which are known from past exploration on
public lands, are plentiful and can be exploited to produce much of the
necessary fuel.
H.R. 2262, if enacted in its present form, presents formidable
regulatory hurdles to the uranium industry. For example, the
legislation as proposed would limit permits for a maximum of ten years.
Thus, a producing operation that met permit requirements would face the
uncertainties of renewal if it had the capacity to produce beyond ten
years. This barrier would dramatically decrease investment in
exploration and mining. Operators would have great difficulty in
obtaining project financing when the longevity of the permit is subject
to the vagaries of subjective renewal. This provision would stifle
mining industry investments in public lands for many commodity sectors,
not just uranium.
Ironically, H.R. 2262, as drafted, would actually foster uranium
production in other countries. For instance, the proposed 8% royalty
alone would certainly render millions of pounds of otherwise
recoverable lower grade uranium deposits in the U.S. to be uneconomic
and, therefore, unmineable and would likely prevent many mines from
ever opening.
On July 10, 2007, the lead story in The Financial Times of London
was the latest report from the International Energy Agency. The article
quoted the IEA reported as saying, ``Oil looks extremely tight in five
years' time,'' and noted ``the prospects of even tighter natural gas
markets at the turn of the decade.'' Uranium faces similar, perhaps
much tighter, supply issues. As these resource supplies tighten,
America must endeavor to expand its resource base.
It is ironic that today's hearing on H.R. 2262 is being held only
eight days following Federal Reserve Board Chairman Ben Bernanke's
testimony before the House Banking Committee. On July 18 Chairman
Bernanke stated that today's high energy and commodity prices, plus a
``bloated trade deficit,'' present one of the greatest risks to the
U.S. economy. H.R. 2262 represents legislation that will make
domestically produced energy and commodities even more costly, or even
not available, and the unnecessary importation of needed uranium to
fuel America's nuclear power industry will only add further to the
trade deficit.
Commodity prices and supply are being driven by emerging Asian
markets. China has tied up major uranium supplies in Australia to meet
its expanding nuclear generation requirements. Forward thinking energy
policy in the United States demands that we recreate the extensive
uranium production capacity our country once enjoyed as a result of the
Atomic Energy Commission's Uranium Procurement Program in the 1950's
and 1960's. The use of public lands to assist in making America less
dependent on foreign uranium should be encouraged, not hamstrung, as
would be the case if Mining Act reform is adopted without fully
considering the consequences of ill-conceived legislation. Today's
domestic uranium industry stands ready, willing and capable to help
America achieve its goal of energy independence and national energy
security. The industry cannot do so if H.R. 2262 is enacted.
The domestic uranium industry has located claims on public lands,
because significant uranium deposits are located there. The domestic
industry is also securing rights to private and state lands across the
West as well, because these lands have uranium potential also. The
extent of uranium reserves in the America West may be staggering, but
its full extent may never be known without the freedom to explore and
then mine these lands.
______
[The Washington Times article submitted for the record by
Mr. Pearce follows:]
``China powering world economy''
[Published in the Washington Times on July 26, 2007]
By Patrice Hill--China, this year for the first time, has dislodged
the United States from its long reign as the main engine of global
economic growth, with its more than 11 percent growth eclipsing
sputtering U.S. growth of about 2 percent, according to the
International Monetary Fund's 2007 projections released yesterday.
China's growth, which has been fueled by booming domestic building
and commercial development, as well as soaring exports, has accelerated
even as U.S. growth dropped to 0.7 percent in the first quarter under
the weight of a profound housing recession. China is expected to drive
a hearty 5.2 percent expansion of the global economy this year, the IMF
said.
The United States, with one-quarter of the world's economy and the
richest consumer markets in the world, has dominated global growth for
decades. But China's emergence has been foreshadowed for years by its
pull on world commodity markets, where it has driven up the price of
raw materials to record levels, from oil to copper, in its race to
build and export goods around the world.
``This year for the very first time--with its very strong growth
expected, and with the growth slowdown in the United States--China will
be contributing the largest part to the increase in the global growth
measured at market exchange rates,'' said Charles Collyns, the IMF's
deputy director of research.
China will provide one-quarter of the annual growth rate of the
world economy, and, Mr. Collyns said, ``if you add together Russia and
India as well, you get over half of global growth coming from the
emerging-market countries.''
Although the IMF expects U.S. growth to rise back above 3 percent
in the second quarter, it predicts that spreading housing and credit
problems will push it back into the 2 percent range by year's end. In a
reversal from previous years, economists expect exports to fast-growing
global markets to be an important contributor to U.S. growth this year
while consumer spending on imports fades, a trend that promises to help
tame the nation's huge trade deficits with China and other countries.
China's seemingly insatiable appetite for raw materials with its
huge footprint in world export markets has given it the key role of
locomotive for other economies as diverse and far away as New Zealand
and Saudi Arabia. The spigot of revenues that resource-rich countries
such as Russia have earned, in turn, has fueled booming domestic
markets for building and consumption.
Better growth in Europe and Japan also is contributing to a healthy
world economy this year. Many economists attribute the improvement
there as well as in emerging countries such as Russia and Brazil to the
successful adoption of U.S.-style economic policies--among them, lower
taxes, less-regulated labor markets and stable monetary regimes. China
also is benefiting from the imposition of economic reforms through its
entry into the World Trade Organization.
``This is a good global economy. It's remarkable,'' said John
Taylor, a scholar at Stanford University's Hoover Institution and
former Treasury official. ``In the 1990s, there was one global crisis
after another, but we haven't seen one since 2002.''
The adoption of stable, low-inflation monetary policies in Brazil,
Mexico, South Africa and Turkey and the enactment of low, flat taxes in
Russia and some Eastern European countries during the 1990s are paying
major dividends with strong growth that is helping to pull the U.S. out
of an economic slumber, he said.
After years of preaching by the U.S. and IMF about the benefits of
good economic policies, ``countries are following better policies all
over the world,'' he said, resulting in lower inflation and interest
rates and healthy growth.
Most impressive is the way soundly managed Latin American economies
such as Brazil, Mexico and Chile have resisted calls from Venezuelan
President Hugo Chavez for a return to the popular socialist policies
that held back Latin growth and spurred hyperinflation in previous
eras, he said.
``I don't see any enthusiasm for him from other Latin American
countries,'' other than a few small economies like Bolivia, he said,
despite the oil subsidies that Mr. Chavez has been lavishing on the
region in an effort to gain allies.
``The change you're seeing began in the U.S. during the 1980s and
spread to other countries in the 1990s,'' he said. ``We have more
balanced growth, and globalization is causing more interconnectedness.
It spreads the riches around.''
While China has adopted some economic and financial reforms, it has
resisted calls from the IMF and U.S. for reforming its fixed-currency
regime, which economists think is keeping the yuan artificially low
against the dollar. The result has been unprecedented U.S. trade
deficits. Mr. Collyns said the exchange-rate distortion also has had
the effect of making China's economy appear smaller than it really is,
masking the influence that the Asian giant has been exerting on the
world economy for years.
With better economic regimes in place, countries like China and
India, with populations of more than 1 billion apiece, have the
potential for explosive growth that can quickly outstrip the U.S., with
its 300 million population.
Even though large parts of China's economy remain poor and
underdeveloped, it is on course to exceed the overall size of the U.S.
economy within a few years, and the emergence of rapidly growing middle
classes in countries such as India and Russia put them not far behind.
The baton of global consumption is being passed from the developed
nations in general, and the United States in particular, to the
developing nations,'' said Joseph P. Quinlan, chief investment
strategist at Bank of America.
``Consumption is no longer the domain of the U.S. Going to the mall
on Saturday afternoon is just as popular in Bangkok and Sao Paulo as it
is in Boston and San Antonio.''
______
[A resolution submitted for the record by Cibola County,
New Mexico, follows:]
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