    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

     NEVADA AND H.R. 2262: OPPORTUNITIES AND CHALLENGES IN REFORM OF THE
                          1872 MINING   LAW:  PART 2

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

                              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

                                   __________

                            Tuesday, August 21, 2007

                                   __________

                               Serial No. 110-42

                                   __________

           Printed for the use of the Committee on Natural Resources

      Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                                   index.html
                                       or
             Committee address: http://resourcescommittee.house.gov

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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 Tuesday, August 21, 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............................................     6

    Statement of Witnesses:
        Abbey, Robert, Former Nevada State Director, Bureau of Land
          Management, U.S. Department of the Interior................    28
            Prepared statement of....................................    30
            Response to questions submitted for the record...........    33
        Barkdull Spencer, Elaine, Executive Director, Elko County
          Economic Diversification Authority.........................    25
            Prepared statement of....................................    26
        Fields, Russ, President, Nevada Mining Association...........    45
            Prepared statement of....................................    47
        Hutchings, Jon, Natural Resources Manager, Eureka County
          Department of Natural Resources............................    58
            Prepared statement of....................................    60
        Molini, William A., Former Director, Nevada Department of
          Wildlife...................................................    34
            Prepared statement of....................................    36
            Response to questions submitted for the record...........    38
        Parratt, Ronald, President, AuEx Ventures, Inc...............    50
            Prepared statement of....................................    52
        Randolph, Dan, Executive Director, Great Basin Mine Watch....    15
            Prepared statement of....................................    16
        Reid, Hon. Harry, a U.S. Senator from the State of Nevada....     9
        Rhoads, Hon. Dean A., State Senator, State of Nevada.........    42
            Prepared statement of....................................    44

    Additional materials supplied:
        Arizona Conservation Partnership, Native American Advisory
          Committee, Letter submitted for the record.................    79
        Bain, Nigel, General Manager, Queenstake Resources USA, Inc.,
          Comments submitted for the record..........................    81
        Buchanan, Kelvin, American Institute of Professional
          Geologists, Oral statement of..............................    69
        Collins, Jim, Small Miner, Oral statement of.................    75
        Conner, Teresa A., Manager, Environmental Resources
          Department, Queenstake Resources USA, Inc., Comments
          submitted for the record...................................    82
        Deringer, Cole, P.E., Mining Engineer, Elko, Nevada, Comments
          submitted for the record...................................    84
        Eklund-Brown, Sheri, Elko County Commissioner, Oral statement
          of.........................................................    68
        Gibbons, Hon. Jim, Governor, State of Nevada, Letter
          submitted for the record...................................    85
        Gochnour, Lee ``Pat,'' President, Gochnour & Associates,
          Inc., Letter submitted for the record......................    87
        Goicoechea, Hon. Pete, Assemblyman, State of Nevada, Oral
          statement of...............................................    67
        Hebert, Joseph P., Vice President of Exploration, Minerals
          Gold Corp., Statement submitted for the record.............    89
        Handwritten comments submitted for the record by employees of
          Queenstake Resources.......................................    90
    Additional materials supplied--Continued
        Kennedy, R. Bruce, Vice President-General Manager, Robinson
          Nevada Mining Company, Letter submitted for the record.....    94
        Knight, David, Carlin Trend Mining Services, Oral statement
          of.........................................................    75
        Koehler, Steven R., Senior Geologist, Miranda Gold Corp.,
          Comments submitted for the record..........................    96
        Lauha, Eric, Elko Resident, Oral statement of................    73
        Martin, Walter, Geologist, Oral statement of.................    76
            Statement submitted for the record.......................    97
        Redfern, Richard, President, Mexivada Mining Corporation,
          Oral statement of..........................................    70
        Renas, John J., GIS Analyst, Spring Creek, Nevada, Letter
          submitted for the record...................................   100
        Rowe, Winthrop, Snowstorm, LLC, Oral statement of............    73
        Sacrison, Ralph R., P.E., Sacrison Engineering, Elko, Nevada,
          Oral statement of..........................................    72
            Comments submitted for the record........................   101
        Schafer, Robert, Great Basin Gold, Oral statement of.........    71
        Seal, Thom, P.E., Ph.D., Mining-Mineral Process Engineer,
          Elko, Nevada, Oral statement of............................    74
            Comments submitted for the record........................   103
        Shelly, Hon. Ben, Vice President, Navajo Nation, Statement
          submitted for the record...................................   103
            Letter submitted for the record..........................   104
        Wilton, Ted, Oral statement of...............................    76

        LEGISLATIVE HEARING ON NEVADA AND H.R. 2262: OPPORTUNITIES AND
              CHALLENGES IN REFORM OF THE 1872 MINING LAW: PART 2

                                  ----------

                            Tuesday, August 21, 2007

                         U.S. House of Representatives

                  Subcommittee on Energy and Mineral Resources

                         Committee on Natural Resources

                                  Elko, Nevada

                                  ----------

        The Subcommittee met, pursuant to call, at 10:08 a.m., at
    the Western Folk Life Center, 501 Railroad Street, Elko,
    Nevada, Hon. Jim Costa [Chairman of the Subcommittee]
    Presiding.
        Present: Representatives Costa and Heller.

     STATEMENT OF THE HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS
                      FROM THE STATE OF CALIFORNIA

        Mr. Costa. Good morning. It's good to be here in Elko,
    Nevada. And what a wonderful turnout we have this morning for
    the Subcommittee's hearing, the Subcommittee on Energy and
    Mineral Resources, a part of the Committee on Natural Resources
    of the House of Representatives, to be here in Elko, Nevada.
        We have a number of opportunities to get firsthand
    testimony this morning on a very important issue, not only
    facing Nevada and the areas throughout northeastern Nevada, but
    also issues that are critical to the United States. And that is
    the reform of mining law and the challenges that we face in
    that effort. And so we came to the place where we thought we
    would get the best information, which is Elko, Nevada.
        Let me first comply with a few housekeeping functions in
    terms of establishing some rules and our process, our
    procedures, so that everyone understands how a House committee,
    in the case of this Subcommittee, conducts its hearing so that
    we can all understand the process because I think it's
    important as we look at representative democracy in action that
    we understand what the rules are.
        My name is Jim Costa. I'm Congressman Jim Costa from
    Fresno, California. I chair the Subcommittee on Energy and
    Mineral Resources. I'm in my second term of Congress. I
    represent an area that many of you, I suspect, are familiar
    with Fresno--Fresno, California. I go down to Bakersfield. I
    have some of the richest agricultural regions in the country,
    and you're looking at a third-generation farm kid from Fresno.
        I still farm. As a matter of fact, I've got a number of my
    friends who come to Elko during the annual cowboy poetry event,
    and actually have friends who are involved in ranching here in
    northeastern Nevada.
        So I have spent the last two days here, and, frankly,
    Senator Reid and Congressman Heller, I felt like I've been at
    home. And I want to thank all the nice people here in Elko and
    the area who have been so kind to us and to the staff over the
    last two days.
        Let me first begin with the housekeeping functions, and we
    will get into the substance of our hearing.
        This legislative hearing of the Subcommittee on Energy and
    Mineral Resources will now come to order.
        The Subcommittee is meeting today to hear testimony on H.R.
    2262, the Hardrock Mining and Reclamation Act of 2007.
        Under Rule 4(g), the Chairman and Ranking Minority Member
    may make an opening statement, which I suspect we will do. And
    if any members have any other statements, they may be included
    in the record under unanimous consent.
        At this moment, I will take under unanimous consent with
    Congressman Heller to ensure that all the privileges under the
    Committee are provided for Senator Reid, our colleague, who we
    are very honored to have here this morning.
        Additionally, under Committee Rule 4(h), additional
    material for the record should be submitted by members or
    witnesses within ten days of the hearing.
        We have two panels that have been chosen in conjunction and
    consensus with the minority and majority and, in a moment, we
    will hear from the witnesses on those two panels.
        Their statements, I suspect, because we comply under the 5-
    minute rule, will be shorter than their written testimony. At
    least that's my hope. And we do try within some leeway to
    follow the 5-minute rule, and I want to urge that to all the
    witnesses who will be testifying. It is important that we get
    through their testimony in the five minutes.
        For that purpose to work well, for those of you in the
    audience who are not familiar with it, we have a little device
    here that--I don't know who came up with it in Congress, but
    it's green, yellow, and red, and a lot of my--that's the green
    light. See everybody? That means that they've got five minutes
    to go, but it's not applying to me right now; OK, Holly?
        Then the yellow light lets you know that you've got a
    minute left. Can we get the yellow light going there so
    everybody can see what it looks like?
        Ms. Wagenet. It's a yellow light.
        Mr. Costa. OK. It's a yellow light. OK. It's a yellow
    light, OK. We'll take your word for it, Holly.
        And then the red light, of course, means that the testimony
    needs to conclude, and I usually give a little leeway, but we
    do want to follow the order. We also want to obviously
    cooperate with the witnesses.
        Because of today's format, the legislative hearing does not
    permit an opportunity to have everyone who would wish to
    testify have that opportunity. We would certainly like to do
    that, but, unfortunately, I do need to get home and back to my
    district at some point in time. I think you can appreciate
    that.
        We will, however, be opening the floor for half an hour,
    after concluding the two panels, for those who would like to
    make a statement. I would urge the following: First of all, the
    half an hour that we're going to have the open mike, we must
    have some reasonable limitations, and so I will subscribe to a
    two-minute rule for those who would like to make a statement.
        Holly over here, again, in conjunction with Senator Reid's
    staff person, Neil, will take sign-in lists. And we're going to
    do our best with you. Obviously with half an hour for open mike
    and two-minute rule per speaker, the best we're going to be
    able to do is probably 14 or 15 people. So we'll try to be as
    Solomon-like as we possibly can, but I think it's important to
    allow this community, this wonderful community that represents
    so much of what is wonderful about our country, an opportunity
    to participate in what we call representative democracy. And
    this is--a legislative hearing is an important part of that
    representative democracy.
        If you would like to submit further information, those of
    you who are not on the scheduled witnesses panels, we would
    certainly entertain any written testimony that you may have. Or
    you can e-mail your comments to the--for the record, to the e-
    mail address that's printed on the card. Obviously we'd like
    that as quickly as possible.
        Now let me give you a few rules with regards to the press
    and those of you who have recording devices and cameras.
        Photographs are allowed, but we request that you take good
    pictures of us. That's not hard, is it?
        We request that you not use flashes, please, and do not
    impede the Committee's ability to see and talk to the
    witnesses. It can be disruptive, and that's not helpful.
        A videotape is allowed only by credentialed press and
    others who have had preapproval for a videotape of the
    proceedings. So that's important for us to know. I assume
    staff, both Republican and Democratic staff, have clearance on
    the press and that's all been worked out, right? So we're good
    to go on that point.
        I think that covers the housekeeping portions of what I was
    going to do, and now I have the privilege as the chair of this
    Subcommittee to make an opening statement, and I will do that
    at this time.
        First of all, I want you to know that besides the challenge
    of looking at a law that's been in the books since 1872, that
    when Chairman Rahall decided to introduce this legislation, as
    he had once done previously, that I said, you know, I'm new to
    this. I took over the chairmanship in January of this year. I
    have a strong agricultural, water, and transportation
    background.
        But I come to the issues of mining with fresh ears and
    eyes. And I hope you'll see that in a positive sense. So I want
    to really do my homework and get a chance to visit the
    facilities and to see the challenges that mining in America
    faces today.
        Senator Reid, one of the great United States Senators in
    our country today and the Majority Leader of the Senate, called
    me and very kindly took me under his wing and said, ``Jim, if
    you want to start to learn about the real challenges that
    mining faces, you ought to come to Nevada, and we ought to try
    to arrange this to work at a time where it makes sense so you
    can better understand the breadth and the width and both the
    economic and the social impacts that mining contributes, not
    only to Nevada but throughout our country.''
        So, you know, I've been around a little bit. This isn't my
    first rodeo. And so I kindly took the advice of the senior
    Senator from Nevada, and I said, ``That would be wonderful,
    Senator. Where do you suggest we hold the hearing?''
        He said, ``Elko, Nevada.'' And----
        Senator Reid. I tried to get him to come to Searchlight. He
    wouldn't.
        Mr. Costa. We thought there were more mining opportunities
    here. But, clearly, Elko today and historically has played such
    an important role, not only in Nevada but in our country. Let's
    think about it.
        Historically it's been the focus of transportation, of
    ranching and mining. I'm a big student of American history. We
    know in the transportation sense, as folks migrated west for
    some of the initial mining that took place in California, the
    great Gold Rush, and prior to that, the various trails that
    came westward came through this part of Nevada.
        The Donner Party, sadly, went around the Ruby Mountains,
    which delayed them in part, and of course they caught the
    storms at Donner Pass, and the rest, as we say, is history.
        The Transcontinental Railroad, of course, 50 feet out from
    the door of the great Western Center here, really binds
    together the Nation from the West Coast to east coast. And yes,
    again, Elko was at the center of that effort that was taking
    place. Ranching and mining, of course, have been tremendous
    contributors to the economy.
        I know a little bit about ranching. Unfortunately, that's
    not the subject of today's testimony. But the fact is that the
    ranching industry, not only in Nevada but throughout the West,
    is an important, and continues to be, a vital element of our
    economy and our way of life. And to be here at the Western
    Center where a lot of my friends come every year for the annual
    event is fun for me. So I want to take special note of the
    place that we're holding this hearing at today.
        Finally, mining, of course, historically has been a part of
    all of that history for northeastern Nevada. And so, therefore,
    it doesn't take a rocket scientist to understand or to tell you
    what you already know, which is that 85 percent of all the U.S.
    gold production comes from Nevada. The proven reserves of
    millions of ounces of minerals are critical to our economy and
    other mineral elements that are contained in hardrock mining.
        And frankly, you know, Senator Reid and Congressman Heller
    have made a big point of impressing upon us that, and that's
    why yesterday I spent a whole day visiting both the underground
    mine and open-pit mines and spending time with industry leaders
    talking about the challenges of mining in the 21st Century in
    America.
        I mean, Nevada, if it were ranked as a country, previously
    had been third and now is fourth, with China having moved a
    little bit ahead in terms of total gold production. But imagine
    that: Nevada is the fourth leading gold-producing area in the
    world.
        Yesterday obviously we learned a lot, the staff and myself,
    about the importance of the productivity of mining and the
    reclamation efforts in Nevada.
        In addition to that, as we look upon the 1872 Mining Law
    and we look at the challenges that Chairman Rahall is
    considering with regards to the reform, we need to know that--
    keep in mind what has changed. Mining has changed, of course,
    just as many other things have changed in 135 years.
        The states have not sat idle. The State of Nevada, in the
    1990s, began a very progressive reform and their own
    reclamation and mining law. And I think there are some very
    instructive things to learn from the changes that Nevadans have
    made in their own mining law.
        Of course, there's no shortage of dispute about how to
    update it. I know we'll hear a lot of different thoughts about
    it here this morning.
        I understand that there's going to be a rally this
    afternoon, and I'm sorry that I just couldn't be able to be
    here this afternoon to participate in that rally, but I'm sure
    that we'll get some good information as a result.
        The ongoing debate, of course, is most important that we
    share four goals. These are the four goals that I want all the
    witnesses to keep in mind this morning when you testify.
        Mining reclamation: How do we secure funds to clean up
    abandoned hardrock mines across the West? I think that is an
    important issue.
        Two, a fair return: How do we sell the world to your fee
    production of hardrock minerals extracted from public lands,
    not private lands, but from public lands? Because at the end of
    the day, these public lands belong to all of America. They're a
    resource that we all are vested in. And are there ways if, in
    fact, we can address that in which communities that are
    partners in the mining can benefit from those funds?
        Number three, environmental standards: Making sure that the
    Federal standards for hardrock mining sustained on our public
    lands for multiple use also take into account hunting,
    recreation, and water.
        Water, I can tell you, coming from California, is the
    lifeblood of all of our lives. Without water, nothing can be
    possible. With water, we can produce a bountiful levy and
    production for all of mankind.
        Certainly creating a stable and predictable and favorable
    environment for mining in the United States ought to be the
    final goal in any reform effort.
        Today we have nine witnesses who will provide a lot of
    information. We're very fortunate to have the Majority Leader
    of the U.S. Senate, a leading voice in so many, so many
    different issues, and one whose wisdom and wise counsel I look
    toward as we tackle this issue.
        Frankly, the end of the day, who is better to speak to the
    needs of Nevada but your representatives who are here, those
    here in the communities who are a part of this hearing, the
    miners, and everyone else who has an interest in this issue?
        So as we begin, I want to finally comment on two areas.
    H.R. 2262 as proposed by Chairman Rahall, as he has told me and
    as he has told others in his press conference, is a starting
    point. Let's underline that: a starting point for the
    discussion.
        As Chairman Rahall says, you gotta start somewhere. We know
    the bill can be improved. I believe it can be improved, and
    we're asking you this morning to help us figure that out.
        Anyone who says to my colleagues that we don't care or we
    are not sensitive to your issues, I think, needs to come to
    Elko, Nevada and spend the time that we have here. Obviously,
    if we did not care and were not sensitive to your issues, we
    would not be here this morning.
        I want you to know that I think it's critical that we keep
    the United States as one of the most desirable places in the
    world to mine. We want to balance the multiple uses on our
    public lands that do include mining, and, therefore, today, I
    am here to listen and to learn.
        So let's start with a constructive dialog, and I will defer
    to my colleague who, today, is serving as the Ranking Member,
    one of our new talents from Nevada, but not new to Nevada, of
    course, but new to our Committee and our Subcommittee, and look
    forward to hearing his comments.
        Congressman Heller.

    STATEMENT OF THE HON. DEAN HELLER, A REPRESENTATIVE IN CONGRESS
                        FROM THE STATE OF NEVADA

        Mr. Heller. Thank you very much, Mr. Chairman, and I want
    to thank everybody for being here. It's good to see a packed
    room, and it's a pleasure to see a lot of friends.
        I want to thank the Chairman for holding this Committee
    meeting here in Elko County. It's good to see the enthusiasm
    and this community come together like this to be here this
    morning.
        I want to welcome you not only to my district, but for a
    very critical portion of my district out here in Elko.
        I appreciate that you took time from your very busy
    schedule. We get a month to work in our districts, and I have
    spent a little bit of time here in this month of August. Had
    some time in southern Nevada. Went down to Nellis Air Force
    Base, had some time. Spent some time at Yucca Mountain, spent
    some time in that area. We're here in Elko. Be back over Labor
    Day weekend.
        You spend as much time in your district because you don't
    get a lot of time. To have the Chairman here, I certainly do
    appreciate you taking the time out to spend time with us.
        I particularly want to thank Senator Reid for being here
    with us today. I know he's a very, very busy man, and what he's
    doing here today I think is very helpful for the direction that
    we're going here today. He and I share a real love for the
    State of Nevada, and I do appreciate his time and energy.
        I'm very fortunate to be part of a delegation that works as
    closely as we do. And we spend time at least monthly in Senator
    Reid's office discussing the issues that are pertinent here to
    the State of Nevada, and I assure you that mining issues are as
    pertinent as any other issue that comes up in those meetings.
        I want to give some sense of perspective as I begin, and I
    want to thank those in the leadership of this community that
    are here. We have Senator Rhoads with us.
        Pleasure to have you with us.
        Assemblyman Carpenter from the Legislature. I see Pete
    Goicoechea also with us, Assemblyman out of Eureka and other
    portions of the state. This isn't just about Elko.
        I see Commissioner Fransway from Winnemucca that's with us.
    Pleasure to have him with us.
        But all the county commissioners, city council members from
    this portion of the state, not just Elko County, but all around
    here.
        But putting some sense of perspective, Elko County is the
    sixth largest county in the United States, consisting of 17,181
    square miles, which is as big as five New England states plus
    the District of Columbia.
        Here we see the best of the mining industry. Industry in
    Elko and all around Nevada are active participants in
    communities with strong sense of social responsibility and the
    high-paying mining jobs translated into better schools,
    community services, and infrastructure.
        Nevada shares with California an important part of history
    because it was the local mining laws organized in the mining
    camps in northern California and Virginia City, Nevada, that
    form the foundation of our current mining laws.
        At the time the western mining districts were in Nevada,
    the United States was without mining law. The mining law was
    not, as some people claimed, designed to lure people out to the
    West; they were already here.
        The mining law was created to have one uniform law
    governing how the mineral resources of our nation were to be
    acquired and developed. This was and is still important because
    of the roll these resources play in our local, state, and
    Federal economies.
        As we discuss mining laws, I think it's helpful to keep in
    mind that mineral deposits are rare. And due to the geologic
    forces that are responsible for creating them, they tend to
    cluster together along structural trends.
        Yesterday, Chairman Costa and his staff, among others, had
    the opportunity to visit two mines, as he mentioned, on the
    famous Carlin Trend. Gold produced from this area has propelled
    the United States to the second or third largest producer of
    gold in the world, and most of that gold is mined from my
    district here in Nevada, 78 percent of the nation's gold
    produced right here in the State of Nevada, to be exact.
        Mining in Nevada is the second largest industry and
    directly employees 11,000 people. Another 52,000 jobs are
    filled by the people providing goods and services to the mining
    industry. Again, most of this employment is in my district.
        Other minerals and mining materials important to our
    society are also produced in Nevada: copper, silver, barite,
    and high-calcium lime.
        Rapid growth and modernization in developing nations, such
    as China and India, have created a higher demand for many
    minerals and mineral commodities. Because of this increase in
    demand, previously discovered mineral deposits that could not
    possibly be developed are now being mined economically.
        One such deposit supplement is the Mt. Hope molybdenum. I
    actually use that particular product. It is located in Eureka
    County. This mine is current in the permitting. It's currently
    in the permitting process. It's scheduled to start production
    in the mid-2010 era.
        Molybdenum is a critical strategic mineral used primarily
    as an alloy agent in steel, stainless steel and pipelines. For
    example, I use it in chrome-moly. I use it in race cars. I
    build chassis for race cars, so chrome-moly is a critical
    product in putting those together. So molybdenum plays a very
    important part in that industry, but it's also primarily a
    cracking agent used to refine high-sulphur fuels and oil
    produced in low-sulphur products.
        This material also has important military applications. Two
    examples are the use in armor and in bunker-busting bombs.
        If H.R. 2262 were to pass, it would jeopardize the ability
    of the project owner to permit the mine and operate it at a
    profit. As you can imagine, this is a serious concern of mine.
        As with energy, the U.S. is highly dependent on foreign
    sources of non-fuel minerals and is competing with China for
    these mineral resources.
        For example, even though we have abundant domestic copper
    resources, we still import 40 percent of what we need. We
    import 100 percent of 17 of the minerals most important to our
    modern-day society and are between 75 to 99 percent import
    dependent upon 15 other non-fuel minerals.
        My primary concern is that changes made to the mining laws
    should not serve to increase our dependence on foreign sources
    of the mineral resources our society depends on. We have to get
    our mineral resources from somewhere, and I believe we should
    get them from responsible domestic resources when possible.
        It would be a shame if we made changes to the mining law
    that favored importing mineral resources from foreign countries
    while exporting the benefits.
        I hope we can work together to improve opportunities for
    domestic mining while addressing some of the outstanding issues
    associated with the historic mining activities conducted prior
    to the creation of the strict environmental laws and
    regulations that govern mining activities today.
        Now I had a saying here. I think it's said in this country
    from time to time that as agriculture goes, so goes the nation.
    And I would reflect that here in Nevada, we say that as mining
    goes, so goes the State of Nevada.
        So I look forward to working together with the Chairman.
    And I'll yield the balance of my time. Thank you.
        Mr. Costa. Thank you very much, Congressman Heller, for
    your statements. You brought your fan club. I must urge the
    audience please to refrain from making comments, clearly, but
    second, any sort of cheering or other kinds of comments with
    regards to any of the witnesses. It's frowned upon and it's
    against the rules of the House, so--just to expedite it.
    Otherwise we can that save that for the rally this afternoon.
    Let's put it that way.
        The next gentleman is one who has been a consistent, strong
    leader and an advocate on behalf of the citizens of Nevada, but
    more importantly for our nation. I believe that he's the right
    person at the right time, for he has one of the most coveted
    leadership positions in our nation's Capitol, that being the
    Majority Leader of the U.S. Senate. And he has done that with
    the same sort of dedication, consistency, concern, and passion
    that he has provided the people of Nevada for leadership for
    decades.
        So let me introduce the next witness, a gentleman who needs
    no introduction, the senior Senator, the Majority Leader of the
    U.S. Senate, Senator Harry Reid.

    STATEMENT OF THE HON. HARRY REID, A U.S. SENATOR FROM THE STATE
                               OF NEVADA

        Senator Reid. Mr. Chairman, thank you very much. I have
    great reverence for the House of Representatives, having served
    there. It is the embodiment of the wisdom of our Founding
    Fathers who set up this unique government that we have. We have
    a bicameral Legislature--the House and the Senate, each day of
    their existence, vying for power against the other. That's the
    way the Founding Fathers set it up. And it's been a miracle and
    it's an experiment that was still--is still ongoing, and I have
    great appreciation for the House of Representatives.
        Loved my service in the House. That's where I met Nick Joe
    Rahall, Congressman from West Virginia, who is now Chairman of
    this full Committee. He and I have had conversations about
    mining. We have disagreed in the past vehemently, but we have
    dealt with each other as gentlemen. I have great respect for
    him. He's my friend.
        And he came to my office to visit with me about his efforts
    to change the law, and I told him I'd be happy to work with
    him, and that's how I feel.
        We're fortunate today to have Congressman Costa with us,
    the Chairman of the Subcommittee, early on second-term member
    of the House of Representatives, but he is a long-time member
    of the California State Legislature where he served with great
    distinction. He is a man who really understands the West and,
    of course, being our neighbor, State of California, we're happy
    to have him here.
        I do recognize the history of the State of Nevada in
    mining. We are part of the history of the great Comstock--one
    of the two great events in mining and the early days of
    America--where the 49'ers discovered gold--they didn't discover
    it but they came there after it was discovered at Sutter's Mill
    and, of course, the Comstock.
        But in recent decades, the focus of mining throughout the
    world has been on the Carlin Trend. Magnificent gold has been
    discovered that in some ways matches what has gone on in South
    Africa with their ability to have unlimited, it appears to
    some, ability to mine that gold. And not only have we found
    this trend, but unique way of getting gold from the rocks. So
    we recognize that we have a history in the State of Nevada that
    is significant worldwide.
        I apologize for not wearing a coat, but I've been out at
    the California Interpretive Trail where we had a--a building is
    80 percent completed. It's a wonderful facility, and we're
    very, very proud of that. I played a small role in allowing
    that to take place. One example of a public/private
    partnership.
        I have, as everyone knows here, a background in mining. My
    father was a miner. As a little boy, I went down in the holes,
    as we called them, with him. And as I got a little older, I
    got--earlier on, Jim, what I would do is go down with my dad,
    which was against the law. You're not allowed in Nevada to work
    underground alone, so he solved that: He took me with him.
    Basically I went to keep him company.
        There was a place kind of up above ground. But as a little
    boy, going underground in a mine was like going out and playing
    catch with your dad on the lawn. I wasn't afraid of anything. I
    had my own hard hat, my own carbide lamp.
        As I got older, I could help. I could muck, and that was
    the best thing that I could do.
        Some 400 miles from here, Searchlight, we joked about
    having the hearing there. You couldn't have the hearing there.
    Mining is almost nonexistent in Searchlight now. We have a
    situation where the mines were really big there for a dozen
    years, and that was it. But during the time that they were
    going well, it was the best mining camp in Nevada and one of
    the best in the country.
        But it's not that way anymore. As we've learned in life,
    you can't go backwards. So Searchlight, even though there was a
    little bit of mining going on, that's not the industry there.
        I so much appreciate Chairman Rahall arranging this meeting
    and you taking the time to be here. You don't have to do this.
    There are lots of other ways that you can spend your August
    recesses. There are many things in your congressional district
    that are important, but obviously you take your responsibility
    as the Chairman of this Subcommittee seriously. That's why
    you're here.
        You could depend on staff to give you information of what's
    going on here. You could have briefings from the BLM and others
    about what's going on here, but I believe, and you as a
    legislator for many years recognize, that all of the lectures
    and movies and demonstrations away from the place where it
    actually happens are not as good as eyeballing what goes on
    here.
        And I'm very happy that you've been able to see what we're
    doing out here underground and aboveground.
        This beautiful corner of Nevada really does have an
    incredible history. For only 20 years we were a conduit for
    people to come to California, basically from 1840 through 1860.
    About 20 years. The California Trail came right through here.
    There's more than 600 miles of the California Trail in Nevada.
    More than 300,000 people came during that 20-year period of
    time to get to California.
        This trail passes just a few blocks from here. Early cattle
    barons built fortunes in this beautiful area. Chinese laborers
    came through and left behind the Transcontinental Railroad.
        Over time, Elko has been become famous as a place where
    people like Bing Crosby had their ranches, but it also was a
    cultural hub for Western and cowboy culture. The festival that
    takes place here early every year is now world famous. People
    come from all over to participate in the Cowboy Poetry Festival
    as it was first named, and now, of course, is many other
    things.
        And I had the good fortune a number of years ago to be able
    to come here during one of these weeks and do a reading from my
    book that was published that year about the history of
    Searchlight. So I have fond memories of coming here for that.
        As you have already mentioned, Congressman, Mr. Chairman,
    Nevada also ranks among the richest gold regions in the world.
    We've processed in recent years nearly a hundred million ounces
    of gold in this area alone. An equal or greater amount is
    believed by geologists to be underground.
        Since introduction of this mining law reform legislation in
    May, I've been asked repeatedly which parts of yours and Mr.
    Rahall's legislation do I agree with and what do I oppose.
        My reply is--and I said this to the press earlier today--
    that we agree on the single most important issue. We agree
    reform is needed and that now is the right time to develop a
    reasonable and balanced national minerals policy.
        The last serious attempts to update the 1872 Mining Law
    were made in the middle '80s and early '90s. It's one of the
    classic debates that have taken place in the history of the
    Senate. Took place between me and Dale Bumpers from Arkansas.
    He is one of the great orators in the history of Senate. And he
    may have had the oratorical skills, but I had the votes. And as
    a result of that, nothing was accomplished. Dale was unwilling
    to compromise. We were, he wasn't. And it was a result of that,
    actually nothing happened.
        Mining industry was different then. At that time there were
    probably 30 mid-sized and large companies. Today, with
    consolidation taking place in mining, as it has in basically
    every industry in America, and, for example, in our gaming
    industry, now the majority of industry production comes from
    only a handful of operators.
        One of the things, of course, we will look to as we work
    through this legislation is to make sure that we take good care
    of these large mining companies, but also make sure that we
    don't leave in the dust the smaller operators, the prospectors.
        We have to make sure that we keep an eye out for them
    because, as much as I appreciate the great work done in the
    mining industry by these large companies and what they've done
    to help in the communities where they're located, I personally
    am more familiar with the small guys. That's what my dad always
    worked with, and that's all that existed. There were no big
    guys then. So we'll try to do a good job of protecting both.
        During the intervening years since the Bumpers/Reid's
    debates, there's also been significant change in the
    environmental community. Some years spent in the political
    wilderness have, I think, made a number of us more pragmatic.
    It can't be labored one way. We've got to work together. And I
    believe that the increased involvement of sportsmen's groups in
    debates like this has helped us see a path forward.
        So it's my hope, Mr. Chairman, that these changes on both
    sides of the reform effort will make it possible to build a
    sturdy compromise for an improved mining law.
        And let me say that I do believe that finding good
    compromise is very important. Mining has a unique legislative
    history among our nation's extractive resources industries.
    Coal, oil, timber, and others have all seen major rewrites of
    the Federal laws under which they operate.
        And some say the Mining Law of 1872 has remained largely
    intact. That's true in some sense, but remember, national laws
    passed, like Clean Water Act and Clean Air Act, have had a
    tremendous impact on mining. And so for people to say the 1872
    Mining Law has changed, that's simply without basis.
        The law was first crafted by one of my predecessors,
    William Stewart, Senator, and signed into law by the great
    Union General, Ulysses S. Grant.
        What this has meant, this 1872 Mining Law, with not a lot
    of changes, has meant, in practical terms, as the industry has
    evolved and changed, Congress hasn't responded as they should
    have. We have, Congress has, instead allowed each passing
    Presidential Administration to develop the rules and
    regulations they see fit to guide the industry. So the mining
    industry has had no certainty. They never know what's going to
    happen.
        Bruce Babbitt is a friend of mine. I like him very much,
    and he's been good to Nevada as it relates to water. But for
    mining, he was awful. And I've told him that to his face. He
    had people there that--John Leshy, I've said this, Professor
    Leshy--was a professor; now, thank goodness, is a professor,
    not involved in doing anything regarding mining.
        He tried to destroy mining. Really. Did he didn't believe
    in it. He wanted it gone. And that has created uncertainty.
        We have one Administration does one thing, another
    Administration does another thing. And Congress has an
    obligation to legislate. We can't have an industry this large
    that--an industry that creates a favorable balance of trade for
    us. We can't have an industry like this have the uncertainty
    that it does.
        We saw the harmful consequences of this, Presidential by
    Presidential Administration, recently. After mining law reform
    efforts failed as late as 1994, the Administration found other
    ways to put restrictions on mining.
        We all remember the Millsite Opinion of 1997, which I said
    publicly could have been written by somebody in the eighth
    grade rather than this professor. Revisions of the 3809
    regulations that were propounded in January 2001, we remember
    those.
        So all I recognize is that many people may see mining law
    reform as a threat to the industry and their livelihoods. I
    offer an alternative view. That view is that Nevada and all
    states that depend on mining will be better served by having a
    full and open debate in Congress about how to change the
    General Mining Law than if we shy away from the topics and let
    it be done by executive order by executive order.
        By working together, we can fashion a mining law that
    provides real certainty in Elko's mining families, that keeps
    high-paying jobs in Nevada and around the West, and provides
    real environmental improvements, like improved bonding and a
    fair return for the use of public lands.
        If we fail to find a steady compromise in these and other
    key issues, we leave the fate of the industry in the hands of
    each proceeding Administration.
        So rather than crossing our fingers every four years and
    hoping that the newly elected President understands the West
    and understands the importance of mining, let's work together
    to guarantee a bright future for mining families all over the
    West and in Nevada. And I think that's the way to go.
        The mining industry, a long time ago, I say, Mr. Chairman,
    said: ``We'll take a look at doing something about the
    royalty.'' We just have to recognize that mining royalties are
    much different than the coal royalties and oil and timber. So
    we're working with you. I believe there's a strong bipartisan
    group of Senators that are eager to work on this issue. We're
    watching your efforts in the House with great interest.
        I appreciate my friend, Congressman Heller, being here. He
    is the Representative in Congress of rural Nevada, along with
    the two Senators. And we appreciate his interest in this--as
    having been the Secretary of State for the years that he was--
    and has seen the formation of companies dealing with mining.
    He's seen the good and bad with what's going on with some of
    the development of these companies. So I'm happy that he's
    here.
        But especially you, Chairman Costa. Thank you very much for
    your willingness to take a look at this.
        The greatness of our Congress is that people like you,
    people who have expertise in other areas, farming and ranching,
    are willing to take a look at other areas within the
    jurisdiction of your Subcommittee and make decisions on your
    own, not depending on staff or what press brief has been
    issued, but take a look at it yourself.
        I'm grateful to you. I appreciate your friendship. And I
    will say in passing--we talked about this a little bit last
    night. When I served in Congress in the House, I was the only
    Democrat. And the California Congressional Delegation adopted
    me. Every Wednesday morning, I went to their meeting, chaired
    most of the time by Don Edwards.
        And so they elected me the Secretary/Treasurer of the
    California Congressional Delegation. On my letterhead, two
    years after I was in the Senate, I was still the Secretary/
    Treasurer of the California Congressional Delegation. So I've
    got some friends over in the California Delegation.
        Thank you very much.
        Chairman, would you excuse me? I've got to head for Ely
    later today, and I think, if you wouldn't mind, I would like to
    be excused.
        Mr. Costa. Absolutely, Senator. But if you would pause for
    one moment to let me say, I take your words to heart. Clearly,
    they're done with not only conviction and the passion that I
    mentioned earlier, but with the wisdom and understanding to see
    the change and the transition that has taken place with the
    mining industry in Nevada and your knowledge over the years of
    mining throughout the country.
        Let me make it clear to everybody here: I have never seen
    any piece of legislation that's successful if it's a one-House
    bill. It takes passage in both Houses of our Congress. As
    Senator Reid indicated earlier, the wisdom of our forefathers
    required a checks and balances, and that's part of the checks
    and balances.
        So everyone should understand here today, in my opinion--
    and this is just my humble opinion--we will not be successful
    at the challenges of the reform in areas that I think there is
    consensus and there are opportunities to be gained unless we
    are able to work out a compromise that has the imprimatur and
    the support of Senator Reid. Let's be very clear about that.
        We can pass a one-House bill as happened in the early
    1990s, but we won't make any of the reforms necessary, in which
    I think there is consensus, nor will we be able to advance the
    causes of the U.S. mining industry to ensure that in the 21st
    Century, it remains strong and viable in the world global
    markets.
        So I look forward to working with you in a bipartisan
    fashion and members from the House and your members in the
    Senate. And hopefully in the 110th Congress, we can produce
    good legislative work product that reflects the changes that I
    think many believe is necessary, and at the same time protect
    the viability and the vitality of the American mining industry.
    So we look forward to working with you.
        We will now begin with the first of our two panels as we
    excuse Senator Reid for other important meetings that he has
    today.
        I would like to call the following to come forward at once.
    Beginning with Mr. Dan Randolph, Executive Director of the
    Great Basin Mine Watch, followed by Ms. Elaine Barkdull who
    is--Spence? I'm sorry, Spencer? Barkdull Spence? Did I get that
    right?
        Ms. Barkdull. Barkdull Spencer.
        Mr. Costa. Please come forward to the table. Director of
    the Elko County Economic Diversification Authority.
        Mr. Bob Abbey, former director of the Nevada State Office
    of the Bureau of Land Management.
        Mr. William Molini?
        Mr. Molini. Molini.
        Mr. Costa. Molini, former director of the Nevada Department
    of Wildlife.
        Before we begin with that testimony, I'll recognize my
    colleague, the gentleman from Nevada.
        Mr. Heller. Thank you very much, Mr. Chairman. With your
    permission, I'd like to submit to the record written comments
    from Governor Jim Gibbons. He was unable to be here today, but
    he did submit some records.
        As is well known here in this room, Governor Gibbons has
    been a very strong advocate of the mining industry here, and I
    think it would be appropriate. So with your permission, I'd
    like to submit this for the record.
        Mr. Costa. Without objection, we'll submit Governor
    Gibbons' testimony, a written statement for the record.
        As all of you know, I served in the House of
    Representatives with distinction, and I had an opportunity to
    serve with the Governor, and I am sorry he couldn't make it
    here today.
        Let me repeat, as I said earlier on, and do it without a
    lot of disruption, please, but Holly has the sign-up sheets
    over there for those who, in that half an hour wanted to speak
    at the open mike. And we'll work that in conjunction.
        But clearly, let me repeat again, because of my flight
    schedule, we only have time for a half an hour, and so I'm
    going to limit everybody's comments to two minutes. So we're
    going to have to be kind of Solomon-like. Clearly, not
    everybody will have a chance to speak, but hopefully we'll get
    a representative sample of the folks in northern Nevada, and
    we'll go from there.
        Now, as we begin with our first witness, the Chair would
    recognize Ms. Barkdull to testify. Excuse me, I'm going out of
    order. Mr. Randolph.
        I failed to mention when I went through the rules of the
    House and the green light and the yellow light and the red
    light, what has I'm sure been clear to everyone at this point,
    that rule doesn't apply to us. Sorry, but that's just the
    facts.
        And so with that understood, we'll begin, and we'll get
    Holly at her desk here in a moment, Mr. Randolph, and she will
    activate the green light, and you have five minutes and we look
    forward to your testimony.

    STATEMENT OF DAN RANDOLPH, EXECUTIVE DIRECTOR, GREAT BASIN MINE
                                 WATCH

        Mr. Randolph. I thank the Chair and Representative Heller
    for inviting me to testify as to this important matter. Also I
    thank you for coming out to Nevada, into the heart of mining
    country, to hear how we see this issue.
        Great Basin Mine Watch is a nonprofit organization founded
    in 1994. Our mission is to protect the land, air, water, and
    wildlife of the Great Basin and the people and communities that
    depend on them from the adverse impacts of mining.
        The question of if and how to reform the Mining Law of 1872
    is of great importance throughout the western United States,
    but especially here in northern Nevada. While on a West-wide
    level, the mining industry is a minor player economically, in
    our area, it is clearly the largest industry.
        We believe that the Hardrock Mining and Reclamation Act
    will bring necessary reforms that will help protect the people
    and lands of Nevada while helping this important industry
    thrive. We, therefore, are in support of H.R. 2262.
        The need for mining reform is evident in Nevada. While
    mining practices have improved since the days of historic
    mining, modern mines still pose significant environmental and
    health consequences.
        Nevada is the driest state in the union. Water quality and
    quantity are both critical to the future of the state.
        I will discuss a few examples of modern mines which have
    caused environmental degradation. The Big Springs mine is
    drained by the North Fork Humboldt River and its tributaries.
    All of these waterways are on Nevada's 303d list of impaired
    waters due to mining activities. Data shows that the water
    downstream from the waste rock dump has over 20 times more
    sulfate than the upstream water, and these concentrations
    increased when mining began.
        The disposal of heap leach drain down water is another
    long-term problem. The Sleeper Mine has heap leach drain down
    water which is very acidic and has up to ten times the
    allowable amount of other pollutants.
        The Mule Canyon Mine provides a striking example of a
    modern pit leak problem. The predictions in the 1995
    environmental impact statement have proved wrong. The South Pit
    is now expected to overflow the rim. As a result, a potentially
    serious water contamination situation has arisen since the pit
    lake has low pH and elevated levels of numerous pollutants.
        A year 2000 U.S. Fish and Wildlife Service study of 12 pit
    lakes here in Nevada found that all the pit lakes contained at
    least one pollutant at concentrations that are potentially
    toxic to aquatic life or wildlife.
        The next issue I'd like to discuss is dewatering our water
    quantity. Mine dewatering is a process of removing groundwater
    to keep mines from filling with water.
        In 2000, the BLM published a study of dewatering from the
    Gold Strike, Gold Quarry, and other Carlin Trend mines showing
    that extensive drawdown would occur throughout the area, and
    base flow in about six streams would be decreased or
    eliminated. This reduction or elimination of springs and
    streams will have significant impact on wildlife.
        Clearly, the current regulatory system is not working.
    While there are mines that do not pose serious threats to water
    resources, there are too many mines which have and continue to
    degrade waters of the state.
        The lack of public confidence in the wisdom of many mine
    proposals is due to this history of failure which is tied to
    the lack of reform. Mine proposals that are well designed and
    managed need not fear having the public involved in the
    process.
        The antiquated law giving mines a presumption of being the
    best use of an area is no longer necessary. This bill will
    provide the land management agencies with the ability to
    balance mining with other important uses of public land.
    Nevada's mining industry will remain strong.
        The single most important reality of mining is that you can
    only mine where the minerals are. Nevada has an excellent base
    of experienced miners and mining professionals, and there's a
    well-developed infrastructure.
        Last, it must be noted, it has a political climate that is
    favorable to the industry. Providing adequate protections for
    the future and alternate uses of the land will not change these
    basic realities. Nevada can be protected from the worst harms
    done by some mines and still have a healthy, productive mining
    industry.
        The Mining Law of 1872 needs to be brought up to the 21st
    Century standards. Mining has changed since 1872. It can now be
    done responsibly.
        H.R. 2262 will allow the industry to continue to thrive
    while protecting the long-term viability and health of Nevada
    and the United States.
        Thank you again for the opportunity to discuss this
    important issue, and I look forward to your questions.
        [The prepared statement of Mr. Randolph follows:]

                Statement of Dan Randolph, Executive Director,
                      Great Basin Mine Watch, Reno, Nevada

        I thank the Chair and Subcommittee Members for inviting me to
    testify on this important matter. Also, I thank you for coming out to
    Nevada, to the heart of mining country, to hear how we in Nevada see
    this issue.
        Great Basin Mine Watch is a non-profit organization, founded in
    1994. Our mission is to protect the land, air, water and wildlife of
    the Great Basin and the people and communities that depend on them from
    the adverse impacts of mining. We have been involved with the federal
    land management agencies, the various state agencies with oversight of
    mining issues, and the mining industry extensively. I am here
    representing Great Basin Mine Watch. My statement will focus on Nevada
    issues.
        The question of if and how to reform the Mining Law of 1872 is of
    great importance throughout the western states, but especially here in
    northern Nevada. While on a west-wide level, the mining industry may be
    relatively minor economically, in our area it is clearly the largest
    industry. We believe that the Hardrock Mining and Reclamation Act of
    2007 would bring necessary reforms that will help protect the people
    and lands of Nevada, while helping this important industry thrive.
    The Need for Reform
        The need for mining reform is evident in Nevada. While mining
    practices have generally improved since the days of historic mining,
    modern mines (1976 or later) still pose significant environmental and
    health consequences. Great Basin Mine Watch will outline the most
    prominent of these that occur here in Nevada, which include mercury
    emissions, dewatering activities, long-term open pit management, and
    water resource degradation.
    Mercury
        Mercury is emitted into the air from processing equipment and sites
    at many precious metal mines. Mercury often occurs naturally in the
    rocks that are being mined for gold or silver. 1 In the
    latest EPA Toxics Release Inventory (TRI) released to the public in
    March 2007, Nevada precious mines reported releasing 4,682 pounds of
    mercury into the air. 2 Based on recent tests, and recent
    corporate revisions to TRI reports, the actual total may be much
    larger. This airborne mercury can be deposited near the mine site or be
    carried hundreds or even thousands of miles before settling.
    ---------------------------------------------------------------------------
        \1\ Jones, Greg, and Glenn Miller; October 24, 2005, Mercury and
    Modern Gold Mining in Nevada.
        \2\ http://www.epa.gov/triexplorer/
    ---------------------------------------------------------------------------
        Mercury not released to the air is either captured as by-product,
    and sold, or becomes part of the waste rock or tailings. 3
    According to the 2005 TRI 3,567,801 pounds of mercury were stored on
    site at mines in Nevada. The 2005 TRI confirms that mercury that is
    emitted from gold mines in northern Nevada constitutes the largest
    source of mercury pollution in the region. 4
    ---------------------------------------------------------------------------
        \3\ Jones and Miller, 2005.
        \4\ http://www.epa.gov/triexplorer/
    ---------------------------------------------------------------------------
        Mercury is a highly toxic and highly mobile element. It is a
    neurotoxin associated with a variety of health ailments including loss
    of vision, loss of memory, temporary or permanent brain damage, tremors
    and deafness. Mercury is easily converted to organic methylmercury when
    it comes into contact with microorganisms. Methylmercury persists in
    biological systems causing accumulation up the food chain. Most mercury
    exposure in human comes from eating fish contaminated with
    methylmercury. Larger, older and predatory fish are more likely to
    contain larger amounts of mercury. As a result the EPA has made
    recommendations to limit the amount of fish that people consume
    especially pregnant women and young children. The effect of mercury
    poisoning can be particularly devastating while development of the
    nervous system is still occurring.
        The Nevada State Health Division issued fish consumption advisories
    for six water bodies in the state in March 2007 in response to data
    gathered from samples of fish tissue with high levels of mercury. Some
    fish from other waters showed levels of mercury that according to EPA
    guidelines would support the release of additional fish consumption
    advisories.
        Last year the State of Idaho issued fish consumption advisories for
    several water bodies. Idaho officials were concerned that the source of
    the mercury was mining activity of Northern Nevada. 5 This
    illustrates that the effects of mining are not isolated, that
    environmental contamination and ecosystem disruption have the potential
    to span states.
    ---------------------------------------------------------------------------
        \5\ Barker, Rocky, November 5, 2005, The Idaho Statesman; High
    mercury levels found in Idaho reservoir.
    ---------------------------------------------------------------------------
        Mining in Nevada and other states releases a large amount of
    mercury into the environment. Companies allowed to mine on public lands
    need to be aware of how much mercury they are releasing, and plan for
    abatement of the circulation of mercury in the environment while the
    mining continues and after it ends. The provisions of the Hardrock
    Mining and Reclamation Act of 2007 would facilitate this practice.
        Mercury can be isolated and used industrially, but at a minimum it
    must be contained and disposed of properly. Also mines must use the
    best emissions reduction technology that is available. Recently the
    Nevada Division of Environmental Protection began a mercury air
    emissions testing campaign to determine the types (species) of airborne
    mercury released from ore possessing equipment. The species of mercury
    released is a large determining factor in how far the particles will
    travel before being deposited.
        The tests revealed that in a few cases more mercury was being
    released than was reported by the mines in a voluntary program. But
    more to the point for the purpose of HR2262 it revealed that emission
    control technology being used are not as effective as they are
    engineered to be and that emissions are highly variable.
        Mercury pollution is one of the most persistent problems that
    mining produces during operations and into the future. The problem
    needs to be addressed from the outset of any new mining operation. New
    legislation like HR2262 can help keep mercury pollution to a minimum
    through careful planning, engineering and consistent monitoring.
    Water
        Nevada is the driest state in the union. Water quality and quantity
    are both critical to the future of the state.
        As many of the mines are in rural areas, away from the primary
    population centers, there used to be an ``out of sight, out of mind''
    attitude towards the impacts of mining on the state's waters. However,
    that is clearly no longer the case. Currently, there are at least seven
    proposals before the State Engineer to allow trans-basin water
    transfers, from rural areas to the metropolitan areas. Some of these
    involve pumping groundwater in remote basins and piping it hundreds of
    miles. 6 Clearly, all water in the state is a resource that
    should be protected.
    ---------------------------------------------------------------------------
        \6\ Nevada Division of Water Resources, http://water.nv.gov/
    ---------------------------------------------------------------------------
    Water Quality
        Great Basin Mine Watch will address three major water quality
    issues of modern mines with specific examples, which are: 1) pit lake
    consequences, 2) waste rock pile drainage, 3) heap leach seepage. All
    of these mines are modern mines that have been in operation since 1980.
    Brief Background on Specific Mines Cited Here
        Mule Canyon Mine: is an open pit gold mine located in the central
    portion of the Argenta Mining district, approximately 15 mines
    southeast of Battle Mountain Nevada and 10 miles west of Beowawe. The
    modern mining began in 1989 with the eventual creation of six pits with
    associated waste rock dumps, a heap leach facility, and a mill. Mining
    was completed in 2005, with activity in the South Pit ending in
    December 1999.
        Big Springs Mine: is an open pit gold mine located along the North
    Fork Humboldt River at the north end of the Independence Range, Elko
    County Nevada. Mining of the disseminated gold deposits began in the
    late 1980s and stopped in 1993. Reclamation commenced in 1993 and has
    been declared complete. The mine also had a mill and tailings
    impoundment.
        Sleeper Mine: is an open pit gold mine located in Desert Valley on
    the western flank of the Slumbering Hills in Humboldt County, Nevada,
    approximately 30 miles northwest of Winnemucca. Active mining was
    conducted between March 1986 and October 1997 with three open pits with
    associated waste rock piles, five heap leach pads with associated
    solution ponds, and a tailings facility.
    Pit Lake Consequences
        Modern mining often involves the displacement of large volumes of
    rock and ore. Particularly, with the use of heap leach cyanide gold
    extraction large open pit mining has proven cost effective. As a result
    lower grade gold ore is being pursued creating enormous opens pits
    often well below the regional water table. In order to mine the deep
    pits groundwater must be pumped to create a ``cone of depression'' in
    the water table to keep the pit dry (dewatering will be discussed
    later.)
        Often when mining activities cease in the pit, and hence dewatering
    ceases, water begins filling in the pit forming a ``pit lake.'' It is
    also common that rock exposed during mining in the pit has a
    ``reactive'' component, meaning that with exposure to air, water, and
    microbes it will undergo oxidation; typically elevating the levels of
    sulfate and Total Dissolved Solids in the pit lake. In historic mines
    this oxidation has caused severe acidification of water draining from
    the mine and into the ground and surface water, often called ``acid
    mine drainage.'' 7 Therefore, reactive rock in a pit can
    cause the pit lake water to become acidic (low pH), which in turn tends
    to leach metals out of the rock in the pit further degrading the water
    making it unsuitable for humans and wildlife.
    ---------------------------------------------------------------------------
        \7\ One such example of severe acid mine drainage is the Rio Tinto
    mine in Northeastern Nevada, which contaminates a portion of the Owyhee
    River. For further information see; Duckwater Reservation, Shoshone--
    Paiute Tribes, Rio Tinto Mine/Mill Reclamation Audit, February 2000.
    ---------------------------------------------------------------------------
        Once the pit lake water becomes degraded there exists the potential
    for this water to infiltrate and contaminate the groundwater. Measures
    to improve pit water such as adding lime to neutralize the acid can be
    effective in the short-term, but the pit water often degrades again
    over a period of years. 8 In order to maintain acceptable
    water quality treatment maybe required for hundreds of years as the
    exposed reactive rock is consumed. In effect, pit lakes can turn out to
    be site of perpetually contaminated water.
    ---------------------------------------------------------------------------
        \8\ Nevada Department of Environmental Protection, ``Hollister Mine
    Fact Sheet,'' permit number NEV0088022, January 16, 2007; Nevada
    Department of Environmental Protection, ``Tonopah Mine Fact Sheet,''
    permit number NEV0088029, January 16, 2007 and Equatorial Tonopah Inc.,
    ``Fourth Quarter 2006 Water Pollution Control Permit,'' NEV88029,
    January 8, 2007.
    ---------------------------------------------------------------------------
        The Mule Canyon mine provides a striking example of a modern mine
    pit lake problem. The 1995 Environmental Impact Statement (EIS) for
    Mule Canyon predicted that only pit lakes would form in the South and
    West Pits. The South Pit lake was expected to be approximately 110 feet
    deep, and the West Pit with two ``ponds'' less than 20 feet deep.
    Seasonal temporary ponds were predicted in the other pits as well.
    9 Pit lake water quality was predicted to be poor initially
    but in the very long-term (40 years after filling) improve
    substantially. 10 These water level predictions were
    considerably off the mark, 11 where all the pits currently
    have substantial pit lakes with the South Pit expected to overflow the
    rim. 12 As a result a potentially serious water
    contamination situation has arisen since the South Pit lake water is of
    poor quality with low pH, and elevated levels of Total Dissolved
    Solids, sulfate, magnesium, and manganese (over 10 times acceptable
    levels). 13 Newmont Mining Inc. has initiated interim
    procedures, and has proposed further interim procedures to evaporate
    the ``excess'' water to prevent contamination of surface drainages. It
    is not clear whether this degraded water may have already infiltrated
    into the groundwater. In general, this is a long-term problem with no
    current solution, since the source of acidification has not been
    identified and water levels continue to rise.
    ---------------------------------------------------------------------------
        \9\ US BLM, Final Mule Canyon Environmental Impact Statement, (NV-
    060 1793/3809 N64-92-001P, September 1996, pg 4-9.
        \10\ ibid, pg. 4-14.
        \11\ According to the EIS the water level in the South Pit would
    have only risen to about 5690 feet AMSL. Currently, the level is at the
    rim or about 5940 AMSL, so about 250 feet higher than predicted.
        \12\ US Bureau of Land Management, Environmental Assessment Mule
    Canyon Mine Interim Water Management Plan, NV063-EA07-084, June 2007.
        \13\ ibid, appendix B.
    ---------------------------------------------------------------------------
        The Department of the Interior U.S. Fish and Wildlife Service in
    Nevada, concerned about contaminated pit lake water, has been examining
    the potential for pit lakes to impact wildlife. A preliminary study
    resulted in the following statement:
            ``In 2000, the U.S. Fish and Wildlife Service identified 18
            existing pit lakes in Nevada. Water quality data was obtained
            for 12 of the existing lakes. Of the pit lakes for which data
            was available, four were slightly acidic. All pit lakes for
            which water quality data was obtained contained at least one
            trace element at concentrations that are potentially toxic to
            aquatic life or wildlife. Aquatic life effect concentrations
            were exceeded for arsenic, cadmium, and chromium in 2 of the 12
            pit lakes for which water quality data were available. Copper
            concentrations exceeded an aquatic life effect level in at
            least six pit lakes. Mercury was detected in four pit lakes.
            All concentrations exceeded aquatic life and wildlife effect
            concentrations. However, detection levels used for mercury in
            the remaining pit lakes were greater than wildlife effect
            concentrations. Selenium exceeded a wildlife effect
            concentration in six pit lakes. Zinc exceeded an aquatic life
            effect concentration in six pit lakes.'' 14
    ---------------------------------------------------------------------------
        \14\ US Fish and Wildlife Service, ``Assessment of Wildlife Hazards
    Associated with Mine Pit Lakes,'' www.fws.gov/pacific/ecoservices/
    envicon/pim/reports/Reno/PitMines.htm.
    ---------------------------------------------------------------------------
        The Big Springs mine also underscores concerns related to pit
    lakes. The 2005 SWX pit lake data shows elevated levels of Total
    Dissolved Solids, sulfate, manganese, and magnesium, 15 and
    seepage from this pit lake has been implicated in contributing to
    contamination of Sammy Creek, which feeds the North Fork Humboldt
    River. 16 Recently, July 10, 2007, the U.S. forest Service
    released a scoping notice regarding continue exploration in the Big
    Springs area. It notes that the pit lakes at Big Springs have drained,
    ``In late October 2006, two lakes that had formed in existing mine pits
    (pit lakes) and the surrounding aquifer began draining. The pit lakes
    are now dry and the aquifer level has dropped about 150 feet below
    previous levels measured prior to October 2006. It is unknown where the
    aquifer is draining to or what the impacts, if any, would be to water
    quality and surface and groundwater resources.'' 17 To the
    extent that the lake water quality was poorer than that in the
    groundwater, draining the lakes into the groundwater would have
    degraded the groundwater. In general, contaminated pit lake water is a
    legacy of modern surface pit mining with varying potential to degrade
    the waters of Nevada.
    ---------------------------------------------------------------------------
        \15\ Nevada Department of Environmental Protection, Water
    Monitoring Report for 10/4/2005, Water Pollution control Permit
    #NEV87001.
        \16\ Myers, Tom, Expert Report, Nevada State Environmental
    Commission, Appeal hearing, Water Pollution control Permit Renewal,
    NEV0087001, Big Springs Mine, Technical Report 2005-07-GBMW, September
    14, 2005, pg. 28.
        \17\ Notice of Intent for the Big Springs Environmental Impact
    Statement, Federal Register, vol. 72, No. 130, page 37182.
    ---------------------------------------------------------------------------
    Waste Rock Drainage
        Enormous amounts of ``waste rock,'' which surround ore bodies, are
    mounded in high piles called waste rock dumps, present potential water
    contamination problems. If these rock piles contain reactive rock, then
    water infiltrating through them from precipitation can become degraded,
    and if not captured contribute to groundwater contamination.
        The Big Springs area (mine) is drained by the North Fork Humboldt
    River (NFHR) and its tributaries; including Dry Creek, Sammy Creek, and
    Water Canyon Creek. All of these waterways are on Nevada's 303d list of
    impaired waters. 18 The listing noted that the impairment
    was due to mining activities. Myers 19 conducted a detailed
    review of waterflow and constituent concentrations from the various
    monitoring stations located on the tributaries of the NFHR. His
    analysis provides clear evidence of contamination from waste rock dumps
    into these waterways. Particularly striking is the data for Sammy
    Creek, where sampling upstream from the waste rock dump shows sulfate
    concentration median of 8.16 milligrams per liter (mg/L) with a maximum
    of 24.30 mg/L, and downstream of the waste rock dump the sulfate
    concentration median measurement was 320.0 mg/L with a maximum of 557.0
    mg/L. Myers used the sulfate concentrations as a trend marker
    20 that showed an increasing trend in sulfate concentration
    as mining proceeded with a jump upward around 1990 when mining first
    began in earnest.
    ---------------------------------------------------------------------------
        \18\ Nevada Division of Environmental Protection Bureau of Water
    Quality Planning, ``Nevada's 2004 303(d) Impaired Waters List,''
    November 2005.
        \19\ reference 10.
        \20\ ibid, pg. 4; Myers connected trends in sulfate concentrations
    with Total Dissolved Solids (known to violate standards on the NFHR,
    and also to examine the hydrology of the basin, in general.
    ---------------------------------------------------------------------------
        Myers concluded regarding waste rock seepage at Big Springs that:
            Analysis of monitoring data completed for this report and other
            studies have found that the tributaries to the NFHR that drain
            the Big Springs mine have added substantial sulfate and metals
            loading to the river. The most likely source of contamination
            is the waste rock that has been dumped in each of the
            tributaries; in all three drainages, the waste rock has been
            piled over the stream or on top of springs. The final closure
            plan indicates the lower Sammy Creek, Dry Canyon, and both
            Water Canyon dumps ``were developed using the cross-valley
            method of construction'' (IMC, 1996, page 14). These all had
            ``[u]nder-dump drainage systems [which] were developed beneath
            the cross-valley type dumps through natural gravity segregation
            of waste rock that occurs during dumping operations. The under-
            dump drainage systems are intended to allow surface runoff from
            the contributing watersheds to flow through the base of the
            dumps'' (IMC, 1996, page 14). This basically means that the
            dumps were designed to be within the drainages with coarser
            rock naturally segregating from the bulk of the rock during the
            dumping. They were designed to convey drainage water from above
            the dump through the dump and to downstream channels. There is
            no provision made to separate or segregate the drainage from
            the waste rock. It would be useful to identify whether this
            waste rock could leach high sulfate concentrations and some
            metals to the river. High sulfate would be caused by pyrite
            oxidation followed by carbonate neutralization; high sulfate
            but neutral pH and not high metals concentration would be the
            result. There are several studies that address the leaching
            from waste rock; this section reviews these studies.
            21
    ---------------------------------------------------------------------------
        \21\ ibid, pp 14-15.
    ---------------------------------------------------------------------------
        Solving the problem that generates the degraded water is often
    infeasible from the mine company's perspective, since it may require
    extensive excavation of the waste rock dump itself. The long-term
    solution is often the eventual disintegration of the reactive
    components within the waste rock dump. However, that ``natural
    attenuation'' could require many years and perhaps centuries.
    Heap Leach Seepage
        The third major long-term water contamination issue with modern
    mines is the fate of the heap-leach piles. These piles contain various
    grades of ``depleted'' ore, which in the case of gold mining have been
    leached with sodium cyanide solution to extract the microscopic gold.
    Once mining has discontinued the leach piles are rinsed until the
    ``drain down'' water (the water that is collected at the bottom of the
    pile after passing through the pile from the top) is of acceptable
    quality to begin active reclamation. The heap leach piles have liners
    underneath to catch the gold laden solution during extraction, so once
    the heaps are out of use the liners will continue to catch the drain
    down water for monitoring. The liners are considered a safeguard
    against future groundwater contamination assuming that they retain
    their integrity through the point when seepage water is no longer
    degraded. The liners collect seepage and convey it to a single point
    from which it discharges from under the heap. The disposal of this
    seepage is a long-term problem.
        In March 2003, New Sleeper Gold LLC submitted a final Closure Plan
    to the Nevada Department of Environmental Protection and the Bureau of
    Land Management. In this closure plan, New Sleeper expressed the need
    for the heap leach ponds (into which the heap leach piles drain) to
    remain in place to serve as evapotranspiration basins 22 for
    the long-term seepage. The previous Reclamation Plan of 1993 required
    these ponds to be decommissioned, so the current proposal is to
    maintain the ponds in perpetuity. The reason for this is evident in the
    current water monitoring data for the Sleeper mine that shows the heap
    leach drain down water of very poor quality with pH's between 2 and 3,
    very acidic, and high levels of a number of constituents such as TOTAL
    DISSOLVED SOLIDS, sulfate, manganese (over 10 times the standard),
    selenium (about 10 times the standard), magnesium, etc. 23
    If the ponds were reclaimed and the heap leach piles were effectively
    allowed to drain uncontrolled the resulting contamination of area water
    resources would be very high. 24 This puts the public in a
    untenable situation of either allowing potentially substantial water
    contamination or try to maintain a facility virtually forever.
    ---------------------------------------------------------------------------
        \22\ An evapotranspiration basin is a partially vegetative field to
    where excess fluids are directed to eliminate the water by evaporation
    and plant transpiration; in this case with liners.
        \23\ New Sleeper Gold LLC, ``Sleeper Mine Water control Permit
    #NEV50006; 2005 Annual Report.'' and ``4th Quarter, 2006 report.''
        \24\ US Bureau of Land Management, ``Preliminary Environmental
    Assessment, Sleeper Closure Project,'' Winnemucca Field Office, October
    2006.
    ---------------------------------------------------------------------------
        In each of the cases outlined above, modern mines have created a
    situation that pose long-term environmental impacts, which to date do
    not have a clear solution. In the case of Mule Canyon early predictions
    led the public to believe that the pits would not create a potentially
    unmanageable situation. Environmental analyses often do not anticipate
    these problems, and sometimes are just wrong about the level of
    toxicity that will ultimately result from the various aspects of the
    mine. Kuipers and Maest have presented a detailed analysis of the
    predictability of water quality in hardrock mining. 25 Below
    are two comparison tables from this report. 26
    ---------------------------------------------------------------------------
        \25\ Kuipers, James R., Maest, A.S., MacHardy, K.A., and Lawson, G.
    2006 Comparison of Predicted and Actual Water Quality at Hardrock
    Mines: The reliability of predictions in Environmental Impact
    Statements.
        \26\ ibid, pg 149 and pg 152.

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Notice that under the ``Predicted Impacts'' column in both
    examples no impacts are typically predicted, and under ``Potential
    Impacts'' many water quality issues are listed. In general, and this is
    concluded in the report, the various EIS analyses recognize that water
    quality may be compromised, but are overly optimistic in the
    effectiveness of the mitigating procedures, which is summarized by the
    authors, ``...as with surface water, the predictions made about
    groundwater quality impacts without considering the effects of
    mitigation were somewhat more accurate than those made taking the
    effects of mitigation into account. Again, the ameliorating effect of
    mitigation on groundwater quality was overestimated in the majority of
    the case study mines.'' 27 Reform of the 1872 mining law
    needs to take into account the limitation of modeling used to predict
    the future environmental consequences of mines.
    ---------------------------------------------------------------------------
        \27\ ibid, pg ES-8.
    ---------------------------------------------------------------------------
    Mine Dewatering
        Mine dewatering is the process of removing groundwater to keep
    mines from filling with water. In the Carlin Trend, the highest
    dewatering rate occurs at the Betze Pit. In 1998, it pumped
    approximately 100,000 af (acre-feet) 28. In 2000, the BLM
    published a cumulative impacts analysis of this dewatering showing that
    extensive drawdown would occur throughout the area and that base flow
    in about six streams would be decreased or eliminated. 29
    ---------------------------------------------------------------------------
        \28\ One acre-foot is the volume of water sufficient to cover an
    acre of land to a depth of 1 foot, = 43,560 cubic feet, approximately
    325,829 U.S. gallons (approximately 1233.48 cubic meters).
        \29\ US Bureau of Land Management, Cumulative Impact Analysis of
    Dewatering and Water Management Operations for the Betze Project, South
    Operations Area Project Amendment, and Leeville Project, Elko Field
    Office, April 2000.
    ---------------------------------------------------------------------------
        The BLM predicted in 2000 that dewatering the Carlin Trend would
    remove approximately 2,000,000 acre-feet of water by 2018. By 2003,
    there had been 1,125,000 af pumped for from the Gold Quarry and Betze-
    Post mines. 30 Gold Quarry had pumped a little more than
    210,000 af by 2003, therefore Betze-Post pumped about 910,000 af with
    peaks of 100,000 af/y in 1994 and 1998. Its rate has stabilized at
    about 45,000 af/y. 31
    ---------------------------------------------------------------------------
        \30\ Plume, R.W., 2005. ``Changes in Ground-Water Levels in the
    Carlin Trend Area, North-Central Nevada, 1989--2003, Scientific
    Investigations Report'' 2005-5075. U.S. Geological Survey.
        \31\ Myers, Tom, internal communication on a preliminary draft of
    ``Review of Mine Dewatering on the Carlin Trend; Predictions and
    Reality,'' August 2007, Reno Nevadad.
    ---------------------------------------------------------------------------
        The perennial yield of a groundwater basin is the amount of water
    which can be economically pumped annually without causing a permanently
    increasing drawdown. Regardless of the source, the dewatering has far
    exceeded and will continue to exceed the cumulative perennial yield of
    the Carlin Trend hydrologic basin. The dewatering pumpage of 2,000,000
    af, if it is correct, will total approximately 51 years of the entire
    perennial yield for the six basins. The deficit above the perennial
    yield will be approximately 950,000 af. Total pumpage to date is
    1,135,000 af which equals 37 years of the perennial yield in the basin
    and is a deficit of 595,000 af or about 20 years of the perennial
    yield. 32 Pumpage from 1992 to 2007 has totaled about three
    times that which would be allowed by the Nevada State Engineer if he
    followed Nevada water law of approving water rights applications up to
    the perennial yield of a basin.
    ---------------------------------------------------------------------------
        \32\ ibid.
    ---------------------------------------------------------------------------
        Water levels near the Humboldt River have dropped up to ten feet in
    the carbonate and a lesser amount in the siltstone. This is not a huge
    amount, but is on the edge of the potentially expanding cone. The
    predictive groundwater model did not simulate this drawdown possibly
    because it had a boundary at the river which prevented the drawdown
    from being simulated.
        The U.S. Geological Survey estimated substantial drawdown occurring
    northeast of Gold Quarry into the upper Maggie Creek basin; this
    drawdown extended far beyond the BLM's predicted ten-foot drawdown
    cone. Similarly, the U.S. Geological Survey plotted a 100-foot drawdown
    contour under Susie Creek and lower Maggie Creek outside of the
    predicted ten-foot drawdown.
        Dewatering has caused significant deficits in the groundwater
    systems of at least six groundwater basins near the Carlin Trend.
    Because the local recharge is small compared to the perennial yield,
    there must naturally be a substantial amount of interbasin inflow. The
    source of this interbasin flow is yet unknown as is the impact of this
    flow. Clearly, the reduction or elimination of springs and streams will
    have a significant impact on wildlife, and potentially impact cultural
    practice as well, 33 but long-term impacts from dewatering
    are to date still unclear.
    ---------------------------------------------------------------------------
        \33\ The Rock Creek drainage is within the hydrologic region of
    impact from dewatering of the Carlin-Trend analyzed in the BLM
    assessment (reference 29), and is of spiritual important to the Western
    Shoshone people.
    ---------------------------------------------------------------------------
    H.R. 2262 Reforms Are Necessary
        Clearly, the current regulatory system is not working to protect
    the water resources put at risk from modern mines. While there are
    mines which do not pose serious threats to water resources, there are
    too many mines which have and continue to degrade waters of the state.
        The need for the federal land management agencies to have the
    statutory obligation to ensure a mine will not cause long-term harm is
    necessary because the current system is clearly not working. The public
    land agencies are responsible for the proper stewardship of these
    lands, and they must have the ability and obligation to meet that
    responsibility.
        Mining can be profitably conducted without causing long-term harm,
    and without leaving a legacy of polluted and dangerous landscapes.
    Every other type of industry that utilizes the public lands must ensure
    that they operate in such a manner prior to being allowed access to the
    public lands. Mining can and should be required to do the same.
    Public Discussion of Land Use
        One of the most controversial aspects of the proposed reforms is
    the repeal of the presumption that mining is the best use of an area.
    Many people fear that if mining loses this completely unique and
    antiquated status, it will be the end of the industry in the United
    States. The argument does not hold up on analysis, and the time for
    allowing public debate is long overdue.
        What the proposed legislation would allow is public debate similar
    to that allowed by the laws governing the oil and gas, coal, and
    industrial minerals extractive industries. The assumption that public
    debate will result in denial of a mining proposal, implies that the
    consequences of the mine will be unacceptable. If, indeed, the
    consequences are similar to what has too often been the case with mines
    permitted under the current system, then that opposition is
    understandable and appropriate. If and when, however, the proposal
    seems unlikely to cause unacceptable harm, or if there are proper
    environmental safeguards in place to keep the consequences within
    acceptable bounds, the level of opposition is and will be moderated.
        The lack of public confidence in the wisdom of many mine proposals
    is due to a history of failure, tied to the lack of reform of the
    regulatory system. Mine proposals that are well designed and managed
    need not fear having the public be involved in the process.
    Nevada Will Continue to be a Mining State
        Reform of the Mining Law is often seen as the death-knell of the
    mining industry. 34 That once current mines are closed, the
    industry will move completely to other countries. We believe this fear
    is greatly overstated and simply incorrect.
    ---------------------------------------------------------------------------
        \34\ Statement of Ted Wilton, Spring Creek, Nevada 89815, Presented
    to the Energy and Mineral Resources Subcommittee of the U.S. House of
    Representatives Natural Resources Committee on H.R. 2262: The Hard Rock
    Mining and Reclamation Act of 2007 July 26, 2007, http://
    resourcescommittee.house.gov/images/Documents/20070726/testimony--
    wilton.pdf
    ---------------------------------------------------------------------------
        The single most important reality of mining is that you mine where
    the minerals are. The geology of Nevada is well known as very favorable
    for finding economic deposits of minerals. 35 This is
    reflected in its history, as well as the continued strong rate of
    exploration for new deposits.
    ---------------------------------------------------------------------------
        \35\ Doug Driesner and Alan R. Coyner, NEVADA EXPLORATION SURVEY
    2006, Nevada COMMISSION ON MINERAL RESOURCES and DIVISION OF MINERALS,
    June, 2007, page 5
    ---------------------------------------------------------------------------
        The most recent information gathered from the mining industry by
    the Nevada Commission on Mineral Resources shows very strong and
    positive confidence in Nevada's mining future. The industry ``reported
    employing 228 geologists in Nevada in 2006, up from the 190 reported
    for 2005. Projections for 2007 show an increase to 236 geologists.''
    36 ``Respondents were asked whether they were optimistic,
    neutral, or pessimistic about domestic exploration. Overall, 60 percent
    of the respondents reported being optimistic, 28 percent were neutral,
    and 12 percent were pessimistic.'' 37
    ---------------------------------------------------------------------------
        \36\ Ibid., page 1.
        \37\ Ibid., page 7.
    ---------------------------------------------------------------------------
        Nevada has an excellent base of experienced miners and mining
    professionals, and there is a well developed mining infrastructure.
    Lastly, it must be noted, it has a political climate that is favorable
    to the industry. 38 All of these are well documented, and
    are reflected in Nevada consistently being recognize by the industry as
    the most favorable (or nearly so, this past year) jurisdiction in the
    world for mining by the industry itself. 39
    ---------------------------------------------------------------------------
        \38\ Ibid.
        \39\ McMahon, Fred, and Anas Melhem; 2007; Fraser Institute Annual
    Survey of Mining Companies 2006/2007; http://www.fraserinstitute.ca/
    admin/books/files/Mining06rv2.pdf
    ---------------------------------------------------------------------------
        As the Nevada Bureau of Mines and Geology and the Nevada Division
    of Minerals put it, the top reason to explore in Nevada is ``great
    geology and mineral potential'', and they conclude that ``Nevada is a
    really great place to explore for and mine gold.'' 40
    (emphasis in original)
    ---------------------------------------------------------------------------
        \40\ Price, Jonathan G., Alan R. Coyner, John Muntean, and Doug
    Driesner; 2006; Update on Production and Exploration Activity in
    Nevada.
    ---------------------------------------------------------------------------
        Providing adequate protections for the future and alternate uses of
    the land will not change this basic reality. Nevada can be protected
    from the worst harms done by some mines under the one hundred and
    thirty five year old Mining Law, and still have a healthy and
    productive mining industry.
    Conclusions
        The Mining Law of 1872 needs to be brought up to twenty first
    century standards. The unique status given to the mining industry by
    this antiquated law is no longer justified or necessary. The long-term
    and serious harms that are often the result of poor mine planning and
    management are no longer an acceptable trade for the benefits to the
    local economies and the precious metals themselves.
        Mining has changed since 1872, it now can be done responsibly. H.R.
    2262 will allow the industry to continue to thrive, while protecting
    the long-term viability and health of Nevada and the United States.
        Thank you, again, for the opportunity to discuss this important
    issue. I will answer any questions you may have.
                                     ______

        Mr. Costa. Thank you very much, Mr. Randolph, and thank you
    for staying within the five minutes allotted. Points from me,
    anyway.
        The next witness is Ms. Barkdull Spencer, correct?
        Ms. Barkdull. Correct.
        Mr. Costa. And you are representing this morning the Elko
    County Economic Diversification Authority.
        Ms. Barkdull. That is also correct.
        Mr. Costa. Wonderful. Well, we look forward to your
    testimony today.

      STATEMENT OF ELAINE BARKDULL SPENCER, DIRECTOR, ELKO COUNTY
                   ECONOMIC DIVERSIFICATION AUTHORITY

        Ms. Barkdull. Thank you. Chairman Costa, Congressman
    Heller, thank you for this opportunity. My name is Elaine
    Barkdull Spencer. I am the Executive Director of the Elko
    County Economic Diversification Authority and also the former
    CEO of the Elko area Chamber of Commerce.
        First of all, I would like to thank the Subcommittee for
    inviting me to participate in this public hearing on the
    Hardrock Mining and Reclamation Act of 2007. Most importantly,
    I would like to thank Senator Reid, although he's already left,
    for the many years of advocacy and leadership on mining law
    reform issues. Without his diligent efforts to stop unfair
    attacks on Nevada mining, it is unlikely that Nevada would even
    be a viable mining industry in the state to discuss with you
    today.
        Mr. Costa.His staff is here, and I'm sure the word will get
    passed on.
        Ms. Barkdull. Very good. I appreciate the opportunity to
    speak to you on the impacts of mining to local communities such
    as Elko County, the community that I represent.
        In my position at the helm of ECEDA, I am very familiar
    with the impacts of mining on local businesses and the
    economies of mining communities. But my experience with mining
    is a lifelong one.
        Like Senator Reid, I am a native Nevadan, and I have lived
    in more than a handful of the cities and towns in this great
    state. My family has lived in Nevada for several generations,
    and our heritage is directly related to mining.
        My mother's family started in Nevada as prospectors and
    continued on through my teen years. My father worked as a heavy
    equipment operator for several mines throughout the state. To
    save money for college, I worked at a barite mine near Battle
    Mountain. I was actually a mucker behind one of those shovels.
        Today I have two sons who work in mining. My oldest son is
    an electrician in a mine in Washington State. A Nevada mine
    helped pay for his college education and his electrical
    certification. He makes a very good living.
        My younger son is only 25 years old. He was a mill
    supervisor for Round Mountain Gold near Tonopah, Nevada.
        I am very proud of my sons and I'm very thankful to an
    industry that has offered so much opportunity to my family.
        While I may have personal reasons for being an advocate of
    mining, as a community representative, I have a high respect
    for any industry that gives back to its community.
        Mining represents a substantial asset to the State of
    Nevada. Last year, Nevada mines exported billions of dollars
    worth of precious minerals. Mines are the largest employers of
    at least six of Nevada's counties, and a typical miner can earn
    an average of $68,000 a year. The economic impacts of mining
    can easily be identified by the great-paying jobs and the
    local--and great benefits.
        It also can be identified locally in the businesses by not
    only the support industry that you can see spread out through
    any mining community, but also the growing stores and retail
    bases, the places where the miners shop and the businesses
    themselves flourish.
        Mining continually gives back to communities where they
    exist. Our local mines have contributed to city
    infrastructures, parks, and schools. Just recent contributions
    from the mines include a partnership with the community for a
    new community health clinic, major contributions to Great Basin
    College's infrastructure such as new facilities and specific
    training programs, plus many years of support for children's
    programs and special community needs.
        In addition to the obvious economic impacts of mining, I
    would like to explain to you the role of mining, the role that
    mining plays in diversification efforts of communities.
        Our local mines support ECEDA, the organization of which I
    work. We are a public-private partnership. We have
    representatives on our board that directly contribute and also
    participate in our diversification efforts.
        Chairman Costa and members of Committee, I have read H.R.
    2262, and I am concerned about what it will do to Nevada's
    economy. I am particularly concerned about the potential
    impacts of the eight percent net smelter return royalty called
    for in the last legislation.
        For Nevada's gold miners, a net smelter return royalty is
    basically the equivalent of a gross royalty tax. And a gross
    royalty could create an enormous financial burden on the
    state's mining industry.
        Since gold is traded on the commodities market, none of
    this additional financial burden can be added to the price of
    the gold that is sold. All the royalty costs will be absorbed
    by the mining companies, and this will be a direct adverse
    impact on the amount of mining tax revenues that flows to the
    state and to the counties.
        Thank you.
        [The prepared statement of Ms. Barkdull Spencer follows:]

           Statement of Elaine Barkdull Spencer, Executive Director,
                 Elko County Economic Diversification Authority

        Mr. Chairman and Members of the Committee--
        My name is Elaine Barkdull Spencer. I am the Executive Director of
    Elko County Economic Diversification Authority and the former CEO of
    the Elko Area Chamber of Commerce. First of all, I would like to thank
    the Subcommittee for inviting me to participate in this public hearing
    on the Hard Rock Mining and Reclamation Act of 2007. Most importantly,
    I would like to thank Senator Reid for his many years of advocacy and
    leadership on mining law reform issues. Without his diligent efforts to
    stop unfair attacks on Nevada's mining industry, it is unlikely that
    Nevada would even have a viable mining industry to discuss with you
    today.
        I appreciate the opportunity to speak on the impacts of mining on
    communities such as those I represent in Elko County. In my position at
    the helm of ECEDA, I am very familiar with the impacts of mining on
    local businesses and the economies of mining communities, but my
    experience with mining is a lifelong. I am a native Nevadan and have
    lived in more than a handful of the cities and towns in this great
    state. My family has lived in Nevada for generations and our heritage
    is directly related to mining. My mother's family started in Nevada as
    prospectors, my father worked as a heavy equipment operator for several
    mines throughout the state. To save money for college I worked for a
    barite mine near Battle Mountain. Today I have two sons who work in
    mining. My oldest son is an electrician at a mine in Washington. A
    Nevada mine helped to pay for his college education and his electrical
    certification. My younger son is only 25 years old and is a mill
    supervisor for Round Mountain Gold near Tonopah, Nevada. I am very
    proud of both my sons' accomplishments and I credit the mining industry
    for the opportunities they have offered my family. While I may have
    personal reasons for being an advocate for mining, as a community
    representative I have high respect for any industry that gives back to
    the community.
        Mining represents a substantial asset to the State of Nevada. Last
    year Nevada mines exported billions of dollars worth of precious
    metals. Mines are the largest employers in at least six of Nevada's
    counties and the average miner can make an average of $68,000 a year.
    The economic impacts of mining can easily be identified by the
    thousands of great paying jobs they offer, the local goods and services
    utilized by the industry and their employees, plus the millions of
    dollars in net proceeds of mines taxes, sales taxes, employee taxes and
    numerous other taxes and fees that benefit this great State and the
    counties where mining occurs. This revenue is absolutely critical to
    the annual budgets of these rural counties.
        Mining continually gives back to the communities were they exist.
    Our local mines have contributed city infrastructure, parks and
    schools. Recent contributions from the mines include a partnership with
    the community for the new community health clinic, major contributions
    to Great Basin College's infrastructure, new facilities and specific
    training programs, plus many years of support for communities'
    children's programs and special community needs.
        In addition to the obvious economic benefits of mining, I would
    like to explain the role mining plays in the diversification efforts of
    mining communities. Our local mines support ECEDA (Elko County Economic
    Diversification Authority), a private-public partnership.
    Representatives serve on our Board and contribute to studies and
    programs. Most notably, mining companies have played a major role in
    developing sustainable communities and the job skills of the people
    that live in those communities. Because of mining, Elko County has
    become an attractive community to new types of industry. Our strong
    economy has allowed us to do long-term planning for the future. The
    expanded infrastructure and resources, including industrial parks,
    expanding housing developments and new retail growth are all due to
    mining.
        Elko County is growing and thriving. Norman Crampton listed the
    City of Elko as the number-one ``Best Small Town, in his 1993 book, the
    100 Best Small Towns in America. This recognition was based on quality
    of life, good jobs, cost of living, good schools and high levels of
    public safety. The City of Elko wore this badge with pride and we
    contributed our advantages to the gold mining industry.
        Chairman Costa and members of the Committee, I have read through
    H.R. 2262 and I am concerned about what it will do to Nevada's economy.
    I am particularly concerned about the potential impacts of the proposed
    8% net smelter return royalty called for in the legislation. For
    Nevada's gold miners, a net smelter return royalty is basically the
    equivalent of a gross royalty, and a gross royalty would create an
    enormous financial burden on the State's mining industry. Since gold is
    traded on the commodities market, none of this additional financial
    burden can be added to the price of the gold that is sold. All of the
    royalty costs will have to be absorbed by the mining companies and this
    will have a direct adverse impact on the amount of mining tax revenue
    that flows to the State and to the counties. There will be less
    investment in mining, and fewer exploration and mining jobs. New
    projects will be shelved; expansion plans put on hold or cancelled
    entirely. Secondary impacts will be felt throughout the entire
    community. Mr. Chairman, you will hear more detail about the impacts of
    the proposed royalty in H.R. 2262 from Mr. Fields and Dr. Dobra later
    in this hearing. Having spoken with many of the miners in this
    community who are very familiar with the legislation before you today,
    I am convinced that this bill will make mining in the United States
    less competitive. If the resources our country needs can no longer be
    affordably mined from our own land--they will be imported from more
    affordable locations in other countries. This would be a disservice to
    our country, a threat to the integrity of our strategic metals and
    minerals supply and a devastating blow to the rural economies of the
    Western United States, which depend on mining for their economic
    security.
        We Nevadans are not mindless people that will allow unsafe mining
    practices and destruction of public lands. We demand the best for our
    communities, our state and our people. We believe our local mining
    industry goes above and beyond legal and regulatory requirements,
    embraces its responsibility as stewards of the public lands, and serves
    our community as thoughtful and generous corporate citizens. As a state
    we are fortunate to have an industry, such as mining, that will pay its
    employees well, provide exceptional benefits, and positively impact
    rural areas with opportunities and strong, sustainable economies. I
    come before you today to ask that you work with Nevada's senior Senator
    and our mining companies to develop a fair, reasonable and workable
    mining law reform package that will provide the long-term certainty and
    stability needed to protect existing investments and to attract new
    capital and not harm these communities which are so dependent on a
    healthy and sustainable mining industry. Mr. Chairman, the importance
    of mining to our national security, our economy and even our way of
    life is at stake in this debate.
        Thank you again for the opportunity to speak today on behalf of
    Elko County's Economic Diversification Authority.
                                     ______

        Mr. Costa. Thank you. Thank you for, again, staying within
    the 5-minute rule. We appreciate that very much. And we look
    for the opportunity to ask you some questions when we complete
    the testimony of this panel.
        The next witness that we have before us is Mr. Robert
    Abbey, former state director of the Bureau Land Management in
    Nevada. Mr. Abbey.

              STATEMENT OF ROBERT ABBEY, FORMER DIRECTOR,
             NEVADA STATE OFFICE, BUREAU OF LAND MANAGEMENT

        Mr. Abbey. Thank you. My name is Bob Abbey, and I appear
    before you today as a member of the public. I'm not an expert
    in mining by any means, but I do bring to this hearing 32 years
    of experience in natural resources management, including eight
    years as the Bureau of Land Management's Nevada State Director
    before retiring in 2005.
        In that role, I had the responsibility for providing direct
    oversight of the largest mining program administered by the
    BLM.
        Mr. Chairman, Congressman Heller, I thank you for the
    opportunity to participate in this hearing, and I commend you
    both for your review of the General Mining Law of 1872 in
    context of today's social, environmental, and economic
    realities.
        Due to time constraints, I'm going to deviate significantly
    from the testimony that I previously submitted, and I'm only
    going to highlight a few recommendations this morning that I
    hope you will consider in future deliberations.
        I have stated numerous times that I am an advocate for
    responsible mining, just like I'm an advocate for responsible
    use by all public land stakeholders. I'm a proponent of the
    BLM's multiple use mandate, and I believe that appropriate
    public lands, but certainly not all public lands, should be
    accessible for mineral extraction.
        The current law does need to be revised so that all
    resource values are given the same consideration when land
    management agencies are making resource allocations through
    their land use planning processes. Under the auspices of the
    General Mining Law, this has not always been the case since
    some believe the existing law gives mining priorities over
    other management goals.
        Mining laws and related regulations have been reviewed
    numerous times. Modifications have been made primarily through
    regulatory reform to address the many complex issues. At the
    direction of Congress to the National Research Council, an
    assessment was made in 1999 regarding the adequacy of the
    regulatory framework for hardrock mining on Federal lands.
        A study was completed and a summary of the Research
    Council's findings and recommendations were submitted to the
    Congress at that time. If you will review the document that was
    submitted, I believe you will find that some of the proposed
    changes might be better addressed through a change in law
    rather than just through regulatory reform. A ``Good
    Samaritan'' clause is just one example where a change in the
    law may have a positive result and help them to clean up
    abandoned mine lands.
        Throughout my career in public service, I have found that
    there's more commonality in citizens' desires than there are
    differences. Most of us want clean water and air; a healthy
    environment for plants, animals and humans. We want productive
    and sustainable ecosystems while managing our public lands in a
    manner that would enhance our overall quality of life and local
    communities.
        We want our public lands to be managed for multiple uses,
    recognizing that, today, these assets are valuable as much for
    wilderness as they are for commodity production. This is a
    basic premise that your Committee should build on when
    reviewing and amending any law affecting public land
    management.
        There's little doubt in my mind that most people support
    the principle of collecting a fair and equitable royalty for
    the privilege of extracting minerals from the public's land.
    There is a strong demand for holding companies doing business
    on the public's land accountable for complying with specified
    environmental and health standards.
        Many people feel that the conveyance of public land tracts
    under the provision of any mining law should be at fair market
    value and not based on historic patent fees.
        Unlike some who might oppose mining under any circumstance,
    most people that I have interacted with understand the benefits
    derived from responsible mining; and these same people believe
    that with adequate safeguards and proper enforcement, mining is
    a legitimate use of our public lands.
        I recommend that the Committee require the use of the
    Forest Service and the BLM's land use planning processes as the
    formal mechanism for identifying the appropriateness of making
    available specifics tracts of public lands for mining.
        Whether a mine would ever be built depends upon a number of
    factors, including having sufficient mineral deposit that is
    economically feasible to mine, but not based on the direction
    and goals of an antiquated law.
        The amount of land needed for the mill sites should be
    determined through the site-specific analysis and not be
    subject to an arbitrary or self-imposed requirement as now
    included in the draft language. The life of the mining plan and
    reclamation requirements should also be addressed as part of
    the initial analysis. And I would hope that Congress would not
    place any requirements or subsequent reviews or analysis unless
    there is a proposed modification to the mining plant or
    significant new information is obtained from monitoring.
        The exception to this, of course, would be the need to
    routinely review and update bonds to ensure full coverage for
    reclamation requirements.
        I recommend that any change to the current law provides
    some form of financial assistance or encouragement for
    prosecuting individuals engaged in mining fraud or scam
    operations.
        Given the demands placed on both the Justice and Interior
    Departments, the investigation and prosecution of people
    engaged in mining scams is given little priority. As a result,
    innocent people, many of whom are elderly, are being taken
    advantage of by scam artists.
        Finally, whether you amend the General Mining Law or not, I
    believe there needs to be greater Congressional attention given
    to staffing the agencies with a sufficient number of people as
    well as with the expertise needed to ensure appropriate reviews
    of mining proposals and the monitoring that is often required
    for approved operations.
        The agencies have been operating at an extreme disadvantage
    for quite some time when responding to their on-the-ground and
    administrative responsibilities. It is common for BLM offices
    to use mining engineers or geologists to respond to a multitude
    of demands. The reality is that most BLM field offices in
    Nevada and elsewhere in the rural West have only one mining
    engineer or geologist, and it's impossible for them to keep up
    with all the work that's required.
        Thank you for the opportunity to provide comments.
        [The prepared statement of Mr. Abbey follows:]

                           Statement of Robert Abbey

        My name is Bob Abbey and I appear before you today as a member of
    the public. I am not an expert in mining nor do I sit here today
    pretending to have answers to all the questions that should be
    addressed as part of any review of the General Mining Law of 1872.
    However, I do bring to this hearing 32 years of experience in public
    land management including eight years as the Bureau of Land
    Management's Nevada State Director, a role that I held with great pride
    prior to retiring from that agency in 2005.
        Mr. Chairman and members of this Subcommittee, like many others, I
    thank you for the opportunity to participate in this hearing to offer
    comments pertaining to proposed changes to the General Mining Law. I
    compliment the members of this subcommittee and others within the
    Congress for your willingness to review an existing law which in this
    case, is 135 years old. I commend your efforts to amend this law in
    such a manner as to better reflect today's social, environmental, and
    economic realities.
        As the BLM's Nevada State Director, I had the responsibility for
    providing direct oversight of the largest mining program administered
    by the BLM. Nevada's gold production by itself makes it the fourth
    largest producer of gold in the world. The BLM's Nevada State Office
    records almost half, if not more, of all the mining claims filed on
    public lands in the United States. While these are impressive
    statistics, I note that Nevada also leads the west in abandoned mine
    lands requiring remediation. With an estimated 300,000 abandoned mine
    lands features, of which 50,000 pose risks to human safety, regulatory
    agencies at both the state and federal levels have significant
    challenges in trying to mitigate such hazards. Through partnerships
    with the State of Nevada, the mining industry, and with a number of
    citizen volunteers, progress is being made in mitigating some of these
    risks.
        Abandoned mine clean up and the mitigation of related public land
    hazards is a national issue however, and some have estimated that the
    cost to clean up these sites range from a low of $12 billion to as high
    as $72 billion. Regardless of the costs, much remains to be done to
    address abandoned mine sites and I am happy to read that you are
    proposing language in the draft legislation that will provide funding
    for clean up activities. Consistent with your goal of mitigating known
    hazards, I strongly recommend that this subcommittee entertain the
    possibility, if you haven't already done so, of including a ``Good
    Samaritan'' provision. Decreasing financial risks and liability for
    industry participants who volunteer their assistance in mitigating
    hazards associated with abandoned mines is needed and long overdue. I
    believe such a provision, if approved by the Congress, can easily be
    managed to maintain the integrity and goals of the Comprehensive
    Environmental Response, Compensation, and Liability Act, better known
    as CERCLA.
        The General Mining Law of 1872 that was passed by the Congress
    reflected the priorities of the nation at that time. Much has changed
    since the late 1872 and for that matter, since the passage of the
    Federal Land Policy and Management Act in 1976. Today, America's public
    lands are valued for much more than just commodity production and I
    feel it is beneficial to all for Congress to routinely review public
    land laws to determine their current relevance in addressing our
    national interests, public demands, and expectations.
        I have gone on record many times stating that I am an advocate for
    responsible mining just as I am an advocate for responsible use by all
    public land stakeholders. I am a firm believer in BLM's multiple use
    mandate and I believe that appropriate public lands, not all public
    lands, should continue to be accessible for mineral extraction. The
    current law needs to be changed so that all resource values are given
    the same consideration when land management agencies are making
    resource allocations through their land use planning processes. Under
    the auspices of the General Mining Law of 1872, this has not been the
    case.
        Existing mining laws and related regulations have been reviewed
    numerous times. Modifications have been made, primarily through
    regulatory reform, to address complex issues associated with
    implementing the General Mining Law. The last major effort which I am
    familiar with occurred in the late 1990s. At the request of Congress to
    the National Research Council an assessment was made regarding the
    adequacy of the regulatory framework for hardrock mining on federal
    lands. To conduct this study, the National Research Council appointed
    the Committee on Hardrock Mining on Federal Lands in January, 1999. A
    study was completed and the designated committee provided a summary of
    its findings and recommendations to the Congress and to the Departments
    of Agriculture and Interior. If the members of this subcommittee do not
    have a copy of this report, I suggest that your staff obtain one and
    become thoroughly familiar with its contents. While the report provided
    recommendations for regulatory changes, the Committee on Hardrock
    Mining also provided a good overview of the mining industry and the
    challenges faced by all as it relates to mining on public lands. I
    believe you will find that some of the proposed changes in that report
    might be better addressed through a change in law rather than through
    regulatory reform. The Good Samaritan clause which I noted above is
    just one example of a recommendation found in that report.
        Some proposals for changing the current law will be easier to reach
    consensus on than others. But as a person with over 32 years of
    experience in public land management, I have found that there is much
    more commonality in our population's basic desires than differences.
    Most of us, including those who work in extraction industries, want
    clean water and air, and a healthy environment for plants, animals, and
    humans. We want productive and sustainable ecosystems. We want
    opportunities to use public lands for recreational pursuits and we want
    these lands managed in a manner that will help sustain our communities
    and local economies. In other words, we want our public lands to be
    managed for multiple uses, recognizing that today these assets are
    valued as much for wilderness as they are for commodity production.
    This is the basic foundation that your subcommittee should build on
    when reviewing and amending any law affecting public land management.
        I will quickly highlight some of these areas where I believe you
    will find general support for change and then use my remaining time to
    identify other issues which I hope you will take into consideration in
    future discussions.
        While the specific amount of any royalty assessed for the
    production of mineral materials from our nation's public land will be
    subject to further debate, there is little doubt in my mind that most
    people and interest groups support the principle of collecting a fair
    and equitable royalty for the privilege of extracting minerals from the
    public's land. There is a general acceptance and strong public demand
    for holding companies doing business on public lands accountable for
    complying with specified environmental and health standards and for
    holding these same companies liable for short or long term damages
    which might occur from their commercial operations. Most people I have
    encountered feel that conveyance of public land tracts under the
    provision of any mining law should be at fair market value and not
    based on historic patent fees. Unlike some who might oppose mining
    under any circumstance, most Americans understand the benefits we
    derive from mining and these same people believe that with adequate
    safeguards, mining is a legitimate use on our public lands. People,
    especially those in the rural West, know the economic benefits that can
    be derive from mining operations and many support a strong and viable
    mining industry.
        I recommend that the subcommittee evaluate the feasibility of using
    the Forest Service and BLM's land use planning processes as the
    mechanism for identifying the appropriateness of making available
    specific tracts of public lands for mining. Both agencies' planning
    processes are open to public scrutiny and input and include
    opportunities for state and local governments to participate as
    cooperating agencies. Mining claims could then be staked and
    development proposed on any public land deemed appropriate for such use
    as determined through a land use plan decision. Whether a mine would
    ever be built depends on a number of factors including having a
    sufficient mineral deposit that is economically feasible to mine. The
    agencies' final decision would be based on site specific analysis, much
    like is done today. Under this scenario the agency, with industry and
    public input, would have the opportunity to review any mining proposal
    as part of its overall multiple use mandates. The final decision would
    be based on science and other contributing factors but not on
    requirements found in an antiquated law.
        The amount of land needed for mill sites and or other
    administrative support functions should be determined through the site
    specific analysis and not be subject to an arbitrary or self imposed
    requirement as now proposed in the draft language. The life of the
    mining plan and reclamation requirements should also be addressed as
    part of the initial analysis and I would hope that Congress would not
    place any requirements for subsequent reviews unless there is a
    proposed modification to the mining plan or significant new information
    is obtained from monitoring. The exception to my recommendation would
    be the need to routinely review and update bonds to ensure full
    coverage for reclamation requirements. Consistent with BLM and Forest
    Service planning regulations, mining proponents or members of the
    public will have the opportunity to protest or appeal any agency
    decision which an individual or the industry proponent believe is
    flawed.
        As part of your review, I also recommend that Congress entertain
    language to address the manner in which we manage for common versus
    uncommon variety of minerals. To the degree possible, I would propose
    that Congress insist that clays, sands, and/or other aggregate
    materials be made available as appropriate under a competitive sale
    procedure. Determining whether these materials are of common variety or
    not is a time consuming and workload intensive process. Incorporating a
    provision authorizing the affected land management agencies to sell
    these materials versus dealing with them in the same manner as precious
    metals would be an improvement over existing law.
        As a former agency administrator, I hope that any change to the
    current law will provide some form of financial assistance or
    encouragement for prosecuting individuals engaged in mining fraud or
    scam operations. Given the demands placed on the Justice Department,
    prosecuting people engaged in mining scams is given little priority. As
    a result, innocent people are being taken advantage of by scam artists
    who are, in some cases, making substantial sums of money. If a source
    of funding were made available to the U.S. Attorney's office for
    investigations and prosecutions, then the number of scams might be
    substantially reduced and innocent people, many of whom are elderly,
    might be better protected.
        Finally, whether you amend the General Mining Law or not, I believe
    there needs to be greater Congressional attention given to staffing the
    agencies with sufficient numbers of personnel as well as with the
    expertise needed to ensure appropriate reviews of mining proposals and
    the monitoring that is often required for approved operations. The
    agencies have been operating at an extreme disadvantage for quite some
    time when responding to their ``on the ground'' and administrative
    responsibilities. In many cases, agencies have relied quite heavily on
    contracted expertise for assistance. While using contractors to perform
    some of the mandatory reviews is not all bad, it is still important for
    BLM and Forest Service offices to have some of their own expertise when
    carrying out their public land and environmental compliance
    responsibilities. The subcommittee's intention to offset the cost of
    administering mining related programs through fees and/or cost recovery
    is commendable. However, the challenges of recruiting for quality
    personnel and scarce skills increase considerably when there is an
    uncertainty of reliable funding sources from year to year.
        It is common for BLM offices to use mining engineers or geologists
    to respond to mining notices, review mining plans and prepare the
    related NEPA documents, respond to public comments, conduct
    inspections, take enforcement action on noncompliance, help in the
    writing of records of decisions, calculate appropriate bond amounts for
    approved operation, and assist the Office of the Solicitor and the U.S.
    Attorney's office in the defense of matters which are litigated. These
    same employees are likely to be part of interdisciplinary planning
    teams as well as perform work in other programs, like oil, gas, or
    geothermal leasing and production. The reality is that most BLM field
    offices in Nevada and elsewhere in the rural West have only one mining
    engineer or geologist to do all of the above. The exception is those
    offices with heavy oil and gas workloads which usually have access to a
    number of mineral specialists. While the agency has generally done well
    in staffing up for its heavy oil and gas work, the same cannot be said
    for its hardrock mining program.
        Mr. Chairman, this is the end of my prepared remarks and I would be
    happy to respond to any questions you or members of your subcommittee
    might have.
                                     ______

       Response to questions submitted for the record by Robert V. Abbey

    1.  In your testimony, you noted that many of the mines that are being
            developed today will have some long-term impacts on water that
            will require treatment. You mentioned a mine approved while you
            were BLM State Director that will require extensive long term
            treatment facilities to be put in place.
          Do you think the BLM should permit a hardrock mine that
    we know will require perpetual water treatment?
          Are there provisions in H.R. 2262 which you think would
    help BLM address water quality and quantity issues from hardrock
    mining?
        I do not believe the BLM should permit a hardrock mine if the
    agency knows for certain at the time a mine is proposed that perpetual
    water treatment will be required. Having said this, I also know just
    how difficult it is to make a determination that the operation will
    actually require perpetual water treatment. The ore to be mined, the
    location of the mine site, and the proposed methods of mining are all
    taken into account in the agency's analysis of the proposal. While it
    is possible to make good assumptions based on this initial analysis and
    from evaluating the data generated through modeling, there is still
    some degree of uncertainty as to what the long term impacts might truly
    be. This is the reason that monitoring and possible adjustments to the
    mining plan are so important during the life of the mine operation.
        Whenever an agency official approves a new mine, it is important
    that mitigation measures addressing possible impacts be included in the
    decision document. In the case of proposals where there is insufficient
    information to make long term predictions, the agency should require
    financial assurances from the proponent to provide for the full cost of
    any long term mitigation, including perpetual water treatment, if it is
    determined from monitoring that such action is required. This is
    precisely what the BLM required of Newmont when approving the Phoenix
    Mine in Lander County, Nevada. In this example, the BLM required
    Newmont to create a trust fund that would be the basis for funding any
    long term water treatment facility. I should note that due to recent
    proposed changes in the Phoenix Mine plan of operation the need for any
    perpetual water treatment program at that site will be greatly reduced
    if these changes are approved.
        While H.R. 2262 proposes several actions which, if implemented,
    will help the BLM address water quality and quantity issues from
    hardrock mining, there are BLM and U.S. Forest Service regulations and
    policies already in place which accomplish the same goals. The passage
    of H.R. 2262 would make these provisions a matter of law and thereby
    provide assurance that existing policies and regulations would not be
    changed that could result in less stringent actions relating to water
    quality and quantity issues.
    2.  You mentioned the importance of regular review and updating of
            bonds to ensure full coverage for reclamation; as you know, the
            Government Accountability Office in 2005 identified weaknesses
            at BLM in this area.
          Do you think BLM's current regulations on financial
    assurances are adequate?
          Do you think H.R. 2262's requirements for financial
    assurances will help ensure regular review and updates of bonds for
    mining on BLM lands across the west?
          Do you think there is a need to set forth clear rules
    about financial assurances for long-term water treatments as detailed
    in Section 305(g) of H.R. 2262?
        I do believe the BLM's current regulations on financial assurances
    are adequate. Unfortunately, there is a general lack of staff expertise
    to keep up with the work. Even in BLM offices where qualified staff
    might be located, competing workloads often times keep these offices
    from updating bonds when required.
        The applicable provisions addressing this requirement in H.R. 2262
    will increase the chances that BLM will give higher priority to
    updating bonds and hopefully, provide funding to hire the expertise
    needed to assure appropriate bonding for all mining on BLM administered
    lands. Without some provision of law, the BLM offices will continue to
    address this workload on a case by case basis.
        Section 305(g) of H.R. 2262 will provide a general standard(s) for
    addressing long term water treatments which I don't believe exist
    today. During my tenure as the BLM Nevada State Director, our office
    was given little guidance or direction from the BLM's office in
    Washington, D.C. regarding long term water treatment facilities or
    requirements for addressing this need. We were left to develop our own
    requirements in order to move forward with proposals for new mines in
    Nevada.
                                     ______

        Mr. Costa. Thank you, Mr. Abbey. You went a little past
    there, but, as I said, I do try to be somewhat flexible, and we
    thank you for your testimony.
        Mr. Abbey. Thank you.
        Mr. Costa. Our next witness, actually, the last witness on
    this panel is Mr. William Molini.
        Mr. Molini. That is correct.
        Mr. Costa. Former Director of the Nevada Department of
    Wildlife. Today I understand you're testifying on behalf the
    sportsmen and a representative of the Theodore Roosevelt
    Conservation Partnership organization; is that correct?
        Mr. Molini. That's correct.
        Mr. Costa. All right. You've got five minutes.

    STATEMENT OF WILLIAM MOLINI, FORMER DIRECTOR, NEVADA DEPARTMENT
                              OF WILDLIFE

        Mr. Molini. Chairman Costa, Congressman Heller, I really
    appreciate the opportunity to appear before you today and offer
    these comments.
        My name is William Molini, and I am here today to represent
    the interests of hunters and anglers which are part of
    Sportsmen United for Sensible Mining, a campaign that's being
    led by the Theodore Roosevelt Conversation Partnership, Trout
    Unlimited, and the National Wildlife Federation.
        I'm a third-generation Nevadan myself, and I spent some 30
    years working for the Nevada Department of Wildlife, over 16 of
    those years as its Director. The primary purpose for my
    testimony today is to address the long-standing need for the
    reform of the General Mining Law of 1872.
        Nevada has the highest percentage of public lands outside
    of any state except Alaska, most of these lands managed by the
    Bureau of Land Management and the U.S. Forest Service. These
    lands provide the primary habitat for over 600 species of fish
    and wildlife that reside in our state.
        These same lands provide the major resource base for
    hardrock mining and minerals. And therefore, we have kind of an
    inherent situation for conflict between mineral extraction and
    maintenance and enhancement of fish and wildlife habitat.
        These public lands in Nevada, for example, provide nearly
    all of the habitat for the three subspecies of bighorn sheep
    which we have here, and we're the only state that has all three
    subspecies in one single state. And that's the desert bighorn
    and California bighorn sheep and the Rocky Mountain bighorn
    sheep. Again, they live almost exclusively on public lands.
        Public lands also provide a considerable habitat for
    pronghorn, mule deer, Rocky Mountain elk, and mountain lion in
    this state. They provide the primary habitat for most of our
    upland game like chukar and gray partridge and sage grouse.
        The majority of the stream trout fisheries, including those
    for the threatened cutthroat trout, are found in public lands.
    Therefore, I think it's obvious that productive public lands
    are very important, not only to the sportsmen of Nevada, but to
    hunters and anglers, I think, across the country.
        Mining is tightly linked with the history of Nevada, and
    that's been referred to before. Certainly, in the early history
    of the state, mining was the pivotal industry in settlement of
    the state. Mining is still a significant and important industry
    in Nevada with significant economic impact in many of the rural
    communities--Elko, Carlin, Eureka, Battle Mountain, Winnemucca.
        Hunting and fishing also play major economic roles in the
    state. And according to the 2006 national hunting and fishing
    survey, hunting and fishing generated $280 million in revenue
    in the State of Nevada.
        What I would like to relate to you is, during my tenure as
    Director of the Department of Wildlife, I spent a great deal of
    time working with the mining industry. And I think our agency
    and the mining industry established a very solid record of
    accomplishment in addressing the more urgent challenges that
    faced fish and wildlife.
        As an example, with the resurgence of gold mining in the
    late '70s and early '80s, we encountered an unexpected loss of
    migratory birds as a result of sodium cyanide solution ponds.
    Working closely with the industry over time, we were able to
    resolve most of that conflict by requiring covering of the
    ponds with netting or by other means, and the industry
    complied.
        I think it's fair to say in my experience that, especially
    at the larger gold mines, we're not only responsible but we're
    responsive, and we did have a positive working relationship.
        On behalf of the Sportsmen United for Sensible Mining, we
    have come up with four tenets that we think should be included
    in any revision of the 1872 Mining Law, the first of those
    being a royalty, as has been discussed by others.
        Sportsmen are used to paying for the management of wildlife
    and habitat improvement through license fees and excise taxes
    on hunting and fishing equipment, so we think it's appropriate
    for mining companies that derive significant benefit from
    public lands to pay a royalty to help with rehabilitation of
    wildlife habitats that have been impacted by mining.
        Second, we look to strengthen protection for fish and
    wildlife and water resources from potential mining impacts by
    providing Federal land managers with clear legal and regulatory
    authority to assure adequate reclamation of mining sites.
        The third tenet is to give Federal resource managers
    discretion to protect the highest-valued fish and wildlife
    habitats from mining use. And Title II of H.R. 2262 makes such
    provision with the exception of national wildlife refuges,
    which we think should be included.
        Our final recommendation is that a reform of the Mining Law
    should provide Good Samaritans with reclamation incentives and
    commonsense liability.
        Again, I'd like to thank you, Mr. Chairman and Congressman
    Heller, for holding this hearing here. We look forward to
    working with your Committee as you work to revise the Mining
    Law of 1872. And certainly we look forward to working with
    Senator Reid and the rest of the Nevada delegation.
        Thank you.
        [The prepared statement of Mr. Molini follows:]

      Statement of William A. Molini, Sportsman and Representative of the
                  Theodore Roosevelt Conservation Partnership

        Chairman Costa and members of the Subcommittee, I greatly
    appreciate the opportunity to address the subcommittee today. My name
    is William Molini, and I am here today to represent the interests of
    hunters and anglers who are part of Sportsmen United for Sensible
    Mining, a campaign led by the Theodore Roosevelt Conservation
    Partnership, Trout Unlimited and the National Wildlife Federation. I am
    a third-generation Nevadan, and I worked for 30 years for the Nevada
    Department of Wildlife and served as the director of that agency for
    more than 16 years. I also served on the State of Nevada Environmental
    Commission for 16 years. I have been retired for several years, and,
    besides doing mostly volunteer work for the conservation of fish and
    wildlife, I spend a good deal of time enjoying hunting and fishing on
    the public lands and waters of Nevada. The primary purpose of my
    testimony today is to address the long-standing need for reform of the
    General Mining Law of 1872.
        Nevada has the highest percentage of public lands of any state in
    the West except for Alaska, and these public lands, primarily managed
    by the U.S. Bureau of Land Management and the U.S. Forest Service,
    provide the vast majority of habitat for the more than 600 species of
    fish and wildlife that reside in our state. These same lands provide
    the major resource base for hard rock minerals and, therefore, for
    mining in Nevada. Thus, there is inherently the circumstance for
    conflict between mineral extraction and the maintenance of fish and
    wildlife habitat. These public lands constitute nearly all of the
    desert, Rocky Mountain and California bighorn sheep habitat in Nevada
    and provide a large majority of the habitat for pronghorn, mule deer,
    Rocky Mountain elk and mountain lion. They likewise support the primary
    populations of upland game, such as chukar, gray partridge and sage
    grouse. The majority of stream trout fisheries, including for the
    threatened Lahontan cutthrout trout, are found on public lands. About
    90 percent of the state's big game and upland game hunting takes place
    on public lands, as does most of the stream trout fishing. Therefore,
    productive public lands are vitally important to Nevadan sportsmen.
    These lands also supply most of the water to our rivers, lakes and
    wetlands that accommodate considerable fishing and waterfowl hunting
    opportunities. Clearly the public lands of Nevada are very important to
    local sportsmen, as well as to hunters and anglers from across the
    country.
        Mining is tightly linked with the history of Nevada, and for much
    of its early history it played a pivotal role in the settlement of the
    state. Mining continues to be an important industry in Nevada and one
    that has significant economic impact in several rural communities, such
    as Elko, Carlin, Eureka, Battle Mountain and Winnemucca. Hunting and
    fishing also play a major economic role in Nevada, generating more than
    $280 million in 2006. During my tenure as director of the Nevada
    Department of Wildlife, our agency had considerable interaction with
    the mining industry, and, over time, we developed a solid record of
    working together to address some of the more urgent challenges that
    faced wildlife because of mining activities. One of the most pressing
    in the early days of gold mining resurgence in Nevada (late 1970s and
    early 1980s) was the unexpected loss of migratory birds at sodium
    cyanide solution ponds. Working with the industry on various potential
    resolutions, we ultimately concluded that lethal ponds must be covered
    by mesh netting or other means--and the industry complied. The industry
    further worked with us to develop legislation that provided for an
    assessment on the tonnage of ore mined that would help fund the
    Department's costs associated with mining activities; this program is
    still in place. However, while these assessment fees originally were
    adequate for the Department's need to address immediate mining impacts,
    they never were intended to address the long-term needs of wildlife,
    and, in fact, the revenue from these fees has decreased in recent years
    because of mine consolidation.
        Certainly placing a major gold mine in important wildlife habitat
    has impacts on the habitat and associated wildlife. Some of these
    impacts, such as direct habitat loss and displacement of animals by
    mine activity, may be short term or long term, depending on the habitat
    type or the type of animal and its behavior, as well as the life of the
    mine. Whatever the case, considering the many variables, some negative
    impact will occur. Water quality may be the impact that is most
    persistent and challenging to address. We seek to help minimize these
    impacts through reform of the 1872 law. While many mining impacts can
    be mitigated to various degrees, some of the long-term impacts remain
    unknown.
        The General Mining Law of 1872 may have served the country well in
    the early years of Western expansion, settlement and development, but
    clearly the West is a far different place today with its well-
    established agriculture, rapidly expanding urban populations, and the
    increasing demand for water resources and outdoor recreation. Sportsmen
    United for Sensible Mining strongly believes that it is time to reform
    the Mining Law of 1872 to better address the needs of today's society,
    and to that end we have developed guidelines as tenets that we ask to
    be included in any mining law reform and that are, for the most part,
    included in H.R. 2262.
        The first guideline is to assess a royalty on any mineral mined
    from public lands to fund fish and wildlife conservation programs and
    abandoned mine reclamation. I already have covered the high value of
    public lands to wildlife and to sportsmen. Since sportsmen long have
    provided funding for wildlife management, habitat maintenance and
    improvement through license fees and excise taxes on fishing and
    hunting equipment, it seems appropriate to us that mining companies,
    which benefit significantly from public land resources and which impact
    fish and wildlife, should share in the cost of rehabilitating and
    improving fish and wildlife habitats. We believe that royalty payments
    should be collected into the federal treasury and then be reallocated
    to the state fish and wildlife agencies, conservation organizations and
    private entities for wildlife and habitat management and improvement
    purposes.
        Our second guideline is to strengthen protection for fish, wildlife
    and water resources from the potential impacts of mining. We believe
    that federal land managers need clear legal and regulatory authority to
    assure adequate reclamation of mining sites. Even more importantly, we
    believe that the sale of public lands under the patenting provisions of
    the current law is particularly troubling for future management of
    public fish and wildlife habitat and for hunting and fishing access. We
    therefore request that the law be reformed to prohibit the patenting or
    sale of public lands.
        Our third tenet proposed for this legislation is to give federal
    resource managers discretion to protect the highest-value fish and
    wildlife habitats from mining use. Such areas are critical to the
    future viability and sustainability of fish and wildlife on public
    lands, and we believe the only way to protect these critical areas are
    to preclude mining on them. Title II of H.R. 2262 makes such provisions
    with the exception of national wildlife refuges, which we believe
    should be included.
        Our final recommended guideline is that a reformed mining law
    should provide ``Good Samaritans'' with reclamation incentives and
    common-sense liability. Companies and conservation organizations that
    have no connection to the abandoned mine waste or interest in re-mining
    the area should be allowed to return the land to other valid uses,
    following reclamation of the land to the extent feasible.
        Again, I would like to thank the Subcommittee for this opportunity
    to present the position of sportsmen on reforming the Mining Law of
    1872. We look forward to working with Chairman Costa, the Subcommittee
    and of course with Sen. Reid and the rest of the Nevada delegation in
    formulating appropriate mining law reform. I hope that this testimony
    has been helpful to the Subcommittee and that you will give the
    recommendations presented here careful consideration in your future
    deliberations.
        Thank you.
                                     ______

      Response to questions submitted for the record by William A. Molini

    September 21, 2007
    Congressman Jim Costa
    US House of Representatives
    Chairman, Subcommittee on Energy and Mineral Resources
    Committee on Natural Resources
    Washington, DC 20515

    Dear Chairman Costa,

        Thank you again for the opportunity to testify at the Subcommittee
    on Energy and Mineral Resource Oversight Hearing on August 21, 2007 in
    Elko, NV and for the opportunity to respond to the Committee's
    question.
        In the 1990's the Nevada Dept. of Wildlife (NDOW) worked with the
    mining industry in Nevada to try and resolve some of the most serious
    immediate impacts to wildlife from mining activity. The most immediate
    threat was the loss of migratory birds from contact with sodium cyanide
    ponds associated with gold mining. As a result of this cooperative
    work, the Dept. of Wildlife was able to get legislation requiring
    mining companies to get a permit to maintain such ponds. In association
    with this permit was a per mine assessment based on the tonnage of ore
    processed. This assessment was capped at $10,000 per mine for any
    tonnage of 1,500,000 tons or more. This assessment was designed to help
    defray the costs to NDOW for working with mines on the many and varied
    wildlife issues. In the mid to late 1990's this assessment fee was
    generating around $500,000 annually. My understanding is that in 2006
    it produced only about $200,000 mainly because of mine consolidation.
    My concern in reference to the ponds is that we did get the money to
    reduce the threat but there was no laws requiring the mining companies
    to do so. That's why we need strong environmental protections in a
    federal law. The state acted because of the requirements of the
    Migratory Bird Treaty Act rather than from state mining law
    enforcement. I would rather see the problems be addressed up front--an
    ounce of prevention is worth a pound of cure.
        I also have concerns about long term effects where there remains
    many unknowns about such things as acid mine drainage, ground and
    surface water quality and abandoned mine reclamation.
        It seems only wise and prudent to have some funding through a trust
    fund or some other method with monies derived from a royalty to address
    such potential problems in the future. I believe that there will also
    be ample opportunities for fish and wildlife habitat enhancement in and
    around mine sites in the future where again having a source of funding
    for such work would certainly be highly beneficial for these resources,
    thereby mitigating the overall impact of mining.
        In closing, there are not adequate regulatory provisions in place
    to insure fish and wildlife resources will not be adversely affected or
    adequate funding to address future wildlife needs and mine restoration.
        Thank you again for the opportunity to answer your questions. Feel
    free to contact me.

    Onward and Upward,

    Willie Molini
                                     ______

        Mr. Costa. Yes, thank you very much, Mr. Molini. You went a
    little past the time, but we'll overlook that. Do appreciate
    your being here and your testimony.
        Now we begin the opportunity, for members of the audience
    who haven't been to a Congressional hearing before, to allow
    the members of the Committee to ask questions of the panel. The
    way that we do this is, in this instance, we do limit ourselves
    to five minutes, and we have an opportunity to go to the
    witnesses.
        I'll kind of be precise, and I may somewhat cut you short
    because I want answers to my questions because I only have five
    minutes. And then when I'm finished, Congressman Heller has
    five minutes. And we'll determine how many rounds we'll keep
    going with this panel, and then we'll start with the next
    panel.
        So with that understood, let me begin with Mr. Randolph.
        You indicated in your testimony about the impacts on water,
    and water is something that I'm familiar with in California
    because, as I said in my outset, water is the lifeblood of all
    of mankind in this world.
        Why isn't the Clean Water Act sufficient to protect water
    resources in Nevada or elsewhere in the West?
        Mr. Randolph. The difficulty with mining is that once you
    open it up, it's very hard to put it back together. And the
    Clean Water--specifically to your question, the Clean Water Act
    specifically deals with surface water issues. A lot of what
    we're dealing with here in Nevada are groundwater issues
    because a lot of the mines don't have surface water adjacent to
    them.
        Mr. Costa. I understand that. I got a better sense of that
    yesterday during my tours.
        Can you make a distinction or is it fair to make a
    distinction between current best management practices with some
    of the--and of course I toured what would be considered rural
    mines yesterday--versus the historic problems with some of
    those that have been abandoned and--
        Mr. Randolph. There's absolutely distinctions, but all of
    the examples that I used and all of the examples in my written
    testimony are mines that were permitted since 1980, actually
    the ones that I discussed today--actually, that's not true. The
    ones that you toured yesterday are prior to 1980, but I do
    think that they would consider themselves--we certainly do
    consider them modern mines, but there is a--
        Mr. Costa. There is a distinction.
        Mr. Randolph. There is a distinction, but unfortunately,
    there are modern mines which clearly are causing the current
    problem.
        Mr. Costa. Ms. Barkdull Spencer, given your work in the
    economic development area and the needs of rural counties,
    certainly we know these things are cyclical. And as Senator
    Reid indicated, Lighthouse, Nevada, that once used to be--
    Searchlight, I'm sorry. Searchlight, Nevada, I know better. But
    was once a booming mining area and no longer is. So what
    preparations are taking place here in Elko County 10, 20 years
    from today?
        Ms. Barkdull. Great question. As you will notice, Elko
    County Economic Diversification Authority is not a development
    authority. That's on purpose. My job specifically is
    diversification of the economy, meaning bringing more types of
    industry to this area that are not mining related. We are--
    we've become successful or are becoming more and more
    successful.
        Probably my largest project that is most well known is
    Northeastern Nevada Regional Railport and Industrial Park.
        Mr. Costa. I read about that. Do you think there's a
    problem with the counties? This is a state issue really, I
    guess.
        But in the case where many of the populations concentrated
    that work in the mines live actually in different counties than
    where the mines are located, and therefore the revenue benefits
    accrue in part to the county where the mines of course are
    located locally and not to necessarily where all of the workers
    live.
        Is that a problem?
        Ms. Barkdull. It could be viewed as a problem, yes.
        Mr. Costa. Depends on which county you live in.
        Ms. Barkdull. Exactly. You are correct.
        Mr. Costa. Mr. Abbey, on the hardrock mines, getting back
    to the water issue, can you give us any scope of the estimated
    long-term treatment that's going to be required, water
    treatment or perpetual water treatment, based on the mining
    impacts?
        Mr. Abbey. Well, I think you would agree many of the mines
    that are being developed today will have some long-term impacts
    that will mean treatment facilities. I can give you--I can't
    quantify exactly how many or to what extent, but I am familiar
    with one mine that we approved on my watch that will require
    extensive long-term treatment facilities so that--
        Mr. Costa. So it has to be put in place.
        Mr. Abbey. It will have to be put in place.
        Mr. Costa. My time is running out. There's other questions
    that I have, but Mr. Molini, since you were, in your previous
    life, were the Director of Nevada Department of Wildlife, I was
    very interested to learn that in the 1990s, that a lot of the
    state law changed to provide greater protections for mining and
    the impacts of mining in Nevada, and I think there are some
    lessons to learn there.
        Do you think those laws and regulations are adequate to
    protect fish and wildlife?
        Mr. Molini. I think they were certainly adequate at the
    time to address the immediate short-term problems. I don't
    think they were ever in--well, not ever, but they weren't
    intended for some of the long-term problems.
        And as you talk about water, I think there are long-term
    impacts that are yet unknown. But I'm certainly working with
    the industry, and they worked with us to develop legislation
    that provided for an assessment fee and industrial artificial
    pond permit, things that really didn't control it, that
    regulate the industry and cost them money that came back for
    wildlife needs. And it was very helpful.
        Although with mine consolidation, that source of funding
    has decreased in the recent past, but it was certainly very
    helpful for the short-term immediate impacts that needed to be
    addressed, like these birds landing on--
        Mr. Costa. Like pond controls. We've had similar problems
    down toward me.
        My time is expired, but let the record show that I asked
    the question with eight seconds left, and the answer took
    longer. So with that understood, I'd like to defer to the
    gentleman from Nevada, Congressman Heller.
        Mr. Heller. Thank you very much, Mr. Chairman.
        It's a pleasure to have all of you here with us today.
        If I can still call you Willie, I thought you--I thought
    I'd never see you testify in front of me again after--
        Mr. Molini. You were hoping.
        [Laughter.]
        Mr. Heller. I will tell you, you know I shared this with a
    lot of people here in this room, and you do too as an advocate
    of hunting and fishing. I guess there's not a lot of bow
    hunters here in the room today. I assume most of them are out
    doing what they do best.
        But I wanted to ask you a question, Willie, and that is on
    the issue of H.R. 2262. Do you support that bill?
        Mr. Molini. Well, I think there are provisions in it that
    we do support. We don't have a position on the amount of the
    royalty as an example, that sort of thing, but the basic tenets
    that I laid out for the most part are addressed in the bill.
    So--
        Mr. Heller. Well, my concern is that there would be a loss
    of some public lands if this particular bill passes. And if
    you're an advocate of hunting and fishing, it would be
    difficult to continue what you enjoy most if in fact you don't
    have access to some of the public lands that are out there.
        Mr. Molini. And I maybe didn't make myself clear,
    Congressman Heller, in my earlier testimony because I was
    running out of time so I skipped over some stuff, but we
    definitely do not want to see the loss of public lands. Our
    position is that the provisions on patenting and turning public
    lands into private lands is--we do not support that and hope
    that those provisions would be modified.
        Mr. Heller. OK. You said you don't have a position on the
    royalty itself. I've never had a bighorn sheep tag. Love to get
    a bighorn sheep tag. I believe you may have. I will continue to
    apply, though.
        But big game hunting, you can go by any mining claim that
    I've seen out there and you can see elk and deer and other big
    game that walk right across the stuff. I don't think that
    there's a real imbalance there between what wildlife does and
    what impact mining may have.
        I guess my question for you: Have you ever had an impact,
    bighorn sheep hunting, where mining has had an impact on your
    quality of hunt?
        Mr. Molini. Not personally that I'm aware of. I think
    there's potential, certainly, for impact in bighorn sheep
    habitat. I look at the Montana mountains and those California
    bighorns, pretty big populations, and it's ringed with mining
    claims. Now, what happens to those claims, whether they become
    active and what kinds of mines, that's all in the future.
        But I think we've certainly witnessed mining impacts on
    mule deer populations here in Elko County. Particularly mule
    deer, but the companies have been good in reclamation, and I
    just don't know if that reclamation over the long term will do
    the job, but I think we've made progress.
        Mr. Heller. OK. Elaine, real quickly, diversification, what
    other industries have you seen move into Elko outside of
    mining?
        Ms. Barkdull. We have small manufacturing and it's actually
    the skills that we possess here in this area because of mining
    that has led to those new industries being attracted to us. And
    it is fabrication of metals and then full-on full-sized brand-
    name manufacturing. And it's not only because of the skill
    level, because of the new rail port and new industrial sites
    that we're starting to develop.
        Mr. Heller. I appreciate the work that you're doing here.
        Mr. Randolph, I'm a little confused with your testimony.
    Are you advocating the Federal Government preempt Nevada's
    authority over its own water rights?
        Mr. Randolph. No, I am not. What I'm saying is that the
    public land agencies, that their primary responsibility for
    permitting land--the mines on public lands, they're the ones
    who are responsible for habitat and that, therefore, they need
    the ability to carry out that responsibility.
        Mr. Heller. Mr. Chairman, I'll yield back.
        Mr. Costa. Thank you. Jeez, you still have 52 seconds.
        Mr. Heller. I'm making up for it.
        Mr. Costa. Right. Well, we appreciate that. The Chair
    appreciates that.
        The witnesses here I think provide some helpful insight as
    to not only the current legislation that's before us but also
    ideas on how we might deal with some of the challenges as it
    relates to, not only individual states, but on any Federal law.
    So we want to thank you for your testimony.
        We will follow up with questions with members of the panel.
    And I as I told you, we have a ten-day rule that we would like
    you to respond by, ten days from the time that we've asked you
    the questions.
        So we very much appreciate your time and your testimony
    before the House Subcommittee, and we look forward to
    continuing to work with all of you as we try to fashion
    legislation that makes sense.
        So thank you very much for your time. And we'll move on to
    the next panel.
        The next group of folks that we have is Mr. Dean Rhoads,
    State Senator from Nevada, who is well known.
        The next individual is Mr. Russ Fields, President of the
    Nevada Mining Association.
        The third witness they have that we would like to come
    forward is Mr. Ronald Parratt, President of AuEx Ventures, Inc.
        And our final witness for this panel is Mr. Jon Hutchings
    from Eureka County Department of Natural Resources.
        And I believe we have all four of us--four of you, excuse
    me, seated, and hopefully you're comfortable. Get some water if
    you don't have any. And we'll begin with the gentleman who is
    no stranger to this to process, I assume, given his years of
    public service.
        Mr. Costa. Let's begin with The Honorable Dean Rhoads,
    Nevada State Senator.

                  STATEMENT OF THE HON. DEAN RHOADS,
                          NEVADA STATE SENATOR

        Mr. Rhoads. Thank you, Mr. Chairman.
        Chairman Costa and Congressman Heller, my name is Dean
    Rhoads. I've been a Nevada State Senator since 1985, and also
    served in the State Assembly in the late 1970s and early 1980s.
        I'm grateful for this opportunity to speak before you
    today, and I welcome you to northeastern Nevada where we
    treasure and respect our natural resources and appreciate a
    rather peaceful and quiet lifestyle.
        I know, Mr. Chairman, with your vast experience as a state
    legislator in California for nearly 25 years, you can
    appreciate my position in representing the needs of the diverse
    constituency spread across thousands of miles. Indeed, my state
    senatorial district is the largest in the United States,
    outside of Alaska. Comprised of over 73,000 square miles, it is
    larger than 34 states and represents about two-thirds of the
    land area in the State of Nevada.
        Also, my legislative district is home to almost all of the
    active mining operations in the state. Many of my citizens are
    directly employed by the mining industry, and thousands more
    work for businesses that support critical mining activities.
        As you know, Nevada is the nation's leading producer of
    precious metals, producing approximately 70 percent of the gold
    and 40 percent of silver.
        The proposed legislation seeks to address current practices
    concerning the issuance of patents for certain mining
    operations, proposes an eight percent net smelter return
    royalty on all future production of minerals on Federal lands,
    limits and revises existing practices for mining permits, and
    changes standards for reclamation and bonding.
        On the surface, these reforms seem logical, and we may be
    experiencing the best political climate in years to address
    these issues. However, I want to urge the Committee to tread
    carefully when considering such reforms.
        First, we must ensure that any reforms to the 1872 Mining
    Law do not cause significant job losses within the mining
    industry, result in mine closures, or discourage future
    investment in or exploration for new mines.
        One of the biggest concerns of my constituents in the
    mining industry is the proposed eight percent net smelter
    royalty on mineral production. As you may know, the State of
    Nevada already assesses a net proceeds of minerals and patented
    mine stacks, which is determined annually based on the actual
    production of minerals from all operating mines. Most of these
    proceeds benefit our local governments and rural schools.
        I question the wisdom of imposing any additional tax on the
    mining industry, and especially one that does not allow the
    deductions for certain mining production costs.
        According to the National Mining Association, many studies
    have shown that this type of royalty would result in job losses
    and substantial revenue losses to state and Federal treasuries
    and discourage mineral exploration.
        Any reforms should protect existing strong and sensible
    state-level mining regulations and current mining regulations
    that already do a good job of protecting the environment and
    monitoring key mining activities.
        For example, Nevada's mining regulations are well known for
    their comprehensive bonding and reclamation requirements,
    unmatched health and safety standards, widespread mine
    reporting and record-keeping mandates, and stringent permitting
    requirements.
        Nevada also has a very active and successful abandoned mine
    lands program, and Nevada's Division of Environmental
    Protection recently established cutting-edge regulations
    regarding mercury emissions. In addition, the Legislature just
    passed legislation further supporting the functions of the
    Nevada Mercury Air Emissions Control Program.
        Reform to the 1872 Mining Law should not allow the blanket
    closure of large tracts of Federal land for mining unless the
    closure can be justified in the national interests. The BLM
    Minerals Policy Statement clearly states that mineral
    exploration and development can coexist with other resource
    uses.
        While today's modern mining techniques have reduced the
    footprint on the landscape, many existing Federal laws and
    programs have already restricted mining on over half of all
    Federally owned public lands. In addition, such reform should
    guarantee and protect economic investment in mining.
        Such reforms, referred to by the National Mining
    Association as security of title, are critical to ensuring that
    capital investment can occur at a mine throughout the life of
    the mine.
        In conclusion, I would like to again thank you for making
    this trip to Elko County and the heart of American mining.
    Mining is very critical to our way of life here in the West. We
    appreciate your interests, and I also would like to submit for
    the record, Mr. Chairman, a comment from the General Mines,
    Incorporated--Idaho General Mines, Incorporated--on the
    Millennium Mine that Mr. Heller was talking about, for the
    record, for their suggestions and comments on the bill.
        [The prepared statement of Mr. Rhoads follows:]

              Statement of Dean A. Rhoads, Nevada State Senator,
                        Rural Nevada Senatorial District

        Chairman Costa and members of the Subcommittee, my name is Dean
    Rhoads. I have been a Nevada State Senator since 1985 and also served
    in the Nevada State Assembly in the late 1970s and early 1980s. I am
    grateful for this opportunity to speak before you today and I welcome
    you to northeastern Nevada, where we treasure and respect our natural
    resources and appreciate a rather peaceful and quiet lifestyle. I know,
    Mr. Chairman, with your vast experience as a state legislator in
    California for nearly 25 years, you can appreciate my position in
    representing the needs of a diverse constituency spread across
    thousands of miles.
        Indeed, my State Senatorial district is the largest in the United
    States outside of Alaska. Comprised of over 73,000 square miles, it is
    larger than 34 states and represents about two-thirds of the land area
    in the State of Nevada. Also, my legislative district is home to almost
    all of the active mining operations in the State. Many of my
    constituents are directly employed by the mining industry and thousands
    more work for businesses that support critical mining activities. As
    you know, Nevada is the nation's leading producer of precious metals,
    producing approximately 70 percent of U.S. gold and over 40 percent of
    U.S. silver. From a broader perspective, it is important to remind the
    Subcommittee that mining benefits each American citizen who uses a
    motor vehicle, owns a computer or appliance, participates in sports,
    wears jewelry, and uses a telephone. Additionally, mining is a vital
    element to the nation's national defense. Given these impressive mining
    statistics, it is fitting that you are here today to discuss reforms to
    the General Mining Law of 1872 as proposed in House Resolution (H.R.)
    2262.
        This proposed legislation seeks to address current practices
    concerning the issuance of patents for certain mining operations,
    proposes an 8 percent ``net smelter return'' royalty on all future
    production of locatable minerals on federal lands, limits and revises
    existing practices for mining permits, and changes standards for
    reclamation and bonding. On the surface, these reforms seem logical and
    we may be experiencing the best political climate in years to address
    these issues. However, I want to urge the Committee to tread carefully
    when considering such reforms. First, we must ensure that any reforms
    to the 1872 mining law do not cause significant job losses within the
    mining industry, result in mine closures, or discourage future
    investment in or exploration for new mines.
        One of the biggest concerns of my constituents and the mining
    industry is the proposed 8 percent net smelter royalty on mineral
    production. As you may know, the State of Nevada already assesses a
    ``net proceeds of minerals and patented mines tax,'' which is
    determined annually based on the actual production of minerals from all
    operating mines. Most of these proceeds benefit our local governments
    and rural schools. I question the wisdom of imposing any additional tax
    on the mining industry, and especially one that does not allow
    deductions for direct mining production costs. According to the
    National Mining Association, many studies have shown that this type of
    royalty would result in job losses and substantial revenue losses to
    state and federal treasuries and discourage mineral exploration.
        Any reforms should protect existing strong and sensible state-level
    mining regulations and current federal mining regulations that already
    do a good job of protecting the environment and monitoring key mining
    activities. For example, Nevada's mining regulations are well-known for
    their comprehensive bonding and reclamation requirements, unmatched
    health and safety standards, widespread mine reporting and record
    keeping mandates, and stringent permitting requirements. Nevada also
    has a very active and successful abandoned mine lands program and
    Nevada's Division of Environmental Protection recently established
    cutting-edge regulations regarding mercury emissions. In addition, the
    Legislature just passed legislation further supporting the functions of
    the Nevada Mercury Air Emissions Control Program. I would encourage you
    and your staff to review Nevada's comprehensive set of statutes and
    administrative regulations concerning mining to assist in the
    Subcommittee's reform efforts. Copies of these laws and regulations
    have been provided to you today. (See Title 46 of the Nevada Revised
    Statutes and Chapters 512, 513, 517, and 519A of the Nevada
    Administrative Code.)
        Reforms to the 1872 mining law should not allow the blanket closure
    of large tracts of federal land from mining unless the closure can be
    justified in the national interest. The Bureau of Land Management's
    Minerals Policy Statement clearly states that mineral exploration and
    development can coexist with other resource uses. While today's modern
    mining techniques have reduced the ``footprint'' on the landscape, many
    existing federal laws and programs have already restricted mining on
    over half of all federally owned public lands. In addition, reforms
    should guarantee and protect economic investment in mining. Such
    reforms, referred to by the National Mining Association as ``Security
    of Title,'' are critical to ensuring that capital investment can occur
    at a mine throughout the life of the mine. Without these economic
    assurances, necessary long-term capital commitments may be jeopardized.
        In conclusion, I would like to again thank you for making the trip
    to Elko County and the heart of American mining. Mining is critical to
    our economy and serves as the ``lifeblood'' for so many rural
    communities in the West. I urge you to consider the impacts that
    overzealous and widespread mining reform could have on our already
    economically fragile communities. I am sure you will agree that the
    possible unintended consequences of job losses and economic collapse
    are not the objective of mining reform. These are real possibilities
    for rural Nevada and the West if mining reforms are not fully debated
    and carefully analyzed.
        As I noted earlier, today's political climate is ripe for some
    reform of the 1872 mining law. As policymakers, we should never reject
    efforts to improve upon current practices in any industry. However, we
    certainly should proceed with caution when enhancing such a strong
    framework of existing state and federal mining laws that protect the
    environment, rural communities, and the ever-important mining industry
    that contributes unselfishly to our rural schools and local governments
    and touches the lives of every American in many ways.
        Thank you again for the generous opportunity to speak to you today.
                                     ______

        Mr. Costa. Without objection, we will enter those into the
    record. We thank you very much, Senator, for your very
    important testimony, and I look forward to asking you some
    questions when we get to that period in the panel. I do take
    your comments seriously. The first rule when we try to
    legislate is to do no harm.
        Anyhow, our next witness is Mr. Russ Fields from the Nevada
    Mining Association.

                 STATEMENT OF RUSS FIELDS, PRESIDENT,
                       NEVADA MINING ASSOCIATION

        Mr. Fields. Good morning, Chairman Costa.
        And thank you also, Congressman Heller. My own congressman,
    we really appreciate you being here in Elko.
        On behalf of the Association, I thank you for this
    opportunity to offer our comments on H.R. 2262. We particularly
    appreciate, as others have said, that you have come to Elko to
    be here with us in a community that is most affected by the
    proposed legislation.
        Mr. Costa. We're pleased to be here.
        Mr. Fields. Very good. I'd also like to thank Senator Reid
    for his comments earlier and his friendship and leadership.
        With respect to working for responsible mining law reform,
    I, too, was there in the Dale Bumpers' days, and we've got no
    finer friend than Senator Harry Reid, and we do appreciate him
    so much. He's opposed changes that would significantly burden
    this industry and these communities in Nevada.
        Thirty years ago, when I first testified before a
    Congressional Subcommittee, it was just down the highway here
    in a small town called Battle Mountain. At that time, the
    industry was firmly opposed to any changes to the General
    Mining Law. Today, the hardrock mining industry stands ready to
    work with Congress to arrive at some workable changes to the
    law, that will maintain the viability of the industry that is
    so critical to this state.
        First I want to address the extensive environmental
    reclamation requirements in the bill. As the Subcommittee is
    already aware, under current law, companies must comply with an
    array of regulations and laws that govern mining activities on
    public lands with regard to the environment. These include the
    so-called 3809 regulations of the BLM, the Part 228 regulations
    of the Forest Service. Both of these imposed comprehensive
    environmental and reclamation and financial assurance
    requirements on mining activities.
        You've heard already a little bit about the 1998 National
    Academy of Sciences, National Resource Council or NRC study
    that was done at the direction of Congress. It was there to
    assess the adequacy of the then-existing framework of
    regulations that govern mining and its ability to protect the
    environment.
        After conducting its comprehensive review, the NRC
    concluded that the then-existing laws were generally effective
    in ensuring that mining operations provide mining-related
    environmental protection. Subsequently, in 2001, the BLM went
    forward and amended the 3809 regulations to make them even
    stronger and more comprehensive.
        Mr. Chairman, as you heard yesterday, I believe, our state
    does impose comprehensive requirements related to the design,
    operation, closure, and reclamation of mining operations as
    well as wildlife protection at the hardrock mining facilities.
        Nevada has also adopted comprehensive reclamation
    regulations designed to ensure that these lands are cared for
    and properly closed.
        We believe that there is no need to graft onto the existing
    framework the requirements proposed by H.R. 2262. We think the
    existing framework will serve.
        Royalty. This is extremely important. The bill proposes an
    eight percent net smelter return royalty, which is essentially
    a gross royalty. We do not believe that this type of royalty
    fairly addresses the needs of the public or of the mining
    industry.
        To a large extent, as you've heard, we have no control over
    price. Therefore, it is impossible to pass on any additional
    cost.
        I bring to you for your consideration Nevada's model of the
    Nevada net proceeds of mines tax. This is a tax that has served
    the State and the industry very well since statehood, and we
    would be delighted to work with the Committee on how this
    Nevada model might be used to become, in a sense, essentially a
    production royalty or a production payment fee.
        So with that, Mr. Chairman, I'll conclude and thank you
    again for the opportunity to appear here.
        [The prepared statement of Mr. Fields follows:]

         Statement of Russ Fields, President, Nevada Mining Association

        Good morning, Mr. Chairman. I am Russ Fields, President of the
    Nevada Mining Association. On behalf of the association, I thank you
    for this opportunity to discuss our thoughts and concerns about the
    legislation you are considering, H.R. 2262. I particularly appreciate
    that you are bringing these hearings to the communities that would be
    most affected by the proposed Hardrock Mining and Reclamation Act.
        If you will permit me to begin on a personal note, I'd like to take
    you back in time for a moment--thirty years or so, to be exact. I was
    just a couple of years out of college with a degree in geology from
    Nevada's Mackay School of Mines, and I was testifying on many of the
    same issues we are facing today before a congressional subcommittee in
    Battle Mountain, Nevada. The topic then was the Federal Public Lands
    Management Act, also known as the Organic Act. It had followed
    publication of a federal report on the nation's public lands, titled
    ``One Third of the Nation's Land.''
        As you know, public lands in Nevada are somewhat more than one-
    third of the state's land--approximately 87 percent. Not surprisingly,
    public lands, and the uses to which those lands are put, are an
    important issue for all of us in Nevada.
        More than 30 years have passed since my first congressional
    testimony. I'm no longer a newly minted geologist--indeed, I've
    recently announced my retirement. I've spent my entire career working
    in or around this industry, as an employee, as a state regulator, and
    most recently, as an advocate for the mining association.
        In the past 30 years, I've seen almost as many changes in the
    industry as I've seen in myself. Like many industries, we've had our
    share of mergers and acquisitions. We've also seen environmental
    advances, production improvements, new mining exploration, and changes
    in mining regulation. Much of that regulation has been embraced or even
    driven by the industry itself--reclamation, hazardous materials
    handling, mine safety, and, most recently, mercury emissions. Thirty
    years ago, the industry was firmly opposed to any changes to the
    General Mining Law. Today, the hardrock mining industry stands ready to
    work with Congress on reasonable, workable amendments which will update
    the law but maintain the viability of an industry so critical to this
    community, this state and this nation.
        Some things haven't changed in Nevada since 1977: We still take
    public lands issues very seriously. And we take our stewardship of
    those lands equally seriously.
        Mr. Chairman, I know you have already heard, or will hear, the
    concerns of mining companies and other interested parties about the
    proposed Hardrock Mining and Reclamation Act. So, I am not going to
    offer an exhaustive analysis of the bill, but rather, would like to
    focus my comments on just a couple of items: First, the environmental
    and reclamation requirements; and second, the royalty provisions.
    A.  The Environmental and Reclamation Provisions of H.R. 2262 are
            Unnecessary
        Let me first address the extensive environmental and reclamation
    requirements that would be imposed by H.R. 2262 on hardrock mining
    operations in Nevada and throughout the West. As the Subcommittee may
    be aware, under current law, companies that engage in hardrock mining
    and related activities on the public lands are already subject to
    numerous federal and State environmental, ecological, and reclamation
    laws and regulations to ensure that operations are fully protective of
    public health and safety, the environment, and wildlife. These include:
    (a) the so-called ``3809 regulations'' administered by Bureau of Land
    Management and the ``Part 228 regulations'' administered by the Forest
    Service that impose comprehensive environmental, reclamation and
    financial assurance requirements on mining companies; (b) all of the
    major federal environmental laws administered by the U.S. Environmental
    Protection Agency (``EPA'') and/or delegated States (including NEPA,
    the Clean Air Act, the Clean Water Act, RCRA, CERCLA and EPCRA); (c)
    comprehensive Western State laws and regulations dealing with
    protection of groundwater and imposing requirements on the management
    and disposal of solid waste; and (d) wildlife protection statutes
    administered by the Department of the Interior and/or States (including
    the Endangered Species Act, the Migratory Bird Treaty Act, and the Bald
    Eagle Protection Act).
        In 1998--prior to BLM's 2001 amendments to the 3809 regulations to
    make them even stronger and more comprehensive--the National Academy of
    Sciences' National Research Council, at the direction of the Congress,
    assessed the adequacy of the then-existing regulatory framework for
    hardrock mining to assure environmental protection. After conducting a
    comprehensive review, the National Research Council concluded that the
    existing laws were ``generally effective'' in ensuring that mining
    operations provided ``mining-related environmental protection.''
    1
    ---------------------------------------------------------------------------
        \1\ Hardrock Mining on Federal Lands, National Research Council,
    89-90 (1999).
    ---------------------------------------------------------------------------
        The National Research Council's conclusions certainly ring true in
    Nevada. Our State imposes comprehensive requirements relating to the
    design, operation, closure, reclamation, and wildlife protection at all
    hardrock mining facilities. Pursuant to Nevada's environmental
    regulations (which are applicable on public as well as private lands),
    in areas of the State where annual evaporation exceeds annual
    precipitation (which include almost all areas where hardrock mining
    takes place), facilities must achieve zero discharge to surface water.
    NAC Sec. Sec. 445A.433(1)(a). Moreover, with minor exception,
    groundwater quality cannot be lowered below drinking water standards
    (including drinking water standards for heavy metals), and the
    concentration of weak-acid dissociable (``WAD'') cyanide in groundwater
    cannot exceed 0.2 ppm. NAC Sec. 445A.424(1). Mining operations must
    draw up and implement a program to monitor the quality of all
    groundwater and surface water that may be affected by their operations.
    NAC Sec. 445A.440. If monitoring reveals that any constituent has been
    released into groundwater or surface water, the operator must conduct
    an evaluation, and if appropriate, undertake remedial measures. NAC
    Sec. 445A.441.
        Land-based process components must comply with very stringent
    design standards, including standards dealing with engineered liners,
    leachate collection systems, and secondary containment systems. NAC
    Sec. 445A.434-435. There are also stringent rules regarding the
    treatment and monitoring of waste facilities and/or heaps at closure.
    See NAC Sec. 445A.430-.431.
        Nevada has also enacted and successfully implemented a law
    specifically designed to protect wildlife from dangers posed by
    artificial ponds containing chemical substances, including cyanide-
    bearing ponds that are often located at gold mining facilities. See NRS
    Sec. 502.390. The law and its implementing regulations impose permit,
    fencing, cover, containment, chemical neutralization, and reporting
    requirements tailored to the specific artificial ponds operated by the
    permittee and require the permittee to take all measures necessary to
    preclude any wildlife death due to contact with the artificial pond.
    See NAC Sec. 502.460 et seq.
        The State has also adopted comprehensive reclamation regulations
    designed to ensure that, after closure, lands used for mining
    operations are returned to a safe stable condition for productive post-
    mining use. The reclamation law and its implementing regulations
    specify, in some detail, the factors that must be addressed in a
    reclamation plan and that must be addressed by the regulators before
    approving that plan, to ensure that public health and safety and the
    environment are fully protected once mining operations have ceased.
        The Nevada reclamation law and regulations also require the
    operator to estimate the cost of implementing the reclamation plan as
    if the plan would have to be completed by a federal or state agency,
    and then to post financial assurance to assure that adequate funds will
    be available at the end of mining activities to assure that reclamation
    can be completed in accordance with the plan. NAC Sec. 519A.350. Forms
    of financial assurance include trust funds, surety bonds, irrevocable
    letters of credit, insurance, and in some cases a corporate guarantee.
    A corporate guarantee cannot, however, be used to cover financial
    assurance for more than 75% of the cost of reclamation (NAC
    Sec. 519A.350(7)); but in any event, in order to obtain a corporate
    guarantee, the operator must satisfy very stringent financial tests and
    must submit to annual review of its finances, in order to assure that
    it continues to meet that test. Id., NAC Sec. 519A.382. The State has
    also set up a bond pool mechanism for smaller operators to obtain
    financial assurance for their mining operations. See NAC Sec. 519A.510
    et seq.
        The comprehensiveness of Nevada's regulatory programs have been
    recognized by the U.S. Environmental Protection Agency. In a 1997
    report, the EPA praised the Nevada regulatory program applicable to
    gold mining facilities as ``the most advanced cyanide mill tailings
    facility regulatory framework'' in the nation. 2 This EPA
    report discusses in detail the ``extensive set'' of Nevada regulations
    that ``govern the design, operation and closure of mining facilities''
    in the State and how these regulations ``ensure'' that the ``design and
    operation of [each] facility is appropriate for the physical,
    geological and hydrogeological conditions at the site.'' 3
    Indeed, this EPA report concludes that, in virtually all respects, the
    Nevada regulations applicable to mining facilities are more protective
    of health and the environment then regulations that have been adopted
    by EPA for radioactive uranium and thorium mill tailings. 4
    The conclusions in this EPA report are consistent with both the views
    of the National Research Council noted above and the views expressed in
    1992 by EPA's Office of Pollution Prevention about the
    comprehensiveness of Nevada's regulatory programs. 5
    ---------------------------------------------------------------------------
        \2\ U.S. Environmental Protection Agency, Office of Solid Waste,
    Nevada Gold Cyanide Mill Tailings Regulation Sec. 1.1 (1997).
        \3\ Id., Sections 2.1, 2.2.1.
        \4\ Id. Table 2-1 and accompanying chart.
        \5\ See U.S. Environmental Protection Agency, Office of Pollution
    Prevention and Toxics, Cyanidization Mining Initiative 30 (March 9,
    1992) (``Nevada's regulations are considered to be among best and most
    comprehensive'').
    ---------------------------------------------------------------------------
        I should add that the mining industry has embraced--not fought--the
    enactment and implementation of these comprehensive environmental and
    reclamation laws and regulations. The reason is as I have said above:
    here in Nevada we take our stewardship of the public lands very
    seriously. For instance, in 1989, when Nevada passed the reclamation
    law, I was Executive Director of what was then the Nevada Department of
    Minerals. It shouldn't surprise anyone that I, as a state regulator,
    supported the measure. But it might surprise you to learn that
    representatives of major mining companies, as well as the director of
    the Nevada Mining Association, also testified in support. Back then,
    the director of the association had this to say:
            ``Reclamation is not new to Nevada mining. We are proud of the
            reclamation that has been, and is being, accomplished...Indeed,
            reclamation must be considered to be an integral part of mining
            itself.''
        As president of the association now, I can repeat without
    hesitation my predecessor's comments about reclamation: It's not new to
    Nevada, we're proud of what we're doing and what we'll continue to do,
    and we consider reclamation integral to mining.
        Given the industry's concern that public lands be adequately
    protected, you may ask why the Nevada Mining Association would oppose
    the environmental and reclamation provisions in H.R. 2262. The reason
    is straightforward.
        In view of the comprehensive federal and State regulations that
    already adequately ensure environmental protection and adequate
    reclamation of hardrock mining facilities, the Nevada Mining
    Association believes that there is no need to now engraft onto existing
    programs a whole new set of environmental and reclamation prescriptive
    requirements, as H.R. 2262 would do, that focus on the same
    environmental issues that are already dealt with adequately under
    existing laws. As the National Academy of Sciences found, the existing
    laws and regulations are fully adequate to ensure protection in all of
    these areas. Those laws and regulations already focus on the same
    environmental issues that are addressed in H.R. 2262, including soils;
    stabilization; hydrological balances; surface restoration; vegetation;
    excess waste; sealing; structures; cultural, paleontological and cave
    resources; road and structures; drill holes; leaching operations and
    impoundments; and fire prevention and control. Moreover, the existing
    laws and regulations have a proven track record, and are familiar to
    both operators and regulators. There is simply no need to require
    mining operators, and regulators, to learn a whole new set of rules,
    and to limit their discretion in ways not limited by current law, by
    imposing ``one size fits all'' prescriptive standards, as H.R. 2262
    would do in all of these areas.
    B.  A Net Smelter Return Royalty is Unfair and Will Lead to Mine
            Closures
        The second issue I would like to discuss is the royalty provisions
    of H.R. 2262. The Bill proposes an eight percent net smelter return
    royalty on all future production of locatable minerals on federal
    lands. We at the Nevada Mining Association do not believe that this
    type of royalty fairly balances the need to provide a fair return to
    the public with the needs of the minerals industry. A net smelter
    return is effectively a gross royalty since the Internal Revenue
    Service does not allow deductions for direct mining costs. Various
    studies have concluded that this type of royalty would result in
    significant job losses, substantial revenue losses to State and federal
    treasuries, mine closures and discouragement of new mines. 6
    ---------------------------------------------------------------------------
        \6\ See Otto, Mining Royalties: A Global Study of Their Impact on
    Investors, Government and Civil Society. Washington DC: World Bank,
    2006 at 3.
    ---------------------------------------------------------------------------
        To a large extent, this is because in the hardrock mining industry,
    we have no control over price--ours is a commodity market. Accordingly,
    a gross royalty makes it very difficult to adjust to economic
    downturns, which, in turn, would make us susceptible to significant job
    losses and mine closures during difficult times. Obviously, the effects
    of mine closures and lack of new exploration and mine openings would
    also result in loss of state and federal tax revenues. In a rural area
    such as those in which most Nevada mining occurs, a mine closure is
    particularly devastating across all sectors of the economy--not just
    mining.
        In contrast to a net smelter return royalty, a net income
    production payment based on production from new mining claims on public
    lands would provide the public with a fair return, but would also
    appropriately take into account the need to foster a strong domestic
    minerals industry. Such a payment could use a formula analogous to that
    used in the net proceeds of mine tax that has been in effect in Nevada
    since statehood. The net proceeds tax primarily funds the counties,
    cities, and school districts in which mining occurs, and that
    contribution is a significant one to these counties. In addition, the
    net proceeds tax provides millions of dollars every year to the state.
    Of course, this Subcommittee should not seek to impose a net proceeds
    tax on production, but rather, as noted above, a net income production
    payment or royalty, since the payment that should be required by any
    law approved by the Congress should only apply to production on public
    lands--not to all production in the State.
        Moreover, the net income production payment should only apply to
    claims located after the enactment of the production payment or royalty
    provision. Such an approach will protect financial expectations and
    sunken investments and prevent ``takings'' litigation.
        Thirty years ago, I first had the privilege of addressing a
    congressional subcommittee in our state. I believed then, and I believe
    now, that mining is good for this state. We are partners in our
    community and good stewards of the land. We have led the nation in
    reclamation. We provide jobs and revenues to our schools and local
    governments.
        The Nevada Mining Association does not oppose the development of a
    fair, predictable, and efficient national minerals policy through
    amendments to the Mining Law of 1872. This association and its members
    stand ready to work with you to achieve this goal. But we strongly urge
    that, in developing that policy and those amendments, this subcommittee
    consider the long-standing and successful history of the net proceeds
    model and local regulation--both of which have enabled this industry
    and the communities in which it operates to thrive and contribute to
    this state's and the nation's welfare.
        Mr. Chairman, it is an honor to present these views before you
    today.
                                     ______

        Mr. Costa. Thank you very much, Mr. Fields. And thank you
    for staying within your five minutes. We appreciate that.
    Couple questions I want to ask you when we get to that part of
    the panel.
        But our next witness is Mr. Ronald Parratt?
        Mr. Parratt. That's correct.
        Mr. Costa. With AuEx; is that correct? AuEx.
        Mr. Parratt. Close enough.
        Mr. Costa. All right. Well, how do you pronounce it?
        Mr. Parratt. We pronounce it A-U-E-X Ventures.
        Mr. Costa. Oh, A-U-E-X Ventures. Well, very good. Please
    begin your testimony.

                STATEMENT OF RONALD PARRATT, PRESIDENT,
                          AuEx VENTURES, INC.

        Mr. Parratt. Thank you, Chairman Costa, Congressman Heller.
    My name is Ronald Parratt. I'm an exploration geologist and
    present CEO of a company named AuEx Ventures. We're a small,
    publicly-traded company that focuses on gold exploration here
    in Nevada.
        I very much appreciate the opportunity to testify today and
    to summarize for you some of the ways in which H.R. 2262 will
    create serious impediments for mineral exploration and mine
    development on Federal lands.
        Nevada, as you know, will bear the brunt of this bill
    because most Nevada exploration projects and many of our
    producing mines are located wholly or partially on public
    lands. The end result will be potentially a serious economic
    downturn for Nevada's mining communities like Elko and even
    more reliance on foreign sources of minerals. As such, in my
    view, the current bill is contrary to the well-being of Nevada
    and our nation.
        During the 30 years I've been an exploration geologist,
    I've worked all over the western U.S. on public lands, but most
    of it here in Nevada. I directly manage exploration programs
    and have spent or perhaps risked over $150 million to drill
    many thousands of holes and have evaluated hundreds of
    exploration projects that ultimately led to the development of
    only three mines.
        Once a commercial deposit is found an additional investment
    of perhaps as little as $50 million to several hundred million
    dollars is typically required to build a mine and the related
    facilities. The entire process from exploration and development
    through mining construction and operation can easily take 6 to
    10 years, and potentially more.
        H.R. 2262 eliminates the right under the current mining law
    to use and occupy public lands for mineral exploration and
    development. Instead, the bill empowers Federal land managers
    with discretionary veto power to reject current applications
    for exploration and mining where mineral development is already
    allowed under current multiple use guidelines.
        The discretionary permitting process proposed in H.R. 2262
    ignores the fundamental geologic fact that commercial mineral
    deposits are rare occurrences.
        Mineral deposits cannot be moved. They need to be developed
    where they're found. And laws and regulations covering
    exploration and mining really must recognize and acknowledge
    this unique aspect.
        When I first started working here in Nevada in the late
    1970s, there were no environmental regulations governing
    attainable mineral exploration. There were no permits, no
    reclamation bonds, and unfortunately no reclamation at all.
        All that changed in 1981 when BLM's 3809 surface
    regulations for hardrock mining went into effect. These
    regulations implemented the Congressional mandate that mineral
    activities on public lands must be conducted in a manner that
    prevents unnecessary or undue degradation.
        The BLM updated these regulations in 1993 and in 2001, and
    as a result, no disturbance can be created on public land until
    an approved permit and an acceptable reclamation bond are in
    place.
        Our small company, for instance, has over $400,000 of cash
    that is in place covering bonds on eight projects. The
    regulatory controls, environmental protection mandates,
    reclamation bonding requirements that are already in place are
    appropriate for mineral exploration and mining on public lands,
    and I think are working well to guarantee that mineral
    activities are conducted in environmentally-sensitive ways.
        Another serious problem with H.R. 2262 is that Title III
    creates a burdensome permitting process for early-stage
    exploration projects by eliminating notice-level operations. In
    its place, Title III establishes a single permitting process
    for all mineral activities from simply drilling a couple of
    holes to building a mine without any consideration for the
    obvious and substantial differences in on-the-ground impacts of
    the two.
        The environmental impacts associated with exploration are
    predictable and well understood. They're temporary and they can
    be easily reclaimed. They consist mainly of building primitive
    dirt access roads, leveling out an area for a drill site, and
    digging a sump to collect tons. All of these disturbances can
    be fully reclaimed once drilling projects are completed.
        Title II of the bill, ``Protection of Special Places,''
    renders millions of acres off-limits to exploration and mining
    on which exploration and development are not currently
    prohibited.
        At the very least, no withdrawal should be made until an
    appropriate and careful study of the mineral resource potential
    has been completed. But really, better yet, these lands should
    remain open to exploration and mining.
        Please keep in mind that substantial land withdrawals have
    already occurred over the past decades, putting many millions
    of acres off limits to exploration and mining, including here
    in Nevada.
        I think with that, I'll thank you for the opportunity to
    testify here today.
        [The prepared statement of Mr. Parratt follows:]

              Statement of Ronald L. Parratt, President and CEO,
                              AuEx Ventures, Inc.

    Introduction
        Chairman Costa and members of the Subcommittee, my name is Ronald
    L. Parratt. I am an exploration geologist and President and CEO of AuEx
    Ventures, Inc. (AuEx), a small publicly-traded company that focuses on
    gold exploration here in Nevada. Prior to AuEx, I managed minerals
    exploration in Nevada for Santa Fe Pacific Gold and Homestake Mining
    Company for an aggregate of 24 years. I also serve as a member of the
    Nevada Commission on Mineral Resources. This seven member Commission is
    responsible for advising the Governor and the Legislature on matters
    involving mineral development, and directing policy and adopting
    regulations for the Nevada Division of Minerals. I was appointed to
    this Commission to represent the exploration segment of Nevada's
    mineral industry. Given the time constraints associated with preparing
    my written remarks, I am not speaking on behalf of the Mineral
    Resources Commission. However, the Commission is keenly interested in
    this legislative dialogue given the substantial problems H.R. 2262
    would create for Nevada's mining industry and will respond to this bill
    separately.
        I very much appreciate the opportunity to testify today and
    describe for you the many ways in which H.R. 2262 will create serious
    impediments for mineral exploration and mine development on federal
    lands. As the world's fourth largest gold producer, Nevada will bear
    the brunt of this bill because most Nevada exploration projects and
    producing mines are located wholly or partially on public lands and 87
    percent of Nevada is federal land. But H.R. 2262 will impact more than
    just Nevada's gold mines. Nevada is blessed with many other important
    mineral resources such as silver, molybdenum, copper, tungsten, and
    barite. Exploration for these important minerals will also suffer
    dramatically. The end result will be a serious economic downturn for
    Nevada's mining communities like Elko. But the adverse effects of this
    bill will extend far beyond Nevada. H.R. 2262 will make the U.S. more
    reliant on foreign sources of the minerals we use every day and need
    for our way of life. As such, H.R. 2262 is contrary to the well being
    of Nevada and our Nation.
        During my 30 years as an exploration geologist I have worked all
    over the western U.S. Nearly all of my work has been on western public
    lands, with most of it here in Nevada. My testimony is based on this
    experience and focuses on how H.R. 2262 will be especially problematic
    for exploration because it:
        1.  Increases the risks associated with mineral exploration and
    development on public lands by eliminating the current right to use and
    occupy public land for mineral activities;
        2.  Gives federal land managers discretionary authority to reject
    permits for exploration and mining on the basis of where a project is
    located--even if it can meet environmental protection criteria;
        3.  Eliminates the existing practical regulatory review process for
    exploration projects which cause limited disturbance that can be easily
    reclaimed and substitutes in its place a costly and cumbersome process
    that is overkill for exploration; and
        4.  Inappropriately withdraws millions of acres of public land from
    exploration and mining without due consideration for the resource
    potential of these areas or how placing these lands off-limits to
    mining will increase the Nation's reliance on foreign sources for the
    minerals we need to maintain our way of life.
    Exploration and Mining are Risky and Expensive--There is No Free Gold
        Exploration and mining are high-risk endeavors because mineral
    deposits are rare, hard to find, and expensive to develop. To
    illustrate this point, I would like to describe my own personal
    experiences to demonstrate the substantial risks and costs inherent in
    mineral exploration and mine development.
        During my 30-year career, I have directly managed exploration
    programs that have spent well over $150 million to drill many thousands
    of holes which have evaluated hundreds of mineral exploration targets.
    This huge investment resulted in only three discoveries that were
    ultimately developed into producing mines--the Lone Tree, Trenton
    Canyon, and Rabbit Creek Mines, all of which are located in Humboldt
    County, Nevada about 85 miles west of where we are today. That process
    of exploration, discovery and development took nearly two decades of
    persistence to accomplish. These mines have employed many hundreds of
    people starting in the mid-1980s and continuing to the present and have
    been an important economic engine that has helped drive the economy of
    this region for many years.
        Our company, AuEx which is now 4 years old, is actively exploring
    17 targets involving public land in Nevada. We and our joint venture
    partners will spend close to $4.0 million this year to test these
    mineral targets. Of course we hope this investment will result in one
    or more mineable discoveries--but there is no guarantee this will
    happen. It will likely take more investment, several years of
    exploration and a lot of luck to be successful. Most exploration
    projects fail to find commercial mineralization.
        I was told by a friend that a witnesses at an earlier hearing on
    this bill described mining companies taking what he called ``free
    gold'' from public lands. I hope that the exploration expenditure
    information that I have just mentioned convinces you that there is no
    free gold. It takes a substantial investment in exploration and
    development to find a mineable deposit. Once the deposit is found, an
    additional investment of from $50 million to several $100 millions is
    typically required to build the mine and related facilities. This
    entire exploration and mine development investment is made without
    knowing what mineral prices will be when the mine finally goes into
    production making fluctuations in metal prices an additional and
    substantial element of risk. The entire process from exploration and
    development through mine construction and operation can easily take 6
    to 10 years and even more. Once again--there is no free gold. It takes
    many millions of dollars, a long time, and a fair measure of good luck
    to develop a profitable mine which will hopefully pay back that
    investment.
    The Mining Law Must Accommodate the Substantial Risks Associated with
            Exploration and Mineral Development--Unfortunately H.R. 2262
            Increases the Risks
        I'm sure that H.R. 2262 will lead to a dramatic decline in mineral
    exploration on public lands because it adds land tenure and permitting
    risks to what is already a very risky endeavor. H.R. 2262 eliminates
    the right under the current Mining Law to use and occupy public lands
    for mineral exploration and development. Instead, H.R. 2262 empowers
    federal land managers with discretionary veto power to reject permit
    applications for exploration and mining on lands where mineral
    development is allowed consistent with multiple use principles.
        This discretionary authority to deny permit applications would
    allow federal regulators to make a judgment about an important mineral
    deposit and the associated investment to find it. To make matters
    worse, in making this judgment, H.R. 2262 does not require regulators
    to consider the Nation's need for mineral resources or to determine
    whether the proposed exploration or mining project can be developed in
    an environmentally acceptable way that complies with all applicable
    environmental protection standards. Instead, at any stage of the
    exploration and mine development process, federal land managers would
    have the ability to deny permit applications. This deviates
    significantly from the present permitting process in which applicants
    eventually can obtain permits to explore or mine once they prove the
    project will meet all environmental protection requirements and furnish
    an adequate bond to guarantee reclamation.
        H.R. 2262 puts mineral dollars at risk every step along the way of
    the mining life cycle, from exploration to mining. This added
    uncertainty will dramatically reduce--if not eliminate--mineral
    exploration and development on public lands.
        The discretionary permitting process proposed in H.R. 2262 ignores
    the fundamental geologic fact that mineral deposits only occur in
    specific and limited places as a result of special geologic conditions.
    Mineral deposits cannot be moved and must be developed where they are
    located. Laws and regulations governing mining must recognize and
    accommodate this unique aspect of mining--miners do not get to choose
    where mines are located. Unfortunately, H.R. 2262 ignores this
    essential geologic reality about exploration and mining.
    Exploration and Mining Require Secure Possession of the Land--H.R. 2262
            Eliminates Security of Land Tenure
        Under the current law, locating and maintaining mining claims gives
    the claim holder the right to be on the land for the purpose of making
    a mineral discovery and, if a discovery is made, the right to develop
    the claim. This right starts at the very beginning stage of
    exploration, when claims are staked, and extends through exploration,
    deposit definition, mining, and reclamation. Because discovering and
    developing a mineral deposit takes many years, it is absolutely
    essential that this right endure throughout the entire mineral
    lifecycle from initial exploration to discovery, to mine development,
    to mineral production, and finally to reclamation and closure.
        Starting in 1993, exploration and mining companies have had to pay
    the federal government for this right when Congress made a significant
    change to the Mining Law by requiring claim holders to pay fees for
    mining claims. These fees, including an initial claim location payment
    and an annual claims maintenance payment, are substantial. The current
    claim location fee is $30 per claim; the annual claims maintenance fee
    is $125. BLM also assesses a $15 processing fee and adjusts the
    location and claims maintenance fees every five years to reflect
    changes in the Consumer Price Index. Here in Nevada, claim owners also
    pay $8.50 per claim to the county in which the claim is located.
        These fees are a substantial part of a company's mineral
    exploration budget. For example, AuEx controls approximately 2,000
    mining claims for which we will pay just over $250,000 to BLM this year
    to keep these claims in good standing. These fees apply to all mining
    claims, at all stages of exploration and mineral development
    activities, regardless of whether the claim will eventually be mined or
    not. Fees are commonly paid in this manner for many years before a
    claim has any potential to become a paying mine.
        Prior to 1993, this fee did not exist. Instead, miners performed
    on-the-ground work, called assessment work, to maintain their claims in
    good standing. Eliminating assessment work (except for small miners)
    and substituting the claims fee system was a substantial change to the
    Mining Law.
        Today, rather than investing $250,000 of our company's resources
    this year in drilling or other on-the-ground work to advance our
    understanding of our mineral properties--as would have been the case
    prior to 1993--we give that money directly to the government. The
    payment of these fees should constitute a good-faith contract with the
    federal government that payment of all necessary fees guarantees claim
    owners like AuEx the right to use and occupy public land for the
    purpose of mineral exploration, development, and mining. This security
    of land tenure is absolutely essential to the future of exploration and
    mining on public lands. Without secure possession of our claims,
    exploration and mining will dramatically decline.
        Unfortunately, H.R. 2262 does not provide security of land tenure.
    Instead, it creates substantial land tenure uncertainties that will
    lead to a dramatic decline in exploration--which will ensure that the
    pipeline of new discoveries will dry up. Without a steady stream of new
    discoveries, domestic production of the minerals America needs will
    decline and eventually stop altogether, leaving the Nation even more
    reliant than we are today on foreign sources of minerals.
    The Environmental Title in H.R. 2262 is Unnecessary--FLPMA and the 3809
            Regulations Already Changed the Mining Law by Adding
            Comprehensive and Effective Environmental Protection Mandates
        The 1993 change to the Mining Law that established fee requirements
    for mining claims is not the only significant change to the Mining Law
    I have witnessed during that past 30 years. I have also experienced
    enormous changes in the way in which mineral exploration is conducted
    and regulated on public lands.
        When I first started working here in Nevada in the late 1970s,
    there were no environmental regulations governing mineral exploration.
    No permits or reclamation bonds were required. If you needed to build a
    road or drill some exploration holes, you simply did so as soon as you
    could find an available contractor to do the work. Unfortunately,
    reclamation was not required.
        All of that changed dramatically in 1981 when BLM's 43 C.F.R.
    Subpart 3809 surface management regulations for hardrock mining went
    into effect. These regulations implement the Congressional mandate in
    the Federal Land Policy and Management Act of 1976 (FLPMA) that mineral
    activities on public lands must be conducted in a manner that prevents
    unnecessary or undue degradation. BLM updated these regulations in
    2001. No disturbance can be created on public land until an approved
    permit and an acceptable reclamation bond are in place.
        As a result of the 3809 regulations, and the Nevada state
    reclamation statute enacted in 1989, mineral exploration today is
    highly regulated. Other states have enacted similar reclamation and
    bonding requirements.
        Mining-industry critics often assert that the Mining Law contains
    no environmental protection requirements. This distortion fails to tell
    the whole story. FLPMA and the 3809 regulations dramatically changed
    how exploration and mining are conducted on public land, resulting in a
    significant de facto evolution of the Mining Law in response to modern
    environmental awareness and protection objectives.
        Therefore, as this Subcommittee considers H.R. 2262, especially the
    environmental provisions in Title III, I would like to ask you to keep
    in mind how quickly and substantially the environmental regulatory
    requirements for exploration and mining have evolved. In a period of
    only 26 years, we have gone from no regulation to truly comprehensive
    regulation. From no bonding requirements to an effective bonding
    program in which BLM holds nearly $1 billion in reclamation bonds for
    hardrock mineral projects.
        To put the bonding requirements into perspective, my company
    currently provides close to $400,000 in financial assurance (and these
    are cash deposits) to BLM to guarantee reclamation on eight of our
    Nevada exploration sites. BLM and state regulators--not AuEx--have
    determined that this is the appropriate bond amount based upon what it
    would cost these agencies to reclaim our sites. On average, our bonds
    require $3,000 to $4,000 or more of reclamation cost per acre of
    disturbance--substantially more than the value of typical outlying
    Nevada real estate. There should be no doubt that we are taking very
    good care of this land and are serious about our reclamation
    obligations.
        The point I wish to emphasize here is that there is already a
    robust system in place to ensure reclamation and environmental
    protection at mineral exploration and development sites. The regulatory
    controls, environmental protection mandates, and reclamation bonding
    requirements that are already in place are appropriate for mineral
    exploration and mining on public lands, and are working well to
    guarantee that mineral activities are conducted in an environmentally
    sensitive way. There is no need to throw out the current system and
    substitute in its place the draconian changes proposed in Title III of
    H.R. 2262.
        It should also be noted that reclamation bonding for initial
    exploration projects is a relatively new requirement. BLM started
    requiring bonds for exploration projects that disturb fewer than five
    acres in response to one of the recommendations in the Congressionally-
    funded National Research Council (NRC) study entitled ``Hardrock Mining
    on Federal Lands'' This 1999 study made the recommendation that bonds
    should be required for all exploration and mining activities that
    involve the use of motorized equipment off of existing roads.
        BLM implemented this recommendation when it issued the revised 43
    CFR 3809 regulations in 2001. This addition of bonding requirements for
    initial exploration project represents yet another significant change
    to operations under the Mining Law.
    H.R. 2262 Creates a One-Size-Fits-All Permitting Process for
            Exploration and Mining that is Inappropriate for Initial
            Exploration Projects
        Another serious problem with H.R. 2262 is that Title III creates a
    burdensome permitting process for initial exploration projects by
    eliminating Notice-level operations. In its place, Title III
    establishes a uniform permitting process for all mineral activities--
    from drilling a couple of holes to building a mine, without any
    consideration of the obvious and substantial differences in the on-the-
    ground impacts between the two.
        The environmental impacts associated with exploration are
    predictable, well understood, temporary, and can be readily reclaimed.
    They consist mainly of building temporary and fairly primitive dirt
    access roads, leveling out an area for each drill site, and digging a
    sump to collect drilling fluids. All of these disturbances can be fully
    reclaimed once the drilling project is completed. A hundred or more
    early-stage exploration projects are permitted now each year. Some
    photographs of exploration drilling and road building are included with
    this testimony to show the very limited nature of the surface
    disturbance impacts typically associated with exploration.
        Section 302 of H.R. 2262 eliminates the current two-tiered
    permitting system in which initial exploration drilling programs are
    regulated under BLM's 3809.300 series regulations for Notice-level
    operations. A BLM-approved Notice allows the permit holder to disturb a
    maximum of five acres of public land, with the requirement that all
    disturbance must be bonded and must comply with the FLPMA environmental
    protection mandate at 43 U.S.C. Sec. 1732(b) to prevent unnecessary or
    undue degradation. The 3809 environmental performance standards at 43
    C.F.R. Sec. 3809.420 implement this FLPMA mandate.
        The Notice approval process typically takes about 30 days as BLM
    reviews a Notice application to evaluate whether there are any special
    on-the-ground issues that need to be protected, to verify that the
    proposed exploration work will not create unnecessary or undue
    degradation, and to make sure that a sufficient financial guarantee is
    being provided.
        This relatively straightforward and streamlined permitting process
    is both appropriate and necessary for initial exploration projects.
    Because the nature of the impacts associated with this type of project
    are well understood, limited, and temporary, a more detailed and time
    consuming process would waste scarce agency resources and would cause
    unacceptable delays for exploration companies, without creating any
    environmental benefits. In light of the fact that initial exploration
    activities are already fully regulated and bonded, there is no
    justification for the dramatic changes proposed in H.R. 2262 to
    eliminate this efficient, practical, and cost-effective approach to
    regulating initial exploration projects.
        Eliminating the notice-level permitting process is completely at
    odds with one of the recommendations in the above-mentioned 1999 NRC
    study on hardrock mining on federal lands. This study specifically
    recommends that the Forest Service adopt a procedure similar to BLM's
    notice process for efficiently reviewing and regulating exploration
    projects that disturb fewer than five acres. In discussing this
    recommendation, the NRC report states the following:
            ``The objective of this recommendation is to allow exploration
            activities to be conducted quickly when minimal degradation is
            likely to occur. The Committee believes, that with reclamation
            bonds or other financial assurances in hand for land
            disturbance, exploration should be able to proceed
            expeditiously.'' (NRC, 1999, page 98.)
    Keeping Lands Open to Exploration and Mining is Essential--H.R. 2262
            Inappropriately Puts Millions of Acres Off-Limits to
            Exploration and Mining
        As discussed above, mineral deposits are rare, hard to find, and
    once discovered, cannot be moved; they can only be developed where they
    are found. The 1999 NRC study explains this immutable fact of geology
    in the following way:
            ``In contrast with most other industries, hardrock mining has
            few alternatives relative to location, because economic
            occurrences of minerals are geologically and geographically
            scarce. Only a very small portion of Earth's continental areas,
            certainly less than .01%, contains the economic portion of its
            non-fuel mineral endowment. Thus, one cannot arbitrarily decide
            to build a mine here or there, but rather one must discover and
            mine those few places where nature has hidden its minerals.''
            (NRC, 1999, page 140.)
        Title II of H.R. 2262, ``Protection of Special Places,'' renders
    millions of acres off-limits to exploration and mining. At a minimum,
    it withdraws the 58.5 million acres identified in the Roadless Area
    Conservation Rule of January 2001, all lands that are currently being
    managed as Wilderness Study Areas, and several other land status
    categories on which exploration and development are not currently
    prohibited. From AuEx's perspective, it will mean that vast areas of
    the Humboldt-Toiyabe National Forest will suddenly become unavailable
    for exploration and mining. Because we have several properties on the
    Humboldt-Toiyabe National Forest, this provision concerns us very much.
    At the very least, no withdrawals should be made until an appropriate
    study of the mineral resource potential has been completed. Better yet,
    these lands should remain open to exploration and mining.
        From a broader perspective, this categorical withdrawal should
    concern the American public because it will mean that presently unknown
    and undiscovered deposits of minerals that we need like gold, silver,
    copper, zinc, molybdenum, tungsten, etc. can never be explored for--let
    alone ever be developed. These deposits will never help the Country
    meet its needs for these minerals. This withdrawal will only serve to
    increase the Nation's reliance on foreign sources of minerals. Please
    remember that substantial land withdrawals have already occurred over
    the past decades putting many millions of acres off-limits to mining,
    including land here in Nevada. The additional large land withdrawal
    proposed in H.R. 2262 is not good public policy for America.
        Besides exacerbating the existing domestic mineral availability
    problem, this wholesale withdrawal is unnecessary to protect special
    places. Both Congress and the Executive Branch already have numerous
    mechanisms for withdrawing lands from operation of the Mining Law. The
    1999 NRC study examines the administrative mechanisms that BLM and the
    Forest Service can use to protect special places and describes at least
    five mechanisms that federal land managers already have for protecting
    valuable resources and sensitive areas from mining.(NRC, 1999, pages
    68-69.)
    Exploring for Hardrock Minerals is Very Different from Oil, Gas and
            Coal
        Throughout the long history of the legislative debate about
    changing the Mining Law, the question is often asked: ``Why should
    hardrock minerals be treated differently than coal, or oil and gas?''
    The answer to this question is simple--they should be treated
    differently because they are substantially different. I would like to
    briefly discuss the differences between these natural resources from an
    exploration perspective.
        As I described earlier, hundreds of holes must be drilled in order
    to discover and develop a hardrock mineral deposit. Moreover, once
    these holes are drilled and the mineral deposit is adequately defined
    to justify developing a mine, several $100 million of additional
    investment is typically required to build a mine. All this is expended
    before any return is generated from the project.
        In marked contrast, in the case of oil and gas, one successful
    drill hole is potentially all that is needed to develop a producing
    resource. These holes are more expensive individually than the typical
    mineral exploration hole but the odds for success are higher. Once a
    discovery is made, the discovery hole can essentially become the oil
    and gas ``mine'' with a saleable product at the wellhead.
        Coal is also very different from hardrock minerals. When coal
    companies bid on a federal coal lease, the existence of the coal
    deposit is already known and not in question. Coal companies don't bid
    on the right to explore for coal. They already know the coal is there.
    Rather, they are bidding on the right to mine the coal and produce a
    product directly out of the mine that is saleable with little or no
    processing.
        There are many other differences between hardrock minerals, coal,
    and oil and gas that extend beyond exploration into the development and
    production stages. These differences are beyond the scope of my
    testimony which focuses on exploration so I will leave it to others to
    discuss them. However, as this Subcommittee considers H.R. 2262, I
    would ask you to keep in mind that the differences between these
    natural resources start at the exploration stage and must be thoroughly
    understood and carefully considered in order to develop a bill that is
    appropriate for hardrock minerals.
    Conclusion
        H.R. 2262 will be devastating for hardrock mining in America. This
    devastation will start at the very initial stages of mineral
    exploration, creating a ripple effect that will extend through
    development and mining. The decline in exploration that will result
    from this bill will translate into no new discoveries and subsequently
    no new mines on public land. This will lead to even greater dependence
    on foreign sources of mineral resources that make our economy work.
        This is clearly not in the best interest of either the State of
    Nevada or of the American public. Our way of life demands readily
    available and affordable minerals to build our cars, bridges and other
    infrastructure, appliances, electronic equipment like computers and
    cell phones, power transmission facilities, and all of the other
    necessities, conveniences, and even luxuries of modern life that we are
    so lucky to enjoy in this country. H.R. 2262 would change all of that,
    making the U.S. much more reliant on foreign countries than we already
    are for essential minerals.
    Reference Cited
    Hardrock Mining on Federal Lands (1999), Committee on Hardrock Mining
            on Federal Lands, Committee on Earth Resources, Board on Earth
            Sciences and Resources, Commission on Geosciences, Environment,
            and Resources, National Research Council.
    [NOTE: Photographs of exploration drilling and road building have been
    retained in the Committee's official files.]
                                     ______

        Mr. Costa. We thank you for your testimony and we think
    that it is important to make distinctions between the size and
    scope of mining efforts taking place, and I think your
    testimony attempted to focus on that. And we'll look forward to
    the Q&A portion.
        Our next witness, last on this panel, but certainly not the
    least, is Mr. Jon Hutchings who is representing the Eureka
    County Department of Natural Resources. And since by way of the
    previous panel, the question that I asked with regards to local
    sharing of local county revenue sources, I suspect I know how
    you would weigh on the answer on that question since we--I
    won't ask you that question.
        Mr. Hutchings. You can try me out.
        Mr. Costa. Anyway, we're looking forward to your testimony,
    Mr. Hutchings.

    STATEMENT OF JON HUTCHINGS, EUREKA COUNTY DEPARTMENT OF NATURAL
                               RESOURCES

        Mr. Hutchings. Thank you, Chairman Costa, Congressman
    Heller. For the record, my name is Jon Hutchings. I'm the
    Natural Resources Manager for Eureka County, Nevada. And
    actually today is my last hurrah in that capacity as principal
    advocate for the community. In natural resources issues, I have
    about 17 years of experience dealing with both technical and
    policy concerns of natural resources management. And I think
    that experience will provide a solid backdrop for addressing
    H.R. 2262 in a fashion that balances the economic needs of
    rural mining communities with those of our human and natural
    environment.
        Of course, the boom and bust cycle that has shaped the
    custom and culture of western mining communities for the last
    150 years certainly have impacts to our rural communities, and
    those are evident in the empty buildings in Goldfield and some
    of the glory day stories that you see in the walking tours and
    those sorts of things.
        Unfortunately the social transitions that accompany this
    economic model impose a tremendous strain on the fabric of
    contemporary rural life. In other words, the booms and busts
    have not gone away. In fact, given the magnitude of the present
    boom and its influence on our western mining economies, we can
    expect that the next bust will deliver a greater blow to a
    greater number of Americans than has ever been experienced in
    the past. And I think that's something to stop and think about.
        As host to the largest gold deposit in the continental
    United States, northern Nevada is squarely in the middle of
    these economic circumstances. Our communities have an enormous
    amount to gain from the mining industry, but we're also poised
    to suffer major correction in population and employment and
    revenues, social services, all of those things that mining
    provides.
        Our quest as local governments is to apply the resources
    that are available to us by geographic fate and by the vitality
    of the mining industry itself to temper those inevitable
    changes in our economic future. And it's really from that
    perspective that I wish to address the proposed changes to the
    1872 Mining Law.
        I have no reason to doubt that the mining communities, the
    mining industry, their state and Federal partners can make
    great progress toward a sustainable economic and social and
    environmental conditions in the rural West if we pursue this
    effort collaboratively and with a progressive agenda. And I
    believe it's the responsible role of any mining law revision to
    honor that precept, and this should certainly be the aim of
    H.R. 2262 as this discussion goes forward.
        To that end, I wish to contemplate three provisions of the
    present bill that I believe will unquestionably diminish the
    role that communities play in mining-related decisions. That's
    really the take-home message here--what the unintended
    consequences of some of these provisions might be and in order
    for the dialogue going forward to get around that and end up
    with a win-win situation for the communities.
        First of all, Title I provisions requiring net smelter
    return royalty. Like most Americans, I personally only have a
    passing interest about how the government extracts tax revenues
    from the industry, mining or otherwise.
        As long as the revenues are sufficient to offset the burden
    that mining places on the community and as long as the cost to
    the industry doesn't somehow unfairly limit future investments
    so that there can be thereabout mining exploration and
    development by mid-tier companies, as long as those two things
    are in place, I think most everybody is happy.
        That said, I think that the proposed royalty will, as it's
    written today, will cause revenues to be shifted from the
    active mineral-producing communities where the likelihood of
    the future impact is greatest and end up sequestered in higher
    levels of government. And I think that ultimately will take
    away from the revenue stream that offsets the burden that
    mining places on local communities.
        The provision is closing enormous tracts of land to mining.
    Mining towns are traditionally against wholesale withdrawal
    from mineral entry. And traditionally, Congress has looked at
    those lands with high esthetic or environmental values on a
    case-by-case basis. I think that's a good policy, and I think
    that this Committee should take a good, hard look at what may
    happen by withdrawing some 58 million acres of land from
    mineral entry.
        Title III provisions, eliminating life-of-mine permits and
    duplicating existing permitting requirements. From my
    perspective, these are probably the most onerous on local
    governments and local communities because they drastically
    increase the burden on local government while offering little
    or no improvement over the status quo.
        And I think the likelihood is that the uncertainty that
    this additional burden will place on those communities will
    result in less involvement by those affected, rather than more.
        So I applaud you again for addressing this extremely
    important bill in this community that's acutely affected by
    your decisions and thank you for the opportunity to testify.
        [The prepared statement of Mr. Hutchings follows:]

            Statement of Jon Hutchings, Natural Resources Manager,
                 Eureka County Department of Natural Resources

    August 15, 2007

    Honorable Jim Costa, Chairman
    Subcommittee on Energy and Mineral Resources
    1114 Longworth, HOB
    Washington, D.C. 20515

    Dear Congressman Costa,

        This letter contains my prepared testimony for your legislative
    field hearing on H.R.2262, the Hardrock Mining and Reclamation Act of
    2007. In the way of introduction, my name is Jon Hutchings; I represent
    Eureka County, Nevada as Director of the Eureka County Department of
    Natural Resources. Until very recently, I served as principal advocate
    for the community, negotiating the myriad of renewable and non-
    renewable resource issues facing rural Nevada. I have seventeen years
    of experience dealing with both technical and policy concerns of
    natural resource management. Besides my tenure with Eureka County, my
    experience includes five years as a co-principal investigator for the
    Idaho Water Resources Institute and four years as a research soil
    scientist at the University of Idaho. I hold a Ph.D. in Soil Science
    and an M.S. in hydrogeology from the University of Idaho. I am a
    Certified Professional Soil Scientist, serve as Vice President of the
    Nevada Water Resources Association, and served on the Secretary of
    Interior's Northeastern Great Basin Resource Advisory Council. My
    training and work experience provide a solid backdrop for addressing
    H.R. 2262 in a fashion that balances economic needs with those of our
    human and natural environment.
        Boom and bust cycles have shaped the custom and culture of western
    mining communities for some 150 years (see Attachment 1, Gold
    Production, 1835-2005). The impacts of boom and bust are evident in the
    empty buildings and glory day stories touted in walking tours and
    museums of historic mining districts across the west. Unfortunately,
    the social transitions that accompany this economic model impose a
    tremendous strain on the fabric of contemporary rural life. Recent
    examples of this struggle include Lead, North Dakota, which is
    presently struggling with closure of the longest operating (1876-2003)
    mine in the United States and Ely, Nevada, which is presently
    recovering from the 1978 and 1997 closures of its vast copper mines.
    Given the magnitude of the present boom and its influence on western
    mining economies, we can expect that the next bust will deliver a
    greater blow to a greater number of Americans than has ever been
    experienced in the past.
        As host to the largest gold deposits in the continental United
    States, Northern Nevada is squarely in the middle of these economic
    circumstances. Our communities have an enormous amount to gain from the
    mining industry, but are poised to suffer a major correction in
    population, employment, revenues, social services, and other amenities
    that have come with increased mining activity. Our quest is to apply
    the resources availed us by geographic fate and by the vitality of the
    mining industry to temper the inevitable changes in our economic
    future. It is from that perspective that I wish to address proposed
    changes to the 1872 Mining Law. I have no reason to doubt that mining
    communities, the mining industry, and their State and Federal partners
    can make great progress toward sustainable economic, social, and
    environmental conditions in the rural west if we pursue a collaborative
    and progressive agenda. The responsible role of any mining law revision
    must honor this precept and, I believe, this should be the aim of H.R.
    2262. To that end I wish to contemplate three provisions of the present
    bill that will unquestionably diminish the role that communities play
    in mining-related decisions.
        Title I provisions requiring a net smelter return royalty. Like
    most Americans, I have only passing concern about how government exacts
    tax revenues from the mining industry. As long as revenues are
    sufficient to offset the burden that mining places on communities and
    the cost to the industry does not unfairly limit future investment, I
    am happy. That said, I believe that the proposed royalty will cause
    revenues to be shifted from active mineral producing communities where
    the likelihood of future impacts is greatest, to be sequestered in
    higher levels of government. An example of this phenomenon is the
    transfer of coal mining revenues away from producing states like
    Wyoming to cover the costs of closing less productive and
    environmentally challenged operations in the East. The outcome is
    inevitable. Local mining communities in Nevada will be hobbled in their
    ability to offset the additional health, safety and welfare burdens
    that mines place on local government. In addition, it is likely that
    Federal gross proceeds payments will be offset by a) reduced direct
    contributions to local communities and b) reductions in state Net
    Proceeds of Minerals tax payments. I ask that the Committee diligently
    research and address the unintended consequences that the proposed
    royalty will have on those communities most directly affected by mining
    activity.
        Title II provisions closing enormous tracts of land to mining.
    Mining counties are against wholesale withdrawal of lands from mineral
    entry. Traditionally, Congress has looked at lands with high esthetic
    or environmental values on a case-by-case basis, fully analyzing the
    costs and benefits of withdrawal. The present proposal contemplates
    withdrawing 58M acres from entry with little or no consideration of
    economic impacts to the communities that depend on those lands. I am
    particularly concerned about withdrawal of Wilderness Study Areas. The
    Bureau of Land Management has followed its Congressional mandate to
    recommend an appropriate management scheme for these lands (as either
    Wilderness or not). Congress has never acted on the recommendations, so
    has not determined whether the lands are suitable for the level of
    protection afforded by mineral withdrawal. Wholesale withdrawal of
    lands from mineral entry will directly impact local mining communities
    by damping mineral exploration and reducing the pipeline of viable
    future projects, greatly exacerbating the next bust. I ask that the
    Committee honor the thoughtful research- and analysis-based approach to
    land withdrawals that has been employed in the past.
        Title III provisions eliminating life-of-mine permits and
    duplicating existing permitting requirements. From my perspective,
    these provisions are most onerous for communities, because they
    drastically increase the burden on local government while offering
    little or no improvement over the status quo. Many arguments against
    this provision focus on the idea that financial markets will find the
    additional uncertainty too risky to underwrite. I would like the
    proponents of the provision to consider the impact of that uncertainty
    on mining communities. Already, local governments are hard-pressed to
    sustain effective engagement in the complicated process of permitting
    mines. For Eureka County that means signing onto the NEPA process as a
    Cooperating Agency, organizing and supporting a standing volunteer NEPA
    Committee and diverting staff and elected officials to the cause. Even
    in today's permitting environment many of these projects end up being
    non-starters. Imposing a greater permitting burden and more uncertainty
    in the outcome without clear benefit will surely prompt less
    involvement by the public most at risk. I ask that the Committee do
    everything in its power to fully understand the scope of existing
    environmental regulations before mandating more. In the same vein, I
    ask that you reconsider the benefits of term permits. This provision
    will result in another under-funded mandate for those who administer
    these permits, cause a backlog of permits akin to the USFS and BLM
    grazing permit renewals, and discourage involvement in permitting by
    affected communities.
        As a spokesman for local government, I applaud you for addressing
    this extremely important bill in a community that is acutely affected
    by your decisions. I ask that that this Committee, together with the
    State of Nevada, Nevada's mining counties, the mining industry, and the
    affected public commit to continued dialog on these issues to ensure
    that mining in America remains a viable and responsible contributor to
    our community.

    Respectfully,

    /s/ Jon Hutchings

    Jon Hutchings,
    Natural Resources Manager

    cc:  Board of Eureka County Commissioners
        Nevada Association of Counties
        Nevada Mining Association
        Northwest Mining Association

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Costa. Thank you very much, Mr. Hutchings. You said
    this is your last hurrah. Where are you going?
        Mr. Hutchings. I am moving to northwestern Washington State
    to take a job there.
        Mr. Costa. I see. Well, we wish you well.
        Mr. Hutchings. Thank you.
        Mr. Costa. Let me begin with my questions of Senator
    Rhoads. First of all, I want to commend your efforts. I know
    how respected you are in the Nevada State Legislature. With the
    reform of the Nevada law beginning in the 1990s and, probably
    at a separate time, I'd like to get more understanding of how
    that all came together. Certainly the bonding retirements you
    talk about, as I learned yesterday, I think are very
    progressive and forward-thinking.
        As it relates to the changes you made in the Nevada law, do
    you believe that it suffices or is sufficient today as it
    relates to the two issues of abandoned mines and mercury
    recovery?
        Mr. Rhoads. You know, I think we made great strides in
    that. Maybe Russ could probably answer it better than I could.
        But as far as the reclamation of old mine sites, we could
    take you to places that they've done a reclamation project that
    looks like a golf course. They do a tremendous job in different
    places. And 20 years ago, you never saw that happening, but
    today's world, you see it a lot.
        Mr. Costa. But you're playing catch-up in essence.
        Mr. Rhoads. Oh, I'm sure we are.
        Mr. Costa. Mr. Fields, as it relates to the comments, as
    you stated, the testimony you gave back in the early 1990s when
    this legislation was last before the Congress, you testified in
    1999 about the impacts of the fees and royalties and that the
    holding fee you thought had an impact in 1993.
        If we look by today's measurements, though, the fee is
    still in place and exploration is up, way up. State claims are
    up by 55 percent over the last four years. I suspect that
    reflects the price of gold.
        But it would suggest to me, though, that the mining
    industry is driven more by the price of minerals than fees, not
    withstanding the fact that fees do have an impact.
        What do you think of the long-term impact of the claim on
    the holding fee in Nevada since its implementation in the last
    15 years?
        Mr. Fields. Well, in the last 15 years we've seen--let's
    see. In 1993, I think the total number of claims that were in
    the state and recorded on the books was roughly 200,000 claims.
    And now, right after the new holding fee was imposed, they fell
    to about 100,000 claims. Today we have about 165,000.
        These are rough numbers, but you're absolutely right. The
    price of metal certainly has a----
        Mr. Costa. I think that's the driving force.
        Mr. Fields.--direct impact as to how much activity is out
    there.
        Mr. Costa. My time is going. I need to be mindful of that.
        Mr. Parratt, you talked, as others did, about that smelter
    royalty impact or fee. It's my understanding, and, you know,
    I'm learning, but that it is an arrangement that is used
    between companies as they negotiate.
        If it works for them, or companies, why wouldn't it work in
    terms of Federal practice as proposed in the legislation?
        Mr. Parratt. Sure. I'll make two comments. Number one, an
    eight percent royalty would be a deal breaker in business.
        Mr. Costa. OK. Well, pick another number. I'm just talking
    about the concept.
        Mr. Parratt. Well, in concept it would be good, except
    during times when prices are high, of course, the income would
    be better. During times when metal prices are low, you're still
    paying that royalty. It becomes kind of punitive. It would be
    better if it's a net profits-based royalty like the Nevada tax,
    whereby when companies are in trouble----
        Mr. Costa. Enough said. I'm mindful of my time.
        The Administration--you know, Senator Reid, I think made a
    good point about should we or should we not reform. And I think
    the National Mining Association and others that have testified
    here today come in good faith and say, you know, we want to
    work together on this.
        Don't you--do you have any fear that we'll continue to be
    impacted from Administration to Administration? I mean, you may
    have a friendly Administration; you may have an Administration
    that's not so friendly as they try to, by executive order, to
    de facto make changes in the law.
        Are you concerned about that?
        Mr. Parratt. Certainly I'm concerned about it.
        Mr. Costa. So you think maybe if we could come to an
    agreement on some reform, that might make sense.
        Mr. Parratt. Sure.
        Mr. Costa. OK. I've got 20 seconds left here, so I'm going
    to defer to my colleague and the gentleman who represents this
    area, Congressman Heller.
        Mr. Heller. Thank you very much, Mr. Chairman. Thanks again
    for everybody for being here. I thought we were going to have
    one short-timer; in fact, we have two now. So I will try to
    catch you guys before you turn off the clock here.
        But, Senator Rhoads, it's great to have you here. The size
    of your district, as you mentioned, is quite big. Mine's
    110,000 square miles. I don't know if you've calculated yours
    yet, but I have a good reason to believe that both mining and
    that side of the district can get along just fine.
        But you know, let's just get to the brass tacks of this.
    Bottom line, this is a tax increase. Any way you want to say
    it, it's an eight percent royalty, gross royalty tax increase.
    That's if this bill goes through.
        I know the Chairman has said, and I have no reason not to
    believe him, that this is a starting point.
        Mr. Rhoads. Sure.
        Mr. Heller. Eight percent gross royalty tax on mining.
    What's your views.
        Mr. Rhoads. Well, eight percent, nobody can stand that. I
    don't know any mining spokesman that would support it, but
    they're willing to look at some type of royalty.
        You know, in today's world, they find a mining area that's
    got potential promise, and they can prove that it's got gold on
    it, they can buy it for $2.50 an acre. The mining companies are
    willing to pay fair market value, and I'm sure they're willing
    to discuss it back and forth. And like the Chairman, he
    indicated if we don't do something, by executive order, it's
    going to happen, so we better do something.
        Mr. Heller. Thank you, Senator. Thank you very much for
    being here.
        Short-timer Russ, you know, you've got a lot of experience.
    I want you to real quickly tell me--I think Senator Reid had a
    net proceeds tax several years ago in Congress.
        Can you tell us what happened to that bill?
        Mr. Fields. It made it through Congress and it was
    eventually vetoed by the President.
        Mr. Heller. Because of that provision or other----
        Mr. Fields. The entire package.
        Mr. Heller. The entire package. You know, I sit in
    Congress. I know I'm brand new, but we had a health bill and
    that included a tax increase. We had an energy bill that
    included a tax increase. We had an agricultural bill that
    included a tax increase. Now we've got a mining bill that
    includes a tax increase.
        What would this tax increase--have you done any analysis
    with your industry on what this tax increase, what kind of
    impact it would have?
        Mr. Fields. Well, I haven't, but the mining industry in
    Nevada, probably about 30 percent or so of the production comes
    from public lands. Last year the value of the revenue of all of
    that production was roughly $4 billion.
        So, you know, we're talking about, let's say, $1.5 billion
    of revenue. If you apply the eight percent to that, that's a
    very large amount of money.
        And unfortunately, the way Nevada's net proceeds and mines
    tax is arranged, the amount of royalty paid to the Federal
    Government would be deductible for net proceeds of mines tax
    purposes, resulting in a reduction in tax payments from the
    industry to the State of Nevada and to these local communities.
        Mr. Heller. I appreciate your input.
        Mr. Parratt, what would happen to your company if this bill
    in its current form would pass?
        Mr. Parratt. Well, we have initial interests in Argentina.
    We have interests in Spain. And I think it's going to drive
    companies like ours out, frankly. I just don't see any other
    alternative. It's going to be very difficult to continue to
    operate and explore and develop mineral resources here with
    what we're seeing.
        Mr. Heller. Mr. Hutchings, your experience sending money to
    the Federal Government and getting it back.
        Mr. Hutchings. Enough said. It's a difficult prospect, and
    the bottom line is the amount of revenues, local governments,
    when the rubber hits the road, that's where we service local
    communities in the first instance, and I think that is where
    the revenues need to stay. We will lose direct investment back
    to those communities. Elko will lose net proceeds revenues back
    to the State and back to other county governments. That's it.
        Mr. Heller. Thank you. Thank you for your time.
        I yield back.
        Mr. Costa. OK, thank you very much.
        Just a couple thoughts as we begin to shift over to the
    open mike.
        Senator Rhoads, you and I share a common interest in
    agriculture. And I wonder, we haven't really spoken about it
    very much this morning, about the compatibility of the
    agriculture interests here in Nevada and I suspect elsewhere
    when it comes to mining. I've got a number of folks from my
    district that actually are actively involved in the cattle
    business here in northern Nevada.
        How would you describe the relationship thus far between
    the cattle operations and the mining industry, the impacts on
    water and feed?
        Mr. Rhoads. Very good question and you probably asked the
    right person because we have a ranch about 50 miles from here,
    right in the heart of all the mining companies. We have mining
    companies on three different sides of us. We have Newmont on
    one side, Barrick on another side, and De Villa and the Western
    States Minerals on the other side.
        Mr. Costa. I think I saw some of your operation yesterday.
        Mr. Rhoads. Yes. So we get along very good with them. We
    get into problems, they'll haul water for us. They're very
    prompt when our cattle get away; they'll call us, whatever. But
    they're very good neighbors and we get along very well.
        Mr. Costa. So you haven't seen any impacts as it relates to
    the water quality issues we've talked about.
        Mr. Rhoads. No way. No way. They even haul water for us in
    one place there when we get in a bind. They've done a good job.
        Mr. Costa. All right, very good. Any other questions?
        Mr. Heller. No questions.
        Mr. Costa. OK. What I'd like to do at this point in time
    before we have the open mike, and we've got about 14 people
    that have signed in, or something like that number, is have a
    five-minute break, because our clerk recorders here who have
    been very attentive and focused have not had a break. And I
    suspect what my colleague and I do here is far easier in terms
    of asking questions than the focus that they have to provide.
        So why don't we give them a five-minute break to let their
    fingers rest for a moment. And the Committee will recess, and
    then we'll begin.
        Let me give the first list of witnesses here that we have
    on the open mike. Mr. Pete Goicoechea from the Nevada Assembly.
    Mr. Goicoechea, we'll look forward to hearing your testimony in
    five minutes. Again, two minutes for that. Followed by Sheri
    Eklund-Brown. Is that correct? And then Richard [sic] Buchanan
    with the American Institute of Professional Geologists. And
    then Mr. Richard Redfern with which mining corporation?
        Mr. Redfern. Mexivada.
        Mr. Costa. Mexivada. OK. Got it. So Mexivada Mining
    Corporation.
        So we'll begin with those four, and I'll give the list of
    those who have signed up.
        So, Pete, you're in the batter's box, and we'll begin in
    five minutes. Thank you very much.
        [Recess.]
        Mr. Costa. All right. The Subcommittee on Energy and
    Minerals will now come back into order following our recess.
        Couple more housekeeping items before we begin with our
    witnesses who have signed up to testify under the open mike
    phase of this hearing. We have outside, for those of you who
    have not seen them, please take advantage of comment cards. And
    we are interested in your comments, so please fill them out.
        And we have also set up, for those of you who are on the
    Information Super Highway--I just got from the onramp onto the
    slow lane in the last couple years. But for those of you who
    are on the Internet and like to e-mail, we have a new e-mail
    address as it relates to the efforts of this legislation. It's
    called energyandminerals@mail.house.gov.
        So that's energyandminerals@mail.house.gov. It's listed on
    the comments cards, so pick up those comment cards on the way
    out. It's another way of weighing in on your views and your
    thoughts as it relates to not just the legislation but the
    hearing and our focus.
        And then finally, for those of you who thought this hearing
    this morning has been absolutely captivating, riveting, and
    worthy of seeing it a second time, we have on the Natural
    Resources Committee Web site the ability to access that. And
    again, that's on http://resourcescommittee.house.gov. But it's
    the Natural Resources Committee website. So you can get it
    there and see it again, for those of you who have literally
    nothing else to do and are bored silly. OK.
        Now we've got the open mike period for the next half hour,
    and then I'm going to have to run and catch the airport.
        Let me just say again that the folks here and Congressman
    Heller, northeastern Nevada, and I suspect all of Nevada, but I
    just feel a kindred spirit to folks who live in rural areas
    because that's how I grew up. And actually I still farm. Much
    of my district is rural, from Fresno to Bakersfield. It's an
    important part of the San Joaquin Valley.
        You have made me feel at home, and you've been very kind to
    our Committee and our staff. And we thank you, we thank all of
    you for that.
        We've had some great Basque food. We have a number of good
    Basque restaurants in the valley, and they're certainly just as
    good here. And I want it known that I've enjoyed it very much,
    both last night and the night previously.
        Speaking of Basque, why don't we have the Assemblyman who
    represents a good Basque constituency from the State Assembly,
    Pete--
        Mr. Goicoechea. Goicoechea.
        Mr. Costa. Goicoechea. Good Basque name.
        Mr. Goicoechea. Thank you.
        Mr. Costa. Before it starts, Holly, the two-minute rule. It
    starts on green, yellow is one minute, and of course, the red,
    your two minutes are done.

                STATEMENT OF THE HON. PETE GOICOECHEA,
                      ASSEMBLYMAN, STATE OF NEVADA

        Mr. Goicoechea. The button has started. Thank you, Chairman
    Costa, members of the Committee. For the record, I am
    Assemblyman Pete Goicoechea. I am out of my district so I will
    welcome you to northeastern Nevada.
        I can understand the movement to want to amend and change
    the 1872 Mining Law, and I agree we do need to facilitate the
    permitting process. However, eight percent of the net would be
    a huge hit. It will impact Nevada's existing tax structure, but
    the other side that I think it will curtail--exploration, and
    that is critical, and the mine service industry, as it affects
    all these small rural communities.
        Maybe the mine payroll is one issue, and you could have the
    mine payroll here in, say, Elko County, but then when you move
    into Lander County, the mine service industry and that
    exploration is a big part of it.
        Having been in public service for the last 22 years, I was
    a County Commissioner, and now with the State Legislature, I
    can assure you, there is tremendous oversight provided by the
    State of Nevada, the Federal agencies, and even local
    government.
        And I'm down to one minute.
        We need to be cautious as we move ahead with the amendments
    and changes. One size doesn't fit all. It doesn't matter what
    industry we're in. And any of these changes we put in place,
    let's make sure they are flexible.
        Thank you.
        Mr. Costa. Well, thank you very much for your testimony. I
    want you to know, as a former state legislator for 24 years, I
    firmly believe that one size does not fit all. Having been a
    past president of the National Conference of State Legislatures
    and we've had meetings throughout the country, I suspect you
    participated in Legislatures around the country, and I believe
    states are the laboratories of democracy, which is why I'm very
    interested in further understanding the changes you've made in
    Nevada state law.
        So we commend you for your efforts and for your wise
    counsel.
        Mr. Goicoechea. Thank you.
        Mr. Costa. Thank you.
        Mr. Costa. Our next witness is Sheri Eklund-Brown. Did I
    get that correct?
        Ms. Eklund-Brown. No.
        Mr. Costa. OK. Well, could you please correct me?
        And our next witness on my list here is Kelvin Buchanan and
    then Richard Redfern.
        Your proper pronunciation?

                   STATEMENT OF SHERI EKLUND-BROWN,
                        ELKO COUNTY COMMISSIONER

        Ms. Eklund-Brown. I'm Sheri Eklund-Brown. I'm here
    representing the Elko County Commission. This is my district,
    and I welcome you to Elko.
        Mr. Costa. You have a lovely district, and thank you so
    much.
        Ms. Eklund-Brown. Thank you. And we appreciate so much your
    coming out here, Chairman Costa, Congressman Heller, and making
    the attempt to understand public land issues, mining issues,
    the industry.
        Too often your comrades in Congress do not do that. They
    rely on their aides who probably do not come out, and too many
    public land decisions are made without knowledge and with the
    bias that is with the lobbying effort back in Washington. We
    appreciate this effort to come out.
        And I am encouraged by the comments that I've heard that
    there is a willingness to amend H.R. 2262, and I'm very
    encouraged by that.
        As you know, we are historically a county that is infamous
    for defending our private property rights, public rights. We'll
    do it again. We'll come to Washington and lobby if we need to.
        We have forged a new direction in our relationships with
    Federal agencies, and have great ones with all of them. And Bob
    Abbey was very correct in that they're underfunded, largely
    because of the war. A lot of our realty efforts can't go
    forward, based on the funding amounts.
        But when we say that Nevada has a love affair with mining,
    it's true, but in Elko County, we have a marriage with mining.
    It's true. We have a marriage. And look at the public that's
    turned out. And thank you all for responding. It's a packed
    house. It's great. It shows you the kind of support that we
    have here.
        And our request to you is to allow mining--the mining
    industry to be at the table to amend this bill and not exclude
    them. It's legislation without representation, and that's, you
    know, not the American way.
        Mr. Costa. Well, we're not going to do that. And County
    Commissioner, thank you very much for your comments. I do know
    that this is the home of the Sagebrush Rebellion. And so----
        Ms. Eklund-Brown. We can get our shovel and muck it out
    anytime.
        Mr. Costa. Not needed to point that out, but I appreciate
    the sincerity in which you make your comments. I think you
    point out quite correctly that there is insufficient funding
    for the Bureau of Land Management and a number of other
    agencies to do their proper work, and it's for a combination of
    reasons. And that's one of the things we're looking at.
        But we--this legislation, I've never seen any--I've been
    involved in this business or work for a long time. I've never
    seen any bill upon introduction that ever continued that way
    through its entire process. And, you know, it's always a work
    in progress. And we cannot do this successfully unless we get
    the input. That's why we're here.
        And as I said in my earlier comments, if we're not able to
    reach some sort of a consensus with folks from Nevada, with
    Senator Reid and Congressman Heller and others, we're not going
    to be able to successfully implement, I think, some of the
    changes that many of us believe is necessary.
        Ms. Eklund-Brown. Well, I think everyone here thinks the
    time is right, the atmosphere is right, and let's do it before
    we--every four years we live in fear here----
        Mr. Costa. Right.
        Ms. Eklund-Brown. Because of a new Administration.
        Mr. Costa. Absolutely. I hear you.
        Ms. Eklund-Brown. Thank you.
        Mr. Costa. Our next witness, Kelvin Buchanan, American
    Institute of Professional Geologists.

                     STATEMENT OF KELVIN BUCHANAN,
             AMERICAN INSTITUTE OF PROFESSIONAL GEOLOGISTS

        Mr. Buchanan. Thank you, Chairman Costa and Congressman
    Heller. My name is Kelvin Buchanan. I'm President of the
    American Institute of Professional Geologists. We certify
    geologists as to their competence and personal integrity. In
    fact, to Congressman Heller's immediate right is one of our
    members.
        Mr. Costa. She wore her T-shirt yesterday, so I'm well
    aware of it.
        Mr. Buchanan. As a professional geological organization, we
    rely on the universities in the western U.S. to provide us with
    members. In the period 1995 through 1997, when various bills
    were being promulgated in Congress, coupled with that was a
    downturn in the commodities interests, and our organization has
    a paucity of members between the ages of 35 and 45.
        It is only in the last four years that we have actually
    seen some response and some new students at our universities,
    specifically the University of Arizona where their economic
    chair was in jeopardy of being defunded, and at the University
    of Nevada where our School of Mines almost disappeared.
        We have many student chapters across the country. I would
    like to bring up one thing that Senator Reid said which is that
    people go into geology because there's jobs. There's jobs
    because there is a confidence in the industry or industries
    that they will work in.
        And there are several things in H.R. 2262, as Senator Reid
    pointed out, which are going to make the industry less
    confident going ahead. It's not just the change of
    Administration. It's also what the bureaucracy can do. So we
    would really encourage you to take a close look at that.
        Thank you very much for your time.
        Mr. Costa. Thank you very much, Kelvin. We appreciate your
    comments. And I think from a point of maintaining institutional
    stability, to have some of the best and the brightest in our
    young people pursue this professional career, your points are
    well taken.
        Next, Mr. Richard Redfern. Richard, where are you? You're
    having a little gathering this afternoon and I'm going to miss
    it. Are you going to have food and all that good stuff or
    music? What kind of rally are you having?
        Mr. Redfern. Well, it's probably just water and soft drinks
    but----
        Mr. Costa. As long as I'm not missing any good Basque food.
        You've got two minutes.

               STATEMENT OF RICHARD REDFERN, PRESIDENT,
                      MEXIVADA MINING CORPORATION

        Mr. Redfern. Thank you, Congressman, and thank you, Mr.
    Chairman, for allowing the public to speak. You're very kind.
        My name is Richard Redfern, and I'm the President--I'm an
    Exploration Geologist and President of Mexivada Mining
    Corporation, which is a three-year-old publicly listed junior
    mineral exploration firm that is exploring for gold, silver,
    and molybdenum.
        The future of the metals mining industry in the western
    United States is partly dependent on the ability of prospectors
    and junior mineral exploration companies to search for new
    deposits of minerals on public lands.
        Certain of the proposed regulatory structures in H.R. 2262
    would make it much more difficult to conduct exploration on
    public lands for us, reducing the probability of replacing
    those needed to provide metals that the country needs and the
    high-paying jobs to people that do--that America needs also.
        Please look out for the needs of prospectors and small
    exploration companies when you're revising the Mining Law
    because it's--I feel it's very important to the future.
        Then point number two: As we think about how H.R. 2262
    would hurt this community, we need to broaden our focus and
    recognize that harsh, unfair mining laws, conceivably like
    those proposed in H.R. 2262, could have long-lasting
    international repercussions.
        Several of us here have mineral exploration projects around
    the world, including places like black Africa, where jobless
    local people view the United States as kind of a shining beacon
    of hope, and they think, maybe we can aspire to have good jobs
    and a nice lifestyle like our American friends.
        But if we implement harsh, economically unfair mining laws,
    countries around the world may adopt similar forms of them,
    spreading problems worldwide and making it more difficult to
    find minerals all over the world.
        So let's do it right the first time. Construct and put into
    place mining laws that are fair and workable to all parties in
    the mining and mineral exploration communities.
        Thank you, sir.
        Mr. Costa. Your points are well taken. Richard, do me a
    favor this afternoon at the rally. Please convey to those who
    are there that I wished I could be there. Unfortunately my
    flight does not allow it. And in all sincerity, as I hope you
    have a sense of today, we're very interested in people's
    comments and their participation. We wouldn't be here today if
    we weren't.
        So please indicate to folks that I'm always--I believe that
    good ideas come from all over the country, and certainly one of
    the reasons we came here was to get some more good ideas.
        So your efforts and those who are part of the effort this
    afternoon will be we welcomed. That information that I gave
    you, those cards and other stuff, please provide the input
    because we'll look forward to doing that, working with your
    local Congressman and Senator Reid and others to see how we can
    form good, commonsense legislation.
        Mr. Redfern. We want to work with you.
        Mr. Costa. You can use that as a direct quote: ``Good,
    commonsense legislation.''
        Mr. Redfern. Absolutely. We want to work with you. All the
    junior companies, individual prospectors. Let us help.
        Mr. Costa. Thank you.
        Our next witness that I have here is Mr. Robert Schafer,
    Great Basin Gold. You said you wanted to make some comments,
    and I said, ``Is your name on there?'' And you said,
    ``Absolutely.'' It's right here.

             STATEMENT OF ROBERT SCHAFER, GREAT BASIN GOLD

        Mr. Schafer. Thank you very kindly, Mr. Chairman,
    Congressman. I appreciate the opportunity to have a chance to
    address you.
        As you know, times have changed, the mining industry has
    changed, technology has changed, and the mining industry is
    ready for constructive updating of the mining law.
        There's a couple of points I just would like to make
    regarding some of the prior testimony today and one of my own
    comments. One is the royalty definition that's applied in the
    bill proposed by Congressman Rahall is very, very different
    from the definition of a royalty used in our mining business.
    It's a gross royalty on overall revenues. The net smelter
    return royalty used in the mining industry is a net smelter
    royalty which is gross revenues minus operating costs.
        Second, in that same area, royalties are used as bartering
    tools between companies, but they're down in the neighborhood
    of two and three percent. Five percent was used 20, 25 years
    ago, was found to be untenable between companies, and it had to
    be reduced back to the two or three percent to make the
    operations potentially viable.
        Mr. Costa. But it is a process that has worked.
        Mr. Schafer. It has worked, but you have to use the proper
    definition of the royalty.
        The second item is, when it comes time for you to negotiate
    through the weavings and changes in this bill, when it comes
    time to resolve a point, err on the side of conservatism. Just
    don't allow unintended consequences. If a mistake is made, it
    would impact our country for decades because this mining--the
    industry is not an on and off switch. When we have a downturn
    in the mining cycle, it requires nearly a decade to recruit the
    professionals to make it happen and another decade to get the
    pipeline of discoveries back on stream again. And then add
    another decade to build the mine; you're 30 years behind by the
    time that all occurs.
        That's all I'd like to say.
        Mr. Costa. Thank you very much. I appreciate that.
        Mr. Costa. Our next witness is Ralph Sacrison, Sacrison
    Engineering. And then following Ralph--I want to make it so
    people can kind of work their way over to the mike.
        Winthrop Rowe with Snowstorm, LLC. Might want to work your
    way over there.
        Is it Rolph or Ralph?
        Mr. Sacrison. Ralph Sacrison.
        Mr. Costa. You're on.

           STATEMENT OF RALPH SACRISON, SACRISON ENGINEERING

        Mr. Sacrison. Chairman Costa and Congressman Heller, thank
    you for coming and allowing this opportunity.
        It does not necessarily need stressing, but there is still
    a five- or seven-to-one multiplier from agriculture and mining
    industries to the general economy. And I'd like to stress and
    ask that we keep that in mind in terms of the potential
    negative impact on the industry.
        If we simply consider the thousands of people working in
    those two industries in the country versus 300 million in
    population, it reasonably well bears out those ratios,
    emphasizes them actually.
        The other point I'd like to make as a small businessman is
    the impression that many have left you that the industry is
    almost exclusively multinational conglomerates is not
    necessarily the case. There are a number of small businesses
    affected throughout the world by this industry.
        The land impacts are minuscule. If you simply consider the
    amount of terrain in the Nation that has been paved, it is
    thousands of times greater than all mining impacts to date in
    this Nation. And again, beware the unintended consequences.
        I do have to get my bifocals, Dr. Liparelli. The regulatory
    consequences of the eight percent royalty could be devastating.
    Please bear in mind that the accumulated fiscal and
    environmental regulations have virtually driven all of our
    refineries offshore. The consequences of driving the mines
    offshore will be as devastating.
        Mr. Costa. Thank you very much. I appreciate your comments.
        And then following that, we have Eric----
        Mr. Lauha. Lauha, L-A-U-H-A.
        Mr. Costa. Yes, 25 years in Elko Mining. Is that you? I
    think so.
        Following Eric, we have Thom Seal and David Knight.

               STATEMENT OF WINTHROP ROWE, SNOWSTORM, LLC

        Mr. Rowe. My name is Winthrop Rowe. I manage a small
    company called Snowstorm, LLC. We own about a thousand claims
    just north of Twin Creeks. We've spent about $7 million over
    the last eight years, and we are probably going to spend a
    couple more million in the next year.
        One of the four partners in Snowstorm, LLC is a company
    called Discovery Dynamics. That's my private company, and it
    started with the savings account of my wife and myself. And I
    just want to bring up an issue called risk. If H.R. 2262 were
    on the deck eight years ago when I started this company, I
    wouldn't have done it. Nor would my partners invest right now
    with this royalty standing out because that's the margin we're
    looking for. So if we make a discovery, we can sell it to a
    mining company; we can get our return from investment and risk.
        So there's the ``P'' word--perception. So on the investment
    for the mining industry to be able to go forward, to take the
    risk, as Ron Parratt brought out, that you take the risk and
    then can see a discovery through to actual production. And if
    the perception is that that can't be done, then it's back to
    South America or other places that I've worked in second- or
    third-world countries.
        So the concept called ``risk'' is important. And this bill,
    as proposed, would hinder people from taking those risks.
        And just to mention, how many people in this room are
    drilling a 3,000-foot hole right now? As we speak, I have a
    drill hole going below that depth, and that's what these junior
    companies are doing. We're taking the risk. We're taking the
    risk. And so we're filling the niche that isn't missing in our
    industry right now, but we wouldn't take that risk if we
    couldn't move forward.
        So thank you very much.
        Mr. Costa. Thank you very much, Winthrop, for staying
    within you time and thank you for your comments. There's a
    total facility out there of interested parties that participate
    in mining in the U.S., and you're very good to reflect that and
    to point that out.
        Eric, you're next.
        And then followed by Eric is Thom Seal and David Knight, I
    believe.
        Come over there to the mike. Go ahead, please.

                 STATEMENT OF ERIC LAUHA, ELKO RESIDENT

        Mr. Lauha. OK. For the record, my name is Eric Lauha, L-A-
    U-H-A. I'm an Elko resident for over 25 years. I worked for
    several of the larger mining companies, as well as the smaller
    exploration companies.
        And I wanted to follow up on one of the key points that
    Congressman Heller made on point four of maintaining a viable
    mining industry. There's one implication of this that I think
    is very important. It's not just the local issue as far as just
    jobs. I think it's a national security issue.
        And the reason for this is the perception among a lot of
    people, especially, we feel, east of the Mississippi River, is
    that mining is no longer a necessary industry and that it's
    obsolete and outdated. And as many of the previous speakers
    have mentioned, we've been outsourcing a lot of our expertise
    and a lot of mining companies and mining individuals have gone
    overseas to work in other areas.
        If we were to face a national emergency in this country
    where our foreign sources are affected and we could no longer
    get those metals, we're going to have to rely on our own
    sources and expertise. And a viable mining industry is very
    important because you have a pool of experienced and well-
    trained geologists and engineers that could quickly step into a
    situation.
        For instance, a lot of us work in the gold industry. We
    could quickly go over to working finding strategic minerals
    that would be very essential in a sense, you know, protecting
    this country.
        So I think it's very important that we maintain a viable
    mining industry so that we have that expertise in case of an
    emergency.
        And a perfect example is during World War II, the auto
    industry and a lot of our industries that were already in place
    were turned, making tanks, making planes, and getting ready to
    fight Nazi Germany and Japan. So we've got to maintain our
    viable mining industry to be ready for that kind of a national
    emergency.
        Thank you.
        Mr. Costa. Thank you very much.
        Our next witness is Thom Seal.

                         STATEMENT OF THOM SEAL

        Mr. Seal. Thank you, Chairman Costa----
        Mr. Costa. Thank you.
        Mr. Seal.--and Representative Heller for this opportunity
    to make a few comments about H.R. 2262. I'd like to address
    some of the goals that were put out earlier in this Committee,
    and one about reclamation.
        Regarding the old mines, it appears to me the best way is
    to use the mining companies' expertise and the technology to
    reclaim the old mines. What we need is an incentive, either a
    tax break, Good Samaritan opportunities there. And it also
    gives the mining companies an opportunity to show their good
    stewardship of the land.
        In regard to fair returns, I agree that the resources of
    the United States are owned by the people, and I think that the
    companies of their U.S. base should be given a break regarding
    that because they pay a lot of income taxes in this country and
    have a tier step up for the foreign companies, so they pay a
    larger margin of these royalties if it's imposed. That way, it
    would be kept within the United States.
        And also an exemption for small mining. I agree with
    Senator Reid that we need to protect the prospector and the
    small mining industries.
        In regard to the environmental aspect, I think the current
    laws and regulations are working very well and they're very
    balanced and they've evolved a lot over the years.
        And regarding favorable mining, I've observed it takes up
    to ten years to get a mine permit started, and a lot of the
    small mining operators that are getting environmental
    assessments and permits, they're backlogged for many years to
    try to get this accomplished.
        So I agree with Mr. Abbey from the BLM that we need more
    resources so we can push the permits through, the faster we get
    the public comment and keep mining a viable industry.
        In conclusion, the Fraser Institute says Nevada is the
    number one place in the world to invest in mining industries
    regarding all the regulations and the permitting and the
    resources.
        Thank you very much for this opportunity.
        Mr. Costa. Thank you. Thank you for your patience.
        David Knight, I believe, is the next individual that we
    have. And following David, we have Jim Collins, small miner.
    And Walter Martin is who I have among those. So you might want
    to work your way there.
        David.

                      STATEMENT OF DAVID KNIGHT,
                      CARLIN TREND MINING SERVICES

        Mr. Knight. Thank you very much, Mr. Chairman. My wife and
    I own a small business called Carlin Trend Mining Services
    here. We provide employees and mining supplies to the industry.
    Over half of our clients are juniors or individuals.
        I am very worried that a two percent or an eight percent
    NSR will really affect them quite a bit. If they can't make a
    living, we're not going to be able to make a living.
        And I would ask the Committee to think about not doing
    anything retroactive. We all have an economic plan. If we do
    something--if we grandfather in, many of my clients have
    already done their feasibility studies, and the mines will be
    uneconomic at the eight percent NSR.
        So I would ask you guys to consider not to do anything
    retroactive with that.
        Mr. Costa. All right. Thank you very much. I appreciate
    your testimony. Like your shirt.
        [Laughter.]
        Mr. Knight. We were told it was a private meeting so I just
    threw something on.
        Mr. Costa. Oh, not true. I don't hold those kind of
    meetings. But I've got a few shirts like that. That's why I
    like it.
        Mr. Costa. Mr. Jim Collins, I believe, is next, small
    miner.

                 STATEMENT OF JIM COLLINS, SMALL MINER

        Mr. Collins. Hi. My name is Jim Collins. Thank you for the
    opportunity to address this assembly.
        Mr. Costa. Thank you for being here. This is all part of
    our practice of democracy, your opportunity to testify.
        Mr. Collins. Thank you.
        As a small miner, if H.R. 2262 is enacted, I'm out of
    business because I do not have the expertise or the financial
    resources to meet all of the requirements.
        My thrust is in plaster mining, and I didn't know that this
    is--this was going to cover plaster mining until I read the
    entire context of this bill.
        I thank you for letting me address this assembly.
        Mr. Costa. How long have you been mining?
        Mr. Collins. About 40 years.
        Mr. Costa. So all over Nevada?
        Mr. Collins. Basically I started in South Dakota. I moved
    in Colorado, Wyoming, and Idaho. And now all of my claims are
    here in Nevada.
        Mr. Costa. You're following the gold.
        Mr. Collins. Yeah. Thank you.
        Mr. Costa. Thank you very much. I appreciate your comments.
        Walter Martin, geologist; is that correct?
        Mr. Martin. That's correct.
        Mr. Costa. Mr. Martin, you're up.

                 STATEMENT OF WALTER MARTIN, GEOLOGIST

        Mr. Martin. Chairman Costa, Congressman Heller, thank you
    very much for letting me speak today.
        I would echo the statements of Russ Fields regarding the
    royalties. What I would suggest is that if you are going to
    implement a royalty, that actually you look to the states who
    are going to be impacted by the loss of their revenues. They're
    the ones that are going to come back to you and ask you to help
    them replace their industries that they've lost.
        What we need probably is to structure a mineral severance
    tax as opposed to a royalty. And probably, Congressman Heller,
    you can probably give your insights on that and how useful it's
    been for Nevada. So that's probably the best way to approach
    this.
        The problems that we face also with the loss of or the
    closure of the minerals industry in the United States is that
    we would--we have--we will have to depend upon third-world
    nations to supply us with our raw materials if that industry
    closes here.
        Now, we only have to look to the statements by President
    Chavez of Venezuela as to why they should be compelled to sell
    their resources to the United States unless it's at a
    significant price. That's not necessary as long as we keep our
    own industry open.
        And so I would ask that you actually keep those items in
    mind when you're actually changing these.
        Thank you.
        Mr. Costa. Thank you very much, Walter. I appreciate that.
    I think you make some good points. I think many of us are
    concerned in the global economy that we live in today, that we
    maintain our ability to chart our own course. It's just not
    with regards to minerals but energy and agriculture and the
    like.
        Mr. Martin. Well said, yes.
        Mr. Costa. So I share that concern.
        Our last witness who we were going back and forth on as to
    whether or not we would allow you to speak, only because you
    came to Washington and you had a chance to testify there. But
    since I am in a generous mood--and please don't make me miss my
    plane--we will give you two minutes. You are last, certainly
    not least. We did appreciate you coming back to Washington to
    testify, and you're on. Two minutes.

                        STATEMENT OF TED WILTON

        Mr. Wilton. Thanks, Mr. Chairman, Congressman Heller.
        I'd like to make a comment about one specific issue that
    was brought up both in Washington and here. And that's the
    interaction between the mining industry and sportsmen and
    fishermen.
        I would urge the Committee to take a careful look at the
    cooperative activities between the mining industry, the Nevada
    Division of Wildlife, other state and Federal agencies.
        We heard a comment this morning about the water quality in
    the North Fork of the Humboldt River as it related to the Big
    Springs Mine. There's two sides to all stories, and this is one
    that I'd urge you to take a careful look at. The North Fork of
    the Humboldt River is habitat for the Lahontan cutthroat trout,
    which is a threatened species under the Endangered Species Act.
    And through the cooperative arrangement between the Forest
    Service and the mining company that originally developed Big
    Springs Mine, the habitat was greatly improved. And in fact,
    the population of the Lahontan cutthroat trout increased
    dramatically from the time that that mine was originally
    proposed and when it was closed down.
        I think that it's worth us taking a careful look at how we
    can develop these partnerships between the companies and
    agencies rather than just having absolutes in the law.
        Mr. Costa. Well, I think your points are well taken. I was
    interested to learn yesterday by one of our noted Bureau of
    Land Management biologists who has, I understand, a very
    wonderful reputation. And she told me of her work on some of
    these partnerships with some of the mining interests on the
    cutthroat trout in the headwaters and the ability to maintain
    those. So I was interested to learn that--just wish I had the
    time to go up there and see those trout.
        The fact is that I believe--I've been a long believer in
    public-private partnerships. I think those partnerships
    oftentimes are really uniquely American and keys to a lot of
    successes.
        So I thank you for your testimony.
        Mr. Wilton. Thank you, Chairman.
        Mr. Costa. All right. Well, this winds up the hearing,
    ladies and gentlemen. Let me tell you that I appreciate and I
    know Congressman Heller appreciates your participation. I'll
    allow him an opportunity to make some closing comments, as long
    as he doesn't make me miss my plane. And then I'll close the
    hearing.
        Mr. Heller. Thank you very much, Mr. Chairman. I just want
    to take a moment to thank you for taking time out of your busy
    schedule. Again, it's been said several times by both myself
    and Senator Reid that it is an honor to have you here in Elko
    County, to have you spend this kind of time and energy and
    realize the complexity of the issue. And the individuals who
    spoke here today, I think, expressed those complexities of the
    issues that are at hand.
        I want to thank everybody that's here today. I want to
    thank the companies who represented, the individuals, the
    patience that you have shown. I want to thank all of those who
    have testified also today.
        This is clearly a critical part of this process, and being
    here in Elko County will go a long way to implementing a bill
    that hopefully we can all live with. So thank you very much.
        Those of you who are going to be at the rally at 2 o'clock,
    I'll see you there. Thank you.
        Mr. Costa. Congressman Heller, I want to thank you for your
    good work. You've hit the ground running in Washington and your
    participation in the Committee and the Subcommittee. We look
    forward to your continued counsel and input as we try to
    fashion legislation that makes sense.
        And let me just close by saying, once again, I hope you
    really get a sense of what I've had, a wonderful two days here.
    And I think that all the things you hear about in Elko County
    and the preservation of the past and your focus on the present
    and the future really reflects on all the good citizens here.
        Today, you have participated in what we like to think is so
    good about our country and our democracy. It's participatory
    democracy. Participatory democracy works in--we are
    representatives, but it's a two-way street. It happens when the
    citizens participate and then we interact. That's what we've
    done here today.
        So I thank you for your efforts and for your desire to
    ensure that this process works.
        So with that understood, I've got to say some words here in
    closing to stay within the constraints of the House rules.
        If there's no further business before the Subcommittee,
    then the Chairman would like to thank everybody, as I've just
    done, our Subcommittee and witnesses; the staff that worked
    very hard, both the Republican and Democratic staff members;;
    our reporter clerks; and all of those who have testified. We
    really appreciate it. We will continue to work on this effort.
        The Subcommittee now stands adjourned.
        [Whereupon, at 1:04 p.m., the Subcommittee was adjourned.]

        [Additional material submitted for the record follows:]
        [A letter submitted for the record by the Arizona
    Conservation Partnership, Native American Advisory Committee,
    follows:]

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        [Comments submitted for the record by Nigel Bain,
    General Manager, Queenstake Resources USA, Inc., follow:]
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        [Comments submitted for the record by Teresa A. Conner,
    Manager, Environmental Resources Department, Queenstake
    Resources USA, Inc., follow:]

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        [Comments submitted for the record by Cole Deringer,
    P.E., Mining Engineer, Elko, Nevada, follow:]
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        [A letter submitted for the record by The Honorable Jim
    Gibbons, Governor, State of Nevada, follows:]

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        [A letter submitted for the record by Lee ``Pat''
    Gochnour, President, Gochnour & Associates, Inc., follows:]

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        [A statement submitted for the record by Joseph P.
    Hebert, Vice President of Exploration, Minerals Gold Corp.,
    follows:]

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        [Handwritten comments submitted for the record by
    employees of Queenstake Resources follow:]
    [GRAPHIC] [TIFF OMITTED] T7529.025

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        [A letter submitted for the record by R. Bruce Kennedy,
    Vice President-General Manager, Robinson Nevada Mining Company,
    follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [Comments submitted for the record by Steven R.
    Koehler, Senior Geologist, Miranda Gold Corp., follow:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [A statement submitted for the record by Walter Martin,
    Geologist, follows:]

         Statement submitted for the record by Walter Martin, Geologist

        Chairman Costa,
        Thank you for the opportunity to extend my remarks in further
    support of my oral testimony given in Elko, Nevada on August 21, 2007
    before the House Subcommittee on Energy and Mineral Resources. My name
    is Walter Martin. I am a geologist with bachelor's and master's degrees
    of science in geology. I have more than 25 years of professional
    experience in minerals exploration and mining in the United States, and
    hold current mining claims that would be impacted adversely by H.R.
    2262.
        The General Mining Law implemented by Act of Congress in 1872 has
    been modified more than 50 times since its inception, by and through
    Congressional actions and administrative, or policy, modifications by
    various Federal agencies. This body of law has served the United States
    well. The replacement, rather than amendment, of the General Mining
    Law, especially with an unproved system, is imprudent. And mining is a
    prudent business for our nation. I urge this Committee to retain the
    General Mining Law, amending it where necessary, in the great tradition
    of our legislative process.
        With that, I submit the following comments on H.R. 2262:
    Section 101. Limitation on patents.
        The right to guaranteed long-term land tenure is essential in order
    to secure the substantial capital required to construct modern mining
    operations. The limitation on patents section appears to terminate
    future secure tenure rights for mining operations on Federal lands. The
    capital source used by most mining companies, investment banking firms,
    require a stable land tenure position for a proposed mine in order to
    finance the tens to hundreds of millions of dollars needed to construct
    a modern minerals mine-and-mill operation in the United States. If
    patenting as presented in the current General Mining Law is not
    palatable, then provision in any revision of that law to allow sale of
    surface rights at market value needs to be enacted in order to provide
    a reasonable certainty to the banking community that the mining
    operations that have been financed will be able to continue operating
    and thereby repay invested capital at a market-consistent rate of
    return. The funds from such sales should be directed towards payment of
    general and administrative costs of monitoring minerals mining on
    Federal lands.
    Section 102. Royalty.
        The royalty provision specified in H.R.2262 Sec. 102 (a)(l) of 8
    percent of the net smelter return (NSR) is too onerous for metals
    mining operations. Commonly, the royalties paid to claimants are no
    greater than 3 percent NSR. Even so, royalties of this magnitude are
    paid only to claimants like myself who have invested intellectual,
    physical and financial efforts to identify and acquire locatable
    minerals that have potential to be economically recoverable. As such
    they have met discovery requirements, staked the mineralized area and
    have met at least the minimum financial and legal requirements to
    secure valid tenure to this ground. No provision is made in H.R. 2262
    to establish any such identification and sequestering of valuable
    minerals by the Federal government to match current minimum industry
    standards for royalty provision. The Federal government's current role
    as a non-participating landowner would garner commonly no more than a 1
    percent NSR (i.e., a 5 percent net proceeds interest). Basically, the 8
    percent NSR proposed in this bill equates to 40 percent net proceeds
    interest. This amount could be available in a modern industry
    production agreement, but only to a fully participating minority
    interest party. This type of agreement requires weighted financial and
    technical participation by the minority party at every turn, or it
    suffers substantial subsequent dilution with each failed cash call,
    typically to a cellar value of approximately 5 percent net proceeds
    interest with a capped end value. No provisions exist in H.R. 2262 to
    provide participation by the Federal government in mining projects that
    would meet modern global industry standards to warrant payment of such
    a large royalty income.
        Many States hosting metallic and non-metallic mining operations
    impose a severance tax on minerals production. Excessive additional
    royalties by the Federal government on mineral production on Federal
    lands will reduce the incomes of those States, whether by loss of
    industry or by loss of net income to the operations. In setting a
    successful Federal royalty, the most prudent track is to look at the
    States whose programs depend most on their mineral severance tax--they
    will be the most impacted and the first applicants for Federal relief
    funds in the event of loss of revenues due to Federal actions. Nevada,
    for example, has a 5 percent net proceeds tax on mineral production
    that contributes tens of millions of dollars annually to the State's
    general fund. Nevada would suffer severe adverse financial impacts if
    the proposed non-participating 8 percent royalty in H.R. 2262 were
    imposed on mining operations on Federal lands in Nevada. A Federal
    severance-based payment for extraction of minerals on Federal lands
    that is similar to Nevada's will least impact those States that depend
    on revenues from their respective mining severance taxes, yet will
    provide a long-term revenue stream to fund mining-related Federal
    programs. I urge the Committee to revise this bill or the General
    Mining Law to adopt Nevada's severance tax in lieu of H.R.2262's
    proposed 40 percent non-participating net proceeds interest.
    Section 201. Lands open to location.
        Mineral deposits that contain economically recoverable products are
    rare events geologically. The denial of mineral entry upon Federal
    grounds that have been selected for wilderness or wilderness study
    designation but not acted upon by Congress has long been a poor use of
    public resources. In abeyance of NEPA requirements, a dismaying number
    of such areas have not been characterized adequately (or at all) for
    mineral resource potential by qualified professionals. The tenet that
    wilderness selection is in the best public interest overlooks the
    highest and best return to the Federal government for land use.
    Wilderness areas cost the Federal government at least $30 for every $1
    returned. No wars have ever been fought, nor human life lost, over
    wilderness. In contrast, mining, an example of competent multiple
    natural resource use, costs the Federal government a maximum of $1 for
    every $10 returned. Resource wars have been waged between nations
    throughout the millennia of human civilization, with staggering loss of
    human life. The denial of mineral entry to land that is improperly
    characterized as to its non-mineral character is a deplorable waste of
    natural, and potentially war-torn human, resources. I therefore urge
    the Committee to require stringent mineral evaluation of proposed
    wilderness withdrawals by qualified professionals, with payment for
    such activities to be made from 20 percent of the requested 5 percent
    net proceeds severance funds outlined in the previous section.
    Title III. Environmental Considerations of Mineral Exploration and
            Development.
        The current provisions of the Federal Land Management and Policy
    Act, the National Environmental Policy Act; the Clean Air Act; the
    Clean Water Act; 43 CFR 3809; 36 CFR 228; the Endangered Species Act;
    and practiced policies of the U.S. Bureau of Land Management and U.S.
    Forest Service are more than adequate to ensure ongoing protection of
    the environment and human health both during and after cessation of
    mining on Federal lands. Many States have their own requirements for
    environmental and health protection that must be met during and after
    mining operations, frequently in cooperation with Federal agencies by
    and through Memoranda of Understanding. Nevada, for example, has
    implemented competent regulatory oversight through its Department of
    Environmental Protection's Bureau of Mining Regulation and Reclamation
    (http://wjywj1dep.nv.gov/bmrrA3miTO1.htm) that ensures environmental
    protection both during and after cessation of mining operations. In
    recognition of successfully established cooperative relations between
    States and Federal agencies, I urge that the Committee maintain the
    current practice in these matters, and that it therefore remove this
    section of H.R. 2262 from the bill, or in contemplated revision of the
    General Mining Law, not include the redundant legislation inherent by
    this section.
    Title IV. Mining Mitigation.
        Various States with mining and milling operations have implemented
    their own Abandoned Mine Land reclamation programs (AML). These AML
    programs are paid for by and through fees and mineral severance taxes.
    Nevada again is an excellent example of a State with such a program.
    Rather than create redundant efforts, the Committee is urged to
    consider supplementing State-based programs with matching Federal funds
    and provide service assistance only when requested. These programs
    should be funded by and through 60 percent of the requested 5 percent
    net proceeds severance funds outlined previously in comments on section
    102.
    Title V. Administrative and Miscellaneous Provisions.
        Various Federal agencies' field offices already levy cost recovery
    fees and processing fees for land use. It is unclear what needs to be
    changed from current practice, if anything. Adequate penalties for
    malfeasance as ``bad faith'' operators are likewise in place elsewhere
    within Federal regulations and codes. Similarly, all entities
    conducting advanced minerals development activities on Federal lands
    are required to file action plans of one sort or another, as well as to
    bond these activities for reclamation costs. Notification of affected
    stakeholders, too, is required under Federal law (NEPA) for all but the
    most minuscule of minerals-related activities. Redundant legislative
    efforts by the Committee are unnecessary on these various matters.
        Citizens' suits are particularly objectionable. Citizens as well as
    all other entities are given more than adequate opportunity during the
    NEPA process and under enforcement provisions of existing State and
    Federal environmental regulations to register their various objections
    re: mining and milling operations. It is untenable to think that
    Congress would enact or even consider legislation that would allow a
    single individual of unspecified qualifications to estop a fully bonded
    active mining and milling operation by simple whim. In addition,
    various existing provisions for legal action can already be implemented
    by persons with implied knowledge of malfeasance, including but not
    limited to professional monitoring by licensing entities (e.g., Federal
    and State Bar associations; State Boards of Engineers; State Boards of
    Geologists), qui tarn actions, and complaints to the Criminal
    Investigation Division of the Bureau of Land Management. Reporting and
    pursuit of action against felonious malfeasance appears to be required,
    for example, by 18 USC 4 (misprisionment codification). There is no
    need for a citizen's suit provision to be included in any revision of
    the General Mining Law given the abundance and adequacy of existing
    forums for registering personal resistance to land development and for
    reporting malfeasance on public lands.
        Uncommon variety mineral materials currently are locatable. These
    unique materials form the essence of research and development efforts
    in the solution of various highly specialized industrial and civil
    development problems, including wastewater treatment; unique building
    materials; specialty filtration materials for medical treatment;
    specialty heat resistant materials for the national space program;
    fillers and extenders for specialty paints and plastics, including
    those used by the defense industries; and numerous other applications.
    Without the certainty of long-term land tenure provided by the General
    Mining Law, the research and development of new technological uses for
    these mineral materials are not likely to continue in the United
    States.
        In addition, the development of new uses for uncommon variety
    minerals requires substantial lead-time to convince end markets to use
    the new materials. Manufacturers require proof of guaranteed long-term
    supply of the products before they will capitalize a new production
    line. The acquisition by proposed sale of uncommon variety minerals on
    Federal lands, as opposed to current acquisition by location, is not
    adequate to provide this assurance. Common variety sales contracts are
    issued at the whim of the Managers of the Field Offices of the
    pertinent managing Federal agencies, giving neither assurance of access
    nor continuity of material supply for manufacturers. A Federal common
    variety sales contract is often set up for 3- to 5-year terms, much too
    short a time for manufacturers to be comfortable with use of the new
    product. The proposed changes in H.R. 2262 do not provide for any
    extended lead time for product research and development, nor lead time
    for market development, nor extended contract times that would assure
    manufacturers of reliable supply of minerals products (20 year terms
    would be needed). This part of the modern mining laws work well for the
    United States; why try to change this? I urge the Committee to reject
    the proposed rescission of locatable uncommon variety mineral materials
    in any revision of the General Mining Law.
    Conclusion of Witness.
        The General Mining Law, as amended, has worked well for the United
    States. With the modest changes to it of fair-market sales of surface
    rights at mines, and a Federal 5 percent net proceeds interest that
    funds abandoned mine land reclamation and competent evaluation of
    mineral potential of Federal lands proposed for withdrawal, the General
    Mining Law will continue to work well for the United States into the
    next century. Thank you again, Mr. Chairman, for allowing me the
    opportunity to provide my insights to viable revisions and amendments
    to the General Mining Law. I appreciate your interest in this matter.
                                     ______

        [A letter submitted for the record by John J. Renas, GIS
    Analyst, Spring Creek, Nevada, follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [Comments submitted for the record by Ralph R.
    Sacrison, P.E., Sacrison Engineering, Elko, Nevada, follow:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [Comments submitted for the record by Thom Seal, P.E.,
    Ph.D., Mining-Mineral Process Engineer, Elko, Nevada, follow:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [A statement and letter submitted for the record by Ben
    Shelly, Vice President, Navajo Nation, follow:]

        Statement submitted for the record by The Honorable Ben Shelly,
                         Vice President, Navajo Nation

        Mr. Chairman and Distinguished Subcommittee Members,
        Ya'at'eeh abini. Yinishye Ben Shelly. Good morning. My name is Ben
    Shelly and I am the Vice President of the Navajo Nation. The Navajo
    Nation extends into the states of Utah, Arizona and New Mexico,
    covering over 27,000 square miles of unparalleled beauty. Dine Bikeyah,
    or Navajoland, is larger than 10 of the 50 states in America.
        The Navajo Nation has fought on ongoing battle against uranium
    mining on our land for over fifty years and the impact is still being
    felt today. We are not only concerned about mining on Navajo land but
    also on lands near our Tribal lands.
        Our land is dotted with contaminated tailings and hundreds of
    abandoned mines that have not been cleaned up. Our people have inhaled
    radioactive dust from the waste piles, drank contaminated water from
    abandoned pit mines and watered our herds with contaminated water. Our
    children have played in piles of mill tailings and spent mines. Our
    people suffer from high cancer rates and respiratory problems--cancer
    rates among Navajo teenagers living near mine tailings are 17 times
    that of the national average.
        There has been a rush over the past five years to claim metals on
    public lands. Many of the claims are near such national treasures as
    the Grand Canyon and tribal lands. And, despite the ban on uranium
    mining on Navajo land, the mining industry is back, staking claims,
    buying mineral rights and applying for permits on the edge of Navajo
    land. They have made no secret of their desire to mine within the
    reservation also.
        H.R. 2262, the Mining Law Reform bill, will help Tribal Nations in
    many ways. It makes it a priority to protect special places like sacred
    sites. It sets strong public health, environmental and cleanup
    standards. It creates an abandoned mine fund and it insures that our
    voices are heard and valued when mining decisions are made.
        I have joined numerous Navajo Nation Tribal officials and community
    leaders in calling upon our own Congressman, Rick Renzi, to assist in
    passing this important legislation. With your permission, I'd like to
    include copies of our letters to him here for the record.
        We are today calling upon your Subcommittee to move quickly on H.R.
    2262 so the outdated and unfair mining law can be reformed at long
    last.
        Thank you for giving me the opportunity to submit this statement
    today.
                                     ______

    June 25, 2007

    The Honorable Rick Renzi
    U.S. House of Representatives
    Washington, D.C. 20515

    Dear Congressman Renzi:

        The Navajo Nation greatly appreciates your support on uranium
    mining issues. Our work is not done.
        For many, many years now we have dealt with the harmful impact of
    mining and abandoned mines on Navajo land, water and wildlife and on
    the health and safety of our people. As we look to the future, we are
    fearful of even more problems if the outdated 1872 law governing metal
    mining is not changed and strengthened. I hope you will co-sponsor H.R.
    2262 to make the mining law current.
        Metal claims on public lands have increased substantially in the
    past five years. There are claims near the Grand Canyon and tribal
    lands. Even with the Navajo Nation's uranium ban, the industry is
    staking claims, buying mineral rights and applying for permits on the
    edge of Navajo land and would still like to mine on the reservation
    also.
        The Mining Law Reform bill includes many good provisions: it
    restricts new mining claims on lands identified as sacred sites; it
    includes strong public health, environmental and cleanup standards; it
    sets up special funds for the cleanup of abandoned mines and for
    assistance to communities impacted by mines; and, it makes sure Native
    American voices are heard and valued when mining decisions are made.
        Continuing to apply 1872 standards to an industry which has such an
    impact on sacred land, water and people today makes no sense and it's
    unfair. Powerful interests are reaping all of the benefits of our
    precious resources while the powerless suffer the consequences.
        Again, I thank you for the courage to stand with us and against
    such powerful interests in the past. Please do so again and co-sponsor
    the 1872 Mining Law Reform bill.

    Respectfully,

    /s/ Ben Shelly