[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.
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\1\ Jones, Greg, and Glenn Miller; October 24, 2005, Mercury and
Modern Gold Mining in Nevada.
\2\ http://www.epa.gov/triexplorer/
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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
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\3\ Jones and Miller, 2005.
\4\ http://www.epa.gov/triexplorer/
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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.
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\5\ Barker, Rocky, November 5, 2005, The Idaho Statesman; High
mercury levels found in Idaho reservoir.
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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.
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\6\ Nevada Division of Water Resources, http://water.nv.gov/
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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.
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\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).
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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.
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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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[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:]
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[Comments submitted for the record by Ralph R.
Sacrison, P.E., Sacrison Engineering, Elko, Nevada, follow:]
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[Comments submitted for the record by Thom Seal, P.E.,
Ph.D., Mining-Mineral Process Engineer, Elko, Nevada, follow:]
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[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