[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/
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         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
---------------------------------------------------------------------------
    \3\ Jones and Miller, 2005.
    \4\ http://www.epa.gov/triexplorer/
---------------------------------------------------------------------------
    Mercury is a highly toxic and highly mobile element. It is a 
neurotoxin associated with a variety of health ailments including loss 
of vision, loss of memory, temporary or permanent brain damage, tremors 
and deafness. Mercury is easily converted to organic methylmercury when 
it comes into contact with microorganisms. Methylmercury persists in 
biological systems causing accumulation up the food chain. Most mercury 
exposure in human comes from eating fish contaminated with 
methylmercury. Larger, older and predatory fish are more likely to 
contain larger amounts of mercury. As a result the EPA has made 
recommendations to limit the amount of fish that people consume 
especially pregnant women and young children. The effect of mercury 
poisoning can be particularly devastating while development of the 
nervous system is still occurring.
    The Nevada State Health Division issued fish consumption advisories 
for six water bodies in the state in March 2007 in response to data 
gathered from samples of fish tissue with high levels of mercury. Some 
fish from other waters showed levels of mercury that according to EPA 
guidelines would support the release of additional fish consumption 
advisories.
    Last year the State of Idaho issued fish consumption advisories for 
several water bodies. Idaho officials were concerned that the source of 
the mercury was mining activity of Northern Nevada. 5 This 
illustrates that the effects of mining are not isolated, that 
environmental contamination and ecosystem disruption have the potential 
to span states.
---------------------------------------------------------------------------
    \5\ Barker, Rocky, November 5, 2005, The Idaho Statesman; High 
mercury levels found in Idaho reservoir.
---------------------------------------------------------------------------
    Mining in Nevada and other states releases a large amount of 
mercury into the environment. Companies allowed to mine on public lands 
need to be aware of how much mercury they are releasing, and plan for 
abatement of the circulation of mercury in the environment while the 
mining continues and after it ends. The provisions of the Hardrock 
Mining and Reclamation Act of 2007 would facilitate this practice.
    Mercury can be isolated and used industrially, but at a minimum it 
must be contained and disposed of properly. Also mines must use the 
best emissions reduction technology that is available. Recently the 
Nevada Division of Environmental Protection began a mercury air 
emissions testing campaign to determine the types (species) of airborne 
mercury released from ore possessing equipment. The species of mercury 
released is a large determining factor in how far the particles will 
travel before being deposited.
    The tests revealed that in a few cases more mercury was being 
released than was reported by the mines in a voluntary program. But 
more to the point for the purpose of HR2262 it revealed that emission 
control technology being used are not as effective as they are 
engineered to be and that emissions are highly variable.
    Mercury pollution is one of the most persistent problems that 
mining produces during operations and into the future. The problem 
needs to be addressed from the outset of any new mining operation. New 
legislation like HR2262 can help keep mercury pollution to a minimum 
through careful planning, engineering and consistent monitoring.
Water
    Nevada is the driest state in the union. Water quality and quantity 
are both critical to the future of the state.
    As many of the mines are in rural areas, away from the primary 
population centers, there used to be an ``out of sight, out of mind'' 
attitude towards the impacts of mining on the state's waters. However, 
that is clearly no longer the case. Currently, there are at least seven 
proposals before the State Engineer to allow trans-basin water 
transfers, from rural areas to the metropolitan areas. Some of these 
involve pumping groundwater in remote basins and piping it hundreds of 
miles. 6 Clearly, all water in the state is a resource that 
should be protected.
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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.
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    \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
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    \14\ US Fish and Wildlife Service, ``Assessment of Wildlife Hazards 
Associated with Mine Pit Lakes,'' www.fws.gov/pacific/ecoservices/
envicon/pim/reports/Reno/PitMines.htm.
---------------------------------------------------------------------------
    The Big Springs mine also underscores concerns related to pit 
lakes. The 2005 SWX pit lake data shows elevated levels of Total 
Dissolved Solids, sulfate, manganese, and magnesium, 15 and 
seepage from this pit lake has been implicated in contributing to 
contamination of Sammy Creek, which feeds the North Fork Humboldt 
River. 16 Recently, July 10, 2007, the U.S. forest Service 
released a scoping notice regarding continue exploration in the Big 
Springs area. It notes that the pit lakes at Big Springs have drained, 
``In late October 2006, two lakes that had formed in existing mine pits 
(pit lakes) and the surrounding aquifer began draining. The pit lakes 
are now dry and the aquifer level has dropped about 150 feet below 
previous levels measured prior to October 2006. It is unknown where the 
aquifer is draining to or what the impacts, if any, would be to water 
quality and surface and groundwater resources.'' 17 To the 
extent that the lake water quality was poorer than that in the 
groundwater, draining the lakes into the groundwater would have 
degraded the groundwater. In general, contaminated pit lake water is a 
legacy of modern surface pit mining with varying potential to degrade 
the waters of Nevada.
---------------------------------------------------------------------------
    \15\ Nevada Department of Environmental Protection, Water 
Monitoring Report for 10/4/2005, Water Pollution control Permit 
#NEV87001.
    \16\ Myers, Tom, Expert Report, Nevada State Environmental 
Commission, Appeal hearing, Water Pollution control Permit Renewal, 
NEV0087001, Big Springs Mine, Technical Report 2005-07-GBMW, September 
14, 2005, pg. 28.
    \17\ Notice of Intent for the Big Springs Environmental Impact 
Statement, Federal Register, vol. 72, No. 130, page 37182.
---------------------------------------------------------------------------
Waste Rock Drainage
    Enormous amounts of ``waste rock,'' which surround ore bodies, are 
mounded in high piles called waste rock dumps, present potential water 
contamination problems. If these rock piles contain reactive rock, then 
water infiltrating through them from precipitation can become degraded, 
and if not captured contribute to groundwater contamination.
    The Big Springs area (mine) is drained by the North Fork Humboldt 
River (NFHR) and its tributaries; including Dry Creek, Sammy Creek, and 
Water Canyon Creek. All of these waterways are on Nevada's 303d list of 
impaired waters. 18 The listing noted that the impairment 
was due to mining activities. Myers 19 conducted a detailed 
review of waterflow and constituent concentrations from the various 
monitoring stations located on the tributaries of the NFHR. His 
analysis provides clear evidence of contamination from waste rock dumps 
into these waterways. Particularly striking is the data for Sammy 
Creek, where sampling upstream from the waste rock dump shows sulfate 
concentration median of 8.16 milligrams per liter (mg/L) with a maximum 
of 24.30 mg/L, and downstream of the waste rock dump the sulfate 
concentration median measurement was 320.0 mg/L with a maximum of 557.0 
mg/L. Myers used the sulfate concentrations as a trend marker 
20 that showed an increasing trend in sulfate concentration 
as mining proceeded with a jump upward around 1990 when mining first 
began in earnest.
---------------------------------------------------------------------------
    \18\ Nevada Division of Environmental Protection Bureau of Water 
Quality Planning, ``Nevada's 2004 303(d) Impaired Waters List,'' 
November 2005.
    \19\ reference 10.
    \20\ ibid, pg. 4; Myers connected trends in sulfate concentrations 
with Total Dissolved Solids (known to violate standards on the NFHR, 
and also to examine the hydrology of the basin, in general.
---------------------------------------------------------------------------
    Myers concluded regarding waste rock seepage at Big Springs that:
        Analysis of monitoring data completed for this report and other 
        studies have found that the tributaries to the NFHR that drain 
        the Big Springs mine have added substantial sulfate and metals 
        loading to the river. The most likely source of contamination 
        is the waste rock that has been dumped in each of the 
        tributaries; in all three drainages, the waste rock has been 
        piled over the stream or on top of springs. The final closure 
        plan indicates the lower Sammy Creek, Dry Canyon, and both 
        Water Canyon dumps ``were developed using the cross-valley 
        method of construction'' (IMC, 1996, page 14). These all had 
        ``[u]nder-dump drainage systems [which] were developed beneath 
        the cross-valley type dumps through natural gravity segregation 
        of waste rock that occurs during dumping operations. The under-
        dump drainage systems are intended to allow surface runoff from 
        the contributing watersheds to flow through the base of the 
        dumps'' (IMC, 1996, page 14). This basically means that the 
        dumps were designed to be within the drainages with coarser 
        rock naturally segregating from the bulk of the rock during the 
        dumping. They were designed to convey drainage water from above 
        the dump through the dump and to downstream channels. There is 
        no provision made to separate or segregate the drainage from 
        the waste rock. It would be useful to identify whether this 
        waste rock could leach high sulfate concentrations and some 
        metals to the river. High sulfate would be caused by pyrite 
        oxidation followed by carbonate neutralization; high sulfate 
        but neutral pH and not high metals concentration would be the 
        result. There are several studies that address the leaching 
        from waste rock; this section reviews these studies. 
        21
---------------------------------------------------------------------------
    \21\ ibid, pp 14-15.
---------------------------------------------------------------------------
    Solving the problem that generates the degraded water is often 
infeasible from the mine company's perspective, since it may require 
extensive excavation of the waste rock dump itself. The long-term 
solution is often the eventual disintegration of the reactive 
components within the waste rock dump. However, that ``natural 
attenuation'' could require many years and perhaps centuries.
Heap Leach Seepage
    The third major long-term water contamination issue with modern 
mines is the fate of the heap-leach piles. These piles contain various 
grades of ``depleted'' ore, which in the case of gold mining have been 
leached with sodium cyanide solution to extract the microscopic gold. 
Once mining has discontinued the leach piles are rinsed until the 
``drain down'' water (the water that is collected at the bottom of the 
pile after passing through the pile from the top) is of acceptable 
quality to begin active reclamation. The heap leach piles have liners 
underneath to catch the gold laden solution during extraction, so once 
the heaps are out of use the liners will continue to catch the drain 
down water for monitoring. The liners are considered a safeguard 
against future groundwater contamination assuming that they retain 
their integrity through the point when seepage water is no longer 
degraded. The liners collect seepage and convey it to a single point 
from which it discharges from under the heap. The disposal of this 
seepage is a long-term problem.
    In March 2003, New Sleeper Gold LLC submitted a final Closure Plan 
to the Nevada Department of Environmental Protection and the Bureau of 
Land Management. In this closure plan, New Sleeper expressed the need 
for the heap leach ponds (into which the heap leach piles drain) to 
remain in place to serve as evapotranspiration basins 22 for 
the long-term seepage. The previous Reclamation Plan of 1993 required 
these ponds to be decommissioned, so the current proposal is to 
maintain the ponds in perpetuity. The reason for this is evident in the 
current water monitoring data for the Sleeper mine that shows the heap 
leach drain down water of very poor quality with pH's between 2 and 3, 
very acidic, and high levels of a number of constituents such as TOTAL 
DISSOLVED SOLIDS, sulfate, manganese (over 10 times the standard), 
selenium (about 10 times the standard), magnesium, etc. 23 
If the ponds were reclaimed and the heap leach piles were effectively 
allowed to drain uncontrolled the resulting contamination of area water 
resources would be very high. 24 This puts the public in a 
untenable situation of either allowing potentially substantial water 
contamination or try to maintain a facility virtually forever.
---------------------------------------------------------------------------
    \22\ An evapotranspiration basin is a partially vegetative field to 
where excess fluids are directed to eliminate the water by evaporation 
and plant transpiration; in this case with liners.
    \23\ New Sleeper Gold LLC, ``Sleeper Mine Water control Permit 
#NEV50006; 2005 Annual Report.'' and ``4th Quarter, 2006 report.''
    \24\ US Bureau of Land Management, ``Preliminary Environmental 
Assessment, Sleeper Closure Project,'' Winnemucca Field Office, October 
2006.
---------------------------------------------------------------------------
    In each of the cases outlined above, modern mines have created a 
situation that pose long-term environmental impacts, which to date do 
not have a clear solution. In the case of Mule Canyon early predictions 
led the public to believe that the pits would not create a potentially 
unmanageable situation. Environmental analyses often do not anticipate 
these problems, and sometimes are just wrong about the level of 
toxicity that will ultimately result from the various aspects of the 
mine. Kuipers and Maest have presented a detailed analysis of the 
predictability of water quality in hardrock mining. 25 Below 
are two comparison tables from this report. 26
---------------------------------------------------------------------------
    \25\ Kuipers, James R., Maest, A.S., MacHardy, K.A., and Lawson, G. 
2006 Comparison of Predicted and Actual Water Quality at Hardrock 
Mines: The reliability of predictions in Environmental Impact 
Statements.
    \26\ ibid, pg 149 and pg 152.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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

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

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

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

    Mr. Chairman and Members of the Committee--
    My name is Elaine Barkdull Spencer. I am the Executive Director of 
Elko County Economic Diversification Authority and the former CEO of 
the Elko Area Chamber of Commerce. First of all, I would like to thank 
the Subcommittee for inviting me to participate in this public hearing 
on the Hard Rock Mining and Reclamation Act of 2007. Most importantly, 
I would like to thank Senator Reid for his many years of advocacy and 
leadership on mining law reform issues. Without his diligent efforts to 
stop unfair attacks on Nevada's mining industry, it is unlikely that 
Nevada would even have a viable mining industry to discuss with you 
today.
    I appreciate the opportunity to speak on the impacts of mining on 
communities such as those I represent in Elko County. In my position at 
the helm of ECEDA, I am very familiar with the impacts of mining on 
local businesses and the economies of mining communities, but my 
experience with mining is a lifelong. I am a native Nevadan and have 
lived in more than a handful of the cities and towns in this great 
state. My family has lived in Nevada for generations and our heritage 
is directly related to mining. My mother's family started in Nevada as 
prospectors, my father worked as a heavy equipment operator for several 
mines throughout the state. To save money for college I worked for a 
barite mine near Battle Mountain. Today I have two sons who work in 
mining. My oldest son is an electrician at a mine in Washington. A 
Nevada mine helped to pay for his college education and his electrical 
certification. My younger son is only 25 years old and is a mill 
supervisor for Round Mountain Gold near Tonopah, Nevada. I am very 
proud of both my sons' accomplishments and I credit the mining industry 
for the opportunities they have offered my family. While I may have 
personal reasons for being an advocate for mining, as a community 
representative I have high respect for any industry that gives back to 
the community.
    Mining represents a substantial asset to the State of Nevada. Last 
year Nevada mines exported billions of dollars worth of precious 
metals. Mines are the largest employers in at least six of Nevada's 
counties and the average miner can make an average of $68,000 a year. 
The economic impacts of mining can easily be identified by the 
thousands of great paying jobs they offer, the local goods and services 
utilized by the industry and their employees, plus the millions of 
dollars in net proceeds of mines taxes, sales taxes, employee taxes and 
numerous other taxes and fees that benefit this great State and the 
counties where mining occurs. This revenue is absolutely critical to 
the annual budgets of these rural counties.
    Mining continually gives back to the communities were they exist. 
Our local mines have contributed city infrastructure, parks and 
schools. Recent contributions from the mines include a partnership with 
the community for the new community health clinic, major contributions 
to Great Basin College's infrastructure, new facilities and specific 
training programs, plus many years of support for communities' 
children's programs and special community needs.
    In addition to the obvious economic benefits of mining, I would 
like to explain the role mining plays in the diversification efforts of 
mining communities. Our local mines support ECEDA (Elko County Economic 
Diversification Authority), a private-public partnership. 
Representatives serve on our Board and contribute to studies and 
programs. Most notably, mining companies have played a major role in 
developing sustainable communities and the job skills of the people 
that live in those communities. Because of mining, Elko County has 
become an attractive community to new types of industry. Our strong 
economy has allowed us to do long-term planning for the future. The 
expanded infrastructure and resources, including industrial parks, 
expanding housing developments and new retail growth are all due to 
mining.
    Elko County is growing and thriving. Norman Crampton listed the 
City of Elko as the number-one ``Best Small Town, in his 1993 book, the 
100 Best Small Towns in America. This recognition was based on quality 
of life, good jobs, cost of living, good schools and high levels of 
public safety. The City of Elko wore this badge with pride and we 
contributed our advantages to the gold mining industry.
    Chairman Costa and members of the Committee, I have read through 
H.R. 2262 and I am concerned about what it will do to Nevada's economy. 
I am particularly concerned about the potential impacts of the proposed 
8% net smelter return royalty called for in the legislation. For 
Nevada's gold miners, a net smelter return royalty is basically the 
equivalent of a gross royalty, and a gross royalty would create an 
enormous financial burden on the State's mining industry. Since gold is 
traded on the commodities market, none of this additional financial 
burden can be added to the price of the gold that is sold. All of the 
royalty costs will have to be absorbed by the mining companies and this 
will have a direct adverse impact on the amount of mining tax revenue 
that flows to the State and to the counties. There will be less 
investment in mining, and fewer exploration and mining jobs. New 
projects will be shelved; expansion plans put on hold or cancelled 
entirely. Secondary impacts will be felt throughout the entire 
community. Mr. Chairman, you will hear more detail about the impacts of 
the proposed royalty in H.R. 2262 from Mr. Fields and Dr. Dobra later 
in this hearing. Having spoken with many of the miners in this 
community who are very familiar with the legislation before you today, 
I am convinced that this bill will make mining in the United States 
less competitive. If the resources our country needs can no longer be 
affordably mined from our own land--they will be imported from more 
affordable locations in other countries. This would be a disservice to 
our country, a threat to the integrity of our strategic metals and 
minerals supply and a devastating blow to the rural economies of the 
Western United States, which depend on mining for their economic 
security.
    We Nevadans are not mindless people that will allow unsafe mining 
practices and destruction of public lands. We demand the best for our 
communities, our state and our people. We believe our local mining 
industry goes above and beyond legal and regulatory requirements, 
embraces its responsibility as stewards of the public lands, and serves 
our community as thoughtful and generous corporate citizens. As a state 
we are fortunate to have an industry, such as mining, that will pay its 
employees well, provide exceptional benefits, and positively impact 
rural areas with opportunities and strong, sustainable economies. I 
come before you today to ask that you work with Nevada's senior Senator 
and our mining companies to develop a fair, reasonable and workable 
mining law reform package that will provide the long-term certainty and 
stability needed to protect existing investments and to attract new 
capital and not harm these communities which are so dependent on a 
healthy and sustainable mining industry. Mr. Chairman, the importance 
of mining to our national security, our economy and even our way of 
life is at stake in this debate.
    Thank you again for the opportunity to speak today on behalf of 
Elko County's Economic Diversification Authority.
                                 ______
                                 
    Mr. Costa. Thank you. Thank you for, again, staying within 
the 5-minute rule. We appreciate that very much. And we look 
for the opportunity to ask you some questions when we complete 
the testimony of this panel.
    The next witness that we have before us is Mr. Robert 
Abbey, former state director of the Bureau Land Management in 
Nevada. Mr. Abbey.

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

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

                       Statement of Robert Abbey

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

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

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

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

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

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

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

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

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

Dear Chairman Costa,

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

Onward and Upward,

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

              STATEMENT OF THE HON. DEAN RHOADS, 
                      NEVADA STATE SENATOR

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

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

    Chairman Costa and members of the Subcommittee, my name is Dean 
Rhoads. I have been a Nevada State Senator since 1985 and also served 
in the Nevada State Assembly in the late 1970s and early 1980s. I am 
grateful for this opportunity to speak before you today and I welcome 
you to northeastern Nevada, where we treasure and respect our natural 
resources and appreciate a rather peaceful and quiet lifestyle. I know, 
Mr. Chairman, with your vast experience as a state legislator in 
California for nearly 25 years, you can appreciate my position in 
representing the needs of a diverse constituency spread across 
thousands of miles.
    Indeed, my State Senatorial district is the largest in the United 
States outside of Alaska. Comprised of over 73,000 square miles, it is 
larger than 34 states and represents about two-thirds of the land area 
in the State of Nevada. Also, my legislative district is home to almost 
all of the active mining operations in the State. Many of my 
constituents are directly employed by the mining industry and thousands 
more work for businesses that support critical mining activities. As 
you know, Nevada is the nation's leading producer of precious metals, 
producing approximately 70 percent of U.S. gold and over 40 percent of 
U.S. silver. From a broader perspective, it is important to remind the 
Subcommittee that mining benefits each American citizen who uses a 
motor vehicle, owns a computer or appliance, participates in sports, 
wears jewelry, and uses a telephone. Additionally, mining is a vital 
element to the nation's national defense. Given these impressive mining 
statistics, it is fitting that you are here today to discuss reforms to 
the General Mining Law of 1872 as proposed in House Resolution (H.R.) 
2262.
    This proposed legislation seeks to address current practices 
concerning the issuance of patents for certain mining operations, 
proposes an 8 percent ``net smelter return'' royalty on all future 
production of locatable minerals on federal lands, limits and revises 
existing practices for mining permits, and changes standards for 
reclamation and bonding. On the surface, these reforms seem logical and 
we may be experiencing the best political climate in years to address 
these issues. However, I want to urge the Committee to tread carefully 
when considering such reforms. First, we must ensure that any reforms 
to the 1872 mining law do not cause significant job losses within the 
mining industry, result in mine closures, or discourage future 
investment in or exploration for new mines.
    One of the biggest concerns of my constituents and the mining 
industry is the proposed 8 percent net smelter royalty on mineral 
production. As you may know, the State of Nevada already assesses a 
``net proceeds of minerals and patented mines tax,'' which is 
determined annually based on the actual production of minerals from all 
operating mines. Most of these proceeds benefit our local governments 
and rural schools. I question the wisdom of imposing any additional tax 
on the mining industry, and especially one that does not allow 
deductions for direct mining production costs. According to the 
National Mining Association, many studies have shown that this type of 
royalty would result in job losses and substantial revenue losses to 
state and federal treasuries and discourage mineral exploration.
    Any reforms should protect existing strong and sensible state-level 
mining regulations and current federal mining regulations that already 
do a good job of protecting the environment and monitoring key mining 
activities. For example, Nevada's mining regulations are well-known for 
their comprehensive bonding and reclamation requirements, unmatched 
health and safety standards, widespread mine reporting and record 
keeping mandates, and stringent permitting requirements. Nevada also 
has a very active and successful abandoned mine lands program and 
Nevada's Division of Environmental Protection recently established 
cutting-edge regulations regarding mercury emissions. In addition, the 
Legislature just passed legislation further supporting the functions of 
the Nevada Mercury Air Emissions Control Program. I would encourage you 
and your staff to review Nevada's comprehensive set of statutes and 
administrative regulations concerning mining to assist in the 
Subcommittee's reform efforts. Copies of these laws and regulations 
have been provided to you today. (See Title 46 of the Nevada Revised 
Statutes and Chapters 512, 513, 517, and 519A of the Nevada 
Administrative Code.)
    Reforms to the 1872 mining law should not allow the blanket closure 
of large tracts of federal land from mining unless the closure can be 
justified in the national interest. The Bureau of Land Management's 
Minerals Policy Statement clearly states that mineral exploration and 
development can coexist with other resource uses. While today's modern 
mining techniques have reduced the ``footprint'' on the landscape, many 
existing federal laws and programs have already restricted mining on 
over half of all federally owned public lands. In addition, reforms 
should guarantee and protect economic investment in mining. Such 
reforms, referred to by the National Mining Association as ``Security 
of Title,'' are critical to ensuring that capital investment can occur 
at a mine throughout the life of the mine. Without these economic 
assurances, necessary long-term capital commitments may be jeopardized.
    In conclusion, I would like to again thank you for making the trip 
to Elko County and the heart of American mining. Mining is critical to 
our economy and serves as the ``lifeblood'' for so many rural 
communities in the West. I urge you to consider the impacts that 
overzealous and widespread mining reform could have on our already 
economically fragile communities. I am sure you will agree that the 
possible unintended consequences of job losses and economic collapse 
are not the objective of mining reform. These are real possibilities 
for rural Nevada and the West if mining reforms are not fully debated 
and carefully analyzed.
    As I noted earlier, today's political climate is ripe for some 
reform of the 1872 mining law. As policymakers, we should never reject 
efforts to improve upon current practices in any industry. However, we 
certainly should proceed with caution when enhancing such a strong 
framework of existing state and federal mining laws that protect the 
environment, rural communities, and the ever-important mining industry 
that contributes unselfishly to our rural schools and local governments 
and touches the lives of every American in many ways.
    Thank you again for the generous opportunity to speak to you today.
                                 ______
                                 
    Mr. Costa. Without objection, we will enter those into the 
record. We thank you very much, Senator, for your very 
important testimony, and I look forward to asking you some 
questions when we get to that period in the panel. I do take 
your comments seriously. The first rule when we try to 
legislate is to do no harm.
    Anyhow, our next witness is Mr. Russ Fields from the Nevada 
Mining Association.

             STATEMENT OF RUSS FIELDS, PRESIDENT, 
                   NEVADA MINING ASSOCIATION

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

     Statement of Russ Fields, President, Nevada Mining Association

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

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

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

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

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

STATEMENT OF JON HUTCHINGS, EUREKA COUNTY DEPARTMENT OF NATURAL 
                           RESOURCES

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

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

August 15, 2007

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

Dear Congressman Costa,

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

Respectfully,

/s/ Jon Hutchings

Jon Hutchings,
Natural Resources Manager

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

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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

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

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

               STATEMENT OF SHERI EKLUND-BROWN, 
                    ELKO COUNTY COMMISSIONER

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

                 STATEMENT OF KELVIN BUCHANAN, 
         AMERICAN INSTITUTE OF PROFESSIONAL GEOLOGISTS

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

           STATEMENT OF RICHARD REDFERN, PRESIDENT, 
                  MEXIVADA MINING CORPORATION

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

         STATEMENT OF ROBERT SCHAFER, GREAT BASIN GOLD

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

       STATEMENT OF RALPH SACRISON, SACRISON ENGINEERING

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

           STATEMENT OF WINTHROP ROWE, SNOWSTORM, LLC

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

             STATEMENT OF ERIC LAUHA, ELKO RESIDENT

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

                     STATEMENT OF THOM SEAL

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

                  STATEMENT OF DAVID KNIGHT, 
                  CARLIN TREND MINING SERVICES

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

             STATEMENT OF JIM COLLINS, SMALL MINER

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

             STATEMENT OF WALTER MARTIN, GEOLOGIST

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

                    STATEMENT OF TED WILTON

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

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

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    [Comments submitted for the record by Nigel Bain, 
General Manager, Queenstake Resources USA, Inc., follow:]
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Manager, Environmental Resources Department, Queenstake 
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P.E., Mining Engineer, Elko, Nevada, follow:]
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Gibbons, Governor, State of Nevada, follows:]

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Gochnour, President, Gochnour & Associates, Inc., follows:]

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Hebert, Vice President of Exploration, Minerals Gold Corp., 
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    [Comments submitted for the record by Steven R. 
Koehler, Senior Geologist, Miranda Gold Corp., follow:]

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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:]

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


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

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


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


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


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

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

    Mr. Chairman and Distinguished Subcommittee Members,
    Ya'at'eeh abini. Yinishye Ben Shelly. Good morning. My name is Ben 
Shelly and I am the Vice President of the Navajo Nation. The Navajo 
Nation extends into the states of Utah, Arizona and New Mexico, 
covering over 27,000 square miles of unparalleled beauty. Dine Bikeyah, 
or Navajoland, is larger than 10 of the 50 states in America.
    The Navajo Nation has fought on ongoing battle against uranium 
mining on our land for over fifty years and the impact is still being 
felt today. We are not only concerned about mining on Navajo land but 
also on lands near our Tribal lands.
    Our land is dotted with contaminated tailings and hundreds of 
abandoned mines that have not been cleaned up. Our people have inhaled 
radioactive dust from the waste piles, drank contaminated water from 
abandoned pit mines and watered our herds with contaminated water. Our 
children have played in piles of mill tailings and spent mines. Our 
people suffer from high cancer rates and respiratory problems--cancer 
rates among Navajo teenagers living near mine tailings are 17 times 
that of the national average.
    There has been a rush over the past five years to claim metals on 
public lands. Many of the claims are near such national treasures as 
the Grand Canyon and tribal lands. And, despite the ban on uranium 
mining on Navajo land, the mining industry is back, staking claims, 
buying mineral rights and applying for permits on the edge of Navajo 
land. They have made no secret of their desire to mine within the 
reservation also.
    H.R. 2262, the Mining Law Reform bill, will help Tribal Nations in 
many ways. It makes it a priority to protect special places like sacred 
sites. It sets strong public health, environmental and cleanup 
standards. It creates an abandoned mine fund and it insures that our 
voices are heard and valued when mining decisions are made.
    I have joined numerous Navajo Nation Tribal officials and community 
leaders in calling upon our own Congressman, Rick Renzi, to assist in 
passing this important legislation. With your permission, I'd like to 
include copies of our letters to him here for the record.
    We are today calling upon your Subcommittee to move quickly on H.R. 
2262 so the outdated and unfair mining law can be reformed at long 
last.
    Thank you for giving me the opportunity to submit this statement 
today.
                                 ______
                                 
June 25, 2007

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

Dear Congressman Renzi:

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

Respectfully,

/s/ Ben Shelly

                                 
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