[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




         H.R. 699, HARDROCK MINING AND RECLAMATION ACT OF 2009

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

                          LEGISLATIVE HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                      Thursday, February 26, 2009

                               __________

                            Serial No. 111-5

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Jeff Flake, Arizona
Frank Pallone, Jr., New Jersey       Henry E. Brown, Jr., South 
Grace F. Napolitano, California          Carolina
Rush D. Holt, New Jersey             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Louie Gohmert, Texas
Madeleine Z. Bordallo, Guam          Rob Bishop, Utah
Jim Costa, California                Bill Shuster, Pennsylvania
Dan Boren, Oklahoma                  Doug Lamborn, Colorado
Gregorio Sablan, Northern Marianas   Adrian Smith, Nebraska
Martin T. Heinrich, New Mexico       Robert J. Wittman, Virginia
George Miller, California            Paul C. Broun, Georgia
Edward J. Markey, Massachusetts      John Fleming, Louisiana
Peter A. DeFazio, Oregon             Mike Coffman, Colorado
Maurice D. Hinchey, New York         Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Cynthia M. Lummis, Wyoming
    Islands                          Tom McClintock, California
Diana DeGette, Colorado              Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                


              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    JIM COSTA, California, Chairman
           DOUG LAMBORN, Colorado, Ranking Republican Member

Eni F.H. Faleomavaega, American      Don Young, Alaska
    Samoa                            Louie Gohmert, Texas
Rush D. Holt, New Jersey             John Fleming, Louisiana
Dan Boren, Oklahoma                  Jason Chaffetz, Utah
Gregorio Sablan, Northern Marianas   Cynthia M. Lummis, Wyoming
Martin T. Heinrich, New Mexico       Doc Hastings, Washington, ex 
Edward J. Markey, Massachusetts          officio
Maurice D. Hinchey, New York
John P. Sarbanes, Maryland
Niki Tsongas, Massachusetts
Nick J. Rahall, II, West Virginia, 
    ex officio
                                 ------                                





















                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, February 26, 2009......................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................    14
        Prepared statement of....................................    15
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     6
        Prepared statement of....................................     9
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................    11
        Prepared statement of....................................    13

Statement of Witnesses:
    Eklund-Brown, Sheri, Chair, Elko County Board of 
      Commissioners, Nevada......................................    52
        Prepared statement of....................................    54
    Heller, Hon. Dean, a Representative in Congress from the 
      State of Nevada............................................    15
        Prepared statement of....................................    17
    Leshy, John D., Solicitor General, Department of the Interior 
      (1993-2001), Harry D. Sunderland Distinguished Professor, 
      University of California, Hastings College of the Law......    21
        Prepared statement of....................................    23
    Nazzaro, Robin M., Director, Natural Resources and 
      Environment, U.S. Government Accountability Office.........    31
        Prepared statement of....................................    32
    Reynolds, James T. (``J.T.''), Superintendent (2001-2008), 
      Death Valley National Park, California, National Park 
      Service....................................................    41
        Prepared statement of....................................    42
    Starr, Hon. Jim, County Commissioner, Gunnison County, 
      Colorado...................................................    49
        Prepared statement of....................................    51

Additional materials supplied:
    Congressional Research Service memorandum dated February 24, 
      2009, to Honorable Doc Hastings entitled ``Wages of workers 
      in the mining and tourism industries'' submitted for the 
      record.....................................................     7
    List of documents retained in the Committee's official files.    60
    National Mining Association, Statement submitted for the 
      record.....................................................     3

 
LEGISLATIVE HEARING ON H.R. 699, TO MODIFY THE REQUIREMENTS APPLICABLE 
   TO LOCATABLE MINERALS ON PUBLIC DOMAIN LANDS, CONSISTENT WITH THE 
PRINCIPLES OF SELF-INITIATION OF MINING CLAIMS, AND FOR OTHER PURPOSES. 
            ``HARDROCK MINING AND RECLAMATION ACT OF 2009''

                              ----------                              


                      Thursday, February 26, 2009

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:05 a.m. in 
Room 1324, Longworth House Office Building, Hon. Jim Costa 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Costa, Lamborn, Heinrich, Rahall 
[ex officio], Lummis and Hastings [ex officio].



    Mr. Costa. The legislative hearing for the Subcommittee on 
Energy and Mineral Resources will now come to order. The 
Subcommittee meeting today is to hear testimony on H.R. 699 as 
introduced by Chairman Nick Rahall from West Virginia.
    This bill is not new. It is an effort that the Chairman has 
actually been a part of for some 30 years. The Hardrock Mining 
Law, frankly, in some instances one could argue, withstood the 
test of time since it was set into law and signed by President 
Ulysses S. Grant in 1872. It is my understanding that it has 
not been changed.
    The purpose of the bill, therefore, is to modify the 
requirements in the original law as it relates to minerals on 
the public domain of lands, consistent with principles that 
Chairman Rahall believes are involved with the self-initiation 
of mining claims, and other purposes as it relates to ensuring 
that that resource is treated appropriately.
    Clearly, no one could argue that a lot has changed since 
1872. I have some ministerial functions with regard to the 
Subcommittee that I need to complete first.
    Under Rule 4[g], the Chairman and the Ranking Member make 
opening statements. If any other Members have statements, they 
can be included in the hearing record under unanimous consent.
    Additionally, under Rule 4[h], any material submitted for 
inclusion in the hearing record must be submitted no later than 
10 days following the hearing, and that includes questions.
    As I said at the outset, this hearing is about a 137-year-
old mining law that has been under consideration for a number 
of decades. The reform of the Hardrock Mining Law on public 
lands is not a new issue to this Subcommittee or to the full 
Committee.
    In the past two decades, I have researched--the Committee 
or the Subcommittee has held almost 40 hearings on it during 
that time period. As the Subcommittee Chair for the second 
term, the One Hundred and Tenth, and now One Hundred and 
Eleventh Congress, I have actually chaired three hearings on 
the reform of the law, two here in our Nation's Capital, and 
one in Elko, Nevada, in our Congressman Heller's district.
    It was a very informative hearing that we held, and we are 
pleased that Representative Heller is here today to give us his 
thoughts.
    This bill before us, that has been reintroduced by Chairman 
Rahall, is nearly identical to the one that the House of 
Representatives passed in 2007. The only changes have been 
minor and technical, and conform with changing the date of the 
bill from 2007 to 2009.
    So it is in essence the same bill. Let me say in conclusion 
that obviously we are in a financial crisis, and that raises 
the question whether or not it is an appropriate time to 
consider new fees and requirements on the mining industry.
    Let me just mention a few considerations that I think 
Members of the Subcommittee and the full Committee should take 
into account as the Chairman makes a determination when he 
wants to move on his measure.
    Should taxpayers be on the hook obviously for a multi-
multi-billion dollar cleanup cost that is impacting 160,000 
hardrock abandoned mines in the West, especially since there 
are no royalty for gold removed from public lands.
    Abandoned mines pose significant health hazard problems and 
safety issues. The 2008 Inspector General's Report of the 
Department of the Interior identified that 33,000 of the 
160,000 abandoned mines, in fact, pose serious safety and 
health hazards.
    That cleanup, obviously, if left unattended, then goes to 
the cost of Federal taxpayers, and many states and communities 
bear the burden also of those cleanups, or the risks when those 
cleanups do not take place. So reclamation jobs obviously 
provide a reason for reform of the mining law, as opposed to a 
retreat on this comprehensive reform.
    Unfortunately, the National Mining Association was unable 
to testify today, but they have submitted written testimony, or 
we had asked them to testify, and they have been very involved, 
of course, in the last Congress, and as they will in this 
Congress, on this important issue.
    I would ask unanimous consent that their testimony be 
included for the record, and we look forward to continuing to 
work with them.
    [The statement submitted for the record by the National 
Mining Association follows:]

 Statement submitted for the record by the National Mining Association

    The National Mining Association (NMA) appreciates the opportunity 
to provide this statement to the Committee. NMA is the principal 
representative of the producers of America's coal, metals, industrial 
and agricultural minerals; the manufacturers of mining and mineral 
processing machinery, equipment and supplies; and the engineering and 
consulting firms, financial institutions and other firms that serve our 
nation's mining industry.
    Our members have a significant interest in the exploration for and 
development of minerals on federal lands. The federal lands are an 
important source of minerals, metal production and reserves that are 
critical to the nation's economic security and well-being. Mining on 
federal lands creates high-wage jobs, contributes to the economic 
vitality of local communities and is essential for meeting the nation's 
resource needs and to rebuilding America.
    NMA supports reasonable amendments to the Mining Law. However, 
provisions of the ``Hardrock Mining and Reclamation Act of 2009'' (H.R. 
699) would put thousands of high-paying mining jobs and mining-
dependent communities throughout the West at risk. American mining 
needs a predictable legal and regulatory framework to provide the long-
term certainty and stability needed to protect existing investments and 
to attract new capital. H.R. 699's royalty would make U.S. mining non-
competitive, and other provisions of H.R. 699 that are duplicative of 
other U.S. laws and regulations would create uncertainty that causes 
investment capital and jobs to go off-shore.
EIGHT PERCENT GROSS ROYALTY IS CLEARLY BAD PUBLIC POLICY
    NMA supports a fair return to the public through imposition of a 
royalty. The ``key is to achieve a royalty that most mines can bear and 
still make reasonable profits.'' (Oct. 2, 2007, testimony of James Otto 
before the House Natural Resources Committee.) H.R. 699, however, 
imposes the same 8 percent gross royalty that, according to the 
economic experts who testified during the 110th Congress, would wreak 
destruction on domestic mining industry., An 8 percent gross royalty 
made no sense when the U.S. economy was thriving--it is even worse 
public policy when we are in a recession. An 8 percent royalty on 
minerals produced on federal lands would be the world's highest 
government imposed royalty on minerals.
    Since the imposition of a royalty has the potential to have 
significant economic consequences on existing and future mining 
operations, the type of royalty, the rate and its application to 
existing claims are all critical variables that must be considered. An 
8 percent gross royalty does not properly balance a fair return to the 
public and the need to encourage the substantial capital investments 
required to explore for and develop minerals that provide the resources 
needed by our economy. Mining operations require long-term and 
substantial commitments of capital and years of development before 
investors realize positive cash flows. A royalty rate, that is the 
highest government-imposed rate in the world, will have a negative 
impacts on returns on investment, our ability to create good paying 
jobs here at home and our ability to meet more of our own needs for 
minerals. As noted by the World Bank:
        A mining country that relies on private firms to find and 
        exploit its mineral resources must compete with other countries 
        for investment. Its investment climate, which reflects how 
        attractive the country is to domestic and foreign investors, 
        depends ultimately on two considerations: first, the expected 
        rate of return the country offers investors on their 
        investments in domestic projects, and second, the level of risk 
        associated with those projects.
Otto, James et al., Mining Royalties: A Global Study of Their impact on 
Investors, Government, and Civil Society. World Bank, 2006, p. 183.
    The primary weakness of a gross royalty ``is that low profit mines 
will have the same royalty basis as high profit mines, and this may 
impact them with regard to decisions about mine life, ore cut-off 
grade, and whether to continue operations when prices are low.'' (Oct. 
2, 2007 Otto testimony) Because it is applied regardless of mine 
profitability, a gross royalty fails to take into account the cyclical 
and often volatile nature of commodity prices.
    As demonstrated by extremes in highs and lows for commodity prices 
over the last couple years, the prices of hard rock minerals have 
historically been subject to great fluctuation. (See Attachment A--Five 
year overview of select commodity prices.) The addition of a royalty 
can:
        turn a profitable mine into valueless rock with a sudden 
        downturn in the market...Simply put, as commodity prices 
        decrease the rate of return required to justify a mining 
        investment increases more dramatically under a gross royalty 
        than under a net royalty. Because the other costs of the mining 
        operation are relatively fixed, the gross royalty takes a 
        bigger bite out of the shrinking income pie as prices decrease.
Oct 2, 2007, testimony of James Cress before the House Natural 
Resources Committee.
    A gross royalty would require a mining company to continue paying a 
royalty even when it is operating at a loss, and that royalty could 
even cause the loss. No mine can be operated long at a loss. The result 
would be that some mines shut down prematurely, jobs would be lost, 
federal state and local taxes would not be paid, and suppliers of goods 
and services would suffer. A net royalty, in contrast, does not cause 
mining operations to operate at a loss. A net royalty automatically 
reduces during periods of low prices and increases again when prices 
are higher, permitting mining operations to weather periods of low 
commodity prices and maximize the recovery of marginal ore during 
periods of high prices. Due to the cyclical nature of demand for 
mineral commodities, there have been and will always be periods of 
lower commodity prices. A net royalty provides the best incentive to 
explore for minerals on federal lands throughout economic cycles so 
that the nation's needs can continue to be met.
    Because the commodities affected by H.R. 699 are sold on a world 
market, U.S. costs must be competitive to attract the investment needed 
to promote domestic mining. Obviously, the royalty will impact U.S. 
costs and, if not carefully crafted, will put U.S. mining projects at a 
competitive disadvantage. A high gross royalty ignores the fact that:
        The United States corporate tax rate of 35% is virtually the 
        highest corporate tax rate in the world. This, combined with 
        many high state levies, provide a significant negative 
        incentive for future investments. Its major trading partners 
        continue to lower their rates putting American corporations in 
        increasingly uncompetitive situations.
Behre Dolbear, 2009 ``Where Not to Invest.''
U.S. IS BECOMING INCREASINGLY RELIANT ON FOREIGN SOURCES OF MINERALS
    Despite reserves of 78 important mined minerals, however, the 
United States currently attracts only eight percent of worldwide 
exploration dollars. As a result, our nation is becoming more dependent 
upon foreign sources to meet our metal and minerals requirements, even 
for minerals with adequate domestic resources. The U.S. Geological 
Survey (USGS) reported that America now depends on imports from other 
countries for 100 percent of 18 mineral commodities and for more than 
50 percent of 43 mineral commodities. USGS Minerals Commodity 
Summaries, 2009, p. 7. This increased import dependency is not in our 
national interest. Increased import dependency causes a multitude of 
negative consequences, including aggravation of the U.S. balance of 
payments, unpredictable price fluctuations, vulnerability to possible 
supply disruptions due to political or military instability, the loss 
of good-paying jobs and out-sourcing of downstream economic activity 
including fabrication and related technologies.
    Our over-reliance on foreign supplies is exacerbated by competition 
from the surging economies of countries such as China and India. As 
these countries continue to evolve and emerge into the global economy, 
their consumption rates for mineral resources are ever-increasing; they 
are growing their economies by employing the same mineral resources 
that we used to build and maintain our economy. As a result, there 
exists a much more competitive market for global mineral resources.
MINING WILL PLAY A CRITICAL ROLE IN REBUILDING OUR ECONOMY
    Mining can help rebuild America and American communities with high-
paying jobs and needed resources in these tough economic times. More 
than 50,000 Americans are employed at U.S. metals mines. They meet half 
of this country's manufacturing needs and can do more. Another 200,000 
jobs are created because of U.S. metals mines--generating $12.5 billion 
in payroll and $4.2 billion in personal income and payroll taxes. In 
fact, the U.S. produces more than $25 billion in metal mining products 
generating nearly $60 billion in economic output. These operations 
truly are the economic engines that drive countless communities across 
the West. Mining's average annual wage of $59,000 is 33 percent higher 
than the combined annual average for all industrial jobs. These are 
jobs and operations that can play a vital role in rebuilding America, 
but they cannot shoulder the world's highest royalty and remain 
competitive in the international marketplace.
    The importance of the domestic mining to our economy, our way of 
life and our national security cannot be ignored. Indeed, it is 
irresponsible for us to ignore the vast mineral resources we have 
within our nation's boundaries when our domestic needs are so great. 
The United States needs robust minerals production to help meet the 
needs of American consumers, the largest users of mined materials. U.S. 
mining provides nearly 50 percent of the metals American manufacturers 
need to operate, including iron ore, copper, gold, phosphate, zinc, 
silver and molybdenum. All aspects of modern society are made possible 
through mining. We rely on metals and minerals to meet our electronic, 
telecommunications and national security needs.
    Furthermore, minerals will play a key role as we investigate 
renewable and alternative energy sources to help our nation reduce its 
reliance on foreign sources of oil. For example, while the average car 
requires up to 50 pounds of copper, hybrid plug-in cars will require an 
additional 25-50 pounds of copper for the battery, cabling harness and 
other components. Wind turbines such as the Vestas V90--3.0 MW require 
approximately 335 tons of steel; 4.7 tons of copper; 3 tons of 
aluminum; 13 tons of glass fiber; and 1,200 tons of reinforced 
concrete. Minerals are also critical components of projects that are 
part of the economic stimulus package signed by President Obama on Feb. 
17, 2009. No infrastructure project, including bridges, buildings or 
transportation can move forward without minerals and metals.
THE ENVIRONMENTAL PROVISIONS OF H.R. 699 ARE UNNECESSARY AND 
        DUPLICATIVE OF EXISTING STANDARDS
    H.R. 699 directs the Secretaries of the Interior and Agriculture to 
promulgate new environmental and reclamation standards for mineral 
activities on Federal lands. Such requirements are totally unnecessary 
since they would be duplicative of the standards that are already in 
place. Under current law, a mineral exploration or mining operation on 
federal lands is subject to a comprehensive framework of federal and 
state environmental laws and regulations including: the Clean Water 
Act; the Safe Drinking Water Act; the Clean Air Act; the National 
Environmental Policy Act; Toxic Substances Control Act; the Resource 
Conservation and Recovery Act; the Endangered Species Act; and the 
Bureau of Land Management (BLM) and Forest Service surface management 
regulations for mining. These laws and regulations are ``cradle to 
grave,'' covering virtually every aspect of mining from exploration 
through mine reclamation and closure. According to the 1999 report on 
issued by the National Academy of Sciences (NAS) panel of experts 
convened by Congress, this existing framework for mining is ``generally 
effective'' in protecting the environment. Hardrock Mining on Federal 
Lands, National Academy of Sciences, National Academy Press, 1999, p. 
89.
    That 1999 NAS report also found that ``improvements in the 
implementation of existing regulations present the greatest opportunity 
for improving environmental protection....'' Id. at 90. Notably, the 
Department of the Interior's 2000 and 2001 regulations governing mining 
and reclamation on BLM lands significantly strengthened the standards 
for mining on federal lands, including new provisions on guaranteeing 
reclamation through financial assurances.
    Importantly, the NAS panel of experts cautioned against applying 
inflexible, technically prescriptive environmental standards stating 
that ``simple ``one-size-fits-all'' solutions are impractical because 
mining confronts too great an assortment of site-specific technical, 
environmental, and social conditions.'' Id. Furthermore, recognition of 
the existing comprehensive framework of federal and state environmental 
and cultural laws that already regulate all aspects of mining from 
exploration through mine reclamation and closure avoids unnecessary and 
expensive duplication. Additional standards or enforcement mechanisms 
are not needed to protect the environment.
    Similarly, existing laws and authorities are adequate to close 
certain ``special places'' to mining activity. Congress has closed 
lands to mining for wilderness, national parks, wildlife refuges, 
recreation areas, and wild and scenic rivers. Congress also has granted 
additional authority to the Executive Branch to close federal lands to 
mining. The Antiquities Act authorizes the president to create national 
monuments to protect landmarks and objects of historic and scientific 
interest. Finally, Congress authorized the Secretary of the Interior to 
close federal lands to mining pursuant to the land withdrawal authority 
of the Federal Land Policy and Management Act. As a result of these 
laws and practices, new mining operations are either restricted or 
banned on more than half of all federally owned public lands. These 
existing laws and authorities are adequate to protect special areas. 
New closures of public land, based on vague and subjective criteria 
without congressional oversight, as contemplated in H.R. 699 would 
arbitrarily impair mineral and economic development.
CONCLUSION
    U.S. metals mining is needed to rebuild America. NMA supports 
responsible updates to the General Mining Law to keep U.S. mining 
strong, but H.R. 699 is the wrong medicine for our economy. NMA 
appreciates the opportunity to provide this testimony.
                                 ______
                                 
    Mr. Costa. We now have before we get to our witness from 
Nevada, our colleague, an opening statement from the Ranking 
Member of this Subcommittee, Representative Doug Lamborn of 
Colorado.

 STATEMENT OF THE HONORABLE DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. I thank you, Mr. Chairman, and I look forward 
to working with you and the other Members of this Committee on 
a lot of important issues as we go forward.
    Today we are meeting for the first of what I hope will be 
several hearings on mining in America. There are a number of 
critical issues which we hopefully will be addressing in this 
Committee.
    We should hold a hearing focusing on the importance of an 
expanded domestic mineral supply. According to the USGS, we are 
more than 50 percent dependent on, quote, 43 mineral 
commodities, and 100 percent import reliant for 18.
    This reliance threatens our economic security. On Tuesday 
night, the President called upon America to expand our domestic 
renewable resource manufacturing. That expansion will depend 
heavily on the mineral resources of America to provide the raw 
materials for that manufacturing.
    The President specifically highlighted the manufacturing of 
lithium batteries. The United States is currently 50 percent 
dependent on foreign sources of lithium.
    We will not be able to rely on foreign imports forever. I 
would like to offer for the record a recent article 
highlighting a move by Bolivia to nationalize its lithium 
mines.
    NOTE: The New York Times article entitled ``In Bolivia, 
Untapped Bounty Meets Nationalism'' dated February 3, 2009, has 
been retained in the Committee's official files. It can be 
found at http://www.nytimes.com/2009/02/03/world/americas/
03lithium.html?_r=1&th&emc=th.
    Mr. Lamborn. We should hold other hearings on how to best 
improve abandoned mine lands and how to streamline the 
permitting process. Hopefully in future hearings we can have 
experts from industry give us that important perspective.
    Updating the mining law has been an elusive task. We can 
constructively explore many of the same principles, discussing 
a reasonable royalty going forward, using a portion of the 
proceeds from locatable minerals to help pay for improving 
abandoned mine lands, and presumably maintaining a vital 
domestic mining industry.
    However, just as with the debate on oil and gas development 
in the outer continental shelf, environmental activists make 
what should be a simple task extremely difficult. It is 
reflected in the legislation that we will be discussing today.
    Many witnesses at the hearings held in 2007 told us this 
legislation, if enacted, would decimate the domestic hardrock 
mining industry, sending some of the highest paying jobs in the 
American west overseas, and making the United States even more 
dependent on foreign sources of mined materials.
    Members from western states like mine will fight vigorously 
to keep these jobs, because the West cannot survive on tourism 
alone. I would want to submit for the record at this point a 
recent CRS report comparing the salaries of workers in the 
mining industry versus those in the tourism industries.
    Mr. Costa. Without objection.
    [The CRS Memorandum follows:]


    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Mr. Lamborn. Thank you, Mr. Chairman. If the past is 
any indication, we are going to hear some real rhetorical 
language about the 1872 mining law here today. We will hear, 
quote, the law was passed in 1872 and is 137 years old.
    Simply because something is old does not mean that it is 
inherently bad. Yellowstone National Park was also created in 
1872. The fact is the Congress that passed the law that created 
Yellowstone National Park, and a few days later passed the 
mining law, recognized that while we need to protect special 
areas, we also need to use some of our lands to supply the raw 
materials to develop a growing nation.
    We may hear the law allows public lands to be purchased 
$2.50 or $5 per acre. In reality, while those are the statutory 
fees included in the law, there has been a moratorium on 
patenting since 1994.
    We may hear that the mining law needs modern environmental 
laws. Modern mining operates under the same strict 
environmental laws that Americans rely on to protect their air, 
water, and quality of life, and those include the following: 
the Clean Air Act, the Clean Water Act, the Endangered Species 
Act, the Resource Conservation and Recovery Act, the 
Comprehensive Environmental Response Compensation Liability 
Act, CERCLA, Toxic Substance Control Act, NEPA.
    All these laws provide for public notice and comment 
opportunities, citizen lawsuit provisions, and various appeal 
processes, that allow the public and affected communities to 
fully participate in the mine permitting process.
    In fact, all of these opportunities to challenge mining 
projects have served to draw out the permitting process for 
projects on Federal lands, and today it can take 12 years or 
more to get a final approval to operate a mine.
    Mr. Chairman, two years ago when the House considered very 
similar legislation, we were in a very different economy. For 
example, copper prices were over $3 per pound, and global 
demand was resulting in record prices for recycled copper.
    This demand for recycled copper led to an epidemic of 
copper theft across the United States. In California, thieves 
stole copper wire from irrigation pumps, which left farmers 
incapable of watering their crops.
    However, that economy is not the economy we have today. 
Today, we are struggling to rebuild America's economy and 
create jobs. This bill as drafted would do irreparable harm to 
that recovery.
    We need the raw materials we get from mining to expand our 
economy and build the infrastructure we need, and we need 
mining jobs, many of which are unionized, and which are some of 
the highest paying jobs in the country.
    If we want to become the world leader in lithium battery 
production, for instance, we need to mine more lithium. If we 
want to lead the world in the manufacturing of solar panels, 
then we need to produce more silicon and titanium.
    If we want to lead the world in the manufacturing of water 
turbines, we need more zinc. Finally, if we want a smart grid 
electrical system, and hybrid cars, we must have copper.
    All of these resources must be mined. Building the mines to 
supply the resources, and building the factories that use those 
resources, will put Americans to work in the private sector.
    Like off-shore oil, this is a debate about using American 
resources to create American jobs and wealth. There is much 
that we can agree on, Mr. Chairman, and I hope that going 
forward with additional hearings, we can examine many of these 
areas, and craft a bill which will grow, not shrink, America's 
economy.
    Thank you for this time I look forward to hearing from our 
witnesses, and I would also ask for unanimous consent for the 
Ranking Member of the full Committee to also make an opening 
statement at the proper time.
    [The prepared statement of Mr. Lamborn follows:]

 Statement of The Honorable Doug Lamborn, a Representative in Congress 
                       from the State of Colorado

    Thank you, Mr. Chairman. Today we are meeting for the first of what 
I hope will be several hearings on mining in America. There are a 
number of critical issues which we should be addressing in this 
committee.
HEARINGS
    We should hold a hearing focusing the importance of an expanded 
domestic mineral supply. According to the USGS, we are more than 50% 
dependent on ``43 mineral commodities and 100% import reliant for 18.'' 
This reliance threatens our economic security. Tuesday night the 
President called upon America to expand our domestic renewable resource 
manufacturing. That expansion will depend heavily on the mineral 
resources of America to provide the raw materials for that 
manufacturing.
    The President specifically highlighted the manufacturing of lithium 
batteries. The United States is currently 50% dependent on foreign 
sources of lithium, We may not be able to rely on foreign imports 
forever. I would like to offer for the Record a recent article 
highlighting a move by Bolivia to nationalize its lithium mines.
    We should hold other hearings on how to best improve abandoned mine 
lands and how to streamline the permitting process. Hopefully, in 
future hearings we can actually have experts from industry give us that 
important perspective
MINING LAW
    Updating the Mining Law has been an elusive task. We agree on many 
of the same principles: reasonable royalty going forward, a portion of 
the proceeds from locatable minerals to help pay for improving 
abandoned mine lands, and presumably maintaining a vital domestic 
mining industry. However, just as with the debate on oil and gas 
development in the outer continental shelf, environmental activists 
make what should be a simple task extremely difficult.
    It is reflected in the legislation we will be discussing today. 
Many witnesses at the hearings held in 2007 told us this legislation, 
if enacted, would decimate the domestic hard rock mining industry 
sending some of the highest paying jobs in the American West overseas, 
and making the U.S. even more dependent on foreign sources of mined 
materials.
    Members from Western States like mine will fight vigorously to keep 
these jobs because the West cannot survive off of tourism alone. I want 
to submit for the record at this point a recent CRS report comparing 
the salaries of workers in the mining industry versus those in the 
tourism industries.
    If the past is any indication, we are going to hear some real 
rhetorical whoppers about the 1872 Mining Law here today. We will hear 
that: ``The law was passed in 1872 and is 137 years old''. Simply 
because something is old, doesn't mean that it is inherently bad, 
Yellowstone National Park was also created in 1872. The fact is the 
Congress that passed the law that created Yellowstone National Park and 
a few days later passed the Mining law recognized that while we need to 
protect special areas we also need to use some of our lands to supply 
the raw materials to develop a growing nation.
    We may hear that: ``The law allows public lands to be purchased for 
$2.50 or $5.00 per acre''. In reality while those are the statutory 
fees included in the law, there has been a moratorium on patenting 
since 1994.
    We may hear that: ``The Mining Law needs modern environmental 
laws.'' Modern mining operates under the same strict environmental laws 
that Americans rely on to protect their air, water, and quality of 
life.
      The Clean Air Act (CAA);
      The Clean Water Act(CWA);
      The Endangered Species Act (ESA);
      The Resource Conservation and Recovery Act (RCRA);
      The Comprehensive Environmental Response Compensation 
Liability Act (CERCLA), otherwise known as superfund;
      Toxic Substance Control Act, and
      National Environmental Policy Act (NEPA).
    All these laws provide for public notice and comment opportunities, 
citizen lawsuit provisions, and various appeal processes that allow the 
public and affected communities to fully participate in the mine 
permitting process. In fact all of these opportunities to challenge 
mining projects have served to draw out the permitting process for 
projects on federal lands and today it can take 12 years or more to get 
a final approval to operate a mine.
CLOSING
    Mr. Chairman, two years ago when the House considered this 
legislation we were in a very different economy. For example, copper 
prices were over $3 per pound and global demand was resulting in record 
prices for recycled copper. This demand for recycled copper led to an 
epidemic of copper theft across the United States. In California, 
thieves have stolen copper wire from irrigation pumps which left 
farmers incapable of watering their crops
    However, that economy is not the economy which we have today. Today 
we are struggling to rebuild America's economy and create jobs. This 
bill as drafted would do irreparable harm to that recovery. We need the 
raw materials we get from mining to expand our economy and build the 
infrastructure we need. And we need mining jobs, many of which are 
unionized, and which are some of the highest paying in the country.
    If we want to become the world leader in lithium battery 
production, we need to mine more lithium. If we want to lead the world 
in the manufacturing of solar panels, than we need to produce more 
silicon and titanium. If we want to lead the world in the manufacturing 
of wind turbines, we need more zinc. Finally, if we want a smart grid 
electrical system and hybrid cars, we must have copper. All of these 
resources must be mined
    Building the mines to supply the resources, and building the 
factories that use these resources will put American's to work in the 
private sector.
    Like offshore oil, this is a debate about using American resources 
to create American jobs and wealth. There is much we can agree on Mr. 
Chairman and I hope that going forward with additional hearings we can 
examine many of those areas and craft a bill which will grow, not 
shrink, America's economy.
    Thank you for this time, and forward to hearing from our witnesses.
                                 ______
                                 
    Mr. Costa. Thank you. I thank the gentleman from Colorado 
for his comments, and I would now like to defer to the Chairman 
of the full Committee, whose legislation that we are hearing 
testimony on today, a gentleman who has been tirelessly 
attempting to bring the hardrock mining law in reflection to 
today's challenges and modern circumstances that we face, 
Chairman Nick Rahall from West Virginia.

STATEMENT OF THE HONORABLE NICK J. RAHALL, II, A REPRESENTATIVE 
          IN CONGRESS FROM THE STATE OF WEST VIRGINIA

    Chairman Rahall. Thank you, Chairman Costa. I appreciate 
you holding these hearings once again, and to the Ranking 
Member, Mr. Lamborn, and to the Ranking Member of the full 
Committee, Mr. Hastings, and to our colleague from Nevada, Mr. 
Heller.
    I appreciate all of you presenting testimony today, and in 
particular I want to recognize the first witness that is on 
panel number two, Mr. John Leshy. John has been around this 
issue longer than--well, I won't go there, but anyway, he----
    Mr. Costa. Longer than you?
    [Laughter.]
    Chairman Rahall. Well, Mr. Lamborn has said with age things 
are not harmed any, but I am still----
    Mr. Costa. They get better.
    Chairman Rahall. They are still in need of redo, as is the 
Mining Law of 1872.
    [Laughter.]
    Chairman Rahall. But to Mr. Leshy, he is really considered 
the guru of the mining law reform, and I really appreciate the 
books that he has written on the issue, and the trusted counsel 
he has been for so many decades, and I know that his testimony 
will be very worthy of this Committee's consideration.
    The old saying that the more things change, the more they 
stay the same, may be particularly appropriate to the mining 
law reform. Nearly everything has changed about mining since 
1872 when Congress enacted the mining law, including the 
following: how we mine, and the environmental impacts of those 
mile-wide pits, what we mine, and how we use hardrock minerals 
like uranium for nuclear power, and iridium for solar p.v. 
cells, the value of what we mine, like gold, which is today 
nearly $1,000 an ounce. Record highs.
    The fact is that in every other country, companies pay a 
royalty to mine hardrock minerals, but they do not pay such a 
royalty in the United States of America. The legacy is 161,000 
abandoned hardrock mines in the West.
    Yet, the mining law has not changed in 137 years. Even the 
Grand Canyon, which was established as a national park 90 years 
ago today, has changed. Today our goals for mining policy 
simply are no longer what they were in 1872.
    The bill that I have introduced, which passed the House by 
an overwhelming majority last Congress, support on both sides 
of the aisle, reflects a need for a comprehensive overall.
    In recent years its industry profits soared, mining 
analysis have glowingly titled their annual reports, quote, 
mining, as good as it gets. And, quote, again, riding the wave.
    Meanwhile, Congress continues to allow companies with 
lucrative activities on public land to escape paying a fair 
return to the American people, the true owners of the land, for 
the gold, copper, and other metals and minerals.
    Over the years, actually the decades, that I have been 
involved in this effort, we have developed a lengthy record 
endorsing a gross income royalty as the best choice for the 
government to ensure a fair return for use of our resources 
from hardrock mining.
    Even in these days of economic crisis, I believe that is 
still true. As the Congressional Research Service has 
determined, and I quote, the vast majority of mining activity 
on Federal lands is gold mining.
    This is significant because although other mineral prices 
have fallen, gold prices, which I already referred to, fare 
pretty well, and profits might even go up. Earlier this month 
the mining sector analysis of precious metal costs predicted 
that an unprecedented rate of cost deflation will boost the 
economy, the economics of gold mines, and gold projects.
    According to a New York Times article in January, and I 
quote, industry lobbyists did not complain when the Nevada 
legislature passed a measure in early December requiring mining 
companies to pay $28 million in '09 taxes early to help the 
State patch its shortfall in revenue.
    Finally, we should remember that for some communities the 
need to change the mining laws right to mine and lack of 
environmental protections simply cannot afford delay. The basic 
environmental standard and the basic ability to protect 
resources like water is just common sense.
    In this time of economic crisis let us not be mislead into 
letting an outdated boondoggle hang on the books. We are only 
adding to our list of financial woes and the environmental 
challenges facing our western communities.
    And I dare say that the mining industry itself would like 
to see this cloud removed from over its head, and would like 
the certainty and continuity of planning for the future that 
any business enterprise would want to do so that they can 
continue to provide the jobs for their people.
    Coming from a mining state as I do, I certainly recognize 
that certainly in the future that all industry needs in their 
financial planning. So, again, Chairman Costa, and Subcommittee 
Members, I thank you for holding this hearing. I yield back.
    [The prepared statement of Mr. Rahall follows:]

       Statement of The Honorable Nick J. Rahall, II, Chairman, 
                     Committee on Natural Resources

    Mr. Chairman, thank you for holding this hearing on H.R. 699, 
legislation I have introduced to reform the Mining Law of 1872. The old 
saying, ``the more things change, the more they stay the same'' may be 
particularly appropriate to Mining Law Reform.
    Nearly everything has changed about mining since 1872 when Congress 
enacted the Mining Law, including:
      How we mine and the environmental impacts of those mile-
wide pits.
      What we mine and how we use hardrock minerals--like 
uranium for nuclear power and indium for solar PV cells.
      The value of what we mine--like gold, which today is 
nearly $1,000 an ounce.
      The fact that in nearly every other country, companies 
pay a royalty to mine hardrock minerals, but they do not in the United 
States.
      The legacy of 161,000 abandoned hardrock mines in the 
West.
    Yet the Mining Law has not changed in 137 years. Even the Grand 
Canyon, which was established as a national park 90 years ago today, 
has changed.
    Today, our goals for mining policy simply are no longer what they 
were in 1872. The bill that I have introduced--which passed the House 
by an overwhelming majority last Congress--reflects the need for 
comprehensive overhaul.
    In recent years, as industry profits soared, mining analysts have 
glowingly titled their annual reports ``Mining: As Good as It Gets'' 
and ``Riding the Wave.'' Meanwhile, Congress continued to allow 
companies with lucrative activities on public lands to escape paying a 
fair return to the American people for gold, copper, and other metals 
minerals.
    Over the years, actually, the decades that I have been involved in 
this effort, we have developed a lengthy record endorsing a gross 
income royalty as the best choice for the government to ensure a fair 
return from hardrock mining.
    Even in these days of economic crisis, I believe that is still 
true.
    As the Congressional Research Service determined, ``the vast 
majority of mining activity on Federal lands is gold mining.'' This is 
significant because although other mineral prices have fallen, gold 
continues to fare well--and profits might even go up.
    Earlier this month, a mining sector analysis of precious metals 
costs predicted that ``an unprecedented rate of cost deflation'' will 
boost the economics of gold mines and gold projects. According to a New 
York Times article in January: ``[I]ndustry lobbyists did not complain 
when the Nevada legislature passed a measure in early December 
requiring mining companies to pay $28 million in 2009 taxes early to 
help the State patch its shortfall in revenue.''
    Finally, we should remember that for some communities, the need to 
change the Mining Law's ``right to mine'' and lack of environmental 
provisions simply cannot afford delay. A basic environmental standard 
and a basic ability to protect resources like water, is just common 
sense. The way the Mining Law works now, BLM officials and communities 
who question a proposal to mine have little influence. According to 
BLM, among the 486 plans of operation for hardrock mines that were 
submitted in the past 10 years, only 2.4% were rejected.
    In a time of economic crisis, let us not be misled into letting an 
outdated boondoggle hang on the books. We are only adding to our list 
of financial woes and the environmental challenges facing Western 
communities.
    Again, Chairman Costa and Subcommittee Members, thank you for 
holding this hearing.
                                 ______
                                 
    Mr. Costa. Thank you very much, Chairman Rahall, for your 
focus, and for your tenacity, and for the expertise that you 
lend to not only this issue, but all the issues that we deal 
with in the Natural Resources Committee.
    We have our Ranking Member, Doc Hastings, from Washington 
State, who I understand also has a statement that he would like 
to make.

 STATEMENT OF THE HONORABLE DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Hastings. Thank you very much, Mr. Chairman, and I will 
make my comments very brief. But I simply want to reiterate two 
important points made by Mr. Lamborn. And that is, first, we 
need to recognize the significant role that minerals and metals 
play in our economy, and how important they are to the 
manufacturing jobs, especially to developing alternative 
sources of energy that Mr. Lamborn laid out.
    Mining creates thousands and thousands of jobs across this 
country, and it is the very economic foundation of many 
communities across the country. The minerals and metals mined 
in America are vital for the broad array of American 
industries.
    We can produce minerals here in our country and create jobs 
for Americans, or we can drive these jobs overseas and become 
dependent on China and other nations for the raw materials 
needed to sustain manufacturing jobs.
    During the first week of this administration, we have seen 
the Interior Department take action after action that is 
costing us the creation of new jobs. Yesterday's announcement 
on oil shale R&D leases was Secretary Salazar's third 
announcement this month regarding delays in America's energy 
development.
    From withdrawing land leases in Utah, to halting off-shore 
drilling, and now oil shale, the administration is walking away 
from utilizing America's resources to become less dependent on 
foreign countries.
    Our economy cannot afford to have the Federal Government 
keep saying, no, no, no, to the creation of new energy and 
production jobs. I think this same principle applies to mining.
    We must be honest that the jobs of American workers are at 
risk if the Federal Government imposes excessive and costly 
regulations and fees on mining in America. With our shaky 
economy, Congress needs to be extremely thoughtful and act very 
carefully in the consideration of mining law changes.
    And that brings me to the second point that was made by Mr. 
Lamborn that I want to emphasize, and that is that this 
Committee must not rush to judgment or attempt to speed through 
changes without taking the time to examine the impact and costs 
of such proposals.
    Mining law reform has been on the table for some time as 
has been said several times this morning, but the new Members 
of the House, and the new Members of the Senate, need the 
opportunity to review and consider this issue, and the new 
administration, especially deserve to have their views heard.
    So as Mr. Lamborn said, this needs to be the first of 
several hearings, and thank you very much for your 
consideration.
    [The prepared statement of Mr. Hastings follows:]

 Statement of The Honorable Doc Hastings, a Representative in Congress 
                      from the State of Washington

    My comments will be brief. I simply want to reiterate two very 
important points made by Mr. Lamborn.
    First, we need to recognize the significant role that minerals and 
metals play in our economy, how important they are to manufacturing 
jobs, and especially to developing alternative sources of energy.
    Mining creates thousands and thousands of jobs across this country, 
and the very economic foundations of many communities are mining jobs. 
The minerals and metals mined in America are vital for a broad array of 
American industries.
    We can produce minerals here in our country and create jobs for 
Americans, or we can drive these jobs overseas and become dependent on 
China and other nations for the raw materials needed to sustain 
American manufacturing jobs.
    In the first weeks of this Administration, we've seen the Interior 
Department take action after action that is costing us the creation of 
new jobs.
    Yesterday's announcement on oil shale R-and-D leases was Secretary 
Salazar's third announcement this month regarding delays in American 
energy development.
    From withdrawing land leases in Utah, to halting offshore drilling 
and now oil shale, the Administration is walking away from utilizing 
American's resources to become less dependent on foreign countries. Our 
economy can't afford to have the federal government keep saying no, no, 
no to the creation of new energy production jobs.
    This same principle applies to mining. We must be honest that the 
jobs of American workers are at risk if the federal government imposes 
excessive and costly regulations and fees on mining in America. With 
our shaky economy, Congress needs to be extremely thoughtful and act 
very carefully in the consideration of mining law changes.
    This brings me to the second point made by Mr. Lamborn that I want 
to emphasize, and that's that this Committee must not rush to judgment 
or attempt to speed through changes without taking the time to examine 
the impacts and costs of such proposals.
    Mining law reform has been on the table for some time, but the new 
Members of the House and Senate need the opportunity to review and 
consider this issue. And the new Administration especially deserves to 
have their views heard. As Mr. Lamborn said, this needs to be the first 
of several hearings.
                                 ______
                                 
    Mr. Costa. I thank the gentleman from Washington State very 
much for your comments. We will now have our first witness, 
Representative Dean Heller from Nevada. I misstated in my 
earlier comment that the hearing that we held in his district 
in Elko, Nevada, was last year.
    I was reminded that it was in 2007. It seemed like it was 
last year, but how time flies, but it was a very informative 
trip for the Subcommittee, and we appreciated the hospitality, 
and I think we all came away with a much greater appreciation 
for the work that takes place there.
    Representative Heller, would you please make your opening 
statement. We would like to keep it to five minutes. We do have 
another panel that follows, and today is obviously a busy day 
with other hearings as well, but we do appreciate you coming, 
and we know of your great interest on this issue.

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

    Mr. Heller. Thank you very much, Mr. Chairman, and I will 
tell you that I do appreciate your trip, whether it was last 
year or the year before. In fact, I am still getting very 
positive feedback on your interests and the time that you spent 
in Elko.
    So it has not gone unnoticed. In fact, I will be in Elko 
tomorrow night, and I am certain that it will come up again.
    Mr. Costa. I liked Elko. It is a good community. When is 
the cowboy poetry festival coming up?
    Mr. Heller. It just passed. You just missed it.
    Mr. Costa. I just missed it? Well, one of these years.
    Mr. Heller. So I want to thank you very much for the 
opportunity to testify. I want to thank the Ranking Member 
Lamborn also for the opportunity to be here. Chairman Rahall, 
thank you for your time and effort on this issue.
    I know you said that this is something that you have spent 
decades dealing with. Rumor has it you were a witness to the 
original signing of this piece of legislation.
    [Laughter.]
    Mr. Heller. So I don't know how many decades that may be, 
but----
    Chairman Rahall. And it won't be forgotten, despite my age.
    [Laughter.]
    Chairman Rahall. I am well preserved.
    Mr. Heller. Yes. I want to introduce one of my 
constituents, County Commissioner Sheri Eklund-Brown, is here 
from Elko, Nevada. She will be here to testify on the 
importance of the mining industry and the impact that it has on 
her community. So I just want to thank her for being here 
today, and she will be on the second panel.
    As I mentioned, Mr. Chairman, you were kind enough to come 
to Elko to hold a field hearing, and witness first-hand the 
importance of hardrock mining and the industry to my district.
    You were also able to see the effect of stewardship, and 
strong sense of community responsibility of the operators in my 
district. I know that because of your visit you are familiar 
with the provisions of H.R. 699, and I believe it jeopardizes 
the livelihood of my rural constituents.
    Let me be clear. The onerous mining law reform proposed by 
my colleague will not only threaten the domestic viability of 
large mining companies. It will also hurt small independent 
businessmen and women in Nevada that support the mining 
industry.
    And we can ill-afford to lose any jobs in Nevada, or 
anywhere else for that matter. Nevada currently has the highest 
and has had the highest foreclosure rate in the Nation for 23 
straight months.
    7.3 percent of all housing in Nevada has received at least 
one foreclosure notice. Clark County, taking in Las Vegas, has 
had almost 9 percent of its properties affected. Washoe County, 
which is the largest county in my district, has seen a 153 
percent increase in foreclosures since 2007.
    In fact, local industry experts estimate that Clark County 
has a 25,000 home inventory, or an estimated four year supply. 
However, there are bright spots in Nevada's economy that are 
still thriving, and those are the areas where mining activity 
is taking place.
    To put it into context, Nevada has a statewide unemployment 
rate of 9.1 percent, while in Elko, the micropolitan areas, the 
rate is 4.9 percent. The most recent statistics show that in 
Nevada mining directly employs 11,690 people, at an average 
wage of over $63,000 per year.
    An additional 51,000 jobs are made possible by activities 
related to the mining industry, largely in rural communities. 
Mining is also an important contributor to local and State tax 
revenue.
    In 2007 the mining industry in Nevada paid $200 million in 
taxes. That is enough to pay for more than forty-seven hundred 
teachers' annual salaries in Nevada. As we have debated, it is 
important to remember that unlike other businesses, mineral 
prices are set on the commodities markets.
    So they are forced to absorb all of the costs imposed by 
this legislation. My fear after consulting with my constituents 
is that the cost imposed by this legislation will put them out 
of business, which will consequently increase economic problems 
in my state.
    We all acknowledge that there have been irresponsible 
practices in the past, but those days are long gone in Nevada. 
The companies, both large and small, in my district have made 
great progress, and are committed to good stewardship and 
community responsibility.
    The minerals mined in Nevada are an important part of our 
daily lives. We need gold for electronics, barite to make 
rubber, tungsten for heavy equipment, lithium for advanced 
battery technology, silica for glass, molybdenum to make steel 
alloys.
    Without minerals mined in Nevada, our military won't be as 
strong. Our economy will be compromised, and we will have to 
rely on foreign countries for the minerals that power our 
economy, just as we are reliant on them for fuel.
    While I applaud my colleague's effort to modernize mining 
law, I am concerned about the consequences of this bill as 
written. 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 that 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.
    My primary concern is that changes made to the mining law 
should not serve to increase our dependence on foreign sources 
of mineral resources that our nation needs, and certainly 
should not increase unemployment in my state.
    We have to get our mineral resources from somewhere, and I 
believe that we should get them in a responsible manner from 
domestic resources mined by American workers. With that, Mr. 
Chairman, I will conclude.
    [The prepared statement of Mr. Heller follows:]

 Statement of The Honorable Dean Heller, a Representative in Congress 
                        from the State of Nevada

    Mr. Chairman, thank you for giving me the opportunity to testify 
today. As you know, H.R. 699, the Hardrock Mining and Reclamation Act 
will have a direct and substantial impact on Nevada and my constituents 
if it becomes law.
    In fact, one of my constituents, Commissioner Sheri Eklund-Brown, 
is here from Elko, Nevada to testify about the importance of the mining 
industry in our most vibrant mining community. I would like to thank 
her for being here today.
    Mr. Chairman, you were kind enough to come to Elko to hold a field 
hearing and witness firsthand the importance of hardrock mining 
industry to my district. You were also able to see the effective 
stewardship and strong sense of community responsibility of the 
operators in my district.
    I know that because of your visit, you are familiar with the 
provisions of H.R. 699 that I believe jeopardize the livelihood of my 
rural constituents.
    Let me be clear, the onerous mining law reform proposed by my 
colleague will not only threaten the domestic viability of large mining 
companies, it will also hurt the small, independent businessmen and 
women in Nevada that support the mining industry.
    And we can ill afford to lose any jobs in Nevada, or anywhere else 
for that matter.
    Nevada has had the highest foreclosure rate in the nation for 23 
straight months. 7.3 percent of all housing in Nevada has received at 
least one foreclosure notice. Clark County, taking in Las Vegas, has 
had almost 9% of its properties affected. Washoe County, which is the 
largest county in my district, has seen a 153% increase in foreclosures 
since 2007. In fact, local industry experts estimate that Clark County, 
Nevada has a 25,000 home inventory--an estimated 4 year supply.
    However, there are bright spots in Nevada's economy that are still 
thriving, and those are the areas where mining activity is taking 
place.
    To put it into context, Nevada has a statewide unemployment rate of 
9.1%, while the Elko Micropolitan area's rate is 4.9%.
    The most recent statistics show that in Nevada, mining directly 
employs 11,690 people at an average wage of over $63,000 per year. An 
additional 51,000 jobs are made possible by activities related to the 
mining industry, largely in rural communities.
    Mining is also an important contributor of local and state tax 
revenue. In 2007 the mining industry in Nevada paid $200 million in 
taxes. That is enough to pay for more than 4700 teachers annual 
salaries in Nevada.
    As we have this debate, it is important to remember that unlike 
other businesses, mineral prices are set on the commodities market, so 
they are forced to absorb all of the costs imposed by this legislation. 
My fear, after consulting with my constituents, is that the costs 
imposed by this legislation will put them out of business, which will 
consequently increase economic problems in my state.
    We all acknowledge that there have been irresponsible practices in 
the past, but those days are long gone in Nevada. The companies--both 
large and small--in my district have made great progress and are 
committed to good stewardship and community responsibility.
    The minerals mined in Nevada are an important part of our daily 
lives. We need gold for computers and electronics, barite to make 
rubber, tungsten for heavy equipment, lithium for advanced battery 
technology, silica for glass, and molybdenum to make steel alloys.
    Without minerals mined in Nevada, our military won't be as strong, 
our economy will be compromised, and we will have to rely on foreign 
countries for the minerals that power our economy, just as we are 
reliant on them for fuel.
    While I applaud my colleague's efforts to modernize mining law, I 
am concerned about the consequences of his bill as written.
    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.
    My primary concern is that changes made to the mining law should 
not serve to increase our dependence on foreign sources of mineral 
resources that our nation needs and certainly should not increase 
unemployment in my state. We have to get our mineral resources from 
somewhere and I believe we should get them in a responsible manner from 
domestic resources mined by American workers.
                                 ______
                                 
    Mr. Costa. Thank you very much, Representative Heller, for 
your comments. Any questions or comments to the gentleman from 
Nevada? Yes, Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman. Representative 
Heller, do you have a perspective on how industry would be 
affected if a royalty is imposed on a gross basis, as opposed 
to a net basis?
    I know that there are possibly some serious tax 
differences, depending on which of those is chosen ultimately.
    Mr. Heller. Yes.
    Mr. Lamborn. But do you have a perspective on that?
    Mr. Heller. Well, we shared some of them in the past, the 
impact of gross taxes, as opposed to a net tax. In fact, I 
believe one of my amendments in the past was to impose a five 
percent net tax, as opposed to the eight percent gross, because 
the obvious impact an eight percent gross would have.
    And I would like to encourage the Committee to reconsider 
and to take a look at that again. Certainly it will have a 
major impact on business as we see it in the mining industry in 
Nevada.
    Currently, mining prices, and I think it is well 
established, are doing well, and it is not unusual for a very 
weak economy to have very strong gold prices. It is very 
cyclical.
    It wasn't long ago, just within the last couple of years, 
that you saw mining under $300 an ounce. If this economy grows, 
if you believe what the President is telling us in his speeches 
that we are going to get out of this, and I truly do believe 
that is going to happen, I don't think we are going to see 
sustained gold prices.
    Mr. Costa. It is countercyclical.
    Mr. Heller. Yes, absolutely, and I am betting on the 
economy, which I am sure most, if not all, here in this room 
are doing so.
    Mr. Costa. Yes.
    Mr. Heller. And so that will have an impact. To double that 
the Nevada legislature is currently in session, and they are 
also taking a look at the mining industry. So it is going to be 
a double hit I think the industry's concern is.
    And again I think that question perhaps would be better 
laid in front of the association, or perhaps Ms. Eklund-Brown, 
when she comes and testifies in the second group, specifically 
the impacts an eight percent gross would have over perhaps 
something closer to a five percent net. I think that question 
should be and could be out there.
    Mr. Costa. The gentleman from West Virginia has a question 
or a comment.
    Chairman Rahall. Just to follow up on that point, as the 
gentleman from Nevada and the Chairman are all involved in this 
issue know, we have had various proposals on the royalty rate 
in the past, and at every stage, let us say, the process has 
been different, and proposals offered on the royalty rate.
    And I am not adverse to considering a variable, a 
variable--excuse my accent. It is not because of my age--a 
variable rate royalty, because as you mentioned, today gold is 
up, and tomorrow it could be down. Copper is down today, and 
tomorrow it could be up.
    Every one of the minerals has that variable rate, depending 
on the recyclical rate, depending on what the economy is doing. 
So perhaps, and I ask for the gentleman's thought on this, the 
Secretary maybe should have the discretion of adjusting rates 
according to the cyclical nature of the economy. Your thoughts?
    Mr. Heller. Yes. I would love to sit down and discuss that 
with you and have an open conversation about that. I do think 
there is room. I do think this is a good time to take a look at 
the mining law. I even think the industry agrees that there 
needs to be some movement for something that was signed into 
law many, many years ago.
    So certainly I would love to have that discussion and see 
if there are some options available to move in that direction.
    Chairman Rahall. Thank you.
    Mr. Costa. Thank you, the gentleman from West Virginia. A 
follow-up question to his point and your point, and your 
statement about obviously I think we all want to maintain the 
viability of the hardrock mining industry in this country for 
all the reasons that have been stipulated.
    What is your thought--and, I mean, you just acknowledged 
that industry, and they have told me, and you and I have had 
conversations over the past two years, where do you think is 
the critical change that needs to be made with trying to 
provide some revenue stream on the health and safety on the 
abandoned mines?
    I mean, where are the critical areas that you think need to 
be addressed that are deficient?
    Mr. Heller. According to my discussions with industry 
experts, they are expecting to see some changes, and would love 
to see changes in that particular area. I think some of the 
other changes that I discussed was to make sure that the 
revenues that were raised, that a certain percentage of it goes 
back to the areas where in fact they were mined so that they 
can be used for the specific purposes that you are talking 
about, and that is to mitigate the abandoned mine issues that 
we have throughout the State of Nevada.
    And I think I had an amendment a year ago or two years ago 
that did just that, that did increase the percentage that would 
come back to help with the abandoned mine issues.
    I think even the industry is eager to discuss this. I think 
they are eager to discuss perhaps what the revenue stream may 
be that would come out of a piece of legislation like this.
    But I don't think they are closing the doors to negotiate 
by any means. I am not sitting here saying that we can't have a 
bill by any means. I think that we do need to discuss 
mitigation issues from the past, and I think we need to discuss 
if a revenue stream is available, what can the industry itself 
absorb.
    Mr. Costa. Thank you very much. Any further questions? 
Hearing none, why don't we go to our full panel.
    Mr. Heller. Thank you.
    Mr. Costa. Thank you for your patience, and the individuals 
that we have today have well established experience and 
expertise on this subject matter. We have Mr. John Leshy. We 
have Ms. Robin Nazzaro, Mr. James Reynolds, and The Honorable 
Jim Starr, and The Honorable Sheri Eklund-Brown.
    So these distinguished individuals, we look forward to your 
testimony, and please come forward, and it looks like it will 
be the Ranking Member and myself here. So we won't be too 
lonely.
    I will take them in the order that they are listed here. So 
I believe all of you are familiar with this process, but just 
to remind you that we have a five minute rule on your stated 
testimony.
    There is a light there in front of you. It has green, 
yellow, and red. The green is on for the first four minutes. 
The yellow goes on when you have one minute left, and then the 
red light goes on when the five minutes have expired.
    The Chairperson truly appreciates when those testifying 
stay within the five minute limits. Actually, the Chair has 
been known to give extra bonus points when those come under the 
five minutes. But we do appreciate your testimony.
    Obviously, if you have a more detailed analysis that you 
would like to provide us, we appreciate that, and that is 
submitted in a written form for the benefit of Committee 
Members, as well as our staffs.
    So obviously we take your written testimony that is more 
detailed, and any graphs or charts that you might have that can 
be included. So we will go through the following five witnesses 
in our second panel, and then open it up for questions or 
comments that Members of the Subcommittee may have.
    With that understood, let us begin with Mr. John Leshy, who 
has already been acknowledged. He is the former Solicitor 
General for the Department of the Interior. He also has part of 
his resume and background as a Professor at the University of 
California at Hastings College of Law, and I suspect that part 
of his professorship as a law professor deals with mining law, 
I suspect. I just suspect that. So, Mr. Leshy, would you please 
open on our testimony.

 STATEMENT OF JOHN D. LESHY, SOLICITOR GENERAL, DEPARTMENT OF 
  THE INTERIOR [1993-2001], HARRY D. SUNDERLAND DISTINGUISHED 
 PROFESSOR, UNIVERSITY OF CALIFORNIA, HASTINGS COLLEGE OF THE 
                              LAW

    Mr. Leshy. Thank you. Thank you, Mr. Chairman, and I 
appreciate the Chairman's remarks at the beginning, and I 
appreciate the Chairman's tenacity in pursuing this issue. I 
will do my best to earn bonus points here.
    There is a certain ritual quality to these hearings, but it 
is an important set of issues, and deserves airing, and I am 
glad that it is being aired again today. Old is not necessarily 
bad. But the Mining Law of 1872 is really totally out of step 
with fundamental principles that have guided national policy 
for many, many decades.
    Mining companies, and it bears repeating, pay no rental. 
They pay no royalty. They make no other payment to the Federal 
treasury that recognizes that the people of the United States 
own the minerals that they are mining.
    Their position is unique in two distinct ways. All other 
users of the Federal lands, whether it is oil and gas 
companies, coal developers, timber harvesters, energy companies 
that run transmission lines, cattle grazers, and even these 
days hunters, anglers, and other recreationists, pay the 
government something, and in most cases something like market 
value for the publicly owned resources that they are using or 
removing.
    And, second, practically everywhere else in the world that 
hardrock mining companies operate, on state and private lands 
in the United States, and just about everywhere abroad, they 
pay something to the government and to others who own the 
minerals for the privilege of extracting them.
    And so it is long past time that Congress close this 
loophole. The justifications that were once offered for this 
kind of public giveaway of public property when gold has 
strategic value, and the West was sparsely settled back after 
the Civil War, those justifications, of course, have long since 
disappeared.
    About 85 percent of the gold mined today is used to make 
jewelry, and the West has long been the fastest growing region 
of the country, and in terms of gold strategic value, I would 
remind the Committee that in World War II, at a time of 
national emergency, gold mines were shut down by the government 
because the mining effort took away from the war effort and did 
not support it.
    Attached to my written statement are statistics, very 
interesting statistics, on the gold production in the United 
States over time, and the fact that it has tremendously 
accelerated in the last 30 years, and also statistics on the 
price of gold.
    And this illustrates well I think that the industry can 
absorb a modest royalty payment, such as is contained in H.R. 
699.
    Second, the mining law results in inadequate protection of 
the environment and other uses of the public lands, and here 
again all other users of the public lands who can cause 
significant environmental disruption are subject to a 
straightforward regulatory system that requires them to 
minimize their environmental effects, and clean up any mess 
that they create.
    And all other users of the public lands are subject to the 
fail-safe authority of the government to prevent proposed 
activities that threaten major environmental harm that cannot 
be mitigated appropriately.
    Mining is a dirty business and needs to be carefully 
controlled. When things go wrong, history teaches in hardrock 
mining, the costs to repair the damage can be enormous.
    Well over a century of mining under the Mining Law of 1872 
has saddled the nation's taxpayers with the cleanup costs for 
thousands of abandoned mines that approaches something like $50 
billion.
    And it bears emphasizing that despite the fact that the 
Clean Water Act and some of these other modern environmental 
laws do apply to hardrock mining, bad mines still fall through 
the regulatory gaps.
    There are a number of major modern mines that have opened 
under modern regulatory controls that have failed, and the 
government and the taxpayer are on the hook to clean them up, 
and it is long past time to close these loopholes.
    Finally, reforming the mining law will not as some maintain 
bankrupt or put an end to the domestic mining industry. Every 
year, as this Committee is aware, Canada's Fraser Institute 
surveys mining industry executives, and ranks jurisdictions 
around the world on who is favorable to mining, including 
factors such as regulatory controls and political stability, 
and every year the American west is at the top or near the top 
of those rankings.
    Gold prices skyrocketing means the industry is thriving as 
never before, and the cost of a modest royalty can be readily 
absorbed. The basic objective of H.R. 699 is to put in place 
practices and policies that oil and gas operators, coal miners, 
electric utilities, ski areas, and other intensive users of the 
Federal lands have operated under quite successfully for 
decades.
    I have no doubt that this industry, which contains a number 
of innovative, progressive companies that have flourished 
around the world will adapt readily to such reforms, just like 
other users have successfully adapted to similar requirements 
imposed on them over the last many decades. And I thank you for 
your attention, and I look forward to any questions you may 
have.
    [The prepared statement of Mr. Leshy follows:]

     Statement of John D. Leshy, Harry D. Sunderland Distinguished 
    Professor, University of California, Hastings College of the Law

    I appreciate your invitation to testify today, and I applaud your 
subcommittee once again taking the initiative to address reform of the 
Mining Law of 1872. There is no more important task among the 
constellation of issues raised by our public lands.
    I am the Harry D. Sunderland Distinguished Professor of Law at the 
University of California, Hastings College of the Law, and was 
Solicitor of the Department of the Interior from 1993 until 2001. I 
appear here today as a private citizen, expressing my own views, and 
not representing any group. I have worked on Mining Law issues for 
thirty-five years, in academia, in government and in the nonprofit 
sector. I have testified many times on the subject of Mining Law 
reform. I am appending to this statement my testimony before this 
subcommittee nineteen months ago.
    Rather than simply repeat that testimony, in this statement I will 
address four specific issues:
    1.  The profitability of the industry and its ability to compensate 
the American public for the privilege of extracting the public's 
minerals.
    2.  Determining what adequate compensation is. H.R.699 would 
require those extracting hardrock minerals from federal land to pay a 
royalty. But many large hardrock mining operations in the west extract 
no or very little ore from federal lands. This is because the ore 
bodies have been previously patented under the Mining Law and become 
private property. Yet these same operations use large tracts of federal 
lands for waste dumps and tailings piles. Under current law, they pay 
the federal government nothing for that privilege, and it is possible 
they would continue to be exempt from significant payments under H.R. 
699 as it is currently written.
    3.  The so-called ``right to say no'' issue; namely, whether reform 
legislation should unambiguously authorize the federal government to 
reject proposals to locate mines on federal lands if they pose 
unacceptable environmental damage or sacrifice other important values 
found on federal lands.
    4.  Whether uranium, currently governed by the Mining Law for the 
most part, should be made leasable under the principles of the Mineral 
Leasing Act.
                                 ______
                                 
    On the first issue, profitability, gold is by far, by every 
measure, the most important hardrock mineral governed by the Mining Law 
of 1872. Exhibit A charts U.S. gold production since 1840. The vast 
majority of that production is found on federal or formerly federal 
lands. As it shows, during the 1980s, production greatly increased 
above historical levels and has remained high ever since. This increase 
resulted from two factors: high gold prices, and development of heap-
leach techniques to recover gold from disseminated low-grade deposits, 
particularly in Nevada. It is also worth noting that this increase 
coincided with the federal government's first serious efforts to 
control hardrock mining to protect the environment.
    Today, the U.S. is the fourth largest gold-producing country in the 
world (behind Australia, South Africa and China). The vast majority of 
U.S. production (more than 80%) comes from gigantic open pit mines in 
Nevada. Only those other three countries and Peru produce more gold 
than is produced in the state of Nevada.
    Exhibit B charts the price of gold over the past forty years. It 
shows a rapid increase in price in the late 1970s and the relative high 
values since then. Indeed, since April 2001 gold has more than tripled 
in value against the U.S. dollar, and it has been hovering around $1000 
an ounce. While in real dollar terms this is well below the January 
1980 peak, many investors have long tried to preserve assets by 
investing in precious metals in times of serious economic difficulty 
like we face today, and therefore many observers expect the price of 
gold to remain high for the foreseeable future.
    The costs of mining that gold are well under one-half of the 
current gold price. See, e.g., the 2006 Economic Overview of Nevada 
Mining. This report, which may be found at http://www.nevadamining.org/
position/economy, shows a 2006 average cost of production of $365 to 
$435 per ounce, depending upon whether non-cash costs like 
depreciation, reclamation are included). A February 2008 white paper by 
Standard & Poor's showed that Barrick and Newmont, the two largest gold 
mining companies in Nevada, had company-wide cash costs of between $282 
and $377 per ounce. https://www.compustatresources.com/support/pub/
whitepapers/pdf/Mining.pdf
    Gold is, and has been for quite a long time, a very profitable 
industry. Its current position is indeed enviable in comparison to the 
economic carnage currently being visited across much of the American 
economy. It can readily absorb the modest royalties levied in H.R. 699.
                                 ______
                                 
    On the second issue, making sure the government is adequately 
compensated, the royalty in H.R. 699 would apply, according to section 
102, to the ``production of all locatable minerals from any mining 
claim located under the general mining laws and maintained in 
compliance with this Act.'' This means the royalty would presumably 
apply only to mineral ore extracted from federal lands. It would not, 
in other words, include any kind of charge for the use of federal lands 
to support the extraction of minerals from formerly federal lands.
    Many, perhaps most, of the very large hardrock mining operations in 
the West which comprise the bulk of domestic production are on lands in 
a mixture of ownerships--private, state and federal. The ore body 
itself may not include any federal lands, or at most mere slivers or 
odd-shaped parcels intermixed with others. Very often, in other words, 
all or most of the actual ore body is on non-federal land, usually 
because it has already been patented under the generous terms of the 
Mining Law. See, e.g., Mineral Resources: Value of Hardrock Minerals 
Extracted From and Remaining on Federal Lands (GAO/RCED-92-192, August 
1992).
    Even where the U.S. no longer owns any part of the ore body, the 
federal lands usually play a key role in bringing the ore body into 
production--by providing lands for mineral processing, for dumping 
waste rock and mine tailings, and so forth. It is not unusual for the 
ore body of a large mine to be 90% or more in private ownership (having 
been previously patented under the Mining Law, at a price of $2.50 or 
$5.00 per acre). Yet that same mining operation may occupy thousands of 
acres of nearby federal land as waste rock dumps and tailings piles, 
which are a permanent and exclusive use, as the land is of little use 
for things like wildlife habitat.
    Under current administration of the Mining Law, the U.S. receives 
no compensation for the use of its land for waste dumps and tailings 
piles, if they are claimed as ``millsites.'' Yet mining companies were 
required to secure access to federal land for these purposes under 
Title V of the Federal Land Policy and Management Act of 1976--which 
would be the case if this were a power plant, a transmission line, a 
water recharge project, or a factory--they would be required to pay 
fair market value for the land.
    Mine operators who permanently encumber thousands of acres of 
federal land as dumping grounds for waste ought to be required to pay a 
fee that reflects the value these federal lands contribute to the 
entire mining operation.
    I am not comfortable that H.R. 699 addresses this important issue 
clearly enough. It provides, in section 304, that a mining company 
securing an operations permit can conduct that mine on ``any valid 
mining claim, valid millsite claim, or valid tunnel site claim,'' and 
may also use ``such additional Federal land as the Secretary may 
determine is necessary to conduct the proposed mineral activities, if 
the operator obtains a right-of-way permit for use of such additional 
lands under Title V of [FLPMA] and agrees to pay all fees required 
under that title for the permit under that title.'' This language 
leaves room for the industry to argue that it can locate and accumulate 
unlimited numbers of 5 acre millsites, and thereby secure the right to 
occupy thousands of acres of federal land at a token cost, and not have 
pay the federal government fair market value, as it would if it used 
the permit process of FLPMA Title V for that purpose.
    Whether the Mining Law allows the accumulation of an unlimited 
number of millsites has never been finally and definitively resolved. 
When I was Solicitor of the Department of the Interior in 1997, my 
office prepared a legal opinion affirming a long-standing legal 
interpretation that mining claimants were limited to one millsite per 
lode or placer mining claim. My successor in the Bush Administration 
signed an opinion in 2003 disagreeing with that conclusion. No federal 
court has squarely addressed this disagreement. The reference in the 
current legislation to ``valid'' millsites may be read as endorsing the 
1997 Opinion, but a more forthright declaration of that principle would 
be welcome, because the American public which owns these lands ought to 
be fairly compensated for their use.
                                 ______
                                 
    On the third issue, the right to say no, the hardrock mining 
industry has argued that the government already has sufficient 
authority to protect the environment and other values of the federal 
lands from hardrock mining operations. Yet they resist saying so in any 
Mining Law reform legislation.
    The record is clear that existing standards and practices are not 
adequate to protect multiple uses of the public lands and a healthy 
environment, and clarifying and upgrading environmental standards is a 
principal reason to reform the Mining Law.
    Looking first at the Bureau of Land Management's current ``Part 
3809'' regulations governing surface management of hard rock mining on 
BLM-managed lands, early on the George W. Bush Administration weakened 
these regulations significantly, removing a number of key provisions 
that had been added by the Clinton Administration. Compare 65 Fed. Reg. 
69,998 (2000) with 66 Fed. Reg. 54,837 (2001). One of the most 
important was to eliminate the federal government's explicit authority 
to disapprove proposed hardrock mines on federal lands that threatened 
devastating, uncontrollable harm on other important natural and 
cultural resources.
    The Bush Administration acted on the basis of a Solicitor's Opinion 
issued by my successor, which overruled an opinion I had issued in 
1999. These dueling legal opinions differed on how to interpret a key 
phrase in the Federal Land Policy and Management Act of 1976 (FLPMA), 
in which Congress expressly amended the Mining Law to require the 
Interior Secretary to protect the public lands from ``unnecessary or 
undue degradation'' (emphasis added). 43 U.S.C. Sec. 1732(b).
    My legal opinion was that ``or'' means ``or,'' so that BLM has a 
responsibility to regulate hardrock mining on the public lands to 
protect against ``undue'' degradation, even if that degradation is 
regarded as ``necessary'' to mining. My successor's legal opinion was 
that ``or'' is better understood as meaning ``and.'' Thus, in his view, 
BLM has no authority to prevent hardrock mining that causes ``undue'' 
degradation if such degradation is ``necessary'' to mining.
    Environmental groups asked a federal court to settle this dispute. 
After full briefing, the court ruled that my reading of FLPMA was 
correct. Somewhat bizarrely, however, the court decided not to set 
aside the Bush Administration's removal of that express authority from 
the Part 3809 regulations. Conceding the question was ``indeed 
extremely close,'' the court was persuaded by the Department of 
Justice's argument that--even conceding that the Bush Administration's 
Solicitor was wrong on the law--those regulations need not articulate 
that authority in so many words. Mineral Policy Center v. Norton, 292 
F. Supp. 2d 30, 46 n. 18 (D.D.C. 2003). Neither side appealed this 
ruling.
    The counterpart U.S. Forest Service regulations (36 C.F.R. Part 
228) are even weaker. This is not surprising, for the Forest Service 
was long reluctant to regulate hardrock mining. Congress gave it 
express authority to regulate mining to prevent destruction of the 
national forests way back in 1897 (see 16 U.S.C. Sec. Sec. 478, 551), 
but it did not exercise this authority for more than three-quarters of 
a century. The regulations it finally adopted in 1974 were relatively 
tepid and have changed little since, despite vast ensuing changes in 
hardrock mining technology and practices.
    The Forest Service regulations require mining operations to 
``minimize,'' ``where feasible,'' environmental impacts on national 
forest resources, 36 C.F.R. Sec. 228.8 (emphasis added), and to take 
only ``practicable'' measures to ``maintain and protect fisheries and 
wildlife habitat which may be affected by the operations,'' id., at 
228.8(e) (emphasis added). In other words, the Forest Service, like the 
Interior Department, currently takes the position that the government 
cannot turn down a proposal to locate a hardrock mine on lands it 
manages even if it threatens dire environmental harm. The courts have 
refused to overturn this position. Okanogan Highlands Alliance v. 
Williams, 236 F.3d 468 (9th Cir. 2000).
    Also in this connection, the hardrock industry sometimes tries to 
draw a distinction between environmental regulation standards and 
standards to protect other land resource values. This distinction is 
very hard to draw, and is not useful in this context. Environmental 
standards are imposed to protect other resource values. For example, 
the government controls air and water pollution in part to protect 
viewsheds and wildlife habitat found on federal lands.
    Every decision made to allow a particular use of public lands ought 
to consider the impact of that use on other uses and values. The 
government routinely does that when it decides whether to authorize any 
and all other uses of the federal lands. There is no persuasive reason 
to give proposals to open hardrock mines an exemption.
    H.R. 699 properly recognizes that this is too important a matter to 
be left ambiguous. It states, in section 301, that the operative 
principle is that the government will ``not grant permission to engage 
in [hardrock] mineral activities'' if it determines that ``undue 
degradation would result from such activities.'' The public interest 
requires no less. Every other user of the public lands--oil or coal 
company, forest products company, electric utility, rancher, hunter, 
angler, or hiker--is held to that common-sense standard. Hardrock 
mining, which has the potential to cause more serious disruption than 
practically any of these others, deserves no special exemption.
                                 ______
                                 
    On the fourth issue, whether uranium should be made a leasable 
mineral, the answer seems to me is clearly yes. All the other energy 
fuels--coal, oil and gas, tar sands, oil shale, and geothermal 
resources--are governed by leasing systems, most dating back to 1920. 
Leasing enables the government to better protect the public's fiscal 
and environmental interests. Past and current controversies about 
uranium mining around such national treasures as the Grand Canyon only 
underscore how ill-suited the Mining Law is to govern uranium 
development. Indeed, some federal uranium is already subject to leasing 
rather than to the Mining Law--a result of post-World War II 
withdrawals of some federal land on the Colorado Plateau that vested 
the old Atomic Energy Commission with jurisdiction, now exercised by 
the Department of Energy.
    There is, moreover, no justification for continuing to subsidize 
the domestic uranium industry (and with it the civilian nuclear power 
industry) by allowing publicly-owned uranium to be mined without a 
royalty or other payment to the Treasury. As with hardrock mining, past 
uranium mining and milling has left a big cleanup bill for the 
taxpayer. The government is currently spending many millions of 
dollars, for example, to move a large mill tailings pile away from the 
banks of the Colorado River adjacent to Moab, Utah, on top of much 
public money it has already spent cleaning up uranium mines and mills. 
And there is more to do. Consumers of uranium should pay these bills, 
not general taxpayers. Finally, there is no strategic argument for 
subsidizing domestic uranium production when the friendly countries of 
Canada and Australia have abundant uranium resources. For all these 
reasons, I believe the idea of simply putting uranium under the Mineral 
Leasing Act ought to be given very serious consideration. It would be a 
welcome part (but only a part) of Mining Law reform.
Conclusion
    Once again, I applaud your taking up this important issue of public 
policy, and I stand ready to advance this effort any way I can.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


                            ATTACHMENT A

                       Statement of John D. Leshy

                                 at the

 Hearing on H.R. 2262, the Hardrock Mining and Reclamation Act of 2007

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                     U.S. House of Representatives

                             July 26, 2007

    I appreciate your invitation to testify today, and I especially 
appreciate this subcommittee taking the initiative to address reform of 
the Mining Law of 1872. There is no more important task among the 
constellation of issues raised by our public lands, which encompass 
nearly one-third of the Nation's real estate and a much larger portion 
of its valuable natural resources, including minerals.
    I appear here today as a private citizen, expressing my own views, 
and not representing any group. I have worked on Mining Law issues for 
thirty-five years, in academia, in government and in the nonprofit 
sector. I hope in this testimony to provide some larger perspective on 
the effort you have initiated with the introduction of H.R. 2262.
    Calls to reform the Mining Law date back to a few years from its 
passage, and have been made by many U.S. Presidents, from Republicans 
like Theodore Roosevelt and Richard Nixon to Democrats like Jimmy 
Carter and Bill Clinton. Almost forty years ago, as Stewart Udall was 
stepping down after eight years as Secretary of the Interior, he called 
its repeal the biggest unfinished business on the Nation's natural 
resources agenda.
    Signed into law by President Ulysses S. Grant four years before the 
telephone was invented, this antiquated relic is the last statutory 
survivor of a colorful period in the Nation's history that began with 
discovery of gold in the foothills of the Sierra Nevada in 1848. The 
mining ``rushes'' that ensued accelerated the great westward expansion 
of settlement. And they swept to statehood California (the golden 
state), Nevada (the silver state), Montana (the treasure state), Idaho 
(the gem state) and eventually Arizona (the copper state). The same era 
witnessed the enactment of numerous other laws filling out the 
framework for that great movement--laws like the railroad land grant 
acts and the Homestead Act of 1862. A generation later, Congress 
followed up with landmark laws like the National Forest Organic Act in 
1897 and the Reclamation Act of 1902, and a generation after that, with 
the National Park Organic Act of 1916 and, in 1920, the Mineral Leasing 
Act and the Federal Power Act.
    All of those other laws have long since been repealed, replaced, or 
fundamentally reformed, often more than once. Today the public lands 
and resources are managed under laws like the Federal Land Policy & 
Management Act of 1976, the Federal Coal Leasing Amendments of 1976, 
the Surface Management Control and Reclamation Act of 1977, the 
National Forest Management Act of 1978, the Reclamation Reform Act of 
1982, and the Federal Oil and Gas Leasing Reform Act of 1987.
    Amazingly, despite the fact that, since 1872, the population of the 
U.S. has grown more than seven-fold (from less than forty million to 
more than 300 million), the population of the eleven western states 
plus Alaska (where the Mining Law principally applies) has grown from 
about one million to nearly 70 million, and our society and economy 
have changed in ways beyond comprehension, the Mining Law has escaped 
fundamental overhaul.
    It is not for lack of trying. It has long been recognized that the 
Mining Law is thoroughly out of step with evolving public resource 
management principles. Indeed, the first Public Land Commission created 
by Congress to assess public land policies recommended in 1880 that it 
be thoroughly rewritten. That recommendation has been echoed by many 
blue-ribbon commissions since. There is widespread agreement that the 
Law's three most important shortcomings are as follows:

        First, the Mining Law allows privatization of valuable public 
        resources, at bargain-basement rates. This so-called patenting 
        feature is the last vestige in federal law of nineteenth 
        century public land disposal policy. Much abused for purposes 
        that have nothing to do with mining, it has resulted in an area 
        of federal land larger than the state of Connecticut passing 
        into private ownership, much of it in scattershot inholdings 
        that continue to complicate land uses throughout the West to 
        this day. While Congress has since 1994 enacted appropriation 
        riders to forestall new applications for patents, it must do so 
        each year, or patenting resumes.

        The fragility of these riders was driven home in the fall of 
        2005 by the now-infamous Pombo-Gibbons legislative proposal 
        that would have lifted the moratorium on new patents and 
        greatly liberalized the terms of patenting. That ill-conceived 
        proposal--which passed the House but then died under a storm of 
        protest--could have resulted in the privatization of more 
        millions of acres of federal lands.

        As long as privatization remains a core feature of the Mining 
        Law, the temptation remains for future mischief-makers to try 
        similar stunts. Patenting is not necessary to mine; indeed, the 
        Supreme Court recognized in 1884 that the ``patent adds little 
        to the security of the party in continuous possession of a mine 
        he has discovered or bought.'' Many large mines are found at 
        least partly on un-patented federal lands. It is time for 
        Congress to repeal, once and for all, the Mining Law policy 
        allowing willy-nilly privatizing of the federal lands.

        Second, the Mining Law fails to produce any direct financial 
        return to the public. Mining companies are charged no rental, 
        pay no royalty, and make no other payment that recognizes that 
        the people of the U.S. own the minerals being mined. This is 
        unique in two ways. First, virtually all other users of the 
        public lands--oil and gas and coal developers, timber 
        harvesters, energy companies that run transmission lines across 
        the federal lands, cattle graziers, and even, these days, 
        hunters, anglers and other recreationists--pay the government 
        something (in most cases, something like market value) for the 
        publicly-owned resources being used or removed. Second, 
        everywhere else hardrock mining companies operate on this 
        earth--on state or private lands in the U.S., and just about 
        everywhere abroad--they pay royalties to the governments and 
        others who own the minerals.

        It is time for Congress to close this glaring loophole. 
        Whatever justification might once have been offered for such a 
        giveaway of public property--such as when gold had strategic 
        value and the West was sparsely settled--has long since 
        disappeared. Today 85% of the gold mined is used to make 
        jewelry, and the West has long been the fastest-growing region 
        of the country.

        Third, the Mining Law results in inadequate protection of the 
        environment and other uses of the public lands. All other users 
        of the public lands who can cause significant environmental 
        disruption are subject to a straightforward system of 
        regulation which requires them to minimize the environmental 
        effects of their activities and clean up any mess they create. 
        And all other users are subject to the fail-safe authority of 
        the government to say no to proposed activities that threaten 
        major environmental harm which cannot be prevented or mitigated 
        appropriately.

        The Mining Law itself is utterly silent on environmental 
        regulation. While it is the case that operations carried out 
        under it no longer escape regulation, thanks to laws like the 
        Clean Water Act, these other laws do not comprehensively 
        address the myriad of environmental threats posed by hardrock 
        mining (such as groundwater depletion and pollution and 
        disruption of wildlife habitat), nor do they weigh the value of 
        mining against other values and uses of the public lands. The 
        hardrock mining industry has long used the silence of the 
        Mining Law on such issues to stoutly contest the reach of the 
        government's authority over its activities.

        The industry has long had powerful allies in the government on 
        these matters. For example, just within the last few years my 
        two immediate successors as Solicitor of the Interior 
        Department issued legal opinions agreeing with the industry 
        that the Mining Law hamstrings government authority. One 
        concluded that the government lacks authority to say no to 
        Mining Law hardrock mining operations proposed for the public 
        lands even if they pose huge threats to the environment. 
        Another concluded that the Mining Law gives the mining industry 
        the right to use as much public land as it thinks it needs as a 
        dumping ground for the residue of its vast hardrock 
        operations--operations which these days can involve hundreds of 
        millions of tons of waste from gigantic open pits several miles 
        across and a mile or more deep. It is no wonder that the 
        federal land management agencies continue to feel cowed when 
        they contemplate exercising regulatory controls over this 
        industry.

        Mining is a dirty business, and must be carefully controlled to 
        prevent environmental disasters. History teaches not only that 
        things can go bad with hardrock mining operations, but when 
        they do, the costs to repair the damage can be enormous. Well 
        over a century of mining under the Mining Law of 1872 has 
        saddled the Nation's taxpayers with a cleanup cost for 
        thousands of abandoned mines that, according to some estimates, 
        approaches fifty billion dollars. While the industry is now 
        subject to some regulation, bad things still happen. Montana 
        and U.S. taxpayers are paying millions of dollars to clean up 
        the Zortman-Landusky mine in Montana--a mine which was approved 
        under so-called ``modern'' regulatory standards that the 
        industry argues are adequate and don't need strengthening.

        It is long past time to close these regulatory loopholes and 
        eliminate these ambiguities so as to make clear to all in the 
        industry--as well as to federal land managers--that the 
        hardrock mining industry will be held to the same standards, 
        and be subject to the same kinds of regulatory authority, that 
        apply to all other users of the public lands.
                                 ______
                                 
    About fourteen years ago, the House of Representatives handily 
approved a comprehensive reform proposal introduced by Chairman Rahall 
and others. That effort nearly succeeded, failing in the last hours of 
the 103rd Congress. In the years since then, much has changed. Today, 
Mining Law reform is both more imperative and, in my judgment, more 
achievable. I'd like to take a few moments to explain why.
    First, the industry structure, operations and economic impact have 
evolved considerably. The domestic hardrock industry now produces much 
more gold than it ever did--the U.S. is the third leading producer in 
the world. And the industry is heavily concentrated, with many fewer 
companies and many fewer mines than ever before. More than four-fifths 
of U.S. gold production now comes from a single state--Nevada. The four 
largest mines, all in Nevada, account for well over half the total 
domestic production. The thirty biggest mines (more than half in 
Nevada, including twelve of the fifteen largest) yield 99% of total 
production. Barrick Gold, a Canadian company, is the biggest, 
accounting for about 40% of domestic U.S. (and 8% of world) gold 
production. Production of copper and other precious metals are 
similarly concentrated. Moreover, the hardrock industry now operates 
with such ruthless efficiency that it employs far fewer people than it 
used to. Its workers may be relatively well-paid, but they are far 
fewer in number and much more geographically concentrated than they 
ever were.
    In the meantime, the economies of the western states have evolved 
rapidly away from their historic roots dependent on resource 
extraction. Today the regional economy where the Mining Law applies--
the western states in the lower 48 plus Alaska--has changed 
dramatically. While mining used to be a dominant industry in many 
western locales, today in most places its impact is small, even 
minuscule. The west is now the most urban and fastest growing region in 
the country. Moreover, its dynamic growth and economic health are 
fundamentally linked to the quality of life provided by the open spaces 
and recreational amenities of the public lands.
    As a result, the politics of the region have changed at the ground 
level. Westerners are increasingly unsympathetic to the idea that the 
hardrock mining industry deserves these special exemptions from the 
laws and policies that apply to everyone else. It is not surprising, 
then, that when the mining industry seeks to exploit its favored 
position under the Mining Law, more and more local people--ranchers, 
hunters, anglers, retirees, land developers, tourist industry 
officials, municipal water providers and other local government 
officials--are asking why this nineteenth century policy still exists. 
And their concerns are growing because soaring mineral prices, 
particularly for gold, copper and uranium, have led to a new rush of 
claimstaking under the Mining Law in areas with high values for other 
uses.
    People in the west are also more familiar than most with the 
consequences of failing to control the industry. They live with the 
thousands of abandoned mines scattered throughout the region, and are 
familiar with the sorry legacy of polluted streams and disrupted 
landscapes that will require billions of dollars to repair. And they 
resent the fact that, under the current regime, the dollars to pay for 
this cleanup will come more from taxpayers than from the industry that 
created the mess.
    Another noteworthy change in recent years is that, for the first 
time, the hardrock mining industry is facing some pressure to reform 
from the demand side--the jewelry industry that consumes much of its 
product. With leadership from Tiffany and other major jewelers, this 
movement has helped persuade some major mining companies, concerned 
about their reputations as well as their impacts, to work to improve 
their practices and make other accommodations to modern social and 
environmental values. In short, the industry is no longer so monolithic 
and so reflexively hostile to change.
    It bears repeating that the H.R. 2262's reforms do no more than put 
in place practices and policies that oil and gas operators, coal 
miners, electrical utilities, ski areas, and other intensive users of 
the federal lands have operated under quite successfully for decades. I 
have no doubt that the innovative, progressive companies in this 
industry--and there are some, who have flourished around the world by 
being so--will adapt readily to such reforms, just like other public 
land users have.
    I am also confident that reforming the archaic Mining Law will 
not--as some industry spokespeople have ritually maintained--put an end 
to the domestic hardrock mining industry. Every year Canada's Fraser 
Institute surveys mining industry executives and uses the results to 
rank the most favorable jurisdictions in the world for hardrock mining, 
considering a variety of factors, including political stability. The 
American West is always at or near the top of the rankings. 
Furthermore, skyrocketing mineral prices means the industry is thriving 
as never before, and any modest increase in production costs that might 
result from reforms like H.R. 2262 can readily be absorbed.
    Once again, I commend your leadership for taking up this important 
issue. You have the best opportunity in a generation to achieve a 
landmark legacy in public land policymaking. I stand ready to help any 
way I can to move this forward, and I would be happy to answer any 
questions you may have.
                                 ______
                                 
    Mr. Costa. Thank you again, Mr. Leshy, Professor Leshy.
    And our next witness is Ms. Robin Nazzaro, Director of the 
Natural Resources and Environmental Division of the U.S. 
Government Accountability Office. Ms. Nazzaro, please open on 
your testimony.

STATEMENT OF ROBIN M. NAZZARO, DIRECTOR, NATURAL RESOURCES AND 
       ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Nazzaro. Thank you, Mr. Chairman, and Mr. Lamborn. I am 
pleased to be here today to discuss GAO's work on several 
hardrock mining issues that are central to the debate on 
reforming the General Mining Act of 1872.
    The Act helped open the West by allowing individuals to 
obtain exclusive rights to billions of dollars worth of gold, 
silver, and other hardrock minerals from Federal lands without 
having to pay a royalty.
    Most of these lands are managed by the Department of the 
Interior's Bureau of Land Management, and the Department of 
Agriculture's Forest Service. In addition to not requiring 
operators to pay royalties prior to 1981, the BLM did not 
require them to reclaim the Federal land they used, leaving 
environmental and physical safety hazards.
    In 1981, BLM began requiring mine operators to reclaim the 
BLM land disturbed by these operations, and in 2001, began 
requiring operators to provide financial assurances to cover 
reclamation costs before they began exploration or mining.
    My testimony today focuses on the royalty states charge, 
the number of abandoned hardrock mine sites and hazards, and 
the value and coverage of financial assurances operators use to 
guarantee reclamation costs.
    All 12 western states assess royalties on hardrock mining 
operations on state lands. In addition, each of these states, 
except Oregon, assesses taxes that function like a royalty, 
which I will refer to as functional royalties, on the hardrock 
mining operations on private, state, and Federal lands.
    The royalties the states assess often differ depending on 
land ownership. For example, for private mining operations 
conducted on Federal, state, and private land, Arizona assesses 
a functional royalty of 1.25 percent of net revenue on gold 
mining operations, and an additional royalty of at least two 
percent of gross value for gold mining operations on state 
lands.
    In addition, 9 of the 12 states assess different types of 
royalties for different types of minerals. Wyoming, for 
example, employs three different functional royalties for all 
lands; net smelter returns for uranium, a different net smelter 
return for trona, and a gross revenue for all other minerals.
    The royalties the states assess often differ in the 
allowable exclusions deductions and limitations as well. In 
Colorado, a functional royalty on metallic mining excludes 
gross incomes below $19 million; whereas, in Montana, a 
functional royalty on metallic mining is applied on all mining 
operations after the first $250,000 of revenue.
    The actual amount of assessed for a particular mine may 
also depend on other factors, such as mineral's processing 
requirements, mineral markets, mine efficiency, and the mine 
location relative to markets.
    Prior estimates on the number of abandoned hardrock mine 
sites have varied widely, in part because there is no generally 
accepted definition of a hardrock mine site. Using a consistent 
definition that we provided to the 12 western states, as well 
as South Dakota, estimated the number of hardrock mine sites in 
their states.
    From this information, we estimated a total of at least 
161,000 abandoned hardrock mine sites in these states on state, 
private, and Federal lands. These sites have at least 332,000 
features that may pose physical safety hazards, such as open 
shafts, or unable, or decayed mine structures, and at least 
33,000 sites have degraded the environment by, for example, 
contaminating surface water and ground water, or leaving 
arsenic-contaminated tailings.
    Between Fiscal Years 1998 and 2007, BLM and the Forest 
Service have spent a total of about $260 million in 2008 
constant dollars to reclaim abandoned hardrock mines. As I 
noted earlier, all operators are provided to provide financial 
assurances to guarantee funding for reclamation costs if the 
operator did not complete the task.
    However, according to BLM's information on financial 
assurances, 52 of the 1,463 hardrock mining operations on its 
lands had financial assurances valued at about $28 million less 
than needed to fully recover estimated reclamation costs.
    We determined that the assurances for these 52 operations 
should more accurately be reported at about $61 million less 
than needed for full coverage. The difference between GAO and 
BLM's estimated shortfall occurs between BLM calculated its 
shortfall by comparing the total value of financial assurances 
in place with the total estimated reclamation costs.
    This approach effectively offset the shortfalls in some 
operations with the financial assurances of others. GAO has 
followed up with BLM and has taken steps to correct its 
reporting on the adequacy of financial assurances.
    In conclusion, for decades GAO has reported on the need to 
reform the General Mining Act of 1872. Assessing a royalty on 
hardrock minerals would ensure that the public is compensated 
for hardrock minerals extracted from Federal lands as more 
recent enacted laws require for oil, gas, and other minerals.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to respond to any questions.
    [The prepared statement of Ms. Nazzaro follows:]

    Statement of Robin M. Nazzaro, Director, Natural Resources and 
           Environment, U.S. Government Accountability Office

    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss our 2008 work on several 
hardrock mining issues that are central to the debate on reforming the 
General Mining Act of 1872: royalties, abandoned mines, and financial 
assurances. 1
---------------------------------------------------------------------------
    \1\ GAO, Hardrock Mining: Information on State Royalties and Trends 
in Mineral Import and Exports, GAO-08-849R (Washington, D.C.: July 21, 
2008); and GAO, Hardrock Mining: Information on Abandoned Mines and 
Value and Coverage of Financial Assurances on BLM Land, GAO-08-574T 
(Washington, D.C.: Mar. 12, 2008).
---------------------------------------------------------------------------
    As you know, since the passage of the General Mining Act of 1872, 
mine operators have extracted billions of dollars worth of silver, 
gold, copper, and other hardrock (locatable) minerals from federal 
lands without having to pay a royalty. 2 Most of these lands 
are managed by the Department of the Interior's Bureau of Land 
Management (BLM) and the U.S. Department of Agriculture's Forest 
Service. Assessing a royalty on hardrock minerals would ensure that the 
public is compensated for hardrock minerals extracted from federal 
lands, as more recently enacted laws require for oil, gas, and other 
minerals.
---------------------------------------------------------------------------
    \2\ Under U.S. mining laws, minerals are classified as locatable, 
leasable, or saleable. Locatable minerals include those minerals that 
are not leasable or saleable, for example, copper, lead, zinc, 
magnesium, gold, silver, and uranium. Only locatable minerals continue 
to be ``claimed'' under the Mining Act. For the purposes of this 
report, we use the term ``hardrock minerals'' as a synonym for 
``locatable minerals.'' Leasable minerals include, for example, oil, 
gas, and coal. The Mineral Leasing Act of 1920, 41 Stat. 437 (codified 
at 30 U.S.C. Sec. 181) created a leasing system for coal, gas, oil and 
other fuels, and chemical minerals. Saleable minerals include, for 
example, common sand, stone, and gravel. In 1955, the Multiple Use 
Mining Act of 1955, 69 Stat. 367 (codified at 30 U.S.C. Sec. 601) 
removed common varieties of sand, stone, and gravel from development 
under the Mining Act.
---------------------------------------------------------------------------
    The vast majority of the federal lands where hardrock mining 
operations occur are in 12 western states, including Alaska (hereafter 
referred to as the 12 western states). 3 These western 
states have statutes governing hardrock mining operations on lands in 
their state. However, unlike the federal government, these states 
charge royalties that allow them to share in the proceeds from hardrock 
minerals extracted from state-owned lands. In addition, most of these 
states charge taxes, such as severance taxes, mine license taxes, or 
resource excise taxes, on hardrock mining operations that occur on 
private, state, and federal lands. For the purposes of this report, we 
use the term ``functional royalty'' to refer to taxes that function 
like a royalty in that they permit the state to share in the value of 
the mine's production. Although states may use similar names for 
functional royalties they assess, there can be wide variations in their 
forms and rates.
---------------------------------------------------------------------------
    \3\ The other 11 western states are Arizona, California, Colorado, 
Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and 
Wyoming.
---------------------------------------------------------------------------
    In addition to not requiring hardrock mining operators to pay 
royalties, prior to 1981, BLM did not require them to reclaim the 
federal land they used. Consequently, hardrock mining operators have 
left thousands of acres of federal land disturbed through mineral 
exploration, mining, and mineral processing. Some of these disturbed 
abandoned mine lands pose serious environmental and physical safety 
hazards. These hazards include environmental hazards such as toxic or 
acidic water that contaminates soil and groundwater or physical safety 
hazards such as open or concealed shafts, unstable or decayed mine 
structures, or explosives. Cleanup costs for these abandoned mines vary 
by type and size of the operation. 4
---------------------------------------------------------------------------
    \4\ For purposes of this testimony, cleanup refers to the 
mitigation of environmental impacts at mine sites, such as contaminated 
water, and the reclamation of land disturbed by hardrock operations.
---------------------------------------------------------------------------
    To curb further growth in the number of abandoned hardrock mines, 
BLM issued regulations, effective in 1981, that required all mining 
operators to reclaim BLM land disturbed by hardrock mining. In 2001, 
BLM began requiring all mining operators to provide financial 
assurances before beginning exploration or mining operations on BLM 
land. These financial assurances must cover all of the estimated 
reclamation costs for a given hardrock operation. Having adequate 
financial assurances to pay reclamation costs for BLM land disturbed by 
hardrock operations is critical to ensuring that the land is reclaimed 
if the mining operators fail to do so. In June 2005, we reported that 
some current hardrock operations on BLM land do not have financial 
assurances, and some have no or outdated reclamation plans and/or cost 
estimates on which the financial assurances should be based. 
5
---------------------------------------------------------------------------
    \5\ GAO, Hardrock Mining: BLM Needs to Better Manage Financial 
Assurances to Guarantee Coverage of Reclamation Costs, GAO-05-377 
(Washington, D.C.: June 20, 2005).
---------------------------------------------------------------------------
    My testimony today focuses on the (1) royalties states currently 
charge on hardrock mining operations, (2) the number of abandoned 
hardrock mine sites and number of associated hazards, and (3) value and 
coverage of the financial assurances operators use to guarantee 
reclamation costs on lands managed by BLM.
    To address these objectives, we interviewed staff at BLM and the 
Forest Service; examined agency documents and data; and reviewed 
relevant legislation and regulations. To identify the types of 
royalties, including functional royalties that the 12 western states 
assess on hardrock mining operations, we reviewed state statutes and 
regulations pertaining to royalties on hardrock mining operations. To 
aid in understanding general patterns in state royalties, we consulted 
academic and industry sources and then we categorized each royalty 
according to how it is assessed. To assess the number of abandoned 
hardrock mine sites, we asked the 12 western states and South Dakota--
which have significant numbers of abandoned hardrock mining 
operations--to determine the number of these mine sites in their 
states. We asked the states to use a consistent definition, which we 
provided, in estimating the number of abandoned mine sites and 
associated features that pose a significant hazard to public health and 
safety and the number of sites that cause environmental degradation. 
6 We specified that states should only include hardrock 
(also known as locatable), non-coal sites in this estimate. From these 
data, we estimated the number of features that pose physical safety 
hazards and the number of sites with environmental hazards in the 12 
western states. We also summarized six selected survey efforts by 
federal agencies and organizations to document differences in 
estimates, definitions, and methodologies. To assess the value and 
coverage of financial assurances in place to guarantee reclamation, we 
reviewed BLM's Bond Review Report. This report provides information on 
financial assurances for 11 western states. 7 This Bond 
Review Report is generated from BLM's automated information system--LR 
2000. Although the LR2000 data are of undetermined reliability, our 
limited assessment of these data indicates that they are appropriate as 
used and presented in this testimony, and we do not base any 
conclusions or recommendations on them. This testimony is based on 
prior GAO reports whose work was conducted in accordance with generally 
accepted government auditing standards. 8 Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives.
---------------------------------------------------------------------------
    \6\ We defined an abandoned hardrock mine site as all associated 
facilities, structures, improvements, and disturbances at a distinct 
location associated with activities to support a past operation under 
the general mining laws.
    \7\ Data for Alaska are not maintained in LR2000 and not reported 
in the Bond Review Report.
    \8\ GAO-08-849R and GAO-08-574T.
---------------------------------------------------------------------------
The 12 Western States Assess Multiple Types of Royalties, Including 
        Functional Royalties, on Mining Operations
    Twelve western states assess royalties on the hardrock mining 
operations on state lands. In addition, each of these states, except 
Oregon, assesses taxes that function like a royalty, which we refer to 
as functional royalties, on the hardrock mining operations on private, 
state, and federal lands. To aid in the understanding of royalties, 
including functional royalties, the royalties are grouped as follows:
      Unit-based is typically assessed as a dollar rate per 
quantity or weight of mineral produced or extracted, and does not allow 
for deductions of mining costs.
      Gross revenue is typically assessed as a percentage of 
the value of the mineral extracted and does not allow for deductions of 
mining costs.
      Net smelter returns is assessed as a percentage of the 
value of the mineral, but with deductions allowed for costs associated 
with transporting and processing the mineral (typically referred to as 
mill, smelter, or treatment costs); however, costs associated with 
extraction of the mineral are not deductible.
      Net proceeds is assessed as a percentage of the net 
proceeds (or net profit) of the sale of the mineral with deductions for 
a broad set of mining costs. The particular deductions allowed vary 
widely from state to state, but may include extraction costs, 
processing costs, transportation costs, and administrative costs, such 
as for capital, marketing, and insurance. 9
---------------------------------------------------------------------------
    \9\ For a full discussion of the definition and formula for each 
type of royalty, see GAO-08-849R.
---------------------------------------------------------------------------
      Royalties, including functional royalties, often differ 
depending on land ownership and the mineral being extracted, as the 
following illustrates:
      For private mining operations conducted on federal, 
state, or private lands, Arizona assesses a net proceeds functional 
royalty of 1.25 percent on gold mining operations, and an additional 
gross revenue royalty of at least 2 percent for gold mining operations 
on state lands.
      Nine of the 12 states assess different types of royalties 
for different types of minerals. For example, Wyoming employs three 
different functional royalties for all lands: (1) net smelter returns 
for uranium, (2) a different net smelter returns for trona--a mineral 
used in the production of glass, and (3) gross revenue for all other 
minerals.
    Furthermore, the royalties the states assess often differ in the 
allowable exclusions, deductions, and limitations. 10 For 
example, in Colorado, a functional royalty on metallic mining excludes 
gross incomes below $19 million, 11 whereas in Montana a 
functional royalty on metallic mining is applied on all mining 
operations after the first $250,000 of revenue. 12
---------------------------------------------------------------------------
    \10\ For a complete listing of exclusions, deductions, and 
limitations, see GAO-08-849R, encl. II, table 3.
    \11\ Gross income is the value of ore immediately after its removal 
from the mine and does not include any value added subsequent to mining 
by any treatment processes.
    \12\ Gross value of product, less first $250,000; Gross value is 
the receipts received from the sale of concentrates or metals extracted 
from mines or recovered from the smelting, milling, reduction, or 
treatment of such ores. Receipts received is defined as the payment 
received, less allowable deductions.
---------------------------------------------------------------------------
    Finally, the actual amount assessed for a particular mine may 
depend not only on the type of royalty, its rate, and exclusions, but 
also on such factors as the mineral's processing requirements, mineral 
markets, mine efficiency, and mine location relative to markets, among 
other factors.
    Table 1 shows the types of royalties, including functional 
royalties, that the 12 western states assess on all lands, including 
federal, state, and private lands, as well as the royalties assessed 
only on state lands.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


Prior State Estimates of the Number of Abandoned Hardrock Mine 
        Sites Vary Widely, but Our Data Show at Least 161,000 Sites, 
        with Many Posing Hazards
    It has been difficult to determine the number of abandoned hardrock 
mine sites in the 12 western states, and South Dakota, in part because 
there is no generally accepted definition for a hardrock mine site. The 
six studies we reviewed relied on the different definitions that the 
states used, and estimates varied widely from study to study. 
13
---------------------------------------------------------------------------
    \13\ For a full discussion of these six studies, see GAO-08-574T, 
app. III.
---------------------------------------------------------------------------
    Furthermore, BLM and the Forest Service have had difficulty 
determining the number of abandoned hardrock mines on their lands. In 
September 2007, the agencies reported an estimated 100,000 abandoned 
mine sites, 14 but we found problems with this estimate. For 
example, the Forest Service had reported that it had approximately 
39,000 abandoned hardrock mine sites on its lands. However, this 
estimate includes a substantial number of non-hardrock mines, such as 
coal mines, and sites that are not on Forest Service land. At our 
request, the Forest Service provided a revised estimate of the number 
of abandoned hardrock mine sites on its lands, excluding coal or other 
non-hardrock sites. According to this estimate, the Forest Service may 
have about 29,000 abandoned hardrock mine sites on its lands. That 
said, we still have concerns about the accuracy of the Forest Service's 
recent estimate because it identified a large number of sites with 
``undetermined'' ownership, and therefore these sites may not all be on 
Forest Service lands.
---------------------------------------------------------------------------
    \14\ BLM and Forest Service, Abandoned Mine Lands: A Decade of 
Progress Reclaiming Hardrock Mines (September 2007).
---------------------------------------------------------------------------
    BLM has also acknowledged that its estimate of abandoned hardrock 
mine sites on its lands may not be accurate because it includes sites 
on its lands that are of unknown or mixed ownership (state, private, 
and federal) and a few coal sites. In addition, BLM officials said that 
the agency's field offices used a variety of methods to identify sites 
in the early 1980s, and the extent and quality of these efforts varied 
greatly. For example, they estimated that only about 20 percent of BLM 
land has been surveyed in Arizona. Furthermore, BLM officials said that 
the agency focuses more on identifying sites closer to human habitation 
and recreational areas than on identifying more remote sites, such as 
in the desert. Table 2 shows the Forest Service's and BLM's most recent 
available estimates of abandoned mine sites on their lands.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    .epsTo estimate abandoned hardrock mine sites in the 12 western 
states and South Dakota, we developed a standard definition for these 
mine sites. In developing this definition, we consulted with mining 
experts at the National Association of Abandoned Mine Land Programs; 
the Interstate Mining Compact Commission; and the Colorado Department 
of Natural Resources, Division of Reclamation, Mining and Safety, 
Office of Active and Inactive Mines. We defined an abandoned hardrock 
mine site as a site that includes all associated facilities, 
structures, improvements, and disturbances at a distinct location 
associated with activities to support a past operation, including 
prospecting, exploration, uncovering, drilling, discovery, mine 
development, excavation, extraction, or processing of mineral deposits 
locatable under the general mining laws. We also asked the states to 
estimate the number of features at these sites that pose physical 
safety hazards and the number of sites with environmental degradation.
    Using this definition, states reported to us the number of 
abandoned sites in their states, and we calculated that there are at 
least 161,000 abandoned hardrock mine sites in their states. At these 
sites, on the basis of state data, we estimated that at least 332,000 
features may pose physical safety hazards, such as open shafts or 
unstable or decayed mine structures. Furthermore, we estimated that at 
least 33,000 sites have degraded the environment, by, for example, 
contaminating surface and ground water or leaving arsenic-contaminated 
tailings piles. 15 Table 3 shows our estimate of the number 
of abandoned hardrock mine sites in the 12 western states and South 
Dakota, the number of features that pose significant public health and 
safety hazards, and the number of sites with environmental degradation.
---------------------------------------------------------------------------
    \15\ Tailings are a combination of fluid and rock materials that 
are left behind after the minerals are extracted. Tailings are often 
disposed of in a nearby pile.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


BLM Estimates That Operators Have Provided About $982 Million in 
        Financial Assurances--About $61 Million Less Than Needed to 
        Cover Estimated Reclamation Costs
    As of November 2007, hardrock mining operators had provided 
financial assurances valued at approximately $982 million to guarantee 
the reclamation cost for 1,463 hardrock mining operations on BLM land 
in 11 western states, according to BLM's Bond Review Report. 
16 The report also indicates that 52 of the 1,463 hardrock 
mining operations had inadequate financial assurances''e i95about $28 
million less than needed to fully cover estimated reclamation costs. We 
determined, however, that the financial assurances for these 52 
operations should be more accurately reported as about $61 million less 
than needed to fully cover estimated reclamation costs. Table 4 shows 
total operations by state, the number of operations with inadequate 
financial assurances, the financial assurances required, BLM's 
calculation of the shortfall in assurances, and our estimate of the 
shortfall, as of November 2007.
---------------------------------------------------------------------------
    \16\ Data for Alaska are not maintained in LR2000 and not reported 
in the Bond Review Report.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


    .epsThe $33 million difference between our estimated shortfall of 
nearly $61 million and BLM's estimated shortfall of nearly $28 million 
occurs because BLM calculated its shortfall by comparing the total 
value of financial assurances in place with the total estimated 
reclamation costs. This calculation approach has the effect of 
offsetting the shortfalls in some operations with the greater than 
required financial assurances of other operations. However, the 
financial assurances that are greater than the amount required for an 
operation cannot be transferred to an operation with inadequate 
financial assurances. In contrast, we totaled the difference between 
the financial assurance in place for an operation and the financial 
assurances needed for that operation to determine the actual shortfall 
for each of the 52 operations for which BLM had determined that 
financial assurances were inadequate.
    BLM's approach to determining the adequacy of financial assurances 
is not useful because it does not clearly lay out the extent to which 
financial assurances are inadequate. For example, in California, BLM 
reported that, statewide, the financial assurances in place were $1.5 
million greater than required as of November 2007, suggesting 
reclamation costs are being more than fully covered. However, according 
to our analysis of only those California operations with inadequate 
financial assurances, the financial assurances in place were nearly 
$440,000 less than needed to fully cover reclamations costs. BLM 
officials agreed that it would be valuable for the Bond Review Report 
to report the dollar value of the difference between financial 
assurances in place and required for those operations where financial 
assurances are inadequate and have taken steps to modify LR2000.
    BLM officials said that financial assurances may appear inadequate 
in the Bond Review Report when
      expansions or other changes in the operation have 
occurred, thus requiring an increase in the amount of the financial 
assurance;
      BLM's estimate of reclamation costs has increased and 
there is a delay between when BLM enters the new estimate into LR2000 
and when the operator provides the additional bond amount; and
      BLM has delayed updating its case records in LR2000.
    Conversely, hardrock mining operators may have financial assurances 
greater than required for a number of reasons; for example, they may 
increase their financial assurances because they anticipate expanding 
their hardrock operations.
    In addition, according to the Bond Review Report, there are about 
2.4 times as many notice-level operations--generally, operations that 
cause surface disturbance on 5 acres or less--as there are plan-level 
operations on BLM land--generally operations that disturb more than 5 
acres (1,033 notice-level operations and 430 plan-level operations). 
However, about 99 percent of the value of financial assurances is for 
plan-level operations, while 1 percent of the value is for notice-level 
operations. While financial assurances were inadequate for both notice- 
and plan-level operations, a greater percentage of plan-level 
operations had inadequate financial assurances than did notice-level 
operations--6.7 percent and 2.2 percent, respectively. Finally, over 
one-third of the number of all hardrock operations and about 84 percent 
of the value of all financial assurances are for hardrock mining 
operations located in Nevada.
    Mr. Chairman, this concludes my prepared statement. I would be 
happy to respond to any questions that you or Members of the Committee 
may have.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 
    Mr. Costa. Very good. Thank you very much for your 
testimony, and we will move on to the next witness, Mr. James 
``J.T.'' Reynolds, former Superintendent of Death Valley 
National Park, in California.
    We are pleased that you are here, Mr. Reynolds, and would 
love to hear your comments. It is a part of California that I 
am a little bit familiar with, and it is truly one of 
California's and our Nation's important treasures. So, please 
open on your testimony.

 STATEMENT OF JAMES REYNOLDS, SUPERINTENDENT [2001-2008] DEATH 
    VALLEY NATIONAL PARK, CALIFORNIA, NATIONAL PARK SERVICE

    Mr. Reynolds. Good morning, Mr. Chairman, Members, and 
others. I am honored to have the opportunity to share with you 
why H.R. 699 will be the much needed law to help managers like 
me in protecting park resources and protecting the visitors who 
come to enjoy these resources.
    Death Valley has over 1,700 mining claims within five miles 
of its boundary, and over twenty-six hundred within ten miles. 
The total number around National Park Service areas within five 
miles is approximately seventy-one hundred, and within ten 
miles, approximately 12,000, and many of these are within the 
boundaries of National Park Service areas.
    My written testimony includes quite a bit more information 
about how over 100 years of mining history has been included in 
the mission of the National Park Service in parks like Death 
Valley and other Park Service areas.
    I often advise folks, especially middle-school kids, and 
their teachers, that National Park Service areas include the 
libraries and cathedrals that tell the stories of our country's 
history, the places where real artifacts are housed and books 
are written about these things.
    One of the National Park's missions is to preserve and 
protect these artifacts for future generations. Death Valley is 
one of those places where this mining history is housed.
    I will also advise that the dedicated employees do the best 
that they can with the inadequate funds and the staff. The 
outdated laws and policies only make this job even more 
difficult, even when we partner with others and share 
resources.
    As you have heard from others, the 1872 Mining Law is 
inadequate and do these historic artifacts and visitors great 
harm. If we pass H.R. 699, this bill will ensure that our 
country's mining history, past and present, will be better 
protected.
    It will also ensure that we will protect the millions of 
visitors who come to learn and enjoy these resources and their 
environment. Section 309 specifically addresses national parks 
and national monuments.
    It will ensure that if mining activities impair scenic 
cultural and natural resources, and other assets like water and 
air quality, these mining activities will not be allowed.
    This bill also includes sections in all five titles that 
will improve how we do business, and better protect our 
resources, as well as protect our citizens and other visitors 
from the hazards created from over 100 years of mining 
activities.
    The techniques used in these mining activities, past and 
present, create unstable slopes on mountains, the mining shafts 
collapse under the weight of vehicles and people. The 
techniques to extract gold and silver from the ore leaves 
cyanide, lead, mercury, and other toxic chemicals in the soil 
and on the ground to be washed away to contaminate surface and 
ground water.
    The wind blows these contaminants, therefore polluting the 
air that visitors and employees breathe. Many of the historic 
mining features that tell the stories, and become more 
unstable, where many collapse due to rot and lack of 
maintenance.
    Our visitors are moving about these unsafe areas, and some 
are injured, and some die. If we had a more consistent funding 
source dedicated to stabilizing, cleaning up, and reclaiming 
these sites, we could provide the more safe and enjoyable place 
for visitors to enjoy, and for future generations to learn 
about their history.
    The reclamation fund proposed in H.R. 699 is a great start 
in protecting our history for our kids. In closing, I want to 
stress that these resources need our help yesterday. Our 
generation must step up and ensure that we do not let our 
future generations down, and that they will not have to visit 
these unsafe issues again, at least anytime soon.
    Park areas, tribes, and town citizens are being subjected 
to the hazards of mining activities as we speak. I just want to 
thank you all for allowing me to share, and I hope that my 
written and oral testimony will add value to the process, and 
why it is imperative that H.R. 699 is passed.
    [The prepared statement of Mr. Reynolds follows:]

      Statement of James T. Reynolds, Superintendent (2001-2008), 
                 Death Valley National Park, California

    On this 26th day of February 2009, I James T. Reynolds, a member of 
the Coalition of National Park Service Retirees, former superintendent 
of Death Valley National Park, and recently retired, 2 January 2009, am 
here to testify before the Subcommittee on Energy and Mineral Resources 
Legislative Hearing on H.R. 699, the Hardrock Mining and Reclamation 
Act of 2009.
    Good Morning Mr. Chairman, members of the committee, and others. I 
am honored to share information to add value that will be most 
beneficial to the Committee who will draft a final bill that will 
reform the governance of hardrock mining on public lands, as carried 
out under the Mining Law of 1872.
    The Death Valley Region is recognized for its rich natural and 
cultural diversity. Native people have inhabited this region for 
thousands of years, and their descendents continue to live and call 
this area home. In the mid to late 1800's, native peoples were pushed 
out of the area by mining companies and the federal government. The 
remnants of this history still exist today. This human history is 
enveloped by beautiful extremes, craggy soaring peaks, deep chasms, 
golden sand dunes, a variety of unusual wildlife and uncommon plants, 
and a myriad of other hidden treasures to experience.
    The mining industry helped to establish Death Valley as a national 
monument. Due to the mining activities, a monument was established 
rather than a national park. Horace Albright, head of the National Park 
Service, drew boundaries for what he wanted President Herbert Hoover to 
declare an American treasure. Hoover eventually designated Death Valley 
as a National Monument, an act that became official on February 11, 
1933. It took over six decades for the Monument's status to be upgraded 
to National Park status in 1994, California Desert Protection Act.
    Its significance is identified in the park's enabling legislation 
and general management plan which states that the park ``has an 
extensive and well-preserved mining history representing over 100 years 
of mining technology.'' Death Valley is a little unusual because some 
of the earlier national parks were established with the assistance of 
the railroad industry, artist, painters and photographers.
    The California Desert Protection Act, 1994 also describes how Death 
Valley (DEVA) will be protected and how it will mandate the 
preservation of historical and cultural values of the California desert 
associated with ancient Indian cultures, patterns of western 
exploration and settlement, and sites exemplifying the mining, ranching 
and railroading history of the Old West.
    Many of these mines have important and irreplaceable historic 
mining artifacts, buildings and other cultural resources on site that 
are being looted or deteriorating at an alarming pace. Using 
discretionary operating funds or occasional project funds cannot begin 
to deal with the issue effectively and responsibly.
    Current topographic maps indicate that there are approximately 
3,500+ known mine features within the park, though there may be over 
10,000. Certain mining districts/sites are visited frequently by park 
visitors. Many of the shafts are several hundred feet deep--the safety 
concern for the unwary visitor is real. The staff of Death Valley and 
other NPS areas tries to address the significant safety hazards and the 
preservation of habitat for rare bat species associated with selected 
mine sites.
    The National Park Service also educates visitors that mining and 
abandoned mineral lands are often part of the park scene. Mining 
interpretive displays and presentations are part of the program at 
several parks. In other parks, special regional events such as 
discoveries and local gold rushes are commemorated. Visitor centers 
often have books on mining history and folklore. Educators have 
recognized that parks make excellent classrooms that bring this rich 
mining history alive and programs are developed for selected mining 
districts and sites. Mining-related topics are used to enhance school 
curricula in history, geography, science, and even art. Some national 
parks and state agencies offer school outreach programs, including 
abandoned mineral lands safety information for children.
    Many parks boast rich mining histories and are active in preserving 
and even reconstructing mining-related historic structures and 
landscapes. Three park units were established with the specific purpose 
of preserving the American mining heritage: Klondike Gold Rush National 
Historical Park, Yukon-Charley Rivers National Preserve, and Keweenaw 
National Historical Park. The first two of these parks commemorate the 
Alaskan gold rush of 1898, and the latter, established in 1992, 
celebrates the internationally significant copper mines in the upper 
Michigan peninsula. Evidence of earlier mining can also be viewed in 
the National Park System. Alibates Flint Quarries National Monument in 
Texas and Wupatki National Monument in Arizona preserve the remains of 
prehistoric extraction sites, and Pipestone National Monument in 
Minnesota protects the pipestone (red mudstone) quarries of the Yankton 
Sioux.
    In 1849, gold was discovered in California and a rush began into 
the state. It is estimated that 80,000 people came to California 
looking for gold. As gold, silver, borax, and other minerals were 
discovered in Death Valley and many other areas, even miners who feared 
these areas, returned to look for the gold and silver potential they 
had seen during their nightmarish ordeal.
    Beatty, Nevada, northeast of Death Valley National Park, is a good 
example of a modern town that went through a ``boom and bust'' period 
(Barrick Bullfrog Mining Site), over a decade ago, and may again go 
through something similar if a new mining company receives a permit to 
extract precious minerals from public or private land in the area. Many 
citizens may resist the mining activities that may cause some impacts. 
However, many will welcome the new jobs despite the consequences.
    Death Valley includes many remains of towns that went through 
``boom and bust'' periods during the late 1800's and the early 1900's. 
The following descriptions describe Death Valley's rich mining history, 
and it also describes the results of mining activities on the 
surrounding areas.
    Now a ghost town, the Keane Wonder Mine (1906) was one of the most 
successful gold mines in Death Valley. Miners were following a rich 
vein of ore that was deposited in fractures in the metamorphic rock. 
Tunnels were excavated, side tunnels were added, always removing as 
much ore as possible. Eventually the mine became a series of chambers 
supported by pillars. So much material was removed that the entire 
mountain slope above became unstable and started to collapse. Besides 
the obvious danger of entering a crumbling mine, just being on the 
surface above or near the mine has become a safety hazard (Toxic 
Waste).
    To extract the gold from the ore, cyanide and other toxic chemicals 
were used at the mill site. Not far from the visitor parking area are 
the remains of tanks used in the cyanide process and fine tailings that 
remained after processing. Preliminary testing has shown elevated 
levels of lead and mercury in these tailings. Erosion is constantly 
exposing this material and wind blows the dust around.
    The historic structures of Keane Wonder Mill and tramway are 
suffering from rot, rust, and decay. These structures are in danger of 
collapse and need to be stabilized.
    Until the site can be made safer--while also preserving the 
historic features of the site and protecting those areas used by 
wildlife--the National Park Service has decided to close this popular 
ghost town and surrounding area to public access.
    Ballarat came into being in 1897 with many gold strikes in the 
Panamint Mountains. The Radcliffe mine alone produced 15,000 tons of 
gold ore from 1898-1903. The town was named after a famous Australian 
gold camp and was home to 400 people in 1898. Several legendary Death 
Valley figures lived in town. Ballarat is now privately owned and 
contains the ruins of several adobe buildings. The town site is located 
off the Panamint Valley road west of Death Valley proper.
    Chloride City became a town in 1905 when the Bullfrog strike 
brought people into the area to re-work old mining claims. It became a 
ghost town the following year. There are numerous adits and dumps in 
the area and one grave of a James McKay, of whom nothing is known. In 
addition, there are remains of 3 stamp mills. It is located off a four 
wheel drive road 3.5 miles east of Hell's Gate or off the dirt road 7 
miles further east at the Park boundary.
    Greenwater was built around a copper strike made in 1905. Water had 
to be hauled into the town and was sold for $15 a barrel. The town grew 
to a population of 2,000 and was known for its lively magazine, The 
Death Valley Chuckwalla. By 1909 the mining had collapsed without ever 
showing a profit and people left for other areas. There are no ruins 
left in Greenwater, which is located south of Dante's View off the 
Greenwater Valley gravel road.
    Originally the town of Harrisburg was to be named Harrisberry after 
the two men who found the gold that launched it in 1905. Shorty Harris 
later took credit for the strike and changed the name of the town to 
Harrisburg after himself. Nevertheless, Pete Aguereberry, one of the 
original strike finders, spent 40 years working his claims in the 
Eureka gold mine. Harrisburg was a tent city that grew to support a 
population of 300. Today nothing remains of the town but Pete's home 
and mine which are located to the right two miles down the dirt road to 
Aguereberry Point.
    Copper and lead claims had been filed in the Leadfield area as 
early as 1905 but it wasn't until 1926 that the area was heavily mined. 
In February of that year, Charles C. Julian, a flamboyant California 
promoter, became president of the town's leading mining company, the 
Western Lead Mines. Julian's promotions were responsible for bringing 
great numbers of people into the area and in April, 1926 the town was 
laid out with 1749 lots.
    The financial downfall of Charles Julian and the playing out of 
lead in one of the main mines, led to the end of the town. The area is 
scattered with mines, dumps, tunnels and prospect holes. There are 
remains of wood and tin buildings, a dugout and cement foundations of 
the mill. The town is located on the Titus Canyon road. This is a one 
way high clearance unpaved road that sometimes requires 4-wheel drive.
    Panamint City was called the toughest, rawest, most hard-boiled 
little hellhole that ever passed for a civilized town. Its founders 
were outlaws who, while hiding from the law in the Panamint Mountains, 
found silver in Surprise Canyon and gave up their life of crime. In 
1874 the town was at the height of its boom with a population of 2,000 
citizens. By the fall of 1875 the boom was over, and in 1876 a flash 
flood destroyed most of the town. The chimney of the smelter is the 
most prominent remnant of the town's heyday. The site of Panamint City 
is accessible via a 5 mile hike from Chris Wicht's Camp, which is 
located 6 miles northeast of the ghost town of Ballarat. Mining in the 
area continued on a sporadic basis up until recent times. The ruins of 
old Panamint City were added to Death Valley National Park in October 
of 1994.
    Rhyolite, the ``Queen City'', was the largest town in the Death 
Valley area with a population of 5,000-10,000 people. During its 
heyday, from 1905-1911, it contained 2 churches, 50 saloons, 18 stores, 
2 undertakers, 19 lodging houses, 8 doctors, 2 dentists, a stock 
exchange and an opera. The town contains numerous ruins including the 
Bottle House, Senator W.A. Clark's train depot, remains of a 3-story 
bank building, and the jail. It is on BLM land and is accessible by 
passenger car. Rhyolite is located 4 miles west of Beatty and 35 miles 
from the Death Valley Furnace Creek Visitor Center.
    Skidoo was founded in 1906 when two prospectors, on their way to 
the Harrisburg strike, found gold. The town reached a population of 700 
and became famous as the site of the only hanging to take place in 
Death Valley. It occurred when Hootch Simpson, a saloon owner who had 
fallen on hard times, tried to rob the bank, was foiled in the attempt, 
and later went back and killed the owner of the store in which the bank 
was located. During the night the townspeople hanged Hootch. According 
to legend, he was hanged twice. The second hanging was to accommodate 
news photographers who missed the first hanging. No one was ever 
arrested for the hanging. Skidoo is located off the Wildrose road on an 
unpaved high-clearance road not recommended for automobiles.
    One of the most well known but short lived mines was the Harmony 
Borax Works, which was active from 1883-1888. This mine was made famous 
not for its ore deposits, but by the 20 Mule Team Wagons and the ad 
campaigns for the Death Valley Days radio and television programs. To 
help the public become familiar with the desert area, in late 1930 the 
Borax Company began airing its radio show, Death Valley Days. The 
program remained on the air for 14 years. The show's run did not end 
there. It ultimately became a popular TV program, which was televised 
for an additional 16 years, 1952 to 1968--an impressive run by 
virtually any standard. And the program's most famous host, Ronald 
Reagan, introduced it until he was elected governor of California.
    On May 10, 1872, Congress passed a law that encouraged people to go 
West, locate hardrock minerals and stake mining claims on federal 
lands, and remove treasure troves of gold, silver, copper, and platinum 
from the public domain--for free. The General Mining Law of 1872, or 
the ``experiment,'' as some of our predecessors named it, has endured 
for more than one and a third centuries--a total of 137 years. Today, 
we can resoundingly assert that the experiment has lasted long enough.
    To Support current National Park Services (NPS) and Department of 
the Interior (DOI) goals to reduce Comprehensive Environmental Response 
Compensation and Liability Act (CERCLA) liability at park facilities, 
Phase I Environmental Site Assessments (ESAs) must be conducted to 
determine whether or not any hazardous waste sites or contamination 
exists. To facilitate this process we seek assistance in conducting a 
Phase I ESA consistent with requirements set forth under 40 CFR 312 
(the All Appropriate Inquiry (AAI) standard), and requirements in the 
current American Society for Testing and Materials (ASTM), which is 
ASTM 1527-05.
    The Phase I ESA is also completed to determine if a site is safe 
for visitors. The Phase I ESA includes an analysis of current and 
historical conditions at the site with respect to site contaminants and 
potential for CERCLA liability. The goal of the site assessment is to 
identify potential liabilities under CERCLA before mitigation 
activities or transactions take place so that costs can be incorporated 
into land transactions or clean-up. These measures are required so that 
individual park facilities do not end up bearing the brunt of the cost 
of CERCLA clean-up. Phase I ESAs must be conducted by an Environmental 
Professional (EP) as described under the AAI standard.
    An interagency agreement (IA) exist between the NPS and BLM that 
defines the responsibilities of the Bureau of Land Management (BLM), 
Department of the Interior, and the National Park Service (NPS), 
Department of the Interior, in the administration of the Mining Law of 
1872, as amended, on lands in the National Park System.
    The BLM is responsible for developing and promulgating the 
regulations and policies to be followed in the administration of the 
mining laws pertaining to location, annual maintenance, and patenting 
of mining claims. The BLM regulations that provide for proper location, 
maintenance, and patenting of mining claims are the definitive 
executive branch position on such matters. The BLM regulations, 
instruction memoranda, manuals, and handbooks contain the standards and 
procedures to be used by the BLM and the NPS for examining the validity 
of mining claims and preparing mineral reports.
    The BLM, in conjunction with the Office of the Solicitor (SOL), 
Department of the Interior, evaluates and interprets the mining law as 
construed by the Office of Hearings and Appeals, Department of the 
Interior, and the courts. Such interpretations are the definitive 
executive branch position on mining law matters. The BLM is responsible 
for reviewing and approving all mineral reports. The BLM initiates 
contest actions on behalf of NPS before the Office of Hearings and 
Appeals (OHA).
    The NPS is responsible for ensuring that operations associated with 
the exercise of valid existing rights on patented and unpatented mining 
claims in the National Park System are conducted in a manner that 
preserves and protects park resources and values. The NPS administers 
these operations in accordance with applicable laws, including the 
National Park Service's Organic Act (16 U.S.C. Sec. Sec. 1 et seq.), 
the Mining in the Parks Act (16 U.S.C. Sec. Sec. 1901-1912), and NPS 
implementing regulations (36 C.F.R. Part 6 and Part 9, Subpart A).
    The NPS conducts validity examinations on mining claims located in 
units of the National Park System, including those claims for which a 
patent application has been filed, to determine if such mining claims 
are valid and/or all patenting requirements have been met. NPS mineral 
examiners or NPS-designated representatives will serve as expert 
witnesses when the government's case is presented before OHA, including 
those cases where NPS has employed a mineral examiner under a contract.
    Procedures for Determining the Validity of Mining Claims: As used 
in the Interagency Agreement, the terms ``validity examination'' and 
``mineral report'' refer to examinations and reports prepared for the 
purpose of either determining mining claim validity or processing 
mineral patent applications. The NPS has a National Park Service 
Programmatic Agreement with the California State Historic Preservation 
Office (SHPO) titled ``A Plan to Minimize the Impacts of Physical 
Safety Hazard Mitigation Treatments at Abandoned Historic Mines'' 
(California AML PA). The California AML PA was developed by cultural 
resources specialists, biologists, and mining engineers for the purpose 
of creating an agreement that allows for closure of historic mining 
features for public safety reasons, without irreversibly harming 
cultural resource and wildlife values. While this document has not yet 
been approved by the California SHPO, we would like to find out if it 
would be worthwhile for the Nevada National Parks to develop a similar 
document.
    Determination of Claim Validity: The NPS, or its designated 
contractors operating under the direction of certified NPS mineral 
examiners, will conduct validity examinations on mining claims in units 
of the National Park System, and will prepare mineral reports detailing 
the findings of validity examinations, making appropriate 
recommendations to the BLM. The mineral reports will conform to the 
standards set out in BLM manuals, handbooks, and instruction memoranda. 
The BLM will review NPS-prepared mineral reports to determine if they 
meet BLM standards. Reports that meet BLM and NPS standards will be 
approved. Reports that are inadequate for the recommended action will 
be returned to the author with an explanation of what steps must be 
taken to correct the document.
    In 2007 the National Park Service and the Bureau of Land Management 
underwent an audit conducted by the Inspector General for the 
Department of the Interior. The audit reviewed the management and 
treatment of abandoned mine lands by these agencies. The Inspector 
General concluded that the agencies are putting public safety at risk 
because many physical and environmental hazards have not been addressed 
for decades. It was noted that at Death Valley National Park, the 
public was invited to visit sites that had not been adequately 
mitigated. Specifically mentioned was the Keane Wonder Mine, which was 
the site of a fatality in 1984. While the auditor was at the mine site, 
he witnessed a three-year-old child exiting from a collapsing adit 
while his family explored other openings. Park staff has spoken with 
visitors at the Keane Wonder site who freely admit that they see the 
warning signs about mine hazards but disregard them.
    Another hazard at the Keane Wonder includes the historic tramway 
system. Wood members have deteriorated, which, combined with a 
collapsed tower near the upper terminal, leads to increased strain on 
the entire tramway. A third issue involves elevated levels of mercury 
and lead in the tailings left from processing operations. The tailings 
are very fine and easily become windborne; further testing is needed to 
determine if the levels of lead and mercury are hazardous to humans or 
wildlife.
    The combination of the physical hazards at the mine, the 
deterioration of the tramway, and the environmental hazards of the 
tailings led the park to close the site to public access and non-
essential employees in September 2008.
    We agree that this is one of the more spectacular hikes within 
Death Valley National Park and that the site is an excellent example of 
mining activity in the early 20th century. Our goal is to reopen this 
site to the public when the human-caused safety issues have been 
addressed. The Keane Wonder Mine and mill site is being nominated for 
inclusion in the National Register of Historic Places.
    Death Valley National Park has received funding through the 
Vanishing Treasures program for work on the historic tramway, which 
will begin in 2009. Funding has also been requested for testing of 
heavy metals in the tailings; the results will determine if 
contamination cleanup will be needed. Additional funding has been 
requested for mitigation of the hazards of the mine openings. The 
treatments will consider the cultural and natural resource values, and 
while they will prevent people from entering the mine openings, they 
will preserve the most significant features of the site and provide for 
continued use by wildlife, particularly bats.
Abandoned Mineral Lands:
    Abandoned mineral lands (known as AML) are one of many types of 
disturbed lands in the National Park System. AML sites are 1) 
underground and surface mines, 2) placer and dredge sites, and 3) oil, 
gas, and geothermal wells. Commodities mined at these sites ranged from 
soft rocks such as coal and sand/gravel to hard rock minerals such as 
gold, lead, and copper. Sites can contain waste rock (unprocessed 
rock), tailings (processed rock), abandoned roads, fuel storage tanks, 
drainage diversions, buildings such as mills and assay shops, 
deteriorating structures such as head frames and tramways, and 
abandoned heavy equipment.
    Not surprisingly, the legacy of abandoned mineral lands spans North 
America. Mining for flint, obsidian, and native copper for tools and 
weapons, turquoise for jewelry, and clay for pipes began with the 
arrival of prehistoric peoples. During the 16th century, expectation of 
mineral wealth drove Coronado's conquistadors beyond the edge of 
civilization to the heart of an unknown continent. Later, the lure of 
gold and the prospect of great wealth were responsible for Europeans 
settling in the western United States. With the beginning of the 
industrial age, the young nation, hungry for energy, exploited its 
mineral resources of coal, oil, gas, and uranium, and this too left its 
mark on the land. Deserted, these sites stand in silent testimony to 
those who pioneered this country in search of mineral wealth.
    An estimated 3,100 abandoned mineral sites can be found in the 
National Park System, in all 7 regions of the system, and in 45 states. 
This number translates to 8,400 mined features, 700 oil and gas wells, 
1,000 quarries, and 33,000 disturbed acres. Additionally, the National 
Park Service estimates that 5,000 miles of abandoned access roads 
exist. Abandoned mineral lands are lands that were disturbed by mineral 
extraction--underground mining, surface mining, dredging, and oil and 
gas exploration--and then abandoned. Abandoned mineral lands can be 
underground with numerous mine openings such as adits and shafts or on 
the surface in the form of strip mines, quarries, open wells, or pits. 
Abandoned mineral lands are not only the actual mine or well but 
include access roads and trails, historic buildings such as mills and 
company towns, tailings and waste rock piles, and abandoned machinery 
such as ore carts, steam engines, and pump jacks.
    Falling down vertical openings is the most common cause of death 
and injury in abandoned mines. Darkness, loose debris, and false floors 
can hide vertical openings. Weathered rock at the edge of an opening 
can break away and slide into the hole under the weight of a person. 
Unstable adits and structures are common hazards at abandoned mines.
    Lethal concentrations of methane, carbon monoxide, carbon dioxide, 
and hydrogen sulfide can accumulate in underground passages. Pockets of 
still air with little or no oxygen can be encountered. By the time 
persons feel ill, they are no longer able to react.
    Mines can cave in at any time! The effects of blasting and 
weathering destabilize once-competent bedrock through time. Support 
timbers, ladders, cabins, pump jacks, tanks, and other related 
structures may seem safe but can easily crumble under a person's 
weight.
    Sand and gravel pits make up a significant portion of the abandoned 
mineral lands in the national park system. Unused or misfired 
explosives are deadly. Because old explosives become unstable, minimal 
vibrations from a touch or footfall can trigger an explosion.
    Vertical cliffs--also called highwalls--from which material was 
extracted are common features of open pit mines and quarries. These 
highwalls can be unstable and prone to collapse.
    Many abandoned mines become flooded. Shallow water can conceal 
sharp objects, drop-offs, and other hazards.
    Some of the materials that were mined, such as uranium and thorium, 
are radioactive. Because the effects of radiation exposure are 
cumulative through a lifetime, any can be harmful or fatal to humans, 
wildlife, and plants.
    Mines were constructed and maintained to be safe only while they 
were in operation. When the miners departed in search of more lucrative 
deposits, they often left vertical openings uncovered and removed the 
water pumping and ventilation systems. Support structures, timbers, and 
ore pillars were removed or left to rot.
    Caves are formed naturally over thousands or even millions of 
years. Mines, in contrast, are formed in comparatively short periods of 
time through blasting, a process that fractures and destabilizes the 
wall and roof rocks. Most underground mines do not have natural 
ventilation and consequently can have lethal air traps. Even 
experienced cavers can die exploring mines. Mine rescues are extremely 
hazardous. Mine rescue teams, despite their extensive training, are at 
significant risk every time they enter an abandoned mine. The tragic 
and unfortunate reality is that most mine rescues turn into body 
recoveries.
    Abandoned mineral lands can have detrimental effects on soils, 
water, plants, and animals. The extent of the effects in National Park 
System units is not known. Inventories are incomplete and parks are 
still evaluating sites.
    Water is one of the resources most frequently harmed by abandoned 
mines and wells. Water is also the main vehicle that carries abandoned 
mineral land impacts beyond the immediate site. Elevated concentrations 
of metals and increased amounts of suspended sediment, acidity, 
petroleum, and brine threaten surface and underground water quality and 
aquatic habitats. Acid is created as metals oxidize in sulfide ore and 
waste rock. Acid allows toxic metals to dissolve and wash into streams 
and lakes. Acid mine drainage occurs at only a few of the abandoned 
mines in the National Park System. At some of these sites, the water 
coming out of the mines is so acidic that it can actually burn a 
person's skin.
    Mining metals requires extracting ore from the ground, crushing the 
ore to the size of sand grains, and removing the desired mineral. Often 
the excess material--tailings--is deposited on the surface. During 
storms and snow melts, water flows over and through the tailings. The 
tailings still contain relatively large amounts of metals such as lead, 
zinc, copper, and cadmium. The water interacts with the metals and 
transports them to nearby streams. Some metals, at concentrations as 
small as a few parts per million, can damage or kill aquatic plants and 
animals.
    Disturbed lands and unprotected slopes are susceptible to erosion. 
Uncontrolled surface drainage can remove soils and may make large areas 
unstable. Every year, sediments from mine sites cause significant 
damage to downstream resources. Although some mine and wells are 
historically significant, most are eyesores. Piles of trash and debris, 
open pits, waste rock piles, and access roads blemish the otherwise 
pristine landscapes of the parks. Surface mines and quarries often have 
the greatest impacts on scenic vistas. In some cases, hundreds of 
thousands of cubic yards of material have been removed, making 
restoration extremely difficult.
    Mining often stripped away not only the vegetation but also the 
topsoil that is needed to reclaim the site when mining operations 
cease. The area left behind is barren and incapable of supporting plant 
and animal life. Bare soil continues to erode and is carried away from 
the site to nearby streams and rivers. Here, the sediment clogs stream 
channels, reducing fish habitat and interfering with natural flow 
patterns. Even when these effects seem minor at first glance, they may 
impair larger ecological communities. Soils and water contaminated with 
heavy metals or chemicals from mineral processing may be harmful to 
wildlife. These contaminants can become increasingly concentrated in 
animals higher up the food chain in a process called biomagnification. 
Affected animals could die or become unable to reproduce.
    Abandoned mines do not always have negative consequences. They 
sometimes provide habitat for wildlife including some rare or 
endangered species. Some woodrats, bats, salamanders, and owls use 
mines as habitat. In many parks, special mine closures protect critical 
habitat and correct safety hazards. Some bat species, which are 
endangered because their native habitats were destroyed, have begun to 
inhabit abandoned mine openings. When conditions are suitable, bats can 
use mines for summer roosts, winter hibernation, nurseries for raising 
young, and a stopover during migration. Of the 43 bat species native to 
the United States, 29 rely on mines for a portion of their habitats. 
The continued survival of several bat species may depend on the few 
mines and remaining caves that meet the habitat needs of these animals.
    The mitigation and reduction of hazards from abandoned mineral 
lands are often complicated and expensive procedures. The National Park 
Service establishes the priority for mitigation by considering the 
level of danger and potential for resource damage. Each site is unique. 
The chosen method for mitigating a hazardous site depends on several 
things: available materials at the site, the type of rock, the 
difficulty of reaching the site, and money. Parks use a variety of 
methods to close hazardous mine openings. Because of limited funding, 
parks can usually afford only to fence the hazard and post signs, 
temporary solutions. Other common mine closure techniques include 
backfilling, blasting, expandable foam, rock and mortar walls, and bat 
gates. Virtually all mineral activities require access roads. The 
erosion and visual scars related to abandoned roads impact park 
resources.
    Scars on the land may last thousands of years even if mined areas 
stabilize and the vegetation recovers. Carefully planned reclamation 
can restore natural processes and greatly speed site recovery. 
Reclamation in the National Park System focuses on reestablishing 
landscapes and environments that mimic the surrounding undisturbed 
lands. Mine structures such as mills, shops, headframes, and others of 
historic value are stabilized and preserved. Otherwise, the pre-mine 
condition is restored wherever possible. Reshaping the surface 
stabilizes slopes and drainages, waste rock piles, tailings ponds, 
highwalls, and access roads. This reshaping often requires the use of 
heavy equipment to contour the land to look and function like the 
surrounding undisturbed lands. The restoration of stream channels also 
provides for the reintroduction of plants and animals that were lost 
because of mining. The same type of earthmovers that created the 
mineral extraction scars are often the best suited to remove them.
    Cleanup or treatment of toxic materials prevents further impairment 
of the environment. Small quantities of mining related materials, such 
as chemicals or fuels used in mining and milling are completely 
removed. Large quantities of naturally occurring materials, such as 
unweathered waste rock that produces acids, may be treated on-site. 
Applications of lime may provide a buffer to prevent the generation of 
acids. In more severe cases, limestone drains or artificial wetlands 
filter heavy metals and reduce acidity.
    The goals for revegetation of mine sites in the National Park 
System are the restoration of native plant populations and patterns. 
The first consideration is the suitability of the soil for 
revegetation. In harsh conditions, topsoils, compost, or specific 
nutrients can be added. Specialized nurseries may be needed to 
propagate suitable plant materials. Sometimes, revegetation work is 
focused on establishing pioneering species to allow for natural 
succession. Time and nature then restore the natural productivity in 
the site.
    The National Park Service closes between 10 and 100 mine openings 
and plugs 5 abandoned oil and gas wells each year. In 1993, the 
estimated cost of reclamation of all remaining abandoned mineral land 
sites in the National Park System was $200 million.
    The Death Valley Mine Closure Alliance was formed in 2006 with Rio 
Tinto Minerals, California Department of Conservation AML program, Bat 
Conservation International, and Death Valley National Park. The 
Alliance has surveyed over 200 of an estimated 600 borax mines; 
identified mines that have significant usage by bats; and are 
prioritizing closures.
    As a final comment, Death Valley estimates there are 6000+ mines 
within the park, more than any other unit in the National Park Service. 
Many of these sites have been documented and mitigated in various forms 
over the last 20 years but many more are left. Most of the mines in 
Death Valley are historic cultural resources spanning over 100 years of 
mining, and range in size from mines worked by the ``single-blanket'' 
prospector to mines commercially operated by Fortune 500 companies. 
While many mines are hazards, the safety mitigations should be designed 
to be sensitive to the cultural significance, interpretive values, and 
accommodate wildlife uses. This will require a systematic and 
methodical approach and can be accomplished through a consistently 
funded program.
    I believe the Subcommittee on Energy and Mineral Resources, H.R. 
699, the Hardrock Mining and Reclamation Act of 2009, legislation will 
end the financial and environmental abuses permitted by the 1872 Mining 
Law--archaic provisions that fly in the face of logic, and are not what 
taxpayers, sportsmen, conservationists, and western communities want or 
need.
    [NOTE: U.S. Department of the Interior memo dated October 2, 2008, 
``Mitigating High-Risk Abandoned Mine Land Features'' and U.S. 
Department of the Interior Office of Inspector General Audit Report 
``Abandoned Mine Lands in the Department of the Interior'' dated July 
2008, have been retained in the Committee's official files.]
                                 ______
                                 
    Mr. Costa. Thank you, Superintendent Reynolds, for your 
very timely testimony, and your insight as the superintendent 
of one of our--and as I mentioned--national treasures.
    Obviously your own experience and your written testimony 
will be helpful to the Committee, and so again I thank you.
    Our next witness is Mr. Jim Starr, the County Commissioner 
for Gunnison County, in the great State of Colorado. County 
Commissioner Starr, please open on your testimony.

  STATEMENT OF THE HONORABLE JIM STARR, COUNTY COMMISSIONER, 
                   GUNNISON COUNTY, COLORADO

    Mr. Starr. Thank you and good morning. First let me start 
by thanking The Honorable Chairperson, Congressman Costa, and 
Members of the Subcommittee for this opportunity to testify 
regarding the Hardrock Mining and Reclamation Act of 2009.
    I am Jim Starr. I am and have been a county commissioner in 
Gunnison County, Colorado, for the past 10 years. My comments 
today are not directed toward any specific project considered 
by the board of county commissioners, and should not be 
construed to be made in a quasi-judicial capacity.
    Gunnison County is a rural Western Colorado county 
consisting of some 15,000 persons and located 230 miles 
southwest of Denver. We encompass thirty-three hundred square 
miles, and approximately 87 percent of our land is owned by the 
Federal and state governments.
    There are four points that I intend to make. We recognize 
that hardrock minerals are valuable natural resources that 
should be extracted and put to beneficial use.
    Second, it is undeniable that the 1872 Mining Law is 
antiquated and in need to immediate and wholesale reform. The 
patent mechanism at the core of the 1872 Mining Law is not the 
appropriate mechanism currently to make Federal lands available 
for private hardrock exploration and extraction.
    Finally, any new mechanism must include robust presumptive 
protections so that exploration and operation in special areas 
and negative impacts to special areas cannot occur.
    There is a preface to my presentation that is essential for 
me to state explicitly, and which will put my comments into 
context. First, my county and I recognize that hardrock 
minerals are valuable natural resources that should be 
extracted and put to beneficial uses.
    Second, we recognize that there are impacts, positive, 
negative, environmental, social, economic, and otherwise, 
caused by extraction of these resources.
    Third, it is only fair and prudent that a mechanism that 
Congress adopts to make Federal lands available to private 
hardrock extraction explicitly include measures to ensure the 
negative impacts be avoided or minimized both by the Federal 
Government and the operators.
    The timeliness of this much needed reform is evident. In 
1872 when President Grant signed the legislation into law, the 
interior west was largely unsettled by people other than Native 
Americans, and the Federal Government was doing everything in 
its power to encourage immigrant settlement and to assist in 
the industrialization of our country.
    An acre of land could be, and still can be, claimed and 
eventually patented. This provides the claimholder with title 
to public land for as little as $5 per acre, the current day 
cost of a gallon of milk.
    Today, the Rocky Mountain West is largely inhabited, 
hardrock mineral resources have been and are being developed 
there and throughout the world, and communities of all sizes 
have located near mineral resource areas in the West.
    In short, 127 years later, mineral extraction may no longer 
be the highest and best use for Federal laws. Many former 
mining communities have now developed economies which are 
incompatible with industrialized mining, and water quantity and 
quality have become issues of utmost importance in the West.
    I respectfully suggest that Congress carefully examine 
first whether the patent process itself remains a viable, 
healthy tool, or whether a different process to make Federal 
lands available to private mineral extraction would better 
serve the country and still accomplish the mission.
    The patent process was a tool appropriate for 1872, when 
the Federal Government was encouraging not only mineral 
exploration, but also the wholesale settlement of the West. A 
similar tool of more than a hundred years ago, Railroad Land 
Grants, such as the Pacific Railroad Act of 1862, has a similar 
impetus and is similarly currently outdated.
    These grants helped build transcontinental railroads, but 
resulted in millions of acres of Federal land being divested 
and placed in private ownership. Would one do the same today to 
encourage the building of private toll roads? I suggest not.
    Section 202 of this legislation, which allows for a 
selective withdrawal of Federal lands from entry must be 
retained and made an affirmative presumption. Rebutting this 
presumption should require a demonstration by clear and 
convincing evidence that there are no other locations where the 
desired minerals can be extracted.
    For instance, municipal watersheds are critically sensitive 
areas that deserve the protection of such a presumption of 
withdrawal. Available high quality water is already a rapidly 
dwindling resource in the arid west, and the availability of 
this water will likely decrease because of climate change.
    We have long recognized that significant natural resources 
such as our national parks must not be open for location and 
entry. Before it is too late, it is imperative that we now also 
recognize the local and national importance of protecting our 
municipal watersheds.
    Accordingly, we respectfully request that Congress act as 
expeditiously as possible to consider these proposals and to 
pass House Resolution 699, including meaningful and workable 
withdrawal language. Thank you.
    [The prepared statement of Mr. Starr follows:]

 Statement of Jim Starr, County Commissioner, Gunnison County, Colorado

    Good Morning.
    First, let me start by thanking The Honorable Chairperson, 
Congressman Costa, and the members of the Subcommittee for this 
opportunity to testify regarding the Hardrock Mining and Reclamation 
Act of 2009.
    I am Jim Starr. I am, and have been, a County Commissioner in 
Gunnison County, Colorado for the past 10 years. My comments today are 
not directed toward any specific project being considered by the Board 
of County Commissioners of Gunnison County and should not be construed 
to be made in a quasi-judicial capacity.
    Gunnison County is a rural Western Colorado county consisting of 
some 15, 000 persons and located 230 miles southwest of Denver. We 
encompass approximately 3,300 square miles and approximately 87% of our 
land is owned by the federal and state governments.
    There are four points I intend to make:
      We recognize that hardrock minerals are valuable natural 
resources that should be extracted and put to beneficial use.
      It is undeniable that the 1872 Mining Law, and its 
particulars, are antiquated and in need of immediate and wholesale 
reform.
      The patent mechanism at the core of the 1872 Mining Law 
is not the appropriate mechanism, currently, to make federal lands 
available for private hardrock exploration and extraction;
      Any new mechanism must include robust presumptive 
protections so that exploration and operation in special areas (and 
negative impacts to special areas) cannot occur.
    There is a preface to my presentation that is essential for me to 
state explicitly, and which will put my comments into context. First, 
my County and I recognize that hardrock minerals are valuable natural 
resources that should be extracted and put to beneficial uses. Second, 
we recognize that there are impacts--positive, negative, environmental, 
social, economic and otherwise--caused by extraction of these 
resources. Third, it is only fair and prudent that a mechanism that 
Congress adopts to make federal lands available to private hardrock 
extraction explicitly include measures to ensure the negative impacts 
be avoided or minimized both by the federal government and the 
operators.
    The timeliness of this much needed reform is evident. In 1872 when 
President Grant signed the legislation into law, the interior west was 
largely unsettled by people other than Native Americans and the federal 
government was doing everything in its power to encourage immigrant 
that settlement and to assist in the industrialization of our country. 
An acre of land could be, and still can be, claimed and eventually 
patented. This provides the claimholder with title to public land for 
as little as $5.00 per acre, the current day cost of a gallon of milk. 
Today, the Rocky Mountain West is largely inhabited, hard rock mineral 
resources have been and are being developed throughout the world, and 
communities of all sizes have located near mineral resource areas in 
the West. In short, 127 years later, mineral extraction may no longer 
be the highest and best use for federal lands, many former mining 
communities have now developed economies which are incompatible with 
industrialized mining, and water quantity and quality have become 
issues of utmost importance in the West.
    I respectfully suggest that Congress carefully examine, first, 
whether the patent process itself remains a viable, healthy tool--or 
whether a different process to make federal lands available to private 
mineral extraction would better serve the country and still accomplish 
the mission. The patent process--which results in fee simple ownership 
of federal land by private owners--was a tool appropriate for 1872--
when the federal government was encouraging not only mineral 
exploration but also the wholesale settlement of the West. A similar 
tool of more than 100 years ago--Railroad Land Grants (e.g. the Pacific 
Railroad Act of 1862) had a similar impetus and is similarly currently 
outdated. These grants helped build transcontinental railroads--but 
resulted in millions of acres of federal land being divested and placed 
in private ownership. Would one do the same today to encourage the 
building of a private toll road? I suggest not.
    There IS currently a tool available that results in federal 
encouragement of exploration and use of federal lands for mineral 
extraction--long term LEASING of federal lands for oil and gas 
exploration and operations. While this leasing regime has its own 
flaws, one thing that it does NOT do is transfer fee simple ownership 
of federal land to private parties. A second benefit of a federal lease 
mechanism would be that the federal government will remain as a steward 
of its own land--enhancing its obligation and ability to protect those 
lands. A further benefit of a non-fee-simple patent transfer is 
avoidance of the unintended but realistic consequence of public land 
going into private but foreign ownership. I would respectfully request 
that Congress examine such a lease approach.
    Section 202 of this legislation which allows for selective 
withdrawal of federal lands from entry must be retained and made an 
affirmative presumption. Rebutting this presumption should require a 
demonstration by clear and convincing evidence that there are no other 
locations where the desired minerals can be extracted. For instance 
municipal watersheds are critically sensitive areas that deserve the 
protection of such a presumption of withdrawal. Available, high quality 
water is already a rapidly dwindling resource in the arid West and the 
availability of this water will likely decrease because of climate 
change. We have long recognized that significant natural resources, 
such as our natural parks, must not be open for location and entry. 
Before it is too late, it is imperative that we now also recognize the 
local and national importance of protecting our municipal watersheds.
    Accordingly, we respectfully request that Congress act as 
expeditiously as possible to consider these proposals and to pass House 
Resolution 699, including meaningful and workable withdrawal language.
    Thank you.
    [NOTE: Gunnison County Board of Commissioners' Resolution No. 03-63 
submitted for the record has been retained in the Committee's official 
files.]
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Starr. Unfortunately, I 
can't give you the same bonus points I gave Superintendent 
Reynolds. You did go a little past your time, but we do 
appreciate your testimony nonetheless, and your focus on the 
specific nature of the legislation.
    Our last witness, but certainly not the least, is The 
Honorable Sheri Eklund-Brown, who chairs the Elko County Board 
of Commissioners in the State of Nevada, the wonderful State of 
Nevada.
    And I want to thank the Chairperson for the wonderful 
hospitality they extended the Subcommittee back in 2007 when we 
visited your wonderful community, and had a chance to see 
firsthand all the efforts that go on with regards to hardrock 
mining, and the nice folks of Elko, Nevada. Please open with 
your testimony.

  STATEMENT OF THE HONORABLE SHERI EKLUND-BROWN, CHAIR, ELKO 
             COUNTY BOARD OF COMMISSIONERS, NEVADA

    Ms. Eklund-Brown. Chairman Costa, and Members of the 
Committee, we certainly appreciate you coming out and viewing 
the mining process. I think it was a very worthwhile effort, 
and I look forward to having the whole Committee back if 
possible. Thank you for----
    Mr. Costa. I know that there is some good Basque 
restaurants.
    Ms. Eklund-Brown. Great Basque restaurants, yes. Well, we 
appreciate this opportunity to share thoughts on mining law 
reform with you, and I doubt that I will get bonus points 
either.
    But with you and your colleagues, we appreciate your 
interest in hearing from those like me who live and work in 
mining communities.
    It is often said that Nevada has a love affair with mining. 
At the county level, it is more like a marriage. I am currently 
the Chair of the Elko County Commission, and Elko County is the 
heart of gold mining country in the United States.
    I represent the county commission to all Federal agencies 
mining EISs, and cooperating agencies, and natural resources, 
and mining in general. I have lived in Elko for 46 years, 
through the booms and the busts. I have been a businesswoman, a 
realtor, and deeply involved in the youth of our community for 
many years.
    I know firsthand how dependent our county is on mining, and 
this morning I want to convey to you the implications of that 
dependency.
    Elko County is the fourth largest county in the continental 
United States. About 70 percent of our county consists of 
public lands, land that is especially rich in minerals and 
metals.
    In fact, Nevada is the world's fourth largest gold 
producing region, producing 82 percent of the nation's gold 
production, and Elko County accounts for 50 percent of the 
State's gold mining employment.
    The county, as well as mining companies, have a very close 
working relationship with Federal agencies charged with 
oversight of public lands. Our economy, therefore, relies on 
multiple use of public lands and stewardship of public lands, 
and the county actively engages in coordination and cooperative 
agency status with both the Forest Service and BLM.
    Elko County has historically been a mining center since the 
first settlers appeared about the time of the American Civil 
War. Today, we are home to some of the biggest and best mineral 
mining operations in the world.
    Gold, silver, and cooper are among the minerals mined in 
our community, with some of the most advanced and 
environmentally friendly mining practices. Our community cares 
about clean air and clean water every bit as much as any of the 
members of this board do, or anyone in any urban area.
    We raise our children in Elko County. We live in Elko 
County, and the mining companies live in Elko County. They go 
above and beyond practices demanded by law with mercury 
emissions, wildlife mitigation on habitat, and wetland 
conversation work.
    If mining companies were not taking care of the 
environment, they would not be able to operate in our community 
today. They would not have the quality workforce that they have 
today.
    It is easy to support the mining industry based on all the 
benefits they bring to our county. Obviously they are a 
sustainable industry. Over the decades mining has literally put 
food on the table, clothes on the backs, and roofs over the 
heads of hundreds-of-thousands of Nevadans.
    Mining, like real estate, has its ups and downs as the 
economy waxes and wanes, but like the homes we sell in real 
estate, the minerals and metals produced by our mines never go 
out of style. America's basic industries, its armed forces, its 
consumer products, and all of us in this hearing room use 
metals and minerals every day from our Nation's natural 
resources.
    As America needs the metals that mining produces, 
communities like Elko need the jobs that mining produces. These 
are the highest-wage jobs in the State of Nevada, 185 percent 
more than the average Nevada worker.
    They are jobs with benefits, paying wages that can sustain 
a family, and no community today can have enough high-wage 
jobs, jobs that allow hard-working people to pay their 
mortgages and bills, send their kids to college, and keep cars 
in the garage.
    Take away these jobs and you take away far more than 
income. You weaken the economic stability of our way of life. 
Suddenly, a lifestyle that one working parent could support now 
takes two.
    The loss of these jobs obviously cannot be replaced by 
local businesses, and in short, without mining, it would be a 
short distance between a thriving community that I came from 
yesterday and a failing one in need of Federal support, much 
like many others in today's society.
    For Elko, the good life becomes endangered if mining 
becomes endangered, and I see that I am getting kind of close. 
I have several more pages, but I will conclude with that.
    Mr. Costa. We sure would appreciate that.
    Ms. Eklund-Brown. This bill is not good for us as it is. We 
are aware, and the industry is aware, that reform is needed, 
but not with gross income. You know, they are already paying 
five percent net proceeds to the State.
    I think that everyone feels that a net income base is much 
more beneficial, but if this bill goes through our community 
will not be striving, and we will be back for a stimulus 
package for Elko County. So please consider the impact of this 
bill in your decisions when you make them as you go forward. 
Thank you.
    [The prepared statement of Ms. Eklund-Brown follows:]

                Statement of Sheri Eklund-Brown, Chair, 
               Elko County Board of Commissioners, Nevada

    Thank you for this opportunity to share my thoughts on mining law 
reform with you and your colleagues. I appreciate your interest in 
hearing from those like me who live and work in mining communities.
    I'm the chair of the county commission and have lived in Elko 46 
years--through the booms and the busts. I'm also a businesswoman, a 
realtor, and have been deeply involved in the youth of our community 
for many years. I know first-hand how dependent our county is on 
mining--and this morning I want to convey to you the implications of 
that dependency.
    Elko is the fourth largest county in the continental United States. 
About 70 percent of our county consists of public land--land that is 
especially rich in minerals and metals. In fact, Nevada is the world's 
fourth largest gold producing region--producing 82 percent of the 
nation's gold production. And Elko accounts for the great majority of 
the state's total. The county, as well as the mining companies, has a 
very close working relationship with federal agencies with oversight 
responsibilities for public lands. Our economy therefore relies on 
multiple use of public lands
    Elko has historically been a mining center since the first settlers 
appeared there about the time of the American Civil War. Today we are 
home to some of the biggest and best mineral mining operations in the 
country. Gold, silver and copper are among the minerals mined in our 
community--with some of the world's most advanced and environmentally 
friendly mining practices.
    Our community cares about clean air and clean water every bit as 
much as people in San Francisco or Boston do. After all, we raise our 
children in Elko. We don't just make a living there, we make our life 
there. In fact, mining companies have voluntarily performed wildlife 
and wetland conservation work and have adopted higher standards of 
mercury emission controls than required by state law. If mining 
companies were not taking care of the environment, they would not have 
the quality workforce they have today.
    Obviously, mining is a sustainable industry. Over the decades, 
mining has literally put food on the table, clothes on the backs and 
roofs over the heads of hundreds of thousands of Nevadans. Mining, like 
real estate, has its ups and downs as the economy waxes and wanes. But 
like the homes we sell in real estate, the minerals and metals produced 
by our mines never go out of style. America's basic industries, its 
armed forces, its consumer products and all of us in this hearing room 
use metals and minerals every day.
    As America needs the metals that mining produces, communities like 
Elko need the jobs that mining produces. These are the highest-wage 
jobs in the state of Nevada. They are jobs with benefits, paying wages 
that can sustain a family. And today no community can have enough high-
wage jobs--jobs that allow hard-working people to pay their mortgage--
pay medical bills--buy things for the kids--and keep a car in the 
garage.
    Take away these jobs and you take away far more than income. You 
weaken the economic stability of our way of life. Suddenly, a lifestyle 
that one working parent could support now requires two working parents. 
The loss of these jobs obviously could not be replaced by local 
businesses in our community. In short, without mining, it would be a 
short distance between a thriving community and a failing one need of 
federal support.
    For Elko, the good life becomes endangered if mining becomes 
endangered.
    What is true for our families is true for our country. As a county 
commissioner, I know our schools, roads, community services, health 
care--all are built and maintained with the help of mining revenue. 
Considering direct and indirect employment, the livelihoods of 11,000 
people plus their families--with a payroll totaling more than $735 
million--depend on mining. Mining contributes more than $2.9 billion 
annually to the local economy.
    In Elko, you don't have to be an economist or a county official to 
know that we need the tax revenue and the community support that mining 
provides.
    I wanted to drive home this point today because I am fearful that 
our mining industry may no longer be sustainable. Not if we are going 
to burden it with what experts describe as the highest tax or royalty 
on minerals found anywhere in the world. Let's not forget our mining 
companies already operate in the highest cost country of the world. 
They are attracted to counties like ours because we have the minerals--
we have the skilled workforce--and we have laws that make orderly 
business possible.
    But if the cost of conducting this business reduces the earnings 
from current investments--and discourages new mining investment--then 
we will begin to see the end of an industry and, before long, the end 
of our community. This is an industry that has sustained itself for 
more than a century in our community. It's an industry that has even 
thrived in a competitive global economy.
    It would be unforgivable if--especially now in a time of economic 
crisis--this industry was damaged or destroyed by well meaning but 
misguided officials from our own government. At a time when those 
without jobs despair of finding them and those with jobs worry about 
keeping them.
    In my community, and maybe in yours, we often hear people 
wondering: why are Americans losing high-wage jobs? Why are industries 
that support them moving off shore?
    Well, here's one example: thoughtless regulation is driving them 
offshore. The unintended consequences of this bill will inflict far-
reaching harm on communities like mine, sending our jobs overseas. 
Please keep this in mind as consider the mining industry and its future 
in this country.
    Thank you for allowing me to share my views from Elko County. I 
will be happy to answer any questions I can.
    [NOTE: University of Nevada, Reno Center for Economic Development 
Technical Report UCED 2008/09-04 submitted for the record entitled 
``Analysis of Economic and Occupational Skill Impacts of the Hard Rock 
Mining Sector on the Elko Micropolitan S.A. Economy'' has been retained 
in the Committee's official files.]
                                 ______
                                 
    Mr. Costa. We will, and thank you for representing not only 
the community of Elko, but the mining industry throughout 
Nevada. We have two new Members that have joined us here, new 
Members to the Subcommittee; Representative Heinrich from New 
Mexico, and Representative Lummis from Wyoming.
    As the Chair, we are going to be called for votes in about 
10 or 15 minutes, and so I would appreciate--I am going to go 
quickly around, and I think I have one question for three of 
the panel, and see if we can conclude here before the votes are 
called so we don't have to come back.
    Let me quickly ask for you to explain why the environmental 
provisions, Mr. Leshy, under H.R. 699 is still needed. Mr. 
Lamborn mentioned in his opening statement a number of laws 
that have been introduced over the last three or four decades 
that protect the environment, and are applicable to the 
hardrock mining, and why those are not sufficient.
    Mr. Leshy. Excuse me, Mr. Chairman, I appreciate the 
question. It is an important one. We have a panoply of 
environmental laws that apply to hardrock mining, but they 
apply in ways that leave very important gaps.
    They do not regulate, for example, ground water quality. 
They do not give the government the right to weigh the proposed 
mining operation against other uses and values of the Federal 
lands.
    And they create kind of an aura and a culture in the 
regulatory agencies that the companies have a right to mine, 
and the government has no right to stop them. That is the sort 
of basic ethos of this process.
    And the results I think are quite clear, because as I 
pointed out in my opening statement, there are major mines that 
have opened under all of these regulatory controls that the 
industry says is sufficient that have created environmental 
problems and contaminations that go on and on, and require 
taxpayers to clean them up.
    Mr. Costa. Yes. You made that in your statement. Thank you. 
Ms. Nazzaro, on your highlights and findings with regards to 
royalty analysis, what other things do you think we in terms of 
findings based on your experience do you think we should keep 
in mind as we work on H.R. 699, gross versus net as such?
    Ms. Nazzaro. Well, certainly the issues that we have been 
raising as far as the number of abandoned mines that are out 
there. If you look over a 10-year period, the BLM and the 
Forest Service spent $260 million to clean these up.
    The legislation as proposed, CRS estimates would give us 
$500 million to start addressing that problem, of which it is 
my understanding that EPA underestimates that it is a $50 
billion problem.
    So we certainly do need revenues to try to figure out how 
to handle this problem, and it is unfair that the American 
taxpayer continues to be taxed basically to clean up these 
mines.
    It is a continuing problem. It is not something that the 
legislation has taken care of in the past. We continue to have 
abandoned mines and we could continue to clean them up.
    Mr. Costa. I appreciate that. I think my questions in the 
last hearing we had on this, I wanted to try to get some 
prioritization, in terms of how you triage in terms of those 
that are in the greatest need of cleanup.
    Mr. Starr, how does the growth occurrence of hunting and 
fishing in your region, which my colleague and classmate, 
Congressman Salazar, always brags about, compare in terms of 
the role--and compared to the analysis on mining in Gunnison 
County?
    Mr. Starr. It is difficult, because mining tends to be an 
exclusive use of the land where it takes place. the economy 
that we have now in Gunnison County is primarily a hunting, 
tourism, fishing economy, and to the exclusion of those 
economies is how mining occurs.
    So if there are areas that are very important to that 
economic industry that we now have in Gunnison County, those 
should be withdrawn from mineralization so that the economy 
that we have had for the past 30 years continues to thrive.
    Mr. Costa. My final question, Superintendent Reynolds, you 
talked about the amount of claims around Death Valley, and its 
impacts. The provision that is included in this bill that there 
would be no exploration or operations permits issued if mineral 
activities would impair the resources or lands of the national 
park, why do you support that provision?
    Mr. Reynolds. I support that because presently with regard 
to some of the mining activities, and the hazards that are 
left, the ground water, the surface water, have been polluted.
    We have not had an opportunity to clean these up, whether 
it be on adjacent BLM lands or Forest Service land, and we are 
subjecting visitors, as well as employees, to these hazards.
    So I think those particular sections would be supporting 
some of the activities that we have been trying to do all 
along.
    Mr. Costa. Thank you very much. I want to stay within my 
time limit. The gentleman from Colorado, Mr. Lamborn, is 
recognized for five minutes.
    Mr. Lamborn. Thank you, Mr. Chairman, and Mr. Starr, it is 
good to have someone from Colorado here, and I would recommend 
to everyone within the sound of our voices to visit Gunnison 
County. It is a beautiful place.
    Mr. Starr. Thank you.
    Mr. Lamborn. To move right along to stay within the time 
frame here, because we are about to have votes, Ms. Eklund-
Brown, how serious would be the consequences to your county if 
domestic mining were to move off-shore because of onerous tax 
or other laws?
    Ms. Eklund-Brown. Our county is 50,000, and 11,000 jobs are 
directly and indirectly attributed to mining. So the 11,000, 
plus their families, basically make up the core of our county's 
population.
    Mr. Lamborn. Would you call the companies in your community 
good neighbors?
    Ms. Eklund-Brown. I would say they are the best neighbors 
anyone could have, and they participate from United Way's 
biggest donor, contributions to the colleges, the schools, the 
boys and girls clubs.
    They sit on city councils. They are the most actively 
involved partner from every extreme or angle that any community 
could want.
    Mr. Lamborn. OK. Thank you. Mr. Leshy, I have several 
questions for you, and if I can't finish the questions, would 
you be able to respond in writing if I give you questions as a 
follow-up?
    Mr. Leshy. Of course.
    Mr. Lamborn. OK. Thank you for that. Now, you mentioned 
that the Federal Government did not receive direct payments to 
the treasury. You are aware, I am sure, that there are claim 
maintenance and location fees that are paid directly to the 
Federal Treasury by mining concerns?
    Mr. Leshy. Yes, those are claim location fees, but they 
don't pay rentals, and they are not based on the acreage, for 
example.
    Mr. Lamborn. And just so people listening will be aware of 
the full picture, you are aware that most states, if not all 
states, do impose severance taxes or royalties even if the 
Federal Government does not?
    Mr. Leshy. That is right, and I should point out that for 
oil, and gas, and coal, and other Federal minerals, the states 
may also tax the production of those, but a Federal royalty is 
still imposed on those. So the mining law is different in that 
respect.
    Mr. Lamborn. OK. Now you referred to the royalties that 
would be imposed in this bill as modest if I remember your 
terminology. How would you square that with the testimony that 
we heard in the last Congress that said that the eight percent 
gross royalty that this bill calls for, or the similar bill 
called for was, quote, the highest ad valorem type royalty in 
the world, in terms of all minerals as a whole, and then went 
on to say that this particular witness, when you get above five 
percent, most countries have experienced a very great decline 
in levels of exploration taking place. So that you have a short 
term increase of revenue, but a long term decrease.
    Mr. Leshy. Well, there are various ways to measure and 
compare royalties against each other, and many countries of the 
world have various kinds of arrangements that they don't call 
royalties, but that they call profit sharing, or something 
else. So it is a very tricky business to compare.
    If you compare the royalties in this bill, H.R. 699, versus 
the royalties that the United States charges coal companies, 
oil and gas companies, those are usually 12, 15, 18 percent. So 
that was a basic source of why I said they were modest.
    Mr. Lamborn. Let us see. You referenced the 2006 study, the 
Economic Overview of Nevada Mining, for the conclusion that you 
stated, that gold mining was a very profitable industry.
    However, in that same study--and I am going to quote from 
it--when one looks at industry average profitability over the 
long run, rather than focus on an individual mine or mining 
company in a short period of time, what they will find is that 
the precious metals mining industry is in fact not particularly 
profitable.
    Mr. Leshy. Well, it depends on how, I suppose, you define 
long run to some extent, but if you look at today, I mean, 
there is economic carnage everywhere as we know. The mining 
companies, gold mining companies, are still a very profitable 
industry, and the outlook is bright by everything that I read 
about from industry analysts and financial analysts.
    In part, because gold prices stay high in economic 
recessions and depressions, such as we are encountering. So it 
is a profitable industry currently, and I think its future is 
bright.
    Mr. Lamborn. Thank you for that. I will have a couple of 
follow-up questions, but I want to thank you all for being here 
today, and I yield back, Mr. Chairman.
    Mr. Costa. Thank you very much. The Chair will recognize 
the gentleman from New Mexico.
    Mr. Heinrich. Thank you, Mr. Chairman, and Mr. Starr, I 
will start with you. I wanted to ask how widespread, and 
forgive me if I missed part of this before I arrived, but how 
widespread is the sort of historical contamination of water in 
Southern Colorado from mining activities?
    Mr. Starr. It is unfortunately very widespread, and that is 
one of the major concerns that we have at the county level. The 
fact those quality waters that serve our communities, that 
serve as the headwaters of the drinking water supplies clear 
down to California and through the COMPAC states, are very 
susceptible to pollution because of these mining activities.
    And I think really vividly points out the need for the 
funding that is proposed in this bill for reclamation efforts.
    Mr. Heinrich. What sort of revenue streams are available to 
your county right now to clean up those water supplies?
    Mr. Starr. Virtually none. I had the opportunity to be very 
involved in the cleanup of a former mill site and mine outside 
of Crested Butte over the past five years. Those monies came 
from a number of sources, a land trust, some State money, some 
EPA funds, but it was very difficult to have that cleanup 
process come to fruition because of the lack of funding.
    Mr. Heinrich. Thank you. Ms. Nazzaro; am I saying your name 
correctly?
    Ms. Nazzaro. Yes.
    Mr. Heinrich. With the pace and scale of cleanup at the 
current level and the funds that you mentioned for cleanup, how 
many years would it take to address the current problems that 
we have with necessary cleanup on public lands around the West?
    Ms. Nazzaro. I don't know if I can quickly calculate it in 
my head, but as I said, EPA estimates the problem currently at 
over $50 billion. So the last time that we looked at it, the 
Federal agencies----
    Mr. Heinrich. So are we talking about years, decades?
    Ms. Nazzaro. We are talking decades, decades beyond that, 
yes. The agencies over a 10 year period only spent $250 
million. So definitely it is going to take a long time to clean 
this up, and the funds just have not been available.
    It has gotten to the point where the agencies have not 
really even cataloged all the problems because they know that 
they will never get to them, and so why spend the time 
cataloging them, and they go to the higher risk areas. You 
know, places that they are aware of, such as Death Valley, 
where they know it is a definite threat to the general public.
    Mr. Heinrich. Gotcha. OK. Ms. Eklund-Brown, I just have one 
quick question for you. How do you sort of reconcile the 
different playing fields? You know, we have hardrock mining 
obviously in New Mexico, but we also have oil, and gas, and 
coal.
    The different treatment that hardrock mining receives when 
it comes to royalties in general, versus these other public 
resources that are being extracted from our public lands?
    Ms. Eklund-Brown. Myself, I think it needs to be a fairness 
issue with all the other extractions, but it also needs to take 
into account the costs of the development of the mine, and the 
expense in extraction of taking coal right out of the ground, 
and being able to use it, and oil and gas, and taking it right 
out of the ground, and being able to use it.
    Where with mining, or for any locatable mineral, it is tons 
and tons of ore to get one ounce of gold, or the other types of 
minerals. So they are not similar. They are not parallel 
processes, and they need to be treated as such.
    Mr. Heinrich. Thank you. I was actually born in Fallon, 
Nevada, and my father worked for Anaconda Copper. My 
grandfather was a gold miner, and I very much appreciate the 
perspective of the State. I think it is one of the great states 
in our Union.
    That said, I do think that maybe the regulatory and legal 
framework that was appropriate for mining in the 1800s may have 
changed in the ensuing hundred-and-some years. So, thank you 
all for being here today.
    Mr. Costa. I thank the gentleman from New Mexico. We have 
11 minutes left before the vote. So I am going to recognize the 
gentlewoman from Wyoming for five minutes of questioning, and 
then we will close the hearing, and we thank the witnesses 
again.
    For the record, I would like unanimous consent to submit--I 
think I mentioned the National Mining Association's testimony; 
the State of Alaska, the Department of Natural Resources 
testimony; the Office of the Mayor of the City of Boise, 
Idaho's written letter to the Subcommittee; and any other 
written testimony that the Ranking Member, without objection, 
provides, and we will ask for unanimous consent that they be 
submitted for the record.
    [NOTE: The documents listed below have been retained in the 
Committee's official files.]
      Bieter, David H., Mayor, Boise, Idaho, Letter submitted 
for the record
      Borell, Steven C., Alaska Miners Association, Comment 
submitted for the record on H.R. 699, Hard Rock Mining & Reclamation 
Act
      Eklund-Brown, Sheri, Chair, Elko County Board of 
Commissioners, Nevada, University of Nevada, Reno, Center for Economic 
Development Technical Report UCED 2008/09-04 entitled ``Analysis of 
Economic and Occupational Skill Impacts of the Hard Rock Mining Sector 
on the Elko Micropolitan S.A. Economy'' submitted for the record
      Irwin, Thomas E., Commissioner, State of Alaska, Letter 
submitted for the record
      Keith, Jason, Statement submitted for the record on 
behalf of the Outdoor Alliance
      Moe, Richard, President, The National Trust for Historic 
Preservation, National Register of Historic Landmarks managed by the 
Bureau of Land Management
      Moe, Richard, President, The National Trust for Historic 
Preservation, List of National Historic Landmarks managed by the USDA 
Forest Service
      Moe, Richard, President, The National Trust for Historic 
Preservation, List of National Historic Landmarks with Federal 
Ownership from the National Register Information System
      Moe, Richard, President, The National Trust for Historic 
Preservation, Statement submitted for the record
      Parshley, Jeffrey V. and Struhsacker, Debra W., Northwest 
Mining Association, Paper on ``The Evolution of Federal and Nevada 
State Reclamation Bonding Requirements for Hardrock Exploration and 
Mining Projects,'' submitted for the record
      Pueblo of Laguna Tribe, Laguna, New Mexico, Statement 
submitted for the record on the Mining Law of 1872
      Reynolds, James T., Former Superintendent, Death Valley 
National Park, California, U.S. Department of the Interior memorandum 
to Regional Directors/Associate Directors dated October 2, 2008, on 
``Mitigating High-Risk Abandoned Mine Land Features'' submitted for the 
record
      Schaumberg, Peter J., Beveridge & Diamond, P.C., 
``Opinion on Whether H.R. 2262's Imposition of a Royalty on Mineral 
Production From Existing Valid Unpatented Mining Claims Is 
Unconstitutional,'' submitted for the record
      Skaer, Laura, Northwest Mining Association, Statement 
submitted for the record on Legislative Hearing on H.R. 699--Hard Rock 
Mining and Reclamation Act,
      Starr, Jim, Commissioners, Gunnison County, Colorado, 
Resolutions and documents submitted for the record
      State of Alaska Position Paper on H.R. 2262 dated 
September 26, 2007, submitted for the record
                                 ______
                                 
    Mr. Costa. All right. Very good. You are up, and we have to 
vote. So the gentlewoman from Wyoming.
    Ms. Lummis. Thank you, Mr. Chairman, and I want to thank 
you all for joining us today. My first question is for Mr. 
Leshy. I am from Wyoming. We are the number one uranium 
producing state in the nation. We are also number one in 
reserves.
    So I do take issue with your statement that we should be 
importing more uranium from friendly countries, such as Canada 
and Australia. Have you analyzed the economic impact to western 
production, and states in the western United States that would 
occur from moving these jobs elsewhere?
    Mr. Leshy. Congresswoman Lummis, thank you for the 
question. I did not advocate moving uranium jobs offshore. What 
my testimony said was that uranium should be subject to the 
same regime, regulatory regime, that coal, oil, and gas, and 
oil shale, and other fossil fuels, and geothermal resources are 
subject to.
    That is, a leasing system, as opposed to the hardrock 
mining system. It is kind of an accident. Of course, when the 
Mining Law of 1872 passed, uranium was not valuable for 
anything or even known as a mineral.
    And so it was kind of an accident that it was treated under 
the Mining Law, rather than under a leasing system, which was 
adopted in 1920 for all these other energy minerals.
    So it seems like some sort of loophole frankly that uranium 
is not subject to leasing like these other energy fuels. 
Subjecting it to leasing would not necessarily involve moving 
any jobs offshore.
    In fact, uranium is substantially already subject to a 
leasing system in the uranium bearing areas of western Colorado 
under a kind of a quirk. After World War II, and the atomic 
bomb, and Hiroshima, the government withdrew a lot of Federal 
land in western Colorado as a source of uranium, and put it 
under a leasing system, which is administered by the Department 
of Energy.
    And that is in fact where historically a lot of uranium 
production has come from under this leasing system. So I think 
moving it to a leasing system is actually a very logical move, 
and would not affect production.
    I only pointed out the fact that the world's by far largest 
producers of uranium, Australia and Canada, are friendly to the 
United States. So there is really no strategic argument about 
if we don't mine uranium, it will go to unfriendly countries 
offshore. I think we would continue to mine uranium under a 
leasing system.
    Ms. Lummis. Mr. Chairman, following up on that, you 
mentioned modest royalties that can be readily absorbed by the 
mining industry. But as my colleague from Colorado mentioned 
earlier, there is a study that shows that an eight percent 
gross royalty would be the highest ad valorem type royalty in 
the world, in terms of all minerals.
    So how do you consider setting a new royalty ceiling as a 
modest action?
    Mr. Leshy. Congresswoman Lummis, there are a lot of 
different ways to calculate royalties, especially when you go 
to countries abroad. They have various ways of sort of taxing 
or recouping some of the costs or some of the value of mining 
to the government, whether they call it a royalty or not.
    I used the adjective modest primarily by considering 
hardrock mining, and the eight percent in H.R. 699l, compared 
to other royalties that other miners pay the Federal Government 
under current law, such as coal pays eight percent, oil and 
gas, 12-to-18 percent currently, and by those standards it is a 
modest royalty.
    Ms. Lummis. Thank you, and my next question is for Ms. 
Eklund-Brown. I understand that Elko County's unemployment rate 
is about 4.9 percent, while Nevada's statewide unemployment 
rate is 9.1 percent.
    And that foreclosures on homes in Elko County is a fraction 
of that in Clark County, in Las Vegas, and a fraction of that 
in Carson City. What economic differences exist in these Nevada 
communities that would explain such a disparity?
    Ms. Eklund-Brown. Gold mining. That is the only basis that 
makes up the difference in those circumstances. We have 
tourism, and our tourism is as good as Gunnison County's.
    Our recreation is as good, and as strong is our hunting. It 
is a balanced economy, and a diverse one as much as we can make 
it, but it is gold mining dependent, and the gold belt, all of 
the regions that have lower employment have gold mining at this 
time.
    Ms. Lummis. Well, Mr. Chairman, I would comment also that 
my State of Wyoming has the lowest unemployment rate in the 
Nation right now as well, and it is due to the fact that our 
mining, oil, and gas, and coal industries are healthy.
    So I want to thank the county commissioner for being with 
us today, and all of the other panelists as well. Thank you 
very much.
    Mr. Costa. We are pleased that things are good in Wyoming. 
We wish that for the rest of the country obviously. This 
concludes the testimony and the questions by the Members of the 
Subcommittee on Energy and Mineral Resources.
    I want to thank the Ranking Member and staff for their hard 
work, and for the Members who were able to make the hearing. I 
also want to thank our witnesses, both on this panel and our 
colleague, Representative Heller, for their desire to want to 
better inform the Committee as to what we ought to consider as 
this measure moves forward.
    So, at this point in time, we have five minutes left to 
make our vote, and the Subcommittee is now adjourned.
    [Whereupon, at 11:34 a.m., the Subcommittee was adjourned.]

                                 
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