[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
H.R. 1937, ``NATIONAL STRATEGIC AND CRITICAL MINERALS PRODUCTION ACT
OF 2015''
=======================================================================
LEGISLATIVE HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
OF THE
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
Thursday, June 25, 2015
__________
Serial No. 114-14
__________
Printed for the use of the Committee on Natural Resources
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COMMITTEE ON NATURAL RESOURCES
ROB BISHOP, UT, Chairman
RAUL M. GRIJALVA, AZ, Ranking Democratic Member
Don Young, AK Grace F. Napolitano, CA
Louie Gohmert, TX Madeleine Z. Bordallo, GU
Doug Lamborn, CO Jim Costa, CA
Robert J. Wittman, VA Gregorio Kilili Camacho Sablan,
John Fleming, LA CNMI
Tom McClintock, CA Niki Tsongas, MA
Glenn Thompson, PA Pedro R. Pierluisi, PR
Cynthia M. Lummis, WY Jared Huffman, CA
Dan Benishek, MI Raul Ruiz, CA
Jeff Duncan, SC Alan S. Lowenthal, CA
Paul A. Gosar, AZ Matt Cartwright, PA
Raul R. Labrador, ID Donald S. Beyer, Jr., VA
Doug LaMalfa, CA Norma J. Torres, CA
Jeff Denham, CA Debbie Dingell, MI
Paul Cook, CA Ruben Gallego, AZ
Bruce Westerman, AR Lois Capps, CA
Garret Graves, LA Jared Polis, CO
Dan Newhouse, WA Vacancy
Ryan K. Zinke, MT
Jody B. Hice, GA
Aumua Amata Coleman Radewagen, AS
Thomas MacArthur, NJ
Alexander X. Mooney, WV
Cresent Hardy, NV
Vacancy
Jason Knox, Chief of Staff
Lisa Pittman, Chief Counsel
David Watkins, Democratic Staff Director
Sarah Parker, Democratic Deputy Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
DOUG LAMBORN, CO, Chairman
ALAN S. LOWENTHAL, CA, Ranking Democratic Member
Louie Gohmert, TX Jim Costa, CA
Robert J. Wittman, VA Niki Tsongas, MA
John Fleming, LA Matt Cartwright, PA
Glenn Thompson, PA Donald S. Beyer, Jr., VA
Cynthia M. Lummis, WY Ruben Gallego, AZ
Dan Benishek, MI Lois Capps, CA
Jeff Duncan, SC Jared Polis, CO
Paul A. Gosar, AZ Vacancy
Raul R. Labrador, ID Vacancy
Paul Cook, CA Vacancy
Garret Graves, LA Vacancy
Ryan K. Zinke, MT Vacancy
Jody B. Hice, GA Vacancy
Alexander X. Mooney, WV Raul M. Grijalva, AZ, ex officio
Cresent Hardy, NV
Rob Bishop, UT, ex officio
--------
CONTENTS
----------
Page
Hearing held on Thursday, June 25, 2015.......................... 1
Statement of Members:
Lamborn, Hon. Doug, a Representative in Congress from the
State of Colorado.......................................... 1
Prepared statement of.................................... 3
Lowenthal, Hon. Alan S., a Representative in Congress from
the State of California.................................... 4
Prepared statement of.................................... 6
Statement of Witnesses:
Amodei, Hon. Mark E., a Representative in Congress from the
State of Nevada............................................ 7
Fellows, Mark, SNL Metals & Mining, Metals Consulting, on
Behalf of the National Mining Association, London, United
Kingdom.................................................... 9
Prepared statement of.................................... 11
Green, Jeffery A., President, J.A. Green & Company,
Washington, DC............................................. 24
Prepared statement of.................................... 25
Kalen, Sam, Winston S. Howard Distinguished Professor of Law,
Co-Director, Center for Law and Energy Resources in the
Rockies, University of Wyoming College of Law, Laramie,
Wyoming.................................................... 19
Prepared statement of.................................... 20
Russell, Luke, Vice President, External Affairs, Hecla Mining
Company, Coeur d'Alene, Idaho.............................. 12
Prepared statement of.................................... 13
Additional Materials Submitted for the Record:
List of documents submitted for the record retained in the
Committee's official files................................. 36
LEGISLATIVE HEARING ON H.R. 1937, TO REQUIRE THE SECRETARY OF THE
INTERIOR AND THE SECRETARY OF AGRICULTURE TO MORE EFFICIENTLY DEVELOP
DOMESTIC SOURCES OF THE MINERALS AND MINERAL MATERIALS OF STRATEGIC AND
CRITICAL IMPORTANCE TO UNITED STATES ECONOMIC AND NATIONAL SECURITY AND
MANUFACTURING COMPETITIVENESS, ``NATIONAL STRATEGIC AND CRITICAL
MINERALS PRODUCTION ACT OF 2015''
----------
Thursday, June 25, 2015
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, DC
----------
The subcommittee met, pursuant to notice, at 11:09 a.m., in
room 1334, Longworth House Office Building, Hon. Doug Lamborn
[Chairman of the Subcommittee] presiding.
Present: Representatives Lamborn, Labrador, Cook, Zinke,
Hardy; and Lowenthal.
Mr. Lamborn. The Subcommittee on Energy and Mineral
Resources will come to order. We are meeting today to hear
testimony on H.R. 1937, introduced by Representative Amodei,
the ``National Strategic and Critical Minerals Production Act
of 2015.''
Under Committee Rule 4(f), any oral opening statements at
hearings are limited to the Chairman and Ranking Member and the
Vice Chairman and a designee of the Ranking Member. This will
allow us to hear from our witnesses sooner, and help Members
keep to their schedules. Therefore, I ask unanimous consent
that all other Members' opening statements be made part of the
hearing record if they are submitted to the Subcommittee clerk
by 5:00 p.m. today.
[No response.]
Mr. Lamborn. Hearing no objection, so ordered. I now
recognize myself for my opening statement.
STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF COLORADO
Mr. Lamborn. Today the subcommittee is meeting to discuss
H.R. 1937, the National Strategic and Critical Minerals
Production Act of 2015, that was introduced on Wednesday, April
22, by Congressman Mark Amodei, and 37 original co-sponsors.
The bill currently has 45 co-sponsors, including myself.
The legislation requires the Secretary of the Interior and
the Secretary of Agriculture to more efficiently develop
domestic sources of the minerals and mineral materials of
strategic and critical importance to the United States'
economic and national security and manufacturing
competitiveness.
Earlier versions of this bill passed the House in both the
112th and 113th Congresses by wide margins. H.R. 4402 passed on
July 12, 2012 by a bipartisan vote of 256 yeas to 160 nays, and
H.R. 761 passed on September 18, 2013, with bipartisan support
of 246 to 178, and as part of H.R. 4, the ``Jobs for America
Act,'' on September 18, 2014, with bipartisan support of 253 to
163.
The legislation addresses a significant problem hindering
domestic production of solid mineral resources, which is the
prolonged permitting timelines of 7 to 10 years to obtain the
necessary permits to build a mine. In some cases that we will
hear about today, the time required to obtain a permit can be
almost 20 years. In comparison, mine projects in Canada and
Australia can obtain the necessary permits in 2 to 3 years.
Critics of the legislation have raised concerns about the
broad definition of ``strategic and critical minerals'' in the
bill. The definition was written broadly to capture the
diversity of the Nation's mineral endowment. This includes rare
earth minerals that were featured in a 60 Minutes special in
March of this year.
Last year, at an oversight hearing on supply and demand of
critical minerals, the Minority witness, Dr. Eric Peterson,
with the Center for Advanced Energy Studies at the Idaho
National Laboratory, was asked whether lead was a critical
mineral. He replied, ``Criticality is in the eye of the
beholder . . . If it is needed for your process, then yes, it
is critical.''
Now let's take a look at copper, a mineral commodity the
United States produces and has significant reserves and
resources of, yet we still import 31 percent of what our
society needs. It is also a mineral that is crucial for
renewable energy and alternative fueled vehicles.
[Slide]
Mr. Lamborn. And if you take a look at Slide 1, you will
see the information behind saying that. You can see from this
slide that a hybrid vehicle requires twice as much copper as a
vehicle that runs on gasoline. At 165 pounds of copper per
vehicle, the electric car requires almost three times as much.
[Slide]
Mr. Lamborn. Demand for copper is projected to outstrip
supply sometime after 2017 with a deficit increasing to 10
million tons by 2028. And you can see that on Slide 2.
[Slide]
Mr. Lamborn. The third slide illustrates the problem we are
here to discuss today: long permitting timelines. Currently,
the average timeline from discovery to production is 20 years
for large copper deposits. Worldwide, there are not enough
large copper prospects in the pipeline to address the supply
shortfall that is projected for the near future.
One might ask how long permitting timelines affect the
economics of a given deposit and a company's ability to
maximize the quantity of the resource they are able to recover.
A study commissioned by the National Mining Association
released this morning found that a typical mining project in
the United States loses more than one-third of its value as a
result of the delays in obtaining the various permits required
for mine construction and production. The cost and increased
risk associated with these delays can cut the expected value of
a mine in half and, in some cases, make the project uneconomic.
This drives investors to fund overseas projects, even in places
like the Democratic Republic of Congo--as you know, a very
unstable country.
Mr. Amodei's legislation goes a long way to address this
problem, and is a first step in addressing the Nation's
troublesome dependence on foreign sources of mineral resources.
I want to thank the witnesses for being here, and look
forward to hearing from them today.
[The prepared statement of Mr. Lamborn follows:]
Prepared Statement of the Hon. Doug Lamborn, Chairman, Subcommittee on
Energy and Mineral Resources
Today, the subcommittee is meeting to discuss H.R. 1937, the
``National Strategic and Critical Minerals Production Act of 2015''
that was introduced on Wednesday, April 22, 2015, by Congressman Mark
Amodei and 37 original co-sponsors. The bill currently has 45 co-
sponsors, including myself.
The legislation requires the Secretary of the Interior and the
Secretary of Agriculture to more efficiently develop domestic sources
of the minerals and mineral materials of strategic and critical
importance to United States' economic and national security, and
manufacturing competitiveness.
Earlier versions of this bill passed the House in both the 112th
and 113th Congresses by wide margins. H.R. 4402 passed on July 12, 2012
by a bi-partisan vote of 256 yeas to 160 nays and H.R. 761, passed on
September 18, 2013 with bipartisan support by 246-178, and as part of
H.R. 4 the ``Jobs for America Act'' on September 18, 2014 with
bipartisan support of 253-163.
The legislation addresses a significant problem hindering domestic
production of solid mineral resources, which is the prolonged
permitting timelines of 7 to 10 years to obtain the necessary permits
to build a mine. In some cases--that we will hear about today--the time
required to obtain a permit can be almost 20 years.
In comparison, mine projects in Canada and Australia can obtain the
necessary permits in 2 to 3 years.
Critics of the legislation have raised concerns about the broad
definition of `strategic and critical minerals' in the bill. The
definition was written broadly to capture the diversity of the Nation's
mineral endowment. This includes the `rare earth minerals' that were
featured in a 60 Minutes special in March of this year.
Last year at an oversight hearing on supply and demand of critical
minerals, the minority witness, Dr. Eric S. Peterson with the Center
for Advanced Energy Studies at the Idaho National Laboratory, was asked
whether lead was a critical mineral replied. He replied, ``Criticality
is in the eye of the beholder . . . if it's needed for your process
then yes it is critical. . .''
Now let's take a look at copper, a mineral commodity the United
States produces and has significant reserves and resources of, yet we
still import 31 percent of what our society needs. It's also a mineral
that is crucial for renewable energy and alternative fueled vehicles
(Slide 1).
You can see from this slide that a hybrid vehicle requires twice as
much copper as a vehicle that runs on gasoline. At 165 lbs. of copper
per vehicle, the electric car requires almost three times as much.
Demand for copper is projected to outstrip supply sometime after
2017 with a deficit increasing to 10 million tonnes by 2028 (Slide 2).
The third slide illustrates the problem we're here to discuss
today--long permitting timelines. Currently the average timeline from
discovery to production is 20 years for large copper deposits. World-
wide there are not enough large copper prospects in the pipeline to
address the supply shortfall that is projected for the near future.
One might ask how long permitting timelines affect the economics of
a given deposit and a company's ability to maximize the quantity of the
resource they're able to recover.
A study commissioned by the National Mining Association released
this morning found that a typical mining project in the United States
loses more than one-third of its value as a result of the delays in
obtaining the various permits required for mine construction and
production.
The cost and increased risk associated with these delays can cut
the expected value of a mine in half and in some cases make the project
uneconomic. This drives investors to fund overseas projects even in
places like the Democratic Republic of Congo.
Mr. Amodei's legislation goes a long way to address this problem
and is a first step in addressing the Nation's troublesome dependence
on foreign sources of mineral resources.
I want to thank the witnesses for being here and look forward to
hearing from them today.
______
Mr. Lamborn. In a moment I am going to recognize the
Ranking Member for an opening statement. In the meantime, I am
going to hand the gavel over to one of the fine members of our
committee, Colonel Paul Cook of California, and at this point
recognize the Ranking Member for his statement.
STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Dr. Lowenthal. Thank you, Mr. Chair. Before I begin, I ask
unanimous consent to introduce into the record a letter from
many, many groups on behalf of thousands of mining-impacted
communities.
[No response.]
Mr. Cook [presiding]. Without objection, so ordered.
Dr. Lowenthal. Thank you, Mr. Chairman, for holding this
hearing. Critical minerals are indeed vital to many high-tech
U.S. industries, and I support the goal that the United States
have a steady supply of these important materials. We are
currently very much dependent on Chinese imports for many of
these critical minerals, maybe not as much as a few years ago,
but any situation in which one source is relied upon too
heavily creates an inherent supply risk.
I think there is a lot of opportunity for us to work
together on this issue to evaluate and secure the Nation's
critical mineral needs. However, I believe that H.R. 1937
misses the mark on this opportunity. Despite its title, the
bill has little to do with critical minerals. Instead, it aims
to simply speed the access that mining companies will have to
royalty-free taxpayer resources.
The Department of Energy and the National Academy of
Sciences, among many others, have defined critical minerals as
elements that are vital to U.S. industry and that also have a
high risk of supply disruption. These organizations concluded
that rare earth minerals, platinum group metals, and lithium,
are critical minerals, based upon their industrial importance
and our dependence on foreign sources.
But H.R. 1937 ignores this well-established definition.
Instead, it offers one of its own, which is so broad that it
even encompasses sand and gravel. I am not saying that these
minerals are unimportant. They are certainly essential in
construction, manufacturing, and building infrastructure, but
they aren't critical because there is no risk of a shortage. We
import less than half of a percentage point of all our sand and
gravel needs. We have a diverse domestic supply. There is no
risk of being held hostage by some foreign dictator for our
sand and gravel needs. And there is no evidence that our
construction industries are suffering from an acute shortage of
rocks.
Yet, under the guise of critical need, this bill would
exempt sand, gravel, and all other hard rock mines from full
review under the National Environmental Policy Act (NEPA),
putting our public lands at risk and eliminating important
opportunities for public comment. Further, the bill would
overturn the principle of multiple land use management, by
requiring that resource extraction take priority over all other
uses of our public lands.
These changes over-ride our bedrock environmental laws,
leaving in their place thin assurances that environmental
impacts will be mitigated while resource development is
maximized. The reason for this, the Majority argues, is that
review under NEPA is too time consuming, and unnecessarily
delays mine permitting. They try to claim that the
Administration is on their side in this argument by pointing to
an executive order aimed at expediting the permitting of
critical infrastructure projects. Yet this order was written to
work within the guidelines of NEPA to improve coordination, not
to strip away the entire process. We cannot throw away the NEPA
process simply because it takes too long.
What really adds insult to injury in this bill is the fact
that once these hard rock mines are permitted, taxpayers don't
see a dime for the resources extracted from their lands. Under
the Mining Act of 1872, there are no royalties charged on the
resources extracted, no matter how valuable they may be. Over
$300 billion of gold, silver, copper, and other valuable
minerals have been taken from public lands without one dime in
royalties returning to the American taxpayer.
This 1872 law, passed when Ulysses S. Grant was the
President, which is still in effect, was designed primarily to
attract settlers to the West. I have late-breaking news: I am
from California, and I can assure you the West has been
settled. It is now safe to update this law.
That is why I have introduced the Hardrock Mining Reform
and Reclamation Act with Ranking Member Grijalva and other
colleagues from this committee. Mining reform should focus on
bringing revenues to taxpayers, and protecting the American
public from environmental damage and the cost of reclaiming
waste mine land.
By weakening environmental review, H.R. 1937 is designed to
make this situation even worse for mining in this country,
which has already left a legacy of environmental cleanup that
is costing American taxpayers billions of dollars.
I cannot support any mining legislation that would not seek
to improve existing law, never mind supporting one that makes
conditions worse.
Thank you, Mr. Chair, and I yield back my time.
[The prepared statement of Dr. Lowenthal follows:]
Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member,
Subcommittee on Energy and Mineral Resources
Thank you, Mr. Chairman, and thank you for holding this hearing.
Critical minerals are indeed vital to many high-tech U.S.
industries, and I support the goal of ensuring that the United States
has a steady supply of these important materials. We are currently very
dependent on Chinese imports for many of these critical minerals--not
as much today as a few years ago--but any situation where one source is
still relied upon too heavily creates an inherent supply risk. So I do
think that there is a lot of opportunity to work together on this
issue, and for us to find agreement on ways to evaluate and secure the
Nation's critical mineral needs.
I believe that H.R. 1937, however, misses the mark on this
opportunity. Despite its title, the bill has very little to do with
critical minerals. Instead, it aims to simply speed royalty-free access
for mining companies to the taxpayer's natural resources.
The Department of Energy and the National Academy of Sciences,
among many others, have defined critical minerals as elements that are
vital to U.S. industry AND that have a high risk of a supply
disruption. These organizations concluded that rare earth elements,
platinum group metals, and lithium are critical minerals based on their
industrial importance and our dependence on foreign sources. But H.R.
1937 ignores this well-established definition and instead offers one of
its own, which is so broad that it even encompasses sand and gravel.
Not that these materials are unimportant--they are certainly
essential in construction, manufacturing, and building infrastructure--
but they aren't critical because there is no risk of a shortage. We
import less than half of a percentage point of all of our sand and
gravel needs. We have a diverse and abundant domestic supply. You may
not have seen any platinum in your back yard as a kid (and if you did,
you are rich now), but I imagine we've all seen sand and gravel . . .
everywhere.
Thus, there's no risk of being held hostage by some foreign
dictator for our Nation's sand and gravel needs. And again, there's no
evidence that our construction industries are suffering from an acute
shortage of rocks.
Yet, under the guise of ``critical need,'' this bill would exempt
sand, gravel, and all other hard rock mines from full review under the
National Environmental Policy Act (or NEPA), putting our public lands
at risk and eliminating important opportunities for transparency and
public comment. Further, the bill would overturn the principle of
multiple use land management by requiring that resource extraction take
priority over all other important uses of our public lands.
These changes would over-ride our bedrock environmental laws,
leaving in their place thin assurances that environmental impacts will
be mitigated while resource development is maximized.
The reason for this, the Majority argues, is that review under NEPA
is too time consuming and unnecessarily delays mine permitting. They
try to claim that the Administration is on their side in this argument
by pointing to an executive order aimed at expediting the permitting of
critical infrastructure projects. Yet this order was written to work
within the guidelines of NEPA to improve coordination, not strip the
entire process away. We cannot throw away the NEPA process simply
because it takes too long.
What really adds insult to injury about this bill is the fact that,
once these hard rock mines are permitted, taxpayers don't see a dime
for the resources extracted from their lands. Under the Mining Law of
1872, there are no royalties charged on the resources extracted, no
matter how valuable they may be. Over $300 billion of gold, silver,
copper, and other valuable minerals have been taken from public lands
without one dime in royalties returning to the American taxpayer.
This outdated 1872 Law, which is still in effect, was designed to
attract settlers to the West.
I'm from California. I can assure you, the West is settled.
It's safe to update this law now.
This is why I introduced the Hardrock Mining Reform and Reclamation
Act with Ranking Member Grijalva and other colleagues from this
committee. Mining reform should focus on bringing revenues to
taxpayers, and protecting the American people from environmental damage
and the costs of reclaiming waste mine land.
Unfortunately, by weakening environmental review, H.R. 1937 is
designed to make the situation even worse for mining in this country,
which has already left a legacy of environmental cleanup that is
costing American taxpayers billions of dollars. I cannot support mining
legislation that does not try to fix existing law, never mind one that
would make conditions worse.
I yield back the balance of my time.
______
Mr. Cook. Thank you. I will now recognize the author of
H.R. 1937, Representative Amodei, for a brief statement about
his bill.
STATEMENT OF THE HON. MARK E. AMODEI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEVADA
Mr. Amodei. Thank you, Mr. Chairman, Mr. Ranking Member.
For your record, Mark Amodei, representing Nevada's original
congressional district.
What H.R. 1937 seeks to do is provide some predictability
and stability to the permitting process. There is nothing in
H.R. 1937 which requires Federal land managers to approve an
application to mine on public land. That is a very important
point, that it doesn't require a yes, it requires a specific
timeline in which to go through the NEPA process.
Now, let's talk about the timeline for the NEPA process. In
the bill, it is 30 months. That is longer than you serve after
you are elected by your constituents to come here, by one-and-
a-half times. That is much longer than it takes you to get
elected to serve here. That is a period of time that, in
previous testimony on this bill, when it was pointed out that
the Administration indicated, ``We're doing real good, and it
only requires us 17 months to process a typical land use
application,'' you say, ``Well, then, what is your objection to
more than doubling that time frame? ''
There is also an extension provision in H.R. 1937 which
says, ``If you need more time, and everybody agrees to that,
then you can extend that process for an additional 6 months.''
By one-sixth you can extend that, so that if there are issues
that need to be worked out--in what sense, committee members,
in a NEPA sense--that you have one-sixth more time to go do
that.
Now, why are we talking about time at all in the context of
permitting mining on Federal lands? Because there is a de facto
track record that is very clearly demonstrable, that in this
industry, which requires the investment of money to develop
these projects, there has been a very effective de facto
culture that says, ``If we can just delay, delay, delay, those
investors will go elsewhere.'' And, Mr. Chairman and committee
members, they are going elsewhere.
And you sit there and say, ``Well, what is the damage in
that? '' To refer to the environmental track record of the
minerals extraction industry in my neck of the woods is a
historical statement. The stories on reclamation and
responsible operation for minerals extraction, in terms of
restorations of land that is mined and also historical ones
that, because these people are there, they picked up those
watershed restorations, those property restorations, are indeed
excellent.
I can tell you that the Nevada Department of Environmental
Protection, who supervises these things directly, has an
excellent record in modern times, over the last three decades,
of making folks do the right thing by the environment. There is
nothing in this legislation that says, ``Let's ignore NEPA,
let's trash the environment.'' It says, ``Listen. If somebody
files an application for minerals extraction on public
property, here is the amount of time you've got. So plan
accordingly. Bureau of Land Management, set up your schedule.
Tell people that if they want to participate in the process,
here are their opportunities.'' And there you go.
Now, if you get to the end of that process and that land
manager says, ``I think the permit should be denied,'' this
does nothing to change that discretion and that compliance with
NEPA. It merely says you cannot sit there and delay the thing
until the investors or the prospect dies of old age--my words,
nobody else's. But it is an important thing, in terms of--we
just want a limit on how long you study this thing to death.
I know that is a novel concept in the organization we are
all in, since we are not famous for swift action on much of
anything. But let's change for a minute to too broad. I find it
interesting to say, ``Well, it is too broad, and it needs to be
this.'' I think there was a statement made earlier that is
indeed the truth--it is in the eyes of the beholder. I think
back to the Loma Prieta earthquake in California, when we had
freeways that all of a sudden were no longer freeways. So you
needed to get those back up and operating again. Well, guess
what? Sand and gravel supply was critical at that point in
time. I am not saying there should be a blanket everything on
it, if there is an amendment that says you have to do some
special showing under the context to get into this. But I can
tell you sand and gravel supply, when you are trying to replace
a freeway system in a major metropolitan area in California, is
a critical thing, in the eyes of those beholders.
I will also indicate that when you talk about the
royalties, you have totally ignored the fact that this is an
industry which pays one of the highest average wages, pays
number one in my state in state and local taxes, and also the
income taxes on those wages are significant. So, if you want to
just judge it on straight up, if after 30 months or before 30
months the land manager thinks that the permit ought to be
denied, then they should deny it. But we shouldn't have to find
out that the time frame for deciding is whatever it happens to
be on a certain case without any limits.
Thank you, Mr. Chairman, for your indulgence, and I yield
back.
Mr. Cook. Thank you very much. We are playing Beat the
Clock today. So, right now, while we have the author, does
anyone--Ranking Member, other Members--have any brief
questions?
Dr. Lowenthal. I don't believe so.
Mr. Cook. OK. Anyone else?
[No response.]
Mr. Cook. Thank you. I know you have other commitments, we
are all running around. Chicken Little would be proud of you.
Thank you, Mr. Amodei.
Dr. Lowenthal. Chicken Little?
Mr. Cook. I am Chicken Little today, the sky is falling.
At this point, I would like to invite the witnesses to come
forward, be seated at the witness table. Mr. Labrador, I see
that you are there. Would you like to briefly introduce the
witness from Idaho, once he is seated?
Mr. Labrador. Thank you, Mr. Chairman. I am pleased to
introduce Luke Russell. Luke serves as a Vice President of
External Affairs for Hecla Mining Company. He has over 30 years
of experience in mine permitting in the United States and
abroad. He has a Master of Science in Mine Land Rehabilitation
from Montana State University, and a Bachelor of Science in
Landscape Architecture from the University of Wisconsin,
Madison. Hecla Mining Company has a rich history in Idaho, and
in my district, and will be celebrating its 125th anniversary
next year.
Thank you for being here, Luke, and we look forward to
hearing your testimony.
Mr. Cook. Thank you. So I don't get confused, the way it is
seated right now, I am going to introduce everyone that is
there.
We have Mr. Mark Fellows, we have Mr. Sam Kalen--if I
pronounced that correctly, Mr. Jeffery Green, and Mr. Luke
Russell.
Let me remind the witnesses that, under our Committee
Rules, they must limit their testimony to 5 minutes, and then
you will hear this little tap, tap, tapping. But your entire
statement will appear in the hearing record.
When you begin, the lights on the witness table will turn
green. After 4 minutes, the yellow light will come on. Your
time will have expired when the red light comes on. If you are
color-blind, we are all in trouble.
I will ask you to please complete your statement. I will
also allow the entire panel to testify before questioning the
witnesses.
So, right now we will start off with Mr. Fellows. Thank you
for being here.
STATEMENT OF MARK FELLOWS, SNL METALS & MINING, METALS
CONSULTING, ON BEHALF OF THE NATIONAL MINING ASSOCIATION,
LONDON, UNITED KINGDOM
Mr. Fellows. Thank you very much, Mr. Chairman, the
committee, for having me here to speak today.
SNL Metals & Mining is a subsidiary of SNL Financial, which
is a U.S.-based data, news, and consulting business focused on
the financial, real estate, media, energy, and mining sectors.
In early 2015, the National Mining Association commissioned SNL
to carry out a study aiming to quantify the impact of
permitting delays on the economic value of mining projects.
This study is published today, and I would like to submit it to
the committee for the record.
We embarked upon this assignment in the hope of creating a
piece of unique research which would demonstrate empirically
the destruction of value which results from unnecessary,
extended delays to project development. What we found is that,
on average, a typical mining project loses over one-third of
its economic value as a result of protracted delays in
receiving the numerous permits needed to begin production. The
longer the wait, the more the value of the investment is
eroded, even to the extent that the project ultimately becomes
an unviable investment. Even a large, high-grade deposit will
remain unmined if the balance between cost, revenue, and
timetable are not favorable.
This inefficient permitting system has partially blocked
the pipeline along which projects advance to become productive
mines. We found that although mining companies continue to
invest in exploration, a greater proportion of projects are
stuck in the earlier phases of development, despite evidence
that a healthy mining sector is an important component of the
economy. This has left the United States dependent on active
mines whose remaining life is declining or leaving the country
reliant on mineral resources from abroad.
It takes, on average, 7 to 10 years to secure the permits
needed to commence operations in the United States. To put that
into perspective, in Canada and Australia, countries with
similarly stringent environmental regulations, the average
permitting period is 2 years. In the United States, the
requirement for multiple permits and multiple agency
involvement is the norm, as is the involvement of other
stakeholders, including indigenous groups, the general public,
and non-governmental organizations.
In Canada and Australia, the timeline for government to
respond is more clearly outlined, the specification of lead
agencies is clearer, and the responsibility for preparing a
stringent environmental review lies with the mining company,
not the government.
Our study examines several real-world examples of mines
where delays have eroded value. The Rosemont Copper project in
Arizona continues in its attempt to secure permits, 5 years
after the originally planned start date of 2010. Over this
period, the value of the project has fallen from $18 billion to
$15 billion, despite much higher copper prices.
The Kensington gold mine in Alaska was plagued by
permitting issues during development. It commenced production
in 2010, 17 years after the originally planned start date of
1993. By the time the mine opened, the capital cost of building
it had increased by 49 percent, and the company had reduced
planned gold production by nearly one-third, to focus mining
operations on the most profitable part of the deposit only.
Earlier research conducted by SNL in 2014 established why a
healthy mining sector is important for the U.S. economy. There
is a mismatch between mineral supply and demand in the United
States. It ranks as only the seventh largest mining nation,
globally, although it is the world's largest manufacturer.
Another key finding of our previous research was that
manufacturing activity is returning to the United States,
driven by manufacturers' desire to reduce the risks in their
supply chains, and consumers' increasing concerns regarding
corporate accountability. Consumers want to see evidence of
sustainable production processes, use of recycled materials,
and sound environmental practices. Made in USA gives them that
assurance.
Our third key conclusion was that, relative to their global
peers, U.S. miners are highly efficient, often exemplifying
best practices with regards to productivity, sustainability,
and safety. The United States remains highly prospective, from
a geological point of view, with abundant, diverse mineral
resources. A duplicative, inefficient permitting system
presents a significant barrier to American companies' access to
minerals.
Thank you very much for your time.
[The prepared statement of Mr. Fellows follows:]
Prepared Statement of Mark Fellows, Director of Consulting, SNL Metals
& Mining
I would like to start by thanking the committee for inviting me to
speak here today.
SNL Metals & Mining is a subsidiary of SNL Financial, a U.S.-based
data, news and consulting business focused on the financial, real
estate, media, energy and mining sectors.
In early 2015, the National Mining Association commissioned SNL
Metals & Mining to carry out a study aiming to quantify the impact of
permitting delays on the economic value of mining projects. We embarked
upon this assignment in the hope of creating a piece of unique
research, which would demonstrate empirically the destruction of value
which results from unnecessary, extended delays to project development.
What we found is that on average, a typical mining project loses
over one-third of its economic value as a result of protracted delays
in receiving the numerous permits needed to begin production. The
longer the wait, the more the value of the investment is eroded, even
to the extent that the project ultimately becomes an unviable
investment. Even a large high-grade deposit will remain unmined if the
balance between costs, revenue and timetable are not favorable.
This inefficient permitting system has partially blocked the
pipeline along which projects advance to become productive mines. We
found that although mining companies continue to invest in exploration,
an ever-greater proportion of projects is stuck in the earlier phases
of development, despite evidence that a healthy mining sector is an
important component of the economy. This has left the United States
dependent on active mines whose remaining life is declining or on
mineral resources from abroad.
It takes on average 7 to 10 years to secure the permits needed to
commence operations in the United States. To put that into perspective,
in Canada and Australia, countries with similarly stringent
environmental regulations, the average permitting period is 2 years. In
the United States, the requirement for multiple permits and multiple
agency involvement is the norm, as is the involvement of other
stakeholders, including local indigenous groups, the general public and
nongovernmental organizations. In Canada and Australia the timeline for
the government to respond is more clearly outlined, the specification
of lead agencies is clearer, and the responsibility for preparing a
stringent environmental review lies with the mining company, not the
government.
Our study examines several real-world examples of mines where
delays have eroded value.
The Rosemont Copper project in Arizona continues in its attempts to
secure permits, 5 years after the originally planned start date of
2010. Over this period the value of the project has fallen from $18
billion to $15 billion despite much higher copper prices.
The Kensington gold mine in Alaska was plagued by permitting issues
during development. It commenced production in 2010, nearly 20 years
after the originally planned start date of 1993. By the time the mine
opened, the capital cost of building the mine had increased by 49
percent, and the company had reduced planned gold production by nearly
one-third, to focus mining operations on the most profitable part of
the deposit only.
Earlier research conducted by SNL in 2014 established why a healthy
mining sector is important for the U.S. economy: there is a mismatch
between mineral supply and demand in the United States; it ranks as
only the seventh largest mining nation, although it is the world's
largest manufacturer. Another key finding of our previous research was
that manufacturing activity is returning to the United States, driven
by manufacturers' desire to reduce the risks in their supply chains and
consumers' increasing concerns regarding corporate accountability.
Consumers want to see evidence of sustainable production processes, use
of recycled materials and sound environmental practices.
Our third key conclusion was that relative to their global peers,
U.S. miners are highly efficient, often exemplifying best practices
with regard to productivity, sustainability and safety. The United
States remains highly prospective, from a geological point of view,
with abundant, diverse mineral resources of high quality. A
duplicative, inefficient permitting system presents a significant
barrier to American companies' access to minerals.
______
Mr. Cook. Thank you very much. Right on schedule. The Chair
now recognizes Mr. Russell to testify.
STATEMENT OF LUKE RUSSELL, VICE PRESIDENT, EXTERNAL AFFAIRS,
HECLA MINING COMPANY, COEUR d'ALENE, IDAHO
Mr. Russell. Good morning, Mr. Chairman, Ranking Member
Lowenthal, other members of the committee. As Representative
Labrador said, I am Luke Russell with Hecla Mining Company.
Hecla is the oldest precious metals mining company in North
America. We currently have U.S. projects in Alaska, Idaho,
Colorado, Nevada, and Montana.
My experience includes more than 30 years in mine
permitting in western states, as well as internationally. In my
international experience, mine projects are commonly permitted
in 2 to 3 years. This is not due to lower international
standards. Far from it. The countries I have worked in
generally have requirements that are at least as protective as
those in the United States. What these countries do have are
predictable permitting processes. If the regulatory
professionals in Canada and Australia can get the job done in 2
to 3 years, so can we, here in the United States.
To be clear, valid concerns about environmental protection
need to be fully considered and addressed. At the same time,
frivolous matters should not serve as an excuse to trap mining
projects in limbo of unpredictable and endless review. We
should not confuse the length of the process with the rigor of
the review.
I would like to share a couple of examples of some lengthy
permitting processes I have been involved with.
Before working with Hecla, I worked with Coeur Mining,
which owns the Kensington mine in southeast Alaska. Permitting
of that mine started in 1988. Over the next 17 years, it went
through three permitting efforts to gain Federal and state
approvals, only to be followed by 5 years of litigation. It
ultimately went to the U.S. Supreme Court, which ruled in favor
of the agency's original decision to approve the project.
Unfortunately, during the litigation period more than 100
workers were idle. The permitting and litigation delay did not
only cost the company a significant amount of money, it also
impacted the community of Juneau, due to uncertainty and loss
of high-paying jobs during the construction period.
Another example. Hecla recently acquired the Rock Creek
project in northwestern Montana. Rock Creek is the largest
undeveloped silver-copper deposit in the United States. The
first permit application for that project was submitted in the
late 1980s. While over a decade in the process, an EIS was
finally issued in 2001, followed by appeals and litigation
which continued through 2012, or over 11 years. In response to
a court decision in 2010, the Forest Service initiated a
supplemental Environmental Impact Statement. Today, some 5
years later, a draft Supplemental Impact Statement has not yet
been developed for public comment.
H.R. 1937 will significantly improve the permitting
process. Similar to other legislative efforts of commerce, like
the 2012 MAP-21, Moving Ahead for Progress in the 21st Century
Act and the 2014 Water Resources Reform and Development Act,
the bill seeks to streamline the U.S. permitting process
specifically for strategic and critical minerals, without
compromising the process.
The bill will coordinate the actions of Federal agencies to
eliminate duplication, outline the responsibilities of the lead
permitting agency, address unending legal challenges to mine
projects by requiring civil actions to be filed within set time
frames, and establish clear and predictable permitting time
frames. And when I say streamline permitting, the bill does not
advocate skipping of steps, but combining steps and doing
things in parallel, rather than in sequence. This is how
effective permitting managers have completed the process in a
shorter time frame.
I have seen U.S. projects that have completed the NEPA
process within the 30-month period proposed in this
legislation. Some recent examples: the BLM completed an
environmental assessment for an expansion of the Rochester mine
in Nevada in 16 months; an EIS for the Pan mine in less than 2
years; and an EIS for the Hycroft mine in less than 20 months.
In establishing a firm timeline to complete the NEPA
process, the bill does not ask the permitting agencies to do
something that has not already been demonstrated to be possible
in the United States, as well as major mineral-producing
countries of Canada, Australia, and Chili. H.R. 1937 is
legislation that will encourage and facilitate the domestic
production of strategic and critical minerals without lessening
the robust environmental standards of the United States.
On behalf of Hecla Mining, I thank you for this opportunity
to testify, and appreciate your consideration of these
comments.
[The prepared statement of Mr. Russell follows:]
Prepared Statement of Luke Russell, V.P. External Affairs, Hecla Mining
Company
introduction
Chairman Lamborn, Ranking Member Lowenthal and members of the
committee, my name is Luke Russell and I am V.P. of External Affairs
for Hecla Mining Company. Hecla Mining Company (NYSE:HL) is the oldest
precious metals mining company in North America and was established in
1891 in northern Idaho's Silver Valley. We are the United States'
largest primary silver producer and third largest producer of lead and
zinc. We currently have U.S. operations and projects in Alaska, Idaho,
Colorado and Nevada and just last week completed the acquisition of the
Rock Creek project in Montana.
My experience includes more than 30 years in mine permitting, mine
reclamation and environmental compliance in several western states
including: Idaho, Alaska, Nevada, South Dakota, and now Montana. In
addition I have permitted mines internationally in Chile, Argentina,
New Zealand, Mexico and Bolivia. I have served as Trustee and past-
President of the American Exploration & Mining Association. In addition
to my industry experience I also have worked inside government serving
as Remediation Manager with the Idaho Department of Environmental
Quality.
In my experience, permitting a mine in the United States is by far
the most challenging. This is not due to a lower international standard
of environmental requirements--the countries listed above have
environmental standards that are at least as protective as the U.S.
standards. What these other countries have are permitting processes
that are much more clearly defined and that have the expectation that a
decision will be made within a given time frame. The U.S. process is
fraught with duplication, inefficiencies, a lack of reasonable time
frames/sideboards, a lack of coordination among Federal agencies and
multiple, never-ending litigation. It is by far the most arduous and
tortuous process in the world. While the rule of law generally favors
the Americas, this long and uncertain process is no incentive to invest
here.
Time is money and unnecessary delays and duplication in the
permitting process strands capital and discourages long-term
investments in producing domestic minerals. Compare our exceedingly
long permitting time with Chile, Canada and Australia where the average
permitting time is between 2 and 3 years while incorporating
essentially the same environmental and engineering standards as the
United States. If land managers and environmental regulatory
professionals in these countries can get the job done in 2 to 3 years,
so can the United States.
Demand for minerals is also increasing across the spectrum of
modern technology from electronics and electrical systems applications,
aerospace and defense, to the energy industry. For example, a modern
computer chip contains more than half of the elements in the periodic
table and even though they may be present in very small amounts, each
is essential to function and performance.\1\ My daughters would say
their phone is strategic and critical to their way of life, and 40 key
minerals in their smartphones includes tantalum, tungsten, copper,
iron, nickel, aluminum, tin, silver, chromium, gold, and palladium and
nine separate rare earth elements.
---------------------------------------------------------------------------
\1\ T.E. Graedel, E.M. Harper, N.T. Nassar, and Barbara K. Reck: On
the Materials Basis of Modern Society, School of Forestry and
Environmental Studies, Center for Industrial Ecology, Yale University,
October 2013.
---------------------------------------------------------------------------
Many of the uses of critical and strategic minerals overlap and
converge in the field of renewable energy. Wind turbines would not be
possible without mined materials. Just one turbine contains 335 tons of
steel and almost 5 tons of copper. Similarly, solar panels cannot be
made without mined materials like steel, copper, silicon, aluminum and
the unique metal that we at Hecla produce, silver.
Silver has the highest electrical and thermal conductivity of all
metals, and is the most reflective. These physical properties make it a
highly valued industrial metal, especially when used in solar cells.
Silver paste is actually a primary ingredient in 90 percent of the most
common solar panels. Overall, the solar industry uses about 5 percent
of the world's annual silver supply, or an estimated 52.4 million
ounces. However, as demand for solar increases, especially in China,
the demand for silver used in solar energy could double. As a result it
is estimated the solar industry may use 100 million ounces of silver
this year.\2\
---------------------------------------------------------------------------
\2\ http://www.usatoday.com/story/money/markets/2014/08/29/no-
silver-no-solar/14756397/.
---------------------------------------------------------------------------
The United States has become increasingly dependent on foreign
sources of strategic and critical minerals and this vulnerability has
serious national defense and economic consequences. According to the
U.S. Geological Survey, the United States is more than 50 percent
import reliant for 43 critical minerals (the United States is roughly
40 percent import reliant on crude oil) and 100 percent import reliant
for 19 critical and strategic minerals despite having the third largest
source of mineral wealth in the world. Our growing dependence on
imports leaves many key domestic industries unnecessarily vulnerable to
disruptions from extended, complex and fragile supply chains. The
length of time it takes to secure permits in the United States is a key
reason behind this dependency on foreign sources.
permitting delay
The United States has one of the longest permitting processes in
the world for mining projects. A 2014 Behre Dolbear report ranking the
25 leading mining countries noted that permitting delays are the most
significant risks to mining projects in the United States with an
average 7- to 10-year period required before mine development can
begin. Consequently, the United States lags in attracting job-creating
exploration dollars. The Metals Economics Group reports that the United
States, despite having significant mineral resources, attracts only 7
percent of total worldwide exploration dollars. In the mid-1990s, the
United States attracted approximately 20 percent of worldwide
exploration dollars. Permitting delays and security of tenure issues
are the major reasons why the U.S. share has dropped by two-thirds.
To be clear, valid concerns about environmental protection need to
be fully considered and addressed. At the same time, frivolous matters
should not serve as an excuse to trap mining projects in a limbo of
duplicative, unpredictable and endless review without a decision point.
We should not confuse the length of the process with the rigor of
review.
I would like to share a few examples of what I think are lengthy
permitting processes I have been involved with.
Greens Creek--Alaska
Hecla is one of the largest private employers in southeast Alaska,
and our Greens Creek mine is responsible for approximately 415
permanent, full-time jobs. The mine near Juneau, Alaska started
production in 1989 producing almost 200 million ounces of silver so far
and will produce more than 100 million additional ounces over its
remaining life. Over 7.8 million ounces of silver were produced last
year and is projected to produce a similar amount this year. The mine
has provided over \3/4\ billion dollars in economic contributions to
the southeast Alaska economy in just over the last 5 years alone. It is
one of the world's largest silver mines and produces gold, lead and
zinc in important quantities as well. The mine has had an exemplary
environmental record and is located, in part, in a national monument
area devoted to the largest concentration of brown bears in the world.
With this history and a plan to only expand the existing tailings
facility, one would expect the receipt of the permits to be done
quickly. In 2010 Hecla submitted an application and the U.S. Forest
Service (USFS) commenced preparation of an environmental impact
statement (EIS). Understanding how long permitting can take the
application was submitted 5 years before construction had to begin to
avoid shutting down the mine due to lack of tailings capacity.
Interestingly, the NEPA process could not begin until approval was
received from the Secretary of Agriculture's office in Washington, DC.
This step had not been required in any of the previous permitting
efforts at the mine.
The final EIS was issued in the third quarter of 2013 and following
appeals the ROD was finalized in December 2013. However, all the other
required state and Federal permits, chiefly the 404 permit from the
Corps of Engineers, were not received until the first part of 2015 or
about 5 years after original permit submission. The final EIS selected
alternative approved only an 18 acre expansion of the 62 acre existing
facility even though the company had proposed a 150 acre expansion.
This decision allows only about 9-10 more years of mining. As the
current reserves extend the mine life beyond this time, this chosen
alternative will lead to additional time consuming, costly and
unnecessary bureaucratic processes. Thus, the company is being forced
to already begin the planning process for its next permitting effort
because of the long permitting lead times required.
Kensington Mine--Alaska
Prior to working with Hecla, I worked with Coeur Mining which owns
the nearby Kensington mine in southeast Alaska. Permitting of the
Kensington mine started in 1988. In July of 1992, the USFS approved a
Plan of Operations for the Kensington Gold Project--a 4-year permitting
effort. The plan called for underground mining and surface facility
construction for ore processing (via cyanidation) and other ancillary
operations. The mine did not receive all Federal permits due to
regulatory process delay and did not proceed.
In 1994, the company submitted a revised plan of operation designed
to reduce the environmental footprint and address water quality
concerns and in August 1997, the USFS approved a revised Plan of
Operations--an additional 3 years permitting effort. The plan still
called for underground mining but changes to the tailings management
system were proposed. While the required permits were obtained the
price of gold had decreased and so the project economics were no longer
favorable to commence construction.
In November 2001, the company submitted a plan amendment to the
USFS for its approved 1998 Plan of Operations. The amendment again
modified the proposed tailings management system. In December of 2004,
the USFS finalized the Supplemental Environmental Impact Statement and
issued the Record of Decision for the modified Kensington project.
In the first half of 2005, the other state and Federal permits were
obtained and construction commenced--another 4-year permitting effort.
Permit appeals and litigation followed. The administrative appeal to
the USFS was denied, which then lead to a lawsuit filed with the
District Court. Plaintiffs lost in District Court but an appeal to the
9th Circuit led to a stay of construction in 2006 and more than 100
workers were idled. The 9th Circuit then overturned the District Court.
The case was then appealed to the U.S. Supreme Court which heard the
case in early 2009. In June of that year, the Court ruled 6-3 in favor
of the agencies and the company was able to resume construction. The
first gold production occurred in 2010.
The permitting process for the Kensington project lasted nearly 16
years. The final 4-year leg of the permitting process was then followed
by a 4-year period of litigation. The permitting and litigation delay
came at significant cost to the company and the community of Juneau due
to uncertainty in the project and temporary loss of high paying jobs
during the construction period.
Rock Creek--Montana
Hecla recently acquired the Rock Creek project in northwestern
Montana. Rock Creek is the largest undeveloped copper-silver project in
the United States containing an estimated 220 million ounces of silver
and over 2 billion pounds of copper. The project has a long permitting
history dating back to the first application for a mining permit in
1987. Following a change in ownership of the project the Forest Service
and Montana Department of Environmental Quality (DEQ) jointly completed
a FEIS and Record of Decision (ROD) in 2001.This was followed by
several appeals and litigation. The Fish and Wildlife Service (FWS)
withdrew its Biological Opinion (BO) in 2002 to settle a lawsuit
causing the USFS to withdraw its part of the 2001 ROD. A new BO and ROD
were issued in 2003. Once again numerous appeals and litigation were
filed, leading to a new BO in 2006 which was further supplemented in
2007. Additional litigation followed and in 2010 the U.S. District
Court confirmed the Biological Opinion but remanded the 2003 FEIS back
on to the Forest Service on very narrow NEPA procedural issues for
further action. Litigants appealed the BO decision to the Ninth Circuit
Court which in 2012 confirmed the agencies decision.
Following the 2010 District Court decision the Kootenai National
Forest commenced a Supplemental Environmental Impact Statement (SEIS)
review to respond to the U.S. District Court Decision on the very
narrow remanded NEPA issues. Now, after 5 years the Forest Service has
still not yet released a draft SEIS for public comment.
why the permitting process is so slow
In my experience, permitting delays are frequently caused by
ineffective agency project management, unnecessary bureaucratic red
tape, inefficient workforce issues within the Bureau of Land Management
(BLM) and U.S. Forest Service (USFS), and multiple appeals and
litigation.
Poor project management skills by Federal agencies: the management
of the multi-faceted aspects of NEPA for a mining project requires good
project management skills. The ability to develop a work breakdown
structure, schedule assigned responsibility and hold people accountable
for deliverables. A successful project has consistency in management--a
good project manager, who stays with the project.
Training on minerals and mining and NEPA process: many Federal
agency resource professionals are experienced in grazing, timber and
recreation, but are not informed on minerals and mining development.
Additional training on the NEPA process and the role of lead agency is
critical to improving the Federal permitting process. The lead agency
must lead; in many cases I have seen it defer to cooperating agencies
or other stakeholder interests, instead of taking charge and leading
the permitting process. H.R. 1937 addresses this inefficiency without
compromising environmental standards.
Fear of Litigation: We often hear BLM and USFS say they must make
these documents legally ``bullet proof.'' This makes all issues
potentially significant which is counter to NEPA which clearly
envisioned the lead agency following scoping would focus on those truly
significant issues that could affect the environment (40 CFR 1502.2).
Litigation: Many mining projects ``die from a 1,000 cuts'' through
multiple appeals and litigation. The Rock Creek example illustrates how
litigation can delay and string out project development. Anti-mining
groups have sued multiple times and continue to litigate on ESA and
NEPA issues in separate litigation efforts. This legal process grinds
down both the agencies that must defend their permitting decisions and
the company's in hopes they will simply walk away from the project.
While the company has millions of dollars and hundreds of high-paying
jobs at risk, project opponents risk nothing with a chance to profit
significantly by recovering their attorney fees through the Equal
Access to Justice Act (EAJA). H.R. 1937 addresses this inequity by
providing that all issues must be litigated in one lawsuit.
Inefficient personnel system: Unfortunately, too often there are
changes in management personnel during the project, changes in District
Rangers, Forest Supervisors, BLM District Managers and with the Corps
of Engineers all which leads to re-education, re-evaluations and loss
of time in the permitting process. In addition, simply staffing a NEPA
process can be difficult. For example, the Rare Element Resources
project in Wyoming required over 11 months to simply get an EIS project
manager assigned to the project. Clearly a more efficient personnel
system can be implemented to get people in place to manage projects.
This factor is compounded by the fact that in the USFS performance
reviews, promotions and raises do not include an employees' performance
in managing mineral projects.
Federal Register Notice Delay: Substantial delays result from a BLM
Instruction Memorandum (IM) issued on December 23, 2009 (IM 2010-043)
requiring all Federal Register Notices be sent to the BLM Washington
Office for review and approval prior to publication in the Federal
Register. This IM also implemented a 12- to 14-step review and approval
process that is taking approximately 4 months per Notice, prior to
publication. Notices are required for intent to start the NEPA process
and public scoping, for a draft EIS and the final EIS. This Federal
Register notice process can add almost a year to the permitting
timeline for a simple administrative notice filing. Prior to 2000,
these routine notices were processed and published in 30 to 45 days.
how h.r. 1937 can help improve a broken system
H.R. 1937 is well thought-out legislation that will encourage and
facilitate the domestic production of strategic and critical minerals
without lessening the robust environmental standards of the United
States. H.R. 1937 will address key issues behind the delay in the
permitting process:
Includes domestic mines that provide strategic and
critical minerals within the scope of ``infrastructure
projects'' as described in Executive Order 13604, the goal
of which is to significantly reduce the review and
permitting time frames for infrastructure projects;
Specifically the objective of this executive Order includes:
Reviews and approvals of infrastructure projects can be delayed due
to many factors beyond the control of the Federal Government, such as
poor project design, incomplete applications, uncertain funding, or
multiple reviews and approvals by state, local, tribal, or other
jurisdictions. Given these factors, it is critical that executive
departments and agencies (agencies) take all steps within their
authority, consistent with available resources, to execute Federal
permitting and review processes with maximum efficiency and
effectiveness, ensuring the health, safety, and security of communities
and the environment while supporting vital economic growth.
To achieve that objective, our Federal permitting and review
processes must provide a transparent, consistent, and predictable path
for both project sponsors and affected communities. They must ensure
that agencies set and adhere to timelines and schedules for completion
of reviews, set clear permitting performance goals, and track progress
against those goals. They must encourage early collaboration among
agencies, project sponsors, and affected stakeholders in order to
incorporate and address their interests and minimize delays.\3\
---------------------------------------------------------------------------
\3\ https://www.whitehouse.gov/the-press-office/2012/03/22/
executive-order-improving-performance-federal-permitting-and-review-
infr.
Addresses permitting delays for strategic and critical
mineral development by coordinating the actions of Federal
agencies to eliminate duplication, bureaucratic
inefficiency and decade-long delays without compromising
---------------------------------------------------------------------------
environmental protection; and,
Outlines the responsibilities of the lead permitting
agency to ensure efficient permitting such as establishing
binding time frames, coordinating with other agencies,
relying on existing data, establishing any required
financial assurance and allowing case-by-case adoption of
the functional equivalence doctrine in lieu of separate
NEPA analysis;
We encourage the Federal agencies to consider the Alaska Large Mine
permitting coordinator approach as an example of a state process that
works to help streamline the permitting timeline while maintaining the
integrity of the process. This provides a coordinated, efficient
approach to mine permitting and oversight that benefits from multi-
disciplinary expertise of team members to enable the public, agencies
and applicant to view the project as whole. The large mine permitting
coordinator participates in the NEPA scoping process, participates in
public meeting and public hearings, and approves baseline data
collection plans.
Attachment 1 illustrates how the large mine permitting approach in
Alaska was designed to ensure the processes are done in parallel rather
than in sequence.\4\ As permitting requirements continue to evolve,
this process ensures all steps are completed but in a parallel manner
that streamlines the process and reduces duplication and inconsistency.
When we say streamline permitting, it is these sort of administrative
approaches that can greatly reduce the permitting time frame with no
impact on the quality of the evaluation. We are not advocating skipping
of steps, but combining steps and doing things in parallel rather than
in sequence. This is how effective NEPA project managers have completed
the process in a shorter time frame.
---------------------------------------------------------------------------
\4\ http://mric.jogmec.go.jp/kouenkai_index/2010/
briefing_100721_3.pdf.
Establishes clear timelines to complete the permitting
process.
While my experience includes examples of very long permitting
timelines, I have also been involved with, and seen, projects that have
completed the NEPA process within the 30-month period proposed in this
legislation. Some recent examples:
-- The BLM completed an Environmental Assessment for an expansion
for the Rochester mine in Nevada in about 16 months. Key
issues included groundwater quality and evaluation of a pit
lake or pit backfill,
-- The USFS completed an Environmental Assessment for the Mt.
Hamilton mine in Nevada in about 17 months. Key issues
included geochemistry, reclamation and Sage Grouse,
-- The BLM completed an EIS for the Pan mine in Nevada in less
than 2 years. Key issues were Sage Grouse and groundwater,
and,
-- The BLM completed an EIS for the Hycroft mine in Nevada in less
than 20 months. Key issues included quality and quantity,
visual effects and cultural resource.
In establishing a firm timeline to complete the NEPA process the
bill does not ask the permitting agencies to do something that has not
already been demonstrated as achievable in the United States as well as
major mineral producing countries Canada, Australia and Chile.
Addresses the Department of Interior's bureaucratic
Federal Register review process for NEPA notices by
delegating processing of such notices back to state
offices; and,
Aims to reduce delays posed by litigation over permitting
decisions by requiring challenges to be filed within 60
days of the final agency action in a single challenge and
eliminates the ability of project opponents to recover
attorney fees through EAJA.
conclusion
H.R. 1937 is legislation that will encourage and facilitate the
domestic production of strategic and critical minerals without
lessening the robust environmental standards of the United States. On
behalf of Hecla Mining Company we appreciate the opportunity to testify
here today and thank you for consideration of these comments.
ATTACHMENT 1
Alaska Large Mine Environmental Permitting and Oversight Process
July 21, 2010--JOGMEC--Tokyo, Japan
Slide #31
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
.eps__
Mr. Cook. Thank you very much. The Chair now recognizes Mr.
Kalen to testify.
STATEMENT OF SAM KALEN, WINSTON S. HOWARD DISTINGUISHED
PROFESSOR OF LAW, CO-DIRECTOR, CENTER FOR LAW AND ENERGY
RESOURCES IN THE ROCKIES, UNIVERSITY OF WYOMING COLLEGE OF LAW,
LARAMIE, WYOMING
Mr. Kalen. Thank you, Mr. Chairman, members of the
committee, thank you for the opportunity to appear before you
today. As a former attorney at the Interior Department, a
private practitioner, and presently as a law professor, I am
particularly interested in the management of our Nation's
public lands. Today my testimony focuses on three principal
issues.
First, while I appreciate the important objective of
promoting economic and national security interests and believe
that most will agree that mere delay in process for process'
sake is undesirable, careful management of our public lands is
critical. H.R. 1937, rather than reforming our public land
management system to ensure that they remain vibrant and
sustainable, could do the converse. For example, its approach
toward NEPA, or by mandating as a priority in Section 103 if
the mineral resource development should be maximized. Indeed,
that mandate alone would threaten to disrupt long-settled
principles of Federal land management under, for instance, the
Federal Land Policy and Management Act.
Second, the bill's functional equivalency approach toward
the National Environmental Policy Act is conceptually and
pragmatically problematic. Conceptually, at the outset, the
bill sets forth what it identifies as six critical aspects of
NEPA, and then charges the appropriate agency with deciding
whether those aspects have been satisfied. How that might be
accomplished, though, is uncertain. Courts have struggled for
quite some time with the idea of NEPA functional equivalency.
And, indeed, they have concluded in only a few rare instances,
primarily involving the Environmental Protection Agency, that
the standard has been satisfied. With that said, EPA though is
different, as a consequence of its mission and its programs.
And indeed, EPA, through Section 309 of the Clean Air Act, as
well as the Council on Environmental Quality, have a role in
NEPA's implementation that seemingly could be diminished under
the alternative process prescribed by H.R. 1937.
Pragmatically, though, moreover, it would be quite
difficult for the appropriate agency to make that determination
up front, whether in any particular case, or whether there is a
sufficiently robust alternative process. The agency is charged
with making that determination within 90 days of an
application, provide an explanation for its decision, include
the facts from a record, then show how those facts from the
record justify the agency's decision. Yet, at that juncture in
the process, unless the agency has rendered a generic decision
on a programmatic basis, there will not be any adequate record
for the decisionmaker to even use.
As such, I would suspect that the litigation risk would be
too great for many to accept. Consequently, it would appear
that the bill would likely trigger Section 102(e), and the
ability of a project proponent to mandate entering into a
schedule. But that standardized schedule and approach is too
optimistic, because it requires too much knowledge before the
process has begun, may be unwieldy in practice, and might
create litigation risk if it were enforced.
Finally, many other aspects of H.R. 1937 would likely
become problematic for the agencies to implement, and then for
the judiciary to review. Take for instance the approach toward
what constitutes strategic and critical minerals. The bill
provides no definition, only a process that allows the agency
to determine whether any ``mineral,'' a term that is not as
self-defined as necessary to achieve one of the four listed
objectives.
I would add here that the hearing memo correctly notes that
the process would allow for including even such things as sand
and gravel. Yet neither, under Federal law nor most state laws,
say sand and gravel are considered a ``mineral.'' With that
said, however, the bill does not address how the agency will
make that type of determination. On a case-by-case basis? On a
programmatic basis? At what intervals, or what type of public
input, if any? And if the determination is made, what then?
If, for instance, the determination is rendered in a
particular mineral exploration or mine permit application, then
it might be an issue that could surface in any possible
lawsuit, in which case a court might invalidate the decision
and render the particular use of the H.R. 1937 process invalid,
and force the agency and the applicant back to the drawing
board. If the determination is made generically, outside any
particular project, will that determination be reviewable
separately and independent of the mineral exploration or mine
permit? If so, then on what basis will it be reviewed by the
courts? And with what administrative record? For these reasons
alone, if I were advising a client, I might even suggest that
it would not be worth the litigation risk to proceed under the
H.R. 1937 process.
Again, I thank you, Mr. Chairman and the committee, for
allowing me to testify. And I would be glad to answer any
questions that you might have.
[The prepared statement of Mr. Kalen follows:]
Prepared Statement of Sam Kalen, Winston S. Howard Distinguished
Professor of Law, University of Wyoming College of Law
Thank you, Mr. Chairman, for the opportunity to appear before the
Subcommittee on Energy and Mineral Resources of the House Committee on
Natural Resources. My name is Sam Kalen, and I am a Professor of Law at
the University of Wyoming College of Law. I am honored to accept this
committee's invitation to testify on H.R. 1937, the National Strategic
and Critical Minerals Production Act of 2015.
For most of my career, I have focused on the administration of our
Nation's public lands, whether as an attorney in private practice, as
an attorney in the Solicitor's Office of the Department of the
Interior, or more recently as a law professor. Because of this
background, I am acutely interested in proposals that address whether
and how mineral activity occurs on public lands.
My testimony addresses five principal issues associated with H.R.
1937. At the outset, H.R. 1937 has the laudable goal of promoting
economic and national security and interests, and meaningful efforts to
explore reforming aspects of public land management--such as efforts to
examine the 1872 Mining Law--are worthy endeavors. Indeed, Congress in
the Mining and Minerals Policy Act of 1970 employs language about
``foster[ing] and encourage[ing] certain private enterprise[s].'' 30
U.S.C. Sec. 21a. So too, in the policy statement for the Federal Land
Policy Management Act, Congress noted the ``Nation's need for domestic
sources of minerals.'' 43 U.S. Sec. 1701(a)(12). Yet H.R. 1937's
attempt to expand upon these notions is neither workable in
administration nor desirable; indeed, it would most likely be quite
difficult for agencies to implement aspects of H.R. 1937, and the bill,
moreover, risks allowing mining activities on the public lands to
proceed without ensuring that those activities are thoroughly vetted by
the public and reviewed by the appropriate agency or agencies for their
possible adverse effects.
But most importantly whether, where, and how mining occurs is
critical, in order to ensure that the public lands are managed in a
sustainable and environmentally sound manner that protects these lands
for the future, prevents harming areas of ``critical environmental
concern,'' and avoids ``unnecessary or undue degradation.'' 17 U.S.C.
Sec. 1732(b). Mining, after all, can require the use of important and
potentially scarce water resources, can contaminate water resources,
affect wildlife, and cause considerable damage to the landscape. See
generally National Research Council, Hardrock Mining on Federal Lands
27 (1999) (Potential Environmental Impacts of Hardrock Mining); Envt'l
Protection Agency, EPA's National Hardrock Mining Framework (Sept.
1997); see, e.g., South Fork Band Council of Western Shoshone of Nevada
v. U.S. Dep't of the Interior, 588 F.3d 718 (9th Cir. 2009) (discussing
BLM's analysis of groundwater impacts for gold mine); Idaho
Conservation League v. United States, 2012 WL 3758161 (D. Idaho 2012)
(discussing Forest Service's treatment of groundwater impacts from
proposed project). Historically, after all, the Bureau of Land
Management reports that 60 percent of all hazardous waste sites on
public lands have resulted from ``commercial uses''--and roughly 50
percent of those from ``[l]andfills, mines and mill sites, airstrips,
and oil and gas'' activities. BLM, Public Land Statistics 2014 241 (May
2015). See, e.g., Gordon M. Bakken, The Mining Law of 1872: Past,
Politics, and Prospects 82-105 (2008) (one historical account). The
Department, moreover, has been engaged in litigation over cleaning up
public lands, often seeking recovery (when a potentially responsible
party is still available) in the millions of dollars. E.g., U.S. v.
Newmont USA, Ltd., 2008 WL 4621566 (E.D. Wash. Oct. 17, 2008).\1\ Not
surprisingly, therefore, the urgency of reforming the program for
hardrock mining and particularly protecting the public lands from
environmental damage has been widely recognized, at least since the
1970s. See generally Council on Environmental Quality: 8th Annual
Report 89 (1977) (noting then President's request to draft reform
legislation); U.S. General Accounting Office, GAO/RCED-89-72, The
Mining Law of 1872 Needs Revision (March 1989); John D. Leshy, The
Mining Law: A Study in Perpetual Motion (1987); Charles F. Wilkinson,
Crossing the Next Meridian: Land, Water, and the Future of the American
West 57-8 (1992). Indeed, when digesting the Public Land Law Review
Commission's report, almost exactly 45 years ago to the day, the New
York Times reported how ``all mineral interests known to be of value
should be reserved with exploration and development discretionary in
the Federal Government and a uniform policy adopted relative to all
reserved mineral interests.'' Digest of the Commission's Report and
Recommendations on Public Land Use, New York Times, June 24, 1970.
---------------------------------------------------------------------------
\1\ Historically, various regulatory gaps contributed to fewer
controls over operations on the public lands, with statutes such as the
Resource Conservation and Recovery Act including provisions exempting
certain wastes from hazardous waste regulation. See 42 U.S.C. Sec. 6921
et seq., Sec. 6921(b)(3)(C). At least until recently, the Clean Water
Act too had limited ability to affect operations that principally
impacted groundwater and involved simply withdrawals. See Great Basin
Mine Watch v. Hankins, 456 F.3d 955 (9th Cir. 2006) (withdrawals); cf.
Klamath Siskiyou Wildlands Center v. U.S. Forest Serv. (E.D. Cal. 2014)
(noting that withdrawal examined in NEPA document). See generally U.S.
Congress, Office of Technology Assessment, Managing Industrial Solid
Wastes from Manufacturing, Mining, Oil and Gas Protection, and Utility
Coal Combustion--Background Paper, OTA-BP-0-82 (GPO Feb. 1992)
(examining management of solid wastes).
---------------------------------------------------------------------------
Second, H.R. 1937's approach toward the National Environmental
Policy Act of 1969 (NEPA), 42 U.S.C. Sec. Sec. 4321-4347, while
understandably seeking to reduce unnecessary duplication and avoiding
unnecessary delay, presents several issues warranting careful
consideration. Rather than strengthening the ability to protect the
Nation's public lands, it could do the converse. When it passed NEPA,
Congress established an environmental charter that ensured that
proposed major Federal actions ``significantly affecting the quality of
the human environment'' would be examined through a broad lens; and,
while the Supreme Court has since held that the act imposes only
procedural not substantive obligations on Federal agencies, it provides
a now well-trodden procedural path for ensuring that agencies take a
hard look at the environmental consequences of the proposed action,
seek public input, and render informed decisions. To the extent,
therefore, that H.R. 1937 would diminish NEPA's role and function in
assisting the agencies' decisionmaking process for whether, when, and
how activities, such as mining, occur on the public lands is
problematic. Indeed, in one instance where the court rejected a
challenge to an expansion of mining operations, the court nevertheless
emphasized the importance of the NEPA process: ``The NEPA process
worked here as it was designed to work. Plaintiffs, the public, and
other state and Federal agencies had the opportunity to comment on the
mine expansion. As a result of those comments and the agencies'
response, the ultimate action is more protective of the environment
than it would have been without the process.'' Greater Yellowstone
Coalition v. Larson, 641 F. Supp.2d 1120, 1151 (D. Idaho 2009), aff'd
628 F.3d 1143 (9th Cir. 2011). Indeed, the National Research Council
had earlier noted how it believed ``that the NEPA process and its
various state equivalents provide the most useful and efficient
framework for evaluating proposed mining activities.'' National
Research Council, supra at 110.
Third, section 102(b)(1) of H.R. 1937 is likely to create
significant problems by employing a functional equivalence standard for
satisfying NEPA. This section seemingly allows a waiver of NEPA when
the appropriate Federal agency determines that any Federal agency's
process or any accompanying state process examines six factors drawn
from the NEPA process. This presumably adopts the concept from some
NEPA cases sanctioning avoiding NEPA when the agency's process is
functionally equivalent--albeit it is not clear that these six factors,
moreover, parallel what an adequate NEPA document would explore. The
functional equivalency idea first surfaced with respect to certain
actions by the Environmental Protection Agency (EPA), some of which
were incorporated into legislation.\2\ For these courts, EPA's special
role as an environmental agency presumably influenced their decision,
but even so there often was hesitation surrounding the ``functional
equivalence'' notion. E.g., Merrill v. Thomas, 807 F.2d 776, 781 (9th
Cir. 1986). Courts, therefore, generally declined to extend the concept
beyond EPA, and instead constructed other ideas such as lack of
discretion, ``displacement,'' or congressional intent involving
decisions designed specifically to protect environmental values.\3\ And
EPA, acting pursuant to specific congressional charges, operates quite
differently than land managers who must decide how best to manage,
given the array of considerations, our Nation's public lands. While
many of these decisions may well be problematic, they nonetheless
collectively underscore the importance of applying NEPA to decisions by
agencies other than the EPA or that are not specifically designed by
Congress as intended to protect environmental values. Indeed, when
Congress considered NEPA, a concern by some legislators was whether the
NEPA process could be entrusted to agencies such as Federal land
managers whose mission was not necessarily perceived of at the time as
limited to environmental protection. Yet Congress chose to trust the
agencies, but in doing so relied on NEPA (and invested the Council on
Environmental Quality [CEQ] with certain responsibilities) and shortly
thereafter bolstered its decision by adopting section 309 of the Clean
Air Act affording EPA a role in reviewing environmental impact
statements (EIS)--a function that H.R. 1937 would obviate (along with
possibly the role of CEQ). Consequently, H.R. 1937's provision for
allowing land managing agencies to determine whether another process is
functionally equivalent with the NEPA process is troubling and ignores
Congress' choices in NEPA as well as the judiciary's struggle with
functional equivalence.
---------------------------------------------------------------------------
\2\ Certain EPA actions under the Clean Air Act were an example,
later codified. See Am. Trucking Ass'n v. U.S. EPA, 175 F.3d 1027, 1041
(D.C. Cir. 1999), rev'd and aff'd in by part by Whitman v. Am. Trucking
Ass'n, 531 U.S. 457 (2001); see also Mun. of Anchorage v. United
States, 980 F.2d 1320, 1329 (9th Cir. 1992) (Clean Water Act); W. Neb.
Res. Council v. U.S. EPA, 943 F.2d 867, 871 (8th Cir. 1991).
\3\ Compare, e.g., Douglas Cnty v. Babbitt, 48 F.3d 1495 (9th Cir.
1995), with Catron Cnty. Bd. of Comm'rs, N.M. v. U.S. Fish and Wildlife
Serv., 75 F.3d 1429 (10th Cir. 1996).
---------------------------------------------------------------------------
Fourth, sections 102(e)-(g) of the H.R. 1937 would, likewise, not
only impair some of the goals and objectives of NEPA but also might
become unwieldy. This section apparently seeks to ensure that project
proponents and the appropriate land-managing agency agree to a
structured process for complying with NEPA. For those who have been
involved in such projects, the idea of outlining how a process might
unfold for particular activities has some merit. The difficulty, of
course, is in how to achieve such a result without compromising NEPA
and any other statutory processes and objectives. Take, for instance,
the concept of determining up front the ``scope of any'' NEPA
document--if that document is an EIS then such a process would conflict
with the idea of ``scoping'' under NEPA, where the interested public is
able to assist in exploring the range of issues that should be
addressed. Similarly, while currently the agencies and project
proponents do enter into agreements, such as for funding of an EIS,
those agreements are more limited than what is contemplated by this
section and this section could limit public participation in the
process. Or, section 102(e)(1) would require an agreement on whether
and what type of NEPA document to prepare, and yet the decision under
NEPA is ultimately a Federal decision and it is not clear what happens
if the project proponent and the Federal agency cannot agree even
though section 102(e)(1) appears to require an agreement (``shall enter
into an agreement''). Also, section 102(e)(6) would require an
agreement presumably covering consultations under laws other than NEPA,
and yet is not clear how that would occur pursuant to the Endangered
Species Act, the National Historic Preservation Act, or other laws.
Finally, several aspects of H.R. 1937 are potentially vague and
could become problematic in implementation. To begin with, the
definition of ``strategic and critical minerals'' is not established in
the usual fashion for definition-type language and what is included may
too easily change with little defining contours, depending upon broad
determinations by an agency about whether a particular mineral is
``necessary'' for ``national defense,'' or ``for the Nation's energy
infrastructure,'' to ``support'' certain industries, or ``for the
Nation's economic security and balance of trade.'' And, it is unclear
how an agency will make any such determination, whether for rare
earths, solid and hard rock minerals, or even for sand and gravel, and
then how any court would have the ability to review that decision
because the language does not necessarily the leave the court with any
law to apply--thus leaving the decision potentially within the agency's
sole discretion.
A similar problem could surface with the agency's determination
under section 102(b)(2). It will be quite difficult, at the outset, for
any agency to conclude that other processes are functionally equivalent
with the six identified factors in section 102(b), because that would
force the agency to examine and interpret the scope of other
authorities, assess the breadth of those authorities, and conclude that
they mirror the six factors--all within 90 days. And then the agency
would need to document that conclusion in a written finding that,
presently, it is not clear whether that determination would be a final
agency decision immediately capable of judicial review (aside from
whether the matter would be ripe), but nevertheless would likely be
reviewable at some point. And how during this process the agency will
examine ``facts'' in the record before any administrative record is
established is unclear. The following are a few additional
observations:
It is not clear whether section 102(f) was intended to
refer to section 102(d) or 102(e);
Section 102(h) would appear to cap financial assurances
unnecessarily by adopting a potentially unworkable third
party standard that may lead to litigation;
Section 104 on preparing Federal Register notices appears
vague and it is not clear how it would work in practice,
particularly because it would require that the notice
originate in any office where any meeting has occurred,
where--and it is not clear whether some or all--documents
are housed, or the activity has been initiated, and the
requirement to publish the notice within ``30 days after
its initial preparation'' may similarly be unworkable and
not provide sufficient time for intra and/or interagency
review, and could simply delay having the agency prepare in
writing any ``initial preparation'';
Section 203 on intervention as of right would
unnecessarily trump well-defined principles under F.R.C.P.
24, a right that generally most project proponents are
afforded currently under the rule;
Section 205 limiting prospective relief unnecessarily
intrudes into the role of the judiciary, under well-defined
principles for awarding preliminary and injunctive relief,
and could easily cause appellate courts difficulty when
reviewing lower court decisions allegedly violating the
proscription in section 205; and
Section 206 limiting recovery of attorney fees is contrary
to the notion that citizens ought to be rewarded when they
prevail in lawsuits that, in particular, protect
congressionally decided principles--whether in enforcing
agency organic statutes, NEPA, or the APA.
Again, thank you for the opportunity to present my views on H.R.
1937 to the subcommittee. I welcome your comments and questions.
______
Mr. Cook. Thank you very much. The Chair now recognizes Mr.
Green.
STATEMENT OF JEFFERY A. GREEN, PRESIDENT, J.A. GREEN & COMPANY,
WASHINGTON, DC
Mr. Green. Mr. Chairman, Ranking Member Lowenthal,
distinguished members of the committee, thank you for inviting
me to articulate my thoughts on the National Strategic and
Critical Minerals Production Act of 2015, a much-needed bill
that will help improve our Nation's strategic and critical
materials policy. In the interest of time, I intend to offer
brief oral remarks, and ask that my written testimony be
incorporated into the record.
Having dedicated my career to national security issues,
specifically supply chain security and defense industrial-based
challenges, I firmly believe strategic and critical materials
are essential to our national security. Over the past 5 years,
the U.S. Government has adopted meaningful strategies to
support the substitution and recycling of strategic materials,
and undertook several successful trade actions. Unfortunately,
far too little has been done to support production of these
materials, which in my view creates unacceptable national
security risk.
The bill under consideration today will help balance the
need to support production with appropriate oversight and a
streamlined regulatory regime. This balance, absolutely
essential to ensure the political viability of the bill,
ultimately will help improve our national security environment.
Without a doubt, our Nation is increasingly reliant on imports
for a growing number of materials that are critically important
to the basic functionality of U.S. weapons systems, from armor
plating to electro-optical targeting, from precision-guided
munitions and stealth technology to ship drives.
To see the adverse impact of over-reliance, we need only to
look at our Nation's recent experience. In my written
testimony, I provide three real-world examples of the nexus
between strategic materials and national security. Looking at
germanium, tantalum, and rare earths--in many of these cases
associated with these materials we have seen potentially
unreliable foreign nations exert near-monopolistic power, using
state-owned enterprises to enforce export embargoes and to
manipulate prices.
In other cases, materials come from extremely violent
regions with ongoing structural challenges and problematic due
diligence schemes. Tantalum, designated a conflict mineral
within U.S. law, is one such material.
In all of these cases, import over-reliance, coupled with a
supply chain interruption, either accidental or deliberate, can
create real national security risk. In light of this nexus
between strategic materials and national security, it only
makes sense that the United States should take common-sense
steps, such as those in the bill under consideration.
Streamlining the permitting process and reducing bureaucratic
red tape is one simple step that can remove a self-inflicted
wound when it comes to strategic materials. The economics to
keep competing with the rest of the world are tough enough
without self-imposed artificial barriers to entry.
That said, removing those barriers upstream, such as mine
permitting, is just a first step. We also need to create an
environment that promotes competitiveness at each value-added
downstream step of the supply chain. From basic research to
recycling, opportunities abound to support production of
strategic and critical materials throughout the supply chain.
This bill offers a chance at increasing our competitiveness and
mitigating this growing national security risk. That requires a
bipartisan and bicameral commitment to an approach that
recognizes that these issues have key implications for our
national security.
Again, I thank the Chairman, Ranking Member Lowenthal, and
members of this committee, for allowing me to offer my
thoughts. I stand ready to answer any questions you may have.
[The prepared statement of Mr. Green follows:]
Prepared Statement of Jeffery A. Green Esq., President, J.A. Green &
Company
Chairman Lamborn, Ranking Member Lowenthal, and distinguished
members of the committee, thank you for inviting me to offer my
thoughts on H.R. 1937, the National Strategic and Critical Minerals
Production Act of 2015. I have spent the last two decades in the
private sector and government--including on active duty in the U.S. Air
Force, in the Air Force Reserve, and as a senior professional staff
member on the House Armed Services Committee--focusing on national
security issues. In that time, I've observed the nexus between our
natural resource policy and national security.
Of particular concern to me is our import reliance on a growing
number of strategic and critical materials. These materials often are
produced in small quantities with opaque markets, and many are
controlled by our Nation's potential adversaries. These strategic and
critical materials are vital and enabling components of many of our
most technologically advanced weapon systems. In recognition of these
risks, the U.S. Government adopted a strategy to promote mitigation
measures such as thrifting, substitution, recycling, and the use of
trade remedies. However, much remains to be done to establish an
environment that supports production of these materials in an
increasingly competitive global market.
Thus, I endorse the legislative intent underpinning the National
Strategic and Critical Minerals Production Act of 2015. This bill
represents an essential component in a strategic and critical materials
policy that balances production and regulatory concerns.
the link between strategic materials and national security
As the committee considers the bill, I strongly recommend a focus
on the implications of our increasing reliance on imports of strategic
and critical materials. This import reliance creates a real national
security risk.
Many of these materials, including the case studies that I will
explore later in this testimony, play a critically important role in
the basic functionality of essential U.S. weapons systems, as well as a
critically important role in the defense industry. First, when
processed, strategic and critical materials provide unique physical
characteristics required by U.S. weapon systems. For example, tungsten
is a very hard metal that has several commercial applications (e.g.,
cutting tools); for the same reason, tungsten also is valuable for
armor-piercing munitions and armor plate--an application it has served
since the Second World War. Other materials, such as beryllium, have
relatively few commercial uses, but military demand in nuclear weapons
and electro-optical targeting systems is significant. Second, in
aggregate, the use of strategic and critical materials in U.S. weapons
systems allows our Nation to equip, train, mobilize, and sustain modern
military forces with cutting-edge capabilities. Finally, production of
strategic and critical materials naturally creates high-paying jobs,
spanning the value chain from research and development and exploration
to primary extraction and end-of-life recycling. This economic activity
boosts gross domestic product (GDP) and tax revenues to state and local
governments.
Challenges associated with accessing reliable supplies of strategic
and critical materials result in sometimes illogical and
counterproductive business decisions. Because commercial supply chains
generally do not tolerate high levels of risk, commercial companies
often try to economize use of expensive or ``high risk'' materials in
their product development efforts, rather than focus on maximizing the
potential of a materials technology. In other circumstances, internal
research and development dollars are diverted from product development
toward material substitution. As a result, rather than focusing on
utilization of the most advanced materials available to support
innovation, scare research dollars are diverted to support substitution
that can often be a technological step backward.
What truly concerns me is the impact that U.S. reliance of
importing these materials can have on the defense supply chain. Foreign
governments have deliberately disrupted supplies of strategic and
critical materials in peacetime and wartime with remarkable effects,
resulting in severe supply restrictions and prohibitive price
increases.
For example, embargos are a well-known tool used to deprive a
target country of strategic and critical materials by prohibiting the
export or sale of such materials. Select instances involving the United
States include the Soviet embargo of manganese and chromium during the
Berlin Blockade (1949) and the Chinese embargo on rare earth minerals
(2010). Preclusive purchasing also is a form of economic warfare
whereby one country purchases resources for the purpose of reducing the
ability of a target country to purchase the same resources. All other
variables constant, this action increases demand, prices skyrocket, and
supply shortages may result.
real-world examples of national security risks
We have learned about the national security risks of over-reliance
on importing strategic and critical materials and supply chain
interruptions through experience with numerous materials including
germanium, tantalum, and rare earths. For example, germanium is a rare
metal that occurs in very low concentrations in the Earth's crust.
Because of this rarity, germanium is recovered as a byproduct of zinc
or coal mining. Today, the largest mineral producers of germanium are
in China, Canada, Russia, and, to a much lesser extent, the United
States. However, companies ship much of this germanium mineral
concentrate to Russia and China for processing into ingots and other
high value-added products. The combination of limited availability of
germanium concentrates and high prices for germanium has led to
significant amounts of germanium recycling outside of China and Russia
as one risk mitigation measure and business opportunity. Nevertheless,
at this time these programs are unlikely to produce a sufficient amount
of recycled material to meet our national security needs.
From a military perspective, the most relevant germanium-related
products include fiber optics, infrared optics, and solar cells. Nearly
every surface vessel and fixed- and rotary-wing aircraft in the U.S.
arsenal has large, forward-looking infrared systems or search-and-track
systems. Many aircraft also carry ``heat-seeking'' missiles, which
contain germanium lenses. In addition, many small arms and light
weapons sights include infrared optics, and U.S. military satellites
use highly efficient germanium-based solar cells. These military
applications formerly accounted for the vast majority of the U.S.
market, but now infrared optics and solar products represent about half
of U.S. demand.
The risks associated with the germanium market are two-fold. First,
there is generally limited primary production of germanium, and to the
extent that it occurs, much of that material is redirected to smelters
in China and Russia. A great deal of the secondary materials market
(i.e., scrap) meets a similar fate because: (1) it is cheaper to
conduct these activities in China and Russia and (2) Chinese and
Russian companies bid very aggressively for such material when it
becomes available. Second, even though companies based in the United
States and NATO countries have advantages in the high value-added
manufacturing of germanium components, their competition in Russia and
China consists of state-owned enterprises that simultaneously receive
millions of dollars per year in price subsidies and other government
grants to support downstream research and development. As these
companies' product lines mature, it is likely that much of China's and
Russia's current semi-finished germanium exports will be consumed
domestically.
Tantalum is a very hard metal that is highly resistant to corrosion
and deformation at high temperatures. Like many other metals, tantalum
can be extracted by typical industrial methods, such as underground or
open pit mining. However, because of tantalum's natural hardness,
artisanal mines are very common. At some deposits, the gangue material
around tantalum-bearing minerals has eroded over the past millennia,
leaving a relatively high-grade concentrate at surface. Artisanal
collection and beneficiation of the latter is typical of Central
African and some South American tantalum mines.
In addition to the characteristics noted above, tantalum also is an
excellent conductor of electricity, and nearly 75 percent of tantalum
demand is focused on electronic materials and capacitors. As such,
tantalum capacitors are one of the key building blocks of nearly every
piece of high-tech equipment operated by U.S. armed forces. Separate
from electronics, another important demand segment for tantalum is the
turbine engine market, particularly for single-crystal nickel
superalloys. In third-generation nickel superalloys, tantalum content
ranges from about 6 percent to 8 percent. Smaller military applications
for tantalum include explosively formed projectiles in anti-tank
missiles.
The principal risk associated with the tantalum supply chain lies
at the furthest upstream portions of the supply chain, and under the
Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-
203), tantalum is a conflict mineral. According to U.S. Geological
Survey statistics, more than two-thirds of global tantalum production
emanates from the ``covered countries'', which include the Democratic
Republic of Congo and those countries that border it. Though there are
many public and private sector initiatives aimed at alleviating this
problem, extreme violence in the region and ongoing structural problems
within upstream due diligence schemes remain highly problematic and may
result in some future supply disruption.
Rare earth materials consist of 17 elements (yttrium, scandium, and
the lanthanide series). With regard to U.S. national defense, rare
earth elements are a force multiplier. The aerospace industry uses
yttrium for the investment casting of titanium parts, and yttrium-based
ceramics act as thermal barrier coatings in jet engines. Yttrium,
neodymium, and dysprosium are additives to magnesium alloys that
compose the transmission and gearbox casings for fixed- and rotary-wing
aircraft. When one of these aircraft elects to place a munition on a
target, the fin actuators and seeker head of that munition likely will
be powered by neodymium-iron-boron or samarium-cobalt magnets. If that
munition is laser-guided, a target designator using a neodymium-doped
yttrium-aluminum garnet may be used. If that munition uses radar
guidance, then the microwave-sensing devices incorporated in that
munition likely will be powered by samarium-cobalt magnets.
The primary concern associated with the rare earth supply chain is
the near complete dominance of China at every stage of the value chain.
The Chinese rare earth industry is in the midst of consolidation into
six large, state-owned enterprises, which receive considerable direct
and indirect government subsidies and benefits that, like germanium,
are targeted at downstream, valued-added manufacturing. Moreover,
prolonged inactivity within the U.S. industrial base already has led to
a massive intellectual capital deficit; even now there is a very
limited pool of experienced rare earth plant operators and engineers
outside of China. Though the use of rare earths in defense applications
is relatively minor in volume, their criticality to the functionality
of many key weapons technologies is indisputable, and the dominance of
Chinese supply remains virtually unchanged nearly 5 years after the
2010 embargo.
conclusion
These examples--germanium, tantalum, and rare earths--illustrate a
continuum of risk to the defense industrial base as a result of
strategic and critical material supply chains. In the case of tantalum,
the central risk is isolated at the mine site and the trade routes
along which those materials flow into the global market. For germanium,
upstream mining risk is showing signs of creeping into downstream,
value-added manufacturing segments. In the rare earth sector though, we
continue to witness the complete dominance by China of an enabling
technology for many weapon systems.
To date, the U.S. Government has initiated a number of programs
that address these risks focused on increased due diligence, trade
enforcement, research and development grants for substitution and
recycling, optimized material use, and a dogged belief that the free
market will diversify the supply chain. As the rare earth market shows,
the global market for strategic and critical materials is highly
competitive, with often insurmountable barriers to entry. Therefore, a
myopic and unshakeable belief in market solutions ignores global
reality and national security risk. What has been lacking in our
approach to these challenges is any encouragement of production of
strategic and critical materials in the United States.
The legislation introduced by Congressman Amodei provides common-
sense steps that will allow the United States to streamline the
permitting process and reduce bureaucratic red tape. The economics of
competing with the rest of the world in strategic and critical
materials is difficult enough without self-imposing barriers to entry.
Removing those barriers at points that are upstream in the value chain
is an excellent first step.
It is, however, just a first step. I encourage the members of this
committee to evaluate the definition of strategic and critical
materials, beginning the necessary work that we, as a country, need to
undertake to create a framework for focusing national-level activities
and promoting true competitiveness at each value-added downstream
segment of the supply chain. Only then will our Nation have the
opportunity to increase our competitiveness and mitigate our growing
national security risks associated with import over-reliance.
______
Mr. Cook. Thank you very much. The Ranking Member, Mr.
Lowenthal, has been magnanimous enough--you like that word? You
gave it to me. I can't spell it, but I can pronounce it, I
think--to allow Mr. Labrador--he has to run--for some
questions.
You are recognized.
Mr. Labrador. Thank you, Mr. Chairman. Thank you, Mr.
Lowenthal.
Mr. Russell, again, thanks for being here today. Can you
please explain how Hecla's longstanding experience in northern
Idaho and with the other mines might be helpful in permitting
the Rock Creek mine in Montana?
Mr. Russell. Mr. Chairman, Congressman, Hecla--I think
there are two opportunities there. First, our Lucky Friday mine
in north Idaho is a 70-year-old mine. And what that has done
has made Hecla an integral part of the community of Mullan and
Wallace. And we would bring that sort of perspective to Rock
Creek, which has the potential to be a 30- or 40-year project.
More importantly I think, is our Greens Creek project,
located in southeast Alaska. Greens Creek is located in
Admiralty Island. It is partially located within a national
monument, adjacent to a wilderness, on national forest and
private lands. The mine has been operating for 27 years.
Admiralty Island is home to more brown bears than anywhere else
in the Lower 48, and the mine and the bears--same species as
the grizzlies in western Montana--have operated successfully
together for 27 years. The island is also home to five species
of Pacific salmon, and the mine has operated without
significant impact to the fish. So the issues that we have
dealt with in Alaska on bears and fish and sensitive
environments are the same issues that we would deal with in
Montana, and we would bring those lessons learned and those
experiences to successfully operate the Rock Creek project.
Mr. Labrador. Excellent, thank you. Do the other countries
that you have worked in to permit mines, do they have high
environmental standards?
Mr. Russell. Mr. Chairman, Representative Labrador, most of
the countries that I have worked in do, in fact, have very
similar environmental requirements to the United States. As an
environmental professional, I feel good about that. So the
standards that we have had to meet internationally--Australia,
Chili, New Zealand, Argentina--are essentially the same.
What I have seen in those countries is that their
permitting process distinguishes the environmental compliance.
What you do on the ground--complying with air, water, solid
waste requirements--those are almost the same as the United
States. Their permitting process is much more predictable. You
can get through that process in a 2- to 3-year period. The
agencies, the public process, all goes through that process in
a much, much shorter time. So those countries are more effects-
driven--what is the effect of this? The United States tends to
be more on a process, and we get bogged down on the process
rather than really what the true effects are.
Mr. Labrador. So their high standards are not delaying the
permits.
Mr. Russell. They are not, no.
Mr. Labrador. I lived in Chili for 2 years, and I actually
happened to live in the city of Rancagua for 5 months, which is
where the biggest copper mine in the world seems to be. I don't
know if it still is the biggest copper mine in the world. Tell
me a little bit about Chili. My experience with the Chilean
government is that they worked pretty swiftly through these
permits, and I understand that they continue to do that. Is
that correct?
Mr. Russell. Yes, Mr. Chairman, Representative, yes. My
experience in Chili--the local region in Chili, which would be
like the state or province here, is the primary permitting
agency or authority. Then there is also the national, which is
somewhat similar to Canada. The national will accept or review,
or not accept, the provincial permitting process and review,
but they are involved. Typically, that local province or region
takes the lead. Yet that process is done very predictably, and
it is in a very strong relationship between the applicant and
the government, and then the public being a part of that
process, so----
Mr. Labrador. The Chileans don't really care about their
cities and their environment, right, because they don't have
any kind of tourism, they don't believe in environmental
tourism, isn't that what we seem to hear all the time, that we
need to make things longer, because we actually care about the
environment? It seems to me the people of Chili rely on
tourism, especially environmental tourism, quite a bit. Isn't
that true?
Mr. Russell. That is absolutely true, and we should not
confuse the length of the process to the rigor of the analysis.
I think Chili is an example where it is a rigorous process, it
is just done in a more timely fashion.
Mr. Labrador. In your testimony you mentioned that the fear
of litigation can lead to agency staff addressing every issue
as if it were potentially significant, instead of focusing on
the truly significant issues. Has agency staff specifically
mentioned that fear of litigation to you, and does this fear of
litigation lead them to do better analysis of the issues?
Mr. Russell. Mr. Chairman, Representative, yes. In my
experience, I have heard repeatedly that we have to make these
documents legally bulletproof.
So, under NEPA, there is a requirement that the agencies
look at issues that have a potential significant impact on the
environment, and that those get analyzed. I think, in other
countries, that is what they do. Here in the United States,
because of the fear of any possible stumble in the legal
procedure, the agencies then say, ``We have to look at these
issues in more depth, and more depth, in an effort to try to
build our case, so that when it does go to court, we can defend
it.'' And that is a major cause to permitting delays.
Mr. Labrador. Thank you very much; I yield back my time.
Mr. Cook. Thank you, Mr. Labrador.
Mr. Lowenthal.
Dr. Lowenthal. Thank you, Mr. Chair. And I enjoy calling
you Mr. Chair.
Mr. Kalen, the Hard Rock Mining Reform and Reclamation Act
that Ranking Member Grijalva and I introduced earlier this year
would make a number of reforms to the Mining Law of 1872,
including putting a royalty on hard rock production from public
lands, permanently ending the system that gives away public
lands for less than $5 an acre, establishing strong reclamation
and bonding requirements, giving clear authority to Federal
land managers to reject a proposed mine if the negative impact
of that mine would be too severe, and more.
Do you think that these reforms would be a positive step in
the right direction?
Mr. Kalen. Mr. Chairman, Representative, yes, I do. If we--
--
Dr. Lowenthal. Is your microphone on? Bring it closer to
yourself, Mr. Kalen.
Mr. Kalen. Mr. Chairman, Mr. Representative, sorry. Is this
better?
Dr. Lowenthal. Yes, much better.
Mr. Kalen. Sorry. Yes, I do. I think that, at least since
the early part of the 1900s, we have engaged in re-looking at
how we deal with our public lands and the management of our
public lands. So beginning in the last century, we started to
look at things like leasing, and identifying lands right up
front for what kind of valuable resources--whether it is
recreation, whether it is oil and gas, whether it is coal, or
whether it might be some other kind of potash.
So what we have done historically is, in other programs,
engaged in looking at bidding for those, and then engaged in
leasing with royalties. So the hardrock mining program is
anachronistic. It doesn't really fit with any of the modern
programs. So I think that, without a doubt, it is in need of
reform.
Dr. Lowenthal. Thank you. I want to talk now about the
definition of critical minerals. First I want to go back to
something that Chairman Lamborn mentioned in his opening
statement. He mentioned an answer from last year's witness in a
hearing that we had last July, and a question that I had asked
Mr. Eric Peterson from the Center for Advanced Energy Studies
at the Idaho National Laboratory. In his opening statement, he
implied that the witness said that lead is a critical mineral.
We asked Mr. Peterson to clarify that response. His written
response back made it very clear--he said, ``Due to its rather
large supply with multiple sources, I do not see lead as being
a critical element.'' And, remember in my opening statement,
what I said was that the definition that we use for critical
minerals, what is critical, is based upon the National Research
Council, the U.S. Geologic Survey, the Department of Energy,
all have definitions, and they all say they have to have three
conditions: they have to be essential, there have to be poor
substitutes to be considered critical, and there has to be a
risk to supply chain disruptions, in terms of procuring these
minerals. And it has to meet all three.
In the legislation that we have before us, it changes that
to the minerals that are necessary for national defense, for
energy infrastructure, to support domestic manufacturing,
agriculture, housing, telecommunications, health care, and
transportation infrastructure. That is the definition now.
I ask the members of the panel, is there any mineral that
doesn't--given this new definition, that is not a critical
mineral? And, can you tell me what mineral does not meet
these--that we are giving this expedited process to, because
they are critical? It seems to me that every single mineral out
there now meets the definition. Can you tell me what doesn't?
What would not meet--I am just asking you. What would not meet
the definition of a critical mineral in this legislation?
Mr. Fellows. OK. So, as a mineral economist, I spend an
awful lot of my time looking at that balance between supply and
demand for a whole range of commodities. And you are absolutely
correct in that, in many instances, supply or potential supply
is currently sufficient to meet demand. But what I would point
out is that criticality, or the degree of criticality, changes
over time. Right now, for some minerals, the degree of
criticality is very low. For some minerals it is indisputably
very high. That----
Dr. Lowenthal. Again, I am running out of time, and I just
want to ask you. Name the minerals that do not meet this
definition of critical mineral. Now, given the new definition
that is being proposed of what is a critical element that we
are going to give this expedited--what doesn't meet the
definition?
Mr. Fellows. From the point of view of abundant supply, you
are quite correct that something like sand and gravel is
abundant. So, from that point of view, criticality would be----
Dr. Lowenthal. Thank you, Mr. Chair. I will submit my
questions.
Mr. Cook. Thank you very much.
Mr. Zinke.
Mr. Zinke. Thank you, Mr. Chair. As the lone Congressman
from Montana, I also am a former geologist. First of all, I
commend you for your investment in Montana. I have some
experience, because I grew up in Montana, which is not very
far. And I can tell you, in Sanders County and Lincoln County,
it is dire. The unemployment rate is far above the national
average, somewhere around 7.5 percent. Montana used to be known
as the Treasure State, and now most people refer to it as the
Big Sky State. It is hard to feed a family on sky.
I commend you for this process, the process in my mind
when--during your testimony, you were talking about timelines.
Well, I graduated high school in 1980, when the process first
began. And your reference to 2001 was when 9/11 occurred. I
spent 23 years as a Navy SEAL, and I remember 9/11. Yet we have
been going through a process, and as a country, we have become
process-orientated and not results-driven. When a process is
years and years and years without end, as a business model, how
can one invest in our future? Because it has become so
uncertain that it will ever have a path to get there.
Many of you--I would say there is no one in this room that
has been to the Yaak, perhaps, other than you. The Yaak was the
last place in this country to receive power. And the Yaak is a
distant place in Montana. Matter of fact, there is a TV show
that looks at isolated places in America, and the Yaak is one
of them. Yet there isn't a job to be found in the sea of forest
because our forest policy has not allowed trees to be cut, and
a vast array of natural resources in a place where jobs are
desperately needed, and the process has been shown over and
over to be reasonable, environmentally prudent, and yet you
cannot pull a permit.
So, how long, Mr. Russell, without this bill, do you see an
estimate of when a permit would be given?
Mr. Russell. Mr. Chairman, Representative Zinke, appreciate
your question. The long permitting timeline for the Rock Creek
project is especially frustrating, when just 15 miles away is
the Troy mine that has been there for 30 years, has had no
significant impact on the environment, and is adjacent to the
proposed Scotchman's Peak new wilderness area. Obviously,
mining, environmental values, recreation, and wilderness values
can co-exist.
The Rock Creek project has been 5 years since the
supplemental EIS was started. The Forest Service will not give
us an updated timeline for when that project would see a draft.
Hecla has come into that project with a long-term view. We are
a 124-year-old company. We know it is going to take time. We
are not happy that it is going to take time, but we know that
it will. We have an approach of patience and persistence to
push that project forward. I think if we could get it done in
10 or 15 years under the current system, we would be fortunate,
to answer your question specifically.
Mr. Zinke. So 10 to 12 years is where you think we would
be? I am looking at--let's see, that would make a process of 40
years, from 1980 to when we expected completion on this?
I support this bill because I think we have lost our mind
as a country, when the amount of litigation, and frivolous
litigation, and stacks of it have become where we can't be
prosperous any more. And I commend you for your level of
investment, and we will do whatever we can, from the delegation
of Montana. I speak with one voice from Montana.
[Laughter.]
Mr. Zinke. But thank you, Mr. Chairman.
Mr. Cook. Thank you very much. The rules of the committee
are such that the next senior Member speaks--even though Mr.
Hardy came in earlier, and if you want to be magnanimous and
yield time, I will leave that up to you. I am going to play
Pontius Pilate and recognize Mr. Hice.
Dr. Hice. Thank you, Mr. Chairman. I appreciate this
hearing, as well. And each of the panelists, thank you for
being here.
Mr. Green, let me ask you just a couple of real quick
questions. What do you see are the potential risks to our
national security, if we lose the strategic and critical
materials?
Mr. Green. Mr. Hice, thank you for the question. I think it
is best answered in two parts, both a near-term risk and a
long-term risk. And I think, as a nation, we need to be very
conscious of that.
In the near term, if we look at the rare earth example back
in 2010, we saw what that means: a supply disruption via the
actions of a near-peer adversary, disruption in the supply
chain, quick reactions in the market. But, ultimately, that
settled out. So there are folks, for example in the Department
of Defense, who don't feel that that was a crisis because
supply chains and delivery in my world of weapons systems were
never affected. But the potential was there. So some in the
Administration will say, ``So there is really no issue here.''
But I think we have to be more conscious in thinking about
the longer term. What I mean by that is that if you lose access
to things at the furthest upstream point in the process--so, at
the mine as this committee looks at it--we tend to see, in
markets such as rares, the collocation of the downstream
products closer to the source of supply.
So, in rare earths, you have seen migration of metal
producers to the oxide markets in China, so they can gain
access to that material. Then you have seen the downstream
alloy producers chase the metal. Eventually, the magnet
producers chase the alloy. And that creates a real risk, where
the next steps--which are viable, and we are seeing them now--
are eventually assemblies, components, and ultimately, end
items.
I think that is a horrible long-term prospect for our
manufacturing base, and that goes right back to the intent of
this bill, which is making sure we have access to that first
step in the supply chain.
Dr. Hice. Well, I thank you for that. I take it you are
familiar with the RAND Report that came out a couple of years
ago.
One of the alarming things in that report was China, as you
just mentioned, and how their market share of global production
of critical materials has grown dramatically over the past
couple of decades, from a strong position to an overwhelming
position of dominance.
Do you think that position of China, of dominance, poses a
risk to the United States, be it national security or economic
security?
Mr. Green. Mr. Hice, absolutely. I would liken this to a
disconnect between our policy as a Nation, as it relates to
strategic materials, and the ability of the market to react to
take advantage of opportunity.
So, again, using the rare earth example, there was a time
and a period where prices skyrocketed. You saw 300 to 400
companies try to enter this space in a very small window. Only
one company in the United States was able to capitalize on that
opportunity in the market, and that was a previously permitted
mine.
We have since seen a decrease in the price of those
materials, and that economic window has closed in a 2- to 3-
year period. So we really never had a chance to try to
challenge China's dominance.
Dr. Hice. OK, Mr. Chairman, I would like unanimous consent
to enter the RAND study into the record.
[No response.]
Mr. Cook. Without objection, so ordered.
Dr. Hice. Thank you, sir.
Mr. Russell, let me go to you real quickly. You have been
involved in permitting for a long time, 30 years or so. How
many different types of permits are required for a typical
mining project?
Mr. Russell. Mr. Chairman, Representative, a typical mine
will have 40 or more permits. Our Greens Creek mine has 85
different permits, approvals, authorizations that we have to
comply with.
Dr. Hice. All right. Forty permits is a lot of hoops to
jump through. I am assuming that that process has changed over
the years since you have been involved.
Mr. Russell. Yes, certainly it has. If you kind of go back
to when I started this, in the first early days of NEPA, the
guidance from CEQ would be an environmental assessment that
would take 6 months and be about a 15-page document. An
environmental impact statement would be 18 months and about 150
pages. The----
Dr. Hice. Let me stop you, if I can, right there. I get the
picture. A lot of changes have taken place. But, besides the
permitting, there are some other issues facing the delays and
all the problems. What are some of the other issues facing the
industry?
Mr. Russell. Mr. Chairman, certainly key to development of
mining in the United States is access to the ground. Mineral
withdrawals on the sage grouse, over 10 million acres are being
proposed to be withdrawn from mineral entry. Three million
acres in my state of Idaho--and the state of Idaho has 10,000
acres that have been affected by mining--yet 3 million acres
are proposed to be withdrawn. Yet fire is the main culprit of
risk to habitat for sage grouse.
The second would be the ever-moving goal post of regulatory
requirements. The rules are always changing, and it is
difficult to hit a moving target.
Dr. Hice. Thank you, Mr. Chairman.
Mr. Cook. Mr. Hardy.
Mr. Hardy. Thank you, Mr. Chairman. Mr. Fellows, Mr.
Russell, I have a mine in my district--a number of mines,
actually--but I have a mine called Round Mountain. Are any of
you aware of that place? Round Mountain has been working on a
permit that is still within the envelope that it was permitted
almost 80 years ago. It is not going outside its boundaries, it
is just trying to expand the hole that it is working on. They
have been working for over 2 years to obtain a permit. This is
due to start the closure process of this mine in 2018. Without
the expansion of this, that is close to 2,900 jobs it would
cost our state, some of the highest-paying jobs anywhere.
Can anybody give me an idea why it would take so long to do
an environmental assessment within the same area that has
already been assessed for over 80 years, and why it has taken
the process--anybody care to tell me why that takes so long?
Mr. Fellows. I genuinely struggle to see, from a purely
technical point of view, how it could take that long. There has
to be something procedural going on there.
Mr. Hardy. Engineering has been done, everything has been
done, the study has been done, been submitted. And it is still
within the same envelope. But because of the environmental
process, we continue to have to fight issues like these
studies.
Mr. Russell, we talk about the fact that America's
significant mineral resources currently attract 7 percent of
the worldwide exploration dollars, as compared to 20 percent
back in the 1990s. Given our wealth of materials and minerals,
would it be likely that we might change that back to that 20
percent, which would change the trade deficit we have in this
country today if those were accessible, were expedient in the
process of doing that, and would that attract more of that
exploration?
Mr. Russell. Mr. Chairman, Representative, the short answer
is yes. If there was a more reliable and predictable process
that would encourage and instill confidence to the business
decisions to come to the United States and to be able to say,
``Through this--we know that we can get through a rigorous
process, but once we have that, that the rule of law will hold
in the United States, and that we can rely on our access and
our rights of tenure,'' I believe that the answer is yes.
But because it takes so long, there are other countries
where projects can go to be done and develop quicker, and the
return on investment is much, much quicker. I think the answer
is yes, if we can get through this issue of long, long times to
develop a permit or mine.
Mr. Hardy. Mr. Fellows, do you believe that there is access
to, or are there minerals out there that are of high-grade
quality that could be gone after if the process was a little
quicker, that would solve some of the issues?
Mr. Fellows. Absolutely. One of the key findings from our
study is that right now the United States receives around 7
percent of global exploration expenditure, which was actually a
surprisingly high figure to me, given how difficult it is to
actually advance projects through the development pipeline
here.
What that tells you, I believe, is that geologists, mining
companies, explorers, still regard this country as being highly
prospective for a whole range of minerals. So, the issue really
is not the geological availability of these things here in the
United States, it is really a case of getting them developed.
Mr. Hardy. Thank you.
Mr. Green, in your comments earlier we talked about the
Federal Government. Is it not its responsibility to make sure
of the safety and security of its citizens within its borders
and outside its borders? Isn't it also maybe responsible for
the economic security of individuals?
Mr. Green. I am sorry, I couldn't agree more, and I think
there is a close nexus between that. Having studied the
industrial base and supply chain for many years, a bill such as
this, creating a positive economic--that environment just has a
flowdown effect through the supply chain. And I have worked
with many industries who say, ``It is the business climate in
the United States, it is either the inability to get a permit,
the inability to find downstream customers that are preventing
us from doing the production here, so we are simply going to
have to look to other places.''
So I think the two, economic and national security, are
inextricably linked.
Mr. Hardy. Thank you. I would just like to make a little
statement, real quick. I would like to concur with my colleague
there, Ranking Member Lowenthal, that these are all precious
metals. Gravels, which I work with--there has to be a certain
density in order for a quality gravel to work on a highway or
in concrete. Wyoming itself has one of the hardest materials,
PR&R use it on their tracks all the way across their system.
They haul it for many miles because it is one of the most hard
or dense products, in order to keep the safety of our citizens
through that process. So, thank you.
Mr. Cook. Thank you. The Ranking Member has a short
statement.
Dr. Lowenthal. I just want to say that I found this
discussion fascinating, about some of the issues around mining
in the United States, but this is not germane to the topic of
this bill. This bill was about minerals that are critical and
strategic to the United States, and how they would get an
expedited process. What this bill does is eviscerate that
definition, and says that all minerals now meet that
definition, which I think is really not appropriate. We are
talking about those that really are at risk, that put our
supply chain at risk.
And with that, I again reiterate my opposition to H.R.
1937.
Mr. Cook. Thank you very much. Before I wrap it up, I am a
co-sponsor to this bill. Obviously, I have a different
viewpoint. I am not going to go into my questions, or anything
like that.
Right now I want to thank the panel. Obviously, I was
trying to move things along. They have called votes. I
appreciate your professionalism and your patience in being here
with us. It was a great, great hearing, at least from my
standpoint.
This meeting is now adjourned.
[Whereupon, at 12:16 p.m., the subcommittee was adjourned.]
[ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]
[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S
OFFICIAL FILES]
-- A Study by the Rand Corporation, ``Critical Minerals:
Present Danger to U.S. Manufacturing''
-- A Study by SNL Metals & Mining prepared for The National
Mining Association, ``Permitting, Economic Value
and Mining in the United States''
-- Statement in opposition to H.R. 1937 from various
environmental groups
-- Statement in support of H.R. 1937 from the Interstate
Mining Compact Commission (IMCC)
-- Statement in opposition to the Bill in its current form
from the Honorable Joseph Holley of the Battle
Mountain Band of the Te-Moak Tribe of Western
Shoshone Indians
[all]