**Statement Of**

**Joel Holtrop**

**Deputy Chief, National Forest System**

**U.S. Forest Service**

**United States Department of Agriculture**

**Before the**

**Subcommittee on Public Lands and Forests**

**Committee on Energy and Natural Resources**

**U. S. Senate**

**July 9, 2008**

**Concerning**

**S. 3157: The Southeast Arizona Land Exchange and Conservation Act of
2008**

Mr. Chairman and members of the Subcommittee, thank you for the
opportunity to appear before you today to provide the Department of
Agriculture's view on S. 3157, the "Southeast Arizona Land Exchange and
Conservation Act of 2008."

I will limit my remarks to the provisions of the bill directly related
to National Forest System (NFS) lands and will defer to the Department
of the Interior on provisions relating to the lands managed by the
Bureau of Land Management (BLM).

S. 3157 is a complex land exchange bill that directs the Secretary of
Agriculture to convey to Resolution Copper Mining, LLC (Resolution
Copper) certain lands and interests in the Tonto National Forest,
Arizona, in exchange for private lands and funds to acquire additional
lands in the State of Arizona for management by the Forest Service and
the Bureau of Land Management.

The Department believes that the acquisition of the non-federal parcels
to be managed as part of the NFS would provide protection for riparian
habitat and water rights, archeological sites, two miles along a
permanently flowing trout stream, a year round pond and an endangered
cactus species. The Department provided testimony last November on a
similar bill, H.R. 3301, and we understand that S. 3157 reflects
modifications to that bill in response to various concerns. We
appreciate these changes. However, some concerns remain and we have some
new concerns regarding the new provisions in this bill. In this context,
the Department supports the exchange as well as the valuation
provisions, and believes it is in the public interest, although some
concerns remain regarding the overall bill.

The bill directs the exchange of a 3,025-acre parcel referred to as the
"Oak Flat" parcel from the United States for nine parcels of land owned
by Resolution Copper, six of which would be conveyed to the Department
of Agriculture: the 147-acre Turkey Creek parcel in Gila County; the
148-acre Tangle Creek parcel in Yavapai County; the 149.3-acre Cave
Creek parcel in Maricopa County; the 266-acre JI Ranch parcel the
95-acre parcel referred to as The Pond in Pinal County (all located
within the Tonto National Forest); and the 640-acre East Clear Creek
parcel in Coconino County located within the Coconino National Forest.

As a condition of the exchange, the bill requires Resolution Copper to
convey a 695-acre conservation easement for the Apache Leap escarpment
on lands to be conveyed from the United States to Resolution Copper.
This conservation easement, which would be held by a qualified unit of
government, an Indian tribe, a land trust or certain other
organizations, would provide permanent protection for the parcel from
surface disturbance and ensure future public access and use.

S. 3157 also directs the Secretary of Agriculture to convey to the Town
of Superior, upon the Town's request, the 30-acre town cemetery and
approximately 181 acres adjacent to the Superior airport. In addition,
upon request by the Town, the Secretary shall convey the reversionary
interest and any reserved mineral interest in the 265-acre Superior
airport site already owned by the Town.

S. 3157 includes the 95-acre parcel called The Pond that was not a part
of H.R. 3301, which would be conveyed to the Department of Agriculture.
We understand that this area is currently used by rock climbers and
could accommodate those who are displaced from current climbing areas
that would be conveyed to Resolution Copper. While the Forest Service
agrees that this would be an attractive site for climbers, it lacks the
access and infrastructure to accommodate public use, such as safe
parking, pedestrian access, and sanitary facilities. We would like to
work with the Subcommittee and the bill's sponsor to amend the bill to
require such accommodations be completed prior to the conveyance of the
parcel to the Secretary.

If the value of the Federal land to be exchanged exceeds that of the
non-Federal land in the specified 9 parcels, section 5(b) of the bill
requires that Resolution Copper make a cash equalization payment. The
payment may be greater than the 25 percent limit imposed by Section 206
of the Federal Land Policy and Management Act of 1976 (43 U.S.C.
1716(b). All cash equalization funds are to be deposited into the
Federal Land Disposal Account and could be used for either 1)
acquisition of additional lands from willing sellers within the
hydrographic boundary of the San Pedro River within a 2-year period from
the date of the deposit or 2) the management and protection of
endangered species and other sensitive land or environmental values in
the San Pedro Riparian National Conservation Area.

It is our understanding that upon completion of the land exchanges
described above, Resolution Copper would explore developing a very deep
copper mine beneath the Oak Flat parcel.

Section 4(d) of the bill requires that the exchange contemplated by S.
3157 will be completed within one year. The Department believes that
this is insufficient time to complete all the work necessary to complete
the exchange, including the development and review of a mineral report,
completion of appraisals and surveys, verification of title documents,
and the many environmental clearances, reviews, and the consultation
with Indian Tribes required under various laws, regulations, and policy,
as outlined in section 4(e).

Section 4(g) is a new provision not in H.R. 3301 that requires
pre-exchange processing including land survey and specified reviews that
are normally done in the course of a land exchange. Section 4(h) directs
the Secretary to complete an environmental impact statement
post-exchange but prior to commencing mineral production regarding any
Federal agency action carried out relating to commercial production. The
bill does not specify which party would be responsible for the costs of
these provisions. The Department's support is contingent upon the
clarification section 4(e) to require that Resolution Copper would be
responsible for these costs.

We are concerned about the provisions of section 5(a)(3) regarding the
failure of the parties to agree on the value of any parcel. As written,
the bill would require that a dispute would be resolved through binding
arbitration procedures pursuant to section 206(d) of FLPMA. However,
section 206(d) is intended for discretionary exchanges. Accordingly, we
believe section 5(a)(3) of the bill should be amended to more
specifically address those options in section 206(d) of FLPMA that would
be applicable to this exchange. We would like to work with the
Subcommittee and the bill's sponsor to amend section 5(a)(3)
accordingly.

S. 3157 includes a provision in Section 10 that would require a payment
to the United States should the cumulative production of locatable
minerals exceed the projected production used in the appraisal required
by section 5(a)(4)(B). This provision recognizes that an accurate
projection of future production will be difficult to develop, and
provides a mechanism for additional payments to the United States should
actual production exceed the projected production. The Administration
generally supports this approach but would like to work with the
committee to clarify the specific intent and implementation procedures,
as well as the disposition of receipts.

We object to the language in Section 10(b)(2) that makes funds from
potential mineral revenue payments available for expenditure without
further appropriation. This provision is meant to ensure that the
government is fairly compensated in the event that the valuation process
underestimates the amount of mineral resource that is ultimately
recovered, and we support this objective. However, the legislation
addresses the exchange of lands with mineral interests, the value of
which may not be fully realized until long after the exchange has taken
place. We would like to work with the committee to ensure that the bill
deposits the receipts into the Treasury, subject to future
appropriation.

If the final appraised value of the non-Federal land exceeds the value
of the Federal land, Section 5(d) reduces the Town's payment for land it
elects to purchase from the Secretary by an amount equal to the
difference in the values. We would like to work with the committee to
ensure that the taxpayer receives full fair market value in the sale to
the Town, in keeping with long-standing policy.

Section 8(a) directs the Secretary to design and construct one or more
campgrounds, including access routes, on the Globe Ranger District of
the Tonto National Forest within four years to replace the Oak Flat
campground. We appreciate that changes have been made to this provision
based on previous testimony on H.R. 3301, to double the amount of
funding and time to accomplish this task. However, concerns remain. We
still believe it will be difficult to find a suitable replacement site
within the Globe Ranger District, the funding cited in the bill remains
insufficient to construct a new campground to current standards, and
construction of a replacement campground within 4 years may be difficult
to accomplish. One alternative to constructing a replacement campground
would be to add to or upgrade existing campgrounds on the Globe Ranger
District. We would like to work with the Subcommittee and the bill's
sponsor to address our concerns.

Section 8(b) also was added to address concerns raised in our testimony
on H.R. 3301, but concerns remain regarding this provision as well. This
section provides an interim period for the Forest Service to retain
title to, operate, and maintain Oak Flat Campground. Due to the complex
nature of this exchange, we are concerned that the completion of the
land exchange could be delayed. We interpret the bill as requiring the
Secretary to deed the campground and revoke the mineral withdrawal only
if the land exchange is completed. We would like to work with the
Subcommittee and bill sponsor to clarify this language.

Finally, we would like to work with the Subcommittee and bill's sponsor
to address some technical issues with the bill and to ensure that the
maps described in the bill accurately reflect bill language, and are
referenced and dated properly.

This concludes my statement and I would be happy to answer any questions
you may have.