Number range CHAPTERStatement of John D. Leshy

Harry D. Sunderland Distinguished Professor of Law

University of California, Hastings College of the Law

at the

Hearing on Hardrock Mining on Federal Land

Committee on Energy and Natural Resources

U.S. Senate

September 27, 2007

I appreciate your invitation to testify today, and the engagement of
this Committee on reform of the Mining Law of 1872. There is no more
important task among the constellation of issues involving our public
lands, lands which encompass nearly one-third of the Nation's real
estate and a large portion of its valuable natural resources like
minerals.

I appear here today as a private citizen, expressing my own personal
views, and not representing any group or institution. I have worked on
Mining Law issues for thirty-five years, in academia, in government and
in the nonprofit sector. Before I address the specific questions in your
letter of invitation, I would like to provide some larger perspective on
the recently rekindled effort to reform the Mining Law.

Calls to reform the Mining Law date back to a few years from its
passage, and have been made by many U.S. Presidents, from Republicans
like Theodore Roosevelt and Richard Nixon to Democrats like Jimmy Carter
and Bill Clinton. Almost forty years ago, as Stewart Udall was stepping
down after eight years as Secretary of the Interior, he called its
repeal the biggest unfinished business on the Nation's natural resources
agenda.

Signed into law by President Ulysses S. Grant four years before the
telephone was invented, this antiquated relic is the last statutory
survivor of a colorful period in the Nation's history that began with
discovery of gold in the foothills of the Sierra Nevada in 1848. The
mining "rushes" that ensued accelerated the great westward expansion of
settlement. And they swept many of the Western states to statehood \--
California (the golden state), Nevada (the silver state), Montana (the
treasure state), Idaho (the gem state) and eventually Arizona (the
copper state). The same era witnessed the enactment of numerous other
laws filling out the framework for that great movement - laws like the
railroad land grant acts and the Homestead Act of 1862. A generation
later, Congress enacted landmark laws like the National Forest Organic
Act in 1897 and the Reclamation Act of 1902, and a generation after
that, the National Park Organic Act of 1916 and, in 1920, the Mineral
Leasing Act and the Federal Power Act.

All these other laws have long since been repealed, replaced, or
fundamentally reformed, often more than once. But the Mining Law of 1872
remains. Today the public lands and resources are managed under modern
laws like the Federal Land Policy & Management Act of 1976 (FLPMA), the
National Forest Management Act of 1976, the Federal Coal Leasing
Amendments of 1976, the Surface Management Control and Reclamation Act
of 1977, the Reclamation Reform Act of 1982, and the Federal Oil and Gas
Leasing Reform Act of 1987.

The Mining Law has escaped this tide of reform despite the fact that,
since 1872, the population of the U.S. has grown more than seven-fold
(from less than forty million to more than 300 million), the population
of the eleven western states plus Alaska (where the Mining Law
principally applies) has grown from about one million to nearly 70
million, and the mining industry, our society and our economy have all
changed in ways beyond comprehension.

It is not for lack of trying. It has long been recognized that the
Mining Law is thoroughly out of step with evolving public resource
management principles. Indeed, the first Public Land Commission created
by Congress to assess public land policies recommended *in 1880* that it
be thoroughly rewritten*.* Many blue-ribbon commissions since have
likewise called for reform.

The Law's three most important shortcomings are as follows:

> *First, the Mining Law allows valuable public resources to be
> privatized at bargain-basement rates, without consideration of the
> broader public interess.* Its so-called patenting feature is the last
> vestige in federal law of nineteenth century public land disposal
> policy. Much abused for purposes that have nothing to do with mining,
> the Mining Law has privatized an area of federal land larger than the
> state of Connecticut, much of it in scattershot inholdings that
> complicate rational land management throughout the West to this day.
> Patenting is not necessary to mine; indeed, the Supreme Court
> recognized as far back as 1884 that the "patent adds little to the
> security of the party in continuous possession of a mine he has
> discovered or bought." Many large mines are found at least partly on
> un-patented federal lands.
>
> Congress has since 1994 enacted appropriation riders to forestall new
> applications for Mining Law patents. This practice has had no
> demonstrable negative effects on the hardrock minerals industry. But
> Congress must act each year, or patenting resumes. The fragility of
> these annual riders was driven home in the fall of 2005 by the
> now-infamous Pombo-Gibbons legislative proposal that would have not
> only lifted the moratorium on new patents, but also greatly
> liberalized the terms of patenting. That ill-conceived proposal -
> which passed the House but then died under a storm of protest - could
> have resulted in the scattershot privatization of more millions of
> acres of federal lands.
>
> As long as privatization remains a core feature of the Mining Law, the
> temptation remains for future mischief-makers to try similar stunts.
> It is time for Congress to repeal, once and for all, the Mining Law
> policy allowing willy-nilly privatizing of the federal lands.
>
> *Second, the Mining Law fails to produce any direct financial return
> to the public for the exploitation of publicly owned resources*.
> Mining companies are charged no rental, pay no royalty, and make no
> other payment that recognizes that the people of the U.S. own the
> minerals being mined. Their position is unique in two distinct ways.
> First, practically all other users of the public lands - oil and gas
> and coal developers, timber harvesters, energy companies that run
> transmission lines across the federal lands, cattle graziers, and
> even, these days, hunters, anglers and other recreationists - pay the
> government something (in most cases, something like market value) for
> the publicly-owned resources being used or removed. Second,
> practically everywhere else on this earth that hardrock mining
> companies operate \-\-- on state or private lands in the U.S., and
> just about everywhere abroad -- they pay something to the governments
> and others who own the minerals.
>
> It is time for Congress to close this glaring loophole. Whatever
> justifications might once have been offered for such a giveaway of
> public property - such as when gold had strategic value and the West
> was sparsely settled - have long since disappeared. Today 85% of the
> gold mined is used to make jewelry, and the West has long been the
> fastest-growing region of the country.
>
> *Third, the Mining Law results in inadequate protection of the
> environment and other uses of the public lands*. All other users of
> the public lands who can cause significant environmental disruption
> are subject to a straightforward system of regulation which requires
> them to minimize the environmental effects of their activities and
> clean up any mess they create. And all other users are subject to the
> fail-safe authority of the government to prevent proposed activities
> that threaten major environmental harm which cannot be prevented or
> mitigated appropriately.
>
> The Mining Law itself is utterly silent on environmental regulation.
> Operations carried out under it no longer entirely escape regulation,
> thanks to laws like the Clean Water Act. But these other laws do not
> comprehensively address the myriad of environmental threats posed by
> hardrock mining, such as groundwater depletion and pollution and
> disruption of wildlife habitat. Nor do these other laws require the
> government, in making decisions about whether to approve proposed
> mines, to weigh the value of mining against other values and uses of
> the public lands.
>
> The hardrock mining industry has long used the silence of the Mining
> Law on such issues to stoutly contest the reach of the government's
> authority over its activities. And it has long had powerful allies in
> the government on these matters. Just within the last few years my two
> immediate successors as Solicitor of the Interior Department issued
> legal opinions supporting the industry's view that the Mining Law
> hamstrings government authority. In one, the Solicitor concluded that
> the government lacks authority to prevent proposed hardrock mineral
> operations on public lands no matter how huge a threat they might pose
> to the environment and other resource uses. In another, the Solicitor
> concluded that the Mining Law gives the mining industry the right to
> use as much public land as it thinks it needs as a dumping ground for
> the residue of its vast hardrock operations. This is no small matter,
> because hardrock mining operations these days can involve hundreds of
> millions of tons of waste from gigantic open pits several miles across
> and a mile or more deep. This legal position holds, in other words,
> that the government is powerless to reject a proposed hardrock mine on
> federal land that would permanently contaminate aquifers containing
> immensely valuable future drinking water supplies, and/or obliterate
> immensely valuable cultural sites, and/or permanently appropriate many
> thousands of acres of land immensely valuable for other uses. It is no
> wonder that the federal land management agencies continue to feel
> cowed when they contemplate exercising regulatory controls over this
> industry.
>
> Mining is a dirty business, and must be carefully controlled to
> prevent environmental disasters. History teaches not only that things
> can go bad with hardrock mining operations, but when they do, the
> costs to repair the damage can be enormous. Well over a century of
> mining under the Mining Law of 1872 has saddled the Nation\'s
> taxpayers with a cleanup cost for thousands of abandoned mines that,
> according to some estimates, approaches *fifty billion dollars.* It
> bears emphasizing that, despite the limited controls modern laws like
> the Clean Water Act bring to bear on hardrock mining, bad mines still
> fall through the regulatory gaps. To take just one example, Montana
> and U.S. taxpayers are today paying millions of dollars to clean up
> the Zortman-Landusky mine in Montana -- a mine which was approved with
> all the modern laws in place that the industry argues are adequate.
>
> It is long past time to close these regulatory loopholes and eliminate
> these ambiguities so as to make clear to all in the industry -- as
> well as to federal land managers \-- that the hardrock mining industry
> will be held to the same standards, and be subject to the same kinds
> of regulatory authority, that apply to all other users of the public
> lands.

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

Since the last time Congress seriously considered comprehensive Mining
Law reform, more than a dozen years ago, much has changed. Today, Mining
Law reform is both more imperative and, in my judgment, more achievable.
Here's why.

First, the industry structure, operations and economic impact have
evolved considerably. Thanks to new techniques for processing gold and
other hardrock minerals from more and more widely disseminated,
fine-particle deposits, the hardrock industry produces more and more
minerals by moving vastly greater amounts of earth and rock than ever
before. The United States now produces much more gold than it ever did
before, and is the third leading producer in the world.

The industry is also much more heavily concentrated, with many fewer
companies and many fewer mines than ever before. More than four-fifths
of U.S. gold production now comes from a single state - Nevada. The four
largest mines, all in Nevada, account for *well over half* the total
domestic production. The thirty biggest mines (more than half in Nevada,
including twelve of the fifteen largest) yield *99%* of total
production. Barrick Gold, a Canadian company, is the biggest, accounting
for about 40% of domestic U.S. (and 8% of world) gold production.
Production of copper and other precious metals are similarly
concentrated.

Moreover, the hardrock industry now operates with such ruthless
efficiency that it employs far fewer people than it used to. Its workers
may be relatively well-paid, but they are far fewer in number and much
more geographically concentrated than they ever were.

In the meantime, the economies of the western states have evolved
rapidly away from their historic roots dependent on resource extraction.
Today the regional economy where the Mining Law applies - the western
states in the lower 48 plus Alaska - has changed dramatically. While
mining used to be a dominant industry in many western locales (as state
nicknames remind us), today its overall economic impact is small, even
minuscule. The west is now the most urban and fastest growing region in
the country. Its dynamic growth and economic health are fundamentally
linked to the quality of life provided by the open spaces and
recreational amenities of the public lands.

Demographic and economic change has changed public sentiment at the
ground level. Westerners are increasingly unsympathetic to the idea that
the hardrock mining industry deserves these special exemptions from the
laws and policies that apply to everyone else. It is not surprising,
then, that when the mining industry seeks to exploit its favored
position under the Mining Law, more and more local people \-- ranchers,
hunters, anglers, retirees, land developers, tourist industry officials,
municipal water providers and other local government officials -- are
asking why this nineteenth century policy still exists.

Their concerns are growing because soaring mineral prices, particularly
for gold, copper and uranium, have led to a new rush of claim-staking
under the Mining Law in areas with high values for other uses. Mining
claims on federal lands recorded with the BLM have nearly doubled in
just the last four years; there are now close to 400,000 individual
mining claims scattered across federal lands.

People in the west are also more familiar than most with the
consequences of failing to control the industry. They live with the
thousands of abandoned mines scattered throughout the region, and are
familiar with the sorry legacy of safety hazards, polluted streams and
disrupted landscapes that will require billions of dollars to repair.
And they don't appreciate the fact that, under the current regime, the
dollars to pay for this cleanup will come more from taxpayers than from
the industry that created the mess.

Another noteworthy change in recent years is that, for the first time,
the hardrock mining industry is facing some pressure to reform from the
demand side - the jewelry industry that consumes much of its product.
With leadership from Tiffany and other major jewelers, this movement has
helped persuade some major mining companies, concerned about their
reputations as well as their impacts, to work to improve their practices
and make other accommodations to modern social and environmental values.
In short, the industry is no longer so monolithic and so reflexively
hostile to change.

Reforming the archaic Mining Law will not - as some industry
representatives ritually maintain - put an end to the domestic hardrock
mining industry. Every year Canada's Fraser Institute surveys mining
industry executives and uses the results to rank the most favorable
jurisdictions in the world for hardrock mining, considering a variety of
factors, including political stability. The American West is always at
or near the top of the rankings. Furthermore, skyrocketing mineral
prices means the industry is thriving as never before, and any increase
in production cost that might result from reform will be modest and can
readily be absorbed. The basic objective of reform is to put in place
practices and policies that oil and gas operators, coal miners,
electrical utilities, ski areas, and other intensive users of the
federal lands have operated under quite successfully for decades. I have
no doubt that the innovative, progressive companies in this industry --
those who have flourished around the world by being so -- will adapt
readily to such reforms, just like other public land users have
successfully adapted to similar requirements imposed on them over the
last many decades.

> \- - - - - -

Now let me address in some detail the questions you posed in your
September 12 letter of invitation.

**Question: Whether there should be a royalty or alternatives to it,
including how to structure it:**

I would underscore two goals in designing a system by which the hardrock
mining industry pays something to the public for the use of the public's
lands and minerals: First, that it produce real revenue for the
Treasury, to reduce the deficit and/or to repair some of the costs and
damage left by past hardrock mining activities. Second, that it be
efficient to administer, to minimize opportunities for clever
accountants and lawyers to "game" the system. Generally speaking, the
rule of thumb for a royalty is that the more exemptions, deductions and
offsets allowed, the more the system can be "gamed," and the less
likelihood significant revenue will be raised. As an extreme example, I
would direct your attention to the "sham" royalty included in what came
to be known as the "sham reform" proposal that was included in the
gigantic budget reconciliation bill vetoed by then-President Clinton in
early 1996. My recollection is that the Congressional Research Service
estimated that it was so riddled with deductions and loopholes that it
would have raised a paltry \$1 million per year from the entire
multi-billion dollar industry.

For guidance on both royalty levels and structure, the Committee would
be well-served to look at the oil and gas and coal provision of the
Mineral Leasing Act. The context is closely analogous to hardrock mining
-- in each case the objective is to secure a fair share of revenue from
highly capitalized investments to produce minerals from publicly-owned
lands, that are not without risk and are globally competitive. While the
Leasing Act royalty systems are not free from opportunities for
mischief, there is no doubt they raise significant revenue for the
Treasury in a relatively efficient manner.

Any royalty or similar payment the Congress might embrace -- whether 8%
as in H.R. 2262, the reform bill introduced into the House, or a higher
percentage comparable to what the oil and gas industry pays -- will be
small compared to risk factors the industry has long faced, like
fluctuations in commodity prices, and in exchange and interest rates.
Sizeable return to the government from fossil fuel extraction from
federal lands has not hurt the competitiveness of that industry.

**Question: Are there alternatives to a royalty?**

A conventional royalty would presumably apply only to mineral ore
extracted *from federal lands*. It would not, in other words, include
any kind of charge for the use of federal lands to support the
extraction of minerals from formerly federal lands. Many, perhaps even
most, of the very large hardrock mining operations in the West (which,
as I noted earlier, are responsible for the vast majority of the total
domestic production) are on lands in a mixture of ownerships - private,
state and federal. Often the federal lands, particularly those where the
ore body is found, may be mere slivers or odd-shaped parcels intermixed
with others. Sometimes all or most of the actual ore body is on
non-federal land (often, because it has already been patented under the
generous terms of the Mining Law). See, e.g., [Mineral Resources: Value
of Hardrock Minerals Extracted From and Remaining on Federal
Lands]{.underline} (GAO/RCED-92-192, August 1992).

Even where the U.S. no longer owns any part of the ore body, the federal
lands usually play a key role in bringing the ore body into production -
by providing lands for mineral processing, for dumping waste rock and
mine tailings, and so forth. The United States should, in my judgment,
receive a financial return for the use of its land in these
circumstances that reflects its contribution, both past and present, to
the overall operation.

Suppose, for example, that the ore body of a large mine is 75% in
private ownership, having been previously patented under the Mining Law,
and 25% federal land. That mining operation may permanently use
thousands of acres of federal land as waste rock dumps and tailings
piles for the mining operation. It seems to me that a royalty or payment
to the Treasury which is limited to the 25% of the ore body still in
federal ownership is inadequate return to the public for this use of the
public's resources. If access to this federal land were granted under
Title V of FLPMA -- which would be the case if this were a power plant,
a factory, the user would pay fair market value for the land. Mine
operators who use thousands of acres of federal land as a dumping ground
ought to pay something more than a nominal fee to hold claims; indeed,
their payment ought to reflect some measure of the value these federal
lands contribute to the entire mining operation. This might be done
through a much more substantial rental, holding fee or other payment, or
a severance tax. I appreciate there may be jurisdictional complications
should this Committee try to craft something along those lines, but it
seems to me well worth thinking about.

**Question: How should revenues from a royalty or other levy be
distributed?**

I will discuss this below, in connection with abandoned mines.

**Question: What kind of transition rules should there be for royalties
or other levies?**

As a matter of law, there are in fact very few limits on Congress's
ability to apply reforms, including a royalty or other fees, or tougher
environmental regulations, to existing mining claims.

This is a much misunderstood area. Many believe, mistakenly, that all
mining claims located on federal lands are constitutionally-protected
"private property interests" which limit the ability of Congress to
reach them. That is not the case. It has long been clear - reaffirmed in
many decisions of the U.S. Supreme Court - that a mining claim located
on the federal lands carries with it a constitutionally protected
property right [only]{.underline} if it contains a "discovery" of a
"valuable mineral deposit." Mining claims which lack such a "discovery"
are mere licenses to occupy the federal lands. The legal status of
locators of such claims is no different from that of a hunter or angler
or other recreational user of federal lands. "\[I\]t is clear that in
order to create valid rights . . . against the United States \[under the
Mining Law\] a discovery of mineral is essential." [Union Oil v.
Smith]{.underline}, 249 U.S. 337, 346 (1919); see also [Cole v.
Ralph]{.underline}, 252 U.S. 286, 296 (1920).

The locator of a claim without a discovery does have the right to
exclude other miners from the claim, so long as the original locator is
actively exploring for a mineral. This is the "pedis possessio"
(foothold) doctrine recognized by the Supreme Court almost ninety years
ago. [Union Oil v. Smith]{.underline}, supra. But the locator has *no
rights against the United States* until a discovery is made. This means
the United States can change its policy or rules, and even effectively
extinguish such claims, at any time before a discovery is made, without
any obligation to pay compensation.

In practice, almost all mining claims are located in advance of
discovery. They are located to provide a foothold on public lands in
order to explore for valuable mineral deposits. Mining claims are
typically located, in other words, in speculation that a mineral might
possibly exist and be profitably mined from the claimed land. But hopes
and speculations, the Supreme Court has long made clear, are not
tantamount to a "discovery." See, e.g., [United States v.
Coleman]{.underline}, 390 U.S. 599 (1968); [Sullivan v. Iron Silver
Mining Co.]{.underline}, 143 U.S. 431 (1892). Thus most mining claims do
*not* carry with them constitutionally protected property rights, and
Congress retains practically unfettered authority to change the rules
regarding them.

With regard to mining claims that do include a "discovery," the analysis
is a little different. These contain property rights which can give the
claimant some argument for compensation in some circumstances if the
government acts to "take" these rights. Whether the argument will
succeed usually depends on a case-by-case, fact-intensive analysis. See,
e.g., [Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional
Planning Agency]{.underline}, 535 U.S. 302 (2002); [Penn Central
Transportation Co. v. New York City]{.underline}, 438 U.S. 104, 123-28
(1978).

But certain things are clear from Supreme Court decisions in this area.
For example, the government retains broad authority to impose new
regulations over mining claims that contain a discovery and a property
right. The U.S. Supreme Court addressed this exact question in 1985, and
its guidance is worth quoting at some length:

> Even with respect to vested property rights, a legislature generally
> has the power to impose new regulatory constraints on the way in which
> those rights are used, or to condition their continued retention on
> performance of certain affirmative duties. As long as the constraint
> or duty imposed is a reasonable restriction designed to further
> legitimate legislative objectives, the legislature acts within its
> powers in imposing such new constraints or duties. \* \* \*
>
> *This power to qualify existing property rights is particularly broad
> with respect to the \"character\" of the property rights at issue
> here*. Although owners of unpatented mining claims hold fully
> recognized possessory interests in their claims, we have recognized
> that these interests are a \"unique form of property.\" \* \* \* The
> United States, as owner of the underlying fee title to the public
> domain, maintains broad powers over the terms and conditions upon
> which the public lands can be used, leased, and acquired. See, e.g.,
> [Kleppe v. New Mexico]{.underline}, 426 U.S. 529, 539 (1976). \* \* \*
>
> *Claimants thus take their mineral interests with the knowledge that
> the Government retains substantial regulatory power over those
> interests*. \* \* \* In addition, the property right here is the right
> to a flow of income from production of the claim. Similar vested
> economic *rights are held subject to the Government\'s substantial
> power to regulate for the public good the conditions under which
> business is carried out and to redistribute the benefits and burdens
> of economic life*.

[United States v. Locke]{.underline}, 471 U.S. 84, 104-05 (1985)
(emphasis added). As this last-quoted sentence from Court's opinion
makes clear, the government retains the right to require a payment
(whether labeled a tax, royalty, fee, or something else) from a holder
of a mining claim on federal lands, even one with a discovery and a
property right, as part of its continuing redistribution of the benefits
and burdens of economic life. In general, the Supreme Court has never
given credence to arguments that federal taxes and fees constitute
takings of private property. See, e.g., [Cole v. LaGrange]{.underline},
113 U.S. 1, 8 (1885) ("the taking of property by taxation requires no
other compensation than the taxpayer receives in being protected by the
government to the support of which he contributes"); [County of Mobile
v. Kimball]{.underline}, 102 U.S. 691, 703 (1880) ("neither is taxation
for a public purpose, however great, the taking of private property for
public use, in the sense of the Constitution").

It is well-established that the "discovery" creating a property right
against the government is dependent upon the marketability of the
mineral. This means the right may vanish - and with it the property
right against the government - as a result of changed conditions. As the
Supreme Court has held, a "locator who does not carry his claim to
patent . . . does take the risk that his claim will no longer support
issuance of a patent." [Best v. Humboldt Placer Mining Co.]{.underline},
371 U.S. 334, 336 (1963).

In this connection, the Interior Department and the federal courts have
long held that, in determining whether a discovery exists, the cost of
complying with environmental laws and regulations must be taken into
account. The courts have recognized that new environmental restrictions
may affect claim validity, and reduce or eliminate the government's
obligation to compensate claimants. See, e.g., [Clouser v.
Espy]{.underline}, 42 F.3d 1522 (9^th^ Cir. 1994) ("virtually all forms
of \[government\] regulation of mining claims - for instance, limiting
the permissible methods of mining and prospecting in order to reduce
incidental environmental damage - will result in increased operating
costs, and thereby will affect claim validity. However, the . . . case
law makes clear that such matters may be regulated by the government");
[Reeves v.United States]{.underline}, 54 Fed. Cl. 652 (2002)
(compensation denied to a claim locator who was prevented from
developing claims he located in a wilderness study area on federal
land).

For all these reasons, I believe it is well settled that the government
has nearly unfettered authority to apply newly enacted laws and
regulations, including a royalty, to mining claims that are not
accompanied by a discovery; that is to say, most of the several hundred
thousand claims currently of record. It also has very considerable power
to apply to new laws and regulations to mining claims that include a
discovery, without creating any obligation to compensate the claimants.

Because of the strength of the case for congressional authority, I was
dismayed by the rather casual assertion of the Administration's witness,
at the House hearing on Mining Law reform on July 25, that a royalty on
existing claims would raise constitutional "takings" questions. Given
the analysis I set out here, I recommend the Committee give no weight to
such assertions unless the person making it supplies the Committee with
a legal memorandum backing up its assertion by refuting the analysis
offered here.

While there is very little legal limit on the ability of Congress to
impose a royalty or other levy or to tighten environmental regulation of
existing claims, obviously Congress can take equitable considerations
into account, such as capital investments that have already been made in
existing mines. But I would strongly discourage applying royalties or
other levies or new environmental regulations only to claims located
after enactment of reform legislation. Most areas of federal land that
have significant likely mineral potential are already blanketed with
claims. Most of these claims lack a discovery and a concomitant property
right. Most have seen little investment and are being held
speculatively. Most mines likely to open in the next few decades will
probably be on already located claims. Thus exempting existing *claims*
from new requirements (permanently, or for a period of years) would be a
huge loophole and not provide genuine reform.

As I indicated earlier, any levy that emerges from Congress will be a
small factor in the overall profit and risk picture for these
enterprises. Furthermore, there are various ways to craft a royalty or
other levy that adjusts its impact to overall profitability. Payments to
the government might be on a sliding scale depending upon overall
commodity prices; e.g., if the price of gold doubles or is halved, the
royalty or other payment is adjusted accordingly.

**Question: Whether to eliminate patenting entirely or only partially
and whether to provide some other mechanism for security of tenure.**

At one time, I thought that further patenting under the Mining Law was
never justified. But after further reflection I believe that
privatization of the federal lands involved in large hardrock mining
operations can be justified under certain carefully defined conditions.
As I have already noted, many, perhaps most, major hardrock mining
operations in the West are on lands in a mixture of ownerships -
private, state and federal, with the federal parcels often mere slivers
or odd-shaped parcels intermixed with others.

Giving mining companies title to federal lands involved in these
operations would consolidate and simplify ownership and reduce
regulatory and other complexities. After operations cease, the lands
involved often serve very little public value for other uses. Moreover,
continuing federal ownership can cloud the responsibility for protecting
public health, safety, and the environment from pollution endemic to
these sites.

On the other hand, I can think of at least two federal interests that
are implicated in any proposal to privatize these federal lands.

[First]{.underline}, taxpayers deserve a fair return on valuable
publicly-owned resources. There is no reason why the U.S. could not
protect this fiscal interest while still privatizing these lands; e.g.,
Congress could make privatization contingent upon the mining operation
making a payment (lump sum or periodic) to the Treasury to capture an
appropriate share of future income streams made possible by the use of
these federal lands in these mining operations.

Mining companies have sometimes showed a willingness to entertain such
arrangements and pay real money to simplify and secure their land
positions. In the last Congress and again in this one, for example,
legislation has been introduced to approve a complex series of land
exchanges in Arizona between the United States and the Resolution Copper
Company (a joint venture between BHP Billiton and Rio Tinto). According
to news reports, Resolution is seeking to tap a large deep underground
copper deposit. While it already owns or controls considerable land in
the area, it wants title to some federal land (which may or may not
include part of the ore body) to facilitate the operation. To gain title
(through a proposed congressionally-approved exchange), Resolution is
apparently willing to pay the United States substantially more than it
would be required to pay to gain title under the Mining Law (assuming
Congress failed to renew the annual moratorium on patenting, and
assuming Resolution qualified for patents). That is, Resolution has
acquired title to and is offering to trade to the United States
considerable land of high conservation and recreational value. Not
having examined the details of this proposal, I am not prepared to
comment on whether the arrangement represents a fair return to the
federal taxpayer. But it is an example of a major mining entity being
willing to pay genuine value for privatizing federal land in order to
facilitate a major mining operation.

[Second]{.underline}, the U.S. should ensure that privatization does not
unduly threaten the environment in general, and nearby federal lands in
particular. So long as the U.S, retains title to some of the lands
affected, some environmental regulations and procedures that attach only
to federal decisions (such as are made with respect to federal lands)
would continue to apply -- such as NEPA, Endangered Species Act § 7,
National Historic Preservation Act, Native American consultation and
protection laws, and parts of the Clean Water Act. Here too, however, I
believe it should be possible to fashion ways to protect the federal
interest protected by these federal laws. For example, privatization
might be conditioned on working out an agreement or compact between
state and federal regulators that establishes a regulatory framework to
do this.

For these reasons, I think privatizing federal lands involved in major
hardrock mining operations need not be ruled out. I hasten to point out,
however, that patenting has a long and sorry history of abuse. Most of
the 3.2 million acres patented under the Mining Law since 1872 have in
fact never been used, or used very little, for mining. Instead, they
have been used for residential or other kinds of development, as private
recreational retreats, spas, golf courses, and many other things. Given
that record, any legislation that retains some opportunity to privatize
lands in connection with hardrock mining must be very carefully drawn.

In short, I think privatization is an option worth considering, so long
as it (a) is narrowly tailored to apply only to active or approved bona
fide major mining operations; (b) retains for the U.S. the discretion to
decide whether, under all the circumstances, the public interest is
better served by deeding the land to the mining company rather retaining
it in public ownership; (c) provides appropriate compensation to the
United States for the fair value of the federal lands and minerals
involved in the land being privatized; and (d) accommodates federal
interests in protecting federal lands and resources not being privatized
through some arrangement worked out in advance with state regulators.

While the hardrock mining industry is naturally concerned about security
of tenure, no other industry operating on federal lands has a guarantee
of perpetual tenure. All are subject to periodic reexamination and
reevaluation, and environmental and other operating standards are
readjusted from time to time. This is, indeed, a fact of life in all
natural resource enterprises operating around the globe. Market and
other forces are usually far more important to the tenure of these
enterprises than the decisions of government land managers.

**Question: How can the administration and efficiency of the Law be
improved?**

The Mining Law contains many provisions which plague the industry. This
is not surprising, considering that the Law was mostly designed for
"pick-and-shovel" mineral activities common in the mid-nineteenth
century. Today's vastly changed industry bears no resemblance to the
kinds of activities for which the Law was designed. As a result, the
Mining Law contains inadequate protection for legitimate explorers
against claim-jumping by rival miners, and has some limits on claim size
that seem arbitrary and anachronistic. I devoted considerable attention
in my 1987 book on the Mining Law to many of these features.

I believe reform legislation could well address these matters. The most
important reasons to reform the Mining Law remain, however, to end the
opportunity for wholesale patenting, to capture some revenue for the
public owners of the minerals and land involved, and to hold the
hardrock mining industry to the same kinds of environmental standards
and regard for other uses of the federal lands that are routinely
applied to all other users of the federal lands.

If reform legislation contains adequate measures on these three points,
I believe Congress should, at the same time, consider and incorporate
any reasonable suggestions the hardrock mining industry has to make the
Law more simple and efficient from its perspective. The Congress should,
however, take care to ensure such improvements do not undermine or
defeat the thrust of the legislation on the three most important points.

**Question: Whether environmental standards, regulations, monitoring and
enforcement need modifying, such as whether a federal land management
agency can deny approval of a permit to a mining operation which meets
environmental standards because of other land resource values and uses
(environmental and other).**

As I indicated earlier, I believe that clarifying and upgrading
environmental standards is a principal reason to reform the Mining Law.
I do not believe existing standards and practices are adequate to
protect multiple uses of the public lands and a healthy environment.

Looking first at the Bureau of Land Management's current "Part 3809\"
regulations governing surface management of hard rock mining on
BLM-managed lands, early on the George W. Bush Administration weakened
these regulations significantly, removing a number of key provisions
that had been added by the Clinton Administration. Compare 65 Fed. Reg.
69,998 (2000) with 66 Fed. Reg. 54,837 (2001). One of the most important
was to eliminate the federal government's authority to disapprove
proposed hardrock mines on federal lands that threatened devastating,
uncontrollable harm on other important natural and cultural resources.

The Bush Administration acted on the basis of a Solicitor's Opinion
issued by my successor, which overruled an opinion I had issued in 1999.
These legal opinions differed on how to interpret a key phrase in the
Federal Land Policy and Management Act of 1976 (FLPMA), where Congress
expressly amended the Mining Law to require the Interior Secretary to
protect the public lands from "unnecessary [or]{.underline} undue
degradation" (emphasis added). 43 U.S.C. § 1732(b).

My legal opinion was that "or" means "or," so that BLM has a
responsibility to regulate hardrock mining on the public lands to
protect against "undue" degradation, even if that degradation is
regarded as "necessary" to mining. My successor's legal opinion was that
"or" really ought to be construed as meaning "and." Thus, in his view,
BLM has no authority to prevent hardrock mining that causes "undue"
degradation if such degradation is "necessary" to mining.

Environmental groups asked a federal court to settle this dispute. After
full briefing, the court ruled that my reading of FLPMA was correct, and
the Department has the responsibility to say no to proposed hardrock
mines that cause "undue" degradation even if it is "necessary" to
mining. Somewhat bizarrely, however, the court decided not to set aside
the Bush Administration's removal of the right to prohibit devastatingly
bad mines from the Part 3809 regulations. Conceding the question was
"indeed extremely close," the court was persuaded by the Department of
Justice's argument that \-- even conceding that the Bush
Administration's Solicitor was wrong on the law \-- those regulations
need not articulate that authority in so many words, because they could
be interpreted as allowing the Department to prohibit such mines, and
environmental groups could challenge Interior's decisions in particular
cases in the future. [Mineral Policy Center v. Norton]{.underline}, 292
F. Supp. 2d 30, 46 n. 18 (D.D.C. 2003). Neither side appealed this
ruling.

Turning to national forest land, the counterpart U.S. Forest Service
regulations (36 C.F.R. Part 228) are even weaker. This is not
surprising, for the Forest Service was long reluctant to do any
regulation of hardrock mining on national forests. Congress gave it
express authority to regulate mining to prevent destruction of the
national forests way back in 1897 (see 16 U.S.C. §§ 478, 551), but it
did not exercise this authority for more than three-quarters of a
century. The regulations it finally adopted in 1974 were relatively
tepid and have changed little since, despite vast ensuing changes in
hardrock mining technology and practices.

Among other things, they require mining operations only to be "conducted
so as, [where feasible]{.underline}, to [minimize]{.underline}
environmental impacts on National Forest resources," 36 C.F.R. § 228.8
(emphasis added), and they require operators to take only those measures
to "maintain and protect fisheries and wildlife habitat which may be
affected by the operations" that are "[practicable]{.underline}"; id.,
at 228.8(e) (emphasis added). In other words, the Forest Service, like
the Interior Department, currently takes the position that the
government cannot prevent a proposed hardrock mine on lands it manages
even if it threatens dire environmental harm. The courts have refused to
overturn this position. [Okanogan Highlands Alliance v.
Williams]{.underline}, 236 F.3d 468 (9^th^ Cir. 2000).

In my judgment, this is too important a matter to be left in this
current state. I believe the law should clearly state that the
government has the responsibility to prevent proposed hardrock mining
operations if it finds severe, un-mitigatable adverse impacts would be
visited on other important public resources and values. The public
interest requires no less. Every other user of the public lands \-- oil
or coal company, forest products company, electric utility, rancher,
hunter, angler, or hiker \-- is held to that common-sense standard.
Hardrock mining, which has the potential to cause more serious
disruption than any of these others, deserves no special exemption.

Finally, the question posed suggests that a distinction may be drawn
between "environmental standards" and standards to protect "other land
resource values." I do not believe this distinction is easy to draw, nor
do I think it is useful to draw in this context. Environmental standards
are imposed for the purpose of, among other things, protecting other
resource values; e.g., an important reason the government controls air
and water pollution is to protect wildlife habitat. Moreover, the "other
. . . resource values" that the government is responsible for protecting
in this context are on public lands. Every decision made to allow a
particular use of public lands ought to consider the impact of that use
on other uses and values. The government routinely does that when it
decides whether to issue coal or oil and gas leases, sell timber, issue
permits for livestock grazing, site power plants or other energy
generating facilities, or allow hunting or off-road vehicle use or even
hiking. I do not believe there is any persuasive reason to give
proposals to open hardrock mines an exemption.

**Question: Whether additional categories of public land should be
withdrawn from hardrock mining.**

I know that the industry has expressed particular concern about the idea
of withdrawing national forest lands subject to the roadless rule from
new mining claim location. Many do not realize that under the Clinton
Administration's so-called "roadless rule" (whose future is still in
doubt, being mired in litigation) national forest roadless areas remain
open to new mining claim location and to the possibility of hardrock
mineral development. Even new roads might be built in such areas to
serve proposed hardrock mines. The extent to which the Forest Service
can and would limit or control such road-building is left murky in the
rule and in its preamble.

I would argue that this matter should not be left uncertain. I
understand that substantial numbers of new claims have recently been
filed in such roadless areas, suggesting the very real possibility of
future conflict. Yet there is much room to doubt whether, in reality,
any proposed new mines will ever be opened in these areas. They are by
definition remote, with difficult access and, wholly apart from legal
restrictions, have high development costs. Also, nearly all of these
lands have been open to mineral development for well over a century, yet
no significant development has taken place (else they would no longer be
roadless). My recommendation would be to close them to new claim
location, subject to whatever valid existing rights exist.

I also recommend that uranium be withdrawn from the Mining Law. The
other energy resources \-- coal, oil and gas, tar sands, oil shale, and
geothermal resources \-- are all governed by leasing systems, most of
them dating back to 1920. These industries have not been hampered, and
the public's fiscal and environmental interests are better protected.
Uranium is the only energy mineral treated differently, and it only to
some extent. Some federal uranium is already subject to leasing rather
than to the Mining Law -- a result of some post-World War II withdrawals
of some federal land on the Colorado Plateau (which vested the Atomic
Energy Commission with jurisdiction over this leasing, now exercised by
the Department of Energy).

There is no justification for continuing to subsidize the domestic
uranium industry (and with it the civilian nuclear power industry) by
allowing publicly-owned uranium to be mined without a royalty or other
payment to the Treasury. As with hardrock mining, past uranium mining
and milling has left a big cleanup bill for the taxpayer. The government
is currently spending many millions of dollars, for example, to move a
large mill tailings pile away from the banks of the Colorado River
adjacent to Moab, Utah, and has spent much public money in cleaning up
uranium mines and mills in the past. And there is more to do. Consumers
of uranium should pay these bills, not taxpayers. Finally, there is no
strategic argument for subsidizing domestic uranium production when
friendly countries like Canada and Australia have abundant uranium
resources. For all these reasons, I believe the idea of simply putting
uranium under the Mineral Leasing Act ought to be given very serious
consideration. It would be a welcome part (but only a part) of Mining
Law reform.

I also urge the committee to consider crafting a special process for
state and local governments to petition the federal government to
withdraw tracts of federal land from the Mining Law where they can show
special reasons for local concern. Many communities in the West derive
water supplies from watersheds that could be severely impacted by
hardrock mines. Many derive important economic and other benefits from
federal lands nearby that could be threatened by hardrock mines; e.g.,
gateway communities to federal land areas with high recreational use,
big game habitat and the like. While some of these lands may already be
withdrawn, some may not. It seems to me appropriate to give state and
local governments a special process to petition the government to
withdraw lands from new mining claims, to give such petitions
presumptive validity, and to require the federal government to act on
them promptly.

**Question: Whether coverage of existing environmental laws is
sufficient and if not what gaps must be addressed.**

In my judgment, existing BLM and Forest Service regulations do not
adequately address hardrock mining's potential for adverse impacts on
surface and groundwater supplies, which can be considerable. The Ninth
Circuit recently ruled, for example, that existing federal law did not
require BLM to protect water supplies in approving hardrock mining
plans. [Great Basin Mine Watch v. Hankins]{.underline}, 456 F.3d 955
(9^th^ Cir. 2006).

Neither the BLM nor the Forest Service do a very good job regulating
small-scale mining operations - so-called "notice only" mines and
wildcat explorations. Compliance with laws like NEPA, the Clean Water
Act or the Endangered Species Act is often wanting, and these operations
sometimes mishandle toxic chemicals and use earthmoving equipment
carelessly, devastating fish and wildlife habitat. Yet many times other
users of federal lands and the public do not even get notice in advance
of these operations.

Finally, there is the matter of "bonding," where the government requires
operators to provide financial assurance for cleanup so that the
taxpayer does not foot the bill if the operator defaults or goes
bankrupt. To its credit, the George W. Bush Administration did not relax
the Clinton Administration's tightening of bonding standards in the Part
3809 regulations. The Forest Service regulations are not as good,
leaving it with much more discretion on bonding.

Several governmental reports have documented that bonds are still
sometimes set at inadequate levels, putting the taxpayers at risk. See,
e.g., [Hardrock Mining: BLM Needs to Better Manage Financial Assurances
to Guarantee Coverage of Reclamation Costs]{.underline} (GAO \# 05-377,
June 2005) (reporting on a 2004 survey showing 48 mining operations on
public lands had closed without cleanup since BLM began requiring
financial assurances; in more than half the cases, the financial
assurance was inadequate, to the tune of at least \$56 million, to cover
the cleanup costs); see also [Environmental Liabilities: Hardrock Mining
Cleanup Obligations]{.underline} (GAO #06-884T, June 14, 2006)
(recommending hardrock mining be given a high priority in developing
financial assurance requirements, because of the serious risk to
taxpayers; some mine owners have defaulted on multiple occasions,
leaving taxpayers to bear cleanup costs); [Environmental Liabilities:
EPA Should Do More to Ensure that Liable Parties Meet Their Cleanup
Obligations]{.underline} (GAO #05-658, August 17, 2005); US EPA, Office
of Inspector General, [Nationwide Identification of Hardrock Mining
Sites]{.underline} (Report No. 2004-P-00005, March 31, 2004).

While federal officials generally try to require financial assurances in
the amount sufficient to repair and reclaim what they forecast will be
the adverse effects of the proposed mine, their forecasts often prove to
be unduly optimistic. Recent studies show they often underestimate the
amount of environmental degradation from proposed hardrock mines,
particularly from disruption and pollution of water supplies. See Ann
Maest and Jim Kuipers, [Comparison of Predicted and Actual Water Quality
at Hardrock Mines: The Reliability of Predictions in Environmental
Impact Statements]{.underline} (2006); and [Predicting Water Quality at
Hardrock Mines: Methods and Models, Uncertainties, and
State-of-the-Art]{.underline} (2006). The cost to repair or control that
kind of damage can be high, and the bond amount \-- which is often
calculated simply on the basis of moving dirt, replacing soil and
reestablishing a vegetative cover \-- can be woefully insufficient to
cover it.

**Question: What is the extent of the problem of abandoned mines, and
what funding mechanisms and priorities should be put in place to deal
with it.**

I have already noted that the problem is huge; while exact estimates
vary, there is no doubt that there are many thousands of abandoned mines
on the federal lands which pose continuing safety and pollution
problems, and that the cost of cleaning up these problems runs into the
tens of billions of dollars. An informative report on this subject is
Patricia Nelson Limerick, et al., [Cleaning Up Abandoned Hardrock Mines
in the West: Prospecting for a Better Future]{.underline} (U. of Colo.
Center of the American West, 2005), available at
http://www.centerwest.org/publications/pdf/mines.pdf.

In considering this problem in the overall context of Mining Law reform,
I would urge that the first principle be one borrowed from the
Hippocratic Oath -- do no harm. Reforming the Mining Law should cement
in place environmental standards and controls sufficient to prevent the
already huge problem of abandoned mines from getting worse.

Second, in my judgment, it is entirely appropriate that a significant
part of the revenues raised by any royalty or other levy be set aside
for helping repair the vast legacy of past hardrock mining operations on
federal land in the west. Often the owners and operators can no longer
be found to bear the costs.

Third, in terms of standards for cleanup, it seems obvious that serious
safety problems need to be put at top priority, with serious pollution
and other environmental problems second. But I would caution against
mandating any comprehensive inventory of the scope of the problem before
on-the-ground work can begin. Many states and some federal agencies have
been evaluating the particulars of this problem for many years. Fourth,
federal money should be limited to cleaning up federal lands, or sites
that are in mixed federal and state/private ownerships. There is plenty
to do for the foreseeable future on federal lands. Other laws, federal,
state and local, may provide remedies to clean up abandoned sites on
non-federal lands. In generally, I think the approach to this problem
contained in the reform bill introduced in the House, H.R. 2262, is a
sound one.

**Conclusion**

I commend your leadership for taking up this important issue. You have
the best opportunity in a generation to achieve a landmark legacy in
public land policymaking. I stand ready to help any way I can to move
this forward, and I would be happy to answer any questions you may have.