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[Senate Report 111-129]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 279
111th Congress                                                   Report
  2d Session                  SENATE                            111-129
                                                      
=======================================================================
 
          SOUTHEAST ARIZONA LAND EXCHANGE AND CONSERVATION ACT 

                                _______
                                

                 March 2, 2010.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 409]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 409) to secure Federal ownership and 
management of significant natural, scenic, and recreational 
resources, to provide for the protection of cultural resources, 
to facilitate the efficient extraction of mineral resources by 
authorizing and directing an exchange of Federal and non-
Federal land, and for other purposes, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill, as amended, do pass.
    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Southeast Arizona Land Exchange and 
Conservation Act of 2009''.

SEC. 2. DEFINITIONS.

    In this Act:
          (1) Apache leap.--The term ``Apache Leap'' means the 
        approximately 822 acres of land depicted on the map entitled 
        ``Apache Leap'' and dated January 2009.
          (2) Federal land.--The term ``Federal land'' means the 
        approximately 2,406 acres of land located in Pinal County, 
        Arizona, depicted on the map entitled ``Southeast Arizona Land 
        Exchange and Conservation Act of 2009--Federal Parcel--Oak 
        Flat'' and dated January 2009.
          (3) Indian tribe.--The term ``Indian tribe'' has the meaning 
        given the term in section 4 of the Indian Self-Determination 
        and Education Assistance Act (25 U.S.C. 450b).
          (4) Non-federal land. The term ``non-Federal land'' means the 
        parcels of land owned by Resolution Copper that are described 
        in section 4(a).
          (5) Oak flat withdrawal area.--The term ``Oak Flat Withdrawal 
        Area'' means the approximately 760 acres of land depicted on 
        the map entitled ``Oak Flat Withdrawal Area'' and dated January 
        2009.
          (6) Resolution copper--The term ``Resolution Copper'' means 
        Resolution Copper Mining, LLC, a Delaware limited liability 
        company, including any successor, assign, affiliate, member, or 
        joint venturer of Resolution Copper Mining, LLC.
          (7) Secretary.--The term ``Secretary'' means the Secretary of 
        Agriculture.
          (8) State.--The term ``State'' means the State of Arizona.
          (9) Town.--The term ''Town'' means the town of Superior, 
        Arizona.

SEC. 3. LAND EXCHANGE.

    (a) In General.--Subject to the provisions of this Act, if 
Resolution Copper offers to convey to the United States all right, 
title, and interest of Resolution Copper in and to the non-Federal 
land, and if the Secretary determines that the public interest would be 
well served by making the exchange, the Secretary shall convey to 
Resolution Copper, all right, title, and interest of the United States 
in and to the Federal land.
    (b) Compliance With Applicable Law.--
          (1) In general.--Except as otherwise provided in this Act, 
        the Secretary shall carry out the land exchange under this 
        section in accordance with section 206 of the Federal Land 
        Policy and Management Act of 1976 (43 U.S.C. 1716) and other 
        applicable laws, including the National Environmental Policy 
        Act of 1969 (42 U.S.C. 4321 et seq.).
          (2) Environmental review document.--
                  (A) In general.--To the maximum extent practicable 
                under the National Environmental Policy Act of 1969 (42 
                U.S.C. 4321 et seq.) and Council on Environmental 
                Quality regulations, the Secretary, in consultation 
                with the Secretary of the Interior and other affected 
                Federal agencies, shall prepare a single environmental 
                review document, which shall be used as the basis for 
                all decisions under Federal law related to the land 
                exchange and connected agency decisions related to the 
                proposed mine on the Federal land.
                  (B) Effect of paragraph.--Nothing in this paragraph 
                precludes the Secretary from using separate 
                environmental review documents prepared in accordance 
                with the National Environmental Policy Act of 1969 (42 
                U.S.C. 4321 et seq.) or other applicable laws for 
                exploration or other activities not involving--
                          (i) the land exchange; or
                          (ii) the extraction of minerals in commercial 
                        quantities by Resolution Copper on or under the 
                        Federal land.
    (c) Conditions on Acceptance.--
          (1) Title.--Title to any non-Federal land conveyed by 
        Resolution Copper to the United States under this Act shall be 
        in a form that is acceptable to--
                  (A) the Secretary, for land to be administered by the 
                Forest Service; and
                  (B) the Secretary of the Interior, for land to be 
                administered by the Bureau of Land Management.
          (2) Terms and conditions.--The conveyance of the Federal land 
        and non-Federal land under this Act shall be subject to such 
        terms and conditions as the Secretary and the Secretary of the 
        Interior may require.
    (d) Consultation With Indian Tribes.--Prior to making a public 
interest determination under subsection (a), the Secretary shall engage 
in government-to-government consultation with affected Indian tribes 
concerning issues related to the exchange, in accordance with 
applicable laws (including regulations).
    (e) Appraisals.--
          (1) In general.--As soon as practicable after the date of 
        enactment of this Act, the Secretary and Resolution Copper 
        shall select an appraiser to conduct appraisals of the Federal 
        land and non-Federal land.
          (2) Requirements.--
                  (A) In general.--Except as provided in subparagraph 
                (B), an appraisal prepared under paragraph (1) shall be 
                conducted in accordance with nationally recognized 
                appraisal standards, including--
                          (i) the Uniform Appraisal Standards for 
                        Federal Land Acquisitions; and
                          (ii) the Uniform Standards of Professional 
                        Appraisal Practice.
                  (B) Final appraised value.--
                          (i) In general.--After the final appraised 
                        value is determined and approved by the 
                        Secretary, the Secretary shall not be required 
                        to reappraise or update the final appraised 
                        value for a period of 3 years beginning on the 
                        date of the approval by the Secretary of the 
                        final appraised value.
                          (ii) Reappraisal.--Nothing in this 
                        subparagraph precludes the Secretary, prior to 
                        entering into an exchange agreement with 
                        Resolution Copper, from requiring a reappraisal 
                        or update of the final appraisal if the 
                        Secretary determines that such reappraisal or 
                        update is necessary.
                          (iii) Improvements.--Any improvements made by 
                        Resolution Copper prior to entering into an 
                        exchange agreement shall not be included in the 
                        appraised value of the Federal land.
                  (C) Public review.--Before implementing the land 
                exchange under this Act, the Secretary shall make the 
                appraisals of the land to be exchanged (or a summary 
                thereof) available for public review.
          (3) Additional appraisal information.--
                  (A) In general.--The appraiser selected under this 
                subsection shall prepare a detailed income 
                capitalization approach analysis, in accordance with 
                the appraisal requirements referred to in paragraph 
                (2)(A), of the market value of the Federal land, even 
                if the income capitalization approach analysis is not 
                the appraisal approach relied on by the appraiser to 
                determine the market value of the Federal land.
                  (B) Inclusion in final appraisal report.--The income 
                capitalization approach analysis under subparagraph (A) 
                shall be included in the final appraisal report of the 
                Federal land.
    (f) Equal Value Land Exchange.--
          (1) In general.--The value of the Federal land and non-
        Federal land to be exchanged under this Act shall be equal or 
        shall be equalized in accordance with this subsection.
          (2) Surplus of federal land value.--
                  (A) In general.--If the final appraised value of the 
                Federal land exceeds the value of the non-Federal land, 
                Resolution Copper shall--
                          (i) convey additional non-Federal land in the 
                        State to the Secretary or the Secretary of the 
                        Interior, consistent with the requirements of 
                        this Act and subject to the approval of the 
                        applicable Secretary;
                          (ii) make a cash payment to the United 
                        States; or
                          (iii) use a combination of the methods 
                        described in clauses (i) and (ii), as agreed to 
                        by Resolution Copper, the Secretary, and the 
                        Secretary of the Interior.
                  (B) Amount of payment.--The Secretary may accept a 
                payment in excess of 25 percent of the total value of 
                the land or interests conveyed, notwithstanding section 
                206(b) of the Federal Land Policy and Management Act of 
                1976 (43 U.S.C. 1716(b)).
                  (C) Disposition and use of proceeds.--Any amounts 
                received by the United States under this paragraph 
                shall be deposited in the fund established under Public 
                Law 90-171 (commonly known as the ``Sisk Act'') (16 
                U.S.C. 484a) and shall be made available to the 
                Secretary, without further appropriation, for the 
                acquisition of land for addition to the National Forest 
                System in the State.
          (3) Surplus of non-federal land.--If the final appraised 
        value of the non-Federal land exceeds the value of the Federal 
        land--
                  (A) the United States shall not make a payment to 
                Resolution Copper to equalize the value; and
                  (B) except as provided in section 9, the surplus 
                value of the non-Federal land shall be considered to be 
                a donation by Resolution Copper to the United States.
    (g) Oak Flat Withdrawal Area.--
          (1) In general.--Subject to the provisions of this subsection 
        and notwithstanding any withdrawal of the Oak Flat Withdrawal 
        Area from the mining, mineral leasing, or public land laws, the 
        Secretary may authorize Resolution Copper to carry out mineral 
        exploration activities--
                  (A) under the Oak Flat Withdrawal Area, so long as 
                such activities would not disturb the surface of the 
                area; and
                  (B) on the Oak Flat Withdrawal Area (but not within 
                the Oak Flat Campground), so long as such activities 
                are conducted from a single exploratory drill pad.
          (2) Conditions.--Any activities undertaken in accordance with 
        this subsection shall be subject to such terms and conditions 
        as the Secretary may require.
          (3) Termination.--The authorization for Resolution Copper to 
        undertake mineral exploration activities under this subsection 
        shall terminate on the earlier of--
                  (A) the date the land is conveyed to Resolution 
                Copper in accordance with this Act; or
                  (B) the date that is 3 years after the date a special 
                use permit is issued in accordance with this 
                subsection.
    (h) Costs.--As a condition of the land exchange, Resolution Copper 
shall agree to pay, without compensation, any costs that are--
          (1) associated with the land exchange; and
          (2) agreed to by the Secretary.
    (i) Intent of Congress.--
          (1) In general.--It is the intent of Congress that the 
        Secretary shall complete any necessary environmental reviews 
        and public interest determination on the land exchange not 
        later than 3 years after the date Resolution Copper submits a 
        mining plan of operation to the Secretary.
          (2) Agreement.--If the Secretary determines that the public 
        interest would be well served by making the land exchange, it 
        is the intent of Congress that the Secretary seek to enter into 
        an exchange agreement not later than 90 days after the date of 
        the public interest determination.

SEC. 4. CONVEYANCE AND MANAGEMENT OF NON-FEDERAL LAND.

    (a) Conveyance.--On receipt of title to the Federal land, 
Resolution Copper shall simultaneously convey--
          (1) to the Secretary of Agriculture, all right, title, and 
        interest that the Secretary determines to be acceptable in and 
        to--
                  (A) the approximately 147 acres of land located in 
                Gila County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Conservation Act of 2009--Non-
                Federal Parcel--Turkey Creek'' and dated January 2009;
                  (B) the approximately 148 acres of land located in 
                Yavapai County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Conservation Act of 2009--Non-
                Federal Parcel--Tangle Creek'' and dated January 2009;
                  (C) the approximately 149 acres of land located in 
                Maricopa County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Conservation Act of 2009--Non-
                Federal Parcel--Cave Creek'' and dated January 2009;
                  (D) the approximately 640 acres of land located in 
                Coconino County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Exchange and Conservation Act 
                of 2009--Non-Federal Parcel--East Clear Creek'' and 
                dated January 2009;
                  (E) the approximately 95 acres of land located in 
                Pinal County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Conservation Act of 2009--Non-
                Federal Parcel--The Pond'' and dated January 2009; and
                  (F) the approximately 110 acres of land located in 
                Pinal County, Arizona, depicted on the map entitled 
                ``Southeast Arizona Land Conservation Act of 2009--Non-
                Federal Parcel--Apache Leap South End'' and dated 
                January anuary 2009, subject to the retained right of 
                Resolution Copper to conduct underground activities 
                that--
                          (i) the Secretary determines would not 
                        disturb the surface of Apache Leap; and
                          (ii) do not involve commercial mineral 
                        extraction under Apache Leap; and
          (2) to the Secretary of the Interior, all right, title, and 
        interest that the Secretary of the Interior determines to be 
        acceptable in and to--
                  (A) the approximately 3,050 acres of land located in 
                Pinal County, Arizona, identified as ``Lands to DOI'' 
                as generally depicted on the map entitled ``Lower San 
                Pedro River'' and dated June 3, 2009;
                  (B) the approximately 160 acres of land located in 
                Gila and Pinal Counties, Arizona, identified as ``Lands 
                to DOI'' as generally depicted on the map entitled 
                ``Dripping Springs'' and dated June 3, 2009; and
                  (C) the approximately 940 acres of land located in 
                Santa Cruz County, Arizona, identified as ``Lands to 
                DOI'' as generally depicted on the map entitled 
                ``Appleton Ranch'' and dated June 3, 2009.
    (b) Management of Acquired Land.--
          (1) Land acquired by the secretary.--
                  (A) In general.--Land acquired by the Secretary under 
                this Act shall--
                          (i) become part of the national forest in 
                        which the land is located; and
                          (ii) be administered in accordance with the 
                        laws applicable to the National Forest System.
                  (B) Boundary revision.--On acquisition of land by the 
                Secretary under this Act, the boundaries of the 
                national forest shall be modified to reflect the 
                inclusion of the acquired land.
                  (C) Land and water conservation fund.--For purposes 
                of section 7 of the Land and Water Conservation Fund 
                Act of 1965 (16 U.S.C. 4601-9), the boundaries of a 
                national forest in which land acquired by the Secretary 
                is located shall be deemed to be the boundaries of that 
                forest as in existence on January 1, 1965.
          (2) Land acquired by the secretary of the interior.--
                  (A) San pedro riparian national conservation area.--
                          (i) In general.--The following land shall be 
                        added to, and administered as part of, the San 
                        Pedro Riparian National Conservation Area in 
                        accordance with the laws (including 
                        regulations) applicable to the Conservation 
                        Area:
                                  (I) The land acquired by the 
                                Secretary of the Interior under 
                                subsection (a)(2)(A).
                                  (II) Any land acquired by the 
                                Secretary of the Interior which is 
                                adjacent to the San Pedro Riparian 
                                National Conservation Area.
                          (ii) Management plan.--Not later than 2 years 
                        after the date on which the land is acquired, 
                        the Secretary of the Interior shall update the 
                        management plan for the San Pedro Riparian 
                        National Conservation Area to reflect the 
                        management requirements of the acquired land.
                  (B) Dripping springs.--Land acquired by the Secretary 
                of the Interior under subsection (a)(2)(B) shall be 
                managed in accordance with the Federal Land Policy and 
                Management Act of 1976 (43 U.S.C. 1701 et seq.) and 
                applicable land use plans.
                  (C) Las cienegas national conservation area.--Land 
                acquired by the Secretary of the Interior under 
                subsection (a)(2)(C) shall be added to, and 
                administered as part of, the Las Cienegas National 
                Conservation Area in accordance with the laws 
                (including regulations) applicable to the Conservation 
                Area.
    (c) Surrender of Rights.--In addition to the conveyance of the non-
Federal land conveyed to the United States under this Act, and as a 
condition of the land exchange, Resolution Copper shall surrender to 
the United States, without compensation, the rights held by Resolution 
Copper under the mining laws and other laws of the United States to 
commercially extract minerals under--
          (1) Apache Leap; and
          (2) the property described in subsection (a)(1)(E) (commonly 
        known as ``The Pond'').

SEC. 5. RECREATIONAL ACCESS AND IMPROVEMENTS.

    (a) Recreational Access and Facilities.--
          (1) In general.--As a condition of the land exchange under 
        this Act, Resolution Copper shall pay to the Secretary 
        $1,250,000, to improve access and facilities for dispersed 
        recreation and other outdoor recreational activities as 
        provided in paragraph (2).
          (2) Use of amounts.--The Secretary shall use the amount paid 
        in accordance with paragraph (1), without further 
        appropriation, to construct or improve road access, turnouts, 
        trails, parking areas, or facilities for dispersed recreation 
        and other outdoor recreational activities as the Secretary 
        determines to be appropriate.
          (3) Preferred locations.--To the maximum extent practicable, 
        the funds made available under this subsection shall be used by 
        the Secretary on national forest land--
                  (A) in the general area north of Arizona State 
                Highway 60; or
                  (B) in the general area along Arizona State Highway 
                177.
    (b) Determination of Value.--Amounts paid by Resolution Copper 
under this section shall not be considered in determining the value of 
the Federal and non-Federal land under section 3(f).

SEC. 6. VALUE ADJUSTMENT PAYMENT TO UNITED STATES.

    (a) Annual Production Reporting.--
          (1) In general.--As a condition of the exchange, beginning on 
        February 15 of the first calendar year beginning after the date 
        of commencement of production of valuable locatable minerals in 
        commercial quantities from the Federal land conveyed to 
        Resolution Copper under section 3, and annually thereafter, 
        Resolution Copper shall file with the Secretary of the Interior 
        a report indicating the quantity of locatable minerals produced 
        in commercial quantities from the Federal land during the 
        preceding calendar year.
          (2) Report contents.--The reports under paragraph (1) shall 
        comply with any recordkeeping and reporting requirements 
        prescribed by the Secretary or required by applicable Federal 
        laws in effect at the time of production.
    (b) Payment on Production.--If the cumulative production of 
valuable locatable minerals produced in commercial quantities from the 
Federal land conveyed to Resolution Copper under section 3 exceeds the 
quantity of production of locatable minerals from the Federal land used 
in the income capitalization approach analysis prepared under section 
3(e)(3), Resolution Copper shall pay to the United States, by not later 
than March 15 of each applicable calendar year, a value adjustment 
payment for the quantity of excess production at the same rate assumed 
for the income capitalization approach analysis prepared under section 
3(e)(3).
    (c) State Law Unaffected.--Nothing in this section modifies, 
expands, diminishes, amends, or otherwise affects any State law 
relating to the imposition, application, timing, or collection of a 
State excise or severance tax.
    (d) Use of Funds.--The funds paid to the United States under this 
section shall be deposited in the fund established under Public Law 90-
171 (commonly known as the ``Sisk Act'') (16 U.S.C. 484a) and shall be 
made available to the Secretary, without further appropriation, for the 
acquisition of land for addition to the National Forest System in the 
State.

SEC. 7. WITHDRAWAL.

    Subject to valid existing rights, Apache Leap and any and acquired 
by the United States under this Act is withdrawn from all forms of--
          (1) entry, appropriation, or disposal under the public land 
        laws;
          (2) location, entry, and patent under the mining laws; and
          (3) disposition under the mineral leasing, mineral materials, 
        and geothermal leasing laws.

SEC. 8. APACHE LEAP.

    (a) Management.--
          (1) In general.--The Secretary shall manage Apache Leap to 
        preserve the natural character of Apache Leap and to protect 
        archeological and cultural resources located on Apache Leap.
          (2) Special use permits.--The Secretary may issue to 
        Resolution Copper special use permits allowing Resolution 
        Copper to carry out underground activities (other than the 
        commercial extraction of minerals) under the surface of Apache 
        Leap that the Secretary determines would not disturb the 
        surface of the land, subject to any terms and conditions that 
        the Secretary may require.
          (3) Fences; signage.--The Secretary may allow use of the 
        surface of Apache Leap for installation of fences, signs, or 
        other measures necessary to protect the health and safety of 
        the public, protect resources located on Apache Leap, or to 
        ensure that activities conducted under paragraph (2) do not 
        affect the surface of Apache Leap.
    (b) Plan.--
          (1) In general.--Not later than 3 years after the date of 
        enactment of this Act, the Secretary, in consultation with 
        applicable Indian tribes, the Town, Resolution Copper, and 
        other interested members of the public, shall prepare a 
        management plan for Apache Leap.
          (2) Considerations.--In preparing the plan under paragraph 
        (1), the Secretary shall consider whether additional measures 
        are necessary to--
                  (A) protect the cultural, archaeological, or 
                historical resources of Apache Leap, including 
                permanent or seasonal closures of all or a portion of 
                Apache Leap; and
                  (B) provide access for recreation.

SEC. 9. CONVEYANCES TO TOWN OF SUPERIOR, ARIZONA.

    (a) Conveyances.--
          (1) In general.--On request from the Town and subject to the 
        provisions of this section, the Secretary shall convey to the 
        Town the following:
                  (A) Approximately 30 acres of land as depicted on the 
                map entitled ``Southeast Arizona Land Exchange and 
                Conservation Act of 2009--Federal Parcel--Fairview 
                Cemetery'' and dated January 2009.
                  (B) The reversionary interest and any reserved 
                mineral interest of the United States in the 
                approximately 265 acre of land located in Pinal County, 
                Arizona, as depicted on the map entitled ``Southeast 
                Arizona Land Exchange and Conservation Act of 2009--
                Federal Reversionary Interest--Superior Airport'' and 
                dated January 2009.
                  (C) The approximately 250 acres of land located in 
                Pinal County, Arizona, as depicted on the map entitled 
                ``Southeast Arizona Land Exchange and Conservation Act 
                of 2009--Federal Parcel--Superior Airport Contiguous 
                Parcels'' and dated January 2009.
    (b) Payment.--
          (1) In general.--The Town shall pay to the Secretary the fair 
        market value for each parcel of land or interest in land 
        acquired under this section, as determined by appraisals 
        conducted in accordance with section 3(e).
          (2) Reduction.--If the final appraised value of the non-
        Federal land exceeds the value of the Federal land under 
        section 3--
                  (A) the obligation of the Town to pay the United 
                States shall be reduced by an amount not to exceed the 
                excess value of the non-Federal land conveyed to the 
                United States; and
                  (B) the amount donated by Resolution Copper to the 
                United States shall be reduced accordingly.
    (e) Sisk Act.--Any payment received by the Secretary from the Town 
under this section shall be deposited in the fund established under 
Public Law 90-171 (commonly known as the ``Sisk Act'') (16 U.S.C. 484a) 
and shall be made available to the Secretary, without further 
appropriation, for the acquisition of land for addition to he National 
Forest System in the State.
    (d) Terms and Conditions.--The conveyances (under this section 
shall be subject to such terms and conditions as the Secretary may 
require.

                                PURPOSE

    The purpose of S. 409, as ordered reported, is to authorize 
a land exchange in southeastern Arizona between Resolution 
Copper, the Secretary of Agriculture, and the Secretary of the 
Interior under which Resolution Copper would acquire National 
Forest lands necessary to allow it to develop a large copper 
mine and the United States would acquire other lands in Arizona 
with important scenic, conservation, and recreational values.

                          BACKGROUND AND NEED

    Resolution Copper Mining LLC (Resolution Copper) is a 
subsidiary of Rio Tinto and BHP-Billiton. The company owns land 
and holds mining claims near the Town of Superior, in 
southeastern Arizona. In the late 1990s, Resolution Copper's 
exploratory activities revealed the existence of a very large 
copper deposit, located between 4,500 to 7,000 feet below the 
surface. It has indicated that if further exploration indicates 
the mine is feasible, it would develop a large underground 
mine, using block caving techniques. Under this method, the 
mine would be developed through tunnels extending deep 
underground, where the ore would be extracted and removed. The 
company anticipates that it would remove the ore through other 
underground tunnels to an existing open pit mine in the area, 
where it would be processed.
    The Oak Flat Campground, part of the Tonto National Forest, 
is located in the center of Resolution Copper's land holdings 
and mining claims. Approximately 760 acres of National Forest 
lands in and around the Oak Flat Campground were withdrawn from 
the mining laws in 1955. See Public Land Order 1229 (Sept. 27, 
1955); 20 Fed. Reg. 7336-37 (Oct. 1, 1955). Resolution Copper 
has proposed a land exchange to allow it to acquire the 
campground and adjacent withdrawn National Forest lands so that 
it can proceed with development of the mine. In exchange, the 
company has acquired several environmentally important parcels 
in the State, which it would convey to the Forest Service or 
the Bureau of Land Management.
    Enactment of the land exchange would allow the company to 
develop the mine, while adding other important lands to Federal 
management. Resolution Copper estimates that the total economic 
impact of the mine over its projected 66-year life will exceed 
$46 billion, and the mine could provide up to one-quarter of 
the nation's estimated annual copper needs.
    The lands to be acquired by the United States under the 
exchange would be added to other areas managed by the Forest 
Service or the Bureau of Land Management in the State. Included 
within these parcels are seven miles of riparian land along the 
San Pedro River that would be added to the San Pedro Riparian 
National Conservation Area, and over 950 acres of grasslands 
within the Las Cienegas National Conservation Area.

                          LEGISLATIVE HISTORY

    S. 409 was introduced by Senators Kyl and McCain on 
February 11, 2009. The Subcommittee on Public Lands and Forests 
held a hearing on S. 409 on June 17, 2009 (S. Hrg. 111-65).
    Similar legislation, S. 3157, was introduced in the 110th 
Congress by Senator Kyl on June 18, 2008. The Subcommittee on 
Public Lands and Forests held a hearing on S. 3157 on July 7, 
2008 (S. Hrg. 110-572).
    Senators Kyl and McCain also introduced similar bills in 
the 109th Congress, S. 1122 and S. 2466, and the Subcommittee 
on Public Lands and Forests held a hearing on S. 2466 on May 
24, 2006 (S. Hrg. 109-582).
    None of the previous bills were reported by the Committee.
    At its business meeting on December 16, 2009, the Committee 
on Energy and Natural Resources ordered S. 409 favorably 
reported with an amendment in the nature of a substitute.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in open 
business session on December 16, 2009, by a voice vote of a 
quorum present, recommends that the Senate pass S. 409, if 
amended as described herein.

                          COMMITTEE AMENDMENT

    During its consideration of S. 409, the Committee adopted 
an amendment in the nature of a substitute. Except as 
specifically provided, the committee amendment requires the 
Secretary of Agriculture to consider the exchange in accordance 
with section 206 of the Federal Land Policy and Management Act 
of 1976 (FLPMA), the National Environmental Policy Act of 1969 
(NEPA), and other applicable laws. Under the process set forth 
in the committee amendment, the Secretary is required to 
complete any required environmental or other analyses following 
Resolution Copper's submission of a mining plan of operations 
to the Secretary. The land exchange could proceed if the 
Secretary determines, following the analysis, that the exchange 
is in the public interest.
    The amendment includes additional provisions to protect the 
culturally and historically significant Apache Leap site, 
located adjacent to the proposed mine, and requires the 
Secretary to engage in government-to-government consultation 
with affected Indian tribes prior to making a determination 
whether the exchange is in the public interest.
    The amendment also requires that any cash proceeds from the 
exchange be deposited in the Sisk Act Fund, which is used to 
acquire additional National Forest lands in Arizona, reflecting 
that the underlying Federal lands to be conveyed are National 
Forest lands.
    The amendment is explained in detail in the section-by-
section analysis, below.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 contains the short title, the ``Southeast Arizona 
Land Exchange and Conservation Act of 2009''.
    Section 2 defines key terms used in the bill. In 
particular, the term ``Federal land'' means the approximately 
2,406 acres of Forest Service land that would be conveyed to 
Resolution Copper under the exchange, and the term ``non-
Federal land'' means the approximately 5,346 acres of land 
owned by Resolution Copper in nine distinct parcels that would 
be conveyed to the United States for management by the Forest 
Service or the Bureau of Land Management.
    Section 3 describes the terms of the land exchange.
    Subsection (a) provides that, subject to the provisions of 
this Act, if Resolution Copper offers to convey to the United 
States all right, title, and interest to the lands owned by 
Resolution Copper and proposed for exchange, the Secretary of 
Agriculture is to convey the Federal lands as depicted on the 
referenced map. The principal requirements for the land 
exchange are found in: subsection (b), requiring compliance 
with applicable laws, including FLPMA and NEPA; subsection (c), 
requiring title to any land conveyed by Resolution Copper to be 
in a form acceptable to the Secretary and subjecting the 
exchange to any terms and conditions the Secretary or the 
Secretary of the Interior may require; subsection (f), 
requiring that the values of the lands to be exchanged be 
equal; and section 206(a) of FLPMA, requiring that the 
Secretary determine whether the land exchange is in the public 
interest.
    Subsection (b)(1) requires the Secretary of Agriculture 
(Secretary) to carry out the land exchange, except as otherwise 
provided in this Act, in accordance with section 206 of FLPMA 
and other applicable laws, including NEPA.
    Paragraph (2) states that to the maximum extent practicable 
under NEPA and Council on Environmental Quality regulations, 
the Secretary, in consultation with the Secretary of the 
Interior, shall prepare a single environmental review document, 
which shall be used as the basis for all decisions under 
Federal law related to the land exchange and connected agency 
decisions related to the proposed mine on the Federal land to 
be conveyed to Resolution Copper. The paragraph clarifies that 
the Secretary is not precluded from using separate 
environmental review documents.
    Subsection (c)(1) provides that title to any land conveyed 
by Resolution Copper to the United States shall be in a form 
that is acceptable to the Secretary, for lands to be conveyed 
to the Forest Service, and the Secretary of the Interior, for 
lands to be conveyed to the Bureau of Land Management.
    Paragraph (2) states the land exchange shall be subject to 
such terms and conditions as the Secretary and the Secretary of 
the Interior may require. The substitute amendment does not 
include specific language requiring Resolution Copper to make 
confidential information available to the United States 
necessary for the preparation of a mineral report and proper 
valuation of the Federal land to be conveyed, but the Committee 
expects that the Secretaries can include such requirements as 
part of the terms and conditions they may impose.
    Subsection (d) requires the Secretary to engage in 
government-to-government consultation with affected Indian 
tribes concerning issues relating to the exchange prior to 
making a determination as to whether the exchange is in the 
public interest.
    Subsection (e) describes the process for appraising the 
lands to be exchanged.
    Paragraph (1) requires the Secretary and Resolution Copper, 
as soon as practicable after the date of enactment, to select 
an appraiser.
    Paragraph (2) requires the appraisals to be conducted in 
accordance with nationally recognized appraisal standards, 
including the Uniform Appraisal Standards for Federal Land 
Acquisitions and the Uniform Standards of Professional 
Appraisal Practice, except that after the final appraised value 
is determined and approved by the Secretary, the Secretary is 
not required to update the final appraised value for 3 years 
(although the Secretary is not precluded from requiring a 
reappraisal or update of any appraisal). The paragraph also 
clarifies that any improvements made by Resolution Copper on 
the Federal land prior to entering into an exchange agreement 
shall not be included in the appraised value of the Federal 
land.
    Paragraph (3) directs the appraiser to prepare a detailed 
income capitalization approach analysis of the market value of 
the Federal land, even if that analysis is not the appraisal 
approach relied on by the appraiser to determine the market 
value of the Federal land. The income capitalization approach 
analysis, which is commonly used in valuing mineral properties, 
is required for the purpose of calculating future value 
adjustment payments to the United States in accordance with 
section 6. The income capitalization approach analysis is 
required to be included in the final appraisal report of the 
Federal land.
    Subsection (f)(1) requires that the value of the Federal 
land and the non-Federal land to be exchanged under this Act 
must be equal or otherwise equalized in accordance with this 
subsection.
    Paragraph (2) provides that if the final appraised value of 
the Federal land exceeds the value of the non-Federal land, 
then Resolution Copper shall convey additional non-Federal 
lands to the Secretary or the Secretary of the Interior 
(subject to their approval), or make a cash equalization 
payment, or any combination of the two. Notwithstanding section 
206(b) of FLPMA, the Secretary may accept a cash equalization 
payment in excess of 25 percent of the total value of the lands 
or interests conveyed. Any cash payments received by the United 
States are to be deposited into the Sisk Act Fund and used, 
without further appropriation, to acquire additional lands for 
addition to the National Forest System in the State.
    Paragraph (3) provides that if the final appraised value of 
the non-Federal land exceeds the value of the Federal land, the 
United States shall not be required to make a cash equalization 
payment to Resolution Copper, and that the excess value shall 
be considered to be a donation by Resolution Copper to the 
United States. If the United States makes land conveyances to 
the Town of Superior, Arizona, as provided in section 9, the 
Town's obligation to pay fair market value for the conveyed 
lands is reduced by the excess value, and Resolution Copper's 
donation is reduced accordingly.
    Subsection (g) addresses mineral exploration issues within 
the Oak Flat Withdrawal Area, which is part of the Federal land 
proposed for conveyance to Resolution Copper, and which is 
presently withdrawn from operation of the public land and 
mining laws.
    Paragraph (1) provides that notwithstanding the existing 
withdrawal, the Secretary may authorize Resolution Copper to 
carry out mineral exploration activities under the Oak Flat 
Withdrawal Area (which is identified on a referenced map) so 
long as those activities would not disturb the surface of the 
area. In addition, the Secretary may allow surface activities 
to be conducted within the withdrawal area from a single 
exploratory drill pad, although the pad may not be located 
within the Oak Flat Campground.
    Paragraph (2) states that any activities undertaken in 
accordance with subsection (g) are subject to any terms and 
conditions that the Secretary may require.
    Paragraph (3) provides that the authority to undertake 
mineral exploration activities under subsection (g) expires 
when the land is conveyed to Resolution Copper or 3 years after 
the date the special use permit authorizing mineral exploration 
activities is issued, whichever is earlier.
    Subsection (h) requires Resolution Copper to pay, without 
compensation and as a condition of the land exchange, any costs 
that are associated with the land exchange and agreed to by the 
Secretary.
    Subsection (i)(1) states that it is the intent of Congress 
that the Secretary complete any necessary environmental reviews 
and determine whether it is in the public interest to proceed 
with the land exchange not later than 3 years after the date 
Resolution Copper submits a mining plan of operation to the 
Secretary.
    Section 4 describes the nine parcels of land that would be 
conveyed by Resolution Copper to the United States under the 
exchange.
    Subsection (a) describes six parcels, totaling 
approximately 1,196 acres, that would be conveyed to the Forest 
Service. The 110-acre parcel described as ``Apache Leap--South 
End'' is conveyed subject to the retained right of Resolution 
Copper to conduct underground activities that do not involve 
commercial mineral extraction under Apache Leap, and which the 
Secretary determines would not disturb the surface of Apache 
Leap.
    The remaining three parcels, totaling approximately 4,150 
acres, would be conveyed to the Secretary of the Interior, to 
be administered by the Bureau of Land Management as part of the 
San Pedro Riparian National Conservation Area or Las Cienegas 
National Conservation Area, both of which are located in 
southern Arizona.
    Subsection (b) describes how the specific parcels are to be 
administered by the Secretary or the Secretary of the Interior.
    Subsection (c) requires, as a condition of the land 
exchange, that Resolution Copper shall surrender to the United 
States, without compensation, the company's rights to 
commercially extract minerals under Apache Leap, and the 
property described in subsection (a)(1)(E), known as ``The 
Pond''.
    Section 5 addresses issues relating to recreational access 
and recreation-related improvements.
    Subsection (a) requires that as a condition of the land 
exchange, Resolution Copper pay to the Secretary $1.25 million 
to improve access and facilities for dispersed recreation and 
other outdoor recreational activities, including road access, 
turnouts, trails, parking areas, or facilities for dispersed 
recreation and other outdoor recreational activities. To the 
maximum extent practicable, the funds are to be used on 
National Forest land in the general area north of Arizona State 
Highway 60 or in the general area along Arizona State Highway 
177.
    Subsection (b) provides that the amount paid by Resolution 
Copper under this section is not to be considered in 
determining the value of the Federal and non-Federal land.
    Section 6 describes a potential future value adjustment 
payment to be made by Resolution Copper to the United States.
    Subsection (a) provides that as a condition of the land 
exchange, beginning on the first year after the date production 
of valuable locatable minerals in commercial quantities from 
the Federal land conveyed to Resolution Copper begins, and 
annually thereafter, the company is required to file a report 
with the Secretary of the Interior indicating the quantity of 
locatable minerals produced in commercial quantities from the 
land during the preceding calendar year.
    Subsection (b) states that if the cumulative production of 
valuable locatable minerals produced in commercial quantities 
from the Federal land conveyed to Resolution Copper exceeds the 
quantity of minerals assumed in the income capitalization 
approach analysis prepared under section 3(e)(3), the company 
shall pay to the United States each year a value adjustment 
payment for the quantity of excess production at the same rate 
assumed for the analysis.
    Subsection (c) clarifies that nothing in this section 
modifies or otherwise affects any State law relating to the 
imposition, application, timing, or collection of a State 
excise or severance tax.
    Subsection (d) provides that the funds are to be deposited 
into the Sisk Act Fund and used, without further appropriation, 
to acquire additional lands for addition to the National Forest 
System in Arizona.
    Section 7 withdraws, subject to valid existing rights, 
Apache Leap and any land acquired by the United States under 
this Act from the public land laws, the mining laws, and the 
mineral leasing, mineral materials, and geothermal leasing 
laws.
    Section 8 pertains to the management of the area known as 
Apache Leap.
    Subsection (a) directs the Secretary to manage Apache Leap 
to preserve its natural character and to protect the 
archeological and cultural resources located on Apache Leap. 
The Secretary may issue special use permits to Resolution 
Copper to allow the company to carry out underground activities 
(other than the commercial extraction of minerals) under the 
surface of Apache Leap that the Secretary determines would not 
disturb the surface of Apache Leap, and subject to any terms 
and conditions that the Secretary may require. The Secretary 
may also allow the installation of fences or signs necessary to 
protect public health and safety, or to ensure that any 
underground activities do not affect the surface of Apache 
Leap.
    Subsection (b) requires the Secretary to prepare a 
management plan for Apache Leap within 3 years after the date 
of enactment. The plan is to be prepared in consultation with 
affected Indian tribes, the Town of Superior, Resolution 
Copper, and other interested members of the public, and is to 
consider whether additional measures are necessary to protect 
the cultural, archeological, and historical resources of Apache 
Leap and provide access for recreation.
    Section 9 authorizes conveyances of land to the Town of 
Superior, Arizona.
    Subsection (a) provides that on request from the town, the 
Secretary is to convey the three referenced parcels to the 
town, totaling approximately 545 acres. The parcels include a 
cemetery site, a reversionary interest in land used for the 
Superior airport, and land adjacent to the airport.
    Subsection (b) requires the town to pay the Secretary the 
fair market value for each parcel of land acquired, as 
determined by appraisals conducted in accordance with this Act.
    Subsection (c) provides that the funds are to be deposited 
into the Sisk Act Fund and used, without further appropriation, 
to acquire additional lands for addition to the National Forest 
System in Arizona.
    Subsection (d) states that the conveyances are subject to 
any terms and conditions that the Secretary may require.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office:

S. 409--Southeast Arizona Land Exchange and Conservation Act of 2009

    S. 409 would authorize a land exchange in Arizona between 
the federal government and a mining company. Based on 
information provided by the affected agencies, CBO estimates 
that discretionary costs to implement the bill would be less 
than $500,000 annually. That spending would be subject to the 
availability of appropriated funds. Those costs would involve 
preparing environmental assessments, surveys, and management 
plans to facilitate the exchange and administer new lands and 
agreements. Enacting the bill would have no significant net 
effect on direct spending and no effect on revenues.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget 
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. CBO estimates that enacting S. 409 
could affect direct spending, but the net effects would be 
negligible for each year.
    The bill contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
            Federal Land Exchange with Resolution Copper LLC
    Under S. 409, the Forest Service would convey about 2,400 
acres of land in Southeast Arizona to Resolution Copper Mining 
LLC in exchange for company land of an equivalent value. Of the 
company land, about 1,200 acres would become part of the 
National Forest System, while about 4,200 acres would be 
administered as conservation areas by the Bureau of Land 
Management.
    If the federal property sought by Resolution Copper is 
appraised at more than the value of the property that the 
company offers for exchange, the company could donate 
additional land or make a cash payment to the United States. If 
the company's property is appraised for more than the federal 
acreage, the difference in value would be considered to be a 
donation to the federal government. Any cash payment received 
by the Forest Service would be available to the agency to 
acquire other lands in the state.
    As a condition of the exchange, Resolution Copper would be 
required to pay the Forest Service $1.25 million. The agency 
would use that amount, without further appropriation, to 
improve recreation facilities in the area. Finally, after 
completion of the exchange, Resolution Copper would have to pay 
the federal government a portion of any future income earned on 
the former federal property if the company determines that the 
actual cumulative production of minerals located on that 
property exceeds the value of the estimated production used in 
the original appraisal process.
    The bill's effect on annual offsetting receipts (a credit 
against direct spending) is uncertain and would depend on the 
outcome of a formal appraisal to be conducted in the next year. 
That process will determine the relative value of the 
properties affected by the exchange, including the value of 
mineral deposits that underlie the federal land and presumably 
would be developed by Resolution Copper in the future. Under 
the terms of the exchange, the Forest Service would receive and 
spend $1.25 million, probably within the next year. In 
addition, the federal government could receive cash payments 
either as a lump sum in the next year or two or annually 
beginning after several years (when Resolution Copper begins to 
develop its new mineral resources). Such payments, could total 
millions of dollars and would be spent by the Forest Service 
(without further appropriation) to purchase other lands within 
Arizona.
            Sale of Federal Property to Superior, Arizona
    Finally, section 9 of the bill would direct the Forest 
Service to sell certain property to the town of Superior, 
Arizona. Proceeds from the sale would be available without 
further appropriation for the purchase of land in the state. 
CBO estimates that the sale of property to Superior, Arizona, 
and use of the proceeds for land purchases would have no net 
effect on the federal budget.
    The CBO staff contact for this estimate is Deborah Reis. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 409.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 409, as ordered reported.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 409, as reported, does not contain any congressionally 
directed spending items, limited tax benefits, or limited 
tariff benefits as defined in rule XLIV of the Standing Rules 
of the Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony provided by the Department of Agriculture and 
the Department of the Interior at the June 17, 2009, 
Subcommittee hearing on S. 409 follows:

Statement of Joel Holtrop, Deputy Chief, National Forest System, Forest 
                   Service, Department of Agriculture

    Mr. Chairman and members of the Subcommittee, thank you for 
the opportunity to appear before you today to provide the 
Department of Agriculture's views on two bills that would 
legislate land transactions: S. 409, would provide for an 
exchange of federal land containing a proposed copper mine for 
non-federal land containing riparian areas in Arizona and S. 
1139, would convey an administrative site in Wallowa, Oregon. 
We defer to the Department of the Interior on provisions 
relating to lands to be managed by the BLM.

                   s. 409--resolution copper exchange

    S. 409 is a complex bill that directs the Secretary of 
Agriculture to convey to Resolution Copper Mining, LLC 
(Resolution Copper), lands on the Tonto National Forest if 
certain conditions are met. The federal lands to be exchanged 
may contain a sizeable copper ore body and are adjoining an 
existing copper mine. In exchange the bill provides the Forest 
Service certain lands in the state of Arizona. The Department 
has not completed its analysis of this complex bill and the 
Administration will provide its views and concerns to the 
Committee upon completion of this work. Nevertheless, there are 
still a number of preliminary concerns with the bill as 
introduced.
    The bill requires the agency to conduct an environmental 
impact statement after the agency no longer owns the property 
on which the mine would be located. The purpose of the National 
Environmental Policy Act (NEPA) is to inform the decision maker 
about potential impacts prior to making a decision. Given the 
current language, we would assume that we would only be 
analyzing impacts from mining activities on the surrounding 
National Forest land, not the land to be conveyed. Consistent 
with Administration policy, NEPA should be done before moving 
forward on the land exchange.
    The bill proposes to use any cash equalization payment for 
multiple purposes including management. Any equalization 
payment by the exchange proponent should be deposited into the 
Federal Land Disposal Account.
    The bill proposes that Resolution Copper replace the Oak 
Flat Campground. We have been unable to locate a suitable 
replacement site for a campground in the vicinity. Funding 
provided in the bill to replace the campground provided to the 
Tonto National Forest should instead address deferred 
maintenance needs of existing recreation facilities.
    The bill directs Resolution Copper to convey a parcel of 
land known as ``the Pond parcel.'' We are concerned about 
recreation related liability issues, access, and facilities 
needed to manage this parcel. A public interest determination 
analysis under NEPA should be required and provide the basis 
for determining whether to proceed with the conveyance.
    We understand there are concerns about management of the 
Apache Leap area and in addition, the acreage that would be 
added to this area. We are concerned about adding another 
planning process as prescribed in the bill because it is 
duplicative of an ongoing Tonto National Forest Planning 
process which can analyze and provide for, if necessary and 
appropriate, a special management area.
    Many of the lands to be exchanged in the bill hold 
significant cultural value to Indian Tribes. In particular, the 
Apache Leap area, the Oak Flat Campground, and Devil's Canyon 
are culturally significant to the San Carlos Apache Tribe and 
the Fort McDowell Yavapai Nation. There are also other 
neighboring Tribes with cultural interests in the area. We will 
continue to work with these Tribes as we move forward with the 
analysis.
    The bill states that Resolution Copper will surrender the 
right to commercially extract minerals under Apache Leap ``or'' 
the Pond parcel but not both. This language should be clarified 
by changing the word ``or'' to ``and.''
    The bill would provide that it is the sense of Congress 
that the exchange to be completed in one year. We appreciate 
the sponsors' interest in expediting this project. However, if 
an environmental impact statement is required on the mining 
operation on the parcel to be conveyed, prior to conveyance, we 
will most likely exceed this time frame. We anticipate that 
there will be considerable concern with any decision and there 
is a likelihood of administrative appeal and litigation.

           *       *       *       *       *       *       *

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

Statement of Ned Farquhar, Deputy Assistant Secretary, Land & Minerals 
                 Management, Department of the Interior

    Thank you for the opportunity to testify on S. 409, the 
Southeast Arizona Land Exchange and Conservation Act. The 
legislation provides for the exchange of a 2,406-acre parcel of 
Forest Service-managed land to a private company in exchange 
for a number of parcels within the State of Arizona for 
management by the Forest Service and the Bureau of Land 
Management (BLM). Three of the private parcels are identified 
for transfer to the Secretary of the Interior. In general, the 
Department of the Interior (DOI) defers to the United States 
Forest Service on the issues directly related to Forest Service 
lands and associated valuation issues. It is our understanding 
that the intent of the legislation is to facilitate an exchange 
of land with Resolution Copper Mining, LLC. Resolution Copper 
has indicated its intention to develop a copper mine near 
Superior, Arizona, and wishes to acquire the 2,406-acre Forest 
Service parcel overlying the copper deposit as well as the 
Federal subsurface rights. The Administration may have 
additional concerns as it works through the analysis of the 
bill.

         conveyance of parcels to the bureau of land management

    We note that while the bill states that three parcels are 
to be conveyed to the Secretary of the Interior, it is our 
understanding that the intention of the sponsors is for the 
parcels to be under the administrative jurisdiction of the BLM. 
We have prepared maps at the request of Senator Kyl's office 
depicting these parcels and our testimony reflects the 
information on those maps dated June 3, 2009. We have recently 
discovered some inconsistencies in our mapping data. The 
parcels identified are:
           3,073 acres along the Lower San Pedro River 
        near Mammoth, Arizona;
           160 acres within the Dripping Springs area 
        near Kearny, Arizona; and
           The 956 acre Appleton Ranch parcel adjacent 
        to the Las Cienegas National Conservation Area near 
        Sonoita, Arizona.
    The lower San Pedro parcel is east of the town of Mammoth, 
Arizona, and straddles the San Pedro River. The acquisition of 
these lands would enhance key migratory bird habitat along the 
San Pedro River. S. 409 directs the BLM to manage the lower San 
Pedro parcel as part of the existing San Pedro Riparian 
National Conservation Area (NCA) designated by Public Law 100-
696. The lower San Pedro parcel lies along the same riparian 
corridor as the San Pedro NCA, but is at least 60 miles 
downstream (north) of the existing NCA, and has substantially 
different resource issues and needs.
    The legislation also proposes to transfer 160 acres in the 
Dripping Springs area northeast of Hayden to the BLM. This 
private parcel is an inholding within a larger block of public 
lands and has important resource values, including sensitive 
Desert Tortoise habitat.
    Finally, the bill provides for the transfer to the BLM of 
the 956-acre Appleton Ranch parcel on the southern end of the 
BLM's Las Cienegas NCA. These lands lie within the ``Sonoita 
Valley Acquisition Planning District'' established by Public 
Law 106-538, which designated the Las Cienegas NCA. That law 
directs the Department of the Interior to acquire lands from 
willing sellers within the planning district for inclusion in 
the NCA to further protect the important resource values for 
which the NCA was designated. These lands are part of a 
significant wildlife corridor.

             additional department of the interior concerns

    There are several additional issues of concern to the 
Department. Among these are the timing of the exchange, 
appraisal provisions, withdrawal language, the equalization of 
values provisions and Tribal consultations.
    Section 5 of the legislation expresses the sense of the 
Congress that the exchange be completed within one year. Based 
on our experience with exchanges, we believe this is not 
sufficient time for the completion of and review of a necessary 
environmental documents, mineral report, completion and review 
of the appraisals, and final verification and preparation of 
title documents. We are also concerned that one year may not be 
enough time to complete analysis of any historic and sacred 
sites in the exchange area as required by the Native American 
Graves Protection Act and the National Historic Preservation 
Act. While this provision is not binding, we believe it is 
unrealistic to expect this to be completed in less than two to 
three years.
    Preparation of a mineral report is a crucial first step 
toward an appraisal of the Federal parcel because the report 
provides important information for an appraisal where the 
property includes a Federal mineral deposit. Accordingly, 
adequate information for the mineral report is essential, 
particularly in the context of this exchange where the proposed 
mining operation is unique in size and scope. The bill does not 
address confidential access for exploration and development 
data and company analyses on the mineral deposits underlying 
the Federal land in order to ensure a timely and accurate 
appraisal.
    The withdrawal language in section 9(d) is not standard and 
may not provide the intended protection for the lands acquired 
by both the Secretary of the Interior and Agriculture.
    Section 4(e) provides for an equalization of values if the 
land values are disparate. We support 4(e)(1) directing any 
equalization payment by the exchange proponent be deposited 
into the Federal Land Disposal Account established under the 
Federal Land Transaction Facilitation Act (FLTFA; Public Law 
106-248). Funds in that account are used for the acquisition of 
environmentally sensitive lands within Forest Service, BLM, 
National Park Service, and Fish & Wildlife Service units. We 
have concerns with the geographic scope of section 4(e)(1)(A), 
and wish to broaden the area where land acquisitions could 
occur using proceeds from the land equalization. The funds 
could then be used in a manner consistent with other FLTFA 
acquisitions.
    However, section 4(e)(1)(B) provides for the use of these 
funds for management activities. We oppose this provision and 
recommend that subsection (B) be deleted. Because the deposited 
funds are a result of the exchange of lands out of Federal 
ownership, these funds should be available to acquire highly 
sensitive conservation lands consistent with the intent of 
FLTFA.
    S. 409 includes a provision in Section 12 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 
7(a)(4)(D). This provision recognizes that an accurate 
projection of future production as part of the appraisal 
process will be difficult to develop, and provides a mechanism 
for additional payments to the United States should the actual 
production exceed the projected production. This provision 
needs clarification.
    Finally, rather than creating a new fund in the U.S. 
Treasury as envisioned under section 12(d), the Department 
recommends the receipts be placed in the Federal Land Disposal 
Account consistent with the provisions of section 4(e)(1)(A) of 
S. 409. Because these funds are to compensate for a possible 
initial inadvertent under-appraisal of land values, it is 
appropriate that the value when captured be used in the same 
manner as if it had been included in the initial appraisal.
    Many of the lands to be exchanged in the bill hold 
significant cultural value to Indian Tribes. In particular, the 
Apache Leap area, the Oak Flat Campground, and Devil's Canyon 
are culturally significant to the San Carlos Apache Tribe and 
the Fort McDowell Yavapai Nation. There are also other 
neighboring Tribes with cultural interests in the area.

                               conclusion

    Thank you for the opportunity to testify. The exchange 
proposed in S. 409 is complex and the Administration is 
continuing its analysis of the bill to assure that the Federal 
government's interest is appropriately protected in any final 
legislation.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 409 as ordered 
reported.

                                  
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